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Archive Introduction

Black Holes 1               

Corruption Cover-up

Several decades ago, a very useful book examined the fundamental problem of organizations that fear change and therefore engage in a process of "dynamic conservatism." Rather than steady learning, improvement, and management of change, they resist it as long as possible; when forced to change, make the changes small (and cosmetic); and then claim much public credit for having acted at all.  This leadership problem is widespread in modern society, especially in the "public relations" and "spin doctor" age, but few organizations have practiced it for as long, and as successfully, as the United Nations Secretariat.

The first of six "black holes" of UN non-accountability is the cover-up of corruption.  Transparency International, the global coalition against corruption, offers a succinct definition:

"Corruption is the abuse of entrusted power for private gain."

The UN has long had serious problems of corruption (also referred to there as fraud, waste, mismanagement, and abuse of authority) at its headquarters locations and in its far-flung field operations.  Only one serious investigation of its corruption problems has ever been made, in 1992, but there are many other investigatory articles stretching far back into the past and recently appearing much more frequently. The UN has even been labeled by one close and knowledgeable observer as "probably the most unaccountable organization in the world." 

This first Black Holes subsection is the longest and most important of the six black hole discussions (except for the last one on the discriminatory "rule of law" in the UN).  Unchecked corruption is very debilitating to any organization, and despite its firm cover-up of this issue, the UN Secretariat in fact has a vast panoply of corruption, mismanagement, and abuse scandals, issues, and problems hidden behind the many pious UN Secretariat reports on accountability and management reform during the past two decades.

In 1985 the Fifth Committee (administrative and budgetary) of the General Assembly was frustrated by the failure of the Secretariat to respond to many past calls for management improvements and systems.  Member States were also concerned about the increasing complexity of UN operations as they shifted from headquarters "talk-shop" activities to major development, humanitarian and peacekeeping programmes around the world.

In 1986 the General Assembly commissioned an expert group report (the first in a series of six major management reform efforts from then on up to the present).  This "Group of 18" found UN management capacity and performance unsatisfactory, and structures to be "complex, fragmented, and top-heavy".  The Group emphasized, inter alia, that efficient staff management must rest on clear, coherent and transparent rules and regulations, and that every manager must implement and create a challenging work environment to strive for top performance.  Above all, responsibility for creating a healthy climate rested with senior managers, and the importance of their having "necessary management skills [could not] be over-emphasized."

Over the next six years, the Secretariat "sort of" implemented the reforms, and issued a tepid series of progress reports.  The General Assembly expressed its continuing dissatisfaction, and the planning and review of programmes remained weak. The Assembly began to focus on some new priority needs: to increase management controls, compliance, and accountability; to increase staff and strengthen the independence of the weak internal audit unit; and to combat fraud, waste, and mismanagement, including confidential reporting of wrongdoing by staff (i.e., whistle-blowers).

The Secretariat attempted to rebuff all these mounting accountability pressures. In a soothing 1992 report it argued that existing UN rules were quite sufficient and that sparse national fraud-hotline efforts had not worked well, and warned that it would be difficult to protect whistle-blowers.  The matter, however, "would be kept under active review."  The report did reaffirm that

"The Secretary-General attaches great importance to his fiduciary responsibility vis-à-vis Member States for the prudent management of resources entrusted to the organization."

This smug Secretariat report was quickly buried in a blizzard of critical new reports. A detailed investigation by the Washington Post found many troubling problems of UN managers' impunity and improprieties worldwide, in a UN with a "Polished image, tarnished reality."  The UN Board of Auditors reported that the internal auditors were severely understaffed, and the General Assembly called for "urgent steps" to correct the problem. An external oversight report found grave weaknesses in all the Secretariat oversight units, control processes, monitoring and evaluation efforts, and financial controls, and a "crisis of confidence" among Member States.  The US Senate agreed to repay part of US debts to the UN only if the UN created an office to root out waste and fraud. The UN's top manager, in his departure report to the Secretary-General, made many sharp criticisms of the UN management culture and performance, including his well-informed conclusion that

"The United Nations presently is almost totally lacking in effective means to deal with fraud, waste and abuse by staff members."

The 1993 external oversight report also created a table showing, for the first and last time [see the end of this subsection], a multi-year listing by type of specific cases reported to the Secretariat personnel office,  including a very disturbing recent increase in  mismanagement and fraud problems, as UN field operations rapidly expanded worldwide:

                                                                   First half of     

                                                                1990      1991     1992     1993

Total new cases referred                     28          30          40          70

subtotal: mismanagement/fraud        15          17          13          45

leading to: dismissal of staff                 2             4             4            1

appropriate action                                   8           10             4            3

 lack of evidence                                      4             2             5          29

       other                                                           1             1             1         13        

The Secretariat brushed off all these devastating criticisms in a 1993 report on establishing a new system of management accountability (as required by no less than four different General Assembly resolutions.) After much conceptual discussion, it cited UN managers' unhappiness with the restrictive nature of UN procedures, and concluded that the Secretary-General would comprehensively review and report on the central problem of "[balancing] the need for a greater degree of managerial discretion by senior staff … and the ultimate responsibilities to Member States."  [This aggressive "free the [incompetent] UN managers" approach still continues on today, despite all the mismanagement that has since occurred and even increased -- see Black Holes 4.]

The General Assembly responded swiftly and with unprecedented firmness.  It called for a transparent and effective system of accountability to be established no later than 1 January 1995, including a mechanism to ensure that programme managers are accountable for effectively managing the human and financial resources allocated to them. The Assembly also called for a new mechanism to combat fraud, and in June 1994 a new, independent internal oversight office was established, including for the first time an investigation unit with a confidential mechanism for the investigation of staff reporting of wrongdoing.

The Secretariat produced a surprising mea culpa report in late 1994, admitting that the UN personnel office had been fragmented, bureaucratic and unresponsive for decades, and largely unable to plan and properly manage staff resources.  But by 1996 the reform efforts had settled back into a "continuing process" of slow, incremental policy revisions as "building blocks" for an accountability system.  [The Secretariat has indeed continued to successfully delay the UN managerial accountability system -- for more than a dozen years so far -- which is double the six years it had stalled implementation of the "Group of 18" recommendations of 1986.] 

The General Assembly "deeply regretted" this non-performance in 1997.  It cited the lack of sanctions for mismanagement and "deplored" the many exceptions to staffing procedures, especially in the personnel office itself. In subsequent resolutions over the next few years it continued to cite the lack of a system, the need to establish firm sanctions for misbehaving managers, and its concerns about disturbing reports of fraud and presumed fraud.

Efforts to combat UN corruption and establish management accountability were further hampered during the late 1990s by two major factors.  First, Secretary-General Annan arrived in 1997 and immediately launched the "most extensive and far-reaching reforms" in UN history, to restructure the organization, cut costs, and "transform the management and leadership structure."  In 1998 he added a new "vision for human resources management" to be attained over the next five years. The General Assembly was unhappy with this new pile of reform plans [management reform plan 3], which quickly come to overshadow the 1993 management accountability reforms.

Second, the new internal oversight unit -- the Office of Internal Oversight Services (OIOS) -- was weakened by many factors. It was not given any new or specialized staff, but merely lumped together the 90 staff from the small existing Secretariat units. More importantly, prestigious UN figures emphasized that for maximum credibility "the [head of the OIOS] must be of impeccable repute and with top-calibre qualifications for such work." The UN's own anti-corruption guidance to Member States emphasized that, to counter overt and subtle intimidation: 

'"the sine qua non is a power figure dedicated to independent investigation of an allegation on its merits, who will protect the anti-corruption authority from improper pressures or will allow it … to resist and ignore threats of career retaliation."

Despite these very sensible standards, Secretary-General Butros Butros-Ghali hand-picked a German diplomat, Mr. Karl-Theodor Pashke, as the first head of OIOS. Mr. Paschke began weakly, seeming "curiously laid back" for an anti-corruption official; expressing his distaste for staff making confidential reports (until reminded that it was his duty to protect them); and asserting, despite his total lack of expertise, that the UN "had no more corruption than other comparable organizations".  He placed a very strong emphasis during his 5-year term (1994-1999) on advising and working closely with Secretariat managers, rather than dealing aggressively with their mismanagement; and complained about weak accountability, but never examined implementation of the 1993 management accountability resolution (although follow-up on implementation of legislative mandates was a specific OIOS function).  Mr. Paschke also accepted forbidden supplementary support payments from his government. 

Worst of all, Mr. Paschke soon decided that "fraud was not the main concern of OIOS."  His annual reports concentrated on thousands of recommendations made in hundreds of narrow audits.  The General Assembly finally forced his attention to broader management problems, but in general did not act on his reports.  Mr. Paschke departed in 1999, firmly endorsed and personally commended by Secretary-General Annan, but admitting that much remained to be done to achieve an accountable organization.

The brand new OIOS investigation unit also started very slowly in its key new tasks of rooting out fraud, waste, mismanagement, and especially the abuse of authority. With only a few staff, the OIOS unit quickly piled up hundreds of reports of wrongdoing from staff worldwide, and actually spent most of its first few years pursuing a single major headquarters case of almost farcical proportions. It announced that most of the many reports to it were rejected as "personal complaints" and turned over to the personnel office (a shocking betrayal), and apparently just discarded many others.    

Mr. Paschke eventually became quite a "crime-fighter", but staff and outside observers had already become skeptical. He had to deny vehemently to the General Assembly in 1996 that he would ever discriminate against whistleblowers, [although in fact he did].  Media articles reported that he would "rake no muck above a certain level of political or bureaucratic influence" and that "staff fear they will suffer more professional harm than the corrupt officials they want to expose." Worst of all, he and Secretary-General Annan gave prime responsibility for performance sanctions to managers.  They also -- amazingly -- actively and directly involved managers in conducting "investigations" of their staff, like so many "Inspector Clouseaus", rather than being subject to such investigations themselves (see Black Holes 4.)

Mr. Paschke's five annual reports never once cited a successful whistle-blower, and contained only one brief mention of a possible case of retaliation against a whistle-blower.  He did, however, report in 1998 on a manager who was absolved by the OIOS on major corruption charges while the auditor involved was fired, to reassure managers of OIOS "fairness."  Upon his 1999 departure, he cited a mere dozen cases of corruption, some quite trivial. And while he perhaps saved more money than his OIOS spent (and most of that in catching accounting mistakes), the annual savings were very modest relative to the billions of dollars the UN was spending each year. 

OIOS did report on corruption each year in its annual reports, but only through a few ad hoc cops-and-robbers "stories". When the General Assembly pressed for a broader report on sanctions against staff for financial malpractice in 1997, the Secretariat provided a terse 2-page report which can only be described as constipated.  It stated that OIOS reports of financial malpractice to department heads may be referred to the personnel office (the Office of Human Resources Management).  OHRM handled them like all other disciplinary/misconduct matters, deciding on a disciplinary proceeding, or closing them out, or leaving them as a performance matter to be "handled" at the departmental level.  Apparently no further Secretariat report has ever been made on this topic. The 1997 report's conclusion (which leaves any reader trying to learn something about Secretariat disciplinary and sanctions actions and patterns, as the General Assembly itself consistently has been, muttering "But what about the other 54?") was merely and cryptically that:

"Of the 61 cases of possible misconduct submitted in 1997 to the … [head of OHRM], 7 were referred as a result of an audit/OIOS investigation.  Four of those seven resulted in a decision of summary dismissal, … [and the other three are pending.]"   

Ever since this opaque effort, neither the OIOS nor the Secretariat has ever done systematic annual reporting on overall Secretariat corruption, misconduct, abuse and other cases, patterns, actions, and outcomes until one weak effort began in 2002. In a biennial information circular (i.e., not a report to the General Assembly), the Secretary-General now reports on disciplinary cases which led to sanctions. The reports for 2000 through 2003 amounted to only a dozen judgments per year, including for instance a grand total of only three cases of harassment over that four-year period, in an organization with 40,000 staff.  Further, the sanctions imposed versus the misconduct charged often seems disturbingly erratic.

.  In contrast, other organizations report systematically on waste and corruption issues, such as the following succinct summary from the World Bank in 1999: 

"World Bank Complaints:  Misconduct cases investigated

by the World Bank's Office of Professional Ethics in 1997

TYPE OF CASE                                        NUMBER

Tax related                                                      57

Misuse of facilities or property                    54

Harassment - nonsexual                             36

Benefits related                                             30

Abuse or negligence of

  authority or position                                     22

Fraud                                                                21

Harassment - sexual                                      8

Criminal charges                                             3

Other misconduct *                                        77

TOTAL                                                             308

* Other misconduct includes defaults on loans, favoritism in hiring, conflict of interest, abusive behaviour toward security, plagiarism, bribe solicitation, and overtime discrepancies"

Meanwhile, In 2000 Secretary-General Annan, pressured again by the General Assembly, declared victory in establishing management accountability.  He stated in a report that:

"In conclusion, the Secretary-General is confident that the comprehensive system of accountability now in place ensures that accountability mechanisms are effectively used, are seen to be used, and ensure that staff at all levels are held accountable for their actions and inaction.

The General Assembly may wish to wish to take note of the mechanisms in place …which together constitute the comprehensive system of accountability for the Organization."

This brash statement has since been proven woefully and totally wrong (see the Secretariat mea culpa of May 2005 and the General Assembly resolution of May 2006, both underscored, later in this subsection).  Mr. Annan then forged ahead with his own management reform initiatives. However, in a firm rebuttal to his optimism (also in 2000, and under the new head of OIOS, Dileep Nair of Singapore, another diplomat  and banker appointed by Mr. Annan), a media article reported on an "unprecedented wave of [UN] waste, fraud, and corruption", and more and more abuses of authority and harassment, in some 350 inquiries conducted around the world, in conjunction with dozens of national police forces.  The OIOS annual report stated specifically that:  

"The Investigations Section investigated 38 cases which were presented for administrative or disciplinary action: 22 of those cases were recommended for criminal prosecution by national law enforcement authorities."

The media article noted that Secretary-General Annan would be embarrassed by this rousing disclosure of widespread UN corruption right before his Millennium Summit gathering to convince skeptical Member States that the UN provided value for money and seek an expanded role for the Organization.  Indeed, OIOS disclosures of systematic anti-corruption actions and sanctions (except for a few more fraud "stories"), immediately disappeared, and even discussions of overall OIOS investigation work in its annual report have become mere brief paragraphs ever since.                                                                          

The UN was sidelined in major global events after the "9/11" tragedy and the ensuing wars in Afghanistan and Iraq.   Mr. Annan did launch a new round of management and technical reforms in 2002 (major management reform number four of six.).  But by 2003 he declared a need for overall "radical reform" of the entire UN, with a High-Level Panel report thereon (2004), and he then issued his dramatic reports on "In larger freedom" (2005), and "Investing in the UN" (2006).  Accountability and corruption priorities were left far behind, or so it seemed.

Mr. Nair and the OIOS, for their part, also had a bumpy road in the new millennium.  OIOS issued many more useful reports, and on broader topics, than had Mr. Paschke.  But although Mr. Nair courageously faced up to Mr. Annan on an OIOS report calling for sanctions against a senior UN official for sexual harassment, he also wrote some "whitewash" reports to protect other officials including the heads of the UN anti-corruption program and avoided any early UN action on serious refugee sexual abuse problems. He also was very busy with oversight initiatives with other UN system agencies and the global oversight community. In 2004, however, he suddenly became enmeshed in scandals within his own OIOS involving personnel and fund-use matters.

It is important to note here that OIOS reported in 2004 that, during its first decade, it had "exposed waste and fraud totaling some $290 million" and recovered and saved $130 million.  Investigation units are expected to save much more money than they cost, but these apparently impressive  statistics are diminished by the fact that OIOS expenditures have built up to some $20 million per year (i.e. perhaps $150 million in total over the decade).  As a portion of the some $80 billion ($6 to $10 billion annually) that the UN expended over that period, the OIOS net fraud exposed ($290 million less $150 million of OIOS costs, or $140 million) was only 0.18 percent, and the amount recovered ($130 million less $150 million) actually negative. 

Further, even the basic "deterrent effect" of OIOS work is dubious, since the Volcker Inquiry concluded in 2005 that both UN staff and management do not accept and support the OIOS, and that it had no whistleblower policy.  The fault, IO Watch believes, is not necessarily that of OIOS, but that of the UN leadership under Secretary-General Annan, which consistently refused to provide new and urgently-needed investigation staff resources for the OIOS.  Only after the scandals of 2004 and 2005 did the OIOS add some new staff, or "Investing in the UN for a stronger organization worldwide", as Mr. Annan suddenly began phrasing it in his final year.

In 2004, both Mr. Annan and the OIOS had stumbled into the eye of a hurricane as multiple corruption, mismanagement, and accountability scandals swirled with a vengeance.  Briefly summarized, they included:

--    an authoritative in-depth external assessment (and its predecessor in 2000), concluding that the UN management reforms of the past decade were still very incomplete, in part because Secretariat managers (as in the past) resisted them;

--  a worldwide survey of UN staff revealed serious doubts about UN integrity, leadership, the power of "the old boy network, and the way the UN fights corruption;

--   the UN external auditors reported that the UN had no comprehensive anti-fraud plan, coordination, mechanisms, training and mechanisms for its many offices and programmes;

--  many powerful allegations of very serious, multi-billion dollar corruption and mismanagement emerged from the UN Iraq oil-for-food program;

--   major security programme mismanagement was found after the tragic bombing of UN headquarters in Baghdad;

--  very grave reports of refugee sexual abuse by UN and peacekeeping staff emerged, which the UN had tried to downplay but could not;

--   harassment cases in the Secretariat, long ignored in general, came to the fore after extensive efforts to protect the head of UNHCR from sanctions failed;

--    the UN staff cited the absence of concrete accountability measures, the erosion of staff rights, uneven disciplinary processes, defective staff-management relations, managers' resistance to reform, a lack of integrity at higher levels, and the exoneration of senior officials despite questionable behavior and performance; 

--   the various personnel and fund-use scandals surrounding Mr. Nair and the OIOS led to his being forced out of office, ostensibly disgraced, followed by Mr. Annan's decision to recommend a comprehensive review of OIOS operations and independence;

--   and finally, there were mounting doubts in late 2004 among staff and outside observers about the UN's operations, and Secretary-General Annan's leadership, in light of Iraq oil-for-food and "all of the above".

All these difficulties were followed in 2005 by three even more severe blows.  First, the Secretariat was forced in May 2005 to admit major breakdowns and produce a set of immediate reforms (UN major management reform effort number 5, albeit a stop-gap one).  The Deputy Secretary-General announced that:

"'The UN must take real action now … particularly in the critical areas of management, oversight and accountability' …

'Perhaps the most obvious shortcomings identified by the Volcker Inquiry and other crises are in the area of oversight and accountability. The current 'control' systems for monitoring management performance and preventing fraud and corruption are insufficient and must be significantly enhanced.'"

The final Volcker report in September 2005 on the Iraq-oil-for-food programme, which the above sudden reform announcements certainly were intended to deflect, was very forceful with regard to the performance of the Secretariat as a whole, of Mr. Annan himself, and of the OIOS:

"The main conclusions are unambiguous.

The [United Nations] requires stronger executive leadership, thoroughgoing administrative reform, and more reliable controls and auditing. …

There was corruption within the United Nations at a critical management point.  There was exposure of important administrative and control weaknesses … The consequences? An avoidable loss of assistance to Iraq's population and a grievous loss of credibility to the United Nations."

"The record amply demonstrates a number of instances where there was a lack of support for and oversight of the Programme by the Secretary-General.

In sum, in light of these circumstances, the cumulative management performance of the Secretary-General fell short of the standards that the [UN] should strive to maintain."

"OIOS ID [Investigation Division] is generally not supported and accepted across the United Nations by both management and staff.  This, together with a lack of a whistleblower protection policy, prevents OIOS ID from successfully carrying out its mandate."

The Secretariat was still reeling from these severe assessments when what may prove to be an even greater scandal hit.  Although the Secretariat tried to take credit for discovering and reporting it publicly, procurement has long been a sore spot in the UN.  The new procurement scandal seems -- as in so often at the UN -- to have arisen only after outside pressure, in this case a US General Accountability Office review in mid-2005. As described in just three of the many articles on this subject:

"[A December 2005 report by Deloitte Consulting LLP, a global accounting and consulting firm, found that] unless addressed soon, serious oversight and safeguard deficiencies leave the United Nations procurement system open to fraud …

The report found … 'a significant reliance on people [which] leaves the UN extremely vulnerable to potential fraudulent or corrupt activity, and limits the Organization's means to either prevent or detect such actions.'

"The United Nations is conducting some 200 investigations into its procurement activities and has placed eight officials on special leave …

[The UN's top manager said] … 'We are ferreting out corruption and fraud where it existed and where it exists.' …

[Audit excerpts] described systemic failures.  'The design and maintenance of controls … were insufficient' … 'Important controls were lacking while existing ones were often bypassed.'"

"In a sense, the alleged irregularities in peacekeeping procurement [recently reported], involving possible waste and fraud of up to $300 [million], do more damage to the UN's reputation than the larger abuse of the UN oil-for-food programme for Iraq. … The UN Secretariat could rightly put some of the blame on the Security Council [in oil-for-food] …The secretariat has no such plausible scapegoat in its mismanagement of peacekeeping procurement."

In 2006 this pressurized situation has only become more complex.  Secretary-General Annan set up a number of new, "independent" panels to examine major management changes, such as reform of the internal administration of justice system.  He also released his final grand management reform plan (number 6 of 6 -- that is, to recapitulate -- those of 1986, 1993-94, 1997, 2002, 2005 (stop-gap) and 2006).  On his way to the exit after ten years as Secretary-General, Mr. Annan proposed major management changes under the theme of "Investing in the UN", in some 400 pages of detailed reports on information technology, budget implementation, financial management, reporting mechanisms, procurement reform, accountability (one more time!), and a new "independent" audit advisory committee.  One can only wonder why he had not done this when he arrived in 1997, but certainly the tumult and scandals of 2004-2005 was a major motivating factor for this last reform attempt.

The only serious body the UN presently has to confront its anti-corruption problems, the OIOS, is also under enormous pressure.  Its third head, this time -- and at last -- an oversight professional, is Ms. Inga-Britt Ahlenius of Sweden.  She is in a very unenviable position. She must deal with the fallout from heavy OIOS involvement in the Iraq oil-for-food scandals; the disruption to OIOS morale from the troubled and abrupt departure of her predecessor, Mr. Nair; the Volcker Inquiry verdict of an OIOS "not supported and accepted" by UN management and staff; and enormous new work burdens of the UN procurement scandal.  On top of all this, her ongoing work is fundamentally disrupted by the July 2006 comprehensive external report on assessing and enhancing OIOS operations and independence that Mr. Annan commissioned, which were only beginning to be debated by the General Assembly in late 2006.  The ensuing discussions may well drag on for years.

One more significant factor must be mentioned. The UN has had a longtime "global role", much expanded under Secretary-General Annan, to lead and advise Member States on anti-corruption matters. For five decades it has held congresses to strengthen international cooperation against expanding crime, and also combating corruption. In 1999 the UN established a Global Program Against Corruption, in Vienna, to aid governments in strengthening anti-corruption efforts and judicial integrity. 

In 2000 Mr. Annan initiated a rather school-masterish "Global Compact", in which multinational companies report publicly each year on their adherence to UN system human rights, environmental, and labor standards,  and -- since 2004 -- anti-corruption efforts.  And in 2003 the General Assembly adopted a UN Convention against Corruption to, as Mr. Annan said, "send a clear message … [of determination] to prevent public and private corruption", to "reform core values" and "[make] the world a better place for us all."  Again, one could only wish that Mr. Annan had turned that zeal into serious anti-corruption efforts inside the UN Secretariat during his ten years as the UN's chief administrative officer. Particularly since 2004-2005, there is now a definite odor of hypocrisy in the UN Secretariat's exercise of these "global leadership" efforts against corruption.  

                                    *      *      *      *

            To sum up, the UN now faces a very serious anti-corruption credibility, strategy, and implementation crisis.  The cover-up of UN corruption problems that has gone on for decades has suddenly boiled over into a very considerable mess, and there is little indication of real change to come in UN operations.  IO Watch wishes to offer three pivotal quotes on this problem, and then four areas in which an entrenched UN culture can finally break free of its inability to act effectively against corruption.

First, in 1994 the first, transitional head of what became the OIOS, a long-time veteran and head of past UN internal audit work, stated a challenge which still remains unanswered today.

"The effectiveness of an oversight office depends to a large extent on how senior officers perceive their roles.  The concept of management accountability in the United Nations has not been consistently applied. … No system of accountability will be effective without the assurance that sanctions will be promptly applied when violations occur.  I strongly recommend that any new system of accountability and responsibility include specific penalties or sanctions for United Nations managers and other staff who disregard United Nations regulations and rules or who are negligent in the conduct of their duties and responsibilities. …

A vast amount of work remains to be done before the United Nations has management structures and a management culture adequate to the great tasks entrusted to it…. "

Second, in 2001, OIOS issued two "damning" reports demanding "drastic and immediate" change in the management of the UN crime programme in Vienna by its Executive Director, after media articles on serious waste and mismanagement, withdrawal of funds by donors, and five subsequent audits containing 145 recommendations for change, almost half of them deemed "critical."  However, an October  2001 interview with OIOS head Dileep Nair discussed this case and then one of a hapless (and asserted "senior") officer in northwest Somalia, who "had not strictly adhered to U.N. rules". IO Watch believes that this juxtaposition beautifully illustrates the existing "kid gloves" sanctions system for higher UN officials of the UN Secretariat, versus the much tougher standards imposed on lesser staff.

"[Mr. Nair] noted [OIOS's] strong criticism of the management of the UN Office for Drug Control and Crime Prevention in Vienna, which was investigated [note: in the spring of 2001] after allegations of fraud and mismanagement.  Last month, the United Nations announced that Pino Arlacchi, who heads the office, will leave his post in mid-2002. …

In northwest Somalia, investigators said allegations of corruption and mismanagement were unfounded, but the audit discovered that a senior U.N. officer had not strictly adhered to U.N. rules.  The [OIOS] recommended that he should be held strictly accountable for approximately $50,000 in losses as a result of his actions."

Third, an astute observer of organizational behaviour reflected on recent corporate scandals in 2004  with words of wisdom equally applicable to public organizations like the UN. In the final analysis, he said, when an organization falters gravely, it's all about "the cops."

"A screwup so egregious you couldn't have imagined it does incalculable harm in a giant enterprise -- we've seen it before.  Managerial failures this mammoth are all different, but in a way they're all the same. 

The great common feature they all share is the compromising of the police.  That may sound odd in a corporate context, but it shouldn't. …

In companies the police are just as important but have a different name.  They're the auditors, part of the finance organization.  When anything impedes the police, or even interferes with their incentives to do the one thing that they're supposed to do -- enforce the rules -- trouble follows.  The only question is how bad it will be. … 

True disasters always require that many things go wrong at once.  But the big lesson is one that proclaims itself often when organizations damage themselves terribly:  Your police have one job, and you'd better let them do it, make them do it, and not ever compromise them."

In December 2005 Secretary-General Annan stated that he "would like to hand over to my successor … a UN that is fit for the many varied tasks and challenges that we are asked to take on today."  But his last round of sweeping management reform proposals was largely rebuffed by the General Assembly, which emphasized in May 2006 the need for greater accountability of the Secretary-General himself, and, once again, for clear definitions of accountability and accountability mechanisms and "instruments for its rigorous enforcement -- without exception -- at all levels."

Attention thus largely shifts from Mr. Annan and his group of senior officials to the new "team" to arrive in early 2007, whoever they may be.   They will have to face up immediately to a weakened organization, and much unfinished business and many grand proposals for major management change.  IO Watch hopes that shutting down the six black holes of non-accountability will become an important part of the agenda.  In addition to closing the other five black holes, which follow, IO Watch would suggest the following four specific efforts to end the Secretariat's corruption cover-up.

1.            In July 2004, as already noted above, the UN Board of Auditors, in accordance with fraud-fighting processes which they had been urging for over a decade, concluded that the Secretariat did not have a comprehensive anti-fraud and anti-corruption infrastructure, and did not include anti-corruption and anti-fraud elements in its various rules, procedures, and internal controls.  A large number of UN offices and programmes had no framework for fraud prevention, no fraud risk-assessment mechanisms, and no mechanism to resolve reported and detected incidents and allegations of corruption and fraud.  The auditors recommended detailed action steps to rectify this situation.

A Secretariat response in October 2004 casually brushed aside these recommendations, stating that the Secretariat assigns "high priority" to fraud and corruption issues and observing superciliously that

" … some of the Board's comments may give the mistaken impression to the uninitiated reader that the potential for large-scale fraudulent and corrupted activities is widespread." 

Less than seven months later, in May 2005, the Deputy Secretary-General announced the "grave shortcomings" in UN accountability and oversight.  As a specific action step, the Secretariat promised to consolidate its "disparate" guidance on fraud and corruption prevention into a new policy and plan drawing on best practices, propose a new coordination mechanism, and provide some staff training.  Little further has been since heard of this effort among all the dramatic management changes and priorities which Mr. Annan put forth in 2006. 

But five decades of experience has clearly shown that a mere Secretariat policy, or plan, is no guarantee of any real action whatsoever, and indeed may only mask continued corruption.  The Secretariat should henceforth report annually (as part of general anti-corruption reporting), clearly and analytically on progress, risk assessments, trends, and results in applying this framework.)  IO Watch discusses the Board of Auditors' essential recommendation -- which has not been acted upon more than two full years later -- in more detail in the website subsection on A real UN fraud prevention programme.  The reform must also be supported by a proposed new General Assembly audit subcommittee and by rectifying a Geneva Group "due diligence" failure. (see also Black Hole 5, on "'Independent' UN oversight is not.")

2.            The fact that the OIOS and the Secretariat have done no systematic, analytical, and annual reporting on its anti-corruption efforts, (except for the "bedtime stories" in OIOS annual reports) for over a decade is scandalous.  This Black Holes subsection has highlighted examples of such reporting, from an external oversight report in 1993 and the World Bank in 1999, but the UN has done nothing similar.