Oil-For-Food Probe Blasts U.N.

A probe of the Iraq oil-for-food program faults U.N. Secretary-General Kofi Annan, the Security Council and some United Nations member states for "egregious lapses" that allowed corruption and incompetence to cripple the operation, according to a preface of the final conclusions.

"The final report of the U.N.-appointed Oil-for-Food inquiry is scathing in its criticism of corruption, large-scale smuggling and grievous lack of oversight by member states and administrative staff," said CBS News Foreign Affairs Analyst Pamela Falk from the U.N.

"The preface of the report released today does not point a finger at Secretary General Kofi Annan for corruption," Falk reports, "but it is critical of his administrative failings and says that Saddam Hussein was able to turn the Oil-for-Food program to his advantage."

The Independent Inquiry Committee's report, to be published Wednesday, criticizes Annan and the U.N. Security Council for a failure of leadership in the overall management of the program, according to the preface, released Tuesday on the committee's Web site.

"Neither the Security Council nor the Secretariat leadership was clearly in command," the preface said. "When things went awry — and they surely did — when troublesome conflicts arose between political objectives and administrative effectiveness, decisions were delayed, bungled or simply shunned."

The preface called for four central reforms, including the creation of a chief operating officer. The U.N. General Assembly should demand that the changes go into force no later than a year from now, the preface said.

"To settle for less, to permit delay and dilution, will invite failure, further erode public support, and dishonor the ideals upon which the United Nations is built," the preface said.

The conclusion of the committee, led by former U.S. Federal Reserve Chairman Paul Volcker, said Saddam Hussein used the largest, most ambitious humanitarian operation ever run by the United Nations to his advantage.

Annan's failure to properly manage the $64 billion program will be a central focus, but there is no new "smoking gun" linking him to an oil-for-food contract awarded to a Swiss company that employed his son Kojo, said one official with knowledge of the final report, speaking on condition of anonymity because the report had not been released.

The Independent Inquiry Committee's final report will say the program succeeded in providing minimal standards of nutrition and health care for millions of Iraqis trying to cope with tough U.N. sanctions imposed after Saddam's 1990 invasion of Kuwait.

While the final report is expected to focus generally on U.N. problems, officials familiar with it said it will assign blame more directly. They also spoke on condition of anonymity because the report had not yet been made public.

One senior official said Russia and France, whose companies had major oil-for-food contracts and for years were considered friendly to Iraq, will be criticized. As veto-wielding permanent members of the Security Council, both countries influenced the committee monitoring sanctions.

Former Secretary-General Boutros Boutros-Ghali will also be criticized over allegations that became known in one of the committee's earlier reports, the official said.

Last month, Volcker's team said it had uncovered enough evidence to prosecute two men suspected of helping former oil-for-food chief Benon Sevan in a kickback scheme. Both men are relatives of Boutros-Ghali.

A second official with knowledge of the report said the General Assembly — which includes all 191 U.N. member states — will also be criticized for failing to provide sufficient oversight.

The preface of the report makes four broad recommendations:

Create the position of a chief executive officer, to ensure hiring decisions are based on talent rather than "political convenience."

Establish an Independent Auditing Board to fully review U.N. programs and hiring.

Seek more effective coordination between U.N. agencies.

Make sure the U.N. Security Council is clearer about the purpose and criteria for U.N. operations that it authorizes.

While the report recommends the changes be enacted by next year, the chances of that happening are not clear. U.N. member states are already grappling over similar reform proposals ahead of a summit of world leaders next week, but have confronted deep divisions.

Many nations in the developing world, for example, oppose some of the management reform proposals because they fear the moves will strip them of some power they wield in the General Assembly which controls the U.N. budget.