UN Procurement Under Fire, Ignored by CEB, Rot
Starts From Within
Byline: Matthew Russell Lee of
Inner City Press at the UN: News Analysis
NATIONS, April 6 -- Scandals
in the UN system's procurement operations arose last month and this on
Hill but not, apparently, in the system's Chief Executives Board
convened yesterday in Paris by Secretary General Ban Ki-moon. This
Joint Inspection Unit report that the UN purported to take seriously,
called for CEB action.
Flaws in UN Peacekeeping's procurement, including
the $250 million
no-bid contract to Lockheed Martin's PAE in Darfur, came up in a
cast on the nomination as deputy Homeland Security chief of Jane Holl
contract's main promoter in the UN.
In a March 11 meeting
closed doors with the House Foreign Affairs Committee, Mr. Ban was
the UN's transparency and accountability, including in procurement.
scandals include not only systemic flaws on contracting, but specific
of continued payments to the so-called Indian Enron Satyam and
erasure of a $3 million entry in the UN Procurement database, and
with firms like Petrocelli
Electric, whose principal has just been indicted for
bribery, and National Mobile Television, which is going bankrupt, as
Press reported over the weekend and confirmed
at Monday's noon briefing.
Just before Ban's DC
City Press asked Ban's Deputy
Spokesperson Marie Okabe about a
Inspection Unit report on UN procurement which had just become
public, Ms. Okabe responded by reading aloud a statement that, among
things, the report
not always provide a clear indication as to which UN organization the
pertain to. Nevertheless, of the 22
recommendations issued by the JIU, the following applied to the UN
Secretariat. Eight were already in place
in the UN Secretariat prior to the Note.
Three would require an Enterprise Resource Planning
system. Three would require coordination
high-level Committee of Management. Five
are accepted, and three would require additional clarification from the
Inspectors as their recommendation is too vague. It should also be
the amounts in question relating to the corporate consultancies are a
specialized element of procurement. This
represents an average of $15 million expenditure, as indicated on page
5 of the
Note... Don’t ask me any more questions, because this is all I have."
Inner City Press asked, "Is it possible to know
which of the five
recommendations the UN is actually going to act on?"
The UN's Marie Okabe answered, "I have just said I
further on this."
Later, while Inner City Press was in Washington
covering Ban Ki-moon's
trip there and subsequently controversy, including admonition by
Barack Obama's spokesman Robert Gibbs, Ms. Okabe's office e-mailed
Press a more detailed answer.
Further information re: your questions on the JIU report
unspokesperson-donotreply [at] un.org
Inner City Press
3/11/2009 12:25:13 P.M. Eastern Daylight Time
recommendations indicated below have been accepted by the United
Secretariat. As indicated yesterday, it should be noted that the UN
disagrees with several findings contained in the Note. Due to the lack
clarity in the Note, it was not possible to ascertain which findings
which UN Organization. Nevertheless, it should be noted that the UN
agrees with the spirit of the recommendations reflected below and will
steps to implement.
(as numbered in the Note):
executive heads of the United Nations system organizations should:
#(2) establish procedures to
follow up, and evaluate the outcome of consultancy reports.
The executive heads of the United Nations system organizations should
that there are clear policies and procedures in place to guide staff
circumstances to resort to corporate consultancy services.
develop an effective monitoring and reporting mechanism for waivers of
provide clear guidelines and sensitize personnel for the proper
of the procurement process, and monitor its implementation.
(17) ensure that the proper application of performance evaluations are
An Inner City Press procurement expert finds this
to the JIU report on procurement misleading, a rapid response intended
up the report. In the actual JIU report,
the 22 recommendations are addressed equally to "The executive heads of
the United Nations system organizations." It was done that way
because, in the view of the JIU, all UN
organizations have similar procurement
CEB meeting on April 5: "something smells in this
temple," procurement ignored?
The note never singles out any
individual organizations, except where it collected statistics. And
Organizations responded to their questionnaire.
Page 2 of the report (in the introduction) states that in creating the
the JIU inspectors examined 72 case files, including 26 -- or 36% --
When they say the Secretariat
had 8 recommendations in place before the note,
that is a common UN way of obscuring things, since they don’t tell you
Or when they had systems put in place. Or whether the JIU agreed that
done things effectively. Or whether their remedies were more than
indication that they are covering up is the number of Secretariat case
that the JIU examined. U.N. compliance with reports like this is always
this fashion, so no outsider can judge whether they did anything or
the report, as mentioned above, never singles out the Secretariat.
To say that three of the JIU
recommendations would require coordination by the
High Level Committee on Management means that it would require action
the United Nations system organizations, as a whole. The HLCM is a
all the Under Secretaries General for Management, right under the
etc. In other words, the Secretariat is admitting that it is party to
three problems that require system-wide resolution.
The Secretariat says that
three recommendations involve Enterprise Resource
Planning systems. That is a very strong indicator that what the JIU
record keeping, lack of evaluations, horrible contract management,
applies to the Secretariat. Because that is what the ERPs are for. We
in the story that several organizations are putting in place Enterprise
Resource Planning systems, which are supposed to be a help. Since the
being managed through consultancies, not only are there sins in record
but the very sins that the report says also belong to the procurement
a whole are very likely being perpetrated in these acquisitions.
What the Secretariat means by
corporate consultancies being only $15 million
per year on average is not clear. There is no mention of $15 million on
of the note, and the average of consultancy expenditures across the
institutions is $21.2 million. But the report also says, at the top of
that 89% of the total outlay went to three organizations, which would
$283 million. For the Secretariat, the total is $76,037,769. If you
that out over 5 years, you get about $15 million annually. But there is
to average it out, because a table on page 5 lays out the exact numbers
each reporting organization. The Secretariat just doesn’t want you to
The reason they don’t
want you to look at it is that the bulk of
Secretariat consultancy procurement consists of two big numbers, $26
and $33.3 million, done in 2003 and 2005 respectively. These are big
expenditures for SOMETHING, possibly the budgeting for IT or something
The secretariat wants you to think this is a drop in the bucket. But it
precisely spending for consultancies involved with information
restructuring, etc. that are supposedly the improvement of the
And they are also the kind of procurements that the first 13 pages of
report criticize severely.
The report called for CEB action. On March
20, when Inner City Press asked about what some call the Secretariat's
JIU coup in choose a new head of the unit, Ban's Deputy spokesperson
tried to say it was the March 10 question about the JIU's criticism,
including recommendation for CEB action. On April
6, Inner City Press asked
Press: At the CEB meeting, was the
procurement report by the Joint Inspection Unit that came out, was that
Michele Montas: I don’t have any details
on what was discussed; I was not there, so I cannot tell you whether
specifics. I think they actually focused
a lot more on the G-20 meeting that had taken place.
I don’t know how far they went in specific
issues like the one you are mentioning.
Question: I have a procurement question.
It’s become clear that, number one, the
electrical contractor for the UN, Petrocelli Electric, the founder has
indicted in the Southern District of New York for bribery.
At the same time, the operator of UN
Television, National Mobile Television Venue Services Group, is
bankrupt. Everything is being sold and
they’re trying to move their people into the basement area as a final
refuge. How can it be that these
contracts were entered into with companies in one case being indicted,
the other case going bankrupt?
Spokesperson: Well, in specific cases, when the contracts
were entered, of course, there was no indictment and there were no
that there were any wrongdoings. In
terms of the second contract, of course, we can look into this. There are several companies going under and
we cannot predict in advance which company will go under.
I can try to get more information for you
from the Procurement Office, but, at this point, as I said, we cannot
what will happen when we sign contracts.
Later in the
Spokesperson: Matthew, I just got your answer.
It was just brought to me. The contract with
the Petrocelli Electric Company covers overall electrical
operations, maintenance, alterations and major projects, and remains in
even though the UN has suspended the vendor from participating in any
procurement activity. That’s what I have
for you. And we’re also aware of the
financial difficulties faced by VSG’s parent company, NMT.
The Organization is dealing with the
situation in consultation with the VSG management.
So I got your answer pretty fast for
but is anything fixed? And so it goes
at the UN.
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