Image: Joseph Stephanides
Stephenie Hollyman / Un Via Ap F
Joseph Stephanides, seen here in 2003, was fired by U.N. Secretary-General Kofi Annan after divulging bidding information related to the Iraq oil-for-food contract.
updated 11/15/2005 6:37:32 PM ET 2005-11-15T23:37:32

U.N. Secretary-General Kofi Annan reversed his decision to fire a key official in the Iraq oil-for-food probe, the United Nations said Tuesday, an embarrassing move as the world body recovers from one of the worst scandals in its history.

Annan’s decision, made known as he traveled in the Middle East, came after an internal U.N. appeals panel exonerated Joseph Stephanides in a ruling disclosed last week. The Joint Disciplinary Committee agreed that he had been made a “sacrificial lamb” by U.N. officials responding to public scrutiny that surrounded revelations of corruption and mismanagement in the $64 billion operation.

The panel had recommended that the 60-year-old Stephanides, who was scheduled to retire in September, be reinstated, issued a written apology, and paid about $200,000 — about two years’ back pay — for the emotional suffering and damage to his reputation.

Annan was not bound by the ruling, and rejected almost all of it.

The secretary-general said Stephanides could retire and would be paid four months’ salary to cover the time between his firing and when he would have stepped down. A note of written censure would also be put in his file.

In a letter to Stephanides dated Monday but sent out on Tuesday, Undersecretary-General Chris Burnham, acting on Annan’s wishes, reiterated Stephanides’ guilt and said the panel ruling was flawed.

But he wrote that “the sanction that was imposed on you has been reconsidered in light of all the circumstances.” The confidential letter was obtained by The Associated Press.

The United Nations refused to issue a public statement on Annan’s decision, suggesting that Annan wanted to distance himself from the move. Two midlevel officials briefed the media, but did not elaborate on the U.N. chief’s reasoning and refused to give their names for reasons they would not disclose.

Stephanides said he was not satisfied and would take the case to the next step up the internal U.N. appeals ladder, the Administrative Tribunal. Unlike the disciplinary committee, its decisions are binding.

“Having now seen the report of the Joint Disciplinary Committee that reviewed my case I am gratified by the unanimous conclusion it has reached that my summary dismissal was ‘illegal, wrong, unfounded and unjustified,”’ Stephanides said in a statement to the media. “I am deeply disturbed, however, that the secretary-general rejected the recommendation of his own impartial inquiry.”

Fired for sharing oil-for-food information
Stephanides was fired for divulging bidding information related to an oil-for-food contract to Britain, even though that information was public at the time. He argued he was acting under the instructions of a U.N. Security Council committee monitoring sanctions against Iraq.

In February, a U.N.-backed probe of the program led by former Federal Reserve Chairman Paul Volcker accused Stephanides of tainting the bidding process over a contract to inspect goods going into Iraq.

Volcker’s team and the U.N. insisted that, even though the information was public, Stephanides’ passing it along to a bidder was a violation of the strict impartiality he was required to uphold. Volcker’s team reaffirmed its findings in a final report in late October.

Stephanides was the only U.N. employee to be punished over the scandal.

Benon Sevan, the program’s former chief, is being investigated by the Manhattan District Attorney’s office for allegedly accepting kickbacks. Alexander Yakovlev, who worked in the U.N. contract office, resigned and pleaded guilty in August to soliciting a bribe from a company seeking a contract.

The oil-for-food program, which ran from 1996-2003, allowed Saddam Hussein to sell limited and then unlimited quantities of oil provided most of the money went to buy humanitarian goods such as food and medicine. It was meant to alleviate the suffering of ordinary Iraqis caused by U.N. sanctions imposed after Saddam’s 1990 invasion of Kuwait.

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