Annan says he will not resign after oil-for-food probe

Kofi Annan

UNITED NATIONS - Secretary-General Kofi Annan said he will not resign after the oil-for-food report concluded he did not influence contract decisions for a firm that employed his son but faulted the UN chief for conducting a superficial probe of the controversy.

"Hell no!" Annan told a news conference when asked if he would resign, as some lawmakers in the United States, had demanded.

"After so many distressing and untrue allegations have been made against me, this exoneration by the independent inquiry obviously comes as a great relief," Annan said.

The report from an independent inquiry into the UN-administered oil-for-food program, led by former US Federal Reserve Chairman Paul Volcker, focused on Annan and his son, Kojo, who worked for the Swiss firm Cotecna.

Cotecna received a US$10-million-a-year UN contract in late 1998 to certify goods coming into Iraq under the US$67 billion program, which began in late 1996 and ended in 2003. It allowed Iraq, then under UN sanctions, to export oil and import humanitarian goods.

Volcker's report concluded that Cotecna tried to hide its relationship with the younger Annan after the UN contract was signed. Kojo Annan had also misled his father, it said.

In response, Annan acknowledged his son had been less than truthful. "I love my son and I have always expected the highest standards of integrity from him. I am deeply saddened by the evidence to the contrary," Annan said.

Volcker's report also revealed that Iqbal Riza, Annan's chief of staff who retired in December, had allowed his assistant to shred documents in 2004, some relating to the oil-for-food inquiry from 1997 to 1999.

The shredding continued even after Annan issued an order that all oil-for-food documents be preserved, Volcker said, adding that Riza "acted imprudently."

In Washington, the White House voiced cautious support for Annan but spokesman Scott McClellan said, "This is a very serious matter." Portugal immediately issued a statement maintaining its trust in Annan.

Still Volcker was critical of Annan's actions. At his own news conference in a New York hotel, he criticised as "inadequate" Annan's investigation of the Cotecna contract, which lasted about a day.

"We think he should have authorised an independent and thorough investigation," Volcker said. "That was not done."

But on Annan himself, the Volcker report said: "There is no evidence that the selection of Cotecna in 1998 was subject to any affirmative or improper influence of the secretary-general in the bidding or selection process."

As for the younger Annan, the report said, "Significant questions remain about Kojo and his actions during the fall of 1998 as well as the integrity of his business and financial dealings with respect to the oil-for-food program. The committee's investigation of these matters is continuing."

Kojo Annan, 31, and living in Nigeria, issued a statement through his lawyers, saying "I have always maintained that neither myself nor my father exercised any undue influence in the awarding of the UN oil-for-food contract to Cotecna."

The younger Annan was a trainee with Cotecna from late 1995 until the end of 1998, about the time the firm received the UN contract for inspecting goods in Iraq.

He did not immediately reveal that he continued to earn US$2,500 a month from 1999 until February 2004 in return for not joining Cotecna competitors in West Africa. The report also raises questions about Kojo Annan's one-time plans to do business in Iraq with Franco-Lebanese Pierre Mouselli, who at one time lived in Nigeria..

Kojo Annan is the son of the secretary-general and his first wife, Titi Alakija, a Nigerian. The parents divorced shortly after he was born in 1973. Kofi Annan in 1984 married the former Nane Lagergren, a Swedish lawyer and artist.

Volcker will give a final report on the program in mid-year. His previous report accused Benon Sevan, the former head of the program, of steering oil contracts worth US$1.5 million to a friend, an Egyptian trader.

The Saddam Hussein government siphoned nearly US$2 billion from the oil-for-food program, according to a CIA report. It earned an estimated US$8 billion through oil exports not part of the program, which the UN Security Council, including the United States, knew about.

- REUTERS