Volcker Panel to Correct Frechette Omission

The committee probing the Oil-for-Food (search) scandal says it will correct omitting the name of a U.N. official involved in the international controversy who has a close relationship with the executive director of the panel.

It's well known that the Volcker commission's executive director, Reid Morden (search), and Louise Frechette (search) have had a "longstanding professional relationship" for 30 years, according to the Independent Inquiry Committee — dubbed the "Volcker commission" after its chief, former Federal Reserve Chairman Paul Volcker (search).

Morden was Canada's deputy minister of foreign affairs in the 1990s. Frechette is U.N. Secretary-General Kofi Annan's No. 2 at the international organization. But Frechette also was Canada's ambassador to the United Nations at the same time Morden was her boss.

The Volcker commission, however, says Frechette did not directly report to Morden in the Canadian Foreign Ministry. The commission offered its take on the Frechette-Morden association following a FOX News story last week.

Committee officials admit that Morden discussed working on the U.N.-commissioned investigation with Frechette before he took the job with Volcker but they insist the friendship has not influenced Volcker's work at all and that the investigation is being conducted in a thorough and impartial manner.

But in the interim report released by the Volcker commission last month, which highlighted abuses and mismanagement of the Oil-for-Food program, Frechette is treated discreetly. Her name is nowhere to be found — the report mentions only her job title — even when declaring that she stopped U.N. auditors from telling the U.N. Security Council (search) about Oil-for-Food irregularities. That detail can be found on page 186 of the 219-page interim report. She later claimed she was just following U.N. rules.

Congressional critics like Rep. Tim Murphy, who also is a member of the House Energy and Commerce Committee that is investigating Oil-for-Food, has accused the investigation of having an unreported conflict of interest.

"One of the things that occurs when one is part of an investigation is, you disclose in the first page what your relationships are so it's very clear — it's very clear — if there's any potential conflict of interest," said the Pennsylvania Republican.

"The fact that in this report, they didn't even refer to her by name or by title, and it seems to be that there is some attempt here to hide that there is any link or relationship there, I think only heightens or magnifies the concerns here that there's a potential for a conflict of interest."

Frechette, 58, came to the United Nations following a long career as a Canadian civil servant. The first deputy secretary-general in U.N. history, she has served since 1998 as Annan's chief administrator. She also chairs the steering committee on U.N. Reform and Management Policy.

Annan's office has argued that the Security Council — and not the Secretariat — supervised the more than $110 billion Oil-for-Food program. But Frechette's decision to intervene also may place responsibility in the secretary-general’s office for obscuring mismanagement of the program from the Security Council.

Click in the video box above for a complete report by FOX News' Eric Shawn.