Europeans back Annan after oil-for-food probe

UNITED NATIONS - European and other nations have rallied behind Secretary-General Kofi Annan even though a new probe of the oil-for-food programme has provided UN critics with fresh ammunition.

A report from an inquiry conducted by Paul Volcker, a former US Federal Reserve chairman, found no evidence that Annan had influenced bidding for a lucrative contract in Iraq for the Swiss firm Cotecna, that employed Annan's son, Kojo.

But Volcker also said that Annan and UN officials were lax in investigating a potential conflict-of-interest and that Annan's former chief of staff and long-time ally shredded possibly relevant documents while the inquiry was underway.

"The priority of the United Nations is now to address the key issue -- which is the summit in September for which we expect and look forward to the leadership of the secretary general," said British Ambassador Emyr Jones Parry.

Jones Parry was referring to a high-level General Assembly session aimed at instituting an overhaul of the world body and setting a timetable for reducing extreme poverty.

European Union nations believed Annan was playing an important leadership role in the world body, "notably with regard to the process of UN reform," said Marc Bichler, deputy ambassador of Luxembourg, which holds the EU presidency.

But he said the EU expected a tightening of the UN regulations, particularly contract procurement procedures, to avoid "comparable shortcomings in the future. "

At issue is the US$67 ($95.60) billion, oil-for-food programme which allowed the Iraqi government under Saddam Hussein to sell oil to finance purchases of civilian goods for its people living under UN sanctions.

The programme began in December 1996 and ended after the US-led invasion in 2003. Iraq then released documents showing bribes, kickbacks and oil smuggling. Some US$2 billion was within the programme and another US$8 billion was earned from oil exports outside of the programme, according to a CIA report.

Still, one key European diplomat said details in the Volcker report were more troubling than its conclusions even though no smoking gun had emerged.

The Volcker report probed the relationship between the secretary-general and Cotecna which was awarded a US$10 million-a-year contract to verify goods imported to Iraq. The company employed Kojo Annan, now a businessman in Nigeria.

The report said Cotecna and the younger Annan had misled the secretary-general on Kojo's ties to the company before and after the contract was awarded.

It also traced long-standing ties between the Annan family and some Cotecna officials as well as meetings Annan had had with the firm.

US Sen. Norm Coleman, a Minnesota Republican and major critic of the United Nations, again called for Annan's departure, although there is little support for this.

US State Department spokesman Adam Ereli said, "We continue to support him in his work." But he noted some of the report's findings were "troubling, particularly the failure to recognise the appearance of a conflict of interest. "

Security Council permanent member China said it was time for the issue to be closed. "We have important work to do in the days ahead," its UN ambassador Wang Guangya said.

Volcker's first report in January accused Benon Sevan, the head of the UN programme of steering some US$1.5 million worth of oil contracts to an Egyptian acquaintance.

Volcker will issue a final report in June and this time will include actions by the 15-member Security Council, which was aware and turned a blind eye to Saddam's selling of oil outside of the UN programme.

- REUTERS