Annan in oil probe spotlight

Kofi Annan

UNITED NATIONS - U.N. Secretary-General Kofi Annan is expected to be faulted today in a key report for ignoring a possible conflict of interest involving his son, but not accused of any personal wrongdoing.

A independent inquiry, led by Paul Volcker, the former U.S. Federal Reserve chairman, is releasing another interim report on the oil-for-food program, this time on the secretary-general and son, Kojo, who worked for the Swiss firm Cotecna.

The company received a large U.N. contract in January 1999 to inspect goods in Iraq.

"What we have been saying from beginning is that this contract for Cotecna was issued according to standard U.N. procurement practices," said U.N. spokesman Fred Eckhard.

"The secretary-general's son's connection with the company had no impact on the awarding of the contract," he added. "The secretary-general expects to be cleared of any wrongdoing."

Still, news reports suggest Volcker will fault Annan for failing to be sensitive to his son's activities and allowing a perception of conflict of interest.

"The report will explore in some detail not only Kojo Annan's relationship with Cotecna, but also his relationship with his father," according to one person familiar with the report quoted in The New York Times. "It will not be pleasant reading for them."

Annan, himself, appeared calm. Asked if he were depressed as some news reports suggested, Annan laughed and told Reuters, "With all the activities and things we are doing and the pace I am keeping, do you think I have time for that?"

Eckhard also announced on the eve of the report that Benon Sevan, the former head of the program would not be paid legal fees as the United Nations originally had intended. Sevan was accused in a report by Volcker on February 3 of steering oil contracts worth $1.5 million (800,000 pounds) to a friend, an Egyptian trader.

KOJO'S EARNINGS

The younger Annan, who was a trainee with Cotecna from late 1995 until the end of 1998, about a month before the firm received the U.N. contract for inspecting goods in Iraq.

Kojo Annan did not immediately reveal that he continued to earn $2,500 a month from 1999 until February 2004 in return for not joining Cotecna competitors in West Africa.

Annan said he was misinformed of his son's activities.

A Cotecna spokesman told Reuters last week the Volcker inquiry had requested information on Kojo Annan's earnings and expenses and the firm had hired an auditor to scrutinise payments made to him. He said payments to the younger Annan from 1996 to 2004 were for work related to West Africa and not for Iraq.

Under the oil-for-food program, former Iraqi President Saddam Hussein was allowed to sell oil to buy civilian goods to ease the impact of 1990 sanctions on ordinary Iraqis.

Since the end of the 2003 war, Iraq has released lists of oil vouchers and kickbacks by the Saddam Hussein government. The lists are a who's who of political groups and individuals from whom the former Iraqi government wanted to buy influence while under U.N. sanctions.

The Saddam government siphoned nearly $2 billion in kickbacks from companies conducting business under the program, according to a U.S. report. The regime also made an estimated $8 billion through oil exports outside of the program which the U.N. Security Council, including the United States, knew about.

- REUTERS