U.N.'s Kofi Annan Off The Hook

U.N. Secretary General Kofi Annan never interfered in the awarding of the contract to a Swiss company, a second report by the U.N.-appointed committee investigating the oil-for-food program concludes. But it notes that connections to Annan's son, Kojo, in the Iraq program should have been better investigated.

Meanwhile, the U.S. State Department stands behind the Kofi Annan, and Kojo Annan maintains the stance that he has been unfairly criticized.

The Swiss company at the heart of a new report on the oil-for-food scandal repeatedly lied about its links to Kofi Annan's son, one investigator said, going much further in his criticism than the document itself.

The investigator, Mark Pieth, rejected Annan's declaration that the report, released Tuesday, exonerated him on the matter of Cotecna Inspections S.A. winning a $10 million-a-year U.N. contract while he was secretary-general and while it employed his son Kojo.

"We did not exonerate Kofi Annan," Pieth told The Associated Press. "We should not brush this off. A certain mea culpa would have been appropriate."

The report was the second to be released by the U.N.-appointed committee led by former Federal Reserve Chairman Paul Volcker. It coincides with allegations of sex abuse by U.N. peacekeepers and of sexual harassment and mismanagement by senior U.N. staff. It comes a week after Annan called for the biggest overhaul of the United Nations in its 60-year history.

"The report is yet another blow to U.N. credibility," said CBS News Analyst Pamela Falk.

The son believes he has been unfairly criticized in an official report on the awarding of a U.N. oil-for-food contract to a company for which he was worked, his lawyers said in a statement Wednesday.

Kojo Annan, who lives and works in Lagos, directed all inquiries to his legal team when contacted through a friend who plays rugby with him in his upscale residential neighborhood, Ikoyi.

His London lawyers said in a that he "believes the report is unfair in its criticism of him ... and is currently considering what options are open to him in relation to the report."

A colleague at the Lagos offices of the oil-trading firm for which he now works, Petroleum Projects International, said Kojo Annan was unavailable Wednesday.

A friend of Kojo Annan, who spoke on condition of anonymity saying he wanted to avoid spoiling his relationship with the secretary-general's son, said Kojo Annan's office at Petroleum Projects International, a trading company in this OPEC member state, was decorated with expensive artwork and that Kojo Annan drove a luxury sport utility vehicle.

The U.S. State Department said Wednesday that the findings of an investigation into the U.N. oil-for-food program were troubling, but it continues to stand behind Secretary-General Kofi Annan.

"We are pleased that the secretary-general has recognized the need to correct serious management deficiencies. We continue to support him in his work," spokesman Adam Ereli said. "And we will endeavor, for our part, to ensure that management reform of the United Nations is a top priority, indeed a higher priority than it has ever been."

Volcker, the investigation committee's head, said at a news conference he hoped the findings, and a final report in midsummer, will help bring about "a reformed U.N., a U.N. capable of commanding and maintaining the support of its member states and the public at large."

A key conclusion was that Kofi Annan never interfered in the awarding of the contract to the Swiss company but should have better investigated possible conflicts of interest after a British newspaper, The Sunday Telegraph, reported the link between Kojo Annan and Cotecna in January 1999.

Annan's advisers had told him after a cursory one-day audit in 1999 found no conflict and that no further probe was necessary. Cotecna's contract was subsequently renewed repeatedly.

In uncharacteristically strong language, Annan replied "Hell, no" when asked if he planned to step down, and noted the report's findings that he committed no personal wrongdoing.

"After so many distressing and untrue allegations have been made against me, this exoneration by the independent inquiry obviously comes as a great relief," he said.

But the report clearly faulted the secretary-general's management of the world body and his oversight of the scandal-ridden oil-for-food program in Saddam Hussein's Iraq.

The report's harshest criticism, however, was reserved for Cotecna, which won a U.N. contract in 1998 to certify goods imported to Iraq under the program, and Kojo Annan. The report accused them of trying to conceal their relationship after the firm was awarded the contract.

Kojo Annan worked for Cotecna in West Africa from 1995 to December 1997, then was a consultant for the firm until the end of 1998 — when it won the oil-for-food contract. In November it was disclosed that he remained on the Cotecna payroll until 2004 on a contract to prevent him from working for a competitor in west Africa.

Volcker's Independent Inquiry Committee found that Kojo Annan was not forthcoming with either his father or the committee and accused him of consistently trying to hide the nature of his relationship with Cotecna.

In an interview with The Associated Press following the report's release, Pieth said Cotecna officials continually deceived investigators about the relationship — specifically, how much Cotecna paid Kojo Annan.

"It's a continuous history of us confronting them, them owning up to something and then backtracking," said Pieth, a professor of criminal Law and criminology at the University of Basel, in Switzerland.

A spokesman for Cotecna denied the allegations.

"We are very shocked to be accused of not being forthcoming," Seth Goldschlager said.

Pieth cited a letter dated April 16, 2004, that was not included in the report released Tuesday, which he showed to The Associated Press. In the letter, a senior vice president of Cotecna wrote that after Kojo Annan left the company in 1998, it paid him no more money.

But the report issued Tuesday concluded that Kojo Annan was paid as much as $484,492 after he left the company.

Cotecna disputes the figure and argues that Tuesday's report does not make clear that the company has ordered an audit into all payments made to Kojo Annan, to be delivered at the end of April.

Goldschlager said a preliminary report to the committee concluded that Kojo Annan had not received more than $400,000 from the company.

The $64 billion oil-for-food program ran from 1996 to 2003. Saddam's government was allowed to sell oil in exchange for humanitarian goods as an exemption from U.N. sanctions imposed after Iraq's 1990 invasion of Kuwait.

Seeking to curry favor and end sanctions, Saddam allegedly gave former government officials, activists, journalists and U.N. officials vouchers for Iraqi oil that could then be resold at a profit. U.S. congressional investigators say Saddam's regime may have illegally made more than $21 billion by cheating the program and other sanctions-busting schemes.

In a statement issued through his lawyer, Kojo Annan welcomed the committee's finding clearing him and his father of exerting "any undue influence" in the awarding of the Cotecna contract.

"I deeply regret any embarrassment that the whole Cotecna issue may have caused my father," he said. "My father has an excellent reputation and his conduct and integrity has always been impeccable and this report does not alter that."