March 29 (Bloomberg) -- United Nations Secretary General Kofi Annan didn't improperly influence the bidding or selection process for contracts awarded to Cotecna Inspection SA, a Swiss company hired in 1998 to monitor humanitarian goods for Iraq, a report said.

The report by former Federal Reserve chairman Paul Volcker said that, while procurement rules weren't followed in the awarding of UN contracts to Cotecna, Annan didn't know the company was seeking the work during his son's employment by the company.

``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,'' the report said. It said Cotecna was awarded $66 million in contracts to inspect goods coming into Iraq because it was the lowest bidder.

The oil-for-food program was an exemption to UN sanctions imposed on Iraq after Saddam Hussein's 1990 invasion of Kuwait. Created by the UN Security Council and administered by a UN agency, it allowed Iraq to sell $64 billion worth of oil from 1996 until the U.S.-led invasion of Iraq that ousted Hussein in 2003.

Hussein skimmed more that $17 billion from the program through oil smuggling and graft involving humanitarian goods, U.S. congressional investigators reported in November. Allegations of UN mismanagement and corruption have prompted six separate investigations and calls from about one in seven U.S. House members for Annan to resign.

Kojo Annan

Annan's son Kojo ``actively participated in efforts by Cotecna to conceal the true nature of its continuing relationship with him,'' the report said.

Kojo Annan wasn't ``forthcoming'' in interviews with the Volcker panel on the subject of the company accounts through which he was paid in 1999 and 2000, and has refused to answer questions about his financial interests, the report said.

A 1999 inquiry by Kofi Annan's chief of staff into the possible conflict of interest stemming from Kojo Annan's employment by Cotecna was ``inadequate,'' and the matter should have been referred to the UN Office of Internal Oversight Services or the Office of Legal Affairs, the Volcker report said. A proper inquiry would have made it ``unlikely'' that Cotecna would have been awarded the contracts, the report said.

A Volcker panel report released on Jan. 10 said UN officials ignored early warnings that humanitarian goods shipped to Iraq before the war were given cursory inspections, a condition that U.S. investigators say may have helped Hussein siphon up to $4.4 billion from the program.

To contact the reporter of this story: Bill Varner at the United Nations at wvarner@bloomberg.net

Last Updated: March 29, 2005 11:45 EST