UN Secretary-General Kofi Annan is to discipline the former director of the oil-for-food programme for Iraq and another official named in an investigation of the operation.
Mr Benon Sevan, who was in charge of the programme, was accused in a report from Mr Paul Volcker, the former head of the US Federal Reserve, of using his position to solicit and receive oil allocations for a trading firm.
Another official, Mr Joseph Stephanides, was said to intervene in selecting contractors in the programme.
But Mark Malloch Brown, Mr Annan's new chief of staff, acknowledged that there was limited action that could be taken against Mr Sevan, who has retired, although Mr Stephanides was still on UN staff.
Should there be proof of criminal acts, however, Mr Annan would immediately lift diplomatic immunity on any UN official, Mr Brown said.
Mr Sevan, in a statement, denied the allegations and said he was being made a political scapegoat.