Annan Responds to Iraq Corruption Charges

.... defends son Kojo
UNITED NATIONS -- Secretary-General Kofi Annan hit back Wednesday at allegations of corruption in the U.N. oil-for-food program, saying the world body had no control over Saddam Hussein's oil smuggling and was being blamed unfairly.

Annan pointed out that all members of the U.N. Security Council were on the committee overseeing the program, yet none had come forward and said "we had a role." Instead, Annan said, all accusations of wrongdoing were being leveled at the U.N. Secretariat which he heads.

"Be that as it may, these allegations are doing damage, and we need to face them sternly and do whatever we can to correct them," he said. "And we are beginning to put out quite a lot of information which I hope will correct some of the misinformation that has been put out."

The United Nations has not released any documentation, but Annan has appointed a three-member panel headed by former U.S. Federal Reserve chairman Paul Volcker to conduct a wide-ranging investigation. The panel has no subpoena authority but is seeking cooperation from governments, regulatory authorities and Iraqi officials.

Annan stressed that he wants "to get to the bottom" of the corruption allegations and would consider lifting the diplomatic immunity of any U.N. staff members "found guilty of wrongdoing."

The allegations of corruption in the oil-for-food program surfaced last January in the Iraqi newspaper Al-Mada and have intensified in recent months, calling into question the U.N.'s credibility and causing what Annan called "a very serious" crisis.

The newspaper had a list of about 270 former government officials, activists, journalists and U.N. officials from more than 46 countries suspected of profiting from Iraqi oil sales that were part of the U.N. program.

The General Accounting Office, the U.S. Congress' investigative arm, estimated in March that Saddam's government pocketed $5.7 billion by smuggling oil to its neighbors and $4.4 billion by extracting kickbacks on otherwise legitimate contracts.

During the seven-year program, Iraq exported $65 billion of oil and some $46 billion of that revenue went to the oil-for-food program.

Annan said some published reports about U.N. involvement were "outrageous and exaggerated" and make it appear that "the Saddam regime had nothing to do with it. They did nothing wrong; it was all the U.N."

On the $5.7 billion that the GAO estimates Saddam pocketed through smuggling, Annan said "there was no way the U.N. could have stopped it" but he suggested the United States and Britain could have.

"We had no mandate to stop oil smuggling," he said. "There was a maritime task force that was supposed to do that. They (the Iraqis) were driving the trucks through northern Iraq to Turkey. The U.S. and the British had planes in the air. We were not there. Why is this all being dumped on the U.N.?"

The maritime force, which included U.S. Navy ships, was responsible for implementing U.N. sanctions imposed on Iraq after its 1990 invasion of Kuwat.

The oil-for-food program, which began in December 1996 and ended in November, was launched to help Iraqis cope with sanctions.

Under its provisions, the former Iraqi regime could sell unlimited quantities of oil provided the money went primarily to buy humanitarian goods and pay reparations to victims of the 1991 Gulf War which liberated Kuwait. Saddam's government decided on the goods it wanted, who should provide them and who could buy Iraqi oil -- but the U.N. committee overseeing sanctions monitored the contracts.

Annan noted that the committee -- which included all 15 council members including the United States, Britain, Russia, China and France -- decided whether to approve contracts or put them on hold.

The United States was responsible for the vast majority of "holds," primarily because of concerns that items could be used in weapons programs.

"Of course, the member states are not coming out saying, we had a role, or we had an oversight responsibility. So all is dumped on the Secretariat," Annan said.

He also denied allegations that his son, Kojo, was involved in the program through the Swiss-based firm, Cotecna Inspection S.A., which was hired by the United Nations to authenticate that the goods actually entering Iraq corresponded to the list of goods approved for import.

Annan said his son joined Cotecna at the age of 22 as a trainee in Geneva before Annan became secretary-general "and then he was assigned to work for them in West Africa, mainly in Nigeria and Ghana."

"Neither he nor I had anything to do with the contracts for Cotecna," Annan said. "That was done in strict accordance with U.N. rules and financial regulations, and these are also part of the issues that the panel ... will look into."

Cotecna put out a statement earlier this month saying Kojo Annan's full-time employment -- which focused entirely on its activities in Nigeria and Ghana -- began in 1995 and ended in December 1997 after which he was retained as a consultant until the end of 1998.

Cotecna said it was selected for the U.N. inspection job on Dec. 31, 1998, had no "commission on fees" as some reports alleged, and "accomplished its limited and technical mission."