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Oil-for-food investigation shows official's son received $300,000

Wednesday, March 23, 2005

UNITED NATIONS -- Kojo Annan, the son of U.N. Secretary-General Kofi Annan, received at least $300,000 from a Swiss company that was awarded a contract from the U.N. oil-for-food program in Iraq, almost double the amount previously disclosed, two newspapers reported in today's editions.

The London-based Financial Times and the Italian business newspaper Il Sole 24 said the payments "were arranged in ways that obscured where the money came from or whom it went to."

The two papers, which conducted a joint investigation, also reported that the secretary-general met top executives of the company, Cotecna Inspection S.A., twice before the oil-for-food contract was awarded in December 1998 and once afterward

Former U.S. Federal Reserve chairman Paul Volcker, who is conducting an independent investigation of alleged corruption in the oil-for-food program, is scheduled to release an interim report on Tuesday detailing his findings about whether Kofi Annan and Kojo Annan committed any wrongdoing.

The secretary-general, his son and Cotecna all deny any wrongdoing.

A spokesman for Cotecna said the company has been cooperating fully in assisting the Volcker inquiry "to clarify any and all outstanding questions concerning payment to Kojo Annan."

Robert Massey, Cotecna's chief executive, met with Volcker and his investigators in New York on Monday to discuss the discrepancies in the reported payments to Kojo Annan and the company's ongoing audit to determine the correct amount, the spokesman said, speaking on condition of anonymity.

The spokesman confirmed the three contacts between Cotecna executives and the secretary-general and said they were reported to Volcker and other bodies investigating the $64 billion U.N. humanitarian program in Iraq.

The papers reported that Annan met in January 1997 with Massey and his father, Elie-Georges Massey, Cotecna's founder and chairman, on the sidelines of the World Economic Forum in Switzerland. The elder Massey also met Annan at U.N. headquarters in September 1998 and sought him out at a public event in Geneva in January 1999, the papers said.

A U.N. spokesman and Cotecna were quoted in the papers as saying the meetings with Annan had nothing to do with the contract to certify the import of goods under the oil-for-food program. The papers said the oil-for-food contract was ultimately worth about $60 million to the Swiss company.

U.N. spokesman Fred Eckhard had no immediate comment on the reports in the two papers. Both papers said Kojo Annan declined to comment.

Also Tuesday, Eckhard said that the United Nations agreed to reimburse Benon Sevan, the suspended head of the U.N. oil-for-food program, for legal fees he incurred during the investigation.

He said Sevan's fees are to be reimbursed with Iraqi oil funds set aside to help administer the program. That means Iraq oil money would essentially pay for Sevan to defend himself against charges that he bilked the program.

Eckhard said the United Nations had agreed to pay reasonable legal expenses up to Feb. 3, when Volcker's probe accused Sevan of a conflict of interest.

The plan to reimburse Sevan, first reported in the New York Sun on Tuesday, is almost certain to raise new questions about the United Nations' handling of the oil-for-food program and draw new criticism from U.S. Congressional investigators also examining its operation.

Annan's son, Kojo, worked for Cotecna in West Africa from 1995 to December 1997 and then as a consultant until the end of 1998, according to the company.

In November, Eckhard said Kojo Annan's lawyer had informed the Volcker investigation that the younger Annan continued to receive $2,500 a month -- $30,000 a year -- from Cotecna for more than five years through February 2004.

The secretary-general said at the time he was "very disappointed and surprised" that his son continued to receive money after 1998. Cotecna said the payments were made under a "non-compete" contract to prevent Kojo Annan from working for a competing company.

According to the Financial Times and Il Sole 24, Kojo Annan's non-compete contract did not appear to adhere to Swiss law which says such agreements cannot exceed three years, except in certain circumstances, and must be limited geographically -- which his wasn't. The papers also reported that records provided by Cotecna and Kojo Annan to U.S. and U.N. investigators showed that the method of paying him changed several times.

The oil-for-food program, which ran from 1996 to 2003, allowed the former Iraqi government to sell oil in exchange for humanitarian goods, as an exemption from UN. sanctions imposed after Saddam Hussein's 1990 invasion of Kuwait.

In a bid to curry favor and end sanctions, Saddam allegedly gave former government officials, activists, journalists and U.N. officials vouchers for Iraqi oil that could then be resold at a profit.


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