UN to Spend a Million Dollars Rooting Out Fraud

By Thalif Deen
July 6, 2006
Inter Press Service News Agency
Original Source: http://www.ipsnews.net/news.asp?idnews=33887


UNITED NATIONS, Jul 6 (IPS) - The United Nations, which is trying to root out corruption in its procurement services, is spending over a million dollars on legal and consultancy fees in an ongoing investigation which has so far offered little or no productive results. 

The Headquarters Committee on Contracts has approved a total of 485,000 dollars as a retainer to a legal firm in New York for the continued provision of outside legal counsel to represent the Organisation and staff members through December this year. 

As a result of preliminary investigations by the U.N. Office of Internal Oversight Services (OIOS), eight staffers were placed on administrative leave with full pay last January. But no single charges have been framed against them so far, nor have they been exonerated, leaving them virtually in limbo. They have essentially been on a paid vacation for the last six months. 

The U.S. Attorney for the Southern District of New York has taken over the investigations and is looking into criminal intent and alleged fraud charges against some or all of the eight staffers. 

But since the U.N. Office of Legal Affairs is unable to predict how long the U.S. investigation would continue, the law firm hired by the U.N. Secretariat had its retainer fees increased -- from 177,698 dollars (February through April 2006) to an aggregate of 485,000 dollars (through December 2006). 

Meanwhile, the Secretariat has already spent about 500,000 dollars on a New York consultancy firm for an audit report investigating procurement fraud in the U.N. system, bringing the total cost of the ongoing probe to about a million dollars. 

The Independent Procurement Task Force, operating under the umbrella of OIOS, is investigating over 500 cases relating to procurement. 

The only significant success so far relates to the arrest of a senior U.N. procurement officer in August last year, by the U.S. Federal Bureau of Investigation (FBI), and his guilty plea in U.S. federal court. 

A report by the OIOS early this year said that there is substantial evidence of abuse in procurement for U.N. peacekeeping operations leading to financial losses and significant inaccuracies in planning assumptions. 

The overall losses cited by the OIOS could be as high as 300 million dollars. 

But according to Deputy Secretary-General Mark Malloch Brown, There is strong disagreement between OIOS and the Department of Peacekeeping Operations (DPKO) about the methodology and quality of parts of the report, which we need to resolve. 

Asked about the status of the eight U.N. staffers, Malloch Brown told IPS in an interview in May: Frustrated and still on leave. 

They are being paid with our insistence. But reputational prudence requires us to put them on leave while this is being sorted out. It amounts to no kind of disciplinary findings against them or assumption of guilt and we devoutly hope that some or all of them will be able to come back to work. 

Malloch Brown also said: We have to let these investigations complete because the allegations that arose, not just out of the audit, but for some of them out of other complaints made to OIOS, are specially serious. 

They would be derelict to allow people to be on the job until these charges are being cleared up. I can tell you that every week. 

Singapore, one of whose nationals is among the eight U.N. staffers on administrative leave, has taken a lead role in pushing the Secretariat to expedite the long drawn out investigation. 

Ambassador Vanu Gopala Menon of Singapore says these investigations should be completed as a matter of urgency. Since no charges have been framed against any of the eight staffers, there is the factor of due process and basic decency. 

If this was all a wild goose chase, then we will also need to look into the reasons for that, Menon told the U.N.'s administrative and budgetary committee last week. 

Addressing the same committee last month, Raziff Aljuneid of Singapore said: Despite all the human and financial resources that have been thrown into this investigation, it seems odd that not a shred of evidence has been adduced to substantiate the alleged 'pervasive corruption' in the U.N. and 'substantial evidence of abuse in procurement'. 

The only logical conclusion that one can draw from this is that there is either nothing to be found, or that the entire army of internal and other investigators are grossly incompetent, he added. 

The OIOS investigation has also smacked of a comedy of errors. One of the procurement officers, who is on administrative leave, has written to the OIOS saying the allegation that he was involved in five contract awards to a vendor was totally off the mark because he had been posted overseas during that period and was not involved in awarding any contracts in New York. 

As Aljunied told the U.N. administrative and budgetary committee: Even more troubling, the principal auditor in charge and the section chief seem to have been aware that the procurement officer was not in U.N. headquarters in New York at the time, and that the allegations were incorrect, he said. 

It gets worse. The same officer also alleged that in the OIOS report he was said to be involved in an improper bidding exercise in U.N. headquarters three months before the officer took office. 

As we think it doubtful that the officer was in two places at once, we can only conclude that the allegations in the OIOS report were rather large mistakes. Even more alarming, the OIOS has not taken steps to correct these mistakes even after they were pointed out. This would be comical if it was not so tragic, Aljunied said. 

In a report to the General Assembly last month, U.N. Secretary-General Kofi Annan said the value of U.N. procurement has significantly increased over the last two years, from 1.0 billion dollars to 1.7 billion dollars, primarily as a result of the unprecedented surge in peacekeeping operations. 

The increase has not been matched by an appropriate increase in human resources, he told the General Assembly. 

Annan has pledged to take concrete measures on procurement reform -- including strengthening of internal control measures; optimising U.N. acquisition and procurement management; and strategic management of U.N. procurement. 

The more concrete measures include mandatory ethics training; a whistle-blower protection policy; financial disclosure of all staff involved in procurement activities; and the restructuring of the headquarters committee on contracts.