Tuesday, March 31, 2009

UN Admits $3 Million Satyam Order Was An “Error,” Ledger Evidence Disappears

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, March 30 -- In the UN's contracting with the Indian Enron Satyam, a $3 million purchase order appeared and then disappeared, the UN has admitted to Inner City Press. But even the explanation raises more question. On March 23, Inner City Press asked UN Associate Spokesman Farhan Haq

Inner City Press: a Satyam question.  In reviewing the website of the Procurement Division, it seems like there was a contract reached for just over $6 million in July 2008, but there were two purchase orders of $3.3 million in June and July 2008... What explains the discrepancy between what was the purchase orders and the contracts? .. the deal that runs through 2013, has all the money in fact been paid and is there any provision for it to be returned?  It seems from this that the money was already actually paid out. 

Associate Spokesperson Haq:  Throughout the system the various bodies of the UN will wrap up the contracts.  The details of that may need some fine-tuning, it may need to be worked out in the coming months.  But, certainly, all the contracts are being wrapped to whatever extent that things that are already in the pipeline need to be completed, some will be completed, but it will all be shut down.

  Inner City Press asked, but why would the UN apparently have paid in advance for work to be done until 2013? The question arose in the context of the UN having misspoken earlier this month about its Procurement Division's coverage of the UN-affiliated International Computing Center, and belated admission that Satyam serves the UN through ICC contracts as well.

Two days after the question was raised, a further explanation was given:

UN's Ban and Microsoft's Gates, MS Word and $3 million not shown

Subject: Clarification from Procurement Division
From: UN Spokesperson - Do Not Reply @un.org>
To: Inner City Press
Sent: Wed, 25 Mar 2009 12:22 pm

We have the following clarification from the Procurement Division to a question that you asked earlier on Satyam:

We understand that there was a question raised by Mr. Lee of Inner City Press concerning our contract with Satyam at the noon briefing on Monday, 23 March 2009. Two (2) Purchase Orders in June and July 2008 referred to by Mr. Lee are identical. It is a duplicate of data entry inadvertently processed. The Purchase Order (P.O.) No. PS-14468 in the amount of US$3,300,500 was obligated (processed in our procurement management system and recorded in IMIS) in June 2008 but was signed in July 2008. We inadvertently picked up this P.O. twice in our reporting system.

This P.O. is what we call an internal P.O. to obligate the funds in connection with the Contract No. PD/CO102/08 with Satyam, which has the Not to Exceed (NTE) amount of US$6,025,933 effective 18 July 2008 for a term not less than five (5) years. We need to issue an internal P.O. to obligate the funds for payment purpose in IMIS since our contract document, which is produced in MS Word, has no technical interface and mechanism to record obligation in IMIS. Obligation of funds does not mean payment. A total of $3,300,500 was reserved for payment in conjunction with the contract and payment is processed only upon receipt and acceptance of services delivered. For your information, a total payment by the UN under this contract is $1,457,560 out of the contract NTE value of $6,025,933 as of today.

A duplicate entry of PS-14468 in June 2008 was removed from our Purchase Order Award in June 2008, as it is a genuine error.

    For the UN to acknowledge when it makes “a genuine error” is rare, and appreciated. But experts consulted by Inner City Press since receipt of the UN's “clarification” question, among other things, how changes can be made so cavalierly to the general ledger, and how this could have happened. We will continue to pursue it.

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