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Annan 'shocked' by initial oil-for-food report

Head of program accused of illicit oil deals

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Paul Volcker, chairman of the investigating committee, says the oil-for-food program chief violated explicit U.N. rules.
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United Nations
Benon V. Sevan
Kofi Annan

UNITED NATIONS (CNN) -- U.N. Secretary-General Kofi Annan said Friday he was "shocked" by an initial investigative report that found the man in charge of the U.N. oil-for-food program made illicit oil deals.

"We do not want this shadow to hang over the U.N. So we want to get to the bottom of it, get to the truth and take appropriate measures to deal with the gaps," he told reporters at U.N. headquarters in New York.

Paul Volcker's report, released Thursday, said Benon Sevan "repeatedly solicited" several million barrels of oil worth about $1 million on behalf of a company named African Middle East Petroleum. The illicit deals "violated standards of integrity," the report said.

Sevan, a 40-year U.N. employee who was appointed in 1997 as executive director of the oil-for-food program, denied the allegations late Thursday afternoon.

"I think I'm not the only one who was shocked by what we read in the report," Annan said. "He's been here working with many of us for quite a time, and we had not expected anything of the sort."

But, Annan said, "I think we should wait until the work is done before we draw definitive conclusions."

Annan said the U.N. takes seriously any allegations of corruption or misbehavior.

Iraq's ambassador to the United Nations said proceeds from Iraqi oil sales should not be used to pay for the investigation.

"I have written to the secretary-general raising our objection, and I have written to members of the Security Council, and I will be calling upon all members of the U.N. to protect Iraqis' interest in this regard," said Ambassador Samir Sumaidai.

Under the oil-for-food program, Iraq was allowed to export a limited supply of its crude oil and earmark the revenues for purchases of food, medicine and supplies. The program was in effect from 1996 until the U.S.-led invasion that toppled Iraqi leader Saddam Hussein in 2003.

The United Nations oversaw the program and received 2.2 percent of the $64 billion generated.

U.N. spokesman Farhan Haq said the money left from the oil-for-food program is still needed for the program itself.

"Some of that money is still valid. Just because the oil-for-food program has ended does not mean that these contracts won't take place," Haq said.

U.S. investigators have said Iraq's government took in about $21 billion by circumventing the sanctions imposed on Iraq after its invasion of Kuwait in 1991.

A spokesman for the U.S. State Department called Annan's remarks "a clear statement of concern and commitment and responsibility on the part of the leadership of the United Nations."

"Clearly, what we have as of today are serious charges regarding the conduct of certain U.N. officials and recognition of the need for broader management reforms and increased transparency," deputy State Department spokesman Adam Ereli said.

He defended U.S. actions regarding the oil-for-food program, noting the United States had called attention to problems in it.

Despite the scandal, the program should be remembered for providing sorely needed humanitarian aid to Iraq, he said.

A "definitive report" by Volcker's commission is due by midsummer, and that document also will look at the role of Annan and his son, Kojo. The son worked in the 1990s for Cotecna, a Swiss firm that won a contract to authenticate U.N.-approved shipments entering Iraq.

U.S. congressional committees also are investigating the oil-for-food scandal.

CNN's Elise Labott and Lauren Rivera contributed to this report.

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