A LONG-AWAITED independent report into the United Nations oil for food scandal will be highly critical of Kofi Annan, the UN secretary-general, for presiding over a corrupt and mismanaged $64 billion aid programme that was supposed to bring humanitarian relief to Iraq but in fact enabled officials to line their pockets.

Annan should have acted to prevent the abuse and cronyism that dogged the programme, the inquiry led by Paul Volcker, the former US Federal Reserve chairman, will conclude in a 700-page report due out on Wednesday. But while Annan will be faulted for poor judgment he will not be held responsible for corruption.

“The secretary-general comes out damaged by this but still airborne,” a top aide to Annan said. He admitted there would be “deeply embarrassing” things in the report, for which the secretary-general would take “responsibility”.

“I don’t see anything in this that is immediately threatening to Annan, but we are seeing a continued erosion of his reputation and standing,” a senior UN diplomat said.

Annan met Volcker last Thursday and was given advance notice of the report’s main findings. One diplomat who saw him afterwards described his mood as “quite bullish”. He is said to be relieved that there will be no new accusations linking him to his son Kojo’s work as a consultant to Cotecna, an oil for food contractor in Switzerland.

The report is expected to be tough on Kojo. “There will be more about how he was using his dad and trading on his name, but the wall his dad insisted existed between them has not been breached. He did not know what he was up to,” a source close to Annan said.

Despite the existence of a memo from Michael Wilson of Cotecna, a family friend of the Annans, which claimed there had been “brief discussions with the SG and his entourage” about Cotecna’s bid and that “we could count on their support”, Volcker appears to have accepted this does not conclusively prove the involvement of the secretary-general in assigning contracts.

Aides to Annan have brushed off Wilson’s claims as inaccurate boasting.

The Volcker panel has already accused Benon Sevan, who was appointed by Annan to head the oil for food programme, of accepting cash bribes of up to $160,000. Sevan has left America for his native Cyprus, where he cannot be extradited should criminal charges be brought against him in the United States.

Adding to the growing scandal, a Russian UN official was arrested by the FBI last week, charged with helping a UN procurement officer to launder bribe money in return for a share of the proceeds. Vladimir Kuznetsov, the official, chaired the UN general assembly’s budget advisory committee, which is supposed to ensure fair practice. He denied the charge during a brief court appearance.

His alleged co-conspirator is thought to be Alexander Yakovlev, who pleaded guilty last month to money laundering and was accused by Volcker of accepting $950,000 in bribes from contractors.

The deepening scandal has come at a time when 178 representatives and heads of state are preparing to gather in New York on September 14-16 to agree an ambitious reform programme, which was meant to be the crowning achievement of the Ghanaian-born Annan’s eight years in office.

But while diplomats and officials have been working round the clock to secure key parts of the programme, a senior western diplomat said that “we’re diverging not converging”.

John Bolton, the hardline American ambassador to the UN appointed by President George W Bush despite opposition in the Senate, threw negotiations into confusion by tabling hundreds of amendments to the UN’s draft declaration.

Bolton angered fellow diplomats and officials by keeping a low profile last week during grinding negotiations disrupted by his amendments. “I haven’t seen him at any of the working groups,” said one diplomat. “His view is everything is hunky-dory. My view is they’re diverging and it takes the senior guy to bring it all together.”

The ill will towards Bolton has one useful consequence for Annan. At the UN headquarters there is general agreement that however damning the Volcker report is for the secretary-general, there is another villain in the house.

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