UNITED NATIONS, March 29 -- A U.N.-appointed panel investigating abuse in the Iraq oil-for-food program said there is no evidence that U.N. Secretary General Kofi Annan used his influence to steer a multimillion-dollar contract to a Swiss company that employed his son.
But the panel's report faulted Annan for inadequately scrutinizing the deal to determine whether his son's involvement posed a conflict of interest, and accused Annan's senior advisers of misusing Iraqi funds and shredding relevant documents as the investigation began. It also indicated that Annan may have initially misled investigators about contacts he had with senior executives at his son's company before they won a U.N. contract.
U.N. Secretary General Kofi Annan says that his "exoneration" is a "great relief," and that he has no plans to step down.
(David Karp -- Bloomberg News)
The U.N.-appointed Independent Inquiry Committee, headed by former Federal Reserve chairman Paul A. Volcker, presented a sharply critical account of efforts by Annan's son, Kojo Annan, to deceive investigators and his father about his financial relationship with his former employer, Geneva-based Cotecna Inspection Services SA.
The report says that Kojo Annan, who stopped cooperating with Volcker's panel after an initial meeting, may have earned as much as $485,000 in consulting fees from Cotecna while it conducted millions of dollars in business in Iraq for the United Nations.
U.N. officials expressed hope that Tuesday's findings would bring some respite from a corruption scandal that has plagued the organization for more than a year, and would allow Kofi Annan to press ahead with changes aimed at increasing the accountability of U.N. officials. But the findings did not satisfy critics in Congress, who renewed calls for Annan's resignation on the grounds that he did not effectively manage the oil-for-food effort -- the United Nations' largest humanitarian program -- in prewar Iraq.
Annan said Tuesday that his "exoneration" by Volcker's panel "comes as great relief" after "so many distressing and untrue allegations have been made against me." Asked if he is considering stepping down before his term ends at the end of 2006, he replied: "Hell, no. I've got lots of work to do, and I'm going to go ahead and do it."
Annan talked about "painful moments" during the past year when he learned his son "might have acted inappropriately, or might not have told me the full truth about his actions."
"I love my son, and I have always expected the highest standards of integrity from him," he said. "I am deeply saddened by the evidence to the contrary that has emerged."
Kojo Annan said in a statement released by his lawyer that Tuesday's finding "clears both my father and me" of exercising "any undue influence" over the awarding of the Cotecna contract. "I deeply regret any embarrassment that the whole Cotecna issue may have caused my father. I am an independent businessman and I do not represent the U.N."
White House press secretary Scott McClellan said the Bush administration continues to "support the secretary general and his work at the United Nations." But Sen. Norm Coleman (R-Minn.), chairman of the permanent subcommittee on investigations, said Annan's "lack of leadership, combined with conflicts of interest and a lack of responsibility and accountability, point to one, and only one, outcome: his resignation."
The U.N. program was established in December 1996 to allow former Iraqi president Saddam Hussein's government, which had been placed under U.N. economic sanctions after its 1990 invasion of Kuwait, to trade oil for food, medicine and other humanitarian goods.
The Iraqi government circumvented the program's restrictions, using it to raise more than $2 billion through illegal kickbacks and payoffs from companies that were conducting business with Iraq, according to a previous report by CIA adviser Charles A. Duelfer.
The 135-page document Volcker released Tuesday is an interim report for his investigation, and focuses largely on whether Kofi Annan played any role in the United Nations' awarding of the contract to Cotecna in December 1998 to monitor the importation of humanitarian goods into Iraq. It concludes that Annan was unaware that Cotecna was competing for the contract and that there was "no evidence" that the U.N. chief exercised "any affirmative or improper influence . . . in the bidding or selection process."
The report also notes that Annan had initially denied participating in two meetings with Cotecna's chairman, Elie-Georges Massey, before the contract was awarded.
After investigators confronted Annan with a computer record of two meetings with Massey, he acknowledged the encounters but said the two never discussed Cotecna's Iraq contract.
The report accuses Kojo Annan and Cotecna of misleading Kofi Annan and the investigating panel, saying: "Kojo Annan actively participated in efforts by Cotecna to conceal the true nature of its continuing relationship with him."
Cotecna spokesman Seth Goldschlager challenged Volcker's assertion that the company had paid Kojo Annan about $485,000 while it worked in Iraq, and that it "had not been forthcoming" with investigators. He said that Cotecna is conducting an audit to determine how much money Kojo Annan received, but that the company's initial estimate is closer to $160,000. He also denied what he described as the report's assertion of "some nefarious scheme to conceal" payments to Kojo Annan, saying: "There was nothing illegal or inappropriate."
The report also discloses that Iqbal Riza of Pakistan, Annan's former chief of staff, had approved destruction of his backup computer files covering the first three years of the oil-for-food program. His April 22 decision came one day after the Security Council officially endorsed Annan's decision to appoint Volcker.
Riza said that it was not an attempt to conceal information and that documents were "simply extra copies" of records that U.N. officials typically destroy each year. He said that his own policy was to hold onto the files for five years. "In hindsight, I can say, 'Oh, goodness, I shouldn't have.' "
The report also asserts that Dileep Nair of Singapore, undersecretary general for the Office of Internal Oversight, improperly used Iraqi oil proceeds to pay the salary of a Singaporean scholar who performed little work on Iraq investigations. Nair rebutted the panel's findings, saying it is "factually incorrect" to say the staff member did only minimal work on the program.