Staffer fired over oil-for-food scandal

UNITED NATIONS -- U.N. Secretary-General Kofi Annan fired a staffer for manipulating contracts under the Iraq oil-for-food program, the first dismissal to result from a U.N.-backed probe of the $64 billion humanitarian operation, a spokesman announced Wednesday.

Joseph Stephanides, a Cypriot diplomat and longtime U.N. staffer, was dismissed over accusations that he tainted the competitive bidding process for a company to inspect humanitarian goods entering Iraq under oil-for-food.

"Mr. Stephanides was advised accordingly yesterday and was separated from service with immediate effect," U.N. associate spokesman Stephane Dujarric said.

Stephanides rejected the charges and vowed to appeal. Stephanides, who had planned to retire in September when he turns 60, has two months to appeal.

"I am very disappointed by this decision," Stephanides told The AP. "I look to the appeal process in the confident hope that justice will be made and I will be exonerated because I have committed no wrongdoing."

The oil-for-food program, established to help ordinary Iraqis suffering under U.N. sanctions imposed after Saddam Hussein's 1990 invasion of Kuwait, is the target of several corruption investigations and has become a lightning rod for critics of the United Nations.

An independent, U.N.-appointed inquiry led by former U.S. Federal Reserve Chairman Paul Volcker first detailed the allegations against Stephanides in an interim report released in February. When the report came out, senior U.N. officials promised to punish anyone found guilty of wrongdoing.

Stephanides, head of the U.N. Security Council Affairs Division, had been accused of helping Britain-based Lloyd's Register Inspection Ltd. win an inspection contract even though there was a lower bidder, France-based Bureau Veritas, Volcker's probe found.

The committee never claimed that he sought to enrich himself. Instead, it described the deeply politicized atmosphere that surrounded the awarding of contracts, and how officials were wary about giving the inspection job to Bureau Veritas because several other companies awarded contracts were also French.

Investigators detailed how Britain, one of five permanent members of the U.N. Security Council, may have exerted pressure to help Lloyd's win the contract.

In the same report, Volcker's investigators accused two other U.N. staff members of wrongdoing in the program, oil-for-food chief Benon Sevan and Dileep Nair, who headed the U.N.'s internal watchdog agency.

Under the program which ran from 1996-2003, Iraq was allowed to sell oil provided the proceeds were used primarily to buy humanitarian goods, including food and medicine.

U.N. action against Sevan has been suspended until Volcker's team finishes its work, Dujarric said. Sevan was accused of a "grave conflict of interest" in soliciting oil deals from Iraq.

Volcker committee spokesman Mike Holtzman said Wednesday that Sevan was still under investigation. Dujarric said any action taken against Sevan would be taken "as a whole instead of piecemeal."

Nair, who recently retired as head of the U.N. Office of Internal Oversight Services, allegedly paid an employee with money from the program even though the staffer's work was not directly tied to it. Annan sent a letter expressing disappointment but took no action.

In a second interim report, on March 29, Volcker's panel faulted Annan for not properly investigating allegations of conflict of interest in the awarding of a contract to a Swiss company that employed his son, Kojo Annan. But it concluded there wasn't enough evidence to prove Annan influenced the awarding of the contract or violated staff rules.

Holtzman said Kojo Annan also remains a target of the Volcker inquiry.