Five years ago Kofi Annan, the UN Secretary-General, set out an ambitious series of development goals aimed at eradicating poverty and disease and securing a long-term role for the UN at the centre of world affairs. At the time Mr Annan’s credibility was not in doubt. His commitment to reform was genuine and his standing higher than that of any secretary-general in 40 years. Yesterday, in the latest report of the independent inquiry into misuse of the UN Oil-for-Food programme in Iraq, he was spared personal accusations of corruption but shorn of most of what remains of his international stature. Sharply criticised for his management style and reluctance to root out corruption elsewhere in the organisation, he must now act with uncharacteristic boldness — or risk condemning the UN to terminal irrelevance.

The Oil-for-Food programme was established in 1996 as a means of responding to Iraq’s humanitarian emergency without breaking UN sanctions imposed after the Gulf War. Conceived as a sophisticated barter scheme, it did allow badly needed food and medicines into the country in return for Iraqi oil. But as limits on the volume of permitted oil exports were relaxed, the programme degenerated into a convenient mechanism for wholesale sanctions evasion by Sad-dam Hussein’s regime, and the worst corruption scandal in the UN’s 60-year history. The US and Britain were virtually alone in declining the chance to buy Iraqi oil coupons at cut rates and resell them on world markets at substantial profit. Some $21 billion of the $64 billion realised by the Oil-for-Food programme went to the Saddam regime rather than being spent on aid. Much of that was funnelled back in bribes to a broad array of willing Iraqi oil retailers, many of them lobbying in return for alternatives to military action against Iraq.

There is no question that much of the corruption funded by the Oil-for-Food programme occurred outside the UN. But neither is there any doubt that the rot went deep within the organisation, nor that the scandal would have destroyed much of the credibility that the UN claimed during the build-up to the 2003 invasion of Iraq had its extent been uncovered earlier.

That yesterday’s report clears Mr Annan personally of corruption is no surprise. Its author, Paul Volcker, is on a self-professed mission to “restore” rather than “tear down” the UN. But it does censure the Secretary-General for failing to head off a looming conflict of interest involving a Swiss company he knew had employed his son while seeking contracts in Iraq. More broadly, Mr Annan failed utterly to ensure that the vast sums generated by the Oil-for-Food programme were handled transparently.

With 18 months of his second term to run, Mr Annan has been woefully passive in confronting systemic corruption within the UN and too defensive when presented by others with the evidence. His reputation is further tarnished by the separate but no less shocking scandal, on his watch, of child sex abuse by UN peacekeepers in Africa. He does not deserve a third term. He should instead use what remains of his authority to push through the sweeping reforms recommended by Lord Hannay of Chiswick, among others, focusing the UN on international security rather than development. If it spreads itself too thin, few will care who succeeds Mr Annan.