Oil-for-food report- No wrongdoing by Annan

UNITED NATIONS -- Investigators probing the U.N. oil-for-food program said Tuesday that Secretary-General Kofi Annan didn't interfere in the awarding of a contract to a company that employed his son, but their report criticized the U.N. chief for not properly investigating possible conflicts of interest.

Asked if he was planning to step down, Annan replied with a rare use of profanity, saying "Hell, no" and noting the report's findings that he committed no wrongdoing.

"After so many distressing and untrue allegations have been made against me, this exoneration by the independent inquiry obviously comes as a great relief," he said.

But the investigation led by former U.S. Federal Reserve chairman Paul Volcker did not completely vindicate the secretary-general.

Although it found no wrongdoing by Annan, it clearly faulted the secretary-general's management of the world body and his oversight of the scandal-ridden oil-for-food program in Saddam Hussein's Iraq.

The report raised questions about when the secretary-general learned about the December 1998 contract to the Swiss firm, Cotecna Inspection S.A., though it said there was insufficient evidence that he was aware of the company's bid. It also strongly criticized the destruction of documents by his former chief of staff that could have shed light on the oil-for-food program.

The independent inquiry, released Tuesday, faulted Annan for conducting a one-day investigation into the matter, saying it should have been a more rigorous, independent probe.

"I accept the criticism," Kofi Annan told reporters. But he also referred them to a letter attached to the report, in which his lawyer said the secretary-general had acted on the advice of three advisers.

The report also accused Cotecna and Annan's son, Kojo, of trying to conceal their relationship after the firm was awarded the contract.

At a separate news conference after the report was released, Volcker said the investigation found no evidence that Kofi Annan improperly influenced the process by which Cotecna was selected for an inspection contract under the oil-for-food program.

"Our investigation has disclosed several instances in which he might, or could have become aware, of Cotecna's participation in the bidding process," Volcker said.

Weighing all the documents and testimony, he said the committee "has not found the evidence is reasonably sufficient" to show that Annan knew about Cotecna's bid.

Kojo Annan worked for Cotecna in West Africa from 1995 to December 1997, and then was a consultant for the firm until the end of 1998 -- when it won the oil-for-food contract. He remained on the Cotecna payroll until 2004 on a contract to prevent him from working for a competitor in West Africa.

The $64 billion oil-for-food program was the largest U.N. humanitarian aid operation, running in 1996-2003. Saddam's government was allowed to sell oil in exchange for humanitarian goods as an exemption from U.N. sanctions imposed after Iraq'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. U.S. congressional investigators say Saddam's regime may have illegally made more than $21 billion by cheating the program and other sanctions-busting schemes.

The report is the second issued by Volcker's team. It coincides with allegations of sex abuse by U.N. peacekeepers and of sexual harassment and mismanagement by senior U.N. staff, and comes a week after Annan called for the biggest overhaul of the United Nations in its 60-year history.

"The U.N. has had a problem of credibility in its administrative arrangements," Volcker said. "I think we all share the hope and confidence that the results of our investigation ... may contribute to the larger objective of a reformed U.N., a U.N. capable of commanding and maintaining the support of its member states and the public at large."

Annan told reporters that Volcker's findings would be incorporated into the world body's reform -- and in response to a question insisted he is the right person to lead the overhaul.

Some critics, including several U.S. lawmakers, have been calling for Annan to resign. Even before the report was issued, Sen. Norm Coleman, R-Minn., reiterated his call for Annan to "put the interests of the U.N. ahead of his personal interest" and step down.

Volcker's Independent Inquiry Committee found that Kojo Annan was not forthcoming with either his father or the committee and accused him of consistently trying to hide the nature of his relationship with Cotecna. It said an investigation was continuing into Kojo Annan's dealings with the program.

The secretary-general said he had spoken to his son and "urged him to cooperate," but had not gotten an answer.

"I love my son, and I have always expected the highest standards of integrity from him," Annan told reporters. "I am deeply saddened by the evidence to the contrary that has emerged," especially his refusal to cooperate.

In a statement issued through his lawyer, Kojo Annan welcomed the committee's finding clearing him and his father of exerting "any undue influence" in the awarding of the Cotecna contract.

"I deeply regret any embarrassment that the whole Cotecna issue may have caused my father," he said. "I am an independent businessman and I do not represent the U.N. or the U.N. secretary-general. My father has an excellent reputation and his conduct and integrity has always been impeccable and this report does not alter that. I admire my father greatly."

William R. Taylor, his lawyer, insisted Kojo Annan "cooperated extensively" with the inquiry and believes the report's criticism of his role with Cotecna is unfair. He is considering "what options are available to him in relation to the report," Taylor said.

The Volcker report said that while Cotecna "generally has cooperated" with the investigation, the committee "concludes that Cotecna has made false statements to the public, the United Nations, and the committee."

It accused Annan's former chief of staff, Iqbal Riza, who retired in January, of giving the OK to shred three years of files on April 22, 2004 -- the day after the U.N. Security Council authorized the Volcker investigation.

The files -- which Riza said were duplicates -- contained documents related to the oil-for-food program that were unavailable in the U.N. records file, the report said.

Volcker also criticized Dileep Nair, the head of the U.N.'s internal watchdog, for hiring a man using oil-for-food money whose work was not directly related to the program.

Asked whether Nair would be disciplined, Annan's current chief of staff Mark Malloch Brown said, "Inevitably."

In letters of response attached to the report, both men denied any wrongdoing.