Former senior UN official accused of taking bribes

The panel, headed by Paul Volcker, the former Federal Reserve chairman, issued a third interim report into its investigation yesterday. The report accused Mr Sevan and Alexander Yakovlev, another former senior UN official, of taking bribes during the seven-year life of the $64bn programme, and recommended that their immunities be waived and they be open to possible criminal prosecution. UN officials said last night that Mr Yakovlev had been arrested in New York.

Lawyers for Mr Sevanclaim he is innocent. He wrote a scathing letter to Mr Annan on Sunday. "As I predicted, a high-profile investigative body invested with absolute power would feel compelled to target someone, and that someone turned out to be me," he said. "The charges are false, and you, who have known me for all these years, should know that they are false."

The scandal continues to cast a pall over the UN, with separate investigations also under way in Washington and Manhattan. Defenders of the UN will be troubled by renewed suggestions that Mr Annan may yet become entangled in the oil-for-food thicket.

Mr Volcker confirmed that his team had again interviewed Mr Annan to find out if he had known in advance that a company that employed his son, Kojo Annan, had bid for a major contract in 1998. (The firm, Cotecna of Switzerland, won the contract.)

After the last interim report, Mr Annan claimed he had been "exonerated" by Mr Volcker, who was unable to prove that he knew, before the contract was awarded, that Cotecna had bid for it. However, since then Cotecna has released an e-mailed letter that suggested its former executives and Mr Annan discussed the contract ahead of it being given.

Mr Volcker confirmed that he was now reassessing the possible role of the secretary general.

The report said it had "reasonably sufficient evidence" to find wrongdoing on the parts of Mr Sevan and Mr Yakovlev. The latter is accused of taking bribes of $950,000, in part in return for trying to help a French company win an inspection contract.

The report describes in detail how Mr Sevan allegedly helped steer contracts for Iraqi oil purchases to a small trading company named African Middle East Petroleum Co. It says a middle-man, named Efraim "Fred" Nadler, who was a close friend of Mr Sevan, helped channel funds to Mr Sevan. The moneyended up in a private account of Mr Sevan and his wife in New York City.