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Second Volker report to fault Annan, son, firm

Reported findings: * UN Secretary-General Kofi Annan is faulted for not taking aggressive action to deal with possible conflict of interest in awarding an oil-for-food contract to Cotecna Inspection, which employed his son, Kojo. * He is also faulted for not detecting shortcomings in the UN's bureaucracy that allowed problems in the oil-for-food program to last until 2003. * Kojo Annan is faulted for concealing information about his work for Cotecna and for deceiving his father. * Cotecna is faulted for failing to make information public about the younger Annan.

Investigators probing the UN oil-for-food program in Iraq will criticize UN Secretary-General Kofi Annan, his son and the Swiss company that employed him, but will not accuse the UN chief of corruption, officials said.

A report by the investigators scheduled to be released yesterday was expected to find fault Annan for failing to take aggressive action to deal with possible conflict of interest in awarding a UN oil-for-food contract to Cotecna Inspection SA, which employed his son, Kojo, in Africa, the officials said.

It will also criticize Kojo Annan for concealing information about his work for 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, officials who have seen the report said on condition of anonymity.

The second report by an investigative team led by former US Federal Reserve chairman Paul Volcker is being issued a week after Annan called for the biggest overhaul of the UN in its 60-year history to better tackle the challenges of the 21st century.

It also comes at a time of scandals not only in the oil-for-food program but in UN peacekeeping where sex abuse has been rife, and among senior UN staff who face allegations of sexual harassment and mismanagement.

Volcker's Independent Inquiry Committee will also criticize the secretary-general for failing to detect shortcomings in the UN's internal bureaucracy that allowed problems in the US$64 billion oil-for-food program to continue until 2003 when it was wrapped up after the US-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."

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 -- the exoneration of any involvement in corruption he and his senior staff were hoping for.

But criticism of Annan's management of the UN bureaucracy continues to bubble, and even before the Volcker report was issued, several critics said that he was not the right person to lead the extensive UN reforms, which annan hopes world leaders will adopt at a summit in September.

The oil-for-food program was the largest UN humanitarian aid operation. It ran from 1996 to 2003.

Under the program, former Iraqi president Saddam Hussein's government was allowed to sell limited -- and eventually unlimited -- oil in exchange for humanitarian goods as an exemption from UN 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 UN officials vouchers for Iraqi oil that could then be resold at a profit.

US congressional investigators claim Saddam's regime may have illegally made more than US$21 billion by cheating the oil-for-food program and other sanctions-busting schemes.

Several US lawmakers have previously called for Kofi Annan's resignation.

Senior UN officials insist he has no intention of stepping down, and UN spokesman Fred Eckhard dismissed reports in several newspapers over the weekend 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 UN contract to the company.

The officials said Volcker will state in the report that his investigation of Kojo Annan 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 US$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 last year to prevent him from working for a competitor, but that was only disclosed last November.
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