PERMANENTMISSIONOF SINGAPORE TO THE UNITED NATIONS
, 2 3 1E A S T5 I S ' S T R E E TN E W Y O R K ,N Y 1 0 0 2 2 TEL: (212)8260840 FAX: (212)8262964

RESPONSESBY THE DELEGATION OF SINGAPORE TO THE DATED I JUNE 2006 SECRETARIAT'S RESPONSES ON THE REPORT OF THE OFFICE OF INTERNAL OVERSIGHT SERVICES ON THE COMPREHENSIVE MANAGEMENT AUDIT OF THE DEPARTMENT OF PEACEKEEPING OPERATIONS, (A1601717), FIFTH COMMITTEE, 12 JUNE 2006.

(Dept of Management and the OIOS) for their I would like to thank the Secretariat 1 to has a numberof comments handoutsdated 1 Jun 2006.My delegation in responses the but make on theseresponses, I will do so later. What I needto do first is to bring a very attention. to troublingdevelopment everyone's leave Officer amongthe 8 staff placed on administrative It looks like a Procurement 2 "accused" or at the very least falsely identified. In its report has been mistakenly OIOS alleged that this officer was involved in five contractawardsto the AP12005120, when vendor TCIL, while in IINHQ. However,the officer was actually postedoverseas possibly have been involved in awarding the the awards were given! He could not contracts! Even more troubling, the PrincipalAuditor in Charge and the SectionChief officer was not in IINHQ at the time, and seemto have been aware that the procurement were incorrect. It getsworse. The sameofficer was alsoallegedin the that the allegations OIOS report to be involved in an improperbidding exercisein UNHQ. However, the bidding took place in TINHQ three monthsbeforethe officer took office! As we think it doubtful that the officer was in two places at once, we can only concludethat the Even more alarming,the OIOS in allegations the OIOS report were ratherlargemistakes. evenafter they were pointedout. This would hasnot takenstepsto correctthesemistakes be comicalif it wasnot so tragic. raise seriousdoubtsand questionsabout the quality and credibility Theseexamples 3 of the OIOS report. These are not minor lapsesor mistakesthat we are pointing out. and our confidencein the allegations Theseare fundamentalerrors. This clearly shakes findingsin the report. We think OIOS hassomeexplainingto do. Addendum 2 4 Moving on to the handouts dated I Jun 2006,on Question 2, we note that the of has Secretariat taken action on some of the recommendations the Deloitte Reportthat "immediate".If the recommendations were important enoughto be termed were termed "immediate"why were they not referredto the 5th Comm as a matterof priority? It would of the is appear that the Secretariat now seeking endorsement the 5th Comm for its actions "afterthe fact ".

has the While we note that On Question 5, The Secretariat not addressed question. 5 we all actionsare carriedout on behalf of the Sec-Gen. would like to know which senior the official actually commissioned Deloitte study on behalf of the Sec-Gen. Secretariat This is a questionof accountability. It is insufficientto simply statethat all actionsare should come clean taken under the authority of the Sec-Gen. Therefore,the Secretariat the Deloitte and Touche study on and inform us who had specifically commissioned which was carried out from Oct to Nov 2005 at the cost of approximately Procurement

us$500,000.
to 6 On Question 6, there is an attemptby the Secretariat link the caseof the 8 staff The pagescited from the Volcker with that of the Volcker Report.The linkageis tenuous. of under the auspices the Security Council and the High Report pertain to transactions The ProcurementDivision carried out only a few OFF Level Steering Committee. thereafter were Most of the purchases purchases behalf of DESA in the mid 1990s. on conductedby UNDP and UNOPS. For example on the appointmentof Saybolt, the of Volcker report statedthat it was done with the "acquiescence the SteeringCommittee" that the (pg 109 of interim report). On the appointment Lloyds, the samereport stated of "prejudiced and pre-emptedthe competitive process" (pg 109 of SteeringCommittee interim report). The Volcker report also clearly statedthat the selectionof BNP was Division. On Page18, not carriedout by the then Controller,Mr. Takasu, the Procurement "accommodating the concernof the the report mentionedthat the selectionwas made United States about the selection of a Swiss bank" and that "decision makers are politicalconcerns somememberstates."On Page110 of by influenced a needto reconcile Interim report of 3 February, the Volcker panel stated that "Formal financial of the regulationsand rules set out by procurementofficials were repeatedlyand knowingly short-circuitedand violated without a clear and written rationale." LIN Procurement Officials can hardly be blamedwhen they were actingunder the direction of a high level use Steering Committee. The selective of the Volckerreport out of contextby OIOS is facetious. therefore had also referredto the Yakovlev case.It should be borne in mind The Secretariat 7 not investigated a result of the Volcker report. In fact, the Interim as that Yakovlev was The Procurement Servicefound report containeda glowing accountof his performance. out about his son'sinternshipwith a vendor in July 2005. The ASG/OCSSinformedthe Chef de Cabinet,the USG/DM and OIOS of the mattereven before Fox News broke the story. The investigationsfollowed this revelation. We would hope that the points We highlightedabovewould put things in its properperspective. thereforeurge the OIOS to and the Secretariat check its information.Incorrectand misleadinginformationis not helpfulto the process. de was On Question9, responsibility clearlyassigned facto. The fact is thata senior 8 official in OCSSwas takento task, while seniorofficials in DPKO were not, eventhough for activities. Your remarkthat "no one has theyhad oversightresponsibility procurement havebeen that no charges beenblamedor disciplined"may be true in the technicalsense

filed,but this statement fails the testof realityandcommonsense.By virtueof selecting 8 staff members for administrative action, you are in reality attributing suspicion of wrongdoing upon them. If this were not the case, then why place only these 8 on administrative leave? Each passingweek reinforcesthis perceptionand fuither tarnishes the reputationsof these individuals. This has been aggravated the commentsof the by USGDM to the media suggesting that corruptionis pervasive the LIN. To add saltto the at wound, the names of the 8 staff were listed in the draft report which was leakedto the press. 9 In addition,we understand that the draft OIOS report dated30 December mentioned that the ASG/OCSShad not recorded negotiations Lettersof Assist. This was a blatant on mistake.The OIOS was not even awareof the fact that LOAs are exclusivelynegotiated by DPKO withoutthe involvement OCSS. of 10 On Question 10 (a), we would like to make the observation that both DM and member stateswere responsible the understaffingof the IINPS. As can be deduced for from the table providedby the Secretariat, approvalrate was dismal.Therewas only a the l2o/oto 20o/o approvalrate for staff increases requested the LINPS.There shouldhave by been more support for LINPS. However, the question also arises as to why the audit observation was written in sucha way as to pin the blame on Procurement Servicefor the lack of staffl On 10 (b), the Secretariat not answered question. Is the Secretariat has the suggesting that the BOA and OIOS do not have the competence carry out the type of to study assigned Deloitte and Touche?If so, why not? Does this meanthat suchstudies to will now be the preserveof externalconsultants?If we are not mistaken,memberstates traditionally base their assessment oversightissueson the findings of the BOA and of "independent OIOS. However, it seemsthat studies" are now playing that role. Will "independent" studiescommissioned seniorofficials of the Secretariat by now be usedto challenge findings of the OIOS and the BOA? What doesthis meanfor the role of the the BOA and OIOS? The fact that that we have the Secretariatcommissioningaudit investigations mattersundertheir overall purview and responsibilityalsoraisesserious on conflictof interests issues. 11 On Question 11 and 15, the Secretariat's response suggests the DeloitteReport that is the basis for the comprehensive procurementreport to be submitted to the GA. However, delegations remain unclearabout the Deloitte and Touche Report as there has not been a thorough and comprehensive review of the audit report by memberstates.It appears that the Deloitte and ToucheReportis now being usedas a reference point by the from which conclusionsand extrapolations derived. Until member states Secretariat are have evaluated and are clear as to veracity of the conclusions the Deloitte and Touche of Report,I would ask that the Secretariat desistfrom quotingor referringto the Deloitteand ToucheReport. We shouldhavea thoroughdiscussion the findings of the D&T Report. on 12 On Question 12, while it may not be "established practiceto requestall partiesto comment on draft consultancyreports", the fact that the consultants'draft report was presented barely two monthsafter the Procurement Servicewas placedunderthe chargeof

the Controllerand the Director of Accounts.Sinceboth of whom had neverpreviously managed procurement activities,would it not havebeenprudentto sharethe draft with at leastthe seniormanagers former seniormanagers ensure or to that therewereno factualor contextualerrors? 13 On Question 13, the Secretariat has indicatedthat the commentsof DM were transmitted the OIOS. We would like to know what were actually the comments the to of Department Management the OIOS. Please of to maketheseavailableto the Committee. 14 On Question 14, we would like furtherelaboration what D&T foundon the issue on of "internalcontrols"'The Deloitte study statedthat llN employees constitute only the control in the ProcurementService.This seemssomewhathard to believe. Did UNPS have no otherkinds of systemicor technicalcontrolsto preventfraud? How could NIGP arrive at the conclusionthat IIN procurementwas consistentwith public procurement elsewhere they did not look at basicissues if suchas internalcontrols?Why would the US federaland stategovernment utilise this non-profitorganisation time and againif it was so incompetent?In any event,what has OIOS being doing all theseyearswith its auditson procurement, they were not looking into controls? if Perhaps Secretariat the OIOS the and could clarify? Addendum3 ive DPK 15 We would like to know what is meantby "interaction with personnel involved".We understand that the OIOS did not conductany formal interview with the Chief of Field Procurement the context of the comprehensive in review. In fact, he was never told that OIOS was engaged such an exercise. in How is it possiblethat the ASG/OCSS, the as Chief Procurement Officer (underdelegated authorityfrom the USG/DM), and the Chief of the ProcurementService were not interviewed in what was supposedto be a "comprehensive review of procurement?" Worsestill, I understand they werenot even that informedof the audit.

16 The handoutindicatesthat "the OIOS InternalAudit Division Management" decided not to go aheadwith the draft". We would like the OIOS to confirm this point as we understand therewas a finaliseddraft. We would like to know whetherthe draft of the that horizontalaudit could be shared with the Committee. not, why not? We alsounderstand If that the draft was quite complimentary the performance the Procurement of of Servicein many areas. Could that be the reason why the draft wasnot released memberstates? to

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India's querv on actiontaken in relationto 200other cases 17 This is a non answer. CanOIOS specifyif administrative actionwastakenagainst the subjects involved in these200 or so cases? Were they placed on specialleaveto avoid undueinfluenceas was donewith the caseof the 8? OIOS did not involve OCSSin their audit. OIOS onlv becameaware of the delesation of authoritv after the report was finalised. 18 What does the phrase"interactedwith TINPS and the HCC" actually mean?Were senior staff of IINPS, who by virtue of their position would have a wider knowledgeof issuescontactedor was it only confinedto middle and junior level staff of UNPS ? The other nagging question is whether the OIOS was really aware about the delegationof authority.In para 1 they statedthat they knew about it. However in para 3, the OIOS indicated that they "requestedand obtainedthe documentationfrom the Office of the ASG/OCSS"after the matterwas raisedby him i.e. after the OIOS report was published. We have been told by the OIOS that the Delegationof Authority only cameto light after they were alertedto it by ASG/OCSS.In addition,as claimedby the OIOS, if they had known about the debateon the delegationof authority,why didn't they reflect this crucial informationin their report? OIOS 2nd para 19 The OIOS recofiunended that "the SecretaryGeneral should take action to hold in senior management DPKO and DM accountable lapses in internal controls and for failureto establish high level of ethicalintegrity..........". a But the fact remains that the in in seniormanagement DPKO were not held accountable the samemanneras the OCSS, even though most of the problemsin the audit report, such as budgeting,inventory and pertained field operations requisitions, to that cameunderthe chargeof the DPKO. Did OIOS take into accountthe views of the ASG/OCSSwhen it prepared its report? OIOS is suggesting that it can act on information provided by senior UN Management.This raisesdoubts as to whether OIOS is indeed plaving its role as a and the Secretariat. watchdogof seniormanaqement 20 The Secretariathas indicated that "the audit process norrnally requires senior and received management act on draft reportsand to consolidate provide the comments to from the managersresponsiblefor specific functions audited. Accordingly OIOS had indeedinformed the ASG/OCSSand other staff membersin the samesituationthat their throughthe USG/DM. OIOS however suggested the that commentsshouldbe channelled USG/DM forward thesecommentsto OIOS. This was done by USG/DM and OIOS had taken all commentsinto accountin finalising its audit". First this confirmed that OIOS throughthe relevantUSG, in this case input on its draft reportsto be channelled expected the Mr Burnham.Second, USG/DM had no wish for the ASG/OCSS'input to be conveyed its But he to OIOS. It was the ASG/OCSSwho forwarded input directly to USG/OIOS.

was then told by the USG/OIOS that she would only considerinput submittedby the USG/DM. 2I These are argumentsraises serious doubts about OIOS's role and the highest independent body in the Secretariat wherestaff can turn to. They also call into question the independence OIOS and its ability to acceptunvarnishedinformation from relevant of parties.In the attemptsto get senior management f'to act on draft reports and to to consolidateand provide the commentsreceived from the managers",how can we ensurethat relevant information are not suppressed? OIOS should be acting on all information that it deemsrelevant,and not constrained strict hierarchicalstructure. by There seem to be an inherentshortcomingin the audit processand the channellingof information as it promotes a conflict of interest.Why can't there be a direct line from managers OIOS ratherthan this "filtering" doneby SeniorManagement this casethe to (in USG/DMX We may needto look into and correctthis anomalv.
t indicated that

or auditsw

nd control control. whv then do we need an audit?

irectlv address

tion based the core

such audit is

22 The OIOS stated that all audits by the OIOS "include an assessment internal of controlsrelevantto the subjectbeing audited".It begs the previous questionas to why OIOS or the BOA did not conductthe studythat Deloitte was commissioned do at such to greatexpense?