Reversing its decision, the United Nations has reinstated Joseph Stephanides, the only official dismissed following adverse findings by the Volcker committee, after a  UN review board cleared him of "serious misconduct" linked to the Iraqi oil-for-food programme.

• Volcker Report 

But Secretary General Kofi Annan refused to apologise and pay two years' wages to Stephanides as damages, recommended by the review board, maintaining he violated procurement rules.

Stephanides, who was alleged by the Volcker committee to have improperly steered a contract under  the programme to a British firm, was dismissed on May 31 and was to retire on September 30.

Effectively, he now gets four months pay, but said he plans to appeal to the 7-member UN Administrative Tribunal seeking full exoneration.

Stephanides said an apology is not important, but he was seeking the administration's admission that it had made a mistake.

The mid-level employee had maintained that he was acting on behalf of superiors when he asked the Lloyd's Register Inspection Ltd to lower the bid to win a  $4.5 mn contract.

The Volcker report said although French firm Bureau Veritas was the low bidder, UN officials decided they could not select a French firm because they had recently given another contract to a French bank and also hired a Frenchman as a UN oil overseer for the programme.

The original decision to summarily dismiss Stephanides was based on a February report of the  Independent Inquiry Committee commissioned by Annan to probe the Oil-for-Food Programme.

The report found that a UN Steering Committee "prejudiced and pre-empted the competitive process in a manner that rejected the  lowest qualified bidder" with the "active participation" of Stephanides, then deputy director of the Security Council Affairs Division. 

He was immediately suspended and given time to respond to the administrative charges against him as part of due process.

Annan's  spokesman said Tuesday that Stephanides had violated the rules by contacting the British Mission and advising them that a competitor would be receiving the bid and telling how much lower the Lloyds' [Get Quote] bid needed to be.

The secretary general does not  share the review board's view that the decision to sanction his conduct was "seriously flawed" in law or in fact, the spokesman  asserted.

But upon reconsidering the matter, the secretary general decided to "rescind the decision to summarily dismiss him and  to pay his salary and emoluments from the date of his summary dismissal to the date of his retirement."

Annan had also written a  letter of censure to Stephanides on the issue, the spokesman added.