Panel Is Revisiting Annan Ties to Firm

By Colum Lynch
Washington Post Staff Writer
Wednesday, June 15, 2005

UNITED NATIONS, June 14 -- A U.N.-appointed panel probing corruption in the $64 billion U.N. oil-for-food program in prewar Iraq has reopened an investigation into whether U.N. Secretary General Kofi Annan steered business to a Swiss company that once employed his son, Kojo.

The move came less than a day after investigators obtained a 1998 memo written by an executive of the Geneva-based company, Cotecna Inspection SA, saying that Annan and his staff indicated support for the company's bid for a $10 million-a-year contract to oversee imports of humanitarian aid into Iraq.

Annan has denied that he knew that his son's former employer was trying to do business with the United Nations before it won the Iraq contract. His spokesman, Fred Eckhard, questioned the veracity of the memo Tuesday, noting that Annan "had no knowledge that Cotecna was a contender for that contract."

The U.N.-appointed Independent Inquiry Committee, headed by former U.S. Federal Reserve Bank Chairman Paul A. Volcker, said in a March 29 report that it found no evidence that Annan had used his influence to award contracts to Cotecna.

But a statement issued by the committee Tuesday said it was "urgently reviewing" the new information, and Reid Morden, the panel's chief of staff, said "we will have to take careful look at what this [memo] says. Certainly, it's a very interesting document that has now come to light." Morden said that the panel will question Annan about the memo in the coming weeks at a previously planned interview about management flaws in the largest U.N. humanitarian program.

Disclosure of the memo drew sharp response from congressional critics of the United Nations who argue that U.N. mismanagement of the oil-for-food program underscores the need for a housecleaning at the world body. Rep. Henry J. Hyde(R-Ill.) is preparing to introduce legislation Thursday to withhold funding to the organization if it fails to implement a series of far-reaching changes.

Sen. Norm Coleman (R-Minn.), chairman of the Senate permanent subcommittee on investigations, said in a statement that the new document "corroborates our suspicions and amplifies our concerns about the secretary general's serious conflict of interest. I fully expect that Mr. Volcker's investigators, due to their unique access to the secretary general, will aggressively follow up on these new revelations."

Cotecna provided Volcker and congressional investigators on Monday with the memo, from Michael Wilson, then a Cotecna vice president whose father was a friend of Kofi Annan. The memo to Wilson's bosses described a brief meeting in late November 1998 in Paris with the secretary general and his staff.

"We had a brief discussion with the SG [Secretary General] and his entourage," said the memo, dated Dec. 4, 1998, one week before Cotecna beat out two competitors for the contract. "Their collective advise was that we should respond as best as we could to the Q&A session of the 1-12-98 and that we could count on their support." The numbers refer to a Dec. 1 meeting Wilson had in New York with U.N. officials about the Iraq contract. Existence of the memo was reported in Tuesday's New York Times.

Eckhard said that Annan could not remember meeting with Wilson. He said that on Tuesday the United Nations provided Volcker with a record of Annan's meetings on that trip and the names of the members of the U.N. delegation. "There is no mention in that trip record of any exchange with Michael Wilson," Eckhard told reporters. "We spoke to the secretary general, who is in Paris today, and he has no recollection of any such exchange."

Eckhard acknowledged that the latest disclosure could hamper Annan's efforts to push through a series of U.N. structural changes, including expansion of the Security Council, when world leaders gather in New York in September for the General Assembly.

A senior official familiar with Volcker's investigation cautioned that Wilson's credibility has long been a subject of concern in the committee. Wilson initially told Volcker's investigators that he had discussed Cotecna's attempts to do business with Iraq in 1997. But he later retracted the statement, saying that the discussion occurred in 1999, long after Cotecna had been awarded the contract. More recently, Wilson has been involved in a corruption inquiry in Geneva involving the construction of a U.N. facility.

The U.N. oil-for-food program was established in December 1996 to provide relief to ordinary Iraqis facing hardships as a result of U.N. sanctions, which were imposed on Baghdad after its 1990 invasion of Kuwait. Under the terms of the program, Iraq was permitted to sell oil to purchase food, medicine and other humanitarian supplies.

Although the program succeeded in boosting nutritional levels in Iraq, it also provided Saddam Hussein's government with an opportunity to raise more than $2 billion in illicit proceeds by requiring its trading partners to pay kickbacks in exchange for doing business in Iraq. The abuse triggered investigations by the United Nations, congressional committees and federal prosecutors.

The Volcker panel had accused the former head of the U.N. program, Benon Sevan, of improperly steering Iraqi oil deals to an Egyptian businessman. Volcker's decision to clear Annan of directing business to Cotecna prompted the resignation of a top investigator, former FBI agent Robert Parton, in protest.

Simon Smith, a representative of Kojo Annan, said that his client believes "it would be inappropriate to discuss" the latest disclosure while Volcker is investigating. But he noted that Volcker's panel had previously "concluded that there was no improper influence exerted in relation to the award of the contract to Cotecna."

Cotecna said in a statement that "it acted at all times appropriately in its bidding for, winning and performing" its U.N. contract.

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