UN inspectors in Iraq spent their working hours drinking vodka while ignoring a shadowy nocturnal fleet believed to be smuggling goods for Saddam Hussein, a former senior inspector told the US Senate yesterday.

In a move that provoked fury from officials of the Swiss firm Cotecna, an Australian former inspector detailed a picture of incompetence, indifference and drunkeness among the men acting as the frontline for UN sanctions.

Arthur Ventham, a former Australian army officer and customs officer, joined the operation in 2002 and worked at various sites in Iraq and neighbouring states.

He said that at Iskendurun in eastern Turkey, some officials had refused to work.

When he asked one of his bosses why, he was told: "They were friends or relatives of potential clients, and are only in the mission so the company could secure future contracts in Nigeria, Comoros and another African country.

"When I said that this was unfair on everyone else, I was told that it was general practice in Cotecna."

Other inspectors had spent most of the day in hotel rooms while others drank beer and talked to the local people.

Inspectors were supposed to check lorries to make sure the UN sanctions regime was being enforced.

At another monitoring site where the UN was supposed to check humanitarian aid supplies, Mr Ventham noticed "the team leader and his fellow countrymen [the nationality is unstated] spending the majority of their time in each other's rooms drinking vodka as opposed to managing and leading the team".

There he noticed small vessels and barges moving to a small island each night.

"I mentioned this to a number of other inspectors saying there was plenty of scope for smuggling and what were the UN doing about it.

"I was extremely surprised by the response that it was common knowledge smuggling was going on at Um Qasir [and that] the oil was being sold on the black market to augment the regime."

Cotecna officials said the unheralded release of Mr Ventham's allegations was unfair and that they would respond in detail at a later date. They said Mr Ventham had been dismissed and was a disgruntled former employee.