-----------------------







-----------------------

Archive Introduction

"The UNCTAD One"        

     The first big OIOS fraud case, in the late 1990s, was also, or so IO Watch believes, one of its few significant ones. Two articles, one immediate and shocked, one two years later and irreverent, observed that:

" … the fraud recently reported at UNCTAD comes as a terrible shock.  The amount involved (estimated at $500,000), the length of time over which the fraud was perpetrated before discovery (thought to be several years), and the seniority of the official involved raise issues of grave concern.

Why did it take so long for the fraud to be discovered?  Was there a UN office with responsibility for countersigning the relevant disbursements?  If so, why didn't that department ascertain whether they were being used properly?  Why was the official involved, with a known history of personal problems, placed in a position of seniority and apparently given unsupervised responsibility over UNCTAD finances?

[OIOS head Karl Paschke], who immediately flew to Geneva from New York once the fraud was uncovered, is to be congratulated for responding so quickly … he has returned to New York and left two OIOS officials in charge of the inquiry."

Morris B. Abram, "UN accountability needed", Geneva Post , June 13-19, 1996.

"OIOS has investigated several cases of fraud.  One of which we have written before involves an UNCTAD staff member (a United States citizen of Cuban origin) who bilked the agency of over $600,000 by claiming travel and per diem expenses for non-existent experts attending imaginary meetings.  OIOS does not record the fact that this imaginative individual was caught only because he was hospitalized for a time and could not keep up the charade.  This is surely material for a Hollywood comedy."

"Reviewing 3+ years of work, [OIOS] sees continuing problems - but reforms are afoot," International Documents Review, 2 November 1988, pp. 1-4.

The case then began a long march toward justice.  In its 1996 annual report the OIOS reported that:

"The Investigation Section was requested and undertook … an investigation … [at] UNCTAD … The first indicator of the problem was discovered by two UNCTAD general service staff.  The investigation is continuing … and the case is pending with the Swiss authorities."

"Report of the Secretary-General on the activities of the OIOS", UN document A/51/432, 1996, para. 123.                                                      

During 1997 the case became a great opportunity for Mr. Paschke, who had been criticized for his "laid-back" approach, to be the "tough cop."  In various articles he emphasized his crime-fighting determination.  For instance:

"The United Nations top sleuth … vowed that corruption would not be 'swept beneath the rug.' …

He said the conviction last week of a former [UNCTAD] staff member for embezzling at least $500,000 displayed a new resolve to prosecute criminal acts by employees.  [The staff member received a suspended jail sentence of 18 months after pleading guilty to 58 charges of fraud and 41 counts of forgery.)

'The verdict itself sends a strong signal to staff worldwide and also to the outside world' Mr. Paschke said at a news conference …

'It says the UN now deals professionally with irregularities and wrongdoing which occurs in any sizeable public administration' he said.  'The UN can be trusted to deal adequately with these irregularities.'

Mr. Paschke said he could not rule out that some managers might be disciplined. 

Mr. Paschke's team investigated after a fellow staff member spotted irregularities in … May 1996.

'There was a certain reluctance … to deal with the complexities of diplomatic immunity and liaising with national courts.  There was a tendency not to go beyond summary dismissal in cases where a criminal dimension was visible.'           

"UN investigating more fraud cases", Reuters, International Herald Tribune, September 4, 1997.                                                     

The 1997 OIOS annual report reported at some length on the successful conclusion of the case:

"In July 1996 the [UN Office at Geneva] made a criminal complaint to the Swiss authorities, who arrested the staff member pending investigation. 

On 9 April 1997 … he formally admitted owing the United Nations a total amount of (US$ 609,704) and agreed to liquidate his entire assets, including the lump sum of his pension entitlements … to make restitution.  The United Nations has been able to recover approximately $350,000.  The Swiss three-judge court ruled the defendant guilty … [and] directed that he pay the balance due to the United Nations from his thefts …"

"Report of the Secretary-General on the activities of the OIOS", UN document  A/52/426, 1997, paras. 123-125.                                                               

The 1998 case returned once more to the UNCTAD case, observing that:

" … The investigation proved that, over a period of more than ten years, the staff member stole nearly $600,000 … by submitting false documents for daily subsistence allowance payments to fictitious 'experts' attending non-existent United Nations conferences. 

Subsequently, [OIOS] sought to determine what lapses may have occurred at the [UN] Office at Geneva and UNCTAD that contributed to the longevity of the staff member's scheme.  A comprehensive report was provided to [UNCTAD and UNOG] management … which have begun to implement corrective actions."

"Report of the Secretary-General on the activities of the OIOS", UN document A/53/428, 1998,  paras. 133, 151-153.                                        

In fact, OIOS still cannot let this case go.  A 2004 overview of OIOS work on its website lists the UNCTAD case as the last of five significant achievements of its investigation activities.

"List of significant achievements: Investigations", at www.un.org/oios/achievements.

IO Watch is also not able to let this case go, in part because it received so much attention and went on for so long, but mostly because it seems unique -- and in 2004 still sounds like "The UNCTAD one."  Some oddities and concerns were obvious:

-- that this brazen scam of fake seminars and payments went on for ten years unnoted is indeed a grave condemnation of internal controls and alertness to fraud within the UN;

-- the case took up very large amounts of OIOS investigator time in a period when the Section was already very short-handed, and certainly other important cases were ignored because of it;

-- although OIOS made much of it, it became a case at all only because several lower-level staff finally noticed it;

-- although there were references to action against the managers involved, and pressure from governing bodies to sanction them, the UNCTAD manager concerned apparently was transferred far away and out of reach, and in fact there may still never have been a manager sanctioned in such a case;

-- such cases are indeed very time-consuming and laborious, so how many others have been simply shelved, especially as OIOS continues to have less investigators than needed?

Most directly, however, IO Watch thinks the UNCTAD case is so unusual because it does indeed stand alone.  First, the five OIOS examples of large investigative cost saving achievements noted above -- except for the UNCTAD case -- all concern wrongdoing in hectic and distant field operations, not at comfortable UN headquarters sites. Second, the case was cast in terms of punishing a senior staff member and manager, although the person involved was in fact only a senior professional staff member.

It is impossible to tell because the OIOS annual reports are so deliberately vague about patterns and types of UN fraud, but IO Watch believes that "the UNCTAD one" is indeed one of a kind -- a stand-in for UN headquarters managers (in New York, Geneva, Vienna, and the regional commissions) who fell into OIOS' hands, with a nice, clean, catchy, and even absurd case to triumphantly wrap up and claim credit.  The "UNCTAD one" therefore became a poster child to prove that OIOS does indeed sanction firmly UN managers who commit fraud and criminal acts, when many other indicators suggest that it does not. 

IO Watch has read all the OIOS annual reports fairly attentively, and does not recall any case of a real UN manager (Director-level or above) sanctioned and sentenced in a national criminal court for his or her sins.  There are hundreds of such managers throughout the UN, handling large amounts of its $6 to $10 billion dollars of expenditures annually without any real accountability system. Further, the OIOS emphasises its partnerships and cooperation with them, rather than firm oversight of their activities. 

Unless and until the OIOS finally provides a systematic  analysis of all its waste, fraud, and abuse cases and their results, by grade level, "the UNCTAD one" will apparently be immortalized as the UN headquarters office sinner, portrayed as a manager, and serving as a fig leaf --  "See, we did catch one!" -- and a trophy whose malfeasance both protects all the many unaccountable UN senior and headquarters managers, and also shows that OIOS "means business", at least once, over the past decade.