U.N. Best Practices

May 5, 2006
The Wall Street Journal
Original Source: http://online.wsj.com/article/SB114679661661544615.html

Deep in the weeds of Turtle Bay, U.S. Ambassador John Bolton has been hacking a path toward United Nations reform -- an effort about as fraught as Marlow's quest for Captain Kurtz in Conrad's Heart of Darkness, and no less horrifying.
But here's the good news: Two reports, released late last month by Congress's Government Accountability Office, are shedding light on how the U.N. mismanages its procurement and auditing functions. U.N. bureaucrats may be trying to downplay the findings, but the rest of us should pay attention.
Consider procurement. Thanks to various Oil for Food investigations, we learned that Alexander Yakovlev, a middle-ranking U.N. procurement officer, siphoned $1 million in bribes from $79 million worth of U.N. contract work. Mr. Yakovlev pleaded guilty in a U.S. court to three counts of fraud and money laundering last August.
But that's just the beginning. In January, Secretary General Kofi Annan placed eight top procurement officials on special leave, pending investigations by the U.N. and U.S. One of these officials is Sanjaya Bahel, former head of the U.N.'s Commercial Activities Services as well as its Post Office. Among other charges, Mr. Bahel, who also worked for the Indian Defense Ministry while at the U.N., is alleged to have improperly steered U.N. peacekeeping contracts to several Indian companies, one of them government-owned.
Also in January, the U.N.'s Office of Internal Oversight Services conducted an audit of U.N. peacekeeping procurement, the value of which has quadrupled over the last decade to $1.6 billion. The Office found that $110 million worth of expenditures had insufficient justification; another $61 million bypassed U.N. procedures; $82 million had been lost to various kinds of mismanagement; close to $50 million in contracts had shown indications of bid rigging; and $7 million were squandered through overpayment. That's a total of more than $300 million.
Senior U.N. management has responded with denial: Not a penny was lost from the organization, insists Deputy Secretary General Mark Malloch Brown. But that point is hard to credit in light of the GAO's findings. Among them: The U.N. has set no training requirements for its procurement staff; has no independent process to address vendor protests; and has no internal mechanisms either to monitor procurement or identify areas prone to fraud or mismanagement.
On auditing, too, corruption starts at the top: Along with Mr. Yakovlev, the other U.N. official to have been recently indicted in the U.S. for bribery is Vladimir Kuznetsov, formerly head of the U.N.'s budget oversight committee. In theory, the oversight office is supposed to be an independent agency. In practice, it relies for its funding on the very U.N. agencies it is supposed to monitor and investigate.
The result, the GAO notes, is that by denying OIOS [oversight office] funding, U.N. entities could avoid OIOS audits or investigations. A case in point was Benon Sevan's refusal to fund an audit of the $100 billion Oil for Food program, which he administered and from which he is alleged to have personally profited. That behavior is only symptomatic of ongoing U.N. practices: Oversight officials tell GAO investigators that they have no authority to enforce payment for services rendered and there is no appeal process, no supporting administrative structure, and no adverse impact on an agency that does not pay or pays only a portion of the bill.
There's more of this, and we urge readers to see for themselves at www.gao.gov. Meantime, it would help if the Bush Administration paid more than lip service to holding the world body to account, not least by holding up its U.N. dues until meaningful reform is achieved. Until that happens, the world body will continue to breed corruption without remedy or consequence, in plain sight.