Annan, 66, the Ghanaian-born head of the UN and Nobel peace prize winner who is due to retire in 2006, is “co-operating” with the independent commission set up to look into the scandal. He has agreed to waive his diplomatic immunity and face legal action if any wrongdoing is uncovered.

Annan played a key role in the design and operation of the scheme.

Although there is no suggestion that he personally benefited from the programme, his actions may have helped others, including Saddam Hussein, the former Iraqi leader, to defraud the oil-for-food scheme.

Set up by the UN in 1995, the scheme allowed Saddam to sell controlled amounts of oil to buy humanitarian supplies. However, it is now alleged that the scheme was abused by the Iraqi dictator to “buy” political influence around the world while pocketing billions of dollars.

Yesterday, Claude Hankes-Drielsma, an adviser to the interim Iraqi government who has written to Annan, said: “The secretary-general carries the ultimate responsibility for the scheme and the problems with it were repeatedly drawn to his attention, yet he chose to do nothing.

“Everyone who allowed this scheme to operate in the way it did is guilty, irrespective of whether they personally benefited.”

The man Annan hired to run the programme, Benon Sevan,who reported directly to him, is now also under investigation for allegedly making more than $1m from selling Iraqi oil. He denies the accusations.

Explore World News

• Iraq News

• US & Americas News

• Europe News

• Middle East News

• Asia News

• Africa News

• Ireland News

Times Recommends

• The truth behind Obama's meteoric ascent
• Christians flee Iraq amid religious cleansing
• Aid agencies: 5m face starvation in Zimbabwe