UNITED NATIONS, Feb 4: UN Secretary General Kofi Annan on Thursday vowed to discipline the director of the former UN oil-for-food programme for Iraq after an investigation said he had violated the United Nations Charter by helping a company owned by a friend to obtain valuable contracts to sell the oil.

Benon Sevan, who ran the humanitarian programme, was accused in a report by Paul Volcker, the former head of the US Federal Reserve, of soliciting and getting allocations for a trading firm connected to the family of former Secretary General Boutros Boutros Ghali.

A second official, Joseph Stephanides, now director of Security Council affairs, was alleged to have intervened in selecting large contractors for the programme he helped organise in 1996, before Mr Sevan took over in late 1997.

Mr Annan said he too would be disciplined and that if criminal acts were committed, diplomatic immunity would be lifted. But the report does not say that Mr. Sevan, or other officials it criticizes, benefited personally from their actions.

At a press conference Mr Volcker conceded that no definite conclusions on Mr Seven's complicity in the kickbacks were established and the final report in June would be able to shed more light on the issue. Nevertheless it discloses that Mr. Sevan received $160,000 in cash between 1999 to 2003 from an aunt in Cyprus, a retired government photographer who has since died.

Although Mr Volcker did not tie that money to his efforts on behalf of his friend's company, but the report says that the aunt's way of life did not suggest that she was wealthy and that the panel was continuing to investigate "the full scope and extent of benefits received by Mr. Sevan."

It also discloses that the Swiss-based company that Mr. Sevan helped, Africa Middle East Petroleum, made a $1.5 million profit by selling the oil allocations that Mr. Sevan had repeatedly solicited on its behalf from senior Iraqi officials. The report accuses the company of paying an illegal surcharge of $160,088 to Iraq in 2001.

ALLEGATIONS DENIED: In a statement on Thursday, Eric Lewis, a lawyer for Mr Sevan, denied his client had acted improperly. He said Mr Sevan had no interest in any oil company and had never "accepted anything from anyone".