US prosecutors probing UN have plenty of work, documents show

When U.S. federal prosecutors charged a senior United Nations official on Tuesday, it was the Justice Department’s first foray into the activities of the international organization in a number of years. The prosecutor behind the push says there’s more to investigate – and internal UN documents suggest he has a point.

The documents, reviewed by Bloomberg News, contain allegations that millions of dollars went missing or were embezzled in Afghanistan, aircraft leasing contracts were rigged at the largest peace-keeping operation in Africa and a staffer’s benefit fraud went undetected for decades. The reports come from the UN Procurement Task Force, which investigated the sprawling global procurement agency.

The task force, with a staff of some two dozen, was shut down seven years ago amid pressure from several member nations, including Russia and Singapore. Critics accused those countries of intervening to protect targeted citizens. The countries argued that the task force lacked accountability. In its three years of operation, the task force’s work led to four criminal convictions from cases referred to U.S. prosecutors, the barring of 47 outside UN vendors and the uncovering of $630 million in contracts tainted by fraud and corruption, UN documents show.

Fraud and bribery

Its findings, including at least 115 active investigations, were turned over to the Office of Internal Oversight Services, another watchdog agency within the UN. That agency is a 350- person office with a $60 million budget. Its duties involve auditing, inspecting and investigating a UN operation that includes a $17.2 billion procurement budget, 44,000 employees and hundreds of outside contractors.

John Ashe, who was indicted on Tuesday, was ambassador from the Caribbean country of Antigua and Barbuda. He was president of the UN General Assembly for a year until September 2014 when he is accused of having committed some of his crimes. Charges against him involve allegations of tax fraud in a bribery scheme.

Since the procurement task force was closed, the oversight office has completed a number of successful fraud investigations, although it hasn’t recovered any ill-gotten gains or prosecuted perpetrators, David Kanja, a UN assistant secretary-general and acting head of the watchdog unit, said in an email.

The UN had no internal investigative body until 1994, when the internal oversight office was set up under the threat of losing U.S. funding. Lawmakers in the U.S. –  whose 22 percent contribution to UN funding is by far the world’s largest – have continued to criticize the UN for weak financial oversight.

Business as usual?

The Justice Department’s probe of the UN comes at a time when allegations of rampant bribery of international soccer officials have focused public attention on corruption within multinational organizations. In a press conference announcing charges against Ashe and others earlier this month, Manhattan U.S. attorney Preet Bharara indicated that he believes the UN’s operations could prove an abundant hunting ground for his prosecutors. Among his allegations are that as General Assembly president, Ashe steered a Chinese tech executive to a Kenyan official.

Although Bharara’s complaint stops short of asserting that bribes were paid in that case, he asked rhetorically at a press conference announcing the charges, "Is bribery business as usual at the UN?"

James Margolin, a spokesman for Bharara, declined to comment. Robert Van Lierop, an attorney for Ashe, didn’t immediately respond to a request for comment. He has said he expects his client to be exonerated.

Momar Ndiaye, a former member of the Procurement Task Force who now advises multi-national organizations at BDO Consulting, said corruption remains a problem at the UN. But the attention it has received in recent years and declining budgets have reduced the magnitude, especially within the UN’s headquarters operations.

"Anything goes"

He said the further away from headquarters, the less oversight there is and the greater the problem. Speaking of humanitarian crises in the field, he said: "Anything goes."

One such operation the task force looked at involved a senior UN official who was disbursing more than $1 million a day in Afghanistan. Large amounts were used for "ambiguous procurements," and the official created false documents and coerced subordinates to conceal their use, the task force wrote.

In the Congo, site of the UN’s largest peacekeeping operation at the time, with an annual budget of more than $1 billion, procurement officials altered specifications and steered aircraft leasing contracts to a company in which they had a financial interest, increasing the cost to the UN by $4 million, the task force found. Separately, a staff member defrauded it of hundreds of thousands of dollars in dependent benefits starting in the 1980s in a case involving forged birth certificates, it wrote.

"A lot of public money is at tremendous risk," says Robert Appleton, a former federal prosecutor who ran the Procurement Task Force until its closure. "Serious, capable and strong oversight is needed or there’s a significant risk that there will be substantial misuse."