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Volcker UN Oil-For-Food Report Due Thursday

The Volcker Commission looking into allegations of corruption and mismanagement in the U.N. oil-for-food program issues its first interim report Thursday. The report, the first of several planned, will focus on weaknesses in administration of the $64 billion program. The report implicates at least one senior U.N. official in possible wrongdoing.

Secretary-General Kofi Annan's chief of staff this week said the United Nations is bracing for some heavy blows when the Volcker Commission releases its report on the scandal-ridden Iraq oil-for-food program. In remarks to two news agencies, Chief of Staff Mark Malloch Brown said the secretary-general would soon introduce reforms to address what he called "undoubted management weaknesses".

When Mr. Annan named the highly-respected former U.S. central bank chief Paul Volcker as head of a commission to look into the humanitarian program last year, he expressed hope it would put to rest allegations of fraud and bad management.

But at an end-of-year meeting with reporters, Mr. Annan admitted that the commission's findings were not what he had hoped.

"The allegations over the oil-for-food program have cast a shadow over an operation that brought relief to millions of Iraqis," said Mr. Annan.

The allegations also cast a shadow on Mr. Annan after it was learned that a firm hired to oversee the program had employed his son. The secretary-general has been interviewed three times by the Volcker Commission about his involvement in the program, most recently last week.

The Security Council created the oil-for-food program in 1996 to allow Saddam Hussein's Iraq to buy food and medicines that were in short supply because of international sanctions. But the Saddam regime quickly turned it into a source of illicit funds.

An earlier report by U.S. weapons inspector Charles Duelfer told how Saddam was able to generate an estimated $1.7 billion in revenue outside U.N. control from 1997 to 2003. The Duelfer report alleged that Saddam issued lucrative vouchers for the purchase of Iraqi oil to several influential figures as a way of winning favor among key Security Council members.

U.N. diplomats have confirmed that Iraqi officials told the Volcker Commission oil-for-food program chief Benon Sevan personally intervened to direct contracts to a favored oil trader. Mr. Sevan has denied any wrongdoing.

Last month, the Volcker Commission issued a briefing paper documenting lapses in oversight of the program. U.N. spokesman Stephane Dujarric said those revelations pointed to the need for urgent reform.

"It is clear from the briefing paper that there were deficiencies in the management of this highly complex program which had to be implemented in an acutely difficult political environment," said Mr. Dujarric.

The Volcker Commission probe is one of at least seven oil-for-food investigations that have at times clashed over witnesses and materials.

Five congressional committees and the U.S. Justice Department are conducting separate inquiries into various aspects of the program. Among them are allegations that the Saddam regime skimmed $8 billion from illicit oil deals during the time when international sanctions on Iraq were in effect.

These investigations have already resulted in one guilty plea. Iraqi-American businessman Samir Vincent last month pleaded guilty to four criminal counts. He admitted receiving millions of dollars in oil vouchers in return for lobbying U.S. and U.N. officials about lifting sanctions on Iraq.

After the plea was announced, Mr. Volcker issued a statement noting that he had not had an opportunity to interview Mr. Vincent. But in earlier comments to reporters, he said oil smuggling and sanctions would not be part of his inquiry.

"Our main mandate is what happened to the U.N. administration of the oil-for-food program,” he said. “The sanctions existed before the oil-for-food program was created. There were clearly indications of smuggling, which have become known. That is not in the oil-for-food program. That is outside the oil-for-food program."

In recent comments to reporters, Mr. Volcker has suggested there were huge failures in the oil-for-food program. But in an interview with the New York Times newspaper, he said his investigation had not turned up what he called a "smoking gun."

Nevertheless, the Volcker report is certain to give new ammunition to critics of Secretary-General Annan and the United Nations.

Mr. Volcker is due to release a second and possibly a third report by the middle of this year as his investigation continues.