PRESS CONFERENCE BY OFFICE OF INTERNAL OVERSIGHT SERVICES

 

In the view of the Office of Internal Oversight Services (OIOS), the procurement system in the Organization needed a major overhaul, Inga-Britt Ahlenius, Under-Secretary-General for Internal Oversight Services, told correspondents at a Headquarters press conference this afternoon.

She said that basic templates and structures were available to guide the United Nations to construct a proper framework of internal control in procurement.  The issues that needed to be addressed included the tone -- or the control environment -- at the top, the risk management responsibility, policies and processes, the checks and balances to guarantee proper handling of functions, efficient reporting and monitoring.  The Organization needed to improve on all those levels.  Requirements should also be in place for vendors.  There was an urgent need to establish a robust structure to be able to act swiftly and resolutely against unserious and corrupt vendors. 

Ms. Ahlenius, joined by the head of the Procurement Task Force, Bob Appleton, spoke to the press minutes after a statement attributable to the Secretary-General’s Spokesperson had been made available on today’s guilty verdict in the trial of Sanjaya Bahel, a former United Nations official who had been charged with bribery and procurement fraud.  She said that recent events and the number of cases that required investigation showed that it was difficult to rely on the system of internal control when it came to procurement.  There was also concern that other major contracts might have not been dealt with in a proper way.

On the Bahel case, Ms. Ahlenius said that the establishment of the Procurement Task Force in January 2006 had followed the release of a report on the Organization’s “oil-for-food” programme by the Volcker Commission, and the indictment of procurement official Alexander Yakovlev, who had later pleaded guilty.  Procurement issues had also been highlighted in the OIOS comprehensive audit of peacekeeping operations.  A report on that audit had been submitted to the Organization in January 2006.

Following the audit report, eight staff members from the Departments of Management and Peacekeeping Operations had been placed on administrative leave, she continued.  During 2006, 20 to 50 investigators had been working on the cases handed over to the Task Force from the Investigations Division of OIOS.  To date, the Force had issued some 15 reports, 9 of them covering the eight people placed on suspension.  However, the investigations of staff were, in fact, a deviation from the activities of the Task Force, whose main focus was on important contracts and large vendors, with contracts worth about $1 billion under consideration.  Significant amounts of fraud and waste had been found, of which the United Nations was a victim.

Having been fully investigated by the OIOS Procurement Task Force, the case of Mr. Bahel had been officially passed to the United States Attorney’s Office, Southern District of New York, upon the issuance of an 86-page report on 27 July 2006, she said.  The Task Force identified the fraud and corruption, which had formed the basis of the indictment against Mr. Bahel.  In fact, the report also covered several other staff members, as well as several vendors and their agents.  The Force’s report was the basis used to charge the defendants with criminal offences, which had resulted in Mr. Bahel’s conviction today.

Mr. Appleton said that much effort had gone into the Bahel case -- only one of the Force’s many cases that it had “inherited” from previous investigations.  It was a voluminous case, involving a large number of transactions and valuable contracts, some of them dating back to the 1990s.  The Force’s investigation had been finished within four months, conducted simultaneously with other cases.  The Task Force, as an administrative body, faced some challenges, including its inability to subpoena documents, compel witnesses or execute search warrants.

The Task Force was continuing its work, with the goal of improving the Organization, he said.  He added that he wanted to lay to rest the concerns that the Procurement Task Force was targeting certain staff members.  The Force focused on checking the evidence in an effort to root out fraud, corruption and waste, and “following it where it takes us”.  If the evidence led to an exoneration, that made him very happy.

Responding to several questions about a previous investigation that had exonerated Mr. Bahel, Ms. Ahlenius said that a review of the previous investigation had shown that it not been thorough enough.  For that reason, she had ordered it reinvestigated, and the case had been handed over to the Procurement Task Force.

Asked if the Office intended to reopen any other previously closed cases, Ms. Ahlenius said that the Office had enough to do, with some 140 cases under active investigation by the Procurement Task Force at present.  There was no “witch-hunt”, and the cases pursued were the ones in the case load of the Task Force.

To another query, Ms. Ahlenius replied that, in 2006, the total amount of procurement in the Organization had amounted to some $1.9 billion.  When it came to contracts under investigation, those amounted to about $1 billion.  So far, OIOS had found millions of dollars in waste and fraud.

Mr. Appleton added that it was difficult to estimate the exact amount.  During the Bahel trial, the defence itself had presented an exhibit, according to which fraud in the United Nations amounted to some $20.7 million, just on the TCIL contracts.  The Procurement Task Force had calculated the fraud to amount to less.  Thus, in that case alone, there had been a $100 million in contracts that had been issued, a product of fraud, but the question was: “How do you calculate it?”  In such cases, the United Nations was a victim, preyed upon by companies and vendors who sought to get a contract any way they could get them.  Obviously, in the Bahel case, they had found a willing participant within the Organization.

Asked if the system had been designed to invite corruption, Ms. Ahlenius said that, in her view, the contrary was true.  The system had been based on the belief that people were honest.  As the investigations had shown, it was not protected enough against corrupt vendors.  The United Nations was a big and attractive buyer, and big companies were competing for its contracts.  Unfortunately, not all vendors were honest -- there were also many shrewd and dishonest people.

“Procurement has been talked about for many years -- why haven’t the problems been fixed?” a correspondent asked.  To that, Ms. Ahlenius said that, although it could not change the situation itself, OIOS could review the Procurement Department, and its report would be available to Member States.  Even if it took time, change would come.  “I can assure you that nothing will be swept under carpet as long as I am here,” she said.  Operationally, OIOS was in a strong position to conduct independent and professional work.  Resolution 59/272 enabled the head of OIOS to report directly to the General Assembly, the governing board of the United Nations.

To several comments about the need for OIOS to be more open to the press, she said that OIOS could not inform the press prior to the presentation of its reports to the Assembly, whose 192 Member States were the “board members” of the United Nations.  It was a slowly working organization, “and we have to have patience with it”.  Currently, the General Assembly had still not concluded its consideration of the Office’s report for 2006, as well as its report on peacekeeping operations.  Personally, she felt that the Organization would be served much better “with a little bit more transparency”.

To a suggestion that OIOS needed a staff member to communicate with the press, Ms. Ahlenius said that her budget proposal to the General Assembly contained a request for a communications officer.  That case had been under consideration since June last year.

Regarding the fate of the staff members who had been suspended, including the former Assistant Secretary-General responsible for procurement, Ms. Ahlenius said that the question should be directed to management.  OIOS did not have the enforcement power and was responsible only for reporting to the Administration on its investigations, audits and evaluations.  Subsequent actions were the responsibility of management.  For its part, OIOS regularly reported to the General Assembly on the implementation of its recommendations.

Regarding ongoing investigations, Mr. Appleton added that five or six reports of the Procurement Task Force were expected to come out this month, and a midyear report would be issued in July.  The current mandate of the Task Force was expiring at the end of the year, and it intended to conclude its investigations by then.  “We resolve them as we go,” he said, but some cases required a long time to pursue and required a lot of effort.

Ms. Ahlenius added that, while the Procurement Task Force mandate was still in place, the funding for the Task Force had been provided only till December 2007.  At the end of the year, her ambition was to merge the Procurement Task Force and the Investigation Division of OIOS.

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For information media • not an official record