2 UN officials singled out for taking kickbacks

The UN-established Indepen-dent Inquiry Committee, headed by former US Federal Reserve Chairman Paul Volcker, said in its third interim report that Sevan, who ran the $67 billion humanitarian programme for Iraq, and Alexander Yakovlev, a former UN purchasing office, should be prosecuted.

UN Secretary-General Kofi Annan lifted both men's diplomatic immunity and Yakovlev was arrested on the orders of federal prosecutors of the US Southern District of New York.

Yakovlev immediately pleaded guilty to wire fraud, conspiracy to commit wire fraud and money laundering arising from getting "several hundred thousand dollars," the federal complaint said.

He was released on bail. Quick guilty pleas are often an indication of cooperation with prosecutors.

The Volcker panel, in its report, accused Yakovlev of pocketing more than $950,000 from contractors not connected with the oil-for-food program. But it said he tried to solicit a bribe on one contract bid for the program.

The report was the first to accuse UN officials of outright corruption in connection with the programme.

"These are senior officers of the United Nations," South African Judge Richard Goldstone, a commissioner on the panel told Reuters. "It is serious for any organisation to have senior officials benefiting illegally."

Annan's chief of staff, Mark Malloch Brown, told a news conference that the United Nations last month had alerted the US Attorney of wrongdoing by Yakovlev and was working with the Manhattan District Attorney's office on complaints against Sevan.

The Volcker report said Sevan's finances had been "precarious" before the alleged wrongdoing. Sevan has vigorously denied the charges.

The Volcker panel was commissioned by Annan to examine charges of corruption in the program, designed to ease the impact on ordinary Iraqis of UN sanctions imposed in August 1990 after Baghdad's troops invaded Kuwait.

The program began in December 1996 and ended in 2003, when the United States invaded Iraq and ousted President Saddam Hussein, who himself had skimmed off money on illegal oil sales and kickbacks, most of them outside the programme.