Next Crisis at U.N. May Involve Ties Of Volcker, Strong
BY BENNY AVNI - Staff Reporter of the Sun
April 22, 2005

UNITED NATIONS - The next chapter in the United Nations crisis may erupt over U.N. investigator Paul Volcker's membership on the board of one of Canada's biggest companies, Power Corporation, since a past president of the firm, Canadian tycoon Maurice Strong, is now tied to the oil-for-food scandal.
Also, following yesterday's reports of resignations of top investigators on Mr. Volcker's team, Washington officials revisited Secretary-General Annan's assertion that the team's report last month exonerated him. For the first time, the Bush administration hinted that it may cease support of Mr. Annan altogether.
Yesterday, Mr. Strong acknowledged that Tongsun Park, the Korean accused by federal authorities of illegally acting as an Iraqi agent, in 1997 invested in Cordex, a Denver-based company owned by Mr. Strong and his son, Fred. Mr. Strong has voluntarily stepped down from his U.N. position as adviser to Mr. Annan on Korean affairs for the duration of the investigation.
One of the allegations in last Thursday's federal criminal complaint was that in 1997 or 1998, Mr. Park invested $1 million obtained from Saddam Hussein's regime in a Canadian company that was established by the son of a U.N. official, who was a target for bribery. The company later went under, according to the complaint.
In his first public interview since last week's complaint against Mr. Park, Mr. Strong yesterday told Canada's Globe and Mail newspaper that in 1997, Mr. Park invested in Cordex, which counts both Mr. Strong and his son Fred as members of its board. The company went bankrupt two years after Mr. Park's investment.
In the Globe and Mail interview, Mr. Strong did not dispute the assertion that the size of Mr. Park's investment in Cordex was $1 million. He called it a perfectly normal investment, and added that it had nothing to do with Iraq, or the oil-for-food program. Whatever I did was perfectly proper, he said.
Mr. Volcker's involvement with the Montreal-based Power Corporation, which in the past he had described as limited to social salmon-fishing with board members, could become a source of contention, as Mr. Park's investment in Cordex may link Mr. Strong to the oil-for-food scandal. And according to official documents seen by The New York Sun, at least one other former official of Power Corporation, William Turner, invested in Cordex, a now-bankrupt energy company.
The Volcker committee has failed until now to describe the involvement of Mr. Park in the oil-for-food scandal - in neither of the committee's two extensive interim reports and other publications was Mr. Park mentioned. Nor was Mr. Strong. Separately, Mr. Park was at the center of the 1970s Washington scandal known as Koreagate.
The Volcker-led Independent Inquiry Committee is under renewed scrutiny after yesterday's reports that two of its members resigned their posts recently. The departures of Robert Parton and Miranda Duncan was met by further criticism from congressional opponents of Mr. Annan and, for the first time, indications from the State Department that the Bush administration's support of Mr. Annan is weakening.
The deputy assistant secretary of state responsible for U.N. issues, Mark Lagon, yesterday said that the top Volcker committee investigator, Mr. Parton, and his aide, Ms. Duncan, quit because they thought the Volcker reports were perhaps a little too charitable toward Mr. Annan.
We aren't calling for the resignation of the secretary-general, Mr. Lagon told reporters at the American U.N. mission yesterday. We haven't made the decision it couldn't happen. It's not ripe, he added.
Yesterday the chairman of the House International Relations Committee, Rep. Henry Hyde, a Republican of Illinois, wrote a letter to Mr. Volcker, urging him to investigate issues that were raised by last week's federal indictments, which until now have not been explored by the Volcker committee.
According to a top researcher at the Heritage Foundation, Nile Gardiner, the Bush administration might drop its support of Mr. Annan in the coming months. It is looking increasingly likely that the Bush administration may express no confidence in the secretary-general, as the situation continues to deteriorate for Kofi Annan, he told the Sun. Mr. Gardiner yesterday urged Mr. Volcker to resign following Mr. Parton's departure.
Mr. Gardiner said that the investigators' resignations undermine the credibility of the committee, and that Mr. Volcker's continued leadership seems untenable as a result. The resignations cast a huge shadow on Mr. Volcker's ability to continue as chairman of the inquiry committee, Mr. Gardiner said.
News of Mr. Volcker's spot on the board of Power Corporation first surfaced soon after the former chairman of the Federal Reserve was nominated by Mr. Annan to head the Independent Inquiry Committee last year.
At that time, a possible conflict of interest involved the Power Corporation's ties to the French bank BNP, which handled oil-for-food accounts, and to the French oil company Total, which also profited from oil-for-food business.
Mr. Volcker said then that he was a member of many boards of directors and that his role at Power would not affect his work. He would occasionally pursue his avocation of salmon fishing with Canadian friends, sometimes including a Power Corporation executive, the committee said in a statement issued at the time, addressing his involvement with the company.
The U.N. is increasingly relying on Mr. Volcker to investigate the propriety of its employees' dealings regarding oil for food. Mr. Strong told us that he'd been contacted by them, U.N. spokesman Stephane Dujarric said yesterday, referring to the Volcker committee. He refused to answer questions on possible conflicts of interest.