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Oil-For-Food Panel Report Critical of Annan

Investigators looking into corruption in the U.N.-run Iraq oil-for-food program are set to issue a report sharply critical of Secretary-General Kofi Annan. The report faults Mr. Annan for management lapses involving his son and a key oil-for-food contractor.

Secretary-General Annan failed to adequately understand the appearance of conflict of interest posed by his son Kojo Annan's relationship with a Swiss firm that won a contract to monitor oil-for-food deliveries.

That is among the conclusions of a report being issued Tuesday by the Volcker Commission, which Mr. Annan appointed to investigate allegations of corruption and mismanagement in the $65 billion humanitarian program. Details of the report have appeared in several newspapers in the past few days.

The Wall Street Journal, which originally broke the story, quoted people who have seen the report as saying it concludes Kofi Annan's relationship with his son apparently blinded him to Kojo's willingness to take advantage of the family name for personal gain.

Kojo Annan worked for the Swiss firm Cotecna in the mid-nineties, but left about the time the company received an oil-for-food contract that was ultimately worth $60 million. Investigators say the younger Annan received nearly $400,000 from Cotecna, including monthly payments that continued until early last year, after the program was terminated.

On the eve of the report's release, U.N. spokesman Fred Eckhard said Kofi Annan remains confident that, despite the appearance, there was in fact no conflict of interest. "This contract for Cotecna was issued according to standard U.N. procurement practices. And that the secretary-general's son's connection to the company had no impact, had no influence on the awarding of contract," he said. "That is what his own internal investigation has shows, it's what he in his heart believes is true, and that's what he expects to come out tomorrow."

Mr. Eckhard acknowledged that Mr. Annan has been hurt, both professionally and personally, by the flood of negative publicity surrounding his son's relationship with Cotecna. Mr. Eckhard referred to recent leaks from the Volcker Commission as "death by a thousand cuts".

But he said the secretary-general expects to weather the storm and finish out his remaining 21 months in office. "The Secretary general has no intention, no intention of resigning. He expects to be cleared of wrongdoing by Mr. Volcker," he said.

Published accounts quoting sources who have seen the Volcker Commission report suggest that, despite the appearance of a conflict, Kofi Annan will not be accused of improperly influencing the awarding of oil-for-food contract.

When he began looking into the Annan family's involvement in the oil-for-food scandal last month, commission chairman Paul Volcker emphasized that his determination of Kofi Annan's guilt or innocence would hinge mainly on the question of influence. "The question that's being explored is was his son Kojo employed by Cotecna at the period of time when that decision was made to employ, contract with Cotecna, and even more importantly, was he aware of it, and even more importantly than that, did he in any way influence the process, which is really the critical question," he said.

The report being released Tuesday is the second of three Mr. Volcker's commission is planning to issue. The third is due about the middle of this year.

The first report, released in early February, found former oil-for-food program chief Benon Sevan guilty of "a grave and continuing conflict of interest" in awarding contracts.

The United Nations originally agreed to pay hundreds of thousands of dollars of Mr. Sevan's legal fees. Spokesman Eckhard announced Monday, however, that the agreement had been revoked after it sparked a storm of protest.