UN announces investigations into more vendors, some with ‘high-value’ contracts

Less than a week after announcing that internal investigations have resulted in the removal of two vendors from the list of those registered to sell goods to the United Nations, the world body today indicated that several additional cases – including a number involving high-cost contracts – are now being probed.

Among those cases are some that “involve the international transfer of funds through circuitous routes and nominees and agents,” according to a statement released by the Office of Internal Oversight Services (OIOS) Procurement Task Force.

The announcement comes six days after UN spokesperson Michele Montas, responding to press questions, said Cogim, S.p.A. and Avicos Insurance Company had been removed from the Vendor Database and prohibited from doing business with the UN as a result of inappropriate relationships between them and an indicted former UN official.

Ms. Montas also said that based on a related investigation by the UN’s Procurement Task Force, registered vendors Corimec Italiana S.p.A and Volga Dnepr Airlines and its subsidiary, Volga-Dnepr (Ireland) Ltd., were suspended from the Vendor Database in light of alleged inappropriate relationships between them and a former UN official.

UN Procurement Officer Alexander Yakovlev resigned in August 2005 amid accusations that he solicited kickbacks. Evidence against him emerged during the course of the Independent Inquiry Committee (IIC) investigation into mismanagement in the UN’s Iraq Oil-for-Food programme. After being contacted by the US Attorney for the Southern District of New York, the then UN Secretary-General Kofi Annan waived Mr. Yakovlev’s immunity.

In a report issued just prior to Mr. Yakovlev’s resignation, the IIC found that he had received $950,000 from various UN contractors and that it was paid into offshore bank accounts.

In June 2005, Vladimir Kuznetsov, the chairman of the UN’s Advisory Committee on Administrative and Budgetary Questions (ACABQ), was arrested by US officials. The Secretary-General waived his immunity and the UN cooperated with the US in connection with its inquiry.

Today’s Procurement Task Force statement said that it “has for some time been vigorously pursuing the matters which were only partially revealed during the testimony” in Mr. Kuznetsov’s criminal trial this month.

It underlined the “greater length of time” required to deal with some cases because of the involvement of lawyers requesting extensions to comply with requests for documents and witness interviews.

“Investigators were fully aware prior to the Kuznetsov trial of the information revealed about the activities of certain vendors during the testimony in the trial of a former UN procurement employee,” the statement said in an apparent reference to Mr. Yakovlev.

The Task Force “is also examining several additional cases, some of which involve high-value contracts, involving vendors and intermediaries and agents of these companies, who have acted on behalf of entities doing business with the United Nations.”

In total, the UN procures some $2 billion in goods and services annually.

The Task Force’s past efforts triggered action, according to the statement. “As a result of the Task Force’s work, and as a consequence of its reports, several additional vendors have been removed from the UN vendor roster.”

The statement said the issue is pending and a report will be released in the future. “These matters are much more extensive and complex than what was revealed during the course of the testimony, and the Task Force’s investigation of all of the surrounding circumstances must be accomplished before the matter is finalized, and a full and final report is issued.”

Paul Buardes, Chief the UN Procurement Division, told a press briefing how the UN is implementing its “zero tolerance” policy on procurement, adding that reform is under way to prevent a recurrence of past events.

In January 2006, the UN announced it was conducting some 200 investigations into procurement activities involving funds running into the tens of millions of dollars. Eight staff members were placed on “special leave with pay” in that connection. The names of the staff members were not disclosed.

Today, Mr. Buardes was asked about the impact on morale of the 14-month suspension of Andrew Toh, who was the Assistant Secretary-General for Central Support Services. “It can have an impact,” he replied, adding he was working to try to overcome this through open communication.

Mr. Toh was the official who accepted Mr. Yakovlev’s resignation in June 2005.

Mr. Buardes said the Procurement Division is looking to the future. “We’d like to put behind all of the dark side, I would say, of those elements. We need to rebuild confidence and trust in procurement function and activity, for the staff, the Member States and the vendors.”