U.N. to Use Oil-for-Food Revenue for Probe

Secretary-General Kofi Annan (search) on Wednesday said the United Nations will use $30 million in revenue from the U.N. Oil-for-Food program for Iraq to pay the initial bill for the independent investigation of corruption allegations in the program.

In a letter to the U.N. Security Council, Annan said money for the probe — headed by former U.S. Federal Reserve chairman Paul Volcker (search) — would come from an account earmarked to pay U.N. administrative and operational costs for the humanitarian program.

Volcker said in August he doesn't know how long it would take to complete the investigation, but estimated it would cost at least $30 million in the next year.

The United Nations paid several million dollars in the investigation's initial costs from its regular budget, to which all 191 U.N. member states contribute.

But U.N. associate spokesman Stephane Dujarric said the regular budget, now about $1.4 billion annually, couldn't absorb the inquiry's cost.

Since voluntary contributions were unlikely to pay for the Volcker panel, Annan decided to tap the Oil-for-Food account for administrative and operational costs. Dujarric said the account contains $300 million.

The Oil-for-Food program, which began in December 1996 and ended in November 2003, was launched by the U.N. Security Council to help Iraqis cope with U.N. sanctions imposed after Iraq's 1990 invasion of Kuwait.

Saddam Hussein's regime could sell unlimited quantities of oil provided the money went primarily to buy humanitarian goods and pay reparations to victims of the 1991 Gulf War.

Corruption allegations surfaced in January in the Iraqi newspaper Al-Mada, which published a list of about 270 former government officials, activists, journalists and U.N. officials from more than 46 countries suspected of profiting from Iraqi oil sales as part of the U.N. program.

Last week, a report by Charles Duelfer (search), the top U.S. arms inspector in Iraq, alleged the Iraqi government manipulated the U.N. program to acquire billions of dollars in illicit gains and to import illegal goods, including parts for missile systems.

He also accused the former head of the program, Benon Sevan, of accepting bribes in the form of vouchers for Iraqi oil sales — an allegation he has denied. He also charged the program was rife with alleged kickbacks for European and Arab countries and officials.