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Oil-For-Food Probe Finds Mismanagement, Conflict of Interests

A United Nations-appointed panel investigating the Iraq oil-for-food program says it found conclusive evidence of gross mismanagement and conflict of interest by a senior U.N. official.

Oil-for-food inquiry commission chairman Paul Volcker says his panel's initial report does not make pleasant reading.

Writing in the Wall Street Journal newspaper Thursday, Mr. Volcker says the panel found that procurement procedures used in the $64 billion program were "tainted" and failed to follow established U.N. rules designed to assure fairness and accountability.

The commission's report singles out for special criticism oil-for-food program director Benon Sevan, who holds the rank of U.N. undersecretary-general.

Mr. Volcker, who chairs the panel, says the investigation turned up conclusive evidence that Mr. Sevon placed himself in an irreconcilable conflict of interest by effectively participating in the selection of purchasers of oil under the program.

Mr. Volcker delivered copies of the 219-page report Thursday to Secretary-General Kofi Annan. Even before reading it, Mr. Annan told reporters he is planning what diplomats have called "sweeping reforms" to correct management failures.

"We ourselves are taking measures to strengthen some of our management practices and we will be making some announcements and taking some concrete action very soon," said Mr. Annan.

Mr. Annan said there would be some changes in senior staff, but denied reports of a wholesale shakeup in the U.N. management team.

U.N. spokesman Fred Eckhard said Mr. Annan would also cooperate with any criminal prosecution that may result from the investigation.

"If there are individuals against whom there are criminal accusations, he would waive the immunity of those people, and he would cooperate with the prosecution as they seek to defend themselves before whatever judicial authorities have jurisdiction and decide to prosecute," he said.

Secretary-General Annan himself has been tainted by revelations that his son, Kojo Annan, received payments from a key oil-for-food contractor. Commission chairman Volcker says the investigation into the case of Mr. Annan's son is advanced, and will be addressed in a later report.

Mr. Volcker has indicated there will be at least one, and possibly more, interim reports before the final document is issued, probably about the middle of this year.