U.N. Antifraud Unit Is in Jeopardy
Singapore, a Major Force In Voting Bloc, Seeks to Shut
Procurement Watchdog

By James Bandler and Steve Stecklow
October 8, 2007
The Wall Street Journal
Original Source: http://online.wsj.com/article/SB119180486561551826.html
The future of an internal United Nations antifraud team that has identified more than $610 million in allegedly tainted contracts is in doubt.
The watchdog unit was created nearly two years ago, as the world body stepped up efforts to root out corruption in the wake of the oil-for-food probe. That investigation had identified rampant fraud in a program designed to let Saddam Hussein's Iraqi government sell oil in exchange for humanitarian supplies. The contract-fraud unit has investigated bid-rigging, bribery and other abuses at U.N. headquarters, and in peacekeeping missions abroad, identifying more than $25 million that it says was wasted or ended up unjustly enriching vendors and their agents. The group's work also led to the conviction in June of a U.N. official on bribery charges.
Funding for the 15-member unit, the Procurement Task Force, is set to expire at the end of this year. Although the U.S. and European Union, as well as U.N. Secretary-General Ban Ki-moon, support renewed funding for the team, the U.N. is facing pressure from at least one influential member, Singapore, to shut it down, according to four people familiar with the matter.
They can certainly make it hard to keep the task force operating, said one of them.
U.N. spokesman Stéphane Dujarric said the secretary-general recognizes the value of the work of the task force, which along with strengthened internal controls is an integral part of his efforts to increase accountability at the U.N. Mr. Dujarric added that as with all budgetary matters, continued funding for the task force is ultimately the decision of the General Assembly.
The task force's funding is determined by a General Assembly committee that is dominated by a voting bloc of developing countries. Singapore is a major force in that bloc.
•  The News: The U.N. is facing pressure from at least one member, Singapore, to shut down an antifraud task force.
•  The Background: The group, set up in the wake of the oil-for-food probe, says it has identified more than $25 million in misappropriated funds.
•  What's Next: A committee dominated by a bloc of developing countries will determine if funding continues beyond this year.
Singapore is unhappy with the treatment of one of its diplomats, who was placed on administrative leave and then investigated by the task force. The diplomat, Andrew Toh, an assistant U.N. secretary-general, was cited for mismanagement and failing to provide financial information sought by the investigative group.
Mr. Toh, in an interview, denied any wrongdoing and said two U.N. administrative panels have subsequently concluded he was denied due process and treated unfairly. If I was as corrupt as they allege, why are they paying me? he asked. A U.N. official said one panel had reached that conclusion but that a higher judicial body, which will determine Mr. Toh's future at the U.N., hadn't yet reached a decision.
A representative of the Singapore mission to the U.N. didn't respond to questions submitted Thursday.
The U.N.'s poor track record of self-policing was highlighted by findings of the oil-for-food investigative committee headed by former Federal Reserve Chairman Paul A. Volcker. His committee found that the U.N.'s in-house watchdog, the Office of Internal Oversight Services, was understaffed and was weakened because some of the programs it investigated had control over its budget.
To strengthen the U.N.'s investigative capabilities, the procurement task force was established in January 2006 within the oversight office, with a mandate to focus on contract fraud. It is headed by Robert Appleton, a former assistant U.S. attorney in Connecticut, who served as special counsel to the Volcker committee.
To date, the task force has identified at least 10 significant instances of fraud and corruption involving contracts at the world body, according to an internal U.N. report dated Aug. 17. The alleged wrongdoing stretches from the U.N. headquarters in New York to peacekeeping missions overseas.
U.S. prosecutors said the task force's spadework helped them to convict in June a former U.N. procurement official, Sanjaya Bahel, on fraud and bribery charges. He was found guilty of helping a friend secure $100 million in U.N. contracts in exchange for a cut-rate deal on two luxury Manhattan apartments and cash.
Some of the task force's findings read like espionage novels. In a case involving bid rigging for food-ration contracts for U.N. troops in Liberia and Eritrea, employees for a unit of http://online.wsj.com/quotes/main.html?type=djn&symbol=EnterSymbol Compass Group PLC, a British food-services conglomerate, obtained competitors' bid submissions from a U.N. employee. Then, using equipment from a local office-supply store, they created a revised bid with a lower price and secretly replaced the original bid at the U.N. office.
The Compass unit won the contract and went on to defraud the U.N. of about $860,000 to make up for the losses it sustained from the lower bid, the report stated. After the task-force probe, the Compass unit lost its right to bid for U.N. contracts.
A Compass spokesman said that two employees had been fired and that the company had put measures in place to prevent such an incident from occurring again.
Corruption problems in Africa have consumed much of the task force's time. In the August report, the task force found there was a collapse of ethical culture among procurement officials working for the U.N.'s largest peacekeeping mission in Congo. One staffer allegedly solicited bribes from vendors for nearly two decades, the report found. The staffer was placed on leave.
Write to James Bandler at mailto:james.bandler@wsj.com james.bandler@wsj.com and Steve Stecklow at mailto:steve.stecklow@wsj.com steve.stecklow@wsj.com