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Tuesday, March 29, 2005

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  It will also be highly critical of Kojo Annan for concealing information about his dealings with Cotecna and for deceiving his father, and it will blame the Swiss firm for failing to make information public about the secretary-general's son, the officials said on condition of anonymity.

The report will be the second issued by the team of investigators led by former U.S. Federal Reserve chairman Paul Volcker. It comes a week after Annan called for the biggest overhaul of the United Nations in its 60-year history. It also coincides with allegations of sex abuse by U.N. peacekeepers and of sexual harassment and mismanagement by senior U.N. staff.

Volcker's committee of inquiry will also censure Annan for failing to detect shortcomings in the U.N. bureaucracy that allowed problems in the $64 billion humanitarian aid program to continue until it was wrapped up after the U.S.-led war in Iraq, the officials said.

While the new report will fault the secretary-general's overall management of the oil-for-food program, it will support statements by his chief of staff and spokesman as recently as Monday that "the secretary-general expects to be cleared of any wrongdoing."

As one official said, "He's not going to be implicated in corruption in any form whatsoever."

For the secretary-general, this will almost certainly be the most important finding. But it may not appease his critics, including several U.S. lawmakers who have called for his resignation.

The oil-for-food program was the largest U.N. humanitarian aid operation, running from 1996-2003. Saddam Hussein's government was allowed to sell limited amounts — and eventually unlimited amounts — of oil in exchange for humanitarian goods as an exemption from U.N. sanctions imposed after Iraq's 1990 invasion of Kuwait.

In a bid 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.

Senior U.N. officials insist the secretary-general has no intention of stepping down, and U.N. spokesman Fred Eckhard dismissed reports describing the secretary-general as weak and depressed.

Kofi Annan, his son, and Cotecna all deny any link between Kojo Annan's employment and the awarding of the U.N. contract to the company.

The officials said Volcker still has questions about Kojo Annan and will state in the report that his investigation of the secretary-general's son is continuing. So is his investigation of Benon Sevan, who headed the oil-for-food program.

Volcker has promised a final report in mid-summer.

In his first report in February, Volcker accused Sevan of a "grave conflict of interest," saying his conduct in soliciting oil deals from Iraq was "ethically improper and seriously undermined the integrity of the United Nations." He also questioned where Sevan got $160,000 in cash, calling it "unexplained wealth" despite Sevan's claim it came from his aunt. Sevan's attorney has said he did nothing wrong.

Kojo Annan worked for Cotecna in West Africa from 1995 to December 1997 and then as a consultant until the end of 1998 — just when it won the oil-for-food contract. He remained on the Cotecna payroll until 2004 on a contract to prevent him from working for a competitor in Nigeria or Ghana, but that was only disclosed in November.

At the time, the secretary-general said he was "very disappointed and surprised" that his son continued to receive money.

Cotecna initially said Kojo Annan was only employed until 1998. It released details of his payments only last week, after a report in the Financial Times and the Italian business daily Il Sole 24 said he received over $300,000, double the amount previously reported.

Cotecna spokesman Seth Goldschlager told The Associated Press last week that Kojo Annan got more than $365,000 from the company — about $200,000 as a full-time employee and consultant from 1995-1998 and more than $165,000 from 1999 until February 2004 under the so-called "non-compete" contract.

He also disclosed that Volcker sought payment records from five companies linked to the firm for the years 1996 to 2004. The Swiss accounting firm BDO Visura is currently conducting an audit, expected to be completed at the end of April.

Goldschlager also confirmed reports in the two papers of three meetings between Kofi Annan and Cotecna executives and disclosed a fourth contact. Two were in social settings, one in Annan's U.N. office, and one after the Cotecna contract was signed.

As for Sevan, the United Nations on Monday reversed its decision to pay his legal fees related to the investigation. The plan to pay Sevan's fees had stirred controversy because of the seriousness of the allegations against him and because U.N. officials said the reimbursements would be paid with money from Iraqi oil sales used to finance the oil-for-food program itself.

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