Joseph Stephanides was dismissed on Wednesday for "serious misconduct" over the handling of contracts in the oil-for-food programme, which has plunged the world body into one of its most embarrassing scandals.

UN spokesman Stephane Dujarric said that after a thorough review of the case, the secretary-general decided that Joseph Stephanides should be summarily dismissed for serious misconduct in accordance with UN staff regulations.

"Mr Stephanides was advised accordingly yesterday and separated from service with immediate effect," the spokesman added.

Breach of rules

"There is no allegation of any criminal act. This is a disciplinary action for a breach of staff rules regarding procurement."

"Mr Stephanides was advised accordingly yesterday and separated from service with immediate effect"

Stephane Dujarric,
UN spokesman

Stephanides, head of the UN Security Council affairs division, and Benon Sevan, who was head of the programme, were criticised in the first report of the independent investigation carried out by Paul Volcker, the former head of the US Federal Reserve.

The report said Stephanides had infringed regulations in pushing for a commodity inspection contract under the UN programme for Iraq to be awarded to the British company Lloyds Register.

Volcker accused Sevan of a "grave conflict of interest" in soliciting oil deals from Iraq. Sevan was suspended from duties.

Awaiting final report

Dujarric said disciplinary measures against Sevan would not be carried out until the publication of the final Volcker report, which is due within three months.

The spokesman said that although technically Sevan remained a UN staff member, he was receiving only a symbolic salary of $1 a year. Stephanides and Sevan are both Cypriots.

Under the UN Oil-For-Food programme between 1996 and 2003, Iraq was allowed to sell oil under UN supervision to buy humanitarian goods to alleviate the suffering of the Iraqi people from international sanctions against Saddam Hussein's government.

Money going astray

The oil-for-food scandal is the
biggest in UN history

The programme had a total value of about $64 billion during its operation. Experts say several billion dollars was diverted back into Saddam's coffers.

There are several investigations into the programme. The Volcker inquiry has released two reports. One said there was no evidence that Annan had sought to use his influence to direct contracts to a Swiss company that employed his son Kojo Annan.

But Volcker's report said Kofi Annan's investigation into any possible conflict of interest was inadequate and the firm would likely not have had its lucrative contract renewed if Annan had carried out a proper inquiry.

It has also said "serious questions" remain about the business dealings of Kojo Annan.