THE latest report into the United Nations Oil-for-Food scandal does not exonerate Kofi Annan, its beleaguered Secretary-General.

No matter that he says it does. “This exoneration by the independent inquiry obviously comes as a great relief,” he said, on publication of the report by Paul Volcker, former Chairman of the Federal Reserve.

True, on the most contentious issue — the awarding of a contract to a company which employed his son Kojo — the panel cleared Annan. Sort of.

It found no corruption, but it criticised him for failing to set up a rigorous investigation when Kojo’s role first emerged.

But Mark Peith, one of the investigators, who has been sharper in his comments about Annan than Volcker has chosen to be, rejected this yesterday. Going further than the published report, Peith said: “We did not exonerate Kofi Annan. We should not brush this off. A certain mea culpa would have been appropriate.”

Even leaving aside Annan’s superficial examination of his son’s case, the episode exposes one of the UN’s greatest flaws, and his lack of success in tackling it: the lack of accountability for huge sums of money.

Of course, the Iraqi Oil-for-Food programme was something of a one-off. There was the sheer size of it: a $67 billion scheme to allow Iraq to swap oil revenues for food and medical supplies. It was the size of a large international corporation, and it was created in a few months.

But then, many big UN-backed missions are a one-off, gathered together in haste to tackle wildly different problems (think of Cambodia, East Timor, the Balkans and the Palestinian territories).

If the Oil-for-Food programme faced a tougher challenge, it was for two reasons. First, Saddam Hussein’s regime was still very much in place, and the UN had no access to the country. As well as that, Saddam was determined to deceive the UN and twist the scheme secretly to allow him to try to buy influence with other governments and cause the sanctions to wither away.

So the UN faced a regime whose sovereignty it still respected, which would have an intimate role in operating the scheme, and which was hostile to the UN’s intent. Those are, we must admit, tougher conditions than the UN often faces.

Second, there was the bitterness of the politics within the UN itself over Iraq, dating from the 1991 Gulf War.

This sourness compromised the UN’s ability to hold the scheme’s managers to account from the start. Only a few countries, including the US and Britain, really wanted it to work.

By the mid-1990s, Britain and the US were desperate for the scheme to be set up. Saddam had initially rejected the UN’s offers of such a deal. The result was that countries which wanted UN sanctions lifted, and wanted to resume trading with Iraq, could argue that Iraqi suffering was intolerable.

Countries which wanted to keep the sanctions in place — again, particularly the US and Britain — had to find an answer to this. They had to win the support of other countries to get the scheme working quickly. But their need to do so handicapped them in pressing home the importance of accounting for such large, fast-moving sums of money.

This is not a point on which the UN has distinguished itself in general. The battles between countries have tended to take place before money goes out. They focus on how much each will pay, and the nationalities of those getting the top jobs.

But once a scheme is set up, there is often much less attention on tracking where the money has gone, and on holding the managers responsible. Few countries, except the largest donors to individual projects or agencies, have a large enough stake to push a row through to a conclusion.

But the oversight of the Iraqi scheme does seem to have been exceptionally poor. The lists and lists of names of those involved in the trades — individuals, at that, not companies — made it all but impossible to verify the trades.

If Volcker had been going to produce damaging charges against Annan, he would have done so this week. His final report in June holds few fears; it will be on the failures of the member countries themselves.

But his report does show that the UN’s faults, which Saddam understood and exploited, run very deep. It would be wrong to see it as an aberration that could not happen again.

OIL-FOR-FOOD HISTORY

An Iraqi-American has pleaded guilty to acting as a go-between for Saddam in America and has told a court that an unnamed UN official was among several people who received payoffs when setting up the Oil-for-Food programme

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