Annan told reporters Monday that he had been working on the understanding that payments to his son, Kojo Annan, from the Swiss-based firm Cotecna Inspection S.A. stopped in 1998 "and I had not expected that the relationship continued."
But on Friday, U.N. spokesman Fred Eckhard said Kojo Annan's lawyer had informed the independent panel appointed by the secretary-general to investigate allegations of corruption in the oil-for-food program that the younger Annan continued to receive monthly payments through February 2004.
The disclosure was the latest embarrassment for Annan and the United Nations over the humanitarian program that was instituted in December 1996 to help Iraqis cope with sanctions imposed after Saddam Hussein's 1990 invasion of Kuwait.
Annan on Monday stressed that his son was an independent businessman "and I don't get involved with his activities and he doesn't get involved in mine."
Annan has said his son joined Cotecna at the age of 22 as a trainee in Geneva before he became secretary-general and worked in West Africa. The firm was hired by the United Nations on Dec. 31, 1998 to authenticate that food, medicine and other goods entering Iraq corresponded to a list of goods approved for import.
In a statement in April, Cotecna said Kojo Annan's full-time employment — which focused entirely on its activities in Nigeria and Ghana and had nothing to do with the oil-for-food program — began in 1995 and ended in December 1997 after which he was retained as a consultant until early 1999. It did not mention any further payments.
The United Nations previously said Kojo Annan stopped receiving monthly payments from Cotecna at the end of 1999. But Eckhard said Friday he continued to be paid because he had an open-ended no-compete contract which allows an employee who leaves a company to receive money to ensure he won't set up a competing company.
"There is nothing illegal in this," Eckhard said. Also, continuing investigations by the U.S. Congress and the United Nations have not shown any wrongdoing by Cotecna.
Cotecna spokeswoman Ginny Wolfe said Kojo Annan was paid $2,500 a month "to prevent him from working for any of their competitors in Africa" which she described as a very competitive market.
"Kojo Annan's sole responsibilities were in Africa," she said. "He had nothing to do with any U.N. discussions and work."
U.S. Ambassador John Danforth discussed the oil-for-food investigations with the secretary-general on Monday and was asked afterward whether the United States still has confidence in Annan.
"I don't think the U.S. government rushes to judgment until all the facts are in," he said, urging that the investigation be exhaustive and reveal all the facts to avoid any charges of a cover-up.
Five U.S. congressional panels have been pressing the independent inquiry headed by former U.S. Federal Reserve chairman Paul Volcker to hand over internal U.N. documents for their own oil-for-food probes. But Volcker told the Senate that his panel won't hand over documents until its investigative reports are issued starting in January.
CBS Radio News reports Danforth said everything should be handed over to the congressional committees for the sake of transparency.
But he added, "I am not for chaos, everyone asking everyone for everything at the same time."
"As soon as the information can be made public, the better off we can be," Danforth said.
The oil-for-food program allowed Saddam's regime to sell unlimited quantities of oil provided the money went primarily to buy humanitarian goods and pay reparations to victims of the 1991 Gulf War.
Annan reiterated that he has "no involvement with granting of contracts, either on this Cotecna one or others."
But the secretary-general said he understood "the perception problem for the U.N., or the perception of conflict of interests and wrongdoing."
Eckhard said both Cotecna and Kojo Annan's lawyers had informed the United Nations that they have turned over information to the independent inquiry headed by Volcker.
"To the extent that there's an allegation of the awarding of this contract and the secretary-general's son, leave that to Volcker to investigate," Eckhard said. "We feel there is not. We have looked into it and we can find no evidence, but it's not for us to judge now, it's for Mr. Volcker to judge."
Annan told reporters Monday he spoke to his son after learning that he had been paid through February, "but I really don't want to get into this."
Asked whether he was disappointed and angry with his son for taking the money and not disclosing it, Annan replied: "Naturally I was very disappointed and surprised, yes."