RE: BREAKING: U.N. Audit Memo Leaked

Stories are popping up everywhere about a leaked memo (PDF) from a United Nations’ internal audit of the Oil for Food program. Journalist Tim Wood posted the full details on the website. The information he has collected is very extensive, so, I am going to list the links from the email he has sent me, from which you can follow the trail.

[Via Friends of Saddam]

Wow! This is ugly! You don’t have to be a MBA to see the seriousness and the magnitude of the management problems found in the audit of Cotecna. Despite the understaffing of inspectors by Cotecna they found $111 million dollar discrepancy between what the UN reported as humanitarian supplies imported and what actually showed up at the border. Let me see if I can summarize the problems:

  1. Cotecna is involved in contract fraud against the UN and it appears to be getting special treatment at circumventing the contract.
  2. Despite Cotecna’s incompetence, they have partially documented a huge fraud issue concerning the amount of humanitarian supplies being reported by the UN. Using their numbers as an estimate of the fraud in the program, the UN was overpaying for supplies there by a margin of 61%. This estimate corresponds nicely with the allegations by Kurdish leaders that half of all humanitarian supplies to the region were stolen.
  3. This memo confirms that another part of the story of bribery, corruption, and influence peddling at the UN. The facts confirm the procedures used and partially confirms the overall size of the estimated 10 billion dollar scandal.
  4. This memo confirms that the UN knew about the problems and chose to do nothing!

The link above provides a lot of resources that attempt to explain the memo but the best summary is found in the article, Leaked UN audit proves Oil-for-Food shambles. In that article it says,

Cotecna Inspection S.A., a privately owned and managed Swiss “global trade facilitation” firm, won UN contract PD/CON/324/98 which was worth $40.9 million dollars between February 1999 and July 2002. Whereas UN Secretary-General, Kofi Annan, whose son, Kojo, worked for Cotecna, is now adopting a constructionist view of the contract disclosure clauses, the OIP was decidedly generous with Cotecna when it came to pecuniary and operating clauses.For example, the audit report reveals that Cotecna over-billed the UN to the tune of $335,328 in just one year because it deployed less staff than obligated. The OIP shrugged off the loss and told its internal auditors that future invoices would be matched to actual staffing. Similar contracting abuses had been uncovered in audits from prior years involving the OIP, especially involving the oil services contract. Clearly, few of the earlier admonishments were taken seriously.

The most deplorable disclosure highlights why Kurdish leaders have insisted that half of all humanitarian supplies to the region were stolen, and why the OIOS found in a 1999-2000 audit that the UN was overpaying for supplies there by a margin of 61%.