The UN Secretary General has suspended two senior officials linked to the oil-for-food programme for Iraq after a highly critical investigation.
The report said Benon Sevan's conduct was "ethically improper"
Benon Sevan, the programme's former head, and Joseph Stephanides, who set up the plan, both deny wrongdoing.
A UN spokesman said the men have both been suspended with pay, the beginning of a lengthy disciplinary process.
The programme allowed Iraq to sell oil to buy food and medicine to ease the effects of international sanctions.
UN spokesperson Fred Eckhard said the men would shortly be sent details of the charges against them.
"It is the beginning of the process. We will, by Wednesday, be giving them a letter, listing the charges against them. They have two weeks to respond," Mr Eckhard said.
An independent report, conducted by the former chairman of the US central bank, Paul Volcker, suggested Mr Sevan had acted unethically.
He has been accused of undermining the UN's integrity by repeatedly trying to allocate oil sales from Iraq to one particular company.
Mr Sevan - who worked for the UN for over 40 years - denies the charges and says he has been made a scapegoat.
Although retired, he is currently a member of UN staff with a nominal annual salary of $1 for the purposes of the investigation.
Mr Annan has said he would lift the diplomatic immunity accorded to both men if they are charged with a criminal offence.
Mr Eckhard said the UN would wait to see if any country pressed criminal charges.
"The lifting of immunity would allow him to defend himself within that judicial system, but we are not there yet," Mr Eckhard said.
Mr Annan has said he is determined to discover what was going on at the oil-for-food programme, which was set up in 1996, and not to allow its alleged mismanagement to overshadow the work of the UN.
Separate inquiries are under way in the US Senate and by the Iraqi interim government. A final report from Mr Volcker is expected in June.
Further investigations are to scrutinise the actions of the Security Council and Mr Annan himself, as well as those of his son, Kojo, who worked for a company involved in the oil-for-food programme.