Kofi Annan was cleared today of corruption in the oil-for-food programme in Iraq but criticised for his handling of the affair.

A report concluded that there is insufficient evidence to show that the Secretary General of the United Nations knew of a contract bid by his son’s employer for the programme in Iraq. But the investigators criticised the UN chief for failing to determine his son’s relationship with the Swiss firm.

The report, released today, also accused the company, Cotecna Inspection S.A., and Mr Annan’s son, Kojo, of trying to conceal their relationship after the contract was awarded.

The investigators' conclusion was not the clear vindication that the Secretary-General had wanted, though the team, led by former US Federal Reserve Chairman Paul Volcker, did not accuse the Mr Annan of corruption or any other wrongdoing.

At a press conference after the report was released, Mr Volcker said the investigation found no evidence that Mr Annan improperly influenced the process by which Cotecna was selected for an inspection contract under the oil-for-food programme.

"Our investigation has disclosed several instances in which he might, or could have become aware, of Cotecna’s participation in the bidding process," Mr Volcker said.

"However, there is neither convincing testimony to that effect nor any documentary evidence," he said. "Taking all of this into account, the committee has not found the evidence is reasonably sufficient to show that the secretary-general knew that Cotecna had participated in the bidding process in 1998."

Kojo Annan worked for Cotecna in West Africa from 1995 to December 1997 and then as a consultant until the end of 1998, just when it won the oil-for-food contract. He remained on the Cotecna payroll until 2004 on a contract to prevent him from working for a competitor in West Africa.

Although today's report found no wrongdoing by Kofi Annan, it clearly faulted the secretary-general’s management of the world body and his oversight of the oil-for-food programme.

The $64 billion ($50 billion) oil-for-food programme was the largest UN humanitarian aid operation, running from 1996-2003. Saddam Hussein’s government was allowed to sell limited amounts, and eventually unlimited amounts, of oil in exchange for humanitarian goods as an

exemption from UN sanctions imposed after Iraq’s 1990 invasion of Kuwait.

In a bid to curry favor and end sanctions, Saddam allegedly gave former government officials, activists, journalists and UN officials vouchers for Iraqi oil that could then be resold at a profit.

US congressional investigators say Saddam’s regime may have illegally made more than $21 billion ($16 billion) by cheating the programme and other sanctions-busting schemes.

The report is the second issued by Mr Volcker’s team. It coincides with allegations of sex abuse by UN peacekeepers and of sexual harassment and mismanagement by senior UN staff. It also comes a week after Kofi Annan called for the biggest overhaul of the United Nations in its 60-year history.

Weighing all the evidence in the report and the credibility of the witnesses, the investigators said "the evidence is not reasonably sufficient" that Mr Annan even knew about the bid. The report found that Kojo Annan was not forthcoming with either his father or the committee and accused him of consistently trying to hide the nature of his relationship with Cotecna.

It said there were still "significant questions" about Kojo Annan's business dealings with respect to the programme, and said an investigation was continuing.

In a letter annexed to the report, Kojo Annan's lawyer, William R. Taylor, rejected any claim that Kojo Annan had not been wholly cooperative with the committee. But Mr Taylor admitted that Kojo Annan had not told his father the entire truth.

"Mr. Annan has consistently acknowledged that he was not completely candid with his father when the Cotecna-UN contract first attracted publicity in late January 1999," Mr Taylor wrote. "He regrets the embarrassment that omission caused to his father and to the United Nations and accepts responsibility for it."

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