Head of oil, food probe to fault Annan, UN Council

By Evelyn Leopold

UNITED NATIONS (Reuters) – The head of a year-long
investigation into Iraqi oil-for-food program intends to fault
both Secretary-General Kofi Annan and members of the U.N.
Security Council on Wednesday for allowing Saddam Hussein to
corrupt the operation for personal gain.

Paul Volcker, the former U.S. Federal Reserve chairman,
addresses and delivers his 1,000-page report to the 15-nation
Security Council after releasing its preface a day earlier.

The report said a major problem was that no one was in
charge — neither the Security Council, meant to supervise the
program, nor the U.N. secretariat headed by Annan, who is not
accused of any personal gain.

“When things went awry — and they surely did — when
troublesome conflicts arose between political objectives and
administrative effectiveness, decisions were delayed, bungled
or simply shunned,” said the preface.

Consequently, ex-President Saddam Hussein was able to
exploit the program and its “wholesale corruption” among
private companies, which will be detailed in an October report.

The report’s timing could not be worse, before Annan
presides over the largest world summit ever on September 14-16,
a meeting of the U.N. General Assembly.

One proposal before the world leaders would give the
secretary-general more power to move around staff and hire
outside auditors, which Volcker’s Independent Inquiry Committee
also recommended. But some developing nations are loathe to
give up power in the General Assembly, which controls the
budget and where they have a majority.

The panel was established by Annan a year ago to probe
corruption into the now-defunct $64 billion program, which was
aimed at easing the impact of sanctions imposed in mid-1990
after Baghdad’s troops invaded Kuwait.

Iraq was allowed to sell oil to pay for humanitarian goods
and was able to choose its own contractors. In a campaign to
end sanctions, Saddam distributed bribes in the form of oil
vouchers to government officials, journalists and political
parties around the world.

While the program provided a lifeline for some 90 percent
of the population, it was also marked by “illicit, unethical
and corrupt behavior” within the United Nations and among
private companies which paid kickbacks, the report says.

Annan is not accused of personal corruption or influencing
the award of a lucrative contract to the Swiss firm Cotecna,
which employed his 32-year old son, Kojo.

But the inquiry, which has issued three previous interim
reports, is expected to accuse the younger Annan of using his
father’s name for personal gain, including diplomatic cover to
purchase a Mercedes without paying taxes.

Boutros Boutros-Ghali, Annan’s predecessor, who presided
over the creation of the program in 1996, is also expected to
be mentioned again. An earlier Volcker report detailed gains by
his relatives in procuring oil contracts with some of the
profits going to the U.N. head of the program.

The report concluded that the United Nations urgently
required “stronger executive leadership, thoroughgoing
administrative reform and more reliable controls and auditing.”

“At stake is the U.N. ability to respond promptly and
effectively to the responsibilities thrust upon it by the
realities of a turbulent and often violent world,” the preface
said. “It is precisely those qualities that too often were
absent in the administration of the oil-for-food program.”