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Annan fires staffer over oil-for-food

Stephanides says he acted to help the U.N.

From Liz Neisloss and Phil Hirschkorn

United Nations
Kofi Annan
Paul Volcker

UNITED NATIONS (CNN) -- U.N. Secretary-General Kofi Annan has fired staffer Joseph Stephanides for his role in the oil-for-food scandal, U.N. spokesman Stephane Dujarric announced Wednesday.

Stephanides immediately vowed to appeal.

"Under no circumstances was I motivated by personal gain," Stephanides told CNN.

"I saved money for the organization," he said of the United Nations.

The 59-year-old longtime Security Council staffer from Cyprus was suspended in February. Stephanides was informed of his firing Tuesday, Dujarric said.

An interim report by a U.N.-appointed investigative committee accused Stephanides of improperly helping British firm Lloyds Register win the contract to inspect humanitarian goods shipped to Iraq.

Dujarric said that Stephanides' dismissal came "after a thorough review of all aspects of the case." He said Stephanides was found to have committed "serious misconduct in accordance with U.N. staff regulations."

The U.N. investigation led by former U.S. Federal Reserve chairman Paul Volcker found that Stephanides violated U.N. contract procurement rules in 1996 when he advised Lloyds to lower its winning bid.

At the time, he was head of the Security Council sanctions branch, dealing with issues related to countries under sanctions, including Iraq.

Stephanides said the committee in charge of the Iraq program had already decided to award the contract to Lloyds and that his intervention with the British delegation to the United Nations resulted in Lloyds lowering its price by $900,000.

Under the oil-for-food program, Iraq was permitted to export a limited amount of its crude oil in exchange for food, medicine and supplies. Most of the revenue was deposited in a U.N.-controlled bank account, and some funds were allocated for weapons inspectors and reparations.

The program was designed to help Iraq deal with the international economic sanctions imposed after its 1990 invasion of Kuwait.

Iraq sold a total of $64 billion through the program, which ran from 1996 to 2003 when the U.S.-led invasion toppled Saddam Hussein's regime. Saddam also bypassed the program by selling billions of dollars of oil to neighboring Jordan, Turkey, Syria and Egypt.

Investigators say that Saddam exploited the oil-for-food program to extort several billion dollars in surcharges on the oil sold and kickbacks on the humanitarian goods bought. Those illicit funds were deposited in bank accounts controlled by Saddam.

The Volcker committee has levied its most serious allegations against the oil-for-food program's executive director, Benon Sevan, finding that he improperly solicited oil deals with Baghdad on behalf of a friend's oil company.

Sevan, 67, also from Cyprus, has been suspended by the United Nations and denies the charges. He remains on a symbolic dollar-a-year salary to cooperate with the Volcker probe and is basically retired.

Volcker also looked into the awarding of a separate contract to Cotecna, a Swiss inspection firm that replaced Lloyds -- and which employed Annan's son, Kojo. While Volcker wound up clearing the secretary-general of wrongdoing, he blamed him for management lapses and the failure to address an under-audited program.

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