Over the last two weeks, the Center for Individual Freedom has reported on the growing U.N. Oil for Food scandal. (See Oil for Osama and Update: U.N. Oil for Food Scandal Continues to Grow.) This week, the inexorable dripping of incriminating information continues.

Writing in the Wall Street Journal, Claudia Rosett reports that a highly secret U.N. audit report was leaked this week to a mining industry trade publication. The report is one of dozens of similar reports prepared by the U.N. Office of Internal Oversight that evaluate the performance of Oil for Food contractors and the financial management of the program.

The leaked report concerns the U.N.’s primary Oil for Food inspection contractor, Swiss-based Cotecna Inspection SA. The company was tasked with ensuring that relief shipments contained only U.N.-approved products and not contraband items such as machine guns, artillery shells, aircraft parts and reactor components.

Recall that while bidding on the lucrative Oil for Food contract, Cotecna retained Secretary General Kofi Annan’s son, Kojo, as a consultant.

The audit report reveals 20-pages worth of problems, short-comings and violations in Cotecna’s performance of the contract. Among the more serious problems, Cotecna was contractually obligated to have inspectors available 24 hours a day. The auditors reported that at least two of the firm’s facilities kept much shorter hours, thus allowing many shipments to proceed uninspected.

Actually, even when Cotecna’s facilities were open, the company wasn’t doing its job. Under the contract, the company was supposed to unload and visually inspect the contents of every shipment. According to the report, they usually only reviewed the shipping manifests, accepting those lists at face value.

So it wouldn’t have taken a super-smuggler (or even Rhett Butler) to slip contraband under the noses of such watchful guardians.

Cotecna was also responsible for ensuring that the goods the U.N. thought it was shipping to Iraq actually made it there. But, by the company’s own count, there was a discrepancy of $111 million — in one region of Iraq.

That’s not all. Even as Cotecna went about failing to perform its inspection duties, the U.N. Oil for Food office approved several "improper" increases in contract fees. One increase raised the fee for Cotecna’s services to precisely the same as the offer from the second lowest bidder. That, says the report, should have triggered the Oil for Food office to go out for fresh bids.

Ready for the best part?

The U.N. auditors discovered that the Oil for Food managers were well aware of these problems. Bet you’ve already figured out what the managers did in response. Yep. You guessed it: Nothing. Zero. Zip.

In fact, instead of taking corrective steps, forcing Cotecna to repay the misspent funds, or canceling the contract entirely, the Oil for Food office attacked the auditors. Of course they did. The Oil for Food managers didn’t want anything to disrupt the massive commission they were collecting to run the program.

So, to sum up: millions of dollars of the Iraqi people’s money was misused, misspent and wasted by the U.N. Countless "goods" were shipped into Iraq without necessary supervision. There was uncertain and unreliable accounting of Oil for Food money. And the program smelled of more than a whiff of improper deal-making — in this case, a little old-fashioned nepotism.

That’s just with the inspection contractor. This report is only one of more than 50 such audits. And this one doesn’t even deal with the contractors responsible for selling Iraqi oil or buying food, medicine and humanitarian supplies. That’s where the really big money was.

Multiple investigations are now underway, but from this single report, it’s clear that the Oil for Food program was thoroughly corrupted. Unfortunately, the public may never know the full extent of the corruption and mismanagement at the U.N.

According to Rosett, "A U.N. spokesman says all the internal audit reports on Oil for Food have now been turned over to the U.N.-authorized inquiry headed by former Fed Chairman Paul Volcker. But under the terms drawn up by Mr. Annan, Mr. Volcker … must submit his own report directly to Mr. Annan. And guess who has the final say over what [the public] gets to see — or not see. Why, Mr. Annan, of course."

To date, the U.N. collective response to this scandal has veered more toward cover-up than full disclosure, and there are no signs any shift of that position is on the horizon.

Unless Secretary Annan is ready to disclose the remaining U.N. reports, guarantee the public that Mr. Volcker’s report will be made available to everyone, and force the U.N. bureaucracy to cooperate with all of the investigations now underway (especially the audit being conducted for the new Iraqi government — whose money the U.N. criminally abused), he should resign immediately.