Oil-for-Food Panel Rebukes Annan, Cites Corruption

By Colum Lynch
Washington Post Staff Writer
Thursday, September 8, 2005

UNITED NATIONS, Sept. 7 -- A U.N.-appointed panel investigating corruption in prewar Iraq's oil-for-food program delivered a scathing rebuke of Secretary General Kofi Annan's management of the largest U.N. humanitarian aid operation and concluded that Kojo Annan took advantage of his father's position to profit from the system.

Former U.S. Federal Reserve chairman Paul A. Volcker, the head of the Independent Inquiry Committee, said blame for the program's failure was shared by the Security Council, other members of the United Nations and Annan's senior advisers. In a dramatic appearance before the Security Council, Volcker warned Annan and the 15-nation council to change the way they do business or face a worldwide loss of public support.

"Our assignment has been to look for mis- or mal-administration in the oil-for-food program, and for evidence of corruption within the U.N. organization and by contractors. Unhappily, we found both," Volcker told the council.

Senior U.N. officials said they hope that Volcker's fourth and most complete report will bring an end to a painful 18-month probe of the $64 billion program, which investigators concluded was so poorly managed that Iraqi leader Saddam Hussein raked in $1.7 billion in kickbacks from participating companies and $11 billion in oil-smuggling profits. Among the most volatile allegations probed by Volcker were suspicions that Kofi Annan had steered lucrative Iraqi oil contracts to a Swiss company, Cotecna, that had put his son on its payroll.

Wednesday's report said the panel found no evidence that Kofi Annan had interceded on behalf of Cotecna and no conclusive proof that he knew of his son's activities. But it provided fresh details suggesting that Kojo Annan, 31, may have obtained privileged information about U.N. business deals from his father's personal assistant and from contacts in the U.N. procurement office. It also asserted that Kojo Annan abused his father's diplomatic status to secure more than $20,000 in breaks on taxes and customs fees for a Mercedes-Benz he bought in Geneva in 1998.

"We have found no corruption by the secretary general," said Volcker, but "his behavior has not been exonerated by any stretch of the imagination."

Annan told reporters after the report's release that he accepted its "criticism," but he dismissed calls for his resignation by U.N. critics, saying: "I don't anticipate anyone to resign. We are carrying on with our work."

He also underscored Volcker's conclusion that blame should be shared by the broader U.N. membership. In a statement released by his lawyer, Kojo Annan denied that he played any role in promoting Cotecna's case for oil-for-food business and said he had never discussed the company's plans with his contacts in the U.N. procurement office. "As to using my father's name to get a discount on a car, I was young and I just didn't think it through," he said.

U.S. Ambassador John R. Bolton seized on the report's findings to advance his case for greater independent oversight of U.N. spending, citing the need "to reform the U.N. in a manner that will prevent another oil-for-food scandal. The credibility of the U.N. depends on it."

Bolton accused dozens of developing countries "who are in a state of denial" of resisting attempts to agree on such changes before world leaders arrive in New York next week for a summit on poverty and U.N. reform.

Congressional leaders said the report raises questions about Annan's capacity to lead the organization.

"The flagship of international diplomacy ran aground while Kofi Annan was at the helm," said Rep. Christopher Shays (R-Conn.), who is heading an investigation into U.N. corruption. "The critical question now is whether the secretary general can provide the management direction needed to restore U.N. credibility and effectiveness."

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