Wednesday, March 30, 2005

NEW YORK — An exhaustive probe into the U.N. oil-for-food program yesterday faulted Secretary-General Kofi Annan for weak oversight of the humanitarian program but said there was insufficient evidence to accuse him of criminality.

A commission headed by former Federal Reserve Chairman Paul Volcker particularly criticized Mr. Annan for not perceiving a conflict of interest in the hiring of the Swiss inspections firm that employed his son Kojo — who in turn was accused of lying to his father and hiding his role in the affair.

A visibly shaken Mr. Annan expressed disappointment in his son at an afternoon press conference, but when asked whether he would resign, replied quietly, “Hell, no.”

Among other findings, the panel also revealed that an aide close to Mr. Annan, Iqbal Riza, shredded documents related to the oil-for-food program immediately after the Security Council authorized the Volcker investigation.

Investigators also found that senior U.N. management failed to seriously investigate potential conflicts of interest when awarding a contract to Cotecna Inspections SA, which paid the younger Mr. Annan at least twice as much as company officials had willingly disclosed. A more thorough investigation was called for, they said.

Kojo Annan, the Independent Inquiry Committee (IIC) found, traded on his father’s position and repeatedly misled inspectors and his own father about the nature of his business contacts and remuneration.

But the investigators did not find criminal wrongdoing, saying the evidence was “not reasonably sufficient” that Mr. Annan even knew his son’s employer was under consideration for a $10 million-a-year U.N. contract to verify humanitarian shipments of goods destined for Iraq.

The investigation did find widespread irregularities throughout the organization, saying an aide hired specifically to work on oil-for-food issues by the U.N. inspector general’s office in fact did little work on the program. The inspector general’s office disputed the characterization.

IIC investigators also found that Kojo Annan, hired out of college for a training program, was eventually paid more than $400,000 — at least twice as much as he or Cotecna had previously acknowledged — and often through circuitous routes.

Nevertheless, Mr. Annan took the report as good news.

“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.

In fact, the report — the second to be released by the panel — was not a vindication of Mr. Annan’s management, and it criticized decisions made by several senior U.N. staffers.

The report focused solely on the hiring of Cotecna Inspection SA, a firm that, by the late 1990s, had a history of bribery and financial problems.

The firm is of particular interest because of its employment of Kojo Annan, and suspicions that it did not do enough to prevent Saddam Hussein from siphoning funds from the oil-for-food program.

The U.N. oil-for-food program was designed to allow Iraq to export oil and import desperately needed humanitarian goods to lessen the blow of postwar sanctions. Eventually, $64 billion worth of oil was sold, while Saddam skimmed off large sums through kickbacks, bribes and smuggling operations.

The program’s administrator of seven years, Benon Sevan, was accused in an earlier Volcker report of pocketing $160,000 and using his influence to shape the Security Council’s sanctions regime.

The harshest findings yesterday were reserved for Kojo Annan, now 32, who is not a U.N. employee.

“Kojo Annan actively participated in efforts by Cotecna to conceal the true nature of its continuing relationship with him,” inspectors found.

“Kojo Annan also intentionally deceived the Secretary-General … was not forthcoming … has failed to cooperate fully … [and] has refused to answer questions. … Significant questions remain about the integrity of Kojo Annan’s business and financial dealings.”

The elder Mr. Annan acknowledged the sting of the findings.

“For reasons that parents everywhere will understand, the most difficult and painful moments for me personally, through this past year, have been those when it appeared that my son, Kojo, might have acted inappropriately, or might not have told me the full truth about his actions,” he told reporters.

“I love my son, and I have always expected the highest standards of integrity from him.”

He said he had urged his son to cooperate fully with the Volcker panel, but that he had not.

The Volcker panel does not have any legal authority, although it is cooperating with the New York District Attorney’s Office.

Yesterday’s report was less scathing than the interim report issued by the committee in February, which outlined glaring problems with the oil-for-food program’s setup, contract procedures, administration and auditing.

That report revealed how the program’s director, then-U.N. Undersecretary Benon Sevan, received $160,000 in questionable payments while drumming up millions worth of oil contracts for a company to which he had close ties.

• Tom Carter and Guy Taylor contributed to this report in Washington.

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