FIFTH COMMITTEE TAKES UP FINANCING OF ANGOLA AND IRAQ-KUWAIT MISSIONS; ALSO ADDRESSES ISSUES RELATED TO PROCUREMENT REFORM

Press Release
GA/AB/3308

FIFTH COMMITTEE TAKES UP FINANCING OF ANGOLA AND IRAQ-KUWAIT MISSIONS; ALSO ADDRESSES ISSUES RELATED TO PROCUREMENT REFORM

At a time when the United Nations was experiencing an expansion of peacekeeping operations, procurement malpractices and deficiencies must not be tolerated, the Fifth Committee (Administrative and Budgetary) was told this morning, as it commenced its consideration of the financing of two United Nations missions: the United Nations Angola Verification Mission (UNAVEM) and the United Nations Iraq-Kuwait Observation Mission (UNIKOM).

The Secretariat had made good progress in correcting problems at UNAVEM, but it must scrupulously ensure that those problems did not occur elsewhere, the representative of the United States said. A written “concrete plan” to correct problems in peacekeeping procurement should be produced, he added.

The representative of Finland, speaking on behalf of the European Union and associated States, observed that the Department of Peacekeeping Operations had begun to provide guidance to procurement officers in the field. He asked whether two staff, who had been disciplined over procurement irregularities at UNAVEM, had been asked to reimburse the United Nations.

Speaking about an overpayment of allowances to staff and military observers at UNIKOM, the representative of Kuwait asked why the Secretary-General’s report referred to this matter as complex, when allowance policies for the Mission were the same as those employed at other missions.

The General Assembly had asked the Secretary-General to report on measures taken against those responsible for the overpayment, he added, but the Secretary- General had decided not to implement such measures yet. At a time when the United Nations was talking about transparency, about reform and about responsibility, words should be matched by deeds.

The representative of Uganda also spoke on the irregularities in financing the peacekeeping operations. C.S.M. Mselle, Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), and Assistant Secretary-General for Planning and Support Young-Jin Choi introduced the relevant reports.

Fifth Committee - 1a - Press Release GA/AB/3308 3rd Meeting (AM) 4 October 1999

When the Committee commenced its discussion of procurement reform, the representatives of Mexico, Finland (on behalf of the European Union and associated States), Russian Federation, Syria, Israel and Saudi Arabia spoke, and Assistant Secretary-General for Central Support Services Toshiyuki Niwa addressed the Committee and responded to Member States’ questions.

The representatives of Costa Rica and Cuba spoke on other matters.

The Committee will meet again at 3 p.m. today, when it will take up financing of the United Nations Mission in East Timor (UNAMET).

Programme of Work

The Fifth Committee (Administrative and Budgetary) met this morning to commence the substantive part of its fifty-fourth session. At this first meeting, it was to take up agenda items on its organization of work and the financing of the United Nations Missions in Angola and Iraq-Kuwait.

The Committee had before it a revised note on the status of documentation (document A/C.5/54/L.1/Rev.1) and the Committee’s revised programme of work (document A/C.5/54/L.2).

The Committee also had before it a report of the Secretary-General on an Office of Internal Oversight Services audit of the procurement process in the United Nations Angola Verification Mission (UNAVEM III) (document A/53/1018).

According to the report, the audit team of the Oversight Office visited UNAVEM in June 1996. It found several instances where that Mission's Procurement Section had interfered in the procurement process by delaying the processing of requisitions. Because a review by requisitioners during the audit reduced the number of such requisitions to 132 (as at 18 June 1997), and the corresponding requisition value by more than $15 million, it was clear that they had been raised for goods and services that were not essential or urgently needed.

The Oversight Office noted serious irregularities in one case regarding the hiring of an aircraft. A contract for $175,000 had been signed by the Chief Procurement Officer without reference to the local committee on contracts. The report also noted irregularities in purchasing trips to South Africa undertaken by procurement personnel on two occasions.

The Oversight Office noted that the Mission was exploring the recovery of excess payments to its commercial bus operator, who had provided buses of smaller capacity than called for in the contract. However, it was considered unlikely that a claim for compensation could be successfully raised.

It also reported that in 1996 the Mission had paid stevedoring charges for the sealift of contingents and contingent-owned equipment, which should have been the responsibility of the vessel operators. It noted that $206,066 of the amount invoiced by the Port of Lobito represented valid charges for services, but $566,066 represented payments made for berthing and stevedoring charges that should have been paid by the carriers, while an additional $96,116 represented payments for other port charges that were later waived.

According to the report, the Oversight Office noted serious management deficiencies and apparent breaches of financial regulations and rules, as well as improprieties and irregularities in the procurement process, which, in some cases, resulted in significant losses to the Organization. Nevertheless, no evidence of fraud or financial abuse had been established.

The Secretary-General advises that the Procurement Manual has now been updated and made available to the field missions on the Internet; efforts are being made to organize training of procurement officers and provide general and mission specific pre-deployment training to procurement staff; and more emphasis is being given to strengthening internal controls.

The Committee also had before it a report by the Secretary-General on an overpayment of mission subsistence allowance at the United Nations Iraq-Kuwait Observation Mission (UNIKOM) (document A/53/1023). By General Assembly resolution 53/238 of June 1998, the Assembly asked the Secretary-General to continue his efforts to recover the overpayment of mission subsistence allowance by UNIKOM, and to report on developments relating to his efforts, including measures taken regarding those responsible. The Secretary-General subsequently asked the Office of Internal Oversight Services to inquire into the matter.

[Mission subsistence allowance is a daily payment made, in addition to salary, to staff on peacekeeping missions to cover their accommodation and other mission-related expenses].

The overpayment under consideration amounted to some $6.3 million, of which $851,093 was overpaid to staff members and some $5.46 million was overpaid to military observers. At 31 March, $935,187 had been recovered, of which $766,263 was recovered from staff members (90 per cent) and $168,924 was recovered from military observers (3 per cent). About $5.38 million remains to be recovered.

The Oversight Office found that a number of factors were responsible for the overpayment. The UNIKOM officials had failed to comply with allowance policies, and to promptly implement audit recommendations. Mission subsistence allowance policies themselves were not clear. Despite clarification and instructions to recover from the Department of Peacekeeping Operations, a lack of monitoring of the carrying out of those instructions led to continued non-compliance.

The Oversight Office report clarified the responsibilities for policy implementation, and identified successive UNIKOM officials responsible for failure to comply and implement audit and recovery actions.

A further review of circumstances and deviations that led to the overpayment revealed that the old mission subsistence allowance policy was intractably complex and that they offered considerable potential for varying interpretations and applications. The review also found that a strict interpretation of the old policy and procedures had resulted in an over-estimation of the overpayment amount, requiring a re-evaluation of the Assembly’s June 1997 decision on recovery.

As a consequence of these factors, and of the pending appeal to the Joint Appeals Board by three staff members against the recovery of allowance overpayments, the Secretary-General has decided not to initiate disciplinary proceedings against officials at this stage.

In a related report from the Advisory Committee on Administrative and Budgetary Questions (ACABQ) (document A/54/418), the Advisory Committee points out that this matter has been under consideration since 1993, and that the amount of overpayment has already been revised several times. The mishandling of this matter has created an unfortunate perception that both military observers and staff have been treated unfairly in the past, and that staff continue to be treated unfairly.

It reports that the case is complicated, and is still in litigation, so it believes no action should be taken by the Assembly pending the outcome of the judiciary process. It intends to revert to the matter in the context of the Administrative Tribunal findings and will inform the Assembly as appropriate.

Statements

PENNY WENSLEY (Australia), Fifth Committee Chairman, invited the Committee to approve its draft programme of work.

ERNESTO HERRERA (Mexico), speaking on behalf of the Rio Group, asked that a short formal meeting on procurement reform be held. There had been major changes in how the Procurement Division did its work. A short formal meeting would allow the introduction of a Rio Group working paper and would facilitate informal consultations.

NAZARETH INCERA (Costa Rica) asked for time to comment on a number of the services the United Nations provided to delegates. She sought time before the end of the meeting to draw attention to some of those services.

The CHAIRMAN then proposed a slight modification of the programme of work to allow a formal meeting on procurement, after which, the Committee, acting without a vote, approved the programme with oral modifications.

The Committee then turned its attention to the procurement process at the United Nations Angola Verification Mission (UNAVEM III) and the United Nations Observer Mission in Angola (MONUA).

YOUNG-JIN-CHOI, Assistant Secretary-General for Planning and Support, Department of Peacekeeping Operations, introduced the Secretary-General’s related report. He said the investigation had revealed deficiencies, but no fraud. A chief procurement officer had been separated from the Organization, and action had been taken against another staff member. While deficiencies and untidiness had been found in the procurement process, there was no evidence of fraud or loss to the Organization.

CONRAD S.M. MSELLE, Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced that body’s’ report. The Advisory Committee noted that, by and large, the report of the Secretary-General covered its concerns. It also noted that lessons learned through the investigation were being applied at Headquarters and other peacekeeping missions.

JARVO SAREVA (Finland) spoke on behalf of the European Union, Bulgaria, Czech Republic, Estonia, Hungary, Lithuania, Poland, Romania, Slovakia, Slovenia, Cyprus and Malta. He said the problems encountered in UNAVEM had been well-known for some time. The Union took note of the fact that the Field Administration and Logistics Division had begun to provide guidance to procurement officers in the field concerning adherence to the procedures established in the Procurement Manual. Knowledge and respect for the procurement process should have been a prerequisite for the appointment of staff responsible for procurement.

The Union was happy to learn that by autumn 1997 the Mission’s Procurement Section had established a vendors roster and had continued to identify qualified suppliers, he said. It took note that the Chief Administrative Officer had initiated the termination of an air-charter service signed by the Procurement Officer without adherence to established rules before the award was approved.

He added that the Union looked forward to the report of the Office of Internal Oversight Services on the procurement of goods for quartering areas. He asked to be informed by the Secretariat of the time when the United Nations expected to get compensation from the Government of Angola for the overpayment of agent’s fees in July 1996. He also asked to be informed whether the former Chief Procurement Officer and a procurement assistant, who had been separated from the Organization and issued with a letter of caution respectively, had been requested to reimburse the United Nations for financial loss as a result of any negligence.

He said UNAVEM seemed to be a particular problem with respect to procurement in the field. In that regard, he urged the Secretariat, in particular the Procurement Division, to continue to reinforce field procurement procedures.

ROYAL WHARTON (United States) said the United States welcomed the remedial action taken to address procurement deficiencies that had taken place at UNAVEM during 1995-1996, but asked why it had taken so long for the Secretariat to report on corrective measures. He noted that the Assembly had called for such a report on three separate occasions. The current report provided assurances that the United States had sought regarding corrective actions taken, and assurances that such deficiencies would not take place in future, he added.

He said the United States understood that the Secretary-General would address the concern about the procurement of goods for quartering areas at a later time, following a separate Oversight Office investigation. It needed to be stressed, particularly when the United Nations was experiencing an expansion of peacekeeping operations, that procurement malpractices and deficiencies would not be tolerated. The Secretariat had made good progress in correcting problems at UNAVEM, and it must scrupulously ensure that these problems did not occur elsewhere.

It would be prudent for the Secretariat to formulate a written “concrete plan” to correct problems in peacekeeping procurement, as the United States had recommended previously, he added. Such a plan should also describe accountability to individuals responsible for procurement abuse.

The Committee then turned its attention to its agenda item on financing the United Nations Iraq-Kuwait Observation Mission (UNIKOM).

Mr. CHOI introduced the Secretary-General’s report on the matter. He stated that the report’s main focus was on the overpayment of mission subsistence allowance to military observers. While it was in the category of unearned compensatory time-off that the greatest problem occurred, he pointed out that the entitlement for time-off given to compensate for loss of weekends was not as large as employees would receive if, each week, they had a “normal” weekend off.

Mr. MSELLE then introduced the ACABQ report on the subject. The report was brief and procedural, he said. The conclusion had not been arrived at easily, but its recommendation that no action be taken at present was the best available under the circumstances. The Advisory Committee, he pointed out, noted that this case was complicated and that every effort must be made to avoid interfering with the judicial process. That process should produce a verification of the facts, which did not exist at present.

ZIYAD MONAYAIR (Kuwait) said he had hoped the Secretary-General’s report would be issued during the fifty-third session of the Assembly, but it had not been issued until after a further deadline had been set by the Assembly. Indeed, it was delayed a month past that new deadline. The main reason Member States had requested the report was to recover the amount incorrectly paid. The main cause of the overpayment was a lack of care by UNIKOM officials, and that they had paid no heed to the findings of the auditors.

Where was the alleged complexity in this situation? he asked. The policy that should have been employed was the same policy that was in place in other peacekeeping missions. Regarding the second part of the Assembly’s request – that the report include measures taken against those responsible -- the Secretary- General had decided not to implement such measures at this stage, he said. That was not consistent with the Assembly’s resolution. He believed that such behaviour should not take place at a time when the United Nations was talking about transparency, about reform and about responsibility. Words should be matched by deeds.

The report was replete with contradictions, he said, and did not go into the real reasons which was what the Assembly was asking for. There was obviously a conflict between the departments in charge of the matter, and it was not fair that his country, which had volunteered to pay two thirds of the costs of the Mission, pay for the negligence of others. Consonant with Kuwait’s established position, Kuwait would continue to make voluntary contributions to the Mission.

KRISTINA TRONNINGSDAL (Finland), speaking on behalf of the European Union, Bulgaria, Czech Republic, Estonia, Hungary, Lithuania, Poland, Romania, Slovakia, Slovenia, Cyprus, Malta, Iceland and Norway, said the Union regretted the amount of time taken for the Secretariat to produce its analysis on the financing of UNIKOM. It was disturbed that, due to lack of analysis in the past, the General Assembly had been given different information.

The Union would be willing to accept the recommendations of the Secretary- General with regard to military observers, she said. She noted that there seemed to have been a difference between the respective policies, applications and conditions for military observers, on the one hand, and civilian staff, on the other.

On the still-pending judicial process, she said the Union wished to hear from the Secretariat whether the outcome of that process would have any bearing on military observers. If there was no such bearing, the General Assembly owed it to the military observers to take action as recommended by the Secretary-General. She added that the Union took comfort that there was now a new and simplified policy in existence.

NESTER ODAGA-JALOMAYO (Uganda) said the Parliament in Uganda was determined to combat the misuse of public funds. The United Nations must ensure that it had clear policies in place. Uganda agreed that new policies on mission subsistence allowance would help resolve the problems that existed in the past. Several reports had been prepared on the issue of overpayment of allowance. Uganda strongly believed that whatever the General Assembly might decide, it should be fair to both the military observers and the international civilian staff.

Mr. CHOI then responded to questions raised by Member States. He said he regretted the delay in issuance of the report. Many departments had been involved in its preparation, and experts had been obliged to travel to the Mission to look at the situation. Nonetheless, the criticism of the late issuance was noted, and late issuance would be avoided in future. He noted the technical detail of the questions, which he took very seriously. He would remit them to his colleagues to ensure he could answer those important and complex questions properly.

The CHAIRMAN then advised that discussion of the issue would continue at tomorrow’s meeting.

The Committee then turned to the question of procurement reform, under its agenda item on the review of efficiency of the Organization.

TOSHIYUKI NIWA, Assistant Secretary-General for Central Support Services, Department of Management, said a number of suggestions made by the Committee on the issue of procurement reform had been acted upon immediately after the Committee had last met. It was clear that the Committee had several key concerns in the area of procurement. On the question of transparency in the procurement process, the United Nations procurement process was now not only transparent, but also in the public domain. All pertinent information on procurement was now posted on the Internet. The posting of advance information on intended purchases on the Web site had contributed significantly towards increasing competition.

The Procurement Division had taken an active part in the creation of guidelines for the selection of venues for procurement meetings, and those meetings should now be geographically rotated, he said. The Procurement Division had also been active in briefing visitors and missions from developing countries and from countries with economies in transition. In the area of statistics, Member States now enjoyed more comprehensive statistical information on procurement.

Undoubtedly, more needed to be done, he said. However, with an invigorated Procurement Division, he was confident that the momentum could be sustained.

Mr. HERRERA (Mexico), speaking on behalf of the Rio Group, said Latin American participation in procurement was virtually non-existent. Principles of equal opportunity should apply to the procurement activities of the United Nations, and decisions should be made according to the financial regulations. He would like to receive more information on the common financial regulations on procurement referred to by the working group on procurement.

Mexico wished to encourage all common system organizations to coordinate their procurement, to promote economies of scale and to make efficient and less costly the administration of procurement administration, he said. At the last session of the General Assembly, the Rio Group had asked for information to allow it to understand more clearly how contracts were assigned. The Group had also held productive discussions with the Procurement Division. That Division’s Web page was extremely useful.

The Rio Group noted positive changes that had taken place in United Nations procurement, but also believed progress could be made in other areas to allow developing countries to better participate. For example, the United Nations used its own system to classify goods, whereas common international trade flows were carried out on the basis of a standardized system. United Nations financial regulations did not allow letters of credit, so some producers preferred to sell

goods destined for the United Nations through a commercial company. That created difficulties, discouraging some companies from participating and adding to the cost of goods offered to the United Nations. The Rio Group would like the Secretariat to study this.

The Rio Group had proposed that all rostered suppliers must be invited to bid for all, and it would like to hear the results of this experiment, he said. In addition, the Group was confident that proper planning would result in savings in procurement. In this connection, as the Secretary-General had instructed -- in his report A/53/271 -- all sectors of the Secretariat to extract all important procurement elements from their budget proposals, he would like to be informed as to what progress had been made in this attempt at annual procurement planning.

ELIAS LAHDESMAKI (Finland), speaking on behalf of the European Union, said a good start had been made to reform and make procurement more efficient.

NIKOLAI LOZINSKI (Russian Federation) asked whether the timing, indicated in the status of documents report for the forthcoming Secretary-General’s report on arbitration proceedings for procurement, could be abided by. He sought assurances that this timetable would be met.

TAMMAM SULAIMAN (Syria) stressed the need for increased participation of developing countries in United Nations procurement. He had raised the matter before and had been content with the answers provided at the previous Assembly session by Mr. Niwa. He understood from Mr. Niwa that the Procurement Division had played a part in establishing the criteria used by the Inter-Agency Procurement Services Office for determining which Member States it would visit to discuss potential procurement, and he would like to be informed as to what those criteria were and how the countries to be visited by the Office were chosen.

RONY ADAM (Israel) welcomed the new procurement Web site. He commended the progress that had been made in improving the procurement process.

Mr. NIWA said simplified financial rules related to procurement had been developed, and some of those had been adopted. If the new rules were to be introduced, existing instructions would have to be modified, and that would take some time.

The introduction of the value for money concept was an important new change, and guidance would be sought on how to proceed with that, he said. On annual procurement planning, he said his office was committed to carrying out good forward planning. This was the first time it had been doing so on a systematic basis.

With regard to criteria for the selection of venues, he said there were two criteria: one was to carry out such activities in developing countries and economies in transition, and the second was to use under-utilized major donors.

Other Matters

Ms. INCERA (Costa Rica) said she wished to discuss the cafeteria services at United Nations Headquarters. Delegates were obliged to stay long hours at Headquarters. The Cafeteria had been renovated, but the needs of delegates had not been taken into account, particularly regarding the quality of the food served. There had been an increase in price, but she was advised that this was not as a consequence of the renovations. Prices had increased, but the quality of food had declined. As delegates were obliged to work long hours, it was important to ensure that cafeteria services were improved. She understood that the cafeteria contract was for six years, with an option for a three-year renewal. She would like the Secretariat to confirm this understanding. The Secretariat should find ways to improve the situation.

FOUAD RAJEH (Saudi Arabia) supported the earlier statement by Syria on the subject of procurement and stressed that the private sector in Saudi Arabia had expressed a wish to receive a visit from the procurement committee so it could identify procurement opportunities for Saudi products. Many Saudi projects had begun to penetrate certain European markets. He had sent a written invitation to the procurement committee to travel to Saudi Arabia to become familiar with Saudi vendors.

DULCE BUERGO RODRIGUEZ (Cuba) said she wished to know whether the question raised by Costa Rica concerning the Cafeteria would be discussed, because of the difficulties all delegations had experienced in the last two weeks.

The CHAIRMAN advised that the matter would be considered at an appropriate time in the Committee’s work schedule.

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