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UN Performance Problems UN Management Accountability Struggles Where is the Rule of Law? Inadequate UN Oversight Recent Developments
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Mr. Annan's supporters
-- UN Member State missions, foreign ministries, and international affairs
pundits -- leaped into the fray in early 2005. They emphasized their
belief in his integrity, confidence in his leadership, and their
continuing support. The pundits who attacked the expanding oil-for-food
findings and allegations on the newspaper "op/ed" pages seemed to
concentrate on three arguments: (a) the whole blowup was just a personal
attack on Mr. Annan from US right-wing politicians, (b) attention should
be focused instead on Mr. Annan's grand new proposals for UN reform in
2005 (ignoring the failure of his preceding management accountability
reform efforts), and (c) asserting that the oil-for-food program was run
by the Security Council, not by the Secretariat and certainly not by Mr.
Annan, who had other things to do. IO Watch believes that
the pundits need to do their homework, not only in considering prior
reports and analyses cited throughout this section and this entire
archive, but considering as well the many other sources diligently
investigating and following this topic in detail. Instead of charges of
political bickering, or future UN reform ideas, the focus of this material
is quite properly on accountability and sanctions for gross mismanagement
of the oil-for-food programme in the UN Secretariat, in which Mr. Annan
serves as chief administrative officer, and on his own direct involvement
in, and responsibilities for, the program. The best analysis of
the Secretariat role, which anyone judging the oil-for-food scandal should
read, was made by Claudia Rosett in April 2004. She laid out the central
Secretariat involvement in the oil-for-food program, versus the scanty
Security Council efforts (devoted mostly to US and UK efforts to block
"dual use" items), and emphasized that "
Oil-for-Food is not simply a
saga of one UN program gone wrong.
It is also the tale of a systematic failure on the part of what is
grandly called the international community. Oil-for food tainted almost
everything it touched. It was
such a kaleidoscope of corruption as to defy easy summary, let alone
concentration on the main issues.
But let us try." Claudia Rosett, "The oil-for-food scam: What did Kofi Annan know, and when did he know it?", Commentary, May 2004, pp. 15-22, available in full at http://www.commentarymagazine.com/SpecialArticle.asp?article=A11705017_1 , p. 1. Ms. Rosett traced and
analyzed the Secretariat's central operational role in detail. The UN reserved clear-cut
oversight and contract-rejection authority. The Secretariat took a very
handsome commission of 2.2 percent -- some $1.4 billion --
of Saddam's oil money for its own administrative overhead costs for the
humanitarian program. Mr. Annan was directly involved in 1996 in
negotiating the basic terms of the oil sales, and he later was given
direct power of approval for contracts. The nine UN agencies involved
employed some 3,600 Iraqis and 900 international staff working in Iraq
under the Oil-For-Food office, plus another 100 in New York.
Claudia Rosett, "The oil-for-food scam: What did Kofi Annan know,
and when did he know it?, Commentary, May 2004, Special article, (see above, pp.
2-3.) The Secretariat
subsequently pushed for aggressive expansion of the program (and thereby
its administrative "cut" as well). It kept the contract records and books,
controlled the bank accounts, authorized the release of funds, and audited
the program [carried out by the OIOS]. In November 2003, when the
programme shut down, the Oil-for-food programme office lauded itself as
"one of the most efficient UN programs". Mr. Annan chimed in with his own
praise for the staff and "particularly to its executive director, Benon
Sevan". And the
then-president of the UN Security Council offered further praise for "the
exceptionally important role of the program in providing humanitarian
assistance to the people of Iraq." Claudia Rosett, "The oil-for-food scam: What did Kofi Annan know, and when did he know it?", Commentary, May 2004, Special article, (see above, pp.3-5, 7, 9.)
Meanwhile, as all the
accusations, revelations, and defenses were mounting in New York and
Washington, it should not be forgotten that the flow of funds issues from
the oil-for-food programme and the struggles of the Iraqi people for food
continued on, as illustrated by the following two
stories. "
More than half a billion
dollars in cash
part of $1.4 billion in Iraqi oil reserves [was] paid in
cash by the US-led occupation authority to the Kurds in June 2004.
[It] is currently held at a
Kurdish bank in Switzerland.
The Coalition Provisional
Authority had shipped the money to the Kurds in three helicopters
It would have weighed 14 tons
and represented the equivalent of around six months regular financing for
the Kurdish regional government.
The money came from the Development
Fund for Iraq, set up by the United Nations following the war for use in
rebuilding the country.
The Kurds have refused to give
UN-mandated auditors access to their records, but say they have not spent
any of the money.
No one has alleged that the
transactions being mooted are improper. But the lack of transparency has
fueled questions about that payment, as well as billions of dollars handed
out by the CPA in the weeks before the handover [of power to the interim
Iraqi government.]" Thomas Catan,
"Oil-for-food funds: Kurds try to invest 14 tons of cash", Financial
Times (UK), December 10, 2004.
"Iraq's trade ministry has
transferred hundreds of millions of dollars earmarked for the country's
food rations into three Lebanese banks, raising concern about lack of
transparency. The ministry of trade is trying to
revive [the] system as under Saddam Hussein, with the same people'
said
a senior Iraqi finance official
The transfers come amid fears of
food shortages as the country prepares for next month's polls.
Iraq's trade minister said the
Trade Bank was taking too long to issue letters of credit for food
purchases before the holy month of Ramadan.
'The only reason behind the
transfer was time', [he] insisted
'[The Trade Bank had only] a manual
system, not an electronic [transfer] system.'
[The finance official, however,
said] 'Now the transparency has gone.' Food shortages could fuel
discontent among a population already angered by severe shortages of
electricity, petrol and water
Iraq's trade ministry resumed
responsibility for the supply of food rations two months ago, after the
UN's World Food Programme ended final food shipments in October.
[The trade minister] said the
claims of lack of transparency were a smear campaign from 'political
parties who have come after the war.'" Nicolas Pelham, "Iraqi
funds for food sent to Lebanese banks", Financial Times (UK),
December 29, 2004. In January 2005, however,
the focus returned to the UN in New York, as the Volcker group publicly
released the set of OIOS audits of the oil-for-food programme, and the
Volcker group then released its preliminary findings. The Secretariat
first responded with some aggressive "spin", but also some promises of
changes to come, particularly because the new material highlighted very
serious criticisms of the UN audits and weak Secretariat follow-up actions
on them. "United Nations officials today
welcomed initial findings by [the Volcker probe] into the UN Oil-for-Food
programme in Iraq, acknowledging deficiencies
and pledging to revamp the
world body's current overall management
structure. [UN spokesman Stephane Dujarric
told a press briefing that the preliminary analysis]
'is just one step
in the
inquiry which the Secretary-General initiated, and which
continues to enjoy his full support and cooperation
' 'What this initial briefing from
the Committee does show is that there was a dynamic auditing process
generated by the UN itself, as well as the audits of external auditors
' He noted that all audits
were conducted in accordance with internationally recognized standards
[and that] 'We ourselves are
already focused on issues of management and accountability
in a critical
review
which will lead to a broad overhaul of the UN's management
structure and systems
' Mr. Dujarric pointed out that the
Oil-for-Food programme 'did fulfil its main objective by providing
humanitarian relief to 27 million Iraqis
' [He] stressed that 'the audits that were released today are just one snapshot of the programme. they are part of a whole process.'" "UN undertaking
management review in response to early findings I Oil-for-Food probe",
UN News Service, 10 January 2005. "The UN failed properly to oversee
contractors hired to inspect Iraq's multi-billion dollar oil-for-food
programme, according to
fifty-six audits conducted over several years
[to be] released today by the [Volcker group.]
Mr. Volcker has said the audits
contain 'no flaming red flags.'
But they do raise important
questions over the way in which the United Nations managed the programme
The UN claims the audits'
existence demonstrate there was substantial oversight of the oil-for-food
programme, but it is unclear to what extent their advice was
heeded. According to Associated
Press, two
audits examined irregularities,
including overcharging
by two companies that were hired to monitor oil sales and the import of
humanitarian goods
while another detailed financial mismanagement by a
United Nations agency administering humanitarian
aid. The Volcker committee's own
preliminary report is scheduled for release at the end of January." Mark Turner, "Internal audits may increase pressure on UN to reform its management", Financial Times (UK), January 10, 2005. 'According to an early sampling of
10 [UN audit reports on oil-for-food]
the UN Office of the Iraq Program
[OIP], which was led by Benon Sevan
allowed major contractors to
overcharge the United Nations and to understaff [monitoring] posts at ports and
borders
The audits reviewed
identify
problems with all three of the program's main contractors hired to inspect
transactions
The United Nations, however,
denied allegations that the audits show that the United Nations did not
adequately monitor the program.
Still
congressional
investigators
say [the audits] reinforce questions about [whether] poor
stewardship by the United Nations played a major role in widespread
corruption in the administration of sanctions against
Iraq. The reports cite many accounting
and operational lapses within the [OIP]. The auditors write that Sevan's
office permitted its own employees to lose money and thousands of dollars'
worth of equipment in the field, and allowed its contractors to overcharge
the United Nations and to understaff critical inspection posts
One congressional investigator who
has examined [most of] the documents said it was clear that Sevan's office
failed to supervise the program's inspections. 'They did not do their job', he
said.'" Judith Miller, "UN
audits fault running of Iraq oil-for-food program", International
Herald Tribune, January 10, 2005. "[The Volcker commission's 36-page
"provisional' assessment of UN auditors' performance says they]
did not
adequately monitor its giant oil-for-food program in Iraq and that in some
cases UN officials ignored recommendations deemed crucial by the auditors.
The audits make clear that
many of the deficiencies were known in the late 1990s, at a time when
indications of corruption of the program by Saddam Hussein and others were
reaching the UN.
The briefing paper chronicles
numerous shortcomings in the Iraq auditors' activities. [It cites]
the auditors' failure
to monitor in depth the New York headquarters of the office that
administered the program, where nearly 40 percent of the $1 billion of the
program's administration costs were spent. In addition, the commission noted,
the auditors failed to monitor contracts for the oil sales
or those for
the purchase of goods
to ease the debilitating effect of sanctions on
Iraqis. Nor did the auditors
examine the letters of credit issued by the program's major banker
The program, the commission said,
suffered from a 'chronic shortage' of auditors assigned to monitor the
UN's largest aid program, financed through 2.2 percent of Iraq's oil
revenue." Judith Miller, "Oil-for-food
auditors failed", International Herald
Tribune,
January 11, 2005. "[The Volcker preliminary report]
has sharply criticized the United Nations for insufficiently auditing
operations [of the oil-for-food program, especially]
at its New York
headquarters. 'There were no examinations of the
oil and humanitarian contracts
during the OFFP.
Oil contacts were not examined
despite the fact that UN officials had contract-approval
responsibilities.' It was also 'unclear' why the
audits
'focused on areas and operations peripheral to or
away from,
headquarters operations of the OIP.' Even where audits of the programme
were done, there was often no follow-up.
The UN has explained many of the
programme's problems in terms of political games between powerful
countries, but the audits reveal that the UN secretariat itself failed to
exert necessary oversight. The report said more comprehensive
monitoring could have deterred the surcharge scheme on Iraqi oil
contracts,
as well as undercutting the Iraqi government's kickback
scheme for goods purchases.
[It found]
no examination of the
processing of letters of credit by the
bank that handled the
oil-for-food account, 'even though UN officials were overseeing the work
of the BNP and had approval roles in oil sales and payments to
vendors." Mark Turner, "UN
criticized by Iraq oil-for-food inquiry", Financial Times (UK),
January 11, 2005. These very sharp
criticisms did indeed mobilize the Secretariat into action, and the
oil-for-food programma may even possibly, maybe, somehow, some time, serve
as the key catalyst to bring real management accountability to the UN. Mr.
Annan swiftly appointed a new chief of staff, who made some dynamic
commitments. "Can Kofi Annan survive? The secretary-general of the
United Nations has just finished what he himself admits was an annus
horribilis for his organization.
Now an American-led campaign to unseat him is probably closer to
its goal than ever.
Although Mr. Annan is unlikely
to be directly implicated in any personal corruption [in the UN's
much-criticised oil-for-food programme in Iraq], some of his staff could
well be. As the overall boss,
he could be culpable of negligence at least.
More troubling could be his son's
links to Cotecna, a Swiss-based company that monitored imports of
humanitarian aid into Iraq.
Meanwhile,
there are grumbles
from America about the UN's alleged mishandling of relief for the tsunami
disaster. Wrangles [continue]
about the UN's role in Darfur, [and] charges of rape and sexual abuse of
children by UN peacekeepers in Congo
This week [Mr. Annan] announced
that Mark Malloch Brown, the media-savvy head of the [UNDP]
is to take
over as his chief of staff
But he will need to draw on all Mr. Malloch
Brown's presentational skills if he is to mount an effective defense to
the Volcker report." "Kofi creamed: The
secretary-general is under increasing pressure to quit", The
Economist, January 8th, 2005, pp. 44-45. "Mark Malloch Brown has spent the
past few days hopping from one disaster-struck region in Asia to the
next. Meanwhile, [he]
is
also charged with seeing the United Nations through one of the most trying
periods in its 59-year history.
Plagued by allegations of corruption, inefficiency and even
irrelevance, the world body will need urgent attention
'The United Nations needs to
take a good hard look at itself and go through a series of management
reforms to make ourselves more effective.
I think people acknowledge the
UNDP is a very successful example of U.N. reform.
[Mr. Annan] made it clear in
appointing me
that it was that kind of management turnaround success
[that we had] at UNDP
that he wants to see brought into the United
Nations proper. And the
emphasis
on communications.
We will see if we can repeat the trick at
the United Nations.
Now
the critics are a lot
tougher and meaner, and the standard of the bar set a lot higher. I know my lines, I know the part,
and we'll see what the critics have to say in the
morning." "The last word: Mark
Malloch Brown", Newsweek International, January 17,
2005.
"The man appointed to oversee a
management shake-up at the United Nations has warned that it must brace
itself for wide-ranging reform
'The crisis is still
building,' [Mark] Malloch
Brown said. 'It's very hard after [last] week's revelations to believe
there isn't going to be some pretty tough stuff on management.'
Paul [Volcker's group] last week
criticized the UN for its limited response to internal audits showing
irregularities in the $65 billion [Iraq oil-for-food] programme.
Mr. Malloch Brown also warned
that it was no longer only the institution's traditional, conservative
critics that were calling for a shake-up. Mr. Volcker also claimed the
volume of allegations surrounding the former [head of the Iraq] programme,
Benon Sevan, suggested there must have been some 'monkey
business.' At the end of January Mr. Volcker
will issue his preliminary findings.
'That may be a transition point', Mr. Malloch Brown said
'It should be a mainstream
preoccupation of every government share holder of the UN.'
,,, A reshuffle of Mr. Annan's cabinet
would take place within six weeks, maybe sooner, he said.
The management shuffle would be
followed by 'human accountability' reforms addressing other recent
scandals." Mark Turner, "UN
warned to get ready for sweeping reforms", Financial Times (UK),
January 17, 2005. In early February 2005
the Volcker investigative group released its full preliminary report on
the Secretariat's oil-for-food programme, and it contained more bad news
for the UN. Mr. Annan
responded dutifully with promises to take action against wrongdoers and
pursue renewed management reforms. "[The Volcker panel interim
report]
investigating the [UN] oil-for-food program in Iraq severely
criticizes its director and depicts the program as 'tainted' for failing
to follow the organization's own procedures. In an essay Thursday in The
Wall Street Journal, Volcker
said the report
. accused Benon Sevan,
the Cypriot who had headed what was once the world body's largest
humanitarian effort, of
'irreconcilable conflict of interest.'
An official [said that the report]
also criticized
Joseph Stephanides, a senior official on the Security
Council staff, for failing to ensure that the organization's own rules for
buying oil, selling goods and selecting contractors were followed.
In his essay, Volcker said that
'The findings do not make for
pleasant reading'
The interim report concluded
that the auditing system was 'underfunded and undermanned' and hence,
'unable to meet effectively the challenge posed by a really unique,
massive and complex program of humanitarian assistance.'
. The auditing system
lacked
'clear reporting lines and the management responsiveness critical to
achieving a fully effective auditing
process.' [Further, he wrote,] the commission found what he called 'a clear lapse from disciplined judgement.'" Judith Miller, "Panel calls oil-for-food program 'tainted'", International Herald Tribune, February 4, 2005. "Reaffirming his pledge to act
resolutely on any findings of staff misconduct in connection with the
United Nations Oil-for-Food programme for Iraq, Secretary-General Kofi
Annan today announced
disciplinary proceedings against officials involved in the operation and
broader management measures in response to the [release of the Volcker
panel report on ]
the
management of the now-defunct relief effort. 'Should any findings of the
Inquiry give rise to criminal charges, the United Nations will cooperate
with national law enforcement authorities pursuing those charges, and
I
will waive the diplomatic immunity of the staff member concerned,' Mr.
Annan said in the statement
The statement noted the [Volcker
panel's] intention to publish a further interim report dealing with [his
son Kojo's involvement, which Mr. Annan awaited]
'with a clear conscience'
'
[Spokesman Mark] Malloch Brown
acknowledged that 'we're dealing with critical and vital breakdowns in the
management of the UN'
[On the inadequate UN auditing
process, he stated that] 'we'll have to look again at what we can do to
strengthen the external independence of audit, to strengthen the assurance
that it will have the resources it needs to do the task'
" "Acting on Oil-for-Food report, Annan takes disciplinary action, further management steps", UN News Service, 3 February 2005.
However, some would-be UN
whistle-blowers also called into question whether the true story of the
oil-for-food programme scandals will ever be told in a UN that suppresses
their efforts. "Two lawyers for U.N.
whistle-blowers urged the United Nations on Wednesday to protect staffers
who want to disclose corruption at the world body, including the
oil-for-food program for Iraq. One of the lawyers said
'five or six' U.N. employees including a high-level employee had
contacted him for advice on how to reveal evidence of wrongdoing in [that]
programme without jeopardizing their careers.
Andre Sirois -- himself a U.N.
staff member and former whistle-blower --- said
'In one case it was something big,
that definitely would make the front page
' But based on his advice,
none of [them]
have gone public, he said. 'I
know them. They won't. They are very quiet and under a
lot of stress.'
While U.N. rules call for
wrongdoers to be punished, they do nothing to shield staff members from
reprisals when
they come forward with evidence, [Tom] Devine and Sirois
said." Irwin Arief, "Lawyers
call on U.N. to shield whistle-blowers", Reuters, December 15,
2004. [emphasis
added.] [Note: For more on
this grave problem, see also the subsection on Suppressed whistle-blowers
.] During February and
March 2005, further troubling aspects of the oil-for-food programme
continued to emerge. "Iraq said on Friday that it
wanted its money back from the United Nations oil-for-food program as
Secretary General Kofi Annan vowed to get to the bottom of wrongdoing by
UN employees. Iraq's ambassador to the United
Nations, Samir Samaidaie, said that 'huge sums of money which should have
served the needs of the Iraqi people who were suffering at that time -- a
lot of these resources -- were squandered and
misspent.' Iraq, he said, should at minimum
not have to pay for the independent investigation set up by the United
Nations from remaining oil-for-food funds. The inquiry's panel has spent $30
million so far, with the approval of the Security
Council. We are as determined as everyone
to get to the bottom of this," Annan [has] said. 'We do not want this shadow to
hang over the UN.' The [first interim report by the
Volcker panel]
showed that if the program were audited more thoroughly,
it might have uncovered the cheating by Saddam Hussein's
government." "Iraq seeks money back from relief program", Reuters in the International Herald Tribune , February 5-6, 2005.
"The Senate subcommittee on
investigations says it has documents showing that the former head of the
United Nations oil-for-food aid program [Benon Sevan] may have made as
much as $1.2 million from illegal oil shipments by Iraq
[and] might have
violated U.S. laws banning the use of mail or telephones for fraudulent
purposes
as well as criminal conspiracy laws
The Senate investigators
[also]
said it was 'troublesome' that
[Kojo Annan] did not account for his
actions during a two-week business trip to New York in September 1998,
before Cotecna's oil-for-food contract was announced. He had filed detailed trip reports
for previous business travel, they said.
In documents distributed Monday,
Kojo Annan told Cotecna's chief executive months before the awarding of
the contract that he had 'put in place a machinery' in New York that would
be of a 'global nature' and would 'assist in development of new contracts
for the future.' The investigators said that
neither the company nor Annan's son, whom they interviewed in London on
Friday, could explain what he meant by that. Both Cotecna and Annan have denied
any wrongdoing or conflict of interest
" Judith
Miller, "New oil-for-food allegations", International Herald
Tribune, February 16, 2005.
"A former U.N. official who was
fired after blowing the whistle on his superiors and accusing them of
'flagrant mishandling' of the Oil-for-Food program will be the star
witness at a ,,, [US congressional hearing
tomorrow.] "Rehan Mullick served
[in the UN
humanitarian coordinator's office] in Baghdad from 2000-2001, during the
height of the alleged corruption that occurred in the Oil-for-Food
program.
He claimed he repeatedly warned
his supervisors in Baghdad and later in New York that the United Nations
had no way to properly measure the success of the delivery of humanitarian
goods
that Saddam was diverting the goods to other uses, including for
the Iraqi military
[and] that wives and children of senior Baath Party
officials and intelligence agents got much-sought-after jobs at the United
Nations and managed to get control of and manipulate the data base that
tracked delivery of humanitarian goods.
He says he was repeatedly demoted
until his job was finally terminated by the United Nations in 2001.
[A UN spokesman said]
. a
blistering 10-page report that Mullick delivered to top officials in
Manhattan days before he was terminated had been forwarded to the
[Volcker commission]
" "U.N. whistleblower to testify on Oil-for-Food", Fox News, March 16, 2005. [Note: This article is one of a set of Fox News (US) articles, found at www.foxnews.com , on the evolving UN oil-for-food problems and the related US federal investigations and multiple congressional hearings that are underway on this topic in Washington, D.C. They include, for instance "UN chief no stranger to controversy", Fox News, February 13, 2005, and George Russell and Claudia Rosett, "Annan's #2 blocks Oil-for-Food scrutiny," Fox News, March 02, 2005.] "Leading members of the United
Nations Security Council yesterday demanded to know why the UN secretariat
had offered to use Iraqi oil revenues to pay the legal fees of Benon
Sevan, the disgraced former head of Iraq's oil-for-food
programme. The UN said on Tuesday that it had
promised to pay Mr. Sevan reasonable legal fees to ensure his cooperation
with the Volcker Commission
[and] proposed to cover the costs from a
special account funded by Iraqi oil revenues to administer the oil-for-food
programme. Feisal Istrabadi, Iraq's
ambassador to the UN, expressed outrage. 'The idea that Iraqi state assets
are being used to defray the legal fees of someone alleged to have stolen
money from the people of Iraq is shameful. This is like a bank employee
accused of stealing funds, and requiring the depositor to pay his legal
fees.
'When I saw that I thought,
'That's not possible', said another diplomat. 'Why should the Iraqi people pay
for that? It's dreadful, the
UN is making one mistake after another.' The disclosures are seen as a
further blow
[before next week's report] assessing whether Kojo Annan
used his family connections to obtain oil-for-food inspection
contracts." Mark Turner, "Fury at UN plan to pay legal fee from Iraq revenue," Financial Times (UK), March 24, 2005. In late March, the
second interim report of the Volcker group appeared, but it did not do
much to resolve the major controversies and charges surrounding the
oil-for-food programme. "An interim report from the
[Volcker inquiry]
is likely to criticize [Secretary General] Kofi Annan
for failing to perceive the appearance of a conflict of interest posed by
his son's employment by a program contractor. It will also say that the son,
Kojo, was paid more than twice the compensation the company had previously
long acknowledged.
The report will add to the
atmosphere of crisis that is buffeting the United Nations at a moment when
it is making senior staff changes and proposing reforms designed to
forestall a repetition of the abuses that have drawn the attention of five
U.N. congressional committees as well as calls for Annan to step down
before his term is completed at the end of
2006. But attention has already shifted
back to the institution's oil-for-food problems.
[A Cotecna spokesman
said Friday it] had told the Volcker commission that it paid [Kojo Annan]
at least $366,000
during the 1996 to 2004 period he received
payments.
The new total was
provided after
[two newspapers] jointly reported on Wednesday that Kojo
Annan had been paid at least $300,000
[Volcker's final report is] due
this summer." Warren Hoge and Judith Miller, "UN leader faces criticism in independent report: Annan faulted over activities of his son", International Herald Tribune, March 28, 2005. "After a nearly year-long inquiry,
[the Volcker inquiry] generally absolved Kofi Annan of involvement in the
alleged improprieties that swirled around the oil-for-food program
But it pointed out that Cotecna's
chief executive, Robert Massey, was indicted in June 1998 by a Swiss
magistrate in connection with an investigation into alleged illicit
payments by Cotecna to former Pakistan prime minister Benazir Bhutto
[The committee suggested the UN should have considered this] when it
awarded Cotecna the contract in the first place.
The panel concluded that Cotecna
'generally has cooperated' with the investigation, but said the company
'has made false statements to the public, the United Nations and the
committee'
[and] 'disguised its continuing relationship with Kojo Annan'
by routing payments to him through other companies from March 1999 until
February 2004." Colum
Lynch and William Brannigan, "U.N. report spares Annan", Washington
Post, March 29, 2005.
"[The Volcker inquiry's second
interim report]
concluded Tuesday that Secretary-General Kofi Annan had
not interfered in the awarding of a contract to a company that employed
his son, but
said an
investigation initiated by Annan himself
was inadequate and the case
should have been referred to the UN monitoring agency for an independent
investigation. As for the younger Annan, the
report said he 'intentionally deceived the Secretary General'
[and that]
'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.' [Kofi] Annan claimed vindication
Tuesday. 'As I had always hoped and firmly
believed, the inquiry has cleared me of any wrongdoing,' especially on the
key issue of awarding a contract to a firm that employed his son, he said
in a statement. The Volcker report [comes after]
allegations of sex abuse by UN peacekeepers and sexual harassment and
mismanagement by senior UN staff
and Mr. Annan's call for the biggest
overhaul of the United Nations in its 60-year
history." "UN chief cleared of aiding son on contract: But Annan is faulted on his inquiry into oil-for-food program", from news reports, International Herald Tribune, March 30, 2005. [Interestingly, the
above article on the UN appeared on the front page of the International
Herald Tribune right next to another article on severe retaliatory
action being imposed on senior corporate officials for mismanagement. The two articles provide a clear
contrast on the "rule of law" issues that are central
to this IO Watch website -- namely the immunity maintained by
international organization senior officials outside the rule of law and
conducting "independent" self-inquiries into major operational scandals,
versus corporate officials subject to severe civil and criminal
prosecutions and damaged organizational reputations in the same situation.
"
After the collapse of Enron
and other companies
corporations and their boards are adopting
zero-tolerance policies and increasingly holding their employees to lofty
standards of business and personal behavior. The result is a wave of abrupt
firings as corporations move to stop perceived breaches of ethics by their
employees that could result in law enforcement action, or public relations
disasters.
The seemingly frantic reach for
the moral high ground is driven as much by self-interest as by any attempt
at righteousness, now that boards and chief executives have seen how
public scandals can torpedo stock prices, alienate customers and end
careers. 'There is a new kind of
puritanism' said Marjorie Kelly, the editor of Business Ethics
magazine, replacing what Kelly said was an era of 'arrogance and
ignorance, an attitude that boys will be
boys.'
The reaction has been most severe
on Wall Street, where investment banks, mutual funds and insurers have
felt the sting of legal prosecution for ethical lapses most acutely."
Landon Thomas Jr., "Nervous about ethics, firms are fast to fire", International Herald Tribune, March 30, 2005. [Note: IO Watch finds nothing "frantic" in the situation at the UN, where, other than some crowded press conferences, the senior "old boys" of the Secretariat continue quietly and calmly on with "business as usual" -- lots of talk (though none whatsoever from the General Assembly) and no legal action.]]
"Kojo Annan, son of the United
Nations secretary general, said yesterday he regretted any embarrassment
caused to his father by an independent investigation into whether his
family connections helped his former employer obain a UN contract.
The report said [Kojo] had not
been clear to his father about his relationship with the company
Kojo's lawyers said: 'Our client
believes the report is unfair in its criticism of him
and is currently
considering what options are available to
him." Mark Turner, "Kojo expresses regret over report", Financial Times (UK), March 31 2005.
"[The Volcker inquiry cleared Kofi
Annan of impropriety in awarding UN contracts to [Cotecna]
... [But it]
also catches Kofi Annan
in a misstatement
'[when he told the committee] in November 2004 that he
had not met Elie Massey, [Cotecna's owner], prior to awarding [the
inspection contract.]'
The inquiry found information on
Kojo Annan's computer that he had met Mr. Massie twice. One ... was in
September 1998
[a] 'private' meeting
'A note to the secretary-general
from his assistant makes it clear that it was Kojo Annan who arranged this
second meeting,' the inquiry says.
[The inquiry also found that] Riza
Iqbal, Mr. Annan's former chief of staff, approved the destruction of
chronological files [from 1997-1999] 'of potential relevance to the
committee's investigation'
a day after the Security Council welcomed the
appointment of the
[Volcker group.] The destruction
then continued
'more than seven months after the secretary-general instructed all UN
staff members not to destroy or remove any documents related to the
oil-for-food programme.' 'The committee does not find
persuasive Mr. Riza's suggestion that his 'chron' files were only
duplicates of files maintained elsewhere
', it said."
Mark Turner, "Oil-for-food investigators clear Kofi Annan but expose shredding of files", Financial Times (UK), March 30, 2005. [Note: The above
article also highlights many long-standing family ties of the Annan family
with a senior Cotecna official's family. In fact, the Financial
Times has done a lengthy series of articles, and especially a set of
joint investigative articles with Il Sole 24 Ore, the Italian
business daily, on new findings in the oil-for-food scandal. They are excellent examples of the
international media's sustained efforts that have repeatedly pressured the
UN to -- ever so slowly and reluctantly -- address the still expanding
oil-for-food programme scandals. In addition to others already mentioned,
these articles include: Claudio Gatti and Mark Turner, "Questions raised about UN official who ran Iraq oil-for-food program", Financial Times (UK), February 1, 2005, Claudio Gatti, "Saddam bribed UN tanker monitor, investigators say", Financial Times (UK), February 12-13, 2005, Claudio Gatti, "Cotecna link to Kojo Annan under scrutiny", Financial Times (UK), March 23, 2005, Claudio Gatti, "Annan son received $300,000 in Cotecna payments", Financial Times (UK), March 23, 2005, and Mark Turner, Raphael Minder, Michael Peel and Dino Mahtani, "How Kojo Annan, rugby player, left his father on the defensive", Financial Times (UK), March 29, 2005.]
IO Watch has devoted
some extra attention (but only a fraction of the content available) to the
issue of "the Annans" in the oil-for-food programme, because it is a
pivotal part of the process. The Annans pronounced themselves pleased and
exonerated after Mr. Volcker's second interim report, but there are still
many open questions and much continuing investigation work in many areas,
by many people, of this major scandal. Even if there was no
impropriety in Mr. Annan's son's involvement with contractors for the UN
oil-for-food programme (an issue still far from being resolved), much
valid criticism properly focuses on how poorly Mr. Annan and the UN have
handled the allegations since they appeared. Two knowledgeable quotes
underscore the remaining grave problems for the UN leadership and for the
organization's diminishing reputation. "
[Investigator] Mark Pieth
rejected [Kofi] Annan's declaration that the [Volcker] report
exonerated
him on the matter of Cotecna winning a $10 million a year UN contract,
while he was secretary-general, and while it employed his son,
Kojo. 'We did not exonerate Kofi Annan',
Pieth said in an interview. 'We should not brush this off. A certain mea culpa would
have been appropriate.'
Annan, when asked if he planned to
step down, replied 'Hell, no"
'After so many distressing and untrue
allegations
made against me, this exoneration
is a great
relief.' But the report clearly faulted
[his] management
and his oversight of the scandal-ridden oil-for-food
program
[Concerning Cotecna,] 'It's a
continuous history of us confronting them, their owning up to something
and then backtracking,' said Pieth, a professor of criminal law and
criminology at the University of Basel, in
Switzerland. [He cited an April 2004 Cotecna
letter, not included in the report, which stated]
that after Kojo Annan
left the company in 1998, it paid him no more
money. But the report issued Tuesday
concluded that Kojo Annan was paid as much as $484,000 after he left the
company." "Firm in UN scandal draws harsh criticism: Investigator disputes Annan comments", Associated Press, in the International Herald Tribune, March 31, 2005.
"Kofi Annan, the United Nations'
embattled secretary general, claims to have been 'exonerated' by the
Volcker committee's second report into the organisation's oil-for-food
scandal. He was not. The committee
did indeed find no
evidence of impropriety by Mr. Annan in the UN giving a hefty contact to
Cotecna, a Swiss firm that employed his son Kojo. But the report is riddled with
unanswered questions and ambiguities. Kojo, in particular, comes in for
damning criticism
accused of repeatedly lying, of seeking to conceal the
true nature of his relationship with Cotecna
and of refusing to
co-operate fully with the committee.
The committee will continue to investigate his role
and his
'financial dealings
' [and, inter alia, it]
point[s] out that Kojo had close contacts in the UN's procurement office
The committee's main conclusion is
carefully worded, not to say opaque.
This is hardly the full
exoneration that Mr. Annan wanted.
Some of his many American critics are once again baying for his
blood. Asked this week if he
would resign, Mr. Annan's answer was clear: 'Hell, no!' But his reputation has been
besmirched, his credibility undermined and his moral authority badly
eroded." "Kofi, Kojo and a lot or shredded documents: There are still too many unanswered questions at the United Nations", The Economist, April 2d, 2005. This pivotal major UN
management and management accountability failure will quite probably
stretch on for several years before the full story emerges -- it will not
end with the Volcker inquiry final report. Many other international media
and US and other Member State investigations will continue on with new
disclosures, so that further oil-for-food revelations and court cases will continue to gravely damage the
UN's operational credibility. Meanwhile, Mr. Annan is pressing for yet
another set of drastic management and other reforms, to be discussed
during the General Assembly's 60th anniversary session in the autumn of
2005 and beyond. Many parts of this
archive assess the very serious recent mismanagement problems of the UN
Secretariat and their very disturbing expansion (see in particular Late 2004: A 'tipping point' for the UN?
as well as 2005: Real management culture reform, or just more UN "smoke
and mirrors"? , both under UN Management Accountability Struggles,
and the entire set of archive
subsections under Other Major
Problems. Yet most of the UN's
"international community" has continued to sing the praises of the UN's
chief executive officer, Secretary-General Annan, even as the Secretariat
burns. Everyone should
remember that Mr. Annan himself grimly stated in September 2003 that
"
the United Nations must
consider sweeping reforms in the wake of the Iraq war and warned that the
organization had lost the confidence of many across the
globe. In unusually strong language
.
Annan suggested that the credibility of the Security Council, the General
Assembly and other UN bodies was at stake. 'If they are to regain their
authority, they may need radical reform,' Annan said before making public
his report on the organization's future." "UN needs big changes, Annan says", AP, AFP, International Herald Tribune, September 9, 2003. These newest overall
UN reform proposals, slowly gestating from late 2003 until late 2005, can
scarcely address and hardly resolve all the grave UN operational problems
exemplified by the oil-for-food programme. Instead, the current situation
was nicely summarized in the following thoughtful response to the "praise
Mr. Annan" statements of early December 2004. "Imagine if U.S. troops were
accused of sexually exploiting children in impoverished nations
a U.S. Cabinet Secretary were
accused of groping a female subordinate, [but then exonerated]
by the
president
. [an agency head]
and the president's own offspring stood accused of complicity in [a
massive embezzlement racket]
[These things happened in the UN
this year.] Where's the outrage?
Why didn't
the mainstream
devote more attention to these scandals? Far from
demanding high-level resignations, they are circling the
wagons. The U.N.'s friends are doing
no
favors with this knee-jerk defense.
Even [Kofi] Annan recognizes [the problems with his 1997 and 2002
management reform attempts, and reports on Rwanda, Bosnia, and general
peacekeeping failures.]
[Yet] all the reformistas'
efforts founder on the rocks of apathy and inertia.
Most of the U.N.'s
191 member states
[and] 49,000 employees
have other
priorities. Flawed as it is, the UN does some
useful things
Leaving the U.N.
is unrealistic. But it will never live up to the
grandiose expectations of its starry-eyed supporters, unless they get mad
enough to demand real change.
So far there's no sign of that
happening." Max Boot, "Why U.N. stays mired in its defects: Start with too-friendly media, apathy and members' entrenched interests", Los Angeles Times, December 9, 2004. | |||
