Inquiry Reportedly Faults Annan in Oil-for-Food Program Abuses

Times Staff Writer

Investigators confronted Secretary-General Kofi Annan on Thursday with findings of their probe of the $64-billion Iraqi oil-for-food program, concluding that he bore primary responsibility for mismanagement and faulting him for not acting to halt suspected abuses by contractors and laxity by member states, said diplomats who spoke to Annan after the meeting.

The investigators, led by former Federal Reserve Chairman Paul Volcker, are expected to issue a public report Wednesday about abuses in the relief program. A committee spokesman said it would be at least 700 pages and would also examine the responsibility of Security Council members who knowingly allowed Saddam Hussein to reap billions from smuggling and kickbacks.

Annan’s office refused to comment publicly Thursday on the meeting between the secretary-general and the investigators. Diplomats who talked to Annan afterward, but asked to remain anonymous, said he told them that the investigators had “no smoking gun” or evidence of wrongdoing on his part.


A senior aide to Annan, who also asked to remain anonymous, said, “I very much hope that while it may be a damaging report, it will be a survivable report.

“He does feel that he has not done anything wrong, and that the program should have been much better managed, and that he clearly will take the responsibility for that, unambiguously,” the senior aide said. “But he doesn’t think it is a resigning matter.”

The timing of the report is tricky for the U.N. The report’s release will come a week before Annan will ask world leaders at a U.N. summit to expand the powers of the secretary-general and support ambitious reforms he has proposed for the troubled organization.

Although U.N. officials hoped that the independent inquiry would clear doubts about Annan’s alleged conflict of interest and mismanagement in the oil-for-food program, it is instead likely to raise questions about whether he retains the credibility needed to clean up the organization -- or even to survive the last 16 months of his term as secretary-general.

Congressional critics and others have called for his resignation over the program, and Annan has acknowledged to friends and colleagues, and in an interview with New York magazine, that he had at times considered stepping down early.

But after meeting with Volcker, Annan is feeling “feisty,” and “not depressed,” said two of the people who spoke with him afterward.

Annan returned early from his vacation in Africa on Tuesday to lend support to the reform process, he told reporters. But he primarily came to meet personally with Volcker and respond to the adverse conclusions before the report is made public.

Annan asked Volcker to head the Independent Inquiry Committee last year to look into the perception of conflict of interest on his part and possible corruption by U.N. employees. Next week’s report will be the Volcker committee’s third, with a final chapter expected in October that will list the companies that did business with Hussein through the oil-for-food program.

Volcker’s panel is not the only one investigating the program. Five congressional committees and a federal panel are looking into various aspects of the effort that was designed to help Iraqi citizens weather international sanctions after Hussein’s 1990 invasion of Kuwait. The U.S. attorney’s office of New York’s Southern District has broken ground in cases involving money laundering and bribery, and has charged three people with various criminal counts related to the program, including one U.N. procurement official, Alexander Yakovlev.

An internal U.N. investigation found that Yakovlev had been soliciting bribes from companies bidding for U.N. contracts, and had received nearly $1 million in payments to a secret account in Antigua from U.N. contractors.

He was in charge of the contract that Annan’s son’s company, Cotecna Inspection, ultimately won, though there is no evidence that he received a bribe from the firm. According to his indictment, Yakovlev had offered another company confidential bidding information on another contract, but the company did not win it, and a company spokesman said the firm did not pay him anything.