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UN Procurement Problems

In January 2006 the United Nations said it was conducting some 200 investigations into procurement activities involving funds running into the tens of millions of dollars. Eight staff members were placed on "special leave with pay" in that connection. The names of the staff members were not disclosed.
by William M. Reilly
UPI U.N. Correspondent
United Nations (UPI) March 23, 2007
Only days after announcing the removal of two vendors from its list of approved businesses, the United Nations said several additional investigations are under way, including a number involving high-cost contracts.

Among those cases are some involving "the international transfer of funds through circuitous routes and nominees and agents," the U.N. Office of Internal Oversight Services Procurement Task Force said Thursday and indicated further prosecutions could be coming.

The inquiry is into the U.N. office responsible for $2 billion annually in procurements.

Chief U.N. spokeswoman Michele Montas a week ago said Cogim, S.p.A. and Avicos Insurance Company had been removed from the Vendor Database and prohibited from doing business with the world organization as a result of inappropriate relationships between them and an indicted former U.N. official.

Based on a related investigation by the task force, registered vendors Corimec Italiana S.p.A and Volga Dnepr Airlines and its subsidiary, Volga-Dnepr (Ireland) Ltd., were suspended from the database in light of alleged inappropriate relationships between them and a former U.N. official, the world organization said.

The official apparently is former U.N. Procurement Officer Alexander Yakovlev, who resigned in August 2005 amid accusations he solicited kickbacks.

The Independent Inquiry Committee investigation into mismanagement of the U.N. Iraq Oil-for-Food Program turned up the allegations.

After an investigation by the U.S. attorney in Manhattan, U.N. Secretary-General Kofi Annan waived Yakovlev's immunity and he was prosecuted.

In a report issued just prior to Yakovlev's resignation, the IIC found he had received $950,000 from various U.N. contractors and that it was paid into offshore bank accounts.

In June 2005 Vladimir Kuznetsov, chairman of the U.N. General Assembly's Advisory Committee on Administrative and Budgetary Questions, was arrested and Annan also waived his immunity and the world organization cooperated with the investigation.

The latest task-force statement said it "has for some time been vigorously pursuing the matters which were only partially revealed during the testimony" in Kuznetsov's criminal trial this month.

It underlined the "greater length of time" required to deal with some cases because of the involvement of lawyers requesting extensions to comply with requests for documents and witness interviews.

"Investigators were fully aware prior to the Kuznetsov trial of the information revealed about the activities of certain vendors during the testimony in the trial of a former U.N. procurement employee," the Thursday statement said in an apparent reference to Yakovlev.

The Task Force "is also examining several additional cases, some of which involve high-value contracts, involving vendors and intermediaries and agents of these companies, who have acted on behalf of entities doing business with the United Nations."

"As a result of the Task Force's work, and as a consequence of its reports, several additional vendors have been removed from the U.N. vendor roster," said the statement.

A further report was expected to be released later.

"These matters are much more extensive and complex than what was revealed during the course of the testimony, and the task force's investigation of all of the surrounding circumstances must be accomplished before the matter is finalized, and a full and final report is issued."

Paul Buades, chief the U.N. Procurement Division, told reporters Thursday how the world organization is implementing its "zero tolerance" policy on procurement, adding that reform is under way to prevent a recurrence of past events.

In January 2006 the United Nations said it was conducting some 200 investigations into procurement activities involving funds running into the tens of millions of dollars. Eight staff members were placed on "special leave with pay" in that connection. The names of the staff members were not disclosed.

Buades, asked about the impact on morale of the 14-month suspension of Andrew Toh, who was the assistant secretary-general for central support services, replied, "It can have an impact," adding he was working to try to overcome this through open communication.

Toh was the official who accepted Yakovlev's resignation in June 2005.

Said Buades, "We'd like to put behind all of the dark side, I would say, of those elements. We need to rebuild confidence and trust in procurement function and activity, for the staff, the member states and the vendors."

Source: United Press International

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