UNITED NATIONS, Oct 21: Secretary-General Kofi Annan on Thursday said the scandal swirling around the UN's handling of Iraqi oil sales under Saddam Hussein was hurting the image of the United Nations.

But he defended his conversations with Paul Volcker, the man he named to lead an "independent" enquiry into the oil-for-food programme, about the investigation into the scandal so far.

"I set up that committee and I think it is appropriate that he talks to me about the release of his report," Mr Annan told reporters at the UN headquarters in New York.

"I don't see anything wrong with that," the UN chief said. "If you don't talk to the person who set you up, who do you talk to?"

The oil-for-food scheme, which ran from December 1996 until last November, allowed Saddam's regime to ease the burden of international sanctions by selling oil to buy humanitarian supplies.

But it mushroomed into the largest aid scheme in UN history, and critics say Saddam abused the programme by evading sanctions and offering vouchers for oil as bribes to hundreds of officials from different countries.

Mr Annan appointed Volcker, the former head of the US Federal Reserve banking system, to investigate the allegations published by a Baghdad newspaper in January.

Former oil-for-food chief Benon Sevan, whose name has emerged as a possible beneficiary of Saddam's largesse, has denied any wrongdoing.

Meanwhile, a New York newspaper has reported that Mr Annan's son Kojo is under investigation by a US prosecutor in connection with the programme.

"I have read the same sort of things but I have no other information and I think it's speculation," the UN chief said.

UN officials privately have lashed out at the right-wing press in the United States for their coverage of the scandal, and Mr Annan mentioned a "campaign" against the United Nations without giving further details.-AFP