Remarks by Ambassador Joseph M. Torsella, -- On Agenda Item 130: Standards of Accommodation for Air Travel

Click here for this in full @ USUN: http://usun.state.gov/briefing/statements/205608.htm

Ambassador Joseph M Torsella
U.S. Representative for UN Management and Reform 

New York, NY

March 4, 2013

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AS DELIVERED

Thank you, Mr. Chairman.

The United States would like to thank Under Secretary General Yukio Takasu for introducing the Secretary General’s report on air travel and the Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), Mr. Carlos Ruiz Massieu for introducing the Committee’s report on this subject, as well as Mr. David Kanja of the Office of Internal Oversight Services (OIOS) for introducing the OIOS report.

Mr. Chairman,

There is no question that frequent, long, and complex travel by UN staff and representatives is a necessity. Ensuring that they are properly accommodated during their official travel is not only the right thing to do, but the smart thing to do.

However, what recent reports taken together reveal is deeply concerning. The 2010-11 Budget included $72.5 million for travel. In fact, the OIOS reports that for UN Headquarters, Offices Away from Headquarters, and the regional commissions, the UN spent a total of $575 million in travel-related expenses in the 2010-11 biennium. In addition, from July 2009 to June 2011, the UN spent $194 million on peacekeeping travel-related expenditures.
So actual total travel expenses paid by member states during the biennium was $769 million, and the portion funded in the UN’s Regular Budget of $575 million is approximately eight times that amount identified for “travel” in the budget documents we approved.
This raises an important issue, Mr. Chairman, of transparency – or lack of it – in the current UN budget process, which is something we all share responsibility for. But let’s put those numbers themselves into perspective for a minute. $769 million is approximately equal to the cost of a major peacekeeping mission like UNMISS ($840 million), more than one year’s worth of funding for all SPMs ($570 million), nearly as much as the two-year budget for all international and regional cooperation for development ($1 billion), and nearly equal to the entire two-year budget of FAO ($1 billion).
Three quarters of a billion dollars spent on travel over two years warrants close attention, period. When travel composes nearly 11% of the UN’s regular budget, it would be irresponsible for us to not review rules and policies carefully and adjust as appropriate. To his credit, the Secretary-General has proposed a number of recommendations to improve the UN’s policies on standards of accommodation for air travel. Regrettably, however, the General Assembly was unable to agree and make the responsible and urgently needed decisions in the 66th Session.
We have let this languish for far too long and we can no longer afford to talk about the problems; we need to begin solving them. And that is simply a question of our will here in the Fifth Committee, since much of the information needed to take action has been before us for over a year.
So what do we need to do?
First, the policies and rules governing the UN should be harmonized with those found in the civil services of national governments like the United States. For example, my government allows business class only when international journeys exceed 14 hours in total. As you know, the U.S. federal system is the comparator for UN compensation, and we should not pick and choose: if that’s a reasonable comparator for salaries and benefits, it should also be a reasonable comparator for limitations on those benefits. We don’t see any reason why the UN’s current 9-hour rule should not be increased to 14 hours to comport with the U.S. civil service. UN employees, unless there are extenuating circumstances, do not need to fly business class to Vienna or Brindisi, nor do the family members who accompany them on home leave trips.
But the issue is not just about which class the UN’s staff and representatives should travel on. We have known for quite some time now that the UN has a number of very generous and obsolete policies and rules governing the various benefits afforded to its travelers, such as the provision of the so-called “daily subsistence allowances” for flight time. In plain English, what that means is we’re paying to reimburse employees for meals and hotel costs while they’re 30,000 feet in the air. Current UN rules allow for four hours of connection time to be included in the calculation of total trip time, so adding a stopover to a five hour flight can get one an upgrade to business class. And the lump-sum payments alternative, based on a fare class that no longer even exists, has resulted in direct payments to travelers of, on average, nearly twice the actual cost of travel. We cannot afford, and should not tolerate, these egregious and wasteful distortions. The loopholes enabling them should be closed immediately.
To do so requires a comprehensive revision of the UN’s policies, rules and guidelines to its staff, and the Secretary General’s recommendations are an excellent starting point. However, changing the rules is the first step; we also need to give the Organization’s leadership guidance and tools needed to better manage air travel.
First, the Secretary-General needs to do a better job of collecting and analyzing UN-wide information on travel so that he can better set policies to control expenditures and improve services. While we understand the Organization’s management information system shortfalls can make this challenging, we cannot wait for UMOJA or other long-term efforts to fix this problem. The OIOS has repeatedly raised this as one of the most critical gaps that prevents the Secretary-General from executing UN-wide changes effectively. He cannot generate better group purchase policies and strategies and refine air travel rules without a solid understanding of current trends.
To this end, the dashboard the UN Office in Geneva has set up to follow trends in air travel appears to be an excellent practice. UNOG deserves kudos, but this practice should be implemented immediately and system-wide in every other UN office. The provision of online booking tools for UN staff for commonly traveled and standard routes can also assist with providing the lowest fares to UN staff and cut down on red tape.
Furthermore, such tools can help management by benchmarking trends in air travel and providing some of the missing data on air travel patterns. Yet, as the OIOS report notes, the UN is currently not using the online booking tools to which it is contractually entitled.
The recalibration of lump sum payment policies based on actual utilization rates and current market practices, as well as tracking and actually collecting refunds to which the UN is entitled from cancellations and changes are two further areas to seek savings. And with over thirty different travel agent contracts, consolidating UN-wide – or even system-wide –travel requirements to take advantage of economies of scale is critically needed.
Finally, Mr. Chairman, we share the concerns voiced in the ACABQ report regarding the Secretary-General’s latest report on air travel, which shows that the UN has been granting many exceptions to its already very generous rules on travel standards. The Secretary-General reports between July 2010 and June 2012 the UN granted 529 exceptions for its staff and representatives to travel in business or first class instead of economy, nearly 60% more exceptions than in the previous two years. These increasing exceptions simply send the wrong message to the UN system and to the taxpayers who fund it.
Mr. Chairman,
The United States reiterates the importance of the Secretary-General’s leadership on this issue and encourages him to continue to find ways to more efficiently and effectively utilize air travel resources. We call on the General Assembly to approve the changes, proposed by the Secretary General, that have been before us for over a year now. And we look forward to working with colleagues to get the greatest value from limited travel funds, and to have UN personnel and Member States set an appropriate example at a time when so many of our people around the world face economic hardship. Thank you.

SCANDAL: Already a “failure of management,” UN computer project turns out to be an epic shambles for Ban Ki-moon

Read in full at Fox News: http://www.foxnews.com/world/2013/02/11/already-failure-management-un-computer-project-turns-out-to-be-epic-shambles/?test=latestnews#ixzz2KcEniJCa

For more than three years, a sophisticated computerized management system intended to be a cornerstone of United Nations reform has been one of Secretary General Ban Ki-moon’s most embarrassing train wrecks, described as a “failure of management” on Ban’s part. Now, the world organization’s attempts to salvage the system -- known in-house as Umoja, a Swahili term for unity – have turned into an even bigger scandal.

Even after an admission that it was three years behind its initial scheduled completion as of a year ago, Umoja has been a victim of U.N. mismanagement, misjudgment and almost surreal levels of ineffective  implementation, according to internal U.N. documents. Meantime, U.N. member states, including the U.S. – the organization’s biggest financial contributor-- fling additional tens of millions of dollars at the dysfunctional ERP project to turn it around.

Read more: http://www.foxnews.com/world/2013/02/11/already-failure-management-un-computer-project-turns-out-to-be-epic-shambles/?test=latestnews#ixzz2KcEniJCa

Management and Reform, on the Proposed UN Program Budget for 2012-13, before the Fifth (Administrative and Budgetary) Committee of the UNGA

CLICK HERE FOR THIS STATEMENT ON USUN WEBPAGE

Ambassador Joseph M Torsella
U.S. Representative for UN Management and Reform
U.S. Mission to the United Nations

New York, NY

October 27, 2011

AS DELIVERED

Thank you Mr. Chairman, and thank you also, on behalf of the United States, to Secretary-General Ban Ki-moon, Under-Secretary-General Angela Kane, ACABQ Chairman Collen Kelapile, and all the members of the Secretariat and the staff who have produced the 2012-13 budget for our consideration today.

Before I begin my substantive remarks, I do want to welcome the comments made regarding transparency by the Group of 77 and China and their joining us in our efforts to raise the public profile of the Fifth Committee and operate in a fully transparent and open manner by taking the important step of webcasting our public sessions, making us more effective advocates for the taxpayers to whom we are all ultimately accountable. We enthusiastically join their call for webcasting all formal sessions of the Committee and applaud their leadership on this issue.

Mr. Chairman, we meet at a time of fiscal crisis, not for just one or a few Member States but for nearly the entire membership of the United Nations. In the General Debate that recently ended, we heard leader after leader, north and south, east and west, speak of the new economic realities. For all of us, resources have become more scarce, outcomes have grown more important, and leaders are being held more accountable.

But the wisest of those leaders know that times of great crisis are also times of great opportunity. The fiscal challenges of our time give the United Nations a chance to fully realize the calls, made over many years now, for fundamental and far-reaching reforms in how the United Nations does business, calls that in more prosperous times were easier to ignore. They give us, as Member States, the chance to rise above some of the tired dynamics that have played out in this room year after year, to come together around an agenda for a leaner and more effective United Nations and prove the cynics wrong. And they give each of us here the chance to leave behind a lasting legacy to those who follow us: a strengthened, renewed, more dynamic and entrepreneurial United Nations.

In this budget document, we can see that some in the United Nations system have indeed recognized the true opportunity in this crisis.

We see leadership: the Secretary-General took a bold first step—and some political heat—in calling for United Nations managers to tighten their belts. We applaud him for seeking to halt a ten-year trend of budget increases, and for courageously telling this organization not what it wants to hear but what it needs to hear: these are not ordinary times.

We see innovation: the Department of Public Information proposes to spend about $5 million dollars less than it did in 2010-2011 by introducing modern information management technologies, making wider use of the Internet and social media, and deploying online reporting and management tools.

And we see what good, entrepreneurial management can look like at the United Nations. We heard in the Committee on Conferences that, since 2009, the Department of General Assembly and Conference Management (DGACM) has reduced the number of pages printed by the United Nations by 65 percent. That means that DGACM has saved, on an annual basis, a pile of paper 49 times the height of the Secretariat building. We need to look no further than that pile of paper to know that reducing resources does not mean compromising mandates: the United Nations, like any organization, can always do more with less. And doing so unleashes a cycle of creativity and dynamism, innovation and renewal.

But as we review this budget we also see, as I said here last month, that while the Secretary-General has led, not enough of the rest of us—both within the Organization and among the Member States—have followed. The innovations I just described have enabled the publishing section of DGACM to propose a reduction in its work force by 41 posts, for example; yet, the Organization as a whole is shrinking by just 44 net posts, a reduction of only four-tenths of one percent. And while we here debate that 0.4 percent, potential add-ons to this budget—both those that we know today, and those yet to be considered—mean that the Secretary-General’s commendable call for budget restraint could, if we are not disciplined and careful in our work here in this Committee, end in a budget that actually increases from the last biennial budget.

So how then should we respond fully to the Secretary-General’s leadership? How do we seize this opportunity?

Our first and most urgent task is to set the United Nations on the path of real fiscal discipline in the 2012-13 budget. That means passing a budget with substantial and sustainable reductions. It means judging whether we’ve achieved real savings by using as our benchmark not a budget outline, but the expenses we approved during the previous period, the 2010-11 bienium. It means measuring all expenditures, including add-ons, in our definition of expenses for the 2012-13 period. And it means achieving savings that will recur, savings the ACABQ would call “significant and structural”.

Doing that will require, above all, tackling personnel costs, which have dramatically increased over the past decade. As the ACABQ report points out, 74 cents out of every dollar the United Nations spends is related to personnel costs.

The United States therefore calls for a freeze on pay for United Nations staff while the comparator salaries, those of the United States federal civil service, are frozen. We also repeat our call for repealing the nearly 3 percent raise given to New York based employees through the cost of living adjustment in August, and we urge the General Assembly to act on this matter. Many Member States, governments, businesses and NGOs have implemented total or partial hiring freezes on vacancies resulting from attrition, and in these difficult times the United Nations should do the same. Moreover, posts that have been persistently vacant over long periods should be abolished. The disturbing trend toward upward re-classification of posts identified by ACABQ should be reversed: the budget before us proposes upward reclassification of 55 posts—more than double the 27 reclassifications contained in the proposed program budgets for the past three biennia combined. Few of these reclassifications should be approved. Furthermore, we call on the Secretariat to comprehensively review all current employee benefit programs and costs, including health care, pension, leave, and travel policies.

Mr. Chairman, The United States has profound respect for the work of the dedicated professionals serving the United Nations—many of them, especially those in the field, doing so in very difficult circumstances and often at great personal sacrifice. But we do those men and women no favors by turning a blind eye to the trends in personnel costs as a whole. In fact, it is the employees of the United Nations who will ultimately suffer if we and United Nations managers do not do our jobs well, and more draconian austerity measures become unavoidable. And when a significant percentage of employees leave each year through normal attrition—retirements, resignations, transfers, non-renewals, and so forth—smart managers can right-size the United Nations and avoid across-the-board layoffs at the same time.

Our second task is to ensure that the budget we pass is in fact a binding budget, and prevents the United Nations from spending more than we actually approve this fall. We continue to be disappointed and concerned that every year Member States are presented a significant number of add-ons at considerable cost that in some cases are not mandated, in many cases can be foreseen, and in all cases should be better managed. Budgets are not suggestions. The United Nations must strictly adhere to the principles reflected in resolutions 41/213 and 42/211 that call for new proposals to be "budget neutral" or offset with savings within the approved budget. And we, as Member States, must ensure that the Secretary-General has the tools to enforce these policies.

We also continue to be concerned that the large additions to budget requests stemming from “re-costing.” While we recognize the organization needs some ability to protect itself from inflation and currency fluctuations, there are better ways to achieve that protection than passing a budget with blanks instead of numbers and regularly adding new funds to it. We continue to seek further details and analysis from the Secretariat—as soon as possible—on options, such as currency hedging, to deal with this issue. We should leave here with the confidence that we’ve approved a final budget, not a first draft.

Our third and final task is to make this the last year we deal with a budget under the current rules, by reforming the budget process itself.

As the United States has said before, the United Nations’s budget is too complex and opaque, and it is built around the wrong measures. Paradoxically, there is too much data, and too little useful information. Readers of United Nations budget documents, for example, will search in vain for the actual travel budget by department or the cost of employee healthcare. But they can easily find the precise number of policy papers issued by any number of the executive committees, as if the number of papers itself is a meaningful measure of accomplishment.

The budget in its current form of 37 different and partitioned sections would tie the hands of the best manager in the world. Our job is to set priorities, not to needlessly constrain the Secretary-General’s ability to operationally adapt, as changing circumstances and changing times demand, to meet the goals we set. If we are demanding more accountability for results from United Nations managers—as we should—we should also give them more flexibility to redeploy some resources within and among budget sections.

As the ACABQ and the Board of Auditors have noted, the United Nations’s results-based budgeting process needs a major overhaul to make it into a useful tool for management. Its focus should shift from process and outputs to results and outcomes.

And finally, we need to reexamine how managers build the United Nations budget in the first place. It is striking that each budget begins with the prior budget’s appropriation. We are caught in a perpetual exercise of adding to the previous biennium’s budget appropriation with the assumption that all previous mandates should be met in the same way and at the same funding level and every new mandate requires new resources. This premise is flawed. The fundamental reality is that resources do not equal results. No organization can work effectively without prioritizing to bridge the gap between limited resources on the one hand and ambitious goals on the other. That’s a conversation held daily in most governments, businesses and families; it should be held more frequently here at the United Nations and in the Fifth Committee.

Three tasks. A 2012-13 budget that represents a significant and sustainable belt-tightening from 2010-2011. A 2012-13 budget that is in fact final, comprehensive, and stable for the full biennium. And reform of the budget process this year so that United Nations budgets in future years will be prepared, presented and debated very differently. If we do those three things, Mr. Chairman, we will indeed have seized this opportunity.

What’s more, we will have kept faith with the people who sent us here, and with the people whose future depends on our work. We are entrusted with the responsibility of allocating these resources, but they do not belong to us. Every dollar, yen, euro, yuan, every peso, real, and rand sent here represents the hard work of a taxpayer somewhere. And every dollar wasted in the United Nations system is in fact a wasted opportunity to build a safer, freer, and more prosperous world.

The United States is therefore committed to achieving a reformed and renewed United Nations that protects human rights, keeps the peace and provides security, seeds development, finds common solutions to the urgent problems of the new century and lives within its means. We look forward to working constructively with all delegations in the weeks ahead to take fullest advantage of this unique opportunity to set the United Nations on a path of economy and excellence for the years ahead.

Thank you, Mr. Chairman.

UN Job Reductions Target Lower Levels, Kane Memo Says Can Cut Permanent

By Matthew Russell Lee @InnercityPress.com

UNITED NATIONS, October 17, updated Oct 18 -- As the UN reacts to calls to cut its budget, its "post reductions" are disproportionately directed as lower level staff, who accuse Secretary General Ban Ki-moon and his administration of a lack of transparency and even honesty.

Inner City Press has obtained a copy of a member from Ban's top Management official Angela Kane which tells Departments to start preparing for cuts, even before the UN General Assembly considers them, and provides for the termination of staff with "permanent" contracts. Click here to view.

But in an October 17 response to questions Inner City Press asked back on October 7 about 41 planned post eliminations in the UN's Publishing Section, the UN statesthat

"The post reductions in the New York Printing Section are contained in the Secretary General’s proposed programme budget for the biennium 2012-2013. They are expected to be achieved through attrition and other management measures, i.e. without involuntary redundancies."

Contrast this with Kane's internal memo, stating that

"I am writing regarding the abolition of posts proposed in your department/office for the biennium 2012-2013. As you know, the final decision on any abolition of post(s) rests with the General Assembly. In the event that the General Assembly does approve the Secretary-General's proposals, certain preparatory work should be undertaken by each department/office with regard to the staff that will be affected by the abolition of their respective posts... staff members who hold permanent appointments must be given three (3) months written notice of termination of their appointment."

The UN's response-after-ten-day is also inconsistent with even the UN's pro-management write up of the underlying meeting, which states that

"The Secretary-General's final budget proposal assumes that 37 TC posts and 4 GS posts will be abolished in the PS... processing of publications currently processed on offset machines will be outsourced... The 2012-2013 model implies that 81 posts need to be abolished."

One of the addressees, Narendra Nandoe, is said to be "sabotaging" the Publishing unit by refusing to order supplies or allow small errors to be fixed. So it goes at this UN.

Kane, SG & DSG, requested (c) UN Photo but caption analysis not shown. For now

The UN's response-after-ten-day begins with the UN's officially garbled transcription of Press questions, followed by a differently prepared transcription of the UN spokesman, with all "uhs" removed. (Some within the chain of command say that UN staff have been ordered to make it so.) So here is a "clean up" of the transcript of the October 7 noon briefing:

Inner City Press: yesterday, people working in UN publishing were told that 41 of those cuts will come from their department — 37 posts and 4 trades and crafts. I wanted you to confirm if that’s true, and they wonder, and I also in turn wonder, whether this idea of totally phasing out publication and laying those people off is something that’s been checked with Member States in terms of them using things like the Journal, and the various things that are printed by the UN, including reports. Is it true that 30 per cent of the cuts are in one division and why is that the case?

Spokesperson: I’d have to check on the details of what is a budget submission and a budget submission that goes to the Member States and is approved by Member States. If I have anything else further, then obviously we can let you know, but I think that’s an important factor here.

Inner City Press: I don’t know whether they are called lay-offs or post eliminations, will these, before they’re implemented, require the approval of the Fifth Committee?

Spokesperson: I need to check. But if it’s a budget submission, then a budget submission needs the approval of Member States.

Inner City Press: they were told, I don’t think it was said in either in the Fifth or ACABQ, I think it was said by the UN Secretariat to publishing people.

Spokesperson: As I say, I need to check.

Then for ten days, the UN did not provide a response. But documents came in. Watch this site.

Footnote: meanwhile the rest of "Kane's reign" bears marks of decline, down to the smallest and most simple things. Monday delegates groused that they couldn't even print, with the computer printer on the North Lawn's second floor left again without paper.

When the hours of the UN cafeteria were cut, they put potato chip and soda machines in the lobby for the other hours. Now these machines have been moved inside the cafeteria: locked up in the off-hours the machines were supposed to serve.

Likewise the small bar purportedly filling in for the closed-down Delegates' Lounge is rarely open. "Ban Ki-moon and Angela Kane have sucked," a well placed commadic UN staff source said, "the life out of the UN."

Update of Oct 18: while UN spokesman Martin Nesirky said he wouldn't comment on a "leaked memo" -- even if it contradicted the public answer he alluded to -- one of the problems reported above was acted on the UN the next day: the potato chip machine

(c) MRLee
Post publication, UN on Oct 18 moved soda and chips back to lobby. Thanks

Pricey Peacekeeping: Ban Gets Blasted for Billion-Dollar Mismanagement

A U.N. report charges Secretary-General Ban Ki-moon's office with repeated failure to police its soaring blue-helmet budget — though Ban says he's doing fine.

Frustration is rising fast at the United Nations over Secretary General Ban Ki-moon's inability to police the organization's huge and fast-growing peacekeeping budget, which looks sure to exceed $8.4 billion this year.

That budget, which covers the period from July 1, 2010 to June 30, 2011, is still under intense debate, especially among the 37 of 192 countries at the U.N. that pick up virtually all of the peacekeeping tab. By far the biggest contributor is the U.S., whose share this year amounts to 27.17 percent of the total, or nearly $2.3 billion. Others include Japan, Germany and Britain.

The issue is not only how much money is being spent, but how the U.N. is spending it. Donor countries are expressing, in undiplomatic terms, their concern at the way Ban's Secretariat has handled the huge peacekeeping enterprise in the past. And so is Ban's independent Board of Auditors.

A report issued just weeks ago by one of the General Assembly's main budget oversight committees, the Advisory Committee on Administrative and Budgetary Questions (ACABQ), and obtained by Fox News, takes Ban harshly to task. The 11-page document was labeled for general distribution, but only went to selected members of a working group attached to the "special committee on peacekeeping operations," which began to meet on April 4 and is still in session.

The report keys in on the U.N.'s peacekeeping performance in the 2008-2009 budget year — when peacekeeping cost only $7.1 billion — and cites, among other things:

• the U.N.'s mismanagement of huge amounts of peacekeeping property at various sites around the world, including "inaccurate" and "unreliable" record-keeping, and "high stock levels" of property that "will result in waste, deterioration and obsolescence as well as possible loss due to theft";
• procedures that excluded "reputable vendors" from its procurement procedures at various missions in Africa;
• "widespread" irregularities in procurement in "many" peacekeeping operations, including in contract awards and monitoring of vendor performance;
• over-budgeting of expensive air transport resources;
• major gaps in Ban's methods of measuring and improving his top officials' performance of their duties to manage peacekeeping better.

Moreover, the report charges that Ban's lack of effective management has become a disturbing habit.

In the U.N.'s customarily congested language, the report says the ACABQ "continues to be concerned" with the U.N. Secretariat's "persistent non-compliance" in implementing Board of Auditors recommendations to improve the situation, and adds that it is "of great concern" to the committee that "effective remedies have not been applied."

Chief among those remedies, the report makes clear, is making U.N. managers more accountable for their actions — or in many cases, inactions, "at Headquarters and in the [peacekeeping] missions."

The sheer scope of the U.N.'s expanding peacekeeping operations is a major part of the challenge. The Board of Auditors' report covers 14 of 16 current U.N. peacekeeping operations and notes — not for the first time — that a mammoth overhaul of the U.N.'s computerized management and accounting systems, known as an enterprise resource planning system (ERP) is far behind schedule, and will not be ready until 2014, at the earliest.

Specifically, the committee notes that "there was no documentary evidence to fully substantiate the actual performance at the United Nations Operation in Cote d'Ivoire (UNOCI)," and that a similar fogginess surrounded the remaining U.N. mission in Kosovo.

The committee also emphasized that the Board of Auditors had complained for three years running about "significant discrepancies" between the U.N. records for "expendable and non-expendable property at various missions" — meaning that the organization could not really account for the huge amounts of goods it had — or did not have — on hand.

The problems of "deficiencies in the monitoring of the inventory" also applied to the main U.N. logistical base for peacekeeping in Brindisi, Italy, where supplies seemed to languish despite the rapid growth in missions that ostensibly needed them.

The same gap between supply and demand occurred in peacekeeping aviation budgets, where the committee and the auditors noted that the U.N. seemed to budget for many more hours of air transport time than its records showed it used. In other words, expensively-contracted aircraft and helicopters were often just sitting around.

Other "irregularities" were also noted, including a $5.3 million overpayment to a vendor in Darfur, and another $3.3 million worth of equipment that was delivered but not used due to various bureaucratic snafus.

In terms of managing peacekeeping personnel, the committee also found the U.N. wanting. Vacancy rates for needed personnel ranged as high as 35 percent, or nearly twice what the organization was supposed to accept — which in turn raised the potential stress on existing staff.

The solution to all this, the committee concluded, was that that Ban and his officials should actually implement the measures that auditors had long suggested for rectifying the problems, especially holding management feet to the fire when required.

The fact that it hadn't happened so far, the report concludes, was an indication of "weaknesses in administration at all levels of management."

Click here to read the committee report.

Not surprisingly, Ban has taken considerable exception to those conclusions, in a 55-page companion document responding to the auditors' comments, also obtained by Fox News, that offered his own assessment of how well the U.N. Secretariat had done in accepting its auditors' recommendations.

Among other things, Ban noted that his administration "has achieved significant improvements in ensuring that the indicators of achievement and outputs ... are formulated as specific, measurable, attainable, realistic and time-bound."

In other words, he and his officials were doing as well as could be expected in measuring their accomplishments. Ban added that consideration also had to be given to the political climate where peacekeeping missions operated, which often limited outcomes.

On issues such as the use of expensive aircraft, Ban pointed to his administration's rebuttal in the auditors' own report, to the effect that "forecasts could not be exact owing to the nature of emergency situations. It was preferable to have sufficient capability on the ground than to be faced with a shortage when a crisis occurred." (But Ban's Administration also admitted that in the case of peacekeeping in Darfur, at least, it was cutting its planned use of aircraft in the future by nearly 50 percent.)

Ban also pointed out that even the auditors felt that his administration had done better this time than in the previous year — by lifting the rate of implementation of audit recommendations from 32 percent to 40 percent, as of March 2010. The rate was even better for those deemed of the "highest priority." Still others, he declared, were "in progress" or had target dates set for completion.

Click here to read Ban's response to the auditors.

However, Ban's rebuttal also said that there was no target set at all for 11 of the auditors' highest priority recommendations.
His rebuttal did not mention what those recommendations were.

George Russell is executive editor of Fox News.

UN Blames Delay in SAP Contract and Accounting Standards on States, But Changed ERP Plan

By Matthew Russell Lee

UNITED NATIONS, October 21 -- Is the current UN well or badly managed? In January 2008, more than twenty months ago, the UN's Department of Management announced it has selected Germany-based SAP for a contract for its enterprise resource or ERP technology project, and that the contract would be finalized in three months.

On October 21, Inner City Press asked Department of Management chief Angela Kane to confirm that the contract has still not been finalized, that ERP is being schedule and over budget, and to explain why. Inner City Press also asked why the UN is failing to live up to a 2010 deadline to implement the International Public Sector Accounting Standards. Video here, from Minute 44:34.

Ms. Kane acknowledged that the contract has not been signed. She blamed the General Assembly, that is the member states, for making the schedule "far too ambitious" and then only allocating the money in March 2009. She said the ERP project is not really over budget, because there is no real budget, "we were way off base." Video here, from Minute 49:43.

But the UN's Advisory Committee on Administrative and Budgetary Questions in its report on ERP criticized Ms. Kane's Department of Management for changing its proposal at the last minute. ACABQ sources say it's "DM's fault it got delayed -- now Kane is blaming others for her department's last minute changes" and thereby putting off the IPSAS accounting standards.

Ms. Kane on Oct. 21, SAP contract not shown

From the ACABQ report:

67. The Advisory Committee was informed of the revised requirements just as it was finalizing the present report. The reductions reflect changes in the sequence of activity and acquisition strategies, as well as delays in the approval of the project.
The Secretary-General now considers that it would be in the best interest of the Organization to complete the selection of the ERP software before proceeding with activities related to the acquisition of integration services rather than conducting those activities in a partially overlapping manner as initially envisaged. In addition, he proposes to break down the acquisition of integration services for the design, build and/or roll-out phases of the project instead of developing system integration proposals to cover a comprehensive range of services for the entire project at the outset (A/62/510/Rev.1, para. 35). ..The Committee was also provided with an updated timeline for the project (see annex IX), which shows an overall six-month delay in completion of the implementation.

68. The Advisory Committee was further informed that, as a consequence of this approach, the following activities and expenditures envisaged previously during 2008-2009 would not be completed during the biennium:

• Software licences and customization ($11,475,000): as a result of the Organization’s stronger negotiation strategy with the software vendors, there would be limited payment for software licensing during the design phase of the project, and any required customizations would be initiated later in 2009.
• Software integration ($21,847,400): based on the above-stated approach to the
acquisition of software integration services, there would be a significant
reduction in the overall work-months required during the biennium 2008-2009, as those resources would be required during the subsequent build and roll-out phases.
• Project and change management ($5,387,700): the ERP project team would postpone the recruitment of its full staffing complement until July 2009 until the initiation of the design phase after the completion of high-level business re-engineering activities in the first quarter of 2009. The change management strategy continues to focus on an awareness campaign for the stakeholders of the ERP project, pending approval by the General Assembly.
• Training ($5,615,400): the commencement of training is dependent upon the acquisition of the ERP software solution, which is in the final phase of evaluation.
• Operational costs ($749,000): the above delays have a corresponding impact on the requirements related to general operating expenses.

69. The Advisory Committee considers that these revisions represent a
significant change in the strategy for the implementation of ERP as set out in paragraph 35 of the report.

So the Secretariat made last minute "significant changes" to the ERP plan, then blames the resulting delay in the allocation of funds for not having taken steps due a year and a half ago, and puts back implementation of IPSAS accounting standards for two -- some say four -- years.

Again the question: Is the current UN well or badly managed?

Footnote: For weeks Inner City Press has been asking in the UN's noon briefing that Department of Management chief Angela Kane come to take questions, on why Office of Internal Oversight Services recommendations have not been implemented, from disciplining a staff member who pleaded guilty to having child pornography to recouping $7 million overpaid in Timor Leste.

On Wednesday Ms. Kane did come to the briefing, but only about the budget. Inner City Press, when called on, was told to limit itself to one question. While the Controller was still answering a question about the UN and the dollar, Ms. Kane left the briefing. It's been three months since the last one: it seems clear these should be more frequent.

U.N. Auditors Find Development Program Broke Rules in Offering Aid to North Korea

By George Russell

Did the United Nations Development Program, the U.N.’s multibillion-dollar development flagship, break its own rules in offering assistance to the dictatorship of Kim Jong Il?

The long awaited answer, offered up by the U.N.’s own Board of Auditors, is a clear "Yes" — though UNDP itself quickly spun the answer as a vindication.

The long-awaited and controversial audit of United Nations operations in North Korea has concluded that, in line with accusations first raised by a senior U.S. diplomat, the United Nations Development Program and other agencies contravened their own regulations in hiring local staff nominated by the dictatorial North Korean government, and in making unauthorized hard currency payments to the Kim Jong Il regime.

The auditors, who stressed that their work was only a preliminary investigation, also declared they were unable to determine the total amount of unorthodox payments that had made. They lacked access to documentation from the U.N.’s offices in North Korea, a frequent observation throughout their report, and even lacked access to the cashed checks involved in the transactions. The auditors also were refused access to North Korea by the Kim Jong Il regime, which refused to cooperate in the investigation.

Paradoxically, the results of the audit immediately were hailed as a vindication by the UNDP, the United Nations’ flagship development organization, which has been largely responsible for running U.N. operations in North Korea.

The UNDP claim was that the report did not specifically support all the charges originally raised last January by U.S. Ambassador to the U.N. Mark Wallace, citing unpublished previous U.N. audits, that tens of millions of dollars in UNDP spending might have been misappropriated by the Kim Jong Il government as a result of the UN’s unorthodox policies in North Korea. Among other things, Wallace declared that it was “impossible” for the U.N. aid agency to verify whether its funds “have actually been used for bona fide development purposes or if the DPRK [North Korea] has converted such funds for its own illicit purposes.”

According to UNDP spokesman David Morrison, the latest audit findings are still under review by the U.N. development organization, which plans to file a formal response. But Morrison declared that the latest audit findings explicitly ruled out the possibility that there had been any diversion of UN funds to North Korea’s nuclear weapons program, and, contrary to U.S. Ambassador Wallace’s January assertions, said that UNDP officials had in most cases been able to visit UN development projects in North Korea to determine that money had been properly spent. “the money went where it was intended,” he said.. Moreover, he claimed, the audit confirmed that there were only “modest” levels of funding involved.

In fact, the specific language of the audit did not necessarily support Morrison’s assertion, especially insofar as the auditors declared they had not even had access to the checks used to pay North Korean staffers or other bills. Morrison’s arguments about the “modest” size of UNDP payments were also immediately contested by a U.S. official, speaking on background, who pointed out that the report tallied more than $72 million in spending by various U.N. agencies in North Korea from 2002 to 2006, and the list of agencies was far from inclusive. (The latest audit specifies thaht UNDP processed payments on behalf of all the mentioned agencies.) During that period, UNDP and one of its subordinate agencies operated anywhere from 28 to 41 projects in North Korea.

The same official pointed out that the audit report said only that visits to projects “only occurred in a coordinated way with the authorization and supervision of DPRK authorities.” (Nor did the report specify whether locally hired UNDP staffers, who continued to work for the Kim Jong Il government, were the ones actually carrying out the visits.)

For his part, Secretary-General Ban Ki-Moon was more cautious in drawing conclusions about the audit findings. A statement issued by his official spokesman, Michelle Montas, noted that the report “does not indicate that large-scale UN funding has been systematically diverted, as has been alleged” -- an unsurprising conclusion, as the report specifically declared that it was unable to judge the amount of funds involved in hard currency payments, without access to documentation in North Korea. But the spokesman’s statement also declares that the auditors’ document “identifies practices not in keeping with how the UN operates elsewhere in the world.”

Ban’s spokeman said that the Secretary General would ask for a further continuation of the auditing process, including a visit by auditors to North Korea, without mentioning the fact that North Korea already has rejected any such cooperation.

In one sense, the entire debate over diversion of UNDP money in North Korea became moot two months ago. At that time, even while declaring it had done no wrong, UNDP revised its policies to prevent further North Korean selection and control of local staff, and banning any payments in hard currency in that country. North Korea refused to accept the new rules, and all UNDP staff have subsequently left the country. A variety of other U.N. agencies, however, including the World Food Program and UNICEF, continue to operate there.

Even while declaring that it lacked access to documents that would have revealed the full extent of hard currency payments to North Korea, the latest audit makes clear that North Korean input into UNDP operations in the country was extensive and pervasive. Of 31 UNDP staff in North Korea in February, 22 were described as local hires, meaning North Korean government nominees, who, the report notes. These included four of UNDP’s program officers, the Information Technology officer who managed local computer networks, and the finance officer.

According to the report, these local hires were “seconded” to the UN agencies from the North Korean government, meaning that they were still government employees, and in general considered to be immune to U.N. rules and regulations governing staff conduct.

The report also noted, as Ambassador Wallace had done in his original complaint, that the unorthodox hiring and foreign exchange practices of the UNDP in North Korea had been exposed in previous audits dating back to 2001.

In his original complaint, Wallace noted that audits had uncovered the practices dating back to 1994; his point was that nothing was done as a result. In a brief on-the-record comment after the latest audit report was released, Wallace declared that the document “vindicated certainly some of our concerns.”

The UNDP’s current argument, on the other hand, is that members of the 36-nation Executive Board supervising UNDP activity (which includes both the U.S.and North Korea) were aware of those practices through the previous audits, and tacitly accepted them. UNDP spokesman Morrison indicated his agency’s view that there were no restrictions, for example, on the type of currency to be used in local economies.

The audit report itself noted that the UN’s current chief representative in North Korea, known as the Resident Representative, viewed the paying of North Koreans in hard currency to be an “established practise” in place when he first arrived in July 2005.

The latest audit report, on the other hand, while noting a lack of basic documentation on payment practices in North Korea, specifically mentioned that hard currency payments were made in violation of specific sections of a basic operating agreement covering UNDP operations in North Korea.

The latest audit report added a further mystery of its own. It was signed not by the auditors who carried out the investigation, but by senior officials in the member countries who had provided the experts under U.N. auspices. UNDP spokesman Morrison was unable to say why the auditors themselves did not sign the document, but it is known that one member of the three-man team who carried out the work, Pierre Brodeur of France, abruptly resigned from the group before the audit was made public. Brodeur was contacted prior to the audit’s publication by FOX News, but refused to make any statements.

There has been widespread speculation that Brodeur resigned due to disagreements with the audit’s conclusions, or the lack of access to documents required for a more definitive report.