CONTROLLER TELLS BUDGET COMMITTEE UN FINANCIAL SITUATION AT END OF 2005 ‘GENERALLY QUITE POSITIVE’

Sixtieth General Assembly

Fifth Committee

53^rd Meeting (AM)

CONTROLLER TELLS BUDGET COMMITTEE UN FINANCIAL SITUATION

AT END OF 2005 ‘GENERALLY QUITE POSITIVE’

Says Increasing Number of Member States Meeting Obligations in Full;

However, as of 30 April, $1.2 Billion in Regular Budget Payments Outstanding

The financial situation of the United Nations at the end of last year had been “generally quite positive”, but not uniformly so, and the Organization had a long way to go before it could receive “a clean bill of financial health”, United Nations Controller Warren Sach told the Fifth Committee (Administrative and Budgetary) this morning.

There had been some encouraging signs of progress in 2005, and he was particularly heartened by the increasing number of Member States that were meeting their financial obligations to the United Nations in full, he said.  So far, in 2006, the trends for peacekeeping accounts and international Tribunals were also encouraging.

On the other hand, however, the level of payments received for the regular budget by 30 April was over $300 million lower than on the same date in 2005, and unpaid assessments were over $200 million higher.  A breakdown of the $1.2 billion outstanding on 30 April also showed a high level of concentration, with seven countries ( United States, Japan, Germany, Argentina, Mexico, Brazil and China) accounting for 94 per cent of the total and just three countries ( United States, Japan and Germany) for 85 per cent.  Clearly, those countries would have a major role in determining the financial outcome for the regular budget.  If payments during the rest of the year followed the past pattern, there would be a modest improvement in cash resources for the regular budget by the end of 2006.  Given the concentration of outstanding balances and current uncertainties, that outcome could not be taken for granted.

Also this morning, as the Committee continued its consideration of peacekeeping management and financing, the United States representative addressed the issue of the Organization’s fact-finding into allegations of procurement irregularities in peacekeeping activities, saying that his delegation took the matter seriously and expected that other Member States would want to make sure that all reasonable means were used to obtain the facts in the case.  Since there was a critical need to pursue accountability in such matters, it was regrettable that others had chosen to question motives and make personal attacks.  Such diversions would only keep members from what should be the primary objective for the Committee, namely to ensure an effective and efficient United Nations.

The Secretariat had acted responsibly in seeking all information relevant to the allegations of fraud, waste and mismanagement, he continued.  In particular, the Secretary-General’s decision to obtain independent, external expertise to assist in gathering and analysing the data in a timely manner was both prudent and integral to ensuring an objective assessment of the situation.  As the Organization’s chief administrative officer, the Secretary-General had both the authority and responsibility to act decisively when confronted with possible instances of fraud, waste and mismanagement.  The United States rejected the suggestion that he needed the Assembly’s approval to seek expert help.

In that connection, Singapore’s representative said that it was incumbent on any senior management member to not only present the findings of an external authority, but also make sure that those findings came in a proper and more thorough manner.  He asked for details on the assigning of external experts, wondering who had authorized the commission of the study.  Had there been a transparent and competitive bidding process? he asked.

In other business, the Chief of the Personnel Management and Support Service of the Department of Peacekeeping Operations, Donna Marie Maxfield, and the Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), Rajat Saha, introduced several reports on the staffing of field missions, including the use of 300- and 100-series appointment.  Pending further consideration of the reform measures proposed in the Secretary-General’s report on “Investing in the United Nations:  for a stronger Organization worldwide”, the Secretariat has requested that consideration of the recommendation to use the 100-series contracts for the appointment of all mission staff be deferred.  In the interim, the Secretary-General would request the Assembly to agree to the continuation of the current practices approved by the Assembly regarding the reappointment of staff serving under the 300-series appointments.

Also participating in the debate were representatives of Austria (on behalf of the European Union), Egypt and Nigeria.

The Committee will continue its work at 10 a.m. Thursday, 25 May.

Background

The Fifth Committee (Administrative and Budgetary) met this morning to hear a statement by the United Nations Controller on the financial situation of the Organization, which is presented to it twice a year.

The Committee also had before it a report of the Secretary-General on the staffing of field missions, including the use of 300- and 100-series appointments (documents A/60/698 and Corr.1) and a related report of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) (document A/60/851).

The reports have been submitted in connection with the Assembly’s decision, in resolution 59/296, to continue to suspend the application of the four-year limit for appointments of limited duration under the 300 series of the Staff Rules in peacekeeping operations until 30 June 2006.  It also authorized the Secretary-General to reappoint under the 100 series those mission staff whose service under 300-series contracts had reached the four-year limit by 30 June 2006, provided that their functions had been reviewed and found necessary and their performance had been confirmed as fully satisfactory.

The suspension of the four-year limit was initially authorized until 31 December 2004 in resolution 58/296, by the terms of which the Assembly also requested the Secretary-General to submit a comprehensive report on the use of 300-series contracts for meeting human resources requirements for peacekeeping missions.  In the report submitted in response to that request (document A/59/291), the Secretary-General sought the Assembly’s approval to use 100-series appointments for the recruitment of staff in field missions for six months or longer, when there was a continuing requirement.

In this connection, the Advisory Committee notes that the latest reform initiatives presented by the Secretary-General in his report entitled “Investing in the United Nations:  for a stronger organization worldwide” include proposals to modify contractual arrangements and harmonize conditions of service for all staff, which would subsume some of the proposed measures.  A detailed report on human resources issues is to be submitted in September 2006.

Following an in-depth discussion with the representatives of the Secretary-General on the status of various reports on the staffing of field missions, the Advisory Committee was informed that the Secretariat has modified its proposal.  It now requests that consideration of the recommendation contained in paragraph 12 of document A/60/698 to use the 100-series contract for the appointment of all mission staff be deferred.  As an interim measure, it is proposed that the Secretary-General be authorized to continue the practice of reappointing staff under a 100-series appointment after completing four years on a 300-series contract, subject to the conditions specified in relevant Assembly resolutions.

The Secretariat also indicated that the report on the reform of the Field Service category that it had intended to submit at the second part of the resumed sixtieth session would be submitted at the sixty-first session in the context of the detailed reports requested on the reform proposals.  The Advisory Committee recommends authorizing such measures, pending the consideration of those reports, as well as the outcome of deliberations of the International Civil Service Commission (ICSC) on the question of contractual instruments available to common system field staff.

Financial Situation Statement

In his presentation, United Nations Controller WARREN SACH focused on the main financial indicators, including assessments issued, unpaid assessments, available cash and debt to Member States.  The picture as at 31 December 2005 had been “generally quite positive”, but not uniformly so, and the Organization had a long way to go before he could give the United Nations “a clean bill of financial health”.

Assessments and payments for 2005 had both been higher than in 2004, he said, by $345 million and $284 million, respectively.  Unpaid dues were down by $24 million, and stood at $333 million.  A total of 140 Member States had paid their regular budget assessments in full by the end of the year.  That was 16 more than in 2004 and was the highest level since before 2001.  As for the breakdown of the $333 million in outstanding debt, he said that the amount was highly concentrated, with over 90 per cent owed by just three Member States and over two thirds by the United States alone.

Regarding the current situation, he said that a total of 85 Member States had paid their assessments in full by 30 April, compared to 72 a year ago.  A further four had paid in full in May -- Indonesia, Mauritania, Oman and Qatar.  On a less positive note, however, the financial position of the regular budget at 30 April was weaker than at the same date in 2005.  Payments received by 30 April were over $300 million lower than on the same date in 2005, and unpaid assessments were over $200 million higher.  A breakdown of the $1.2 billion outstanding on 30 April also showed a high level of concentration, with seven countries ( United States, Japan, Germany, Argentina, Mexico, Brazil and China) accounting for 94 per cent of the total, and just three countries ( United States, Japan and Germany) for 85 per cent.

Regarding the cash resources for the regular budget, he said that, if payments received during the rest of the year followed the past pattern, there would be a modest improvement in cash resources available by the end of the year.  Given the concentration of outstanding balances and current uncertainties, however, that outcome could not be taken for granted.  It would depend crucially on action to be taken by the 106 Member States which had not fully paid their assessments for the regular budget and, in particular, the Member States with the highest level of unpaid dues.

Turning to peacekeeping, he said that the unpredictable nature of the demand for peacekeeping activities made it hard to predict financial outcomes with any confidence.  In addition, peacekeeping had a different financial period, running from 1 July to 30 June; and assessments were issued separately for each operation and for different periods, depending on the mandate issued by the Security Council.  That made the comparisons between the regular and peacekeeping budgets difficult.

The total amount outstanding for peacekeeping operations at the end of 2005 had been over $2.9 billion, with almost $1.2 billion of that amount related to assessments issued on 16 December.  Over half was owed by two Member States and almost three quarters by six countries.  Although peacekeeping cash at the end of 2005 had stood at over $1.6 billion, it had been divided among separate accounts for each mission, and there were restrictions on its use, he continued, with the Assembly having specified that no peacekeeping mission shall be financed by borrowing from other active missions.  In addition, the terms of reference of the Peacekeeping Reserve Fund restricted its use only to new operations and expansions of existing ones.

The financial position of peacekeeping at 30 April 2006 showed some improvement, he said.  New assessments of a little over $1 billion had been issued by that date, including $448 million on 13 April.  Against that, contributions of over $2.3 billion had been received, reducing the debt from $2.9 billion to $1.6 billion.  Based on current information, he expected that total cash available in peacekeeping accounts at the end of the year would amount to almost $1.4 billion, with $917 million in the accounts of active missions, $306 million in closed missions’ accounts, and $143 million in the Peacekeeping Reserve Fund.  Of the $306 million expected to be available in the accounts of closed missions, $233 million related to amounts to be paid for outstanding liabilities, such as troop and equipment payments and credits to be returned to Member States.  That left only $73 million freely available for possible cross-borrowing for other accounts.  Such borrowing had been required last year for three active missions ( Kosovo, Georgia, Western Sahara) and the Rwanda Tribunal.  So far this year, cross-borrowing had been required for Georgia and Western Sahara, and he anticipated it would be required for Kosovo.

Regarding debt to Member States, he said that the amounts owed for troops and contingent-owned equipment at the end of 2005 had amounted to $695 million.  Based on current trends, that debt was expected to go down to $615 million by the end of the year.  Naturally, the level of payments would depend on Member States’ meeting their financial obligations to the United Nations.

Turning to the International Tribunals, he said that their financial situation had continued to improve in 2005.  Having jumped to $88 million at the end of 2003, outstanding assessments for the two courts had fallen to $30 million at the end of 2004, and $25 million at the end of 2005.  The debt was highly concentrated, with five Member States accounting for over three quarters of the total.  While 93 Member States had paid their Tribunals’ dues in full by the end of 2005, no fewer than 98 countries still had outstanding dues to one or both Tribunals at the end of 2005.

On the Capital Master Plan, he said that since 2002-2003 the Assembly had authorized assessments totalling $51.5 billion for preparatory activities for the project.  Total payments of $41.8 million had been received by 30 April.  Earlier this month, the Assembly had authorized an additional assessment of $23.5 million and a commitment authority of a further $77 million.

In conclusion, he paid special tribute to those Member States that had paid in full all their assessments as of 30 April:   Australia, Azerbaijan, Canada, Croatia, Finland, Italy, Kuwait, Monaco, Mozambique, New Zealand, Norway, Poland, Russian Federation, Singapore, Slovakia, South Africa, Sweden and Switzerland.  Payments received this week would add Liechtenstein to that list.  He encouraged all other Member States to follow their example.

Financing of United Nations Peacekeeping Operations

DONNA-MARIE C. MAXFIELD, Chief, Personnel Management and Support Services of the Department of Peacekeeping Operations, introduced the Secretary-General’s report on the staffing of field missions, including the use of 300- and 100-series appointments, which covered the period July 2005 through June 2006.  During the reporting period, a total of 482 international staff members would have reached four years of service under a 300-series appointment.  Those 482 staff members were considered for reappointment under a 100-series contract against the criteria set out by the Assembly in section VII, paragraph 16, of resolution 59/296.  Mission staff who had reached the four-year limit on a 300-series appointment might be reappointed under a 100-series appointment, provided that their functions had been reviewed and found necessary, and their performance had been confirmed as fully satisfactory. Of the 424 staff members reviewed, 21 had not been recommended for reappointment for a variety of reasons.

The report, she said, reiterated the need for human resources management systems and contractual arrangements that enabled the Organization to attract and retain experienced and qualified staff.  In that context, the report recalled the 2004 comprehensive report on the staff of field missions, including the use of 300- and 100-series appointments, which described challenges in meeting the increased demand for highly qualified and experienced personnel to manage complex, multidimensional peace operations.  The Secretary-General’s comprehensive management reform proposals included proposals to harmonize conditions of service for staff serving in field missions and to streamline contractual arrangements.  To enable the Assembly to consider interrelated human resources issues in an integrated manner, they would be addressed in the Secretary-General’s overall reform report and in a separate report on the reform of the Field Service category.  The timing of the staff-management consultations and subsequent reports might not allow for the Assembly to reach a decision regarding contractual arrangements of mission staff before 30 June 2006.

She also noted that the ICSC considered staffing at field missions at its sixty-second session in March 2006.  The ICSC had decided to revert to the matter at its sixty-third session, in order to continue the discussion with the Commission in light of his reform proposal in that area.

Pending further consideration of the reform measures proposed in the Secretary-General’s report on “Investing in the United Nations:  for a stronger Organization worldwide”, she requested that consideration of the recommendation contained in the report before the Committee to use the 100-series contract for the appointment of all mission staff be deferred.  In the interim, the Secretary-General would request the Assembly to agree to the continuation of the current practices approved by the Assembly regarding the reappointment of staff serving under the 300-series appointments.

RAJAT SAHA, ACABQ Chairman, noted that the Secretary-General’s report was interim in nature and that the subject would be dealt with comprehensively in the fall.  The Advisory Committee had had an in-depth discussion with the representatives of the Secretary-General on the status of the various reports related to the staffing of field missions.  The Secretariat had subsequently modified the proposals and now requested that the consideration of the recommendation contained in the report to use the 100-series contract for the appointment of all mission staff be deferred and that, as an interim measure, the Secretary-General be authorized to continue the practice of reappointing staff under a 100-series appointment after completing four years on a 300-series contract, subject to the conditions specified by the Assembly in its resolution 59/266.

The ACABQ understood that the ISCS was now seized of the matter.  Pending the outcome of the ICSC deliberations and consideration of the relevant Secretary-General’s reports to be submitted during the Assembly’s sixty-first session, the Advisory Committee recommended that the measures now requested by the Secretariat be authorized.  That request of the Secretariat superseded and replaced the request contained in the Secretary-General’s report.

ENNO DROFENIK (Austria), on behalf of the European Union, said the Secretary-General in his report, “Investing in the United Nations:  for a stronger Organization worldwide”, had affirmed the central importance to his reform efforts of addressing the complex issue of staff appointed to field missions, including, but not limited to, contracts on which field staff were recruited.  He noted from the ACABQ’s report that, during their discussion with representatives of the Secretary-General, the original recommendation to use the 100-series contracts for the recruitment of all mission staff be deferred and that the present practice of recruitment and reappointment be continued.  He endorsed that approach given that a comprehensive report on all human resources management-related issues would be presented to the Assembly at its sixty-first session.

He also noted that the ICSC had discussed the issue of staffing in field missions at its sixty-second session.  Given the importance of the issue, he trusted that the ICSC considered the issue in detail, taking into account all relevant factors, including the continuous nature of many functions within peacekeeping operations, the need to recruit staff on the requisite contracts for those long-term functions, and the continuous need to address high vacancy rates in peacekeeping operations.  He also trusted that the ICSC’s final decision would be of a comprehensive nature, addressing those and other pertinent points, which would aid the Assembly in its consideration of the issue at its sixty-first session.

MARK D. WALLACE ( United States), addressing the issue of the Organization’s fact-finding into allegations of procurement irregularities in United Nations peacekeeping activities, said his delegation took the matter seriously and expected that other Member States would want to make sure that all reasonable means were used to obtain the facts in the case.  Since there was a critical need to pursue accountability in such matters, it was regrettable that others had chosen to question motives and make personal attacks.  Such diversions would only keep members from what should be the primary objective for the Committee, namely to ensure an effective and efficient United Nations.

Regarding the specifics, he said the Secretariat had acted responsibly in seeking all information relevant to the allegations of fraud, waste and mismanagement.  In particular, the Secretary-General’s decision to obtain independent, external expertise to assist in gathering and analysing the data in a timely manner was both prudent and integral to ensuring an objective assessment of the situation.  As the Organization’s chief administrative officer, the Secretary-General had both the authority and responsibility to act decisively when confronted with possible instances of fraud, waste and mismanagement.  The United States rejected the suggestion that he needed the Assembly’s approval to seek expert help.

“We must allow the fact-finding effort to take its course”, he said.  Until then, he hoped that Member States would refrain from making statements that prejudged the results and served only to divert attention from the Committee’s primary function of ensuring that the United Nations carried out priority mandates efficiently, effectively and transparently.  Concluding, he requested that the Secretariat provide a written response in a formal meeting to the comments made by delegations on the matter.

YASSER ELNAGGAR ( Egypt) asked the Secretariat for information in the context of the written response requested by the previous speaker regarding fact-finding endeavours.  He wanted to know why those efforts had been cancelled or not commissioned, so that the Committee could have a frank discussion on the accountability of all staff members, at all levels.

NONYE UDO ( Nigeria) said that, as the ACABQ had stated, the Secretariat had made a request that the discussions on the use of the 100 series be deferred.  While she was not prepared to make a comment on that request, she wondered why the request had been presented as an oral statement, when important information was being conveyed.  Why not issue it as a corrigendum?

RAZIFF ALJUNIED ( Singapore) said that it was incumbent on any senior management member to not only present the findings of an external authority, but also make sure that those findings came in a proper and more thorough manner.  He asked for details on the assigning of external experts, wondering who had authorized the commission of the study.  Had there been a transparent and competitive bidding process?

Responding to Nigeria’s comments, Mr. SAHA said that the Secretariat had presented a formal letter, requesting that the consideration of the recommendations contained in document A/60/698 to use the 100-series contract for the appointment of all mission staff be deferred.  As an interim measure, it was proposed that the Secretary-General be authorized to continue the practice of reappointing staff under a 100-series appointment after completing four years on a 300-series contract, subject to the conditions specified in relevant Assembly resolutions.  In fact, the receipt of that letter could trigger a formal corrigendum being issued.

Mr. ALJUNIED ( Singapore) said that, since the Committee was now expecting a written response, the information regarding his questions, including the one on the bidding, should be included in the document, particularly regarding De Loitte and Touche.

Mr. ELNAGGAR ( Egypt) said that he was happy that the Committee was having an interactive discussion.  In fact, he had been referring to the forensic investigation, so he hoped that the information requested would contain details on tenders, who commissioned the study, and why it had been cancelled.

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