by BBC News

October 14, 2004

An investigation into corruption within the UN’s oil-for-food programme for Iraq will be funded with $30 million (£17m) from the programme itself. UN Secretary-General Kofi Annan announced the money would be put into an account dedicated to the inquiry.

A report by the US-backed Iraq Survey Group last week alleged that a top UN official took bribes from Iraq to subvert the programme.

It also said there were numerous kickbacks for European and Arab states.

The former US Federal Reserve chairman Paul Volcker is in charge of the investigation into the programme.

Defunct

He recently said the inquiry would probably cost at least $30m over the next year alone, and that he did not know how long the probe would last.

In a letter to the UN Security Council, Mr Annan said that amount would be earmarked from the programme’s administrative costs.

The oil-for-food programme was set up in 1996 as a means for Iraq to buy humanitarian supplies with the proceeds of regulated oil sales, without breaking the sanctions imposed on it after its 1990 invasion of Kuwait.

However the programme, which is now defunct, became linked with allegations of corruption.

In January, the Iraqi newspaper Al-Mada printed a list of about 270 people it said were involved in corruption, including former government officials, activists, journalists and UN staff.

Illegal imports

It is alleged that President Saddam Hussein offered vouchers to officials, allowing them to buy oil at a discounted rate and then sell it at a profit.

The deals made the regime billions of dollars, it is alleged, and helped the then Iraqi leader import illegal goods, including parts for missile systems.

Officials are also accused of accepting bribes for lobbying for an end to the sanctions programme.

The report by the Iraq Survey Group, headed by the top US arms inspector in Iraq, Charles Duelfer, accused the former head of the programme, Benon Sevan, of being one of those who benefited from corruption.

He has denied the allegations.