WASHINGTON, 30 March 2005 — An inquiry into the UN oil-for-food scandal yesterday failed to give Secretary-General Kofi Annan the clear vindication he wanted, even though the investigators did not accuse him of corruption.

Annan interpreted the report as clearing him of wrongdoing and said he would not resign.

The report, the second issued by the team of investigators, is led by former US Federal Reserve Chairman Paul Volcker.

The inquiry concluded that Annan had not interfered in the awarding of a contract to a firm that employed his son but faulted him for not investigating the issue properly.

The independent inquiry released its second interim report on the oil-for-food program, this time on Annan and his son, Kojo, who worked for the Swiss firm Cotecna.

The company received a $10 million a year UN contract in late 1998 to certify goods coming into Iraq under the scandal-tainted $67 billion oil-for-food program, which began in late 1996 and ended in 2003.

“There is no evidence that the selection of Cotecna in 1998 was subject to any affirmative or improper influence of the secretary-general in the bidding or selection process,” Volcker told a news conference.

“Based on the record and lack of evidence of impropriety, it is the finding of the committee that Cotecna was awarded the contract in 1998 on the ground that it was the lowest bidder,” he said.

But Volcker’s committee said a probe initiated by Annan himself into the Cotecna contract was inadequate and the case should have been referred to the UN watchdog agency for an independent investigation.

As for the younger Annan, the report said he “intentionally deceived the secretary-general” about his continuing financial relationship with Cotecna.

“Significant questions remain about Kojo and his actions during the fall of 1998 as well as the integrity of his business and financial dealings with respect to the oil-for-food program. The committee’s investigation of these matters is continuing,” the report said.

Investigators said “the evidence is not reasonably sufficient” to prove that Annan knew about Cotecna’s bid in 1998. Annan has said his son’s job did not help the company win weapons inspection contracts.

Cotecna paid Kojo up to $400,000. It is unclear what he did to earn such a large salary.

Addressing a news conference, Annan said he would not resign as head of the United Nations and indicated he would continue to work to push through his ambitious UN reform plan.

“I have lots of work to do and I am going to go ahead and do it,” Annan said.

Asked directly if he would resign, Annan said: “Hell no.”

“I was absolutely confident that a thorough enquiry would clear me of any wrongdoing. The committee has now done so,” Annan said. “This exoneration by the independent inquiry obviously comes as a great relief.”

Annan also urged his son Kojo to cooperate with the panel.

“I love my son and always expected the highest standards of integrity from him,” Annan 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. I have urged him to cooperate,” he said.