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Volcker Wants U.N. Backing for Oil-for-Food Probe

Former U.S. Federal Reserve chairman Paul Volcker (search), tapped to chair a panel investigating alleged corruption in the U.N. oil-for-food program (search), wants the Security Council to endorse the panel with a resolution before he takes the post, diplomats said Thursday.

Secretary-General Kofi Annan (search) discussed Volker's request with ambassadors from the five permanent council members — the United States, Russia, China, France and Britain — and the envoy for the current council president, Germany, the U.N. diplomats said, speaking on condition of anonymity.

The Security Council sent a letter to Annan on March 31 signaling its support for the inquiry, but only a resolution is legally binding.

The diplomats also said the two others on the panel with Volcker will be: Richard Goldstone, the first prosecutor at the Yugoslav war crimes tribunal and now a judge on South Africa's Constitutional Court; and Mark Pieth, professor of criminal law at Basel University in Switzerland.

Volcker, 76, served as chairman of the Federal Reserve System from 1979-1987. He has since chaired a panel that investigated Swiss banks' handling of the accounts of Holocaust victims and an independent oversight board at Arthur Andersen LLP, the accounting firm responsible for auditing the bankrupt energy company, Enron.

U.S. lawmakers conducting their own investigation into the oil-for-food program have expressed skepticism about the U.N.'s ability to create an independent probe that could implicate some of its top officials.

For that reason, U.S. diplomats pressed for an American to lead the panel and backed Volcker, who has a reputation for integrity and fairness. A call to Volcker's New York office Thursday seeking comment went unanswered.

The corruption claims — a major embarrassment for the United Nations — surfaced last January in the Iraqi newspaper Al-Mada, which published a list of about 270 former government officials, activists and journalists from more than 46 countries suspected of profiting from Iraqi oil sales under the U.N. program.

The U.S. General Accounting Office, Congress' investigative arm, estimated last month that the Iraqi government pocketed $5.7 billion smuggling oil to its neighbors and $4.4 billion extracting illicit surcharges and kickbacks on otherwise legitimate contracts.

Annan launched an internal inquiry into the oil-for-food program in February but canceled it to allow an independent examination covering governments and companies that signed contracts with the United Nations or Iraq.

The oil-for-food program allowed the former Iraqi regime to sell unlimited quantities of oil to buy humanitarian goods and pay reparations to victims of the 1991 Gulf War. Saddam Hussein's government decided on the goods it wanted, who should provide them and who could buy oil; a U.N. committee monitored the contracts.