U.N. fires first staffer over oil-for-food role
(Agencies)
Updated: 2005-06-02 07:47

UN Secretary-General Kofi Annan, himself under attack for mismanagement of the Iraq oil-for-food program, has dismissed his first U.N. official linked to the scandal-tainted humanitarian plan, the United Nations said on Wednesday.

Joseph Stephanides, a veteran midlevel official who contends his actions were approved by his superiors, was accused by a U.N.-appointed inquiry of steering a lucrative contract under the oil-for-food program to a British firm.

Annan, who was not secretary-general when the incident took place in 1996, concluded Stephanides committed "serious misconduct" and "was separated from service with immediate effect," U.N. spokesman Stephane Dujarric said.

Stephanides denied breaking any rules and vowed to appeal.

In this photo released by the United Nations, Joseph Stephanides, left, director of Security Council Affairs, speaks on the U.N. talk show 'World Chronicle' at U.N. headquarters in New York Thursday, April 17, 2003. Stephanides was fired by Secretary-General Kofi Annan on Tuesday, May 31, 2005 for 'serious misconduct' in the oil-for-food scandal.[AP]

"There were tremendous pressures to cut corners and accelerate the institutional arrangements because civilians were suffering in Iraq and oil-for-food had to be started as soon as possible," he told Reuters. "To make me the fall guy for that -- this is really preposterous."

Under the $67 billion program, Iraq was allowed to sell oil to buy civilian goods in order to ease the impact on ordinary Iraqis of U.N. sanctions imposed after Baghdad invaded neighboring Kuwait in 1990.

After the U.S.-led invasion of Iraq in 2003, Iraq's new leaders disclosed ways Iraqi President Saddam Hussein had undercut the program by bribing and soliciting bribes in exchange for contracts.

The entire U.N.-administered program is being investigated, and Annan, who took office in 1997, has come under criticism for failing to root out mismanagement.

Paul Volcker, the former U.S. Federal Reserve chairman who heads an independent inquiry into oil-for-food, has cleared Annan of interfering in the award of a separate contract to Cotecna, a Swiss firm that employed his son, Kojo Annan.

DETAILS OF RIVAL BID REVEALED

But Volcker faulted Annan for a lax investigation into possible conflicts of interest in granting that contract.

Volcker in a Feb. 3 report accused Stephanides, a Cypriot who helped set up the program in 1996, of colluding with Britain's then-U.N. ambassador, John Weston, by revealing details to him of a rival bid for a contract in Iraq.

Stephanides, who was suspended with pay after the Volcker report, was not accused of enriching himself through his actions but of violating U.N. procurement rules.

The British firm Lloyd's Register Inspection Ltd. ended up winning the $4.5 million contract until 1998 -- when it was awarded to Cotecna -- for verifying that goods purchased under the program had arrived in Iraq.

While French firm Bureau Veritas was the low bidder, U.N. officials decided they could not select a French company because they had recently given another contract to a French bank and hired a Frenchman as a U.N. oil overseer for the program, Volcker's report said.

Stephanides said without mentioning names that his superiors had already decided to award the contract to Lloyd's when he gave the bidding details to the British.

"We saved the organization $900,000 thanks to the intervention" because Lloyd's lowered its initial bid by that sum after hearing from him, Stephanides said.

Annan has fired 40 U.N. staff members since he became secretary-general for a range of serious staff rules violations ranging from procurement irregularities to sexual abuse, Dujarric said.

In a second case related to the Iraq program, the United Nations decided to suspend disciplinary action against Benon Sevan, the former director of the oil-for-food program, until the Volcker inquiry completed its work, Dujarric said.

Sevan, also a Cypriot, ran the oil-for-food program from October 1997 until its end in 2003. He remains suspended from any U.N. duties until the Volcker investigation is concluded.

Volcker accused Sevan of a grave conflict of interest in steering an allocation of Iraqi oil to a relative of Boutros Boutros-Ghali, the U.N. secretary-general from 1991 to 1996. The relative, who owned a small Panamanian-registered trading company, earned $1.5 million from the transaction.

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