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2 Suspended in UN Oil-For-Food Probe

Two United Nations employees have been suspended after a commission investigating the Iraq oil-for-food program accused them of misconduct.

Benon Sevan, an undersecretary general who headed the oil for food program, and Joseph Stephanides, currently head of Security Council affairs, have been suspended with full pay while Secretary-General Kofi Annan determines what action to take against them. The process could take several weeks.

The commission Mr. Annan appointed to investigate allegations of corruption and mismanagement in the $64 billion program concluded that the two men, both Cypriot nationals, had misused their authority in awarding contracts for Iraqi oil.

U.N. spokesman Fred Eckhard says the range of possible punishments is narrow. "It can be anything from summarily dismissing them, the secretary-general has the option to summarily dismiss them, or putting a note in their file, or finding them not guilty at the other end of the spectrum," he said.

The spokesman said the two men would have two weeks to defend themselves in writing.

In the case of Mr. Sevan, the potential penalties would be almost meaningless. For all practical purposes, he retired months ago. He is being retained at a salary of $1 a year, mostly for the purpose of cooperating with the oil-for-food investigation.

A U.S. government prosecutor was quoted over the weekend as saying he would seek to prosecute Mr. Sevan. Several U.S. congressional committees are also looking into various aspects of how the humanitarian oil-for-food program was used corrupted.

Mr. Annan has said he would waive diplomatic immunity for any U.N. officials charged with criminal behavior. But spokesman Eckhard says the two U.N. employees face no criminal charges so far and remain covered by immunity. "There's no action taken on immunity," he said.

Neither Mr. Sevan nor Mr. Stephanides have had any criminal charges laid at their doorstep by the Volcker commission, although Mr. Volcker did say his inquiry into Mr. Sevan was continuing. So it means they continue with their pay. For Mr. Stephanides it's his full salary, for Mr. Sevan it's his one dollar a year."

In addition to the one-dollar a year, Mr. Sevan is also receiving a U.N. pension based on his 40-years of service to the world body. He retired with the rank of undersecretary general at an annual salary of about $125,000. Spokesman Eckhard says pension benefits will not be affected by findings of the oil-for-food investigation.

Mr. Stephanides earns about $100,000 a year in his current position. He is due to retire in less than six months. If he is fired, he would leave with full pension benefits.

The Volcker commission did not accuse either Mr. Stephanides or Mr. Sevan of profiting from their involvement in the oil-for-food program. But commission chairman Paul Volcker expressed concern about $160,000 in cash that Mr. Sevan said he had received from an aunt in his native Cyprus. The aunt, who died recently, was a retired government employee with a modest income.

Mr. Sevan has denied any wrongdoing. He said through a lawyer last week that he never took a penny illegally from the humanitarian program he ran.

Secretary-General Annan, meanwhile, is said to be planning substantial changes in the U.N. management structure to avoid any future scandals. Several senior staff changes have already been announced, and Mr. Annan is expected to address the issue further in a speech later this week in London.