Monday, January 10, 2005

UN Heal Thyself

The Volcker Commission investigating fraud in the UN Iraq oil-for-food program released dozens of internal UN audit documents this weekend along with a statement that UN auditors knew of at least $5 million in losses resulting from mismanagement of the program. The full report on the oil-for-food program is not due until the end of January, but one interesting aspect of the document released this weekend is alleged mismanagement at the UN Compensation Commission, which has maintained that Volcker had no legal basis to investigate ts activities in the first place. As the Washington Post reports today, Volcker uncovered serious problems in the Commission's auditing function, including troubling allegations that the Commission paid out undocumented claims against the Iraq government by third countries:

The auditors cited several cases in which countries made huge, undocumented claims. Iran claimed $2.7 billion in costs for providing humanitarian assistance to waves of refugees crossing its border. It received $7.87 million. Jordan put in a claim for more than $6.5 billion for providing relief to people fleeing Kuwait and Iraq, but received $72 million. Israel, which sought $1.06 billion in damages for Iraq's Scud missile attacks, got $74.6 million.

This should provide some additional fodder for at least one of the five congressional committees investigating UN fraud in the oil-for-food program.

Meanwhile, ripples from the Volcker Commission are felt on the Tsunami aid front, where Jan Egeland
announced that the UN has enlisted PricewaterhouseCoopers and other financial experts to create an external advisory and audit function for the Tsunami relief effort. Among other things, the outside experts (who are donating their services) are setting up a system to track every payment made out of the relief funds to avoid precisely those problems that occurred in the oil-for-food program. Outside auditors may not prevent determined individuals from lining their own pockets (see Enron), but with total pledged Tsunami aid approaching billions of dollars, this is a necessary and welcome effort to try to provide some public transparency and accountability to UN assistance programs. The US administration and UN-detractors on the Hill should support it. Transparency in bookkeeping is new to the United Nations, but it should be the norm.

On the topic of UN reform, ASIL will be hosting a
forum January 12 on the Report of the Secretary General's High-level Panel on Threats, Challenges and Change that was released in December. Steve Stedman and Ruth Wedgwood are the discussants. Well worth checking out if you are in the DC area this week.

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