U.N. Secretary-General Kofi Annan (search) on Monday ordered the entire procurement division of the United Nations — a multibillion-dollar operation — to be investigated.
Annan placed the division under the direct authority of U.N. Controller Warren Sachs while an independent commission probes charges raised by FOX News and the latest report from the panel investigating the Oil-for-Food (search) scandal.
To handle the probe, the United Nations will turn to an unnamed "independent external consultancy company," according to a U.N. statement.
Meanwhile, the U.N. Office for Internal Oversight Services will continue its own investigation into Alexander Yakovlev (search), a former U.N. procurement official who resigned his job following a FOX News investigation. He subsequently pleaded guilty to conspiracy, wire fraud and money laundering for taking bribes during his work at the United Nations.
Click here to read the U.S. Attorney's press release detailing the guilty plea (pdf).
Yakovlev's plea came just hours after Paul Volcker (search), the man in charge of the independent investigation into Oil-for-Food (search), fingered the Russian native as one of two main U.N. officials involved in the program's corruption.
Volcker's U.N.-approved panel, the Independent Inquiry Committee (IIC), released its latest report highlighting mismanagement of Oil-for-Food Aug. 8. It accused Yakovlev of collecting nearly $1 million in kickbacks outside the Oil-for-Food program.
Yakovlev resigned from his job earlier this summer after a FOX News investigation.
The Volcker report also accuses Benon Sevan (search), the one-time head of the Oil-for-Food program who severed his ties with the United Nations on Sunday, of taking kickbacks under the multi-billion dollar humanitarian operation aimed at easing the effects of sanctions on Iraqi civilians.
Volcker, a former Federal Reserve chairman, also said in releasing the report that Sevan should also lose his diplomatic immunity so he can be prosecuted for alleged crimes.
"All I can fairly say is that given the kind of evidence that we have presented, I would think there may well be interest in doing so," Volcker said, referring to Sevan and Yakovlev losing their immunity.
Investigators: Yakovlev Took Money
Investigators found that Yakovlev tried to solicit kickbacks from a giant Geneva-based inspection company called Société Générale de Surveillance S.A. (SGS), which was seeking an oil-inspection contract under Oil-for-Food.
They said Yakovlev passed secret information on the bidding for the contract to a friend in France, Yves Pintore, who then approached SGS to see if it would "work with" him and "influential people in the U.N. in New York."
Volcker's team found no evidence that the company agreed to kickbacks. It noted that Pintore essentially agreed to its characterization of his involvement.
The committee found "persuasive evidence" that Yakovlev took some $950,000 from other U.N. contractors outside the Oil-for-Food program.
It said it had found that some $1.3 million had been wired to a bank account in Antigua, an English-speaking Caribbean nation, in the name of Moxyco Ltd. More than $950,000 of that cash was traced back to U.N. contractors.
Yakovlev was the U.N. officer in charge of awarding Oil-for-Food contracts to two other well-established inspection companies, the Rotterdam-based Saybolt (search) and the Geneva-based Cotecna (search).
The Volcker committee relied on Yakovlev's claims that in both cases, particularly concerning Saybolt, he had fought against the violation of U.N. rules.
The Oil-for-Food program, launched in December 1996 to provide Iraqis with food and medicine during a U.N.-led embargo imposed after Saddam Hussein's 1990 invasion of Kuwait, quickly became a lifeline for 90 percent of the country's population of 26 million.
Under the program, Saddam's regime could sell oil, provided the proceeds went to buy humanitarian goods or pay war reparations.
Saddam's government decided on the goods it wanted, who should provide them and who could buy Iraqi oil. But the U.N. Security Council committee overseeing sanctions monitored the contracts.
Saddam allegedly sought to curry favor by giving foreign government officials, activists, journalists and U.N. officials vouchers for Iraqi oil, which could then be resold at a profit.