Friday, February 4 2005 10:01 Hrs (IST) - World Time -

United Nations: The head of the former UN oil-for-food programme in Iraq, Benon Sevan, received large payments of cash as well as allocations of Iraqi oil, an independent enquiry said.

The enquiry's first report into the scandal-tainted programme yesterday (Feb 03, 2005) stopped short of saying Sevan took bribes but said that behaviour was unethical and in clear violation of UN rules.

The findings will turn up the heat on the United Nations, where Secretary General Kofi Annan has admitted that the scandal surrounding the largest UN aid programme in history has cast a shadow over the world body.

In a 219-page interim report into the complex programme, the probe - headed by former US federal banking chief Paul Volcker - said that Sevan used his position to solicit oil on behalf of a Panama-registered trading company. It said that Sevan had denied asking for the allocations but that his claims "are contradicted by the first-hand accounts of Iraqi officials involved," and said questions remained about cash payments Sevan had subsequently received.

"In making such solicitations, Mr Sevan created a grave and continuing conflict of interest. His conduct was ethically improper and seriously undermined the integrity of the United Nations," the panel said.

Sevan has repeatedly denied any wrongdoing. The $ 64 billion programme was closed in November 2003, several months after the US-led war on Baghdad toppled Saddam Hussein.

Volcker also said there is "convincing and uncontested evidence'' that selection of the three UN contractors for the oil-for-food programme- Banque Nationale de Paris, Saybolt Easern Hemisphere BV, and Lloyd's Register Inspection Limited did not conform to established financial ad competitive bidding rules.

The report said that Sevan denied any wrongdoing but said that evidence from Iraqi officials contradicted that. Still, a summary of the report's findings did not accuse Sevan of any crime.

The committee said that it investigated allegations that Sevan, while executive director of the oil-for-food programme, requested oil allocations from the Iraqi Government on behalf of the African Middle East Petroleum Co Ltd Inc, a Swiss-based oil trading company known as AMEP.

"The committee concludes that Mr Sevan ... solicited and received on behalf of AMEP several million barrels of allocations of oil from 1998 to 2001. As a result of M Sevan's conduct, AMEP's revenue net bank fees and surcharge payment totaled $ 1.5 million.''