UN PROCUREMENT REFORM SHOULD BE TOP PRIORITY, CHAIRMAN OF ACABQ TELLS FIFTH COMMITTEE

Press Release
GA/AB/3107

UN PROCUREMENT REFORM SHOULD BE TOP PRIORITY, CHAIRMAN OF ACABQ TELLS FIFTH COMMITTEE

Committee Takes Up 14 Reports from Board of Auditors; Board Chairman Says Some Reports 'Qualified' for Insufficient Evidence

The United Nations system should accord top priority to procurement reform due to the large sums of resources spent on, and the irregularities uncovered in, acquisitions, the Fifth Committee (Administrative and Budgetary) was told this morning, as it took up financial statements and reports of the Board of Auditors and discussed human resources management.

The suggestion was made on behalf of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) by its Chairman, Conrad S.M. Mselle, while introducing the ACABQ's views on the auditors' reports. He said that irregularities persisted in the recruitment of consultants. "Some of these practices give the impression of favouritism and cronyism on behalf of the old-boy network", he said.

Introducing the Board's reports on 14 United Nations organizations, the Chairman of the United Nations Board of Auditors, Osei Tutu Prempeh, said that the Board had qualified its audit statements on the financial reports of six organizations and peace-keeping operations. For example, in the United Nations Development Programme (UNDP), the United Nations Population Fund (UNFPA), the United Nations International Drug Control Programme and the United Nations Environment Programme (UNEP), the Board had not received sufficient evidence from governments and non-governmental organizations to prove that funds advanced to them had been spent on the purposes intended.

Speaking on human resources management, Germany's representative said that staff to be redeployed under the current budget-cutting exercise should have the opportunity to fill positions encumbered by those on fixed- or short- term appointments. If those staff who were hired on a short-term basis were given preference in recruitment, the process of advertising posts externally would be put in doubt. He recalled that concerns had been expressed on the issue of short-term appointments.

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The representative of the Democratic People's Republic of Korea asked why two of his nationals, who had passed the national competitive examinations, had not yet been hired. Recruitment should be based on equitable geographical representation, with due regard to competence.

Statements were also made by the representatives of Iran, Uganda, Cuba, Portugal, Japan, Nicaragua, Costa Rica -- also speaking for the "Group of 77" developing countries and China -- Bolivia and Egypt. The Assistant Secretary- General for Human Resources Management responded to questions raised by delegations.

The Committee will meet again at 3 p.m. to continue discussing the various programmes in the proposed 1998-2001 medium-term plan.

Committee Work Programme

The Fifth Committee (Administrative and Budgetary) met this morning to taken up the financial statements and reports from the Board of Auditors covering the biennium ending 31 December 1995, from the Advisory Committee on Administrative and Budgetary Questions (ACABQ) and the Secretariat's responses to the recommendations of the Board. The Committee would also continue discussing human resources management.

Financial Statements and Auditors' Reports

A note by the Secretary-General on the implications of extending the term of office of members of the Board of Auditors (document A/49/368) transmits to the Assembly the Board's views on such an extension from three to four or six years. The comments were made in response to a General Assembly resolution calling for such analysis.

In an annex to the note, the Board says it favours a six-year term over a four-year one in order to ensure a smooth pattern of rotation of the three members of the Board. Under the six-year appointment, the terms of offices of a member would expire every two years. It suggests that if the Assembly adopts the six-year term of office, appointments to the Board must be synchronized with the financial reporting cycle of the Organization. The first appointment to a six-year term would have been from 1 July 1996, the start of the audit cycle on the financial statements for the biennium 1996-1997 and every two years thereafter. It states that 1 July remains the most appropriate date for incoming members to assume office.

It calls for transitional arrangements to move from the existing pattern of annual appointments to the Board to one of appointments biannually, starting 1 July 1996.

Another note from the Secretary-General transmits to the Assembly the Board of Auditors' report on the liquidation audit of the United Nations Transitional Authority in Cambodia (UNTAC) (document A/49/943). The Board's work covered the period from 1 October 1993 to 30 June 1994. What it examined included the planning for the liquidation process, the disposition of non- expendable property, financial records kept for the procedure and the process itself.

The liquidation involved the disposition of property worth some $175 million, according to the report. Items worth $120.4 million were transferred, $41.1 million donated, $5.9 million sold, $5 million stolen, and $2.6 million written-off. The UNTAC was owed $224.4 million in assessments by the end of June 1994. At that time, it had assets of $244.5 million and liabilities of $246.4 million.

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In their report, the auditors found that the realizable values of property had not been independently determined before the liquidation date. An exercise should have been conducted by an independent team to do so by 1 October 1993. They also found an unexplained difference of $7.9 million between the UNTAC assets status report of 8 November 1994 with the total of UNTAC assets declared in a report of the Secretary-General. There was no evidence that non-erected prefabricated housing units worth $2.7 million were actually transferred at their original cost as directed by the Secretary- General. There was no acknowledgement for the receipt of 968 out of the 4,811 vehicles transferred to different missions at the date of the audit. Communications gadgets worth $1.8 million had not been accounted for, while electronic data-processing equipment worth $720,069, believed to have been lost through fraud or negligence, were under investigation. The value of prefabricated housing units reportedly donated to the Cambodian Government was higher by $3.3 million than what was acknowledged by the Government's officials.

The many discrepancies in the acknowledgement of assets transferred from UNTAC to other missions, mainly due to delayed and inadequate responses, rendered the confirmation exercise ineffective, according to the Board. For example, of 20,717 items of communications equipment worth $12.3 million transferred to 21 missions and United Nations entities, only 8,962, worth $3.1 million, had been confirmed as received. While some missions acknowledged only the quantities of the items they got, others referred to their values only, making the matching of transfers with acknowledgements ineffective, according to the Board. Inventory worth $62.6 million were pending consideration as to whether they should be categorized as write-off cases.

The Board also found that, contrary to United Nations accounting procedures, disbursements of $2.3 million were made when obligating documents had not been established. For the period 1 October 1993 to 31 December 1993, with UNTAC in liquidation, disbursements for civilian pay and air operations exceeded allotments by $9.5 million. That action was taken without the Controller's prior approval.

The Board recommends that the difference of $7.9 million between the UNTAC assets status report of November 1994 and those reported by the Secretary-General's report should be investigated to set the correct value of assets disposed of. The $3.3 million difference between the value of prefabricated units reportedly donated to the Cambodian Government and what it acknowledged and the loss of communications and electronic data-processing equipment worth $2.5 million should be investigated.

It adds that the review of outstanding property write-off cases worth $62.6 million should be sped up and the conditions in which disbursements of $2.3 million were made without necessary papers should be probed.

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Also before the Committee, a report of the Secretary-General responds to some concerns on the implementation of the recommendations of the Board of Auditors on an inventory control system for non-expendable property at Headquarters (document A/C.5/50/51). The four main concerns raised by the Board are as follows: property accountability should be transferred to end- users; correcting the deficiencies and updating inventory records will require a physical inventory of non-expendable property; the value of the cumulative inventory of non-expendable property is unreliable; and the inventory controls and property records for non-expendable property are deficient and unreliable.

On the creation of a physical inventory of assets, the Secretary-General writes that one was conducted at Headquarters from June to August 1995. The results showed that there were non-expendable items worth some $19.3 million, special items of about $36 million, and group inventory items worth about $25.1 million for a total value of $80.4 million. The total of the three categories of property has been recorded in a computerized system and constitutes a central record of the Organization's fixed assets at Headquarters. All property owned by or loaned to the United Nations in serviceable condition have been recorded.

There are three categories of non-expendable property -- non-expendable property valued at $1,500 or more per unit at the time of purchase and having a service life of at least five years, including generators, kitchen equipment, major equipment and vehicles; special items, regarded as attractive, easily removable because of their size, and cost $500 or more, including computers, cameras, televisions, facsimile machines, as well as tape recorders; and group inventory items, including furniture and modular work stations.

In a consolidated report which, among other things, comments on the inventory control system for non-expendable property at Headquarters (document A/50/985), the ACABQ welcomes the Secretary-General's intention to delegate to each head of department and office authority over property assigned to that unit. It also trusts that a comprehensive physical inventory of non- expendable property conducted at Headquarters will be extended to field offices. It states that biennial conduct of physical inventories should be used to ensure the efficient use of programme budgets.

The report of the Board of Auditors on the United Nations (document A/51/5-Vol.I) provides information on the various funds controlled by the Organization, such as the regular budget, and the scores of trust funds that pay for various programmes of the United Nations.

The Board recommends that rigorous control over budgetary performance of trust funds should be ensured. Budget performance reports presented to the Assembly should be modified to include actual expenditures and performance closer to the end of the biennium.

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Regarding procurements, the Board recommends that internal control requirements in the modified structure of the Procurement and Transportation Division should be analysed and appropriate internal control systems established. Action should be taken to establish a reliable unified management information system and a database, including one for high-value procurements which were exempted from the bidding process.

Turning to conference services, the Board recommends that the practice of maintaining information on the combined output of regular staff and temporary assistance staff in the translation service should be stopped. Rather, the output of temporary assistance staff should be monitored against total amount spent in hiring them.

It recommends, on human resources management, that the terms of reference of consultants be prepared more precisely, including objectives and output delivery dates. Also, to ensure selection of consultants more competitively, all proposals for consideration of a sole candidate for recruitment should be discouraged. Appropriate norms should be established for selecting consultants from a wider geographical base.

Among many other conclusions, the Board found a steady decline in the net income from revenue-producing activities, from $10.2 million in 1990-1991 to $0.5 million in 1994-1995. The United Nations Postal Administration (UNPA) accounted for most of the decreases ($6.4 million) in net income as compared to the previous biennium. Nearly 80 per cent of the consultants engaged by Headquarters were from 12 developed countries. Some four developed countries accounted for 47 per cent of all contracts given by the Department for Development Support and Management Services in 1994. The level of remuneration paid by the Department to consultants was from 30 to 35 per cent higher than that paid by comparable organizations.

In 1994-1995, Headquarters engaged 1,178 consultants at a cost of $5.4 million. The Department for Development Support and Management Services arranged 1,031 consultancies for technical cooperation projects at a cost of $14.6 million. The United Nations Office at Geneva, on behalf of the various United Nations organizations in Geneva, awarded 544 consultancy contracts in 1994 and issued nearly 700 special service and reimbursable loan agreements with a value of $4.8 million in 1995. The United Nations Office at Vienna awarded 286 consultancy contracts valued at $0.55 million in 1994-1995. The administration stated that the primary consideration in selecting consultants was the nature and complexity of the services to be provided. The daily average rate paid as consultants' fees by the Department for Development Support and Management Services was $485, although rates varied from $350 to $700 daily for different activities.

On the question of procurement, the Board found that, out of 1,237 re-registered vendors, 1,061 (86 per cent) were based in Europe and the

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American continent. Forty-eight per cent of the suppliers belonged to one Member State and a further 13 per cent belonged to a second. The Board encouraged the Secretariat to ensure that suppliers from a wider geographical base are registered on the vendor roster. In response, the administration had written to permanent and observer missions, asking for their help in advertising and disseminating the registration procedures for vendors within their countries. New sources are also being sought through business journals and seminars or conferences.

Turning to the tendering and bidding procedures, the Board found that, despite its previous recommendation that major procurement above $500,000 should be by open tender, that was rarely used in the procurement process. On the bidding process, the Board's scrutiny of a sample of 49 purchase orders worth over $20,000, issued between 1 January and 30 September 1995, found that in 27 cases, worth some $4.5 million, bids were invited from vendor who had been nominated by the requisitioners themselves. The administration explained that the selection of vendors for a particular procurement is determined by the relevant procurement officer and is approved by the Procurement and Transportation Division at the appropriate level required.

The Board was informed of 11 cases of fraud and presumptive fraud, including theft or misuse of United Nations property and funds, forged bank cheques and improper acquisition of United Nations entitlement.

Total income to the United Nations, including peace-keeping operations, technical cooperation activities and trust funds, was about $9.87 billion. Total spending was $9.44 billion. The Organization's total assets were $5.08 billion and its liabilities were some $2.99 billion.

In a report on the implementation of the recommendations of the Board of Auditors regarding the United Nations (document A/51/488), the Secretary- General states on procurements that a group of procurement officers has been established to review applications from suppliers on the existing roster, and the process of re-registration is almost completed. The registration of suppliers is an ongoing process. Therefore, the evaluation criteria and procedures will be reviewed from time to time on the basis of the experience gained.

The administration will implement the recommendations on the practice of keeping information on the combined output of regular staff and temporary staff in translation services, the Secretary-General says. As to the selection of consultants, he states that specific needs, time constraints and unavailability of other candidates may force selections on single-candidate bases. Noting the Board's observation on the recruitment of consultants from a limited number of developed countries, the Secretary-General states that efforts will continue to recruit consultants on as wide a geographical basis as possible.

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The Board's report on United Nations peace-keeping operations (document A/51/5-Vol.II) shows that, while there were nine active operations funded outside the regular budget at the end of 1991, the total had risen to 17 active missions by the end of 1995. Expenditures, which had totalled $819 million in 1990-1991, rose to $5.81 billion in 1994-1995, accounting for 56.9 per cent of the Organization's total expenditures for all activities. The largest mission was the former United Nations Protection Force in Bosnia and Herzegovina (UNPROFOR), which consumed $3.04 billion.

The Board recommended that the control and monitoring of procurement made through letters of assist should be improved. [Note: a letter of assist is a contracting document issued by the United Nations to a government authorizing it to provide goods or services to a United Nations peace-keeping force.] The administration should pay more attention to the management and completion of the liquidation of missions within a specified period by assigning specific responsibility for the post-liquidation functions until all tasks are completed. Standard procedures for transferring and acknowledging assets should be developed to provide a prompt and adequate response and to improve transparency in the disposition of assets.

Before assets are transferred from a liquidating mission to a continuing one, the Board recommends that appropriate evaluation should be conducted to avoid the transfer of unserviceable property. Guidelines on the bidding process should be prepared, indicating when tenders should be by advertisement or by invitation. The Department of Peace-keeping Operations should identify in advance suitably qualified core field personnel who could be dispatched at short notice to set up new missions.

Among the findings was that, due to an over-estimation of need on a contract based on flying hours, the United Nations Operation in Somalia (UNOSOM II) paid $2.8 million in a three-month period for services it had not used. The absence of supporting documents made it hard to confirm the validity of a claim of $21.3 million filed by a contractor. International procurement undertaken at Headquarters totalled $598.6 million in 1994 and $668.5 million in 1995.

In a report on the recommendations of the Board relating to peace- keeping operations (document A/51/488/Add.1), the Secretary-General states, on the need for personnel to set up missions, that the Board's recommendation coincides with ongoing work in developing the operational modalities for a rapidly deployable headquarters for the start-up phase of peace-keeping missions. That arrangement would involve a compact group of multidisciplinary staff, including experts in administration, finance and logistics, fully conversant in the relevant United Nations rules and procedures.

The Board's report on the International Trade Centre of the United Nations Conference on Trade and Development (UNCTAD)/World Trade Organization

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(document A/51/5-Vol.III) recommends that the Centre should adhere to United Nations procedures and ensure, before approving a payment, that it obtains assurance that the goods received are what had been ordered. The Centre, the Board adds, should augment the information contained in the consultants' roster to show previous assessments, experience, technical skills and the languages they spoke. The roster should be updated on a more timely basis; consultants who have consistently failed to provide updated personal histories should be dropped from the records.

According to the report, the Centre's General Fund had total income of $42.5 million, and spent $42.6 million in 1995. It had assets of $1.4 million and liabilities of $1.1 million.

The report on the United Nations University (document A/51/5-Vol.IV) recommends that a more transparent system should be established at the University headquarters and in its regional institutes for selecting, appraising and approving research and other projects. Progress of work relating to research projects should be monitored more closely to avoid delays in implementation and to ensure the quality of output. Effective measures should be taken to attract a larger number of researchers and consultants from developing countries. Print requirements of publications should be periodically reviewed to avoid overstocking and wastage. Methods should be established to dispose of the large stocks of earlier publications either by offering discounts or through free distribution.

The University, according to the report, derives its income from an endowment fund and voluntary contributions. Total income was $96.2 million while total spending was $56.6 million in 1994-1995. Its combined assets were $323.8 million while combined liabilities were $11.3 million.

The report on the United Nations Development Programme (UNDP) (document A/51/5/Add.1) recommends that the UNDP should ensure that all projects with significant expenditure are audited independently. It should establish appropriate controls to monitor payments made in the field and at headquarters under the same contracts. The Programme should ascertain whether any payments to contractors or architects were outside the terms of a contract and, if so, should take appropriate steps to recover the amounts.

The total income of the UNDP General Fund for the biennium ended 31 December 1995 was $3.25 billion, total spending was $2.76 billion, and the surplus of income over expenditure was $490.4 million.

The report on the United Nations Children's Fund (UNICEF) (document A/51/5/Add.2) recommends that the agency stop its deliberate strategy of setting spending levels higher than income. Its headquarters should strengthen its monitoring of the internal control systems in field offices by promptly investigating indications of mismanagement.

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The Board was informed of 66 cases of fraud and presumptive fraud, involving $1.8 million, in the biennium. Of those, 22 cases, involving about $1 million and 22 staff members, were perpetrated in the Kenya country office due to the breakdown of internal controls relating to procurement, disbursements and recruitment. In each of the 22 cases, disciplinary action was taken. Twenty-one staff members have been dismissed and one has resigned. Investigations continue into alleged mismanagement of some $9 million.

The Board's audit of the Greeting Card Operation in New York found that total net proceeds of $35.7 million expected from three National Committees were not transferred by 30 September 1995. As at 28 February 1996, a balance of $1.7 million was still outstanding. Of the Greeting Card Operation's total assets of $196.6 million, as of 30 April 1995, 98 per cent were accounts receivable.

The UNICEF's 1994-1995 income totalled about $2.02 billion. About 82 per cent ($1.65 billion) of income is from governments and intergovernmental organizations. Expenditures were $2 billion.

The Board's report on the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) (document A/51/5/Add.3) recommends improvements in financial management. The Agency should also ensure strict adherence to its management procedures on accepting, disbursing and reporting on project funds in order to assure donors of the effective use of their contributions. The implementation of projects should be expedited. The involvement of UNRWA in any project should be at the start of the planning process to provide the necessary expertise in the development of a feasible project plan and realistic implementation schedules.

The report states that the Agency's total income was $854 million, while expenditure was $678.8 million.

The Auditors' report on the United Nations Institute for Training and Research (UNITAR) (document A/51/5/Add.4) recommends that UNITAR should implement more effective controls over expenditure, in particular staff costs, in addition to collecting outstanding pledges and attracting more income to its General Fund. Disputed charges transferred to UNITAR from United Nations Headquarters should be examined and cleared promptly.

The UNITAR should improve its planning of staff expenditure to ensure that sufficient funds are available to meet staff costs. In 1995, eight of the 19 fixed-term staff employed by UNITAR were promoted. The costs of those promotions, which were unplanned, contributed to the deficit in some of UNITAR funds. Total income of $731,479 was received by the General Fund for 1995 and expenditures were $843,064. However, the separate Special Purpose Grants Fund raised total income of $3.3 million and total expenditure was $3.3 million.

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The Board's report on the voluntary funds administered by the United Nations High Commissioner for Refugees (UNHCR) (document A/51/5/Add.5) recommends that the accounts of the agency's implementing partners should be regularly audited by independent audit authorities. Appropriate criteria should be established for selecting who would benefit from projects, after obtaining adequate information. The abilities of implementing partners to carry out major projects should be assessed in more detail. The deficiencies noticed in the implementation of a project by an implementing partner in the United Republic of Tanzania should be investigated and appropriate remedial measures taken, including the recovery of overpayments. The UNHCR should ensure that project monitoring reports are received on time and used by all programme managers to monitor projects.

The Board also recommended that the procedures for bulk purchase of items should be reviewed in light of the unplanned procurement of Lysol, a disinfectant, for a field office in the former Yugoslavia, which resulted in wasteful spending of some $3 million.

The Board found eight cases of fraud and presumptive fraud. In the United Republic of Tanzania, armed robbers removed more than $120,000 from the safe of an implementing partner. The money was an instalment paid by the UNHCR. The administrator/programme officer in Tashkent voluntarily disclosed in August 1995 that $90,000 had been accepted by UNHCR staff members, including himself, as "unsolicited gifts" in connection with the procurement of roofing sheets. Of that, $80,000 was recovered. The administration dismissed the international staff member concerned; two local staff members voluntarily resigned.

The UNHCR total received income of $1.03 billion in the period ended 31 December 1995. Total expenditure was $1.14 billion. Its total reserves and fund balances were $346.2 million.

The report on the United Nations Environment Programme (UNEP) (document A/51/5/Add.6) recommends that the merits and demerits of the present system of top-down planning and its impact on project implementation should be reviewed. The practice of placing piecemeal purchase orders for commonly used commodities should be avoided. Established rules on procurement, including those relating to competitive bidding, should be enforced more rigorously. Deliveries of supplies by vendors should be monitored against stipulated time schedules and a vendor performance system established early. The inclusion of a penalty clause in contracts should be considered.

At the end of 1995, the total cash and deposits in all UNEP funds was almost $111 million.

The report on the United Nations Population Fund (UNFPA) (document A/51/5/Add.7) recommends that the UNFPA should make more systematic

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assessments of country needs to ensure that it can respond in a well-planned and effective manner when called upon to do so. The UNFPA should determine the role and responsibilities of field staff in relation to national execution of projects and equip field offices to fulfil their tasks. The Fund should establish and periodically review countries' needs and adjust resources for each country accordingly.

According to the report, the UNFPA received income of $577.9 million and had expenditures of $586.4 million. As of 31 December 1995, the UNFPA had bank balances in convertible currencies and time-deposit investments of about $187.5 million.

The report on the United Nations Habitat and Human Settlements Foundation (document A/51/5/Add.8) says that the Board's review of the financial statements of the Foundation and the second United Nations Conference on Human Settlements (Habitat II) showed that they do not conform fully to the United Nations System Accounting Standards. The Board also noted that the income of the Foundation and Habitat II for 1994-1995 had been overstated by $981,854 and $184,817, respectively. The Board observed that the accounts of Habitat II had not been recorded under two separate trust fund accounts, as mandated by the Assembly, one for funding the Conference's preparatory process and the other for supporting the participation of developing countries in the Conference.

The Board recommended that two separate trust funds should be established on the expenditures of the Habitat II Conference. Financial statements should be prepared in conformity with the United Nations System Accounting Standards.

The income of Habitat and the Human Settlements Foundation totalled about $13.7 million, while expenditure was $15.1 million in the biennium ending 31 December 1995.

The report on the Fund of the United Nations International Drug Control Programme (document A/51/5/Add.9) recommends that the Drug Control Programme should take action to ensure timely receipt of audit certificates from various executing agencies. It should consider presenting a performance report which includes a quantified summary of achievements measured against mandates.

The total income of the Programme was $131.4 million and total expenditure was $138.4 million for 1994-1995. Total assets were $97.1 million while total liabilities were $23.7 million.

The Board's report on the United Nations Office for Project Services (document A/51/5/Add.10) recommends that the Office should closely monitor actual spending against budget to avoid the high incidence of overexpenditure. The Board had noted that, as of 31 December 1995, 46 projects executed by the

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Office for Project Services had each exceeded their budget by more than $50,000. A further 24 projects had each incurred expenditures exceeding $5,000 without any approved budget for the year. The Office explained that the 65 overspending had resulted from unforeseen or urgent expenditures.

Total income for 1994-1995 was $59.4 million and total administrative expenditures were $55.6 million.

A note by the Secretary-General transmits the concise summary of the principal findings, conclusions and recommendations (document A/51/283) in the reports of the Board of Auditors for the financial period ended 31 December 1995.

In its own related report on the financial statement and reports of the Board of Auditors (document A/51/533), the ACABQ welcomed, shared or endorsed many of the Board's recommendations. For instance, it calls, on consultants, for immediate action to correct the irregularities in identifying, recruiting and reimbursing consultancies. Further investigations might be needed to take action against those responsible for the malpractices, which have persisted despite the Board's recommendations and the ACABQ's comments. The United Nations spent about $25 million on hiring consultants in 1994-1995.

Statements on Reports of Board of Auditors

OSEI TUTU PREMPEH, Auditor General of Ghana and the Chairman of the United Nations Board of Auditors, introduced the reports of the Board on 14 United Nations system organizations and reviewed some of their contents. He said that the Board favoured a six-year term of office for the auditors.

The Chairman said that the Board had qualified its audit statements on the financial reports of six organizations and peace-keeping operations. For example, in the UNDP, UNFPA, the United Nations International Drug Control Programme and UNEP, the Board had been unable to get sufficient evidence from governments and non-governmental organizations to confirm that funds advanced to them for technical cooperation projects had been spent on the purposes intended. In the case of the United Nations Habitat and Human Settlements Foundation, the Board had qualified its audit opinion on the financial statements due to non-compliance with the format of presentation approved by the Assembly and the overstatement of income by some $1.2 million.

Turning to some specific instances of overpayment, he said that the UNDP had paid $39.3 million for some construction contracts worth some $27.9 million, without the approval of the Contracts Committee. Additionally, the UNDP paid an architect some $3.8 million for four contracts worth about $1.3 million.

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CONRAD S.M. MSELLE, Chairman of the ACABQ, introduced the report of his Committee. Considering the large sums of resources spent on procurement and the irregularities uncovered, the ACABQ said that procurement reform should be a top priority in the United Nations and its funds and programmes.

The reasons for which the Board of Auditors had qualified its opinion in some cases, such as for the UNDP, UNFPA, the Drug Control Programme and UNEP, should be addressed urgently, he continued. Irregularities continued in identifying and recruiting consultants. "Some of these practices give the impression of favouritism and cronyism on behalf of the old-boy network", he said. In one case, a retired staff member who still received a United Nations pension was hired in 1995 as a media consultant and paid $120,000, at a rate of $12,000 a month. The applicable amount should have been a flat rate of $12,000 in any calendar year.

Continuing, he said the ACABQ rejected some of the explanations given by various administrations, that expertise and complexity of work were the reasons for consistently hiring consultants from a narrow geographical base. There were instances when it was more cost-effective to recruit from a larger base, including widening the base for national consultants. As permanent contracts for international civil service came under pressure, there would be a tendency to resort more often to loaned personnel, temporary employees and consultancies under the guise of getting services at lower costs. The ACABQ, therefore, recommended that the Secretariat revert to the previous practice of reporting regularly to the Assembly, through the ACABQ, on the hiring of consultants. The reports should include information on functions performed, nationality, remuneration and the period covered.

Statements on Human Resources Management

DENIS J. HALLIDAY, Assistant Secretary-General for Human Resources Management, responded to a number of questions asked during the 31 October meeting at which human resources management issues were discussed. He said the statement he had read on that day had been distributed to the Committee. On outstanding Joint Inspection Unit (JIU) reports, he said his Office had already seen the drafts of the three JIU reports on recruitment, on geographical distribution of staff and on staff-management relations. The reports were expected to be issued shortly.

He then responded to a series of questions asked by the representative of Japan. On the recent recruitment of P-2 staff, he said that during the period September 1995 to October 1996, the Secretariat had recruited 32 P-2 level staff through the national competitive examination process -- 18 men and 14 women. They had been exempted from the recruitment freeze. Twenty language staff, also exempted from the recruitment freeze, had also been hired during the period of the recruitment freeze -- nine females and 11 males. Responding to the concern about an error in the Secretary-General's report on

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the composition of staff, he said a corrigendum would be issued shortly. The Staff List would be issued next week. Regarding the concern about the impact of the Staff College project on other United Nations training bodies, he said the Secretariat would be on guard regarding the potential impact of the College on those bodies.

Regarding questions raised by the representatives of Costa Rica, Cuba and Iran for more detailed information on redeployment, such as nationality and the impact on geographical distribution, he said that the information would be provided under the agenda item concerning the 1996-1997 budget. If necessary, Member States could be briefed on the redeployment process. Turning to Iran's concerns about the status of Iranian nationals in the Secretariat, he said two Iranians were on the redeployment list. However, the Secretariat was still trying to place the remaining 17 staff scheduled for redeployment either in peace-keeping operations or against established posts. Other concerns of Iran's representative would be responded to in writing to that Member State's Permanent Representative.

On the issue of the crisis of confidence that seemed to be reflected in management-staff relations, he said management representatives had met with staff representatives throughout the Organization on a regular basis in the Joint Advisory Committee (JAC). On the recent Staff Management Consultative Committee (SMCC), held in New York in September, he said that body's President believed it had been a successful meeting. However, staff representatives perceived the meeting differently. Management had asked the SMCC President to chair a staff-management meeting to try to improve the perception of staff representatives and staff-management relations. The JAC was also having a meeting this week.

He went on to say that management sympathized with their union colleagues and the staff under the present circumstances. Management personnel were also staff members. Efforts had been made to have staff union colleagues work along with management, instead of opposing management's efforts that were being pursued within the constraints of the budget resolutions. The staff representatives did not have a monopoly on caring and they were not responsible to the Secretary-General and the Assembly for making things happen. They needed to work with management to find the best possible solutions to difficult situations.

Elaborating on the issue of the current perception of staff-management relations, he said he did not sense that there was a breakdown. His staff had been in daily contact with staff representatives, and they were working together on a number of issues. Although there were many common areas of concern, it was important that problems be addressed with a sense of realism. That would include taking into account such issues as staff performance. Staff morale was low in the present climate as a result of involuntary separations, the departure of long-term staff, unsatisfactory levels of compensation and

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the increase in loan personnel. It had also been very unsettling for the international civil service to be depicted as a bloated bureaucracy. Acknowledging that management was not perfect, he said training had been initiated for management staff through the People's Management Programme, which had been designed to address management deficiencies. The Office of Human Resources Management would continue to try to improve staff-management relations, beginning this week.

MORTEZA MIR MOHAMMAD (Iran) welcomed the responses to some of the questions he had asked and looked forward to the written responses. However, some of the questions he had raised had been lost between the two agenda items -- human resources management and budget savings. He requested more information on the recruitment of short-term consultants. His concern was also related to the ACABQ's concern about that issue.

Mr. HALLIDAY, Assistant Secretary-General for Human Resources Management, apologized to the representative of Iran on the way his questions were being handled. He promised to provide the information on consultants and other related issues raised in the ACABQ's report.

NESTER ODAGA-JALOMAYO (Uganda) sought further details on redeployments and placements and the exchanges between the Secretariat's administration and staff representatives. He asked whether any posts vacated involuntarily would be maintained or whether they were occupied by some other people.

DULCE BUERGO RODRIGUEZ (Cuba) said that information expected from the Secretariat should include the effect of the redeployments on the principle of equitable geographical representation. She reiterated Uganda's question. Concerned about the state of staff-management relations, her delegation wanted staff representatives themselves to brief the Committee. She reiterated her delegation's concern about the Secretary-General's proposal to achieve higher vacancy rates than what had been sought by the Assembly.

REGINA EMERSON (Portugal) said that staff morale was low, due partly to the financial restraints and the uncertainties the staff faced. At the same time, not all the correct procedures were being followed, and the staff felt they were not being given the necessary opportunities to advance their careers. The staff was troubled when vacancies were given to Member States rather than being made available to existing staff to further their career advancement. She wanted to know how many times posts were filled without staff being given the chance to apply.

Mr. HALLIDAY said, in response to Uganda, that document ST/AI/415 had been published to protect staff from losing opportunities due to the recruitment freeze and the demands of the Assembly's budget resolutions. Groups of staff were evaluated at various stages to determine those to be retained or redeployed. Once those to be redeployed were identified, they

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were asked to apply for vacancies, either locally or globally. There were 160 Professional vacancies, and individuals were asked to apply to not more than five positions each. The Secretariat did its best to tell the staff of vacancies. Panels were set up to review and recommend applicants to fill vacancies, with staff involved at many stages of the process. Since there had been no involuntary separations, that process had not affected gender balance or equitable geographical representation. Long service was recognized as much as possible.

Turning to Cuba's question, he acknowledged concerns about staff- management relations, adding the Secretariat had tried to ensure consultations and informal exchanges between the two sides. Some data on the reallocation and redeployment of staff could be provided tomorrow.

Referring to Portugal's statement, he said that procedures were followed properly 99 per cent of the time. The hiring of persons was a major task requiring major investments, if the individual was to stay for 20 or 30 years. Exceptions to the rules on recruitment were rare.

Ms. EMERSON (Portugal) said the list of such exceptions should be circulated to Member States as a conference room paper.

WOLFGANG STOECKL (Germany) asked whether the lists of vacancies circulated to staff were complete and included posts that were occupied by people on fixed- or short-term appointments. Those to be redeployed should have the chance to fill posts occupied by individuals who had not gone through the normal recruitment process. He asked for a breakdown of those who filled Professional posts -- how many were from G to P examinations, from national competitive examinations and short-term staff who sat for examinations to regularize their positions? He also wanted a breakdown of how many posts had been filled by external candidates and how many had been filled by those whose short-term appointments were being regularized. If those hired on a short- term basis were given preference in appointments, the entire process of advertising posts externally would be in doubt. He wanted assurance that that sort of entry into the Organization would be stopped. Concerns had been expressed on the issue of short-term appointments.

Mr. ODAGA-JALOMAYO (Uganda) supported the views expressed by the representatives of Germany and Portugal. He wanted to hear Mr. Halliday's answers. If the processes of the Organization had been fair to staff, there might be no need for a discussion of low staff morale. He asked if all those scheduled to be redeployed had been placed.

Mr. HALLIDAY, Assistant Secretary-General for Human Resources Management, responded to the additional questions. Regarding Portugal's question, he said the information on exemptions from the established recruitment process would be compiled and presented to the Committee by the

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end of the week. In response to Germany's question on the vacancy compendium for the redeployment process, he said his Office "had faced some difficulties" in compiling the compendium. The staff of the Office of Human Resources Management worked hard to ensure that all the vacant posts had been included. As a result, some 160 posts had been included. A great deal of pressure had been put on some management colleagues -- some had even to be harassed -- to ensure that all the posts that were available were put into the compendium. His Office had done the best possible job on that matter.

On the regularization of P-2 entry posts, he said the reference being made was to a process that had been terminated. There had been an attempt to regularize the positions of staff who had been against posts in the Organization for about six or seven years, but who had had no opportunity to sit for the competitive examinations. His Office had insisted that such staff be examined. That was done twice in 1996, but the procedure had since ceased. The staff concerned did not include staff moving from the General Service to the Professional category. They included the percentage of posts which had been set aside for the recruitment of nationals of countries below their mid- point range of staff working in the Secretariat.

Regarding the P-3 category, he said he could not verify the number quoted. Internal candidates and successful national examinees were usually promoted or appointed to the P-3 level. In other instances, external candidates were recruited. Data would also be assembled on that issue. He hoped the "nightmare picture given by the representative of Germany" was not as he had described. Much work had been done to clean up the Organization's recruitment procedures, including the policy on encumbering posts.

In response to the questions asked by Uganda, he said the redeployment process had been as transparent as possible in the context of Administrative Instruction ST/AI/415. The process had incorporated joint management-staff bodies and department heads. Sadly, there had not been as many placements as was hoped. There were a variety of posts for which some redeployees were not suitable. If the administrative instruction governing the redeployment process were to be used again, his Office would sit with staff colleagues to improve the process. The present insecurity and anxiety of staff was attributable to many factors.

He was not aware that some departments had determined that certain posts would be reserved for specific individuals. The redeployment process had been implemented successfully. The situation of staff members who had been on mission at the time and were not as readily placed remained a problem. The Secretariat had less of a tradition of staff mobility than other United Nations bodies. It tended to underreward those who were mobile. His Office had introduced managed assignments to provide more security to staff members who would like to work in other parts of the Secretariat or return to New York. The issue of staff mobility was being pursued.

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HIDEKI GODA (Japan) said he was also concerned that recruitment did not follow established procedures and awaited the information on that matter. Also of concern was the issue of follow-up action on the competitive examinations. Citing some discrepancy in what Mr. Halliday had said on the issue during the fiftieth session and the current session, he requested more information on that issue when the Committee began its informal discussions. He also asked for information on recent developments regarding the examinations. Staff-management relations in this difficult period, as well as under the present unsatisfactory working conditions, adversely affected staff morale. Staff was very important for the Organization's proper functioning. Management should maintain good relations with its staff.

RI GWANG NAM (Democratic People's Republic of Korea) said that the Secretariat should recruit officers on the basis of regional distribution, with due regard to competence. The Secretary-General should accord priority in recruitment to nations with few officers in the Secretariat. Based on what could be observed, the recruitment of staff was not on a fully equal basis. Many Member States did not have their nationals working for the United Nations and the principle of regional representation was not always observed. Priority should be given to unrepresented or underrepresented Member States. Even though the Assembly had decided that candidates for P-2 and P-3 posts, who had passed the national competitive examinations, should be hired within a year, two nationals of the Democratic People's Republic who had passed their examinations had not yet been recruited.

EFFRAIM ROSALES (Nicaragua) said the Assistant Secretary-General should be more specific on the increased recruitment of junior professional officers. He asked for the proportion of such officers in various United Nations bodies. The Secretariat should provide information on which Member States were funding the junior professional officers, most of whom were from developed countries. He expressed concern about the use of such staffing methods.

Mr. HALLIDAY said, in response to Japan's question, that since staff who had passed national competitive examinations came from Member States of the Organization, they could be included in the 70 per cent. The majority of United Nations staff were highly qualified and dedicated, often risking their lives in dangerous locations around the globe. "I do not believe that the majority of staff hide behind the skirt of permanent contracts", he said. The majority of staff were also content and dialogue between them and management would continue. He said, in response to the representative of the Democratic People's Republic of Korea, that unrepresented or underrepresented Member States were invited to take part in the national competitive examinations. Member States should help the United Nations ensure that fewer of them were either unrepresented or underrepresented. He would find out what could be done about the two candidates from the Democratic People's Republic who had been passed up for appointments.

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Junior professional officers were widely used in the Organization, mainly in the field, he continued. They were distinct from loaned staff, fully funded, served for short periods, and their overheads were paid for by donor Member States. Concerns that the majority of the junior professional officers were from the advanced countries were valid. However, some of those nations also funded junior officers from the developing countries. The Netherlands was one of the countries that ensured that about half of its funds for the junior professional officers was spent for hiring from developing countries.

NAZARETH INCERA (Costa Rica), also speaking for the "Group of 77" developing countries and China, said that the Secretariat should furnish all the information requested by Member States and Mr. Halliday's comments in writing.

MARTHA V. MONTAÑO-DURAN (Bolivia) said that national competitive examinations would be held in Bolivia, for the first time, next year. Therefore, Bolivia supported the process of using examinations to recruit Professionals.

Mr. HALLIDAY suggested that the representative of Costa Rica should refer to the meeting's summary records.

AMR NOUR (Egypt) said that, while he had hoped that the agenda item on human resources management would be kept open to allow further formal discussions, Egypt would accept the chair's decisions on how to proceed.

Ms. INCERA (Costa Rica) said that Member States did not have time to wait to get summary records, since they would not be published until next year. She was still waiting for summary records from the fiftieth session.

Mr. HALLIDAY said he would try to capture the essence of what he had said and provide a summary to Member States.

Ms. INCERA (Costa Rica) suggested that the tapes of the meeting should be transcribed and forwarded to Member States.

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