UN: Waste and Fraud Found in Peacekeeping Work

UNITED NATIONS, Jan. 23 -- An internal U.N. probe of the department that runs international peacekeeping operations has uncovered extensive evidence of mismanagement and possible fraud, and triggered the suspension of eight procurement officials pending an investigation, according to U.N. officials and documents.

U.N. investigators have uncovered rampant waste, price inflation and suspicion that employees colluded with vendors in awarding contracts for a variety of peacekeeping programs, said a confidential report presented to several governments Monday.

Peacekeepers, for example, spent $10.4 million to lease a helicopter for use in East Timor that could have been secured for $1.6 million, and paid $2.4 million to buy seven aircraft hangars in Congo that were never used, the report said. An additional $65 million or more was spent for fuel that was not needed for missions in Sudan and Haiti, said the report, which called for an investigation into whether U.N. staff members improperly "colluded to award" one U.N. supplier an $85.9 million fuel contract for the Sudan mission.

The failure of U.N. managers to enforce basic standards has led to a "culture of impunity" in U.N. spending, according to the report. Together, it says that there are "strong" indications of fraud involving contracts whose value totaled about $193 million, nearly 20 percent of the $1 billion in U.N. business examined by the auditors.

"We have no idea yet as to the scope of this, but I believe that we have significant evidence of fraud and corruption," the U.N. undersecretary for management, Christopher Burnham, told reporters Monday. Burnham, a former Bush administration official, went further than other U.N. officials in characterizing the seriousness of the wrongdoing.

Burnham, however, said that the decision to suspend the eight officials -- including Andrew Toh, who recently oversaw the U.N. procurement department, and Christian Saunders, the director of the U.N. procurement division -- did not represent a finding that they had done anything wrong. The two have both denied any wrongdoing.

The U.N. findings come as the organization is struggling to recover from a financial scandal involving abuse of the $64 billion oil-for-food program in prewar Iraq and reports of widespread sexual abuse by U.N. peacekeepers.

U.S. prosecutors, meanwhile, are conducting their own investigation into criminal wrongdoing in U.N. contracting. The U.S. attorney's office for the Southern District of New York in August charged a former U.N. procurement officer, Alexander Yakovlev, with receiving hundreds of thousands of dollars in bribes on behalf of companies doing business with the United Nations. Yakovlev pleaded guilty to three counts of wire fraud and agreed to cooperate with the ongoing investigation.

Monday's revelations came as U.N. peacekeeping operations are expanding rapidly, with more than 70,000 uniformed police and blue-helmeted troops posted in 18 missions around the world. The United Nations is gearing up for a new peacekeeping mission in Darfur, Sudan, and has asked the Security Council to authorize an increase of 4,000 peacekeepers in Ivory Coast.

"We know that we have some areas of difficulty that have to be strengthened," said Jane Holl Lute, a senior peacekeeping official, noting that U.N. officials alerted the investigators to possible wrongdoing. "We are operating in a highly complex, highly volatile operating environment in places around the world that are difficult, austere and, as evidenced by the killing of eight Guatemalan peacekeepers today in the Congo, dangerous."

John R. Bolton, the U.S. ambassador to the United Nations, said the procurement scandal would not prompt a retreat from U.N. peacekeeping. But he said it underscored the need for far-reaching administrative changes in the world body.

"It is very disturbing. It shows the sad record of mismanagement that we are trying to deal with through the reform process," he said.

The U.N. Office of Internal Oversight, which conducted the inquiry, cited several cases in which they found "fraud indicators," or cause for suspicion.

The helicopter deal in East Timor was one of them. U.N. procurement officers had been offered a $1.6 million lease for an Mi-26 helicopter, the report said, but the procurement documents did not reflect that offer. The U.N. report called for an investigation into why officials paid $8.8 million too much and into their dealings with vendors.

The report did not name individuals or companies suspected of breaking U.N. procurement rules. But an earlier draft, made available to The Washington Post, included some names of companies and U.N. staffers.

For instance, it identified SkyLink Aviation Inc., a Canadian firm, as the company that supplied fuel to the U.N. mission in Sudan. A spokesman for SkyLink, Jan Ottens, confirmed that his company had that contract and he denied any wrongdoing. He said SkyLink actually lost "bundles" of money from the fuel contract.

Ottens said the problem was that the United Nations overestimated the amount of oil it would need because it anticipated the deployment of tens of thousands of peacekeepers that never arrived.

He also said auditors failed to note that his company billed the United Nations only for the oil that was used, representing about half the cost envisioned by the fuel contract. He said his company, meanwhile, had to absorb the costs of setting up the infrastructure for delivering far greater quantities of oil than the United Nations eventually bought.

"We were misled" by the United Nations, he said. "We are very unhappy with that fuel contract."

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