Dignitaries with 'no morals'

Bakhtiar Amin said those responsible should be brought to justice and the money repaid to the Iraqi people.

"It shows that some so-called dignitaries had not an iota of shame in their bones, no conscience and no morals," he said.

"They profited as parasites on the misery of an impoverished nation."

The 32 billion oil-for-food programme, which ran from December 1996 to November 2003, allowed Saddam Hussein’s government to sell oil to buy humanitarian goods. It was intended to ease the life of ordinary Iraqis under 1990 UN sanctions. But an interim report from an independent inquiry into the programme reported it had found lax UN controls, a shortage of audit staff and political favouritism.

Yesterday Kofi Annan, the UN secretary general, said two officials, including the programme director, would be disciplined and if criminal charges were needed, diplomatic immunity would be removed.

"We are as determined as everyone to get to the bottom of this," he said.

"We do not want this shadow to hang over the UN. So we want to get to the truth and take appropriate measures to deal with the gaps."

Investigators are still examining the role of Mr Annan and his son, Kojo, who had been employed by a Swiss company, Cotecna Inspection SA, which had a UN contract to certify deals under the oil-for-food programme.

Paul Volcker, the former head of the US Federal Reserve, who is leading the investigation, is expected to issue a report on that part of the inquiry soon.

More officials are expected to be named by investigators who are still looking into the actions of the UN Security Council, which authorised and monitored the oil-for-food programme, as well as the performance of UN contractors and the activities of UN agencies in the field in Iraq.

"It is not the whole story by a long shot," Mr Volcker said yesterday.

He has accused the programme director, Benon Sevan, of soliciting oil allocations for a small trading firm run by relatives of Boutros Boutros-Ghali, the UN secretary-general from 1991 to 1996. Investigations are continuing into whether Mr Sevan received money for his efforts, as Iraqis have alleged.

"I think it is a fact that Mr Sevan placed himself in a grave and continuing conflict of interest situation that violated explicit UN rules and violated the standards of integrity essential to a high-level international civil servant," Mr Volcker said.

A second official, Joseph Stephanides, now director of Security Council affairs, was alleged to have intervened in selecting large contractors for the programme he helped organise in 1996, before Mr Sevan took over in late 1997.

Mr Sevan, a Cypriot, has denied profiting from the scheme. "Mr Sevan never took a penny," his lawyer Eric Lewis said. "Unfortunately, in the current political climate, the independent inquiry committee needs to find someone to blame."

"Mr Sevan ran the largest humanitarian programme in UN history, a programme that literally saved tens of thousands of innocent people from death by disease and starvation. He is enormously proud of his service."

But Mr Annan does not appear to accept this version of events.

"The secretary-general is shocked by what the report has to say about Mr Sevan," said Mark Malloch Brown, Mr Annan’s chief of staff. "He very much doubts there can be any extenuating circumstances to explain the behaviour, which appears proven in the report."

The report also cited "convincing and uncontested evidence" that three firms, Banque Nationale de Paris; the Dutch Saybolt Eastern Hemisphere and Britain’s Lloyd’s Register Inspection, were awarded contracts without competitive bidding in 1996.

But Mr Volcker said in the interim report - the final one will be in June - that the most serious violations of the UN sanctions involved illegal oil sales outside oil-for-food.

"And there is no question that those sales were known by the UN Security Council," the report added.

Official claims 85,000 windfall came from aunt

MICHAEL THEODOULOU

ONE of the key questions being asked of Benon Sevan, the head of the UN’s oil-for- food programme, is how he came to be in possession of 85,000 which he claimed was given to him by an elderly aunt.

The report questioned this "unexplained wealth", noting that his aunt, Berdjouhi Zeitountsian, was a retired Cyprus government photographer living on a modest pension.

Ms Zeitountsian died last June after falling into the lift shaft at her home, but relatives say they find the story convincing.

They say that Mr Sevan, who is the illegitimate son of one of Ms Zeitountsian’s sisters, was cared for by her "like a son".

Later, she would visit him in New York every two or three months.

Friends and relatives agreed Ms Zeitountsian did not give the impression of being rich. But they said it would not be surprising if she had accumulated the sum mentioned in the inquiry as, by Cyprus standards, it was a relatively modest amount.

"People in Cyprus will laugh at this amount being the focus of an investigation," one relative said. "If they want to find something, they won't find it in Cyprus."