The secretary-general's remarks came Thursday at a reunion seminar of current and past U.N. spokesmen. Answering a question from a former top U.N. official, Mr. Annan defended the world body's role in the scandal-plagued Iraq oil-for-food program. He said The United States and Britain, as members of the Security Council Committee that authorized and oversaw the program, had turned a blind eye to oil smuggling by Saddam Hussein's government.
"The bulk of the money that Saddam made came out of smuggling outside the oil-for-food [program], and it was on the American and British watch. They were the ones who had interdiction, possibly they were also the ones who knew exactly what was going on, and that the countries themselves decided to close their eyes to smuggling to Turkey and Jordan because they were allies," he said.
The comments drew an immediate reaction in both London and Washington. British Foreign Secretary Jack Straw called the charges "inaccurate".
A State Department official noted that what Mr. Annan was referring to were exemptions for Turkey and Jordan that had been highly publicized, and made with the full knowledge and understanding of the United Nations.
The official, who spoke on condition of anonymity, said anyone who was not aware of the exemptions had not been paying attention. He said it was a "red herring" to try now and claim that this was some shocking new revelation.
The U.S. mission to the United Nations Friday sent U.N. correspondents a transcript of a Congressional hearing earlier this week at which the Turkish and Jordanian exemptions were explained in detail.
Spokesman Richard Grennell said the mission's reaction to the smuggling allegations was the same as it has been for some time.
"There's a fundamental difference between oil smuggling, illegal oil smuggling that was done under the table and behind closed doors, and the very public process that the American government went through to exempt certain countries. Don't forget that this exemption came before the oil-for-food program was even established," he noted.
Asked to explain Mr. Annan's comments, U.N. spokesman Fred Eckhard said the secretary-general had thought he was speaking off the record.
"It was my fault,” said Mr. Eckhard. “I didn't tell him that the UN TV camera was on and everyone in the building was listening to his remarks. He thought he was talking to a private seminar."
The oil-for-food program ran from 1996 to 2003. It allowed Saddam Hussein's government to sell oil to buy critical supplies for Iraqi civilians at a time when the country was under a U.N. economic embargo.
Investigators say, however, that Saddam's regime made billions of dollars in illegal profits, both by corrupting the humanitarian program and through illegal oil sales totaling as much as 20 billion dollars.
Mr. Annan has been harshly criticized for U.N. mismanagement of the program, and for his son's involvement with a key oil-for-food program contractor. One U.S. Senator has repeatedly called on the secretary-general to step down.
But in what he thought were off-the-record comments Thursday, Mr. Annan bristled at the criticisms, which he called politically biased and ideologically inspired. He told the media seminar he sees the oil-for-food scandal as largely "an American story." He said in the rest of the world, there is still a lot of respect and enthusiasm for the world body and what it does.