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Annan: 'Hell no,' I won't go

From Richard Roth and Phil Hirschkorn

U.N. Secretary-General Kofi Annan.
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United Nations
Kofi Annan

NEW YORK (CNN) -- U.N. Secretary-General Kofi Annan has rejected any possibility he might step aside amid accusations of scandal, defiantly telling a reporter "hell no" when asked if it was time to resign for the good of the world body.

Annan made his comments after investigators probing the now defunct U.N.'s oil-for-food program in Iraq said the secretary-general did not exert any influence on the $10 million annual contract awarded to a Swiss company that employed his son, Kojo.

"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 told reporters at the United Nations.

He said it was not unusual for "problems to arise" in institutions as large as the United Nations.

"You deal with the problem and you draw the lessons and move on," Annan said. "I have lots of work to do, and I'm going to go ahead and do it now."

The investigative committee, led by former U.S. Federal Reserve Board Chairman Paul Volcker, found that Annan did not know in 1998 that the company, Cotecna Inspection, was bidding for the contract to inspect goods going to Iraq under the now-defunct oil-for-food program.

"Based on the record and lack of evidence of impropriety, it is the finding of the committee that Cotecna was awarded the contract in 1998 on the ground that it was the lowest bidder," a statement accompanying the committee's report said.

At a news conference releasing the report Tuesday, Volcker said the committee's findings came after "diligent and extensive research of written and electronic records and intensive interviews with all of those involved."

Cotecna released a statement saying that the interim report proved there was no link between its winning of the contract and the Annan family. The report was the second issued by the committee, with a final one due this (northern hemisphere) summer.

"The committee's report demonstrates clearly what we have been saying all along, that we were awarded this contract fairly, based on the merit of our proposal and on our worldwide leadership position in inspection services," Cotecna CEO Robert Massey said in the statement.

Some U.S. lawmakers have called on Annan to resign, among them Republican Sen. Norm Coleman of Minnesota, who led a congressional investigation into the oil-for-food program.

In addition, several top U.N. officials face allegations of impropriety; a U.N. watchdog agency is investigating sex abuse by U.N. peacekeepers in various missions around the world; and the U.N. mission in Ethiopia and Eritrea is trying to recover an estimated $500,000 in unregulated phone calls by peacekeepers seeking to avoid billing there.

Renewing his calls for Annan to resign, Coleman said Tuesday the findings of the Volcker report supported the results of his investigation that the secretary-general "is responsible for the failed management that resulted in the fraud and abuse."

U.S. State Department spokesman Adam Ereli said Washington supported Annan and expected he would follow up on the findings of the Volcker committee and move forward on the broad reform program he announced for the world body last week.

Report's findings

While the Volcker report cleared Annan of exerting influence in the awarding of the Cotecna contract, it found that son Kojo deliberately tried to conceal his relationship with the company.

"After the media disclosed in January 1999 his relationship with Cotecna, Kojo Annan actively participated in efforts by Cotecna to conceal the true nature of its continuing relationship with him," the statement said.

"He also intentionally deceived the secretary-general about this continuing financial relationship."

It added, "Significant questions remain about Kojo Annan's actions during the fall (northern autumn) 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."

Upon reflecting on the committee's findings regarding his son, the elder Annan said, "I love my son and have always expected the highest standards of integrity from him. I am deeply saddened by the evidence to the contrary that has emerged, and particularly by the fact that my son had failed to cooperate fully with the inquiry.

"I had urged him to cooperate, and I urge him to reconsider his position and cooperate."

Kojo Annan, 31, is one of Annan's two children from his first marriage. The younger Annan has had business interests from Lagos, Nigeria, to London, England, ranging from oil trading and infrastructure development to part ownership of a nightclub.

Cotecna hired the younger Annan before his father became secretary-general but did not disclose his employment to the United Nations when it made the low bid for the Iraq inspection contract. The U.N. contracts committee was unaware of the connection at the time.

Cotecna employs 4,000 people in 100 countries. The U.N. contract represented 10 percent of its revenue. Under the program, Cotecna's job was to inspect goods going to Iraq to ensure they were humanitarian in nature.

The Volcker report said Cotecna has "generally cooperated" with the investigation but that it "has made false statements to the public, the United Nations and the committee by asserting that Kojo Annan had resigned his consultancy" in 1998.

In a statement, Volcker said "this falsehood was maintained into 2004," which was through the time that the company continued to pay Kojo Annan as part of a non-compete agreement.

Volcker also said Cotecna "disguised its continuing relationship with Kojo Annan by routing the payments ... through other companies."

A spokesman for the company reacted angrily to that finding.

"We are outraged at the misleading manner the committee has attempted to present payments to Kojo Annan from 1999 to 2004," Seth Goldschlager told CNN.

"We believe this is a dishonest manner at presenting speculative numbers at a time the committee knows full well Cotecna is financing an audit of five Massey companies."

Kojo Annan's attorneys, Clarissa Amato and John Kelly, said their client "cooperated extensively" with the Volcker committee and they called the report's criticism of him "unfair."

In a statement released by his attorneys, Kojo Annan said, "I deeply regret any embarrassment that the whole Cotecna issue may have caused my father. My father has an excellent reputation and his conduct and integrity has always been impeccable and this report does not alter that. I admire my father greatly."

U.N. also criticized

The committee also criticized the United Nations for not having Cotecna submit a financial statement that would have revealed strains on the firm's financial position at the time.

In addition, the panel said the United Nations did not consider a Swiss criminal investigation of Cotecna CEO Robert Massey into bribery allegations to the family of former Pakistani Prime Minister Benazir Bhutto. No charges were brought against Massey in that probe.

The report found that the office of Kofi Annan's longtime chief of staff, Iqbal Riza, shredded documents related to the oil-for-food program, despite the secretary-general's order to the U.N. staff to preserve such papers.

"The committee does not find persuasive Mr. Riza's suggestion that his ... files were only duplicates of files maintained elsewhere at the United Nations," the report said.

Volcker and his staff questioned Annan on at least three occasions and interviewed his son at least twice.

Annan appointed Volcker last year to lead the probe into misconduct in the $64 billion humanitarian program, which ran from 1996 until the U.S.-led invasion that toppled Iraqi dictator Saddam Hussein in 2003.

Over seven years, 248 companies incorporated in 61 countries bought 3.4 billion barrels of Iraqi crude, but Saddam is accused of extorting billions of dollars from his chosen oil buyers and goods suppliers.

Iraqi revenues, deposited in a U.N.-controlled account at BNP Paribas, were earmarked mainly for food and medicine.

One-fourth of the revenue paid reparations to Kuwait for the 1990 invasion that prompted international sanctions, while the United Nations used 2 percent of the money for administrative costs.

Last month, Volcker reported that the program's director, Benon Sevan, repeatedly solicited oil allocations for a small trading company run by a friend.

Sevan, the subject of a U.S. criminal investigation of the program, has denied the allegations. (Full story)

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