DUBAI (Reuters) - Iraq's State Oil Marketing Organization (SOMO) vowed on April 25 Wednesday to keep a close watch on all of its customers as dealings with Swiss trading firm Glencore International AG come under United Nations scrutiny.

Glencore owns 27% of the shares in Israeli company Granite Hacarmel, adds.

"We are monitoring our customers and if we see anything wrong, we will ask them to rectify it," a senior Iraqi oil official told Reuters.

Britain on April 24 threatened to cut off Glencore from Iraqi crude sales unless it offered more information about its trade in Iraqi barrels.

The Iraqi official said he understood the situation with the UN was resolved after Glencore "corrected" its letter of credit. He declined to comment further.

Glencore said that the one million barrels of Kirkuk crude was only going to be stored in Croatia for further shipment to the United States, according to a letter sent Tuesday to the United Nations.

The company's London trading office attached a form it says shows that the oil was held outside of customs in Croatia and not to be unloaded there.

"We have always been, and will continue to be, totally committed to fully respecting and observing all UN regulations," said the letter from Glencore (UK) Ltd.

Earlier, the United Nation's oil experts, the overseers, said that Glencore's claim that it was only holding the oil in Croatia was not credible.

A past of broken rules, say UN diplomats

London, together with Washington, wants the trading house to explain to the UN, which oversees Iraqi oil sales, why it diverted one million barrels of crude oil to Croatia instead of delivering them to the United States.

Glencore stood to rake in an extra $3 million by the diversion, which flouts UN rules, but has agreed to repay the UN account that funds humanitarian supplies to Iraq's people, according to UN diplomats.

But the Croatian incident was not the first time Glencore had broken the rules, industry sources said.

SOMO got wind of an earlier cargo diversion by Glencore and immediately notified the UN, the Iraqi official said. He declined to provide further details.

International trader Glencore is coming under the UN spotlight as the United States and Britain seek to weed out little-known middlemen from Iraq's lengthy contract list in a bid to stamp out Baghdad's illegal surcharge on its oil sales.

The Iraqi official said SOMO was not considering any changes to its oil sales procedure or marketing policy at this stage.

U.S. officials have said that while there is evidence that Iraq, now selling about 2.2 million barrels per day, has sought surcharge payments since last November there is - as yet - no hard proof the illicit fees have been paid.

Under the UN oil-for-food program, Iraq is allowed to sell oil to purchase humanitarian goods and some equipment to rebuild its infrastructure - an exception to sanctions imposed after Baghdad invaded Kuwait in August 1990.

The website notes that Glencore International AG is a privately-owned company with worldwide activity in the mining, smelting, refining, processing and trading of metals and minerals, energy products and agricultural products. "Turnover for the 2000 fiscal year was US$ 48.0 billion, Total Assets were US$ 10.2 billion and Total Shareholder's Equity was US$ 1.9 billion at 31 December 2000", the site states.