Report: U.N.D.P. spent U.S. funds on shoddy projects

By Ken Dilanian, USA TODAY WASHINGTON — Two United Nations agencies spent millions in U.S. money on substandard Afghanistan construction projects, including a central bank without electricity and a bridge at risk of "life threatening" collapse, according to an investigation by U.S. federal agents. The U.N. ran a "quick impact" infrastructure program from 2003 to 2006 under a $25 million grant from the U.S. Agency for International Development. The U.N. delivered shoddy work, diverted money to other countries and then stonewalled U.S. efforts to figure out what happened, according to a report by USAID's inspector general obtained by USA TODAY under the Freedom of Information Act. REPORT: Read full investigation "Due to the refusal of the United Nations to cooperate with this investigation, questions remain unanswered," the report says. Federal prosecutors in New York City were forced to drop criminal and civil cases because the U.N. officials have immunity, according to the report. USAID has scaled back its dealings with the U.N. and hired a collection agency to seek $7.6 million back, Deputy Administrator James Bever said. The aid agency hasn't heeded its inspector general's request to sever all ties. "There are certain cases where working with the U.N. is the only option available," Bever said in an e-mail. The quick-impact program was designed to demonstrate results and promote confidence in the reconstruction effort, but the report suggests it did the opposite. One U.N. employee told investigators that "about $10 million of USAID grant money went to projects in other countries, to include Sudan, Haiti, Sri Lanka and Dubai." That witness said the Afghanistan country director for the U.N. Office for Project Services (UNOPS), which served as the contractor on the project for the U.N. Development Program (UNDP), spent about $200,000 in U.S. money to renovate his guesthouse. Witness names were withheld by USAID. The development program hired UNOPS to do the work and kept a 7% management fee, the report says. The finances were "out of control," an unnamed project services manager told investigators. An unnamed USAID contractor told investigators that the program was "ill conceived from the beginning. This was a political idea to do quick impact projects that would look good," the report said. Investigators found that projects reported as "complete" were actually so shoddily built that they were unusable, the report said. For example: •A bridge near Kandahar cost $250,000, had to be overhauled by other contractors and still was not safe. The U.N. claimed the bridge was damaged by flood, but a colonel in the U.S. Army Corps of Engineers told investigators that "falls between absolute incompetence and a lie; the project was improperly constructed." •An airstrip in the southern town of Qalat, originally budgeted at $300,000, cost $749,000 and could not accommodate military planes. •A $375,000 headquarters for Afghanistan's central bank lacked electricity or plumbing, and basement flooding destroyed stacks of local currency. Investigators found that UNDP withdrew $6.7 million from a U.S. line of credit without permission in 2007, months after the project had ended. UNDP has yet to explain what happened to that money, the report says. "This is a disturbing report and an egregious example of the kind of fraud and waste that needs to be fixed," said Mark Kornblau, a spokesman for Susan Rice, the U.S. ambassador to the U.N. "The U.S. is committed to making the U.N. more accountable." Vitaly Vanshelboim, UNOPS deputy executive director, did not dispute that some of his agency's work was substandard and that money was improperly diverted. He said UNOPS had overhauled itself dramatically since then. An internal U.N. investigation found serious irregularities by one former official that have since been addressed through management reforms, he said. UNDP spokesman Stéphane Dujarric called the report "disturbing." Both officials denied that their agencies failed to cooperate with investigators. "We are continuing to work closely with USAID to get to the bottom of all of the issues they have raised," he said in an e-mail. USAID's inspector general, Donald Gambatesa told the Commission on Wartime Contracting during a February public hearing that he was "concerned" that his agency was continuing to do business with the U.N. Commissioner Dov Zakheim, a former Pentagon controller, asked Gambatesa whether the agencies have immunity "if they siphon (their U.S. grants) all off into Swiss banks? Is that accurate? They will be totally immune, no matter what they do with the money?" "My understanding is, yes," Gambatesa replied. On Monday, Alonzo Fulgham, USAID's acting administrator, met in in New York to discuss the matter with Ad Melkert, the development program's acting administrator, USAID said in a statement. "Mr. Melkert pledged UNDP's full cooperation with USAID in reforming UNDP's project management practices, improving financial accountability and in recovering any missing funds," the statement said.