The report is a second interim accounting from the commission, which will deliver its final verdict this summer. The panel was commissioned by Mr. Annan a year ago to investigate how Saddam Hussein managed to skim billions of dollars from the $65 billion program and whether there had been corruption in addition to mismanagement on the part of United Nations officials.
The first report on Feb. 3 accused Benon V. Sevan, the former head of the program, of a "grave conflict of interest" that "seriously undermined the integrity of the United Nations." The conclusion was based on evidence that he had steered deals to a friend and on his inability to explain where he got $166,000 in cash. A second official, Joseph Stephanides, was accused of violating procurement regulations.
The new report questioned the conduct of two more of Mr. Annan's closest advisers: Mr. Riza, his chief of staff until his retirement in December, and Mr. Nair, head of the United Nations' watchdog group, the Office of Internal Oversight Services.
Mr. Riza was criticized for ordering the shredding of personal files from the startup period of the oil-for-food program. He said Monday that he had had told aides to do it three months before Mr. Annan ordered all documentation about the program to be saved. The report noted, however, that the actual destruction happened after Mr. Annan's order.
Mr. Nair was faulted for appointing a person to a high-level post with oil-for-food responsibilities who did almost no work on the program.
But the centerpiece of the report was the awarding of the $10 million-a-year contract for aid inspections to Cotecna, whether Kojo Annan's employment by the company influenced the United Nations' choice of Cotecna, and whether Kofi Annan knew a crucial contract had been won by the company where his son worked.
While the commission accepted that Mr. Annan had no knowledge of the awarding of the contract, it faulted him for not acting to curb suspicions of a conflict of interest when a report in The Sunday Telegraph of London raised the issue in 1999.
UN Secretary General Kofi Annan has been cleared of wrongdoing in an investigation of charges that he influenced the UN to award aid-screening contracts in Iraq to Swiss company Cotecna Inspection Services, which employed his son Kojo Annan. The investigation was led by former US Federal Reserve Chairman Paul Volcker, who said that the investigation initiated by Kofi Annan should instead have been referred to UN's independent watchdog agency. The report issued was called by the secretary general a "second interim report" in his statement reported in the New Zealand Herald. The commission will issue its final report in the northern hemisphere summer of 2005.

While Kofi Annan was exonerated, two of his staff members, Iqbal Riza and Dileep Nair, were criticized by the report. Riza allegedly shredded documents related to the contracts under investigation after the secretary general ordered that they be retained. The New York Times said that Nair was "faulted for appointing a person to a high-level post with oil-for-food responsibilities who did almost no work on the program".

According to the New York Times, the Secretary General said "I am deeply saddened by the evidence to the contrary that has emerged, and particularly by the fact that my son had failed to cooperate fully with the inquiry". The Guardian reports that Annan's son concealed from his father the fact that Cotecna continued to pay him for 6 years after "he left Cotecna in 1998". It was not clear from the Guardian report why Cotecna was paying Kojo Annan if he had indeed left the company.

Asked whether he planned to step down as Secretary General, as called for by US Republican Senator Norm Coleman, among others, Kofi Annan responded, "Hell, no!" according to Ewen MacAskill of the Guardian, as well as an unattributed Sydney Morning Herald article.  Senator Coleman continued to press forward with his criticism of Annan and calls for his resignation despite the report's findings.