Ex-chief Linked to Un Oil Scandal

Kofi Annan yesterday promised to move swiftly to deal with corruption after an inquiry into the oil-for-food programme drew links to the relatives of the former UN chief Boutros Boutros-Ghali.

"Obviously, there were some hard knocks in the report and we are concerned about it," the UN secretary general told reporters. "We want to get to the bottom of it, to get to the truth, and to take appropriate measures to deal with the gaps."

Mr Annan, who succeeded Mr Boutros-Ghali in 1997, could also fall under scrutiny for possible familial connections to the scandal. A forthcoming report from the independent inquiry will examine charges that his son, Kojo Annan, helped a Geneva-based company obtain a UN contract.

So far, the head of the inquiry, Paul Volcker, has reserved his greatest criticism for the programme's administrator, Benon Sevan. But there were new concerns at the UN yesterday about the role of Mr Boutrous-Ghali, who was in charge of the organisation from 1991 to 1996, and oversaw the inception of the oil-for-food programme.

Two of Mr Boutros-Ghali's relatives - a brother-in-law and a cousin - have been connected to the scandal in which Mr Sevan is accused of trading influence for barrels of oil.

Mr Boutros-Ghali told the New York Times from Paris that the inquiry's allegations about his conduct were "silly".

His cousin, Fakhry Abdelnour, headed African Middle East Petroleum, which made at least $1.5m (£800,000) profit between 1998 and 2001, buying oil at a favourable price and selling it on to larger firms including Royal Dutch/Shell.

The firm sold 6.4m barrels of Iraqi crude to Shell, which said in a statement yesterday that it had been unaware of Mr Sevan's involvement in the deal.

Mr Sevan's contacts with Mr Abdelnour were infrequent. He was in regular communication with Fred Nadler, the brother of Mr Boutros-Ghali's wife, who served as a link with the oil company. Mr Nadler was a middleman between Mr Abdelnour and Mr Sevan. Mr Nadler and Mr Sevan were in phone contact on an almost weekly basis from 1998 to 2004.

Phone records obtained by the investigation also show calls made from the homes of Mr Boutros-Ghali's mother-in-law and another brother-in-law, Emmanuel Nadler.

The report notes that Mr Boutros-Ghali bypassed UN financial regulations on competitive bidding to award a banking contract to the Banque Nationale de Paris, making his choice after getting approval from the Saddam Hussein regime.

Two other companies were alleged to have benefited from the non-competitive tenders. The British company named, Lloyd's Register Inspection Limited, said yesterday its bidding for UN contracts was "fair and above board".