Panel orders U.N. to pay costs of oil-for-food chief

By Patrick Worsnip

UNITED NATIONS (Reuters) - The United Nations' top internal court has ordered the world body to pay at least part of the legal costs of a former U.N. official accused of corruption over the Iraq oil-for-food program.

A ruling by the Administrative Tribunal, obtained by Reuters on Wednesday, found that the U.N. leadership promised to reimburse some of the costs of Benon Sevan and that its subsequent decision to rescind the promise was invalid.

The tribunal noted that Sevan and law firm Baach Robinson & Lewis PLLC were seeking damages of $880,300.98 plus interest, but indicated that the U.N. would not have to pay all of that. It said an independent audit of the law firm's invoices should decide what were "reasonable legal fees."

Sevan, a Cypriot now aged 71, was chosen as executive director of the $64 billion oil-for-food program in late 1997 after a distinguished 40-year career with the U.N. in which he tackled some of the most intractable world crises.

The program was designed to soften the blow to civilians of U.N. sanctions against Iraq -- imposed after Iraqi troops invaded Kuwait in 1990 -- by allowing Baghdad to sell oil to finance purchases of humanitarian goods. It began in late 1996 and ended in 2003.

Allegations against Sevan surfaced in 2005 in a U.N.-established independent inquiry headed by former Federal Reserve Chairman Paul Volcker that looked into the program. More than 2,300 companies were also investigated over bribery allegations linked to the scheme.

Volcker's report said an Egyptian oil dealer paid Sevan to steer lucrative Iraqi oil contracts his way. Two years ago, Sevan was charged in New York with bribery. He did not appear in court as he was in his native Cyprus, which has a law against extraditing its citizens. He has denied wrongdoing.

Former U.N. Secretary-General Kofi Annan ordered the inquiry into the oil-for-food program in 2004.