Watchdog Body Finds Irregularities in U.N. System

By Thalif Deen
September 28, 2006
Asian Tribune
Original Source: http://www.asiantribune.com/index.php?q=node/2210
United Nations, 28 September, (IPS): The U.N. Office of Internal Oversight Services (OIOS), the organization’s 12-year-old watchdog body, has uncovered a rash of financial irregularities, including misappropriation of funds, waste, breaches of regulations, wire fraud and conspiracy to commit money laundering.
As a result of its investigations, the OIOS says it has identified a total of some 49.2 million dollars in cost savings, while actual savings and recoveries amounted to 14.2 million dollars during 2004-2005. 
Of the more than 60 U.N. entities under investigation, at least five pose particular oversight challenges owing to their high financial exposure and/or to their complexity as a result geographical dispersion or a broad scope of work. 
The five U.N. bodies or departments under intense OIOS scrutiny include the Department of Management, the Office for the Coordination of Humanitarian Affairs (OCHA), the Office of the U.N. High Commissioner for Refugees (UNHCR), the U.N. Joint Staff Pension Fund and the U.N. Compensation Commission. 
These entities require extensive and continuous oversight coverage by OIOS, says a 34-page report released Tuesday. 
The report, which will go before the current session of the U.N. General Assembly, lists a long catalogue of irregularities. 
The U.N. Compensation Commission, which was set up to settle war reparation claims after the 1990 Iraqi invasion of Kuwait, has approved more than 52 billion dollars in award payments. 
But the report says there was no reasonable assurance of the effectiveness of the controls used in the certification and approval of vast sums of money as compensation. 
In addition, too much reliance was placed on governments and international organizations that received award payments without adequate monitoring and oversight by the Commission. 
While the commission has completed processing claims, it is still responsible for the payment of about 30 billion dollars of unpaid claim awards. This, the report says, will constitute one of its major tasks in the future. 
The strongest criticism of the commission is that it has not provided adequate audit coverage for the claims process. 
With the audit resources provided, OIOS has been able to audit less than six percent of the 52 billion dollars in claims awarded. 
As a result of the limited resources provided, the management of the Commission has accepted a level of risk that OIOS considers to be unacceptable to the Organization, the report says. 
Of the investigations relating to U.N. procurement, the chairperson of the U.N. Advisory Committee on Administrative and Budgetary Questions has been charged with money laundering offences. His criminal case is currently pending at the U.S. Attorney's Office for the Southern District in New York. 
In a second investigation relating to procurement, a staff member had set up an offshore company that facilitated the illicit and secret payments of currency by outside companies to himself, and arranged for those companies to be awarded procurement contracts by the United Nations. 
Last year, the staff member pleaded guilty to violations of the U.S. code relating to wire fraud and conspiracy to commit money laundering. He is currently awaiting sentencing. 
At the Economic Commission for Africa (ECA) in Addis Ababa, one former staff member printed 10 duplicate ECA cheques and sold them to a retired staff member, who cashed them. As a result, the U.N. suffered a loss of 179,000 dollars. Both former staff members are being prosecuted. 
An investigation at the Economic Commission for Europe in Geneva produced evidence of a staff member misusing laptop computers provided for the discharge of his official duties by accessing pornographic and pedophile internet sites, downloading related material and viewing an x-rated DVD on one of the computers in his office. 
A common practice system-wide was the misuse of official vehicles by current and former senior U.N. officials in several duty stations overseas. In one case, the systematic misuse of U.N. vehicles for private purposes, mostly during weekends and holidays, had resulted in a financial loss of about 35,000 dollars. 
The OIOS has also expressed concern over the investments made by the U.N. Joint Staff Pension Fund whose assets have reached a staggering 32 billion dollars. 
These assets are potentially at risk, says the OIOS because of the fund's real estate investment portfolio. 
While acknowledging that the pension fund has maintained a broadly diversified portfolio by property type, geographical location and investment vehicle, the OIOS found that those funds generally carried higher risks than conventional real estate funds and required more versatile risk-to-reward tolerance. 
They also required more specialized investments skills than traditional real estate investment vehicles. 
But the pension fund, in turn, has challenged the OIOS over its right to conduct audits. The fund has said it is not a department or office within the U.N. secretariat, but rather a subsidiary organ of the General Assembly with an independent inter-agency entity status. 
Therefore its lines of reporting differ from those of other offices that OIOS is investigating. 
The General Assembly may wish to consider clarifying the reporting requirements of OIOS with regard to the (Pension) Fund, the report says. 
- Inter Press Service (IPS) News Agency -