Annan cleared of any wrongdoing

UNITED NATIONS, Wednesday (Reuters) A key report concluded that Secretary-General Kofi Annan did not influence contract decisions for a firm that employed his son but it faulted the U.N. 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 U.N.-administered oil-for-food program, led by former U.S. Federal Reserve Chairman Paul Volcker, focused on Annan and his son, Kojo, who worked for the Swiss firm Cotecna.

Cotecna received a $10-million-a-year U.N. contract in late 1998 to certify goods coming into Iraq under the $67 billion program, which began in late 1996 and ended in 2003. It allowed Iraq, then under U.N. 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 U.N. 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 criticized as "inadequate" Annan's investigation of the Cotecna contract, which lasted about a day.

"We think he should have authorized 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 U.N. oil-for-food contract to Cotecna."