FIFTH COMMITTEE, IN RESUMED SESSION, TAKES ACTION ON REPORTS ON UN FINANCIAL SITUATION, MECHANISMS TO MANAGE ORGANIZATION'S RESOURCES
Press Release
GA/AB/3158
FIFTH COMMITTEE, IN RESUMED SESSION, TAKES ACTION ON REPORTS ON UN FINANCIAL SITUATION, MECHANISMS TO MANAGE ORGANIZATION'S RESOURCES
19970908 Assembly's Working Group Did Not Agree On 'Magic Formula' to Solve United Nations Financial Crisis, Committee ToldThe Fifth Committee (Administrative and Budgetary) this morning decided to transmit to the General Assembly the report of the General Assembly's working group on the United Nations financial situation, as it started the third part of its resumed session.
The report contains a draft decision which would have the Assembly note the group's work on the understanding that it would be resumed when appropriate, after consultations with Member States. The working group was established in December 1994.
Introducing the report, Ernst Sucharipa (Austria), a Vice-Chairman of the working group, said that while it had not agreed on a "magic formula" for the Organization's financial crisis, the group had done much valuable work that should be pursued.
The representative of Indonesia expressed regret that the Working Group could not agree on concrete recommendations to address the United Nations financial situation. The representatives of Pakistan, United States and Belgium (on behalf of the European Union) also spoke.
On the review of the United Nations administrative and financial efficiency, the Committee adopted an oral draft decision recommending that the Assembly take note of two reports on the jurisdictional and procedural mechanisms for properly managing United Nations resources and funds. One was submitted by the Secretary-General and the other by the Ad Hoc Intergovernmental Working Group of Experts established pursuant to Assembly resolution 48/218 A.
By the terms of the draft decision, the Committee also recommended, following a proposal by France, that the Assembly request the Secretary-General to submit reports on evaluation of the performance appraisal system and on management irregularities that caused financial losses, as indicated by the Office of Internal Oversight Services.
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Also this morning, the Committee considered developing countries' access to the optical disk system, under the agenda item on pattern of conferences. Speaking on the matter, New Zealand's representative said Internet access to the system was slow and cumbersome, taking 45 minutes to one hour on average to download a 20-page United Nations document. Access to it should not be expanded while systemic difficulties prevented successful use.
The Chief of Information Management Services, Department of Administration and Management, Wolfgang Fuerst, introduced the Secretary-General's report on the optical disk system.
Speaking on the construction of conference facilities in Addis Ababa, the United States' representative said the Committee should be given more time to deliberate on the issue rather than be presented with a fait accompli.
The representative of Saudi Arabia said that since the $115 million cost of the conference centre was a large sum of money, the issue should be considered carefully in the next Assembly session, without undue pressure from the Secretariat.
Also speaking on the matter were the Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), C.S.M. Mselle; United Nations Controller, Jean-Pierre Halbwachs; and the Director of the Legal Division, Office of Legal Affairs, C. Bruce Rashkow.
At the beginning of the meeting, the Committee adopted its programme of work for the resumed session.
Under other matters, the Committee took note of a letter from the Spokesman for the Secretary-General, Fred Eckhard, apologizing for the disconnection of the MX broadcast system on 17 March, when Secretary-General Kofi Annan presented the first phase of his United Nations reform measures to the Committee.
Also, the representative of Costa Rica expressed concern about how diplomats were affected by security arrangements during the special session of the Assembly last June.
The Committee is scheduled to meet again at 3 p.m., on Wednesday, 10 September, to consider the Secretary-General's report on the Lessons Learned Unit of the Department of Peacekeeping Operations.
Committee Work Programme
The Fifth Committee (Administrative and Budgetary) this morning started the third part of its resumed fifty-first session. The Committee is scheduled to consider agenda items on how to improve the United Nations financial situation; aspects of the 1996-1997 regular budget, particularly the construction of conference facilities at Addis Ababa; pattern of conferences; the scale of assessments; and the review of United Nations administrative and financial efficiency.
Improving United Nations Financial Situation
A report of the Assembly's working group on the United Nations financial situation (document A/51/43) recommends the adoption of a draft resolution that would take note of the group's work on the understanding that it would be resumed, when appropriate, after consultations with Member States. In the current Assembly session, the group, established in December 1994, discussed Member States' payment of dues in full and on time; the problem of arrears; the procedure for approving peacekeeping budgets and appropriations; the Organization's cash-flow situation; and the methods for calculating the scale of assessments.
Aspects of 1996-1997 Budget: Addis Ababa Conference Centre
The Secretary-General's report on the construction of additional conference facilities at Addis Ababa and Bangkok (document A/C.5/50/17) contains information on the work at the Economic Commission for Africa (ECA) in Addis Ababa, and on a project to expand it at the Economic and Social Commission for Asia and the Pacific (ESCAP) in Bangkok.
Approved by the Assembly in 1984, the Ethiopian project was originally estimated at $73.5 million in November 1984 exchange rates and later adjusted to $107.6 million in November 1990 exchange rates. Major civil works were completed at the end of September 1995, and the project was expected to be completed in January 1996 and handed over in April of that year. Although there is currently no basis to anticipate the project's costs to rise, it cannot be totally discounted.
The Bangkok project, the report states, had consumed $67.5 million as of 31 July 1995. The new conference centre's construction was begun in May 1989 and completed in the first quarter of 1993. The centre was inaugurated in April 1993 and its maintenance guarantee period ended on 21 March 1994.
The Secretary-General's further report on the construction of additional conference facilities at Addis Ababa and Bangkok (document A/C.5/51/37) states that, despite delays, the Addis Ababa conference facilities had been substantially completed and handed over to ECA in April 1996.
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Regarding the project's financial aspects, the Secretary-General anticipates that no additional appropriation would be required in the regular budget beyond the $107.6 million originally approved. That is because the revised project cost could be covered by interest earned by the accounts of the two projects.
Yet, another report on the facilities at Addis Ababa and Bangkok (document A/C.5/51/37/Add.1) says that the former project would cost a total of some $115.2 million, reflecting an increase of about $7.6 million over the $107.6 million already appropriated.
The Secretary-General asks the Assembly to authorize him to pay for the increase with the interest accrued in the construction accounts of ECA and ESCAP. The amount totalled some $7.9 million, as of 31 December 1996. Of that, $7.8 million was in the ECA account.
In its related report on the building of additional facilities at Addis Ababa (document A/51/7/Add.9), the Advisory Committee on Administrative and Budgetary Questions (ACABQ) recommends that the Assembly appropriate the additional sum of $7.6 million, paid for with the accrued interests. That would make additional assessments unnecessary.
Pattern of Conferences
The Committee also has before it the Secretary-General's report on access to the optical disk system (document A/C.5/51/56), which says that the Secretariat is developing a policy for expanding access to the system, as part of the Secretary-General's strategy for creating an "electronic United Nations" as part of his reform proposals. The system's development and the use of the Internet to offer electronic access to documents and to the United Nations World Wide Web site would offer information at a lower unit cost to a vastly broader audience in all Member States. The development of a specific policy for the optical disk system will be guided by the need to achieve more efficiencies in disseminating information and to maintain an appropriate mix of electronic and hard-copy documentation services. The Secretary-General seeks Member States' views and guidance from the General Assembly.
Since the establishment of the optical disk system in 1993, the Secretary- General recalls, there has been an exponential growth in the number of users, totalling more than 2,300 worldwide at the end of 1996. All permanent missions have had access to the system through the Internet, since 30 June. Since optical disk system documents can be printed on demand to meet unforeseen requests for limited numbers of copies, stocks of hard-copy documents kept at Headquarters have been reduced by half. The streamlining of print-runs for stock and internal uses led to a 13 per cent cut in the pages printed in New York in 1996, compared with 1995, and allowed for staff reductions and lower spending on supplies. Also, a survey by the Distribution Section of the
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Conference Services showed an overall reduction of 14 per cent in the number of copies permanent missions wished to have distributed to them on issuance.
Scale of Assessments
A report of the Committee on Contributions (document A/51/11) addresses, in particular, procedural aspects of consideration of requests for exemption under Article 19 of the United Nations Charter, that strips Member States of their voting rights whenever they owe dues equal to or more than two years' assessments.
The report says that the Committee on Contributions had discussed the possibility of establishing guidelines for granting exemptions under that Article. They could be based on evidence that the States concerned had serious difficulties in earning revenues and in meeting their financial obligations. It also considered the importance of Member States providing payment plans. With doubts expressed about the uniform applicability of one set of guidelines to all those seeking exemptions, it was agreed in the Committee that States' particular circumstances be examined whenever exemption requests were reviewed. In doing so, the Committee should draw on its review of other cases and apply precedents whenever they were appropriate.
Responding to such requests from Liberia, Tajikistan and the Comoros, the Committee on Contributions recommends that they be exempted from the effects of Article 19 and allowed to vote through the Assembly's fifty-second session. They had convinced the Committee that their failure to pay their dues was due to circumstances beyond their control.
In seeking an exemption under Article 19, Liberia told the Committee that its economy still suffered from the effects of its civil war, according to the report. Moreover, while the annual income from ship registry, its principal source of revenue, was about $18 million, Liberia's external debts had grown to some $2.6 billion, with no payments being made. In the case of Tajikistan, it argued that its economic situation was still very serious, with the impact of a civil war, floods and mud-slides, the collapse of economic relations among the republics of the former Soviet Union, which had contributed to the decline of Tajikistan's gross domestic product (GDP), as well as a drop in agrarian and industrial output that caused a shortfall in export earnings and foreign exchange reserves. The Comoros argued that the economic and social traumas caused by the 1995 mercenary invasion had hurt its economy. Economic problems had contributed to a bid at secession by one of the islands of the Comoros in March.
Review of United Nations Efficiency
The Secretary-General's report on jurisdictional and procedural mechanisms for the proper management of the United Nations resources and funds
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(documents A/49/98 and Corr.1 and Adds.1-2), dated 22 March 1994, presents the views of 12 Member States on the issue. At its forty-eighth session, the Assembly decided to establish an ad hoc intergovernmental working group of experts to study the establishment of a new jurisdictional and procedural mechanism to address alleged cases of fraud in the United Nations. The report presents the views of Argentina, China, Colombia, France, India, Netherlands, Panama, Sweden, Brazil and Burkina Faso.
The report of the ad hoc intergovernmental working group (document A/49/418), dated 22 September 1994, was the conclusion of three sessions held at Headquarters in 1994 in which the working group studied cases of fraud and presumptive fraud. It noted a number of financially significant instances of fraud or presumptive fraud in the area of peacekeeping operations and concluded that, in view of the extremely high level of expenditure involved, procurement for those operations constituted a major risk area of possible fraud or other abuse against the United Nations, both outside and within the Organization.
According to the report, the working group recommended that provisions should be made in the Financial Regulations and Rules and the Staff Regulations and Rules requiring every United Nations staff member to report immediately to the Secretary-General any apparent instances of financial irregularity involving the United Nations financial integrity, whether arising within or outside the Organization. Another recommendation called for the Secretary-General to promulgate additional financial and staff rules specifically for temporary peacekeeping missions that would ensure the independence and objectivity of persons appointed for procurement functions. The rules should establish a time-limit within which an initial audit of the mission would be undertaken and provide a schedule for follow-up action.
The working group also advised the Secretary-General to impose surcharges on staff members who violate the provisions of the Financial Regulations and Rules and other financial instructions of the United Nations. It stressed that the strengthening of the internal and external audit functions would help deter fraud and other misconduct in the United Nations. Accordingly, it strongly endorsed the initiatives that would do so. The working group also recommended that the Secretary-General monitor the effectiveness of the newly established Committee on Personal Responsibility and Financial Liability of the United Nations Development Programme (UNDP) and consider whether it would be useful to establish a similar mechanism in the United Nations.
Also before the Committee is a letter dated 28 July from the Permanent Representative of the United Republic of Tanzania to the United Nations addressed to the Secretary-General, on behalf of the "Group of 77" developing countries and China. The letter was written on the implementation of General Assembly resolution 51/226 of 3 April, on human resources management. The Group of 77 and China also endorsed the understanding that the resolution
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would not be implemented in a retroactive manner. It was officially recognized in the Fifth Committee that staff holding short-term appointments before 3 April were not subject to the provisions of paragraph 26 of resolution 51/226. In the view of the Group, the understanding applies without exception to all Secretariat staff.
But, the letter states, the Group had learned that the Under-Secretary- General for Administration and Management had issued instructions to heads of various departments regarding the application of paragraph 26, which do not take into account the understanding of the Fifth Committee regarding its prospective application. It had also learned that staff holding short-term and/or fixed-term appointments had been asked to leave the Organization by the end of July, ostensibly in pursuance of the aforementioned paragraph. It demanded an explanation as to how the Secretariat interpreted the use of the term "short-term appointments ... of one year or more" as stated in the resolution, to encompass "fixed-term appointments of less than one year".
The Group then asks for information on the mode of application of paragraph 26 of resolution 51/226; number and nationality of staff on short- term appointments before 3 April 1997; number and nationality of staff asked to leave the Organization in implementing the resolution; number and nationality of staff on short-term appointments recruited after the adoption of the resolution; number and nationality of staff exempted from the application of paragraph 26, the reasons for such exemptions and the name of the department where he/she works.
Statements on Improving United Nations Financial Situation
ERNST SUCHARIPA (Austria), Vice-Chairman of the high-level, open-ended working group on the United Nations financial situation, introduced the report and reviewed some of its contents. While the group had not agreed on a "magic formula" for solving the United Nations financial crisis, it had done valuable work that should be followed up on.
AMJAD HUSSAIN SIAL (Pakistan) said that while he appreciated the work of the vice-chairmen to date, it was disappointing that the working group had not made a complete recommendation in addressing the Organization's financial difficulties. Certain matters required particular attention, including the issue of gratis personnel and reimbursements to troop-contributing countries. The Committee should consider the item seriously; a concrete recommendation should be made.
MICHAEL R. BOYNTON (United States) expressed appreciation for the work of the vice-chairmen and all those involved in the working group. He said he looked forward to working with the group in the future.
PRAYONO ATIYANTO (Indonesia) expressed regret that the group could not
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agree on concrete recommendations to address the United Nations financial situation. Given the urgency of the cash situation cash flow, depletions should be looked at urgently. Even though the end of the cold war had presented the United Nations with new opportunities, its financial crisis had frustrated the Organization's ability to exploit them. The United Nations was an organization of sovereign States who had responsibilities that they agreed to by treaty. If all Member States paid up their dues on time and in full, the Organization would not experience a financial crisis. The withholding of dues would cripple the ability of the Organization to carry out its mandates.
PETER MADDENS (Belgium), speaking for the European Union, expressed appreciation for the work of the working group. He would make a more substantive statement in the General Assembly plenary, when action was taken on the report.
Action
At the suggestion of the Committee's Acting Chairman, KLAUS DIETER STEIN (Germany), the Committee decided to take note of the report of the working group and to transmit it to the Assembly.
Statements on Aspects of 1996-1997 Budget
C.S.M. MSELLE, Chairman of the ACABQ, introduced the report on the conference facilities at Addis Ababa. He drew attention to paragraph 4 of the report which stated that the terms of the settlement agreement determined that the unpaid balance should be paid no later than 30 September.
THOMAS A. REPASCH (United States) thanked the Chairman of the ACABQ for the briefing, and said that he would like to receive the additional information the Secretariat had provided after the report had been completed. Referring to the information in paragraph 4, on the agreement that a certain amount would be paid by the end of September, he asked whether that was a contractual agreement. What would the implications be if that amount was not provided by that date? he asked. A full report was needed on the matter, he added.
Mr. MSELLE invited C. Bruce Rashkow, Director of the Legal Division, to respond to those inquiries.
Mr. RASHKOW said the obligation to pay the outstanding amount had been made under a settlement agreement with the contractor. That agreement had been the result of negotiations in which the contractor had indicated that unless the issues were resolved, arbitration would be initiated. To minimize the cost to the Organization, the settlement agreement had been negotiated, which provided that payment should be made by the end of September.
If payment was not made by 30 September, he continued, the contractor
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might revoke the agreement and initiate arbitration. That would expose the Organization to risk of a substantially higher liability. He believed strongly that the Organization's interests would be best served by making payment under the terms of the settlement.
AHMED FARID (Saudi Arabia) said that, since $115 million was a large sum of money, all circumstances regarding the building of the conferences facilities should be considered carefully, without undue pressure from the Secretariat. The matter should have been brought before the Committee at the beginning of the year. He would like to study all the issues step by step because he had not seen a report that explained how the entire sum of $115 million was committed. Therefore, the matter should not be rushed, but considered carefully in the next Assembly session.
JEAN-PIERRE HALBWACHS, United Nations Controller, said that, since the construction of the facilities was authorized, the Secretariat had submitted reports on the progress of the project, which was now at the tail end. The building in Addis Ababa had been completed and handed over since April 1996. So far, $108 million had been spent, and the Secretariat was asking for an additional $7 million to close the project in time to meet a deadline that could have legal implications.
Mr. STEIN (Germany), Acting Chairman, reminded the Committee that the item had been on its agenda since the last part of the resumed session.
Mr. REPASCH (United States) said he supported the statement by Saudi Arabia. The Committee seemed to be presented with a fait accompli. He asked about what authority was used to commit to pay the additional amount, in the absence of a clear Assembly mandate.
Mr. RASHKOW said the payments were made in two steps. In one stage, the Secretariat paid for invoices that had at one point been the subject of dispute. Another tranche of payment remained under the settlement with the contractor. If the United Nations went to arbitration, the Organization might have to pay more than the amount agreed to in the settlement, as well as the costs of arbitration.
Mr. REPASCH (United States) asked whether the Secretariat had the authority to pay the amount without the Assembly's mandate.
Mr. RASHKOW said the Secretariat had the authority to settle, but the authority to pay was another matter.
Mr. HALBWACHS, United Nations Controller, said that, if the Secretariat had the authority to pay the amounts needed, it would not have come before the Committee with its requests.
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Statements on Pattern of Conferences
WOLFGANG FUERST, Chief of Information Management Services, introduced the report of the Secretary-General on access to the optical disk system (ODS).
WEN CHIN POWLES (New Zealand) said that while the optical disk system was an extremely useful resource for Member States, her country's experience was that Internet access to ODS was not working well. In fact, it was slow and cumbersome. For example, the average time required to download a 20-page United Nations document was between 45 minutes and an hour. The problem pertained to the way the documents were loaded in the first place.
She said she had been informed that resolution of those problems required funds. Because accessing the optical disk via the Internet was not working as it should, access to it should not be expanded while systemic difficulties prevented successful use.
Statement on Review of United Nations Efficiency
PHILIPPE NICOLAS (France) expressed support for the strengthening of jurisdictional mechanisms in the United Nations. Some proposals had been made in the past to strengthen the procedural aspects and mechanisms, the training of staff and to ensure follow-up. Oversight bodies and appraisal mechanisms should help ensure the proper management of assets. He proposed an amendment to the oral draft decision that would be presented by the Committee's Acting Chairman on the agenda item. The amendment would have the Assembly ask the Secretary-General to submit a report on the evaluation of the new performance appraisal system (PAS) and on a follow-up on management irregularities that caused financial losses to the Organization, as indicated by the Office of Internal Oversight Services.
Action
Mr. STEIN (Germany), Acting Chairman, proposed an oral draft decision that would have the Committee recommend that the Assembly take note of the report of the Secretary-General on the jurisdictional and procedural mechanisms for properly managing United Nations resources and funds, as well as of the report of the Ad Hoc Intergovernmental Working Group of Experts established pursuant to Assembly resolution 48/218 A on those mechanisms. He also proposed that the Committee recommend that the Assembly ask the Secretary-General to submit a report on the evaluation of the new PAS and on management irregularities that caused financial losses, as indicated by the Office of Internal Oversight.
The Committee approved the orally presented draft decision.
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Other Matters
The Chairman read out a letter addressed to him from the Spokesman for the Secretary-General, Fred Eckhard, dated 2 September. That letter pertained to events on 17 March, during which the Secretary-General had released details of his interim reform package, first to delegations and then to the press. "In order to prevent the press from listening in on a confidential briefing of the Fifth Committee by the Secretary-General I asked that the MX transmission of that briefing be turned off", the letter reads.
In making that request, Mr. Eckhard had been unaware that some Committee members listened to Committee meetings on the MX system, the letter continues. In addition, the Spokesman had not been aware that any decision regarding termination of the MX transmission must be taken by the Committee, in accordance with Rule 60 of the Rules of Procedure of the General Assembly. Stating that it had not been his intention to usurp the Committee's authority, the Spokesman apologized for his inadvertent error and assured the Committee it would not be repeated.
The Committee took note of the letter.
NAZARETH INCERA (Costa Rica) said she was concerned about several administrative matters. Fines were being levied on delegations that used the garage, yet, to her knowledge, the garage administrator did not have the authority to levy those fines.
Security measures during the recent special session had been ridiculous, she continued. Security people belonging to a Member State had imposed unusual measures which violated diplomatic immunity and violated the dignity of Member States. It was unacceptable that foreign delegates had not been allowed to use the main entrance of the General Assembly building. The Costa Rican delegation had been the victim of physical aggression by a Protocol staff member when it had attempted to enter the building at the Delegates Entrance.
While stringent security measures were necessary at times, those must not disrupt the work and dignity of Member States, she said. The entrance of vehicles into the compound should be arranged so that delegates did not have to wait on queues or behind trucks. She wished to know what measures would be taken to prevent such incidents in the future and requested that her comments be included in the Committee's records.
Mr. ATIYANTO (Indonesia) said that it was important to receive formal clarification on the matters raised by the representative of Costa Rica.
The CHAIRMAN said he would convey the information to the appropriate parties.
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