Annan: Oil-for-Food Probes Hurt UN

UNITED NATIONS -- UN Secretary-General Kofi Annan acknowledged on Thursday that continuing probes into and discussion on the now defunct UN oil-for-food program in Iraq hurt the United Nations.

"There is no doubt that the constant campaign has, and the discussions have, hurt the UN. That is not something we would like," Annan said. "It has done damage, yes."

"And that's why we want to get to the bottom of it and clear it as quickly as possible," he added.

Annan met Paul Volcker, the former U.S. chairman of the Federal Reserve, whom he appointed to lead an independent commission probing the $67 billion program, set up in late 1996 to allow civilian goods into Iraq in an effort to ease the impact of UN sanctions.

Volcker and his team intend to release later on Thursday the full list of oil companies that dealt with Iraq until the U.S.-led invasion in March 2003 as well as firms that sold Iraq goods. The amounts of each transaction will be listed, not as evidence of cheating, but "in the interest of transparency," one UN diplomat said.

According to a recent comprehensive report by Charles Duelfer for the CIA, Saddam Hussein's government earned $2 billion from kickbacks or surcharges, mainly on oil associated with the UN program after 1997.

His most profitable avenue to break sanctions since the early 1990s was from direct agreements with other governments, which amounted to about $7.5 billion, Duelfer said.

Much of this was possible because the oil-for-food program set up by the UN Security Council allowed Iraq to choose its own contractors. Saddam used this power to hand out oil vouchers that could be sold for cash to those who might help him get rid of the sanctions.

Annan said diplomatic immunity would be lifted against any UN official involved in illegal activity. Other UN diplomats said this would happen after Volcker completed his investigation. Among the many names on Iraq's list of those who received oil vouchers was Benon Sevan, a Cypriot national and head of the program, who has vigorously denied it.

Volcker has said previously he would not release "confidential, contractual or proprietary documentation in response to requests of individuals or officials of member states."

But Annan said, "We will not stand in the way of investigations" and hoped the Volcker commission would unearth any wrongdoing as soon as possible.