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Only U.N. Official Fired in Oil-for-Food Scandal Cleared, Reinstated

The United Nations reinstated the only U.N. official who was fired over the Iraq Oil-for-Food scandal, after an internal appeals body ruled that he had done nothing wrong, according to a letter made public Tuesday.

The decision was made Monday and Joseph Stephanides, fired May 31, received the letter Tuesday maintaining that he violated staff rules by showing preference to one bidder for an Oil-for-Food contract but essentially acknowledging the punishment was too harsh.

Stephanides, a 60-year-old Cypriot national, had been scheduled to retire in September and the move gives him his pay up to that point. Deputy spokeswoman Marie Okabe confirmed that Stephanides' firing had been overturned and said Undersecretary-General for Management Christopher Burnham signed the letter on behalf of U.N. Secretary-General Kofi Annan, who is at a conference in Tunisia.

The letter, dated Monday, said "the sanction that was imposed on you has been reconsidered in light of all the circumstances in the case and the principle of proportionality."

The Joint Disciplinary Committee, an internal U.N. appeals board, had ruled last month that Stephanides should be reinstated, issued a written apology and paid about $200,000 — about two years' back pay — for the emotional suffering and damage to his reputation caused by Annan's handling of his case.

Stephanides' lawyer, George Irving, said he was not satisfied with Annan's move and would take the case to the next step up the internal U.N. appeals ladder, the Administrative Tribunal. Unlike the disciplinary committee, its decisions are binding.

"They just maintain their decision that he did something wrong," Irving said.

The committee's ruling, disclosed to The Associated Press last week, concluded that Stephanides was fired mostly because of the public scrutiny from an investigation that found the $64 billion Oil-for-Food program was poorly managed and corrupt.

The committee "sympathized with the applicant's argument that he was being made the 'sacrificial lamb' in this matter so as to give the impression to the world that concrete and decisive action was being taken," the ruling said.

The decision to reverse Stephanides' firing, which required Annan's approval, could be embarrassing to the secretary-general and the U.N. as they try to move on from the Oil-for-Food scandal and other problems that have made this year one of the worst chapters in the world body's 60-year history.

Annan was not required to heed the decision.

Stephanides was fired for divulging bidding information related to an Oil-for-Food contract to Britain. He argued he was acting under the instructions of a U.N. Security Council sanctions committee.

In February, a U.N.-backed probe of the program led by former Federal Reserve Chairman Paul Volcker, accused him of tainting the bidding process over a contract to inspect goods going into Iraq.

On Stephanides' request, Volcker reopened his investigation into Stephanides over the summer. But Volcker's team reaffirmed its findings in a final report in late October, saying that he had shown a clear preference for one bidder over another, a technical violation.

Stephanides was the only U.N. employee to be punished over the scandal. Benon Sevan, the program's former chief, is being investigated by the Manhattan District Attorney's office for allegedly accepting kickbacks. Alexander Yakovlev, who worked in the U.N. contract office, resigned and pleaded guilty in August to soliciting a bribe from a company seeking a contract.

The Oil-for-Food program, which ran from 1996-2003, allowed Saddam Hussein to sell limited and then unlimited quantities of oil provided most of the money went to buy humanitarian goods such as food and medicine. It was meant to alleviate the suffering of ordinary Iraqis caused by U.N. sanctions imposed after Saddam's 1990 invasion of Kuwait.