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Oil-for-Food Panel Slams Annan But Clears Him of Wrongdoing

The commission investigating corruption and mismanagement in the United Nations oil-for-food program in Iraq has sharply criticized Secretary-General Kofi Annan. But, the commission stops short of accusing Mr. Annan of wrongdoing.

The panel's second interim report, released Tuesday, faults the Secretary-General for management failures in the $65-billion program. It also bluntly accuses him of failing to understand that his son Kojo's involvement with a Swiss-based oil-for-food contractor could be seen as a conflict of interest.

But Commission chairman Paul Volcker said his staff of 65 investigators did not find any evidence that the U.N. chief had done anything wrong in awarding a contract to the Swiss firm Cotecna. "Diligent and extensive search of written and electronic records and intensive interviews with all of those involved have provided no evidence of any influence by the secretary-general on the bidding and selection process for humanitarian goods inspections in 1998," he said.

Secretary-General Annan appointed the Volcker Commission nearly a year ago amid allegations of widespread corruption and mismanagement in the humanitarian oil-for-food program. In its first report last month, the commission found that the program's chief, former undersecretary-general Benon Sevan, had been guilty of a "grave conflict of interest" in awarding contacts.

The second report criticizes the secretary-general's failure to adequately investigate reports that his son's relationship with Cotecna was improper.

But Mr. Volcker charged that the younger Annan and Cotecna conspired to conceal the nature of the relationship, which involved payments totalling nearly $400,000. "The committee finds that both Cotecna officials and Kojo Annan acted to disguise their continuing business and financial relationship, misleading the secretary-general himself, other U.N. officials, and the public in process," he said.

Secretary-General Annan issued a statement Monday noting that the Volcker report had cleared him of wrongdoing. The brief statement makes no mention of other allegations and criticisms contained in the report.

The Bush administration issued a brief statement Tuesday offering support for Mr. Annan pending a review of the commission's findings. "We continue to support Secretary General Annan in his work at the United Nations. We will carefully study the report that Mr. Volcker has put forward today and we will also look forward to seeing the final results of his investigation," said spokesman Scott McClellan read the statement.

The Iraq oil-for food program was the largest-ever U.N. humanitarian aid operation. The program was created by the Security Council to allow Saddam Hussein's government to sell oil to buy essential goods for Iraqis during a time the country was under strict sanctions.

A third Volcker report, due out later this year, will examine the U.N. Security Council's role in overseeing the program. U.S. investigators have documented how Saddam Hussein was able to siphon off billions of dollars in illegal profits and kickbacks, part of which was used to buy influence in Security Council member countries.