UN: UN Secretary-General Kofi Annan pledged yesterday to "get to the bottom" of the Iraq oil-for-food scandal, saying "we do not want this shadow to hang over the United Nations".
"For an organisation like the UN, any hint of corruption or misbehaviour is harmful and dangerous and we do take it seriously," he told reporters at UN headquarters in New York.
"So we want to get to the bottom of it, get to the truth and take appropriate measures to deal with the gaps." Mr Annan was speaking a day after an interim report by an independent inquiry into the $69 billion programme found that it was plagued with lax UN controls, a shortage of audit staff and political favouritism.
It found no direct embezzlement from the 1993-2003 programme but faulted its director, Benon Sevan for engaging in a "grave conflict of interest" by soliciting oil allocations for a small trading firm run by relatives of Boutros Boutros-Ghali, the UN secretary-general from 1991 to 1996.
The head of the inquiry, Mr Paul Volcker, is investigating claims from Iraqi sources that Mr Sevan received a kickback for this. Mr Annan said he intends to take disciplinary action against Mr Sevan and Mr Joseph Stephanides, the UN official who now heads Security Council affairs and was accused in Mr Volcker's report of interfering in contracts without competitive bidding in 1996.
He said he was consulting lawyers on how to do this and diplomatic immunity would be lifted if there were charges of criminal acts. The interim report said Mr Sevan had "seriously undermined the integrity of the United Nations" and suggested he used an aunt to launder money into his bank account.
The report expressed suspicions about the sum of $160,000 Mr Sevan said he received from his aunt in his native Cyprus from 1999-2003. This was "unexplained wealth" as the aunt, now deceased, was merely a retired Cyprus government photographer living on a modest pension.
Mr Sevan claimed he never recommended any companies for oil vouchers, but the inquiry said it had evidence that he asked Iraq to give a small Swiss-based oil company, African Middle East Petroleum (AMEP), the opportunity to buy oil.
AMEP received the allocations and earned $1.5 million from them. The report said Mr Sevan's solicitations on AMEP's behalf "presented a grave and continuing conflict of interest, were ethically improper, and seriously undermined the integrity of the United Nations."
Mr Volcker is still investigating Mr Annan and his son, Kojo, who was employed by a Swiss company, Cotecna Inspection SA, which had a UN contract to certify deals under the oil-for-food programme. The scheme allowed Iraq to sell oil to buy food for people starving because of UN sanctions imposed after the 1990-1991 Gulf War. Congressional critics in Washington alleged that it allowed Saddam Hussein to pocket up to $21 billion and exert pressure for an end to sanctions by awarding foreign officials vouchers for Iraqi oil that could then be resold at a profit.
The report also found "convincing and uncontested evidence" that selection of the three UN contractors - Banque Nationale de Paris (BNP), Saybolt Eastern Hemisphere BV, and Lloyd's Register Inspection Limited - did not meet established bidding rules and that BNP was chosen by former secretary-general Boutros Boutros-Ghali to be the programme's banker without meeting the UN requirement to accept the "lowest acceptable bidder".
Mr Sevan is officially retired but is being kept on at a token salary of one dollar a year to be available for the inquiry.