Showdown Likely Between Volcker, Congress

A legal and political fight is brewing between the man tasked with leading the U.N.-approved probe into the Oil-for-Food (search) program and congressmen who want to interview two of his former investigators.

Paul Volcker (search ) called the chairmen of at least three congressional committees looking into the $64 billion Oil-for-Food program Thursday and told them Congress cannot subpoena the former employees, FOX News has learned. Volcker said the former investigators, who resigned two weeks ago, have diplomatic immunity and therefore cannot be called to testify before their panels.

A spokesman for Volcker confirmed the calls. "It was a courtesy call, not a command. To subpoena investigators would harm the integrity of the investigation,” the spokesman said.

But at least one of the lawmakers Volcker spoke with said Friday that he had "grave and growing concerns about the credibility and independence" of Volcker's committee.

Sen. Norm Coleman, R-Minn., the chairman of the Senate Permanent Subcommittee on Investigations, said in a statement that he had directed his staff to issue subpoenas to the two former investigators — Robert Parton and Miranda Duncan — as soon as possible.

Parton's lawyer, Lanny Davis, spoke on his client's behalf.

"Mr. Parton respects the congressional committees and their work," said Davis. "He hopes that Mr Volcker, the U.N. and the Congress can work this out."

Volcker, the former chairman of the Federal Reserve, was appointed last year by U.N. Secretary-General Kofi Annan (search) to head up the Independent Inquiry Committee into Oil-for-Food. So far, Volcker’s panel has released two interim reports that said the program suffered from mismanagement and raised questions about the role of Annan’s son, Kojo Annan (search). A final report is expected to be released this summer.

After the release of the second report, Parton and Duncan resigned as investigators over how the committee handled Annan's dealings with a Swiss company that was contracted under the program and that once employed Kojo Annan.

"Contrary to recent published reports, I resigned my position as Senior Investigative Counsel for the IIC not because my work was complete but on principle," Parton told The Associated Press in a statement.

Several congressional committees want to subpoena Parton and Duncan to testify about what they know, and lawmakers are now angry over Volcker’s decision to invoke diplomatic immunity for the two.

Congressional sources told FOX News that they believe Volcker is terrified of the damage the investigators' testimony could do to his credibility.

Rep. Chris Shays (search), R-Conn., chairman of a House Government Reform subcommittee, told FOX News that his panel is consulting with legal counsel about how to proceed. "This lack of transparency is part of the problem,” Shays said.

And a spokesman for Rep. Henry Hyde (search), R-Ill., chairman of the House International Relations Committee, said the issues of confidentiality and immunity were raised in the phone conversation between Volcker and Hyde.

“The issue of access to current and former U.N. staff is not settled,” the spokesman said.

U.N. experts said the showdown between Volcker and Congress will be critical.

“It's also being pointed out that if Mr. Volcker is asserting that his team has U.N. diplomatic immunity, then he is admitting that his committee is not in fact independent but a part of the very organization it is supposed to be objectively investigating,” said Nile Gardiner of the Heritage Foundation.

Gardiner said it was vital for Parton and Duncan to be heard.

“It's absolutely essential that these two individuals be allowed to testify before Congress to give the full picture. After all, this is a $30 million investigation being funded by the Iraqi people. They demand absolute accountability from this inquiry,” Gardiner said.