U.N. Cites $20 Million in Fraud

Corruption Is Alleged in Congo, Kenya, Greece and New York

Washington Post Staff Writer
Tuesday, October 21, 2008; Page A13

UNITED NATIONS, Oct. 20 -- A U.N. task force has uncovered five new cases of corruption, fraud and mismanagement involving $20 million in contracts throughout the international body, according to the unit's annual report to the U.N. General Assemblyand sources familiar with the findings.

The cases in the U.N. Procurement Task Force's report, which will be formally presented to U.N. members Thursday, span air charter services in Congo, office supplies in Kenya, consulting jobs in Greece and payroll services at the New York headquarters. They are the latest cases in a three-year investigation into U.N. purchasing that has exposed more than $630 million in contracts tainted by fraud, corruption or mismanagement at the United Nations.

The task force, headed by former U.S. federal prosecutor Robert Appleton and staffed by up to 18 white-collar crime experts, plans to examine at least eight more cases -- including multimillion-dollar scams at a U.N. office in Afghanistan and Geneva as well as in U.N. peacekeeping missions -- before its mandate expires Dec. 31. It will leave behind 150 incomplete cases, including 50 cases involving fraud or corruption.

In some cases, the report did not specify the amounts involved or the identities and nationalities of the companies and officials implicated, but sources familiar with the findings provided those details.

One case features a scheme by two U.N. peacekeeping officials in Congo to steer $13 million in contracts to an Angola-based air charter company between mid-2005 and 2007; the officials furnished the company with confidential documents and insider information. Another involves a U.N. procurement official who provided insider information and documents to a French firm in an effort to help it secure about $5 million for contracts to inspect humanitarian supplies. The scheme, which dates to the 1996-2003 U.N. oil-for-food program in Iraq, ultimately failed and the business went to another company.

A third case involves two American employees, tasked with reviewing the United Nations' payroll and benefits policies in New York, steering $2 million in contracts to private firms in which they had a financial stake, thereby compromising "the integrity of the U.N. procurement process," according to the report. It added that the employees sought to "obstruct" the subsequent investigation "through the use of deletion software on UN computers to erase relevant documents and files."

In another case cited in the report, a Kenyan employee of the U.N. Office for Project Services -- which purchases supplies for U.N. operations worldwide -- solicited kickbacks and directed more than $350,000 in contracts to 12 companies linked to her husband and other relatives and friends. That official, and another U.N. employee, were subsequently fired.

And finally, the report describes officials with the U.N. Department of Economic and Social Services directing tens of thousands of dollars in contracts related to a project in Greece to associates and at least one relative without a competitive bidding process. A top official at the agency is also accused of using money earmarked for the Greek program to pay a consultant for a job he had done previously.

The U.N. task force was established in January 2006 to investigate corruption in U.N. procurement following the exposure of a Russian purchasing agent who received more than $1 million in kickbacks from companies doing business with the United Nations. The task force has secured misconduct findings against 17 U.N. employees, sanctioned 22 companies and provided evidence leading to the conviction of a top U.N. procurement official.

But it has butted heads with U.N. departments that found its methods too aggressive, and with U.N. member states -- including India, Russia and Singapore -- who say the unit has denied due process to their citizens.

The U.N. Office of Legal Affairs has resisted task force recommendations to pursue criminal charges against corrupt U.N. officials and contractors in foreign courts and to recover ill-gotten profits in foreign courts. "The task force's recommendations of recovery actions -- supported by documentary evidence of fraud, corruption and misappropriation of funds resulting in losses and damages -- have not been vigorously pursued," the report says.

It also criticized the United Nations' system for monitoring corrupt firms, noting that one company suspended for misconduct by the world body continues to do business with other U.N. funds and agencies. In "more than a handful of cases," the report said, "perpetrators of fraudulent and corrupt schemes have been able to simply reconstitute themselves under a separate corporate identity."

The task force has also come under scrutiny. The U.N. Board of Auditors conducted an inquiry following allegations by Singapore that the task force had trampled the rights of one of its citizens. While the auditors cleared the task force of violating due process rights and said that it "may have served as a deterrent to corrupt behaviour," their July report also played down the extent of wrongdoing, saying the task force "did not expose widespread corruption." It said the United Nations could identify only "clear losses of $25 million, of which $20 million related to the same person."

But the task force countered that the full dollar amount of a contract tainted by corruption -- not just the money that changes hands through corruption -- should represent the damage to an organization. "The actual monetary loss is not the appropriate measure of harm in a corruption case," the report stated.