Release of OIOS Audit Prompts Spin War

UNITED NATIONS – A spin war was launched over the weekend, as the United Nations-authorized commission to investigate allegations of wrongdoings in the oil-for-food program loosened its exclusive grip over internal U.N. documents.Audit reports prepared by the U.N.’s Office of Internal Oversight Services, which until now were seen only by investigators of the commission headed by Paul Volcker, were posted last night on the team’s Web site and had been passed on to Congressional investigators on Friday.As The New York Sun revealed the surprise release of the OIOS reports on Friday, Mr. Volcker gave the New York Times an interview, adding his own spin. “There’s no flaming red flags in this stuff,” he said. But as soon as Congressional investigators began reading the reports they said that what was revealed was evidence of extensive mismanagement and fraudulent paperwork.Part of the gap in interpretation may be a result of a culture at the U.N. that habitually allows some leeway in its procurement of outside contractors, a U.N. official told the Sun over the weekend on condition of anonymity.For example, Cotecna, the Swiss company famous for its relations with Secretary-General Annan’s son, Kojo, won a 1998 contract for border inspections in Iraq after it bid lower than its British based competitor, Lloyd’s Register Inspection. One of the OIOS reports, which was leaked to the press last May, showed that Cotecna’s low $4.87 million bid was quickly followed by an “inappropriate” upward revision, which occurred a mere four days after the deal was signed.According to the official, who is familiar with U.N. procurement habits, this was not the exception, however, but the rule. “Sixty percent of all procurement contracts were handled this way,” he told the Sun.OIOS reports examined by the press over the weekend showed many other irregularities, which were summarized by a spokesman for the House International Relations Committee, who told the Associated Press he saw “overpayments, a total lack of U.N. verification of contractor duties performed, and no bid procedures for additional contracts and extensions.”In a July 3, 2002, report, which examined contracts with a Dutch company hired to monitor oil exports from Iraq under the program, the company, Saybolt International BV, inflated invoices, charged for accommodation of workers provided by Saddam’s government, and exaggerated staffing and other expenses, according to the AP. The report found, for example, that over several years the United Nations was billed for 31 days of work in June, which only has 30 days.Another July 21, 1999, report detailed possible overpayments of more than $3 million to Lloyd’s Register. The company, for example, billed the U.N. for agents deployed in December 1996, two months before the first contracts for the import of humanitarian supplies were issued under oil-for-food.A third audit, dated April 20, 1999, revealed that the U.N. Office of the Humanitarian Coordinator for Iraq, the agency responsible for the implementation of humanitarian aid, submitted invoices totaling $42,518 for furniture from a Jordanian company. “Purchases had actually been made from a local vendor in contravention of sanctions,” the report concluded, according to the AP, and the price was exorbitant.The 56 internal OIOS reports are also critical of the French-based bank Paribas BNP, which handled the oil proceeds for the U.N. in an escrow account. They prove that the program was “highly audited,” U.N. spokesman Stephane Dujaric told the Sun. “A number of those things were corrected” after the audits, he insisted.But in his cover letter published last night, Mr. Volcker wrote that some of the reports “fail to examine and test execution of the oil purchase and humanitarian aid contracts, particularly as they relate to price and quality.” He adds that “in regard to some of the more critical reports, such as those on the inspectors Saybolt Eastern Hemisphere B.V. and Cotecna SA, there was no apparent follow-up auditing done.”

Release of OIOS Audit Prompts Spin War

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