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April 1, 2005



PAUL GIGOT: Welcome to the Journal Editorial Report. The Volcker Commission, investigating the scandal in the UN's oil-for-food program in Iraq, reported this week that it could find no conclusive proof that Secretary General Kofi Annan had used his influence to make sure a lucrative contract was given to the company that employed his son. But the report also criticized the Secretary General for management failures, including his failure to order a serious investigation when the issue was first raised six years ago. It accused his son, Kojo, of conspiring to hide facts about his job, which paid him hundreds of thousands of dollars starting when he was fresh out of college. And it criticized two of Kofi Annan's top aides for shredding documents about oil-for-food and for giving a high-level job in the program to a person who did almost no work. Still, Mr. Annan claimed that the report had exonerated him:

KOFI ANNAN: After so many distressing and untrue allegations have been made against me, this exoneration by the independent inquiry obviously comes as a great relief. 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.

MAN: Do you feel it's time for the good of the organization to step down?

KOFI ANNAN: Hell, no.

PAUL GIGOT: Another report released this week, done by a Swiss consulting firm at the request of the UN, found bad management, misuse of funds, and tolerance of sexual harassment at the UN agency that promotes and monitors elections. The White House and the State Department said they supported Mr. Annan and his promises to reform the UN. Republican Senator Norm Coleman of Minnesota renewed his call for Mr. Annan to quit.

Joining us to discuss all this are Dan Henninger, columnist and deputy editor of the Wall Street Journal editorial board; Bret Stephens, a member of the editorial board; and Claudia Rosett, a columnist for the Wall Street Journal in Europe and for who has been following the Kofi Annan story very closely.

Bret, is this the exoneration that the Secretary General says it is?

BRET STEPHENS: No. Well look, I guess it depends on what the meaning of "is" is. The Secretary General basically stood up and said that the committee has found no wrong-doing. What the committee in fact did is, it found insufficient evidence to come to a conclusion that the Secretary General himself was guilty of influence peddling, or of accepting money from Cotecna. But why did it come to that conclusion? In part, it came to that conclusion because documents were shredded, in part it came to the conclusion because a lot of the key meetings that Kofi Annan had with people involved with Cotecna were private and off the record. And in part it came to that conclusion because his son, Kojo Annan, won't testify.

What we still know is that Cotecna, the Swiss inspections company which won a multi-million dollar UN contract, paid hundreds of thousands of dollars, at least 484 thousand dollars, to Kojo Annan, that is sedulously cultivated Kofi Annan in the months leading up to the awarding of this contract, and that it kept this contract despite having had a reputation as a corrupt company, and despite not meeting its contractual obligations once it had obtained the contract. All of that suggests to me that we're really at the beginning of an investigation, not at the end point.

PAUL GIGOT: So, Claudia, there's more here than just mismanagement or somehow a lack of due diligence, is that right?

CLAUDIA ROSETT: Oh yeah, apart from the smoke of the shredder in overdrive, which was in the office of Kofi Annan's recently-resigned Chief of Staff --

PAUL GIGOT: Just to put on the record, we don't know what documents were actually shredded. They could have been oil-for-food, but we don't know what documents were shredded. But they were shredded for three years, we do know that.

CLAUDIA ROSETT: Yes, and the shredding went on for months. We do know that as well. But you're quite right. In fact, we know very little about much of the documentation relating to this program. One of the problems with the United Nations from the start with this is the secrecy, which has not yet been lifted. We have seen some things disclosed. But the secrecy, where here's an example of the kind of thing that is now being described by Kofi Annan as exonerating, but would not wash for a second in private business.

Faced with a press report in 1999 that his son has in conflict of interest been receiving payments from Cotecna, a [UNINTEL] food contractor. How did Kofi Annan deal with this? He phoned an old family friend employed by Cotecna to ask him what the story was, and then apparently may have relayed this information to his staff, which formed the basis of a one-day turnaround report, which was then presented to the press. We never got to see it, but we were simply told a report has been done, he has been cleared, don't ask any more questions. And that's what we were handed by the UN, and that's really about all we've still got on this.

PAUL GIGOT: Well, where are the further leads? Where should this go? Where is it going to expand from here?

BRET STEPHENS: Well, I'll tell you. There are a few questions, and they concern Kojo and his --

PAUL GIGOT: Annan's son.

BRET STEPHENS: Kojo Annan, Kofi Annan's son, and his dealings. For instance, one of the things that's come to light, Kojo Annan has consistently claimed that the work he did for Cotecna all has to do with West Africa, primarily Nigeria, where he lives now and where he was living in the late 1990s. Well we've now learned from a French businessman called Pierre Mouselli, that in 1999, Kojo Annan asked Mr. Mouselli to introduce him to the Iraqi ambassador to Nigeria, and Mr. Mouselli, who's of Lebanese origin and speaks Arabic, acted as a go-between between the Iraqi ambassador and Kojo, and they had at least two or three meetings. Now, what was discussed at those meetings? Why was Kojo Annan talking to the Iraqi ambassador, of all people, if not with respect for oil-for-food?

We also know that about a month later Kojo Annan introduced Pierre Mouselli to his father at a luncheon on the outside of a meeting of the non-aligned movement in Durban, South Africa. When Kofi Annan was asked about this meeting, he initially could not recall having any meeting with his son and Pierre Mouselli. The committee then showed him his schedule. It says, "private luncheon with Kojo Annan and friend." Kofi Annan said, "Oh, we really discussed nothing." But Pierre Mouselli tells us that in fact they discussed their business dealings with Cotecna and their business dealings in Nigeria. Let's find out what happened at that meeting.

DAN HENNINGER: But we may not, because there is no evident prosecuting authority that exists in this case. There is nobody who has subpoena power, which is what you need to get to the bottom of all of these accusations. The UN in effect has a kind of global immunity. There is no authority, legal authority, within the United States or anywhere else that can bring any of these people to account, much less trial.

PAUL GIGOT: Well, but Kofi Annan says he's now cooperating. He said his son should cooperate. And we had his new chief of staff, Mark Malloch Brown, in to see us this week. He did, I think everybody agrees, impressive work at the UN Development Program, and he's being brought in to help rescue the UN. And he said that your analogy, you folks, to the -- you used the corporate CEO analogy saying a CEO in this predicament would be out by now -- he says look, the main shareholders of the UN, who are the member countries, including the United States and France, are still supporting Kofi Annan. He has a point, does he not?


PAUL GIGOT: But we are supporting him?

CLAUDIA ROSETT: No, it is a structure in many ways -- the problem is precisely that it's not structured in any way that gives you the kind of responsibility you can expect from a CEO. And it's structured much more like a secret society or a third-world dictatorship. And the kinds of standards that are held up -- here's a conflict of interest that hasn't even made the news so far. In this report is a mention of how the head of Cotecna in 2002 sent Kofi Annan a letter asking the Secretary General of the UN -- Kofi Annan -- to intervene with the government of Ghana to save the Cotecna contract. Kofi
Annan did not return the letter. He forwarded it to the Ambassador of Ghana. That's a conflict of interest.

PAUL GIGOT: Dan, does Kofi Annan, is he the man who's going to be able to reform the UN, as even he now says needs to happen?

DAN HENNINGER: Well, there was a novel once called Nowhere to Look Up But From Here, and he may be the guy we have to, the horse we have to ride. The important point Malloch Brown made was that the United Nations cannot function without the United States. The United States is the only country that has the resources, that has the authority to do the kind of reforms and peace keeping and such that they need. And I think that unless the UN gets closer to US principles of accountability and transparency on this issue, it's going to be very difficult to carry out those reforms.

PAUL GIGOT: Okay Dan, thanks. Next subject.