Oil-for-Food Officials Informed of Charges

Secretary-General Kofi Annan (search) has informed the head of the U.N. Oil-for-Food program in Iraq and another official of the U.N. charges against them, a U.N. spokeswoman said Wednesday.

Benon Sevan (search), who was in charge of the $64 billion humanitarian program, and Joseph Stephanides (search), head of the U.N. Security Council Affairs Division, were accused of misconduct last week by an independent inquiry.

"The two charge letters have been sent outlining the case against them," associate spokeswoman Marie Okabe said. "Should they so wish, they have two weeks to respond to those charges. Afterwards, the secretary-general will decide on what action to take."

Annan has three options: the cases could be closed, he could decide to dismiss them, or the matter could be referred to the U.N. Joint Disciplinary Committee which would then make a recommendation to the secretary-general.

Sevan and Stephanides were suspended with pay last Friday, a day after former U.S. Federal Reserve Chairman Paul Volcker released an interim report highly critical of their behavior and of U.N. management.

Sevan ran the Oil-for-Food program from 1996 until it ended in November 2003. He retired from the United Nations last year but remains on the payroll for $1 a year to help with the investigation. Stephanides is scheduled to retire in about five months.

Sevan and Stephanides are entitled to two appeals and U.N. officials say the process can take months.

Volcker accused Sevan of a "grave conflict of interest," saying his conduct in soliciting oil deals from Iraq was "ethically improper and seriously undermined the integrity of the United Nations."

His report accuses Sevan of violating the U.N. Charter and U.N. Staff Regulations by failing to act in the sole interest of the United Nations, engaging in an activity that was incompatible with his duties, and actively associating with a business "where it was possible for him to benefit ... by reason of his official position with the United Nations, thus creating a conflict of interest."

Sevan's lawyer, Eric Lewis, accused Volcker's Independent Investigative Committee of trying to make his client a "scapegoat" and said "Mr. Sevan never took a penny."

The report said Stephanides "tainted" the competitive bidding process for a company to inspect humanitarian goods entering Iraq under the program.

His contacts with an unnamed U.N. mission — which a U.N. committee acquiesced to for political reasons — led to Lloyd's Register Inspection Limited winning the contract even though there was a lower bidder, it said.

Volcker said Stephanides violated U.N. rules by actively participating in a process that "prejudiced and preempted" competitive bidding.