Friday, May 16, 2008

UNDP Whistleblower Details Comprehensive Wrongdoing in Somalia Projects

May 14, 2008

Contact: Shelley Walden, International Program Associate
Phone: 202.408.0034 ext 156

Contact: Bea Edwards, International Reform Director
Phone: 202.408.0034 ext 155, 202.841.1391

UNDP Whistleblower Details Comprehensive Wrongdoing in Somalia Projects
Evidence Shows Lack of Oversight, Retaliation, and Program Ties to Terrorist Groups

(Washington, D.C.) – A whistleblower represented by the Government Accountability Project (GAP) is alleging that actions taken by the United Nations Development Program (UNDP) have allowed continued wrongdoing in the Somalia Office, which threatens to jeopardize the ability of remittance companies to comply with international anti-terrorism regulations.

GAP’s client, Dr. Ismail Ahmed, has shared a detailed dossier with the United Nations Office of Internal Oversight Services (OIOS) that provides substantial evidence regarding ongoing fraud and corruption in the UNDP Somalia Remittances Programme over the last five years. This dossier details, among numerous other serious problems:

Corrupt practices and fraud used to award contracts to a consulting firm that established an improper relationship with UNDP country office management and program staff
UNDP’s failure to fully investigate repeated formal complaints of wrongdoing
Devastating impacts of the wrongdoing on the Somali remittance industry
Retaliation against Dr. Ahmed for his repeated attempts to expose wrongdoing

On March 28, 2008, Dr. Ahmed made an external disclosure to OIOS, as he believes that UNDP’s investigative unit – the Office of Audit and Investigations (OAI) – has a conflict of interest in this case. OAI has failed to fully investigate prior complaints of wrongdoing in this program and contracted with the consulting firm it is supposed to be investigating. OIOS has not yet determined if it will investigate the ongoing wrongdoing and retaliation that Dr. Ahmed exposed.

To read a letter detailing OAI’s conflicts of interest, and the reasons that OIOS should take jurisdiction of this case, click here:

“An urgent, independent investigation of this case – only by OIOS – is needed to prevent further wrongdoing in the UNDP Somalia Remittances Program,” stated Shelley Walden, GAP International Program Associate. “The failure of OIOS to do so could have devastating repercussions for the people of Somalia, the fight against money laundering, and whistleblowers across the UN system. OAI is definitely not the proper unit to investigate this case.”

Background on Dr. Ahmed & Remittances Program

Dr. Ahmed is an expert on economic issues in Somalia and a former UNDP staff member whose contract was allowed to expire in November 2007. He has over 20 years of work experience on Somali development issues and a Ph.D. in Economics from the University of London.

At UNDP, Dr. Ahmed worked as a financial services compliance advisor. In this position, he was responsible for providing guidance and support to the Somali Transmitters Association (SOMTA) in the development of a self-regulation system, as part of UNDP’s Somalia Remittances Programme. This program was launched in 2002 following the closure of Al-Barakaat, the largest Somali money transfer company, by the U.S. Treasury Department for alleged links with terrorist organizations.

In 2004 the Financial Services Development Project (FSDP) was launched with funding from the European Commission (EC) and Department for International Development (DFID) of the UK to expand the activities of the initiative that commenced in 2002. The overall objective of the FSDP was to strengthen Somali remittance companies’ ability to comply with international regulations that combat money laundering and terrorist financing,

UNDP Somalia is based in Nairobi, Kenya. The absence of effective central authorities in Somalia and the fact that the UN agencies are based outside the country have led to increasing concerns of accountability.

Alleged Wrongdoing by KMPG

Soon after Dr. Ahmed began working as a program officer at UNDP in October 2005, he witnessed irregularities and corrupt practices related to contracts issued to the Nairobi-based accounting firm, KPMG East Africa. Since the launch of the Remittance Programme, KPMG had won all the professional services contracts awarded by the program. Moreover, a senior partner of KPMG East Africa who had prepared the Programme documents and served as the principal consultant for some of the contracts awarded to the firm was appointed as UNDP Chief Technical Adviser, responsible for managing the same program. This employee was apparently awarded his post without any competition or advertising, and was listed as a lead consultant on the project he was overseeing, meaning that the payments he approved were going to himself as a consultant and shareholder of KPMG. Dr. Ahmed also learned that KPMG had been awarded several contracts without a competitive bidding process and had submitted a plagiarized report to UNDP. Dr. Ahmed’s dossier provides details of five of the KPMG contracts and presents evidence supporting the allegations of wrongdoing.

UNDP Support to Company with Suspected Links to Terrorist Organizations

Dr. Ahmed’s dossier also contains information about UNDP Somalia supporting Dalsan, a Somali remittance company with suspected links to terrorist organizations, potentially in violation of UNDP and international regulations. Dalsan was co-founded by the former spokesman of Al-Ittihad al-Islamiya (AIAI), an organization placed on a list of terrorist organizations by the U.S. in 2001 and by the UN Sanctions Committee. Dalsan senior managers included Abdilkadir Hashi Farah “Ayro”, who was the chairman of the company when it collapsed in May 2006. Abdilkadir is the younger brother of Aden Hashi “Ayro”, the top al-Qaeda commander in Somalia. Aden Hashi “Ayro” was killed earlier this month in a U.S. missile attack.

From early 2003 to late 2005 the UNDP Somalia Office provided Dalsan critical support that may have helped the company to flout international regulations and commit a major fraud in which hundreds of Somali migrants and remittance recipients lost an estimated $30 million dollars. The support provided by UNDP to this company ranges from the release of frozen funds, to helping senior company officials obtain visas and travel documents. Most importantly, UNDP supported the nomination of the UK managing director of Dalsan, Mukhtar Sheikh Osman, to become the Chairman of the Somali Financial Services Association (SFSA) Europe and assume the overall responsibility for the establishment of self-regulation systems for the Somali remittance industry.


In March 2006, Dr. Ahmed put together evidence of the corruption involving KPMG and the UNDP country office, and submitted evidence of wrongdoing anonymously. UNDP’s investigations unit failed to conduct a thorough investigation at that time and the wrongdoing subsequently intensified.

In October 2006, Dr. Ahmed submitted a detailed dossier to UNDP Country Office management documenting his concerns. The next month, UNDP abruptly transferred Dr. Ahmed to Dubai. UNDP proceeded to deny issuing him a mobilization payment and residency visa. His family was forced to leave Dubai after two months because UNDP failed to secure residence visas for them.

A year later, Dr. Ahmed learned that his dossier had never been forwarded to UNDP management in New York and that no investigation had been launched. He was told by his supervisors that the dossier was in a “secure” location and that he would not be able to retrieve it. Dr. Ahmed also discovered that all the hard copies of key correspondences, proposals and bidding documents regarding consulting contracts in the last four years had been removed from the folders in the Somalia office. Dr. Ahmed decided to compile a new dossier, which he submitted to the UNDP Administrator on November 22, 2007.

In October 2007, however, Dr. Ahmed was informed that because of new instructions from senior UNDP management in New York regarding the Financial Services Development Project (FSDP), his contract was not going to be renewed and that FSDP activities would be closed down immediately.

Dr. Ahmed faced severe retaliation for his disclosures. First, UNDP transferred him and denied issuing him an agreed-upon mobilization payment, work permit and residency visa. Then, UNDP failed to renew his contract. A UNDP representative also attempted to blacklist him by telling Somali remittance companies, several of which had already offered Dr. Ahmed a job, not to hire him. All the companies subsequently withdrew their job offers. UNDP then withheld two months of Dr. Ahmed’s salary and other outstanding payments, blocked his pension fund contributions and launched an investigation against him.

UNDP’s Ethics Office

In December 2007, after Dr. Ahmed learned from OAI that they had not yet made a decision about whether his case warranted formal investigation, he forwarded a copy of his complaint to the UNDP Ethics Advisor. In January 2008 the Advisor found a prima facie case of retaliation that warranted an investigation.

GAP subsequently wrote to the UNDP Ethics Advisor requesting interim relief for Dr. Ahmed, which the Ethics Advisor is authorized to provide. In a letter, the UNDP Ethics Advisor said that he could not grant this request, saying that:

“because Mr. Ahmed wrote to me on 17 December 2007 (17 days after his contract had expired), it was not possible for me to recommend suspension of the action as that action had already taken place. It was obviously also not possible to recommend that Mr. Ahmed be reassigned or that he be placed on special leave with full pay as he had already separated from the organization.”

This fails to acknowledge the fact that OAI, which was responsible for receiving complaints of retaliation in November 2007, received Dr. Ahmed’s complaint before he separated from the Organization. Considering that the UNDP Ethics Advisor assumed his functions on December 1, 2007, and Mr. Ahmed’s contract expired at the end of November, Dr. Ahmed could not have submitted a complaint to the Ethics Advisor before his contract was terminated.

“Dr. Ahmed thought that he would be protected by the UNDP whistleblower policy when he came forward with allegations of severe wrongdoing and retaliation,” said Walden. “Instead, UNDP penalized this whistleblower because of flaws in its protection system. This demonstrates the inadequacy of UNDP’s new whistleblower rules and the need for a unified whistleblower protection policy in the UN system.”

In 2005, then-UN Secretary-General Kofi Annan issued a whistleblower protection policy that was a breakthrough for freedom of expression at intergovernmental organizations. But in 2007, after the UN Ethics Office established by this policy ruled in favor of a UNDP whistleblower, UNDP claimed that the policy was never meant to apply system-wide. UNDP then proceeded to create its own whistleblower protection policy, which offers substantially less protection. Dr. Ahmed is one of the first whistleblowers to test this new policy.

“By turning a blind eye to wrongdoing and threatening to cancel the remittance program because of its own blunders, UNDP has wasted funds, undermined genuine efforts to combat money laundering, and damaged its own credibility,” said Walden. “The United Nations must show its commitment to accountability by urgently investigating this case and ending the intense retaliation against this whistleblower.”

Government Accountability Project

The Government Accountability Project is the nation’s leading whistleblower protection organization. Through litigating whistleblower cases, publicizing concerns and developing legal reforms, GAP’s mission is to protect the public interest by promoting government and corporate accountability. Founded in 1977, GAP is a non-profit, non-partisan advocacy organization based in Washington, D.C.


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