Annan's future clouded, U.S. says

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From combined dispatches

NEW YORK -- The Bush administration said yesterday that U.N. Secretary-General Kofi Annan's future in the office "is not certain" despite the U.N. chief's assertion that he had been cleared by investigators probing the huge Iraq oil-for-food scandal.

U.S. Deputy Assistant Secretary of State Mark Lagon, briefing a small group of reporters in New York, said Mr. Annan had been premature in claiming vindication for his oversight of the program from a March 29 report issued by a U.N.-appointed inquiry led by former Federal Reserve Chairman Paul A. Volcker.

"The report did not exonerate him," Mr. Lagon said during a visit to the U.N.'s New York headquarters, according to an account by the Reuters news agency.

Mr. Lagon repeated the official State Department line, saying the United States government did not support Mr. Annan's resignation, but added: "His future is not certain. ... It's his decision."

Mr. Annan, whose term concludes next year, has resisted growing calls from U.S. lawmakers and others that he step down because of the oil-for-food scandal.

Considered the biggest financial black eye in the world body's history, the sanctions program allowed Iraqi dictator Saddam Hussein to siphon off an estimated $10 billion in smuggled oil sales, inflated contracts, bribes and kickbacks, according to the U.S. Government Accountability Office.

A number of senior U.N. officials, including the executive directly in charge of the program, stand accused of corruption. Mr. Volcker's investigators even looked at the business dealings of Mr. Annan's son, Kojo, who worked for a time for Cotecna, a Swiss firm that was given a key monitoring contract for the program.

The last interim report by the Volcker panel, issued March 29, found that Kofi Annan had not tried to influence the contract given to his son's employer, but said the secretary-general had been lax in investigating charges of conflict of interest and other problems swirling around the oil-for-food program.

The embattled Mr. Annan immediately insisted that the report cleared him, replying with an uncharacteristically frank "Hell, no" when asked by reporters whether he planned to step down.

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

Asked about Mr. Lagon's remarks yesterday, Fred Eckhard, Mr. Annan's spokesman, defended Mr. Annan's interpretation of the Volcker report, saying it had cleared him of any impropriety in the Cotecna contract.

But the Associated Press reported Wednesday that two of Mr. Volcker's senior investigators recently have resigned in protest, saying the interim report had been too easy on Mr. Annan.

Also this week, Canadian business tycoon Maurice Strong, who served as Mr. Annan's special adviser on North Korea, acknowledged he was one of the unnamed U.N. senior officials cited by U.S. prosecutors last week in an oil-for-food criminal complaint unsealed last week in New York.

In an interview with the Toronto Globe and Mail, Mr. Strong, 76, confirmed that he and his son were major investors in a Calgary-based oil company that received a $1 million investment from South Korean businessman Tongsun Park.

Prosecutors say Mr. Park, who was involved in a major influence-peddling scheme in Washington during the Carter administration, was secretly on Saddam's payroll and charged with trying to get the best terms for the Iraqi dictator in easing U.N. economic sanctions after the 1991 Persian Gulf War.

House International Relations Committee Chairman Henry J. Hyde, Illinois Republican, said yesterday that the revelations in the federal indictment put new pressure on the Volcker panel.

The criminal complaint "raises a number of new questions about the genesis of the oil-for-food program and, in particular, gives rise to the possibility that the government of Iraq sought to influence U.N. officials over the scope and design of the program as early as 1993," Mr. Hyde said.

• Staff writer David R. Sands in Washington contributed to this article.