By Ellen Wulfhorst

NEW YORK (Thomson Reuters Foundation) -

The United Nations defended its aid funding in Syria on Tuesday after an investigation revealed lucrative contracts were awarded to people close to the nation's President Bashar al-Assad.

The U.N.'s Syrian contracts came under fire in British newspaper The Guardian which said aid money has gone to a charity set up by Assad's wife and to groups and businesses under U.S. and European Union sanctions.

More than 250,000 people have died and 11 million from a population of 23 million have been forced from their homes in Syria's five-year war which started as an uprising against Assad's rule.

The uprising sparked violence among government forces, pro-government militias, nationalist rebels, Islamic State and Kurdish groups and has created a patchwork of areas controlled by different groups.

A spokesman for U.N. Secretary-General Ban Ki-moon said Syria was a "difficult and challenging operating environment" with a limited number of vendors of fuel, telecommunication and other goods, especially in hard-to-reach areas.

But he said U.N. aid had reached more than one million people this year in such areas.

"People who accuse us of being 'too close' to one side or another have clearly not been paying attention to what we have been saying on a regular basis," he said in an email to the Thomson Reuters Foundation.

He added that a guiding principle for the United Nations, with 193 member states, was to deliver to all areas of Syria irrespective of the status of control.

"This includes regular dialogue with the government of Syria and its relevant entities to operate at scale and assist the most vulnerable people," the spokesman said.

"PROXIMITY TO THE REGIME"

The Guardian report said it had analyzed hundreds of U.N. contracts awarded since 2011, finding the U.N.'s World Health Organization spent more than $5 million on Syria's national blood bank which is controlled by Assad's defense department.

It found the United Nations had paid more than $13 million to the Syrian government to improve farming and agriculture - although the European Union has banned trade with those departments.

It also said the United Nations has paid at least $4 million to Syria's state-owned fuel supplier, also under EU sanctions.

The newspaper cited anonymous sources as saying the United Nations knew its association with such groups in Syria did not promote its humanitarian principles and who believed aid was being prioritized in government-held areas.

It quoted Reinoud Leenders, a London-based expert in war studies, who said the U.N.'s procurement contracts to associates of the Syrian regime "bankroll the very repression and brutality that caused much of the country's humanitarian needs".

"The U.N.'s alleged pragmatism has long given way to troubling proximity to the regime," Leenders said.

The Guardian said two U.N. agencies partnered with the Syria Trust charity, headed by Assad's wife Asma, and had spent $8.5 million. She is under U.S. and E.U. sanctions, it said.

The United Nations said its humanitarian aid in Syria is delivered through dozens of agencies and partners, one of which is the Syria Trust that received less than $800,000 in funding under the U.N.'s Office for the Coordination of Humanitarian Affairs.

The U.N. spokesman defended its actions in Syria.

"We do not shy away from criticizing the government for its heavy bureaucratic clearance process and the systematic removal of surgical supplies from convoys, not to mention the use of barrel bombs and indiscriminate bombings of civilian targets," he said.

(Reporting by Ellen Wulfhorst, Editing by Belinda Goldsmith; Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's rights, trafficking, property rights and climate change. Visit http://news.trust.org)