By Louis Charbonneau

UNITED NATIONS, Jan 10 (Reuters) - The United Nation's internal auditing agency said on Thursday it was investigating some 250 corruption cases including alleged sexual abuse by peacekeepers and financial irregularities, and it has found the extent of misbehavior surprising.

"Our caseload has been very steady over the last three months, around 250 cases," Inga-Britt Ahlenius, head of the U.N. Office of Internal Oversight Services (OIOS), told reporters. "We can say that we found mismanagement and fraud and corruption to an extent we didn't really expect."

Ahlenius said two-thirds of the cases under investigation related to peacekeeping missions. Of those, around 80 were allegations of sexual exploitation and abuse in countries including Haiti and Liberia.

Ahlenius, the former chief auditor of Sweden, held the news conference in response to media reports suggesting that there has been widespread fraud related to U.N. peacekeeping contracts.

She said that out of a total value of around $1.4 billion of peacekeeping contracts that had initially aroused suspicion, contracts worth around $600 million were confirmed to have involved fraud at some level.

The total U.N. peacekeeping budget for 2007-2008 amounts to over $5 billion.

Robert Appleton, head of the OIOS's Procurement Task Force, a temporary body set up in 2006 after the corruption scandal involving the U.N. oil-for-food program in Iraq, said only a minority of U.N. contracts involved irregularities.

Appleton added that many of the allegations of corruption and fraud ultimately turn out to be unsubstantiated.

Ahlenius said the OIOS had begun reviewing a $250 million contract the United Nations signed with a unit of U.S. defense firm Lockheed Martin Corp <LMT.N> to build five peacekeeping bases in Sudan's western region of Darfur, which has been racked by five years of war, without competitive bidding.

"We have been mandated by the General Assembly to carry out a review of the circumstances (of the contract)." she said. No deadline has been given for the review, though Ahlenius said she was treating it "as an urgent matter."

U.N. Secretary-General Ban Ki-moon has come under fire for awarding the contract to Lockheed unit Pacific Architects and Engineers Inc without opening the field to competitors.

In December the U.N. General Assembly passed a resolution criticizing Ban for his decision and demanding the OIOS review. Ban has defended his action, saying current U.N. rules allow him to award such contracts in exceptional cases. (Editing by Cynthia Osterman)

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