The inquiry into the UN's scandal-ridden oil-for-food program has found that Canadian businessman Maurice Strong accepted a personal cheque for nearly $1-million US from a controversial businessman who was working closely with the Iraqi regime.

Korean-born Tongsun Park, who has since been charged with influence-peddling for Saddam Hussein, allegedly carried $1 million US in cash out of Iraq in July 1997.

He reportedly took the cash to a Jordanian bank in a plastic bag where he deposited it before writing "Mr. M. Strong" on a cheque for $988,885 to purchase a stake in Cordex Petroleum Inc., a company controlled by the Strong family.

According to the report, Park was given the cash by then-Iraqi deputy prime minister Tariq Aziz, who gave him $1-million US in a cardboard box to be used in the regime's campaign to win favourable treatment from the UN.

The report, which was delivered to the UN Security Council Wednesday, said there was circumstantial evidence that Strong was in a position to know that the money came from Iraq, but concluded there was no "direct evidence" that he knew where the money came from or if Park was trying to buy his influence.

However the independent inquiry said the relationship between Strong, who served as a close advisor to UN Secretary-General Kofi Annan, and Park raised troubling questions regarding conflict of interest among UN officials.

In July 2005, Strong lost his job as top UN envoy for North Korea after the oil-for-food investigation revealed his previous involvement with Park.

Strong was travelling in China and not available for comment yesterday.

He has denied any conflict of interest and said the payment by Park was a normal business investment.

Strong's Toronto lawyer, John Campion, said he was pleased that the committee found no wrongdoing by the prominent businessman, who is a friend and former mentor to Prime Minister Paul Martin.

"Mr. Strong had no connection or advocacy or influence over the oil-for-food program or any aspect of it," Campion told The Globe and Mail.

He added that Strong, who has worked at the UN in various capacities for three decades, made it a policy not to involve himself in other people's files.

Wednesday's report by the committee headed by former Federal Reserve chairman Paul Volcker criticized the UN Security Council and Annan for allowing Hussein's regime to bilk some $10.2-billion US during the $64-billion US oil-for-food program.

The report claims that at least $8-billion US of the pilfering was the result of smuggling, which Security Council members were aware of and failed to stop.

In addition to its account of Strong's dealings, the report also placed an uncomfortable spotlight on two other Canadians who have played prominent roles at the UN.

The panel slammed deputy secretary-general Louise Frechette for allegedly failing to respond adequately to allegations of corruption.

Frechette, a former senior bureaucrat in Ottawa, "did not carry out the responsibilities of her office," said Volcker.

And former Canadian spymaster Reid Morden, executive director of the Volcker inquiry, was forced to recuse himself from the investigation into Strong's relationship with Park because of his previous relationship with both men.

According to the inquiry, when Morden was president of Atomic Energy of Canada Ltd. in 1996, he asked Strong and Park to help the Crown corporation sell nuclear reactors to Korea.

AECL had no immediate comment on Park's arrangement with the company.

Park was a prominent lobbyist at the centre of the Koreagate scandal in the 1970s, in which he was alleged to have handed out envelopes stuffed with cash to willing congressmen as part of a lobbying effort on behalf of the South Korean government.

He was charged with 36 counts of mail fraud, bribery, conspiracy and failure to register as a foreign agent. The charges were eventually dropped.