FIFTH COMMITTEE TAKES UP REPORTS OF INTERNAL OVERSIGHT OFFICE

Press Release
GA/AB/3253

FIFTH COMMITTEE TAKES UP REPORTS OF INTERNAL OVERSIGHT OFFICE

The Fifth Committee (Administrative and Budgetary) this afternoon began considering thematic reports of the Office of Internal Oversight Services. It also began its consideration of the Joint Inspection Unit (JIU).

Three reports from the Oversight Office were introduced by the Under- Secretary-General for Oversight Services, Karl Paschke: one on aviation procurement and two on United Nations insurance policies.

The representative of the United States asked a question about health insurance in the United Nations, to which the Under-Secretary-General responded.

The Chairman of the JIU, Francesco Mezzalama, introduced that body's reports to the Committee. He stressed the need for the General Assembly to take action on the Unit's programme of work and annual report, as well as on a proposal for follow-up to JIU recommendations that had been approved by legislative organs of participating organizations.

Austria's representative made a statement on behalf of the European Union and associated States. The representatives of the United States and Portugal made comments to which Mr. Mezzalama responded.

The Fifth Committee will meet again at 10 a.m. tomorrow, 30 October, to conclude discussing the Oversight Office and its thematic reports, and to conclude its consideration of the Joint Inspection Unit.

Fifth Committee Programme of Work

The Fifth Committee (Administrative and Budgetary) met this afternoon to review United Nations administrative and financial efficiency. It had before it several reports from the Office of Internal Oversight Services. The Office was established by Assembly resolution 48/218B (1994) to assist the Secretary- General in fulfilling his internal oversight responsibilities regarding resources and staff by: monitoring, internal audit, inspection and evaluation, and investigation of reports of violations of United Nations regulations, rules and pertinent administrative issuances.

In addition, the Committee was scheduled to take up reports of the Joint Inspection Unit (JIU). The JIU consists of 11 expert inspectors, appointed by the Assembly, serving in their personal capacity for a maximum of two five- year terms. The Inspectors have broad powers of investigation in all matters pertaining to efficiency of services and use of resources. They are mandated to make recommendations aimed at improving management and coordination. The Unit makes its recommendations to the Assembly.

Review of Efficiency: Thematic Reports of Oversight Office

The Committee had before it a report of the Oversight Office on the review of the practices of the secretariat of the International Trade Centre (ITC) (document A/51/933). The Oversight Office found weaknesses in the ITC's management structure, including: lack of mechanisms for strategic thinking, policy formulation and programme development; lack of mechanisms for coordination and central direction; and a lack of teamwork and clearly defined responsibilities.

The Office recommended the establishment of mechanisms for systematic coordination, monitoring and evaluation. For rapidly changing technical fields, the ITC should offer fixed-term appointments of up to five years, with no renewal or extensions. The Division of Administration should be streamlined and savings ploughed into substantive areas.

The JIU's comments on the preceding report are transmitted by a report of the Secretary-General (document A/52/575). The JIU reviewed the report and concurs with its findings.

A note by the Secretary-General transmits a report of the Oversight Office on the investigation into alleged conflict of interest in Habitat (document A/52/339). The appearance of a conflict of interest occurred because a Habitat staff member was recommending and approving consulting contracts and payment to her husband both before and after their marriage. The staff member was a human settlements adviser with Habitat's Technical Cooperation Division from February 1991 while she was living with -- and later

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married to -- a director of a Nairobi-based consultancy group called Matrix Development Consultants.

The fact that she did not actually "hold" an interest in Matrix, as United Nations Staff Rule 101.6 requires, did not allow for a finding of an actual conflict of interest, the Oversight Office says. Her husband's financial interest could not be imputed to her.

The Oversight Office recommended the Office of Legal Affairs be supported in strengthening and clarifying the conflict of interest provisions to include rules that bar staff from using their positions to enrich themselves indirectly through family members, the report advises. Habitat management should ensure that the Matrix consultant's spouse is not involved in decisions to initiate or certify consultancy contracts with the firm.

Habitat and the Office of Legal Affairs had responded to the recommendations, the Oversight Office says. The Office of Legal Affairs had developed an amendment to the code of conduct that would bar staff from deriving "direct or indirect" benefits from involvement with a firm because of their role as a United Nations employee.

An addendum to the report (A/52/339/Add.1) states that the JIU reviewed the report and also concurred with its findings.

A note by the Secretary-General transmits a report of the Oversight Office on the audits of four regional commissions (document A/52/776), conducted from September 1996 to April 1997. The Economic Commission for Europe (ECE) was scheduled for a different audit cycle.

On the Economic Commission for Africa (ECA), the Office found major improvements were needed to strengthen internal controls and monitor compliance with financial regulations and rules. Separate account codes should be established and common costs prorated to reflect the actual costs of running the Conference Centre. The ECA management generally agreed with the recommendations and has already addressed many of the problems reported.

On the Economic Commission for Latin America and the Caribbean (ECLAC), the report states that audits disclosed generally satisfactory management of programmes. However, monitoring of extrabudgetary projects was inadequate and programme outputs were not properly assessed. The ECLAC management generally concurred with the recommendations and has initiated action.

Regarding the Economic and Social Commission for Asia and the Pacific (ESCAP), the Office noted that there was little congruence between programmatic and organizational structures, and no correlation between the programme budget and the financial statements. The ESCAP management agreed to implement many of the recommendations.

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On the Economic and Social Commission for Western Asia (ESCWA), the report notes that internal controls are generally adequate, but procedures for procurement and financial management needed strengthening. Disaster planning and prevention needed improvement. The ESCWA management agreed with the recommendations and has begun implementation.

Another Oversight Office report contains its review of programme management in the United Nations Crime Prevention and Criminal Justice Division (document A/52/777). The report states that there is little evidence of guidance and oversight by top management, resulting in an absence of clear strategic direction, including resource mobilization.

The report states that, regarding the Commission on Crime Prevention and Criminal Justice -- the policy-making body of the United Nations in the field of crime control -- the secretariat should integrate interrelated issues into fewer activities and not expand its role in areas where it does not have a comparative advantage. The programme planning and budgetary process should be used more effectively, particularly in the preparation of programme budget implications in response to new mandates.

A report of the Secretary-General transmits the Oversight Office's report on the audit of Habitat II (document A/52/821), conducted from September 1996 to March 1997. The audit was to assess the financial controls over the Conference, and the effectiveness of the Habitat II secretariat in preparing for the Conference, which was held in Istanbul in June 1996.

The report states that the Oversight Office acknowledges that the Habitat II secretariat played a successful role as facilitator and coordinator of the Conference and thus contributed to the achievement of the Conference's objectives. However, it was concerned about the breakdown of internal controls on financial management and financial reporting of Habitat II. The Habitat II secretariat hired consultants without competitive bidding and, in some cases, with little value received in return. Conference expenditures were shifted to, and money borrowed from, other funds to reduce the Conference's reported financial deficit. The Centre for Human Settlements should submit a comprehensive report to the United Nations Controller on the financial performance of Habitat II since its inception, and seek approval from legislative bodies on how to cover the remaining deficit.

The Fifth Committee also had before it the Secretary-General's report on the findings on alleged insufficient use of expertise in procurement planning in eight peacekeeping missions by the Office of Internal Oversight Services (OIOS) (document A/52/1010). The inquiry was undertaken after the Board of Auditors found that funds had been spent on services not rendered by aviation vendors in several peacekeeping missions during the 1994-1995 biennium.

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At a time of unprecedented expansion in peacekeeping operations, sufficient experience in managing commercial aviation procurement was not available within the United Nations, the report states. This created difficulties for an "under-resourced and inexperienced" Secretariat, and the resources necessary to recruit sufficient experienced staff for field missions and the United Nations Headquarters were not provided in a timely manner during the expansion of the peacekeeping activities.

Significant corrective actions had been implemented since 1994 by the responsible departments, the report states. The Secretary-General recommends that an aviation oversight committee be formed at Headquarters to meet semi- annually to review United Nations aviation activity and the Department of Peacekeeping Operations should review aviation planning processes on an ongoing basis. The Oversight Office should review aviation operations in peacekeeping missions to ensure compliance with United Nations rules, policies and practice.

A note by the Secretary-General transmits the Oversight Office's report on its audit of the United Nations commercial insurance arrangements (document A/52/1020). The audit covered policies on Headquarters property; foreign property (in four locations); aviation and liability; and the self-insurance fund for general liability claims at Headquarters. It also analysed whether the insurance arrangements had been established and administered in a coherent manner and whether risk and potential liabilities had been managed.

The Oversight Office concludes that the United Nations needs a more cohesive and defined approach to managing its risk exposure. The insurance coverage evolved historically, rather than strategically and its package of risks is not always competitively presented to underwriters.

The Insurance Section, in the Office of Programme Planning, Budget and Accounts of the Department of Management is not appropriately structured and lacks the resources it needs to perform its tasks, according to the report. It relies too much on its external brokers, not necessarily working in the best interests of their clients. Since the Insurance Section did not know details of brokers' commissions, the Oversight Office was unable to determine whether those commissions were the best arrangement and there had never been an analysis of whether the commissions were competitive. The Section should be able to properly function as a focal point for insurance and as overseer of the work of external brokers and underwriters, the Office recommends.

The Oversight Office also found that no risk assessment for the foreign property and demining liability policies had been performed. There were limitations in the competitive bidding process for establishing and renewing foreign property coverage. No asset valuation methodology for insurance purposes existed. The Insurance Section's handling of foreign coverage was limited to United Nations premises in Addis Ababa, Beirut and Santiago de

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Chile, yet little guidance was provided to offices away from Headquarters, nor did standardized coverage criteria exist.

A number of recommendations are made, including the development and implementation of an Organization-wide policy on risk management. Relocating the responsibility for commercial insurance to a specialized procurement and contract management unit in the Office of Central Support Services should be considered, such as assigning additional resources to monitoring commercial insurance arrangements.

Other recommendations include performing comprehensive risk assessments of foreign property and demining liability programmes; launching a comprehensive broker competition exercise; defining a valuation methodology; and performing an assessment of Headquarters liability self-insurance programme with a view to eliminating or reducing the annual allocation of $200,000, since that fund was at about $2.7 million and only $265,633 had been drawn on it since 1986, and compensation for any non-economic loss was limited to $100,000.

The Committee also had before it a report on a management audit by the Oversight Office on the United Nations Health Insurance Programme (document A/53/467). The health insurance programme involves the provision of medical, hospital and dental services through eight different insurance plans, the cost of which is shared by the Organization and 22,000 active and 7,000 retired staff participants. In the 1996-1997 biennium, the cost of the programme was $251.7 million, of which the Organization's share was $148.1 million.

Among the report's most significant findings were that there were too many plans, with varying benefits and subsidies, making the programme difficult to administer and control. The Oversight Office recommends using outside assistance to restructure the programme. Although the United Nations remunerates funds on the basis of claims, no regular checks by the Secretariat to verify the number and dollar amount of claims have been carried out, and the Oversight Office recommends that resources be allocated for regular verification of the accuracy, efficiency and reasonableness of settlement figures and administrative expenses.

Only the Headquarters dental plan has been subject to competitive bidding or review since the 1950s, according to the report. It recommends appropriate action be taken on this and any related renewal or modification should be reviewed by the Headquarters Committee on Contracts. Modifications for improved transparency need to be made to the way in which income, expenditures and reserves are reported in the United Nations financial statements, and action should be taken to implement the 1991 recommendation of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) that extrabudgetary funds be used for part of the after-service health insurance programme.

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Reports of JIU

Before the Committee was the JIU's annual report for 1995-1996 (document A/51/34). Attached to the report are two annexes. The first lists the Unit's standards and guidelines and provides definitions of inspections, investigations and evaluations. The second lists the reports issued during the reporting period.

The Unit's annual report for 1996-1997 (document A/52/34) says the JIU has endeavoured to streamline its procedures by, for example, making its reports more uniform and reader-friendly. Concerned about implementation and follow-up to its reports, the Unit traces the problem to when and how these are presented to legislative bodies in the United Nations system, as well as the decisions taken to implement them. Procedures to submit JIU reports to legislative organs fall short in follow-up on the implementation of recommendations contained therein.

A proposal for a more effective system of follow-up, for consideration and action by the legislative organs of those bodies under its jurisdiction, is annexed to the report. A second annex lists the eight reports issued by the JIU during the reporting period.

A note from the Secretary-General transmits the Unit's work programme for 1996-1997, the indicative list for 1997-1998 and beyond, and the internal roster (document A/51/559 and Corr.1). The Unit's work programme included examining fellowships in the United Nations system and peacekeeping operations and lists JIU reports on peacekeeping operations.

The Secretary-General's report on implementing the JIU's recommendations (document A/52/206) addresses issues which had been taken up in JIU reports over the past years. The present report contains information on the reorganization of the Department of Public Information (DPI); the optical disk system; and working with non-governmental organizations, among other matters. Due to departmental reorganization, many of the recommendations on the DPI were no longer relevant. The report suggests establishing a trust fund of voluntary contributions to be used for enlarging the optical disk system.

Another note from the Secretary-General transmits the JIU's programme of work for 1997 to 1998 and its preliminary work programme for 1998 to 1999 (document A/52/267). In 1997-1998, the Unit's investigations would focus on: management, budgetary and administrative issues; and operational activities for development.

Under management, the JIU anticipated eight reports during 1997-1998 on subjects including the International Labour Organization (ILO); United Nations documents; and the use of experts and consultants. The Inspectors had

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preliminarily identified nine subjects for reports during 1998-1999 under the heading of management and budgetary and administrative issues. These include practices for awarding contracts, performance appraisal, management of the World Health Organization (WHO), United Nations archival policies, procedures for senior-level appointments, and review of the administrative and financial management systems of the International Court of Justice (ICJ).

According to a note by the JIU on its programme of work (document A/53/180), the Unit decided to change its work cycle back to the January- December pattern. In so doing, it reversed its 1995 decision to shift its work cycle to a July-June pattern.

Transmitted by a note of the Secretary-General, the note explains that the Unit's current 1997-1998 programme of work would be extended through 31 December. Given that, the following items have been added to the 1997-1998 work programme: a note to the Secretary-General on the structure and mandate of the Department of Economic and Social Affairs; a report on practices and procedures for senior-level appointments; and an overview of United Nations system organizations' experience with results-based-budgeting.

The JIU's experience with the July-June cycle had not resulted in the anticipated improved synchronicity with the calendars of the legislative organs of its participating organizations, according to the report. Also, the Unit's biennial programme budget relates to a January-December cycle and action on the budget by the General Assembly coincides with the General Assembly's biennial review of the Unit's annual reports.

In preparing its 1999 programme of work, the Unit intends to draw on a preliminary list of planned reports, which is annexed to the report. Those include: effectiveness of the Performance Appraisal System (PAS); planning, programming, budgeting, monitoring and evaluation procedures in the United Nations system; the role and impact of private sector involvement and collaboration with the United Nations system; support costs on programmes and activities financed from extrabudgetary resources; and the practice of donors attaching conditions to special-purpose contributions.

Statements on Review of Efficiency

KARL THEODORE PASCHKE, Under-Secretary-General for Internal Oversight Services, introduced the report on allegations of insufficient use of expertise in procurement planning of aviation services (document A/52/1010). The Office of Internal Oversight Services had found that comments leading to the request for a review on that inefficiency were well-founded, but that steps had been taken to protect the United Nations from such future activities.

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From its investigation, he said, the Oversight Office considered that the problems were not a consequence of any activity of specific staff members, but rather of the rapid expansion of peacekeeping operations and a lack of experienced personnel combined with a lack of timely response to requests for extra resources to address that deficiency. Corrective measures had been taken in 1994, but until 1997, staffing had still been inadequate. The Office believed that, without tight oversight from Headquarters, wastage could occur again. The review had found that blame could not be placed on staff members, but rather the source was a systematic problem, he added.

He then turned to the report of the Oversight Office on the audit of commercial insurance programmes (document A/52/1020). He noted that because of the functional differences between commercial and health insurance, two separate reports on insurance had been prepared. That report reviewed four major policies, Headquarters property, foreign property, aviation liability and demining liability. Total premiums had amounted to more than $1 million in 1997. The Office found that the Organization required a more cohesive approach to managing risk. It relied too heavily on external brokers. Many of the shortcomings could be attributed to the relevant section being inappropriately structured and inadequately resourced.

He then presented the report of the Oversight Office on the audit of the United Nations health insurance programme (document A/53/467). The Office viewed the current number of plans as excessive and recommended it be reduced. The Department of Management agreed to restructure the programme and to reduce the number of plans. The five Headquarters plans were administered by outside administrators, paid on the quantity and value of claims from individual participants. The Office recommended that the amounts and quantities of claims be reviewed. The Department of Management agreed, but said that could only be done by outside firms specializing in such tasks. The audit had given rise to other observations concerning the contracts signed by the United Nations with plan administrators, and, based on those, the Oversight Office had made a number of other recommendations.

THOMAS REPASCH (United States) said the reports were important as they dealt with key issues of management of the United Nations. The United States hoped and expected the Oversight Office recommendations would be fully implemented. On the health insurance report, the Under-Secretary-General had said the programmes were numerous and there was a perception that some programmes provided better benefits than others. Did staff members have a choice as to which programme they entered, or were they told by the United Nations? he asked.

He said the report on aviation procurement problems was very useful and could also be taken up under the Fifth Committee's agenda items on procurement and peacekeeping

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Mr. PASCHKE said there was freedom of choice for staff to enter different health funds. Some might choose lower fees for lower services. That was why the Department of Management did not share the Oversight Office's view that there should be a better relationship between costs and benefits. However, the Oversight Office believed the number of choices was excessive and confusing.

KOJI YAMAGIWA (Japan) asked whether all the reports listed in the Journal were now under consideration.

JOSEPH ACAKPO-SATCHIVI, Fifth Committee Secretary, said all the reports were under consideration.

Mr. YAMAGIWA (Japan), turning to the Oversight Office's report on Habitat II, said that his delegation's questions from almost half a year ago remained unanswered. On the inappropriately high payment made to the media consultant, he asked for clarification as to how the preparatory committee for Habitat II could, while adhering to relevant rules, pay that consultant as much as $30,000, which was far beyond the annual limit of $12,000. He asked who had made that decision and whether any steps were being taken to get reimbursement.

What progress had been made to date by the Department of Management to implement the Oversight Office's recommendations? he asked. On leaves of absence taken by the Deputy Secretary-General of Habitat II during missions, he asked whether United Nations staff were generally able to take leaves of absence in the course of official travel, and if so, did senior management have any responsibility or authority to coordinate such leaves.

Mr. PASCHKE said he could not answer the substantive questions, since those were addressed to the Department of Management. However, he was aware of a "revitalization team" that had been dispatched from Headquarters to Habitat. That team had submitted an interim report to the Department of Management on those and other questions raised by Member States regarding the financial performance of Habitat. He was confident that in due time, the questions would be answered satisfactorily.

Statements on Joint Inspection Unit

FRANCESCO MEZZALAMA, JIU Chairman, said several of the reports before the Committee had been introduced during the Assembly's fifty-second session. Turning to new events and matters that required the Assembly's action, he said the Unit had decided to revert to its previous January-December cycle for its annual report and programme of work. The July-June work cycle had not brought significant improvement in synchronization with the calendars of meetings of the legislative organs. Also, the JIU's biennial programme budget related to

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a January-December cycle, and action on the budget coincided with the Assembly's review of JIU's reports.

One of the Assembly's most important directives to the Unit had been to try to achieve punctual follow-up of its recommendations approved by the legislative organs of participating organizations, he said. Follow-up to the Unit's recommendations was a responsibility shared by the JIU, and participating organizations' secretariats and legislative organs. The Unit had annexed to its 1996 annual report a proposal for a system to track and monitor follow-up, but the Assembly had not yet acted on it. The Unit's work had been affected. Some other participating organizations were also waiting for guidance from the Assembly. For example, the ILO secretariat recommended that its governing body wait for the Assembly's action. He appealed to the Fifth Committee for action on the proposal.

To improve the Unit's functioning, urgent action was required by the Assembly on a number of issues, he said. Those included: the process for selecting qualified inspectors; administrative and budgetary independence; reporting procedures; and leadership. The Unit hoped that current efforts to undertake a comprehensive approach on oversight issues would allow a renewed discussion in review of concrete results.

THOMAS SCHLESINGER (Austria), speaking for the European Union, said he understood the JIU was awaiting the Assembly's consideration of the Unit's proposed programme of work, as well as implementation of their recommendations. During the last session, the Committee had decided to postpone the matter until the current one. The Union was ready to consider the matter in informal consultations so the JIU could carry out its programme of work and develop a follow-up system to ensure more timely implementation of its recommendations by the relevant bodies of the United Nations.

Mr. REPASCH (United States) asked whether the Assembly's failure to take a decision on the proposed work programmes affected the Unit's ability to carry out its work programme. Also, when would the recently issued JIU report on oversight in the United Nations system be taken up? he asked.

Mr. MEZZALAMA said that, while the representative had mentioned the work programme, in fact there was a global problem. The Unit had begun to implement its programme of work even without the Assembly's action. But the Unit felt uneasy without the Assembly's guidance. It worked on the basis of shared responsibility, which included Member States, who also benefitted when the JIU's recommendations were accepted and approved. Also, that affected the 13 participating agencies that recognized the JIU's statute. Those bodies felt constrained by the fact that the Assembly had not approved the programme of work, which also included their suggestions, and that the Assembly had not provided guidance on important proposals. Oversight would be examined separately, he added.

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MARIA REGINA EMERSON (Portugal) said that as the JIU had its headquarters in Geneva, it should review of the management of the United Nations Office in Geneva itself. She asked whether that was planned.

Mr. MEZZALAMA responded that the responsibilities of the JIU were system-wide. The Unit was based in Geneva, where many of the agencies that had accepted the statute of the JIU were located. The Unit had started surveys of individual agencies. A survey of the ILO should be available soon. In next year's work programme, the Unit had scheduled a survey of management of the WHO but the new head of the WHO had advised him that major reforms were under way of the WHO's management practices and had asked that the JIU postpone its review until the restructuring of management of the agency was completed.

The JIU had included common services in the system in its reviews, he said. It had published a report on common services at the United Nations in New York and had just completed a review of common services in Geneva. The issue of common services had been identified by the Secretary-General as a priority, and the JIU had responded to that priority. A third report would be forthcoming on common services in Vienna. The JIU was trying to involve all the components of the system and extend its activities to ensure a system-wide approach.

Ms. EMERSON (Portugal) said she was aware of the JIU's system-wide overview responsibilities. She was referring to management of the United Nations Office in Geneva and would like to know if it were possible for the JIU to review that Office.

Mr. MEZZALAMA said that items on the JIU programme of work were either suggested by participating bodies or chosen internally by the Unit. He would note the suggestion by the representative of Portugal. Such a review had not been envisaged thus far, but note would be taken and it would be considered when the JIU programme of work was looked at.

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