UN head refuses to quit after oil-for-food scandal

UN Secretary-General Kofi Annan told the council "the report is critical of me personally, and I accept its criticism".

UNITED NATIONS - The UN secretary general Kofi Annan has apologised for his handling of the oil-for-food corruption scandal but ruled out resignation despite the damaging judgement of an independent investigation.

A year-long probe into the Iraqi oil-for-food programme heaped sharp criticism on Annan, his deputy and the UN Security Council for allowing Saddam Hussein to illegally obtain more than US$10 billion ($14.26 billion).

The programme, which allowed Hussein to sell oil to buy food and choose his own customers, "was a compact with the devil and the devil had means for manipulating the programme to his ends," said Paul Volcker, the former US Federal Reserve chairman, who headed the probe.

Volcker delivered his nearly 1000-page five-volume report to the 15-nation Security Council and told them to institute sweeping management reforms.

The report said a major problem was that no one was in charge of the $64 billion programme -- neither the Security Council, meant to supervise it, nor the UN secretariat headed by Annan. But Annan is not accused of personal gain or influencing contract bidding, which involved a firm that employed his son, Kojo.

Annan told the council "the report is critical of me personally, and I accept its criticism," adding that the findings are "deeply embarrassing to us all" and told reporters that he did not intend to fall on his sword only days before world leaders gather in New York to endorse plans for sweeping reforms.

"I don't anticipate anyone to resign. We are carrying on with our work," Mr Annan said.

He, like Volcker, said member states had to approve some of the sweeping financial controls the United Nations has proposed.

Mr Annan, who had been warned of the charges against him before the council session, said he accepted the criticism that he had not been diligent in investigating his son's involvement with a firm which received a lucrative contract under the US$64bn scheme.

"I deeply regret that," he said.

The report said the former Iraqi president was able to divert US$10 billion under oil-for-food, which began in late 1996 and ended in 2003. Of this, US$1.8 billion was from revenues related to the programme, the Independent Inquiry Committee said.

Another US$8.4 billion came from smuggling oil to Jordan, Syria, Egypt and Turkey, with the knowledge of UN Security Council members, who were to enforce sanctions imposed on Iraq after it invaded Kuwait in 1990.

"The committee's central conclusion is that the United Nations requires stronger executive leadership, thoroughgoing administrative reform and more reliable controls and auditing," the panel said in a statement.

"However, responsibility for what went wrong with the programme cannot be laid exclusively at the door of the (UN) secretariat," the panel said. "Members of the Security Council ... must shoulder their share of the blame in providing uneven and wavering direction in the implementation of the programme."

The Volcker report also faulted Canadian Louise Frechette, the UN deputy secretary-general, whom Annan assigned at one point to oversee the programme.

"The committee finds that the deputy secretary general, apparently uncertain of her role, did not provide the degree of leadership and oversight that the complex programme required," the report said.

The panel also criticised Kojo Annan for trying to lobby UN purchasing officials on behalf of the Swiss firm Cotecna, which received a lucrative contract for Iraq.

The younger Annan also imported a costly Mercedes into Ghana using his father's diplomatic cover to avoid taxes and customs duty. There was no evidence the secretary-general knew about this.

The report also disclosed that Iraq tried to bribe former UN Secretary-General Boutros Boutros-Ghali with over US$1 billion. But it said it had no evidence that Boutros-Ghali, in office in 1996 when the programme was created, had been aware of Iraq's intentions or received any money.

The money was to have been passed through Iraqi-American businessman Samir Vincent and Tongsun Park, a South Korean lobbyist. Both are accused by federal prosecutors of attempting to bribe UN officials.

US Ambassador John Bolton told the Security Council: "There were bribes; there were kickbacks; there was lax oversight from the Secretariat; and some member states turned a blind eye toward this corruption."

But he said the report rejected the notion that "business as usual" at the United Nations is acceptable," adding: "We need to reform the UN in a manner that will prevent another oil-for-food scandal."

Mr Volcker strongly criticised the Security Council for failing to react to reports both of corruption in the programme and of continuing smuggling by Iraq.

Political differences between members on policy towards Iraq "hampered any forceful reaction - or any reaction - to any reports of smuggling," he said.

- REUTERS and INDEPENDENT