KRISHAM BATRA IS CORRUPT: Selective Insurance, the latest Satyam customer seeking exit

HYDERABAD: Selective Insurance Group, one of the biggest property and casualty insurers in the US is seeking to replace its outsourcing contract 

The Great Fall of Satyam The crux of the scam in Satyam Top Accounting scandals Five facts about Satyam

with Satyam Computer Services. 

In a report filed with Securities and Exchange Commission (SEC) last month, Branchville, New Jersey-based insurer said that Satyam accounts for almost a quarter of the company’s IT work. 

“We believe we would be able to manage an efficient transition to a new vendor and not experience a significant negative impact to ouroperations in the event that we no longer retain Satyam in their current capacity due to the financial issues they are currently experiencing,” the company said in its regulatory filing. 

As reported by ET recently, around 46 customers have either completely exited, or are in the process of moving their outsourcing contracts from Satyam to rival tech firms such as IBM, TCS, Wipro, Infosys and Accenture. 

Potential bidders for Satyam such as Tech Mahindra, L&T, Spice and several private equity firms are readying their strategy for taking over a majority stake in Satyam, and their financial bids will depend a lot upon the amount of business Satyam has from around 695 existing customers, last reported during company s financial results for quarter ended September last year. 

Inside the secret world of auditing - SATYAM

PwC’s unqualified opinions of Satyam’s financial statements were materially false and misleading… as an accounting expert which consented to the use of its unqualified audit opinions, PwC is liable for the material misrepresentations or omissions…

Excerpt from a Class Action Complaint against Satyam, Ramalinga Raju, Rama Raju, Srinivas Vadlamani and PricewaterhouseCoopers filed in a US district court

After investment bankers, it’s the turn of auditors at the big four accounting firms to become the public’s favourite whipping boys, not just in India but all over the world. After PricewaterhouseCoopers’ (PwC) apparent peccadilloes in the Rs 7,000-crore Satyam fraud, the accounting firm whose brand has been present in India for over 100 years has come in for some serious pounding, globally. But even as a huge question mark hovers over the future of PwC in India, the Great Raju Robbery has succeeded inevitably in dragging the other three that make up the Big Four—Ernst & Young (EY), Deloitte and KPMG—into the mire.

Do you know 1. That two of the Big Four auditing firms entered India as management consultants 2.Indian laws don’t allow foreign auditing firms—directly 3.The Big Four’s audit work is done by local partners 4.Audit business for most is smaller than non-audit business 5.The global firms own no stakes in local units 6.Local firms can leave one umbrella and enter a rival one

To be sure, it didn’t need a fraud in India to provide an opportunity to take the accountants to the cleaners. Every accounting fraud—and there are plenty of them globally—is greeted with ridicule being heaped on this fraternity. And it’s not just restricted to the Big Four. The US arm of BDO International, the world’s #5 accounting firm (which in India has an -affiliation with Haribhakti & Co.), has to pony up damages of $521 million awarded against it for a negligent audit. A month ago, three of the Big Four—PwC, KPMG and EY—were dragged into Bernard Madoff’s alleged $50-billion fraud—they were all auditors of the feeder funds that channelled money into the accounts of Madoff’s New York brokerage. And let’s not forget Deloitte, which as the external auditor to GM in the US, was dragged into an accounting fraud allegedly perpetrated by the automobile giant. Deloitte stood accused of falsely certifying GM’s accounts—the Detroit major had apparently accelerated the booking of income between 2002 and 2006.

Along with such headline-grabbing instances of alleged misconduct, the accounting fraternity isn’t exactly adored because these pinstriped suits are perceived to live lives of extravagance—not too different from fat-cat investment bankers. What’s worse, at least from the public’s view point, is that nobody knows exactly how they make that money. Few, in fact, know about what accounting firms do, the precise role of auditors, how the Big Four function globally (they aren’t like any typical multinational operation), how they are regulated, and what else do they do besides auditing company books (plenty more, as it turns out). In the next few pages, Business Today attempts to lift the lid off the mystery that shrouds accounting firms—particularly the Big Four—and find out what makes them tick… and what makes them not tick.

Let’s start at the very beginning: How real is the global network of the Big Four? Do they function seamlessly as one firm?

The big four accounting firms are actually hundreds of firms held together with the glue of knowledge, economics and brand— or so we’re told. They operate under an umbrella brand and a global company that promotes the brand, and researches and coordinates between the member firms (as they are usually known). EY and PwC have their coordinating firm in the UK, while Deloitte and KPMG have their coordinating companies in Switzerland. There are no cross-holdings and ownership is always with the local seniors. These firms or companies—as the structure may be—are owned by partners who become co-owners or shareholders as they go on to become senior members of the organisation. These are largely unlimited liability partnerships and even if some of the firms are limited liability companies, the senior members who become shareholders are still designated as partners.

Globally, the Big Four clock almost $100 billion in revenues and employ close to 5.8 lakh people. In India they are minuscule—less than $1 billion (around Rs 3,500 crore) and employ around 21,000 people.

Other than access to methodologies, training and quality standards, as Jairaj Purandare, Executive Director, PwC, points out, the Indian affiliates get access to the firm’s global clients when they do business in India. However, the One Firm concept becomes a double-edged sword when a local affiliate is pulled up for accounting wrongdoings. For instance, PwC will have to face the heat in the US because of its Indian firm’s involvement in the Satyam fraud (that Satyam is listed on the New York Stock Exchange opens it to a string of Class Action Suits).

How does the Big four work in India?
The Indian rules, revised in the mid-1980S with an eye on the world Trade Organisation (WTO) negotiations on opening up of services, do not permit the Big Four—or any multinational audit or accounting firm—to be registered in India as auditors. So two of them—EY and KPMG—are actually registered in India as management consultants; PwC registered two firms as Price Waterhouse (PW) and Price Waterhouse & Co. back in the pre-Independence era and Deloitte had registered one firm under the name Deloitte Haskins & Sells in 1978 before these rules came into force. That may explain why the audit business of the Big Four is smaller than the rest of their operations—advisory, corporate finance and tax. Audit (assurance in accounting jargon) is conducted by local audit firms who are part of the respective networks of the Big Four (for example, S.R. Batliboi does it for EY, A.F. Ferguson and C.C. Choksi for Deloitte, BSR for KPMG and PW and Lovelock & Lewes for PwC). The chartered accountants and audit firms in India are regulated by the Institute of Chartered Accountants of India (ICAI) and, therefore, the Big Four must have as local members firms registered in the name of local chartered accountants. All the audit work is handled by the local firm, which supposedly follows global standards. The global brand is still not allowed to be used in the audit business. The ICAI, for its part, sees the MNCs’ entry into India as a backdoor one. “To go and seek auditing work as an international firm and then sign the balance sheet as an Indian firm can’t be tolerated,” says Ved Jain, the outgoing President of the ICAI. The PwC-Satyam saga is being used as a pressure point to negotiate in the WTO, a reciprocal access for Indian auditing firms to the US, the UK and to other countries in return for opening up India to the Big Four.

Audit firms in India were recently allowed to advertise their services, but they’re still prohibited from marketing their services. Audit in India is a smaller business for the Big Four. It brings in anywhere between 25 and 40 per cent of their Indian revenues. Also, these firms operate through multiple entities as the the Indian Partnership Act of 1932 doesn’t allow one body to have more than 20 partners. The new law on limited liability partnerships passed in December 2008 will ease this barrier on number of partners and clear the path for less-complicated structures.

So, what’s so special about the Big Four; Are they really superior to the others—local or global?
The big four are not as yet that big in India. However, they love to talk about their sophisticated methodologies, training systems and quality standards. And, they claim to be particularly choosy when picking clients. “Often, many clients themselves withdraw when they hear about our requirements and processes,” quips Sunil Chandiramani, Partner, EY. Adds Rajiv Memani, Country Managing Partner, EY: “There is an effective system of quality control, which includes policies, tools and procedures that are in place to support people in carrying out quality work.” But most importantly, it’s the globally recognised brand of the Big Four that Indian companies— especially those with global linkages—find more useful.

What are these practices that ensure quality in statutory audits?
Evidently, there are many. let’s begin with partner rotation: This entails that the same ‘lead engagement’ partner is not involved with the listed audit client for more than five years. With some clients, partners are rotated every three years. Then, there’s the independent partner review, whereby all audits of listed clients go through a review by a second partner; this could be followed by a ‘Hot Review’; before the audited accounts are submitted to the company’s board, many a time a quick desktop review is done by an independent technical team to check if all presentations and disclosures are appropriate. There’s also an ‘audit quality review’, or AQR, which firms like EY follow; this is a review of a large number of audits by visiting partners and senior managers from member firms worldwide, with local support.

Points out Roopen Roy, Managing Director of Deloitte’s consulting arm: “Deloitte Touche Tohmatsu’s rules, in most cases, are ahead of and exceed the standards set by the regulators.” 

From big eight to big four A long time ago, they were the Big Eight... 1. Arthur Andersen 2. Arthur Young & Company 3. Coopers & Lybrand 4. Ernst & Whinney (until 1979,Ernst & Ernst in the US and Whinney Murray in the UK) 5. Deloitte Haskins & Sells (until 1978, Haskins & Sells in the US and Deloitte Plender Griffiths in the UK) 6. Peat Marwick Mitchell (later Peat Marwick) 7. Price Waterhouse 8. Touche Ross … then there were six… In 1989, Ernst & Whinney merged with Arthur Young to form Ernst & Young; and Deloitte, Haskins & Sells merged with Touche Ross to form Deloitte & Touche … which came down to five… In July 1998, Price Waterhouse merged with Coopers & Lybrand to form PricewaterhouseCoopers ….and now, they're the Big Four (So Far) In 2002, Arthur Andersen, auditors to Enron (which collapsed), was indicted for obstruction of justice (although the verdict was later overturned). This led to its country practices round the world being sold to the Big Four (mostly EY). ... who are #5 and #6? BDO and Grant Thornton are globally #5 and #6—often they switch positions. Grant Thornton is present in India through Walker Chandiok & Co. and BDO through BDO Haribhakti & Co.

So, why aren’t these practices good enough to ensure against fraud?
The favourite maxim of the accounting fraternity is: “We’re watchdogs, not bloodhounds.” ICAI’s Jain quips: “When we were young, we were taught that an auditor is someone who is groping in the dark for a cat that is not there.” Well, in the Satyam case, to paraphrase an excerpt of Raju’s confession, there wasn’t a cat but a marauding tiger at work. How did the auditors fail to catch a glimpse of it? Says Vishesh Chandiok, Managing Partner of Grand Thornton in India: “A collusive management fraud is extremely hard to detect and an audit is not planned or performed with that objective.” Agrees Tridibes Basu, Partner, S.R. Batliboi: “Fraud is particularly difficult to detect in cases where there is management override of set processes.” Jain acknowledges that the biggest challenge for the profession today is the huge gap between society’s expectation of what auditors must do and what auditors actually can do. That gap just got larger after the Satyam scandal.

So, does this mean that auditors are destined to remain toothless watchdogs?
Perhaps not, thanks to some new accounting standards and laws passed in the aftermath of colossal corporate frauds. There’s, for instance, SAS 99, a US accounting standard that came into existence after Enron went bust, and took Arthur Andersen down with it, even though the verdict eventually was that Andersen was not guilty. SAS 99 requires auditors—amongst other things—to gather information necessary to identify risks of material misstatement due to the fraud by a series of measures (like making surprise inventory checks). Along with the provisions of the US Act Sarbanes-Oxley (SOX) of 2002, SAS 99 will become more and more relevant in India, avers Vaibhav Manek, Partner, KNAV Advisors. Auditors at the Big Four reveal that they follow SOX norms when auditing the books of their global clients who’ve set up operations in India. Yet, the main criticism of SAS 99 is that many of the procedures are suggested rather than required—more watchdogish than bloodhoundish. Meantime, the ICAI has prescribed a revised standard on auditing which lists the responsibilities of auditors when it comes to fraud.

How It’s done globally Global regulation of audits seems more stringent and independent than India’s. US The SEC regulates auditors in the US and appoints members of the Public Company Accounting Oversight Board under the Sarbanes-Oxley Act of 2002. CEOs and CFOs have to certify financial statements they file with the SEC. A company cannot have certain consulting contracts with its auditors. The Auditing Standards Board of the American Institute of Certified Public Accountants, a representative body, issued a standard (SAS 99) in 2002 that has several requirements to help an auditor find frauds, not all of which are mandatory. UK The government-appointed Financial Reporting Council regulates auditors. One of its boards, the Accounting Standards Board, issues accounting standards. Japan The governmentappointed Accounting Standards Board regulates auditors. The Certified Public Accountants and Auditing Oversight Board is appointed by the Prime Minister with the consent of the Diet. France Joint audit is mandatory. So, companies have two auditors. Belgium If an auditor provides any permitted non-audit services to a company it audits, fees for such services cannot exceed audit fees. India Auditors regulate themselves through ICAI and there is no independent regulator.

How prevalent is self-regulation when there’s plenty of room for conflict of interest?
Unsurprisingly, businesses like mergers & acquisitions and valuations are the primary activities of the Big Four. Along with the taxation practice, this share of the pie is easily bigger than audit. Can these disparate businesses, which feed off the same client base, co-exist? Evidently not— not in the US, where three of the Big Four shed their consulting practice to ensure independence of the audit practice. In 2002, EY sold its consulting practice to Capgemini, PwC to IBM and KPMG to BearingPoint. Only Deloitte still holds on to its consulting arm globally. The other three have slowly re-built a consultancy business, which they claim follow strict guidelines to avoid conflict with audit. The lopsidedness of regulation in India notwithstanding, shouldn’t consulting and audit be under two different umbrellas? Such questions are greeted with plenty of clearing-of-thethroats, even as local partners at the Big Four insist that Chinese Walls separate audit from the rest. Audit clients can never be advisory clients, and vice versa. Also, there’s no law that prevents partners from becoming independent directors on boards of companies they are not auditing, although most Big Four firms say that’s a no-no. ICAI says an auditor can’t audit a company and be on its board at the same time. Ultimately, the best assurance of self regulation is the fear of reputional damage. This assurance becomes stronger as these firms expand their businesses beyond audit.

So why do many, including the ICAI, hate the big four?
It’s been a long time since the ICAI has had a big four president. there was Rahul Roy, the youngest-ever president of the Institute but he joined EY after he finished his term as ICAI president. Uttam Agarwal, the man who takes over as president of the ICAI on February 5, points out that the institute has taken action against Big Four representatives in the past. “But how much can we do? We can only impose a fine on the member— we cannot do anything about the firm since licences are given to individuals, not firms. However, now we have started mentioning the name of the firm when we impose a penalty on a member,” says Agarwal.

Agarwal is also head of the committee set up to look into the affairs of Satyam and the audit conducted by PwC. He says that during his tenure, strict action will be taken against errant members—be they from the Big Four or any other firm. PwC had two members sitting in the ICAI council when the Satyam saga broke. They voluntarily stepped out of the meeting of the ICAI Council that discussed the Satyam case. Later, Jain said he can’t bar them from the proceedings since they are elected representatives. Agarwal says: “There are certain measures that we want to introduce and one of those is rotation of auditors.” Perhaps that will go some way in making auditors less-reviled. But remember, even at its best, audits can only be an effective deterrent to fraud—never a guarantor of its absence.

Yet Another Scandal for 'India's Enron'

Wednesday, February 04, 2009

By George Russell

Satyam Computer Services Ltd., the Indian tech giant at the center of a $1 billion executive fraud and a World Bank ethics scandal, is involved in yet another kind of debacle — this time at the United Nations’ public health arm, the World Health Organization (WHO).

At issue is Satyam’s role in the development of a $55.5 million global business management system for WHO, which was slated to become the master control for staffing, financial payments and procurement by the organization by an initial deadline of September 2007.

That deadline has long since passed, and instead, according to documents obtained by FOX News, the project is far behind schedule, wallowing in glitches that have deeply affected WHO operations, and, despite management claims to the contrary, likely to end up far exceeding its budget.

Moreover, according to the documents, in the push to get at least part of the system up and running by last summer, Satyam ignored the instructions of the software’s manufacturer, Oracle, for implementing the complex system; ran user tests that validated the system without “being able to replicate a real-life situation,” provided little or no training to WHO employees; and failed to adequately involve health care professionals who see the system as a vital tool, among a host of other failings.

Among other things, the report strongly implies that the failure to use actual data in its testing may severely crimp the abilities of the disease-fighting organization, for example, in “mobilizing large amounts of money in a very short time for emergencies.”

Despite being written in a fog of bureaucratic language, the audit report is a scathing indictment of Satyam’s role as “system integrator” for the global business management program, and also of management’s oversight of the project — failings that include “the risk of over-dependence” by WHO on Satyam even after the project is completed.

Those lapses are even more dramatic in the context of Satyam’s behavior at the World Bank.

WHO signed its contract with Satyam in September 2005 — at roughly the same time as the World Bank was in the final stages of a three year, hush-hush investigation of the company’s improper financial dealings with the bank’s chief information officer, Mohamed Muhsin, that would end with Muhsin’s ouster the following month.

Satyam itself was not suspended as a supplier by the bank, however, until February 2008 — a suspension that turned into an eight-year formal ban last September. Along with the financial dealings, the World Bank cited “lack of documentation on invoices” by Satyam as a cause for the belated sanctions.

(The World Bank, a U.N. institution, never informed the U.N. or its sprawling network of funds and agencies of the investigation, the suspension or the ban until December 2008, after a series of reports appeared in FOX News.)

In other words, Satyam won the contract at roughly the same time that the World Bank was about to fire its top technology manager for accepting heavily discounted shares of stock from Satyam in return for promoting the company’s fortunes.

Even WHO’s top management, which has been strongly defensive of its Satyam project, has admitted that “there remain continuing problems,” and has pushed off the full global roll-out of the system, beyond WHO’s Vienna headquarters and its Western Pacific region, into the indefinite future.

A WHO spokesman would say only that “there are further planned roll-outs to extend the geographical coverage during the next year or so.”

When it came to cost over-runs for the fiasco, the spokesman said only: “The contract with Satyam is a fixed price contract and no additional costs associated with the delay have been identified to date. We still currently estimate that the project will be completed within budget.”

Nor, the spokesman added, was there any evidence of “incorrect billing” by Satyam in connection with its portion of the overall deal, which amounted to more than $27 million, or roughly 50 percent of the entire cost.

But that management assertion, along with many others, is openly questioned by WHO’s own external auditors in a report that was presented to the health organization’s main legislative body, the Health Assembly, last May. According to the audit report, Satyam had already exceeded its contractual work-time on the project by more than 40 percent by that time, worth at least $1.4 million over the contract price.

Moreover, WHO’s own staff costs as a result of delays are escalating at a project rate of at least $250,000 a month, according to the report, which adds drily that management efforts to manage the financial exposure “are encouraged.”

Click here to see the audit.

When asked by FOX News whether WHO was “confident” that Satyam had not had similar improper relations with WHO staffers in winning or working on the contract, a spokesman replied, “All contractual relations were subject to the strict WHO procurement procedures.” He added that “this particular contract has been subject to audit.”

The spokesman also told FOX News that Satyam, which has been suspended by other branches of the U.N. in the wake of its banning at the World Bank, is bidding on a future WHO contract and also has three other contracts with the health organization “totalling less than $400,000.”

WHO’s own external auditors, however, are far less admiring of WHO’s “strict” procurement procedures.

The same external audit that slammed Satyam and WHO management for their handling of the global management system also cited WHO’s Contracting and Procurement Services Unit (CPS) for ignoring a startling variety of fundamental WHO procurement rules, involving tens of millions of dollars.

Among other things, the audit cites WHO staff for ignoring rules that demand three competitive bids on contracts, or justifying selection of a single supplier without competitive bidding, as well as rules that called for sealed bids.

Click here for more U.N.-related stories.

In the case of one shipping company favored by WHO, the auditors noted, a contract worth $4.5 million “had been operative for the last 15 years without a written agreement and without adhering to competitive bidding at any stage,” in violation of procedures.

In the case of a $3 million insurance contract, the auditors noted that “there was no evaluation on record to establish that the new negotiated rates were competitive," and added that WHO insurance agreements “have continued with basically the same company from 1990 to date, and the current one is to continue until 2011.”

Whatever discretion the rules allowed, the auditors said, “does not encourage an agreement to be continually renewed for four terms and a period of 21 years with the same company, without going in for competitive bidding.”

More alarming was the fact that WHO’s ostensibly “strict” procurement rules were ignored on multiple occasions when they involved life-or-death vaccines for the likes of influenza, yellow fever, rabies and hepatitis A and B.

In all of thoses cases, the auditors reported, WHO’s procurement staff ignored guidelines that declared “it is imperative to purchase vaccines only from prequalified sources” to ensure that the medicines worked as they should, and instead bought them from non pre-qualified vendors.

Nor does WHO, according to the auditors, have “specific written guidelines” for the review of how well its vendors were performing. Perhaps as a result, WHO procurement staffers said they did not have a supplier performance evaluation system. Likewise, the auditors said, there was no system for recording “the background and other details for assessment of new suppliers who were invited to tender.”

Finally, the auditors found that WHO does not even have a process for blacklisting vendors who violated its rules, listing them only as “active” or “de-active.” Not that it apparently made much difference: during WHO’s then-current two year budget cycle, the auditors reported, the procurement unit “has not ‘de-activated’ any vendor in the system.”

Ironically enough, WHO procurement staff claimed that some of the lapses in collecting background data were supposed to be solved in the new global management system being installed by Satyam.

But when the auditors evaluated the Satyam project for “data conversion,” they discovered instead that whatever historical data WHO possessed on procurement would disappear once its old electronic purchasing system was shut down. “The loss of institutional memory of the Organization,” they concluded, “is a real risk.”

When it came to procurement, it seemed, much of WHO’s memory was of rule-breaking events.

George Russell is executive editor of FOX News.

Kim Jong-Il to reinstall ATM machines in Pyongyang

The UN’s own personal ATM for Kim Jong-il is returning to North Korea:

The U.N. Development Program (UNDP) will likely resume stalled operations in North Korea in March.

The executive board of the UNDP held its first regular session this year on Friday in which it approved the resumption of UNDP operations in North Korea.

The program’s presence in the North has been suspended since March 2007, when its staff was withdrawn following U.S. allegations of funds embezzlement by Pyongyang.

The executive boards said the final approval came after Pyongyang successfully met the four preconditions for resumption set by the program, including third-party audits.

An official at the South Korean mission to the United Nations said that if the UNDP resumes its operations in North Korea, the program will be in charge of the activities of the other UN agencies there.  [KBS Global]

For those not familiar with this scandal basically the UN staffers in Pyongyang were giving millions of dollars to North Korea for “developmental projects” in the country.  However, for whatever reason the UN staffers were allowing North Korea to deposit the money in a North Korean bank and were allowed no oversight of the bank records.  Additionally the UN staffers were not allowed to inspect the status of the “developmental projects”.  So basically this UN crew in Pyongyang was Kim Jong-il’s own personal ATM.

A US Senate probe would later find out that much of the UNDP’s money was linked to arms sales by the North Koreans.    The UN Secretary General Ban Ki-moon vowed to get to the bottom of the scandal and of course as far as I can tell no one has ever been held accountable for the fraud and the ATM is about to open for business again in North Korea.

The aftermath of this fraud was so bad that the Wall Street Journal declared this incident Ban’s first cover up.  With all his practice covering up for the North Koreans while he served under the Roh Moo-hyun adminstration in South Korea is it any surprise?

'India's Enron' Blitzes U.N. Procurement Divisions

Friday , January 23, 2009

By George Russell

What kind of special relationship has Satyam Computer Services Ltd., the Indian-based computer giant at the center of a $1 billion fraud scandal, been trying to cultivate with the United Nations?

The full extent of the company's relationship to the world body is not publicly known. But, U.N. documents obtained by FOX News strongly indicate that it continued to deepen even as Satyam slid into trouble.

The relationship is special enough, apparently, that in the days and months after the World Bank, a U.N. institution, suspended Satyam as a supplier last February for financial improprieties involving a top World Bank official, other U.N. agencies simultaneously accepted different branches of Satyam as suppliers.

The World Bank suspension, upgraded to a complete ban on Sept. 22, 2008, brought an end to a strategic partnership that had sent hundreds of millions of dollars to the Indian computer firm since 2003. But as FOX News subsequently reported, the World Bank sanctions were not conveyed by the institution to other agencies in the sprawling U.N. system.

According to internal U.N. procurement documents obtained by FOX News, no fewer than four major U.N. agencies — the United Nations Development Program (UNDP), the United Nations High Commissioner for Refugees (UNHCR), the International Labor Organization (ILO), and the World Intellectual Property Organization (WIPO) — suddenly adopted a Geneva, Switzerland-based branch of Satyam as a provisional supplier on March 3, 2008 — the same day that the company applied for acceptance.

• Click here to see the Swiss branch's registration.

The extraordinary salvo of lightning-fast U.N. acceptances, at a time when Satyam itself knew it had been suspended by the World Bank, did not end there.

Same-day approval was also given to the Swiss branch of Satyam by the U.N.'s International Fund for Agricultural Development (IFAD), based in Rome, on Aug. 6, 2008, according to the same documentation from the United Nations Global Marketplace (UNGM), a central registry of U.N. suppliers based on information from the separate agencies.

That was roughly a month before the World Bank converted its February suspension of India-based Satyam into a formal ban — a fact that the public only learned on Dec. 22, via FOX News.

And again on Oct. 3, 2008 — after the World Bank's formal ban had taken effect — yet another branch of Satyam, this time based in Parsippany, New Jersey, emitted a flood of requests to be accepted as a U.N. vendor, and got same-day approval from UNICEF.

The Parsippany branch's Oct. 3 request was also approved by IFAD, but at a more leisurely pace — on Dec. 18, 2008. That was four days before FOX News revealed the months-long World Bank suspension and ban.

A number of other U.N. agencies also received the Oct. 3 request from Satyam USA, but apparently did nothing, according to the UNGM records.

• Click here to see the Parsippany branch's registration.

What exactly was going on?

For one thing, as FOX News pointed out earlier this month {link here}, Satyam was continuing to make money from contracts with the U.N., in part because the World Bank did not make its suspension and subsequent banning of Satyam known to other U.N. agencies. One of those contracts was a $6 million service agreement with the U.N. Secretariat to customize and manage its sensitive human relations software around the world.

But the latest documentation to see daylight reveals something else — a blitzkrieg effort by Satyam to install different parts of itself in the U.N. system, even as it sank into the swamp of financial fraud and sanctions imposed by the World Bank.

The significance of at least one part of the re-registration effort seemed clear from the records examined by FOX News: each time Satyam applied for a new vendor registration, it received a new ID number, known as its "UNGM Number," in the Global Marketplace system, which allowed it to be recorded as a separate supplier.

The different registrations allowed the respective Satyam branches to remain in the Global Marketplace as separate entries alongside the original India-based main company (UNGM Number 108808).

• Click here to see the main company registration.

The Swiss-based branch of Satyam was issued UNGM Number 149527, and the Parsippaney-based branch got Number 145821.

These separate identities were maintained even though all of the different companies offered up the same Web address at UNGM — www.satyam.com — .Whether each of the distinct companies may have played some role in Satyam's final financial implosion, which may not be fully entangled by Indian investigators for months, or even years, is also not known.

The same separate identities also allowed different branches of Satyam to continue to try to offer services to the U.N. — which it was already, in some cases, doing. Among the U.N. contracts underway even after the Indian company imploded were a $6,035,000 contract to customize and manage sensitive human resources software for the U.N. Secretariat, made public by FOX News on Jan. 12.

As soon as FOX News began questioning that contract, U.N. officials began scrambling to suspend Satyam's status — but only as the existence of each separate branch of the company was made known to them by FOX News.

Thus, the Indian branch of Satyam (Number 108808) was officially suspended by the U.N. Global Marketplace, through the sites manager, known as the U.N. Office for Project Services, or UNOPS, on Jan. 14 after the FOX News article on its human relations software contract appeared.

• Click here to see the suspension announcement.

But the Parsippany and Geneva branches of Satyam were only marked as suspended on some views of the UNGM website on Jan. 22, the day after FOX News asked all of the U.N. agencies that had suddenly embraced the firm to account for its status with them.

• Click here to see the amended suspension announcement.

When it came to answering questions about their registration of Satyam and their contractual relations with the firm, the U.N. agencies offered varying and sometimes contradictory explanations.

The United Nations Development Program told FOX News that it had contracted for one year with Satyam, branch unspecified , to the tune of $1.7 million starting in December 2007, and was currently "evaluating" phase-out of the contract — apparently still in force after the one-year term had expired. (A check of other U.N. data bases revealed that most of the UNDP contracts were with a British-based branch of Satyam that did not show up in the Global Marketplace listing at all.)

Geneva-based IFAD, a relatively little-known U.N. agency that finances agricultural development in poor countries, told FOX News that it has a three-year "Long Term Agreement" with the Parsippany branch of Satyam, which went into effect last June. Such long-term agreements are typically open-ended, but in IFAD's case, a spokesman said, it has so far involved two consultancy contracts, with a value of about $100,000.

IFAD did not say what the consultancies involved, or whether the agreement would be terminated in light of the fraud charges engulfing Satyam's parent company. Nor did it explain why the Global Marketplace website only listed the Parsippany branch of Satyam as being "evaluated" as a supplier in December, 2008, months after the consultancies were contracted.

The Geneva-based United Nations High Commissioner for Refugees (UNHCR) said that it had never formally registered Satyam's Swiss branch at all, and any record of that registration on the Global Marketplace was apparently mistaken. "In Satyam Geneva's case they were never pre-qualified, approved or registered by UNHCR in our vendor database because we never received the required follow-up documents from them" a UNHCR spokesman maintained, basing his reply on answers he got from UNHCR procurement in Budapest. "The UNGM platform you read is only used by UNHCR as an entry portal for potential vendors to communicate to us their interest in being registered with us or as a platform for us to advertise tenders that are open to all."

According to a spokesman for the managers of the U.N. Global Marketplace, however, any status of the companies noted on the website only got there because the solicited U.N. entity approved. As one of them put it, each U.N. entity "manages its own set of potential suppliers in UNGM and independently approves, rejects, and suspends suppliers, which actions appear in the database via the website www.ungm.org."

And in the UNGM database, Satyam Switzerland is clearly listed as approved for UNHCR. In the case of some other agencies approached in the Swiss company's registration blitz, requests for registration are noted, but approval is not indicated.

UNHCR officials insisted, however, that "we have never entered into any contract with any of the Satyam companies, and although they may have submitted tenders in open tender procedures, they were never successful with those."

According to UNICEF, Satyam's request for registration involved nothing more than an on-line form. "Any company can list the particular services that it claims to sell, and indicate it wants to sell them to UNICEF," a spokesman for the children's fund said. "UNICEF's only role at that point is to confirm that the supplies/services in question are ones we buy. If so, the company is "registered" with the UNGM. Registration in one day is not uncommon."

A subsequent further review of Satyam within UNICEF, the spokesman added, confirmed its eligibility — "including (among other things) a review of its financials." Satyam received a stamp of approval from UNICEF's own purchasing organization on October 16, the spokesman said — an approval that was rescinded this month after revelation of the World Bank's ban. UNICEF, the spokesman emphasized, "has not done any business with them."

According to the World Intellectual Property Association (WIPO), its own vendor registration policy "does not require any pre-qualification or vetting of the companies that wish to register as potential suppliers." Companies are only thoroughly vetted when they respond to contract tenders. A WIPO spokesman said that acceptance of a company through UNGM would be "automatic."

Yet despite the fact that the Swiss branch of Satyam's acceptance at WIPO dates from March 12, 2008, the spokesman also reported that the same branch "won a WIPO open international tender in 2007 for the provision of a range of IT consulting services." The spokesman did not specify the value of the contract. That ongoing contract with Satyam had been "evaluated" since the revelations concerning the parent company's misdeeds, but only, it seemed, from the viewpoint of whether the Swiss branch might run out of money as a result of the financial scandal.

That risk, the spokesman reported, had been deemed "negligible." No other reason for a change in the supplier had apparently been contemplated.

One of the broader issues raised by the Satyam case is whether any public source of information about U.N. contracting actually reveals the true state of its dealing with companies that, as in the case of Satyam, have engaged both in financial fraud and in unacceptable financial dealings with U.N. officials.

But the same issue has been true, of course, in regard to the U.N.'s internal and non-public information systems.

Last May, for example, FOX News revealed that United Nations Development Program auditors had reported that the agency's multibillion-dollar procurement business was a shambles, rife with shoddy paperwork and faulty or non-existent bidding practices, full of unqualified personnel, and with no sure way of knowing whether its vendors even had been registered with the rest of the U.N. as maintaining terrorist ties.

The case of Satyam may well raise the issue of whether a similar audit is needed across the entire U.N. system.

UN Belatedly Suspends Indian Enron Satyam, Puts Contracts Under Assessment, No Accountability on Oracle Yet

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

UNITED NATIONS, January 14 -- The UN has belatedly suspended as a vendor Satyam, and has put under review the ongoing contracts of this so-called Indian Enron, including a $6 million deal reached long after the World Bank first suspended the company. On January 13, Inner City Press asked UN spokesperson Michele Montas to explain how Satyam got this contract, why the UN's Inter-Agency Procurement Task Force process, meant to share contractor information throughout the UN system, had failed. Ms. Montas said she was unaware of the controversy. Video here.

   Hours later, Inner City Press asked Assistant Secretary General Warren Sach about the scandal. He said that UN affiliated agencies are supposed to inform others of their suspension, by correspondence and through databases, which the World Bank appears to have failed to do.

  On January 14, the Spokesperson's Office answered Inner City Press' question-

Subj: Your question yesterday on Satyam
From: unspokesperson-donotreply [at] un.org
To: Matthew Lee [at] innercitypress.com
Sent: 1/14/2009 10:04:28 A.M. Eastern Standard Time

Satyam has been suspended from the UN Secretariat vendor database. The information has been communicated to the UN procurement system and the UN Global Marketplace. Ongoing contracts with Satyam are currently under assessment.

    An ongoing five year contract between the UN Secretariat and Satyam for over $6 million began on July 18, 2008, for "talent management software." It is time for the UN to provide further information on how this happened, what will be done and who will be held accountable.

UN's Ban and computers, Satyam not shown, even in suspension database

  In late December 2008, Inner City Press exposed that the UN purchased 30,000 licenses from Oracle to a computer program called Seibel, a so-called Customer Relations Management (CRM) system, and has left them unused.

    That contract is for $7.5 million, of which over $3 million have already been paid to Oracle. But the licenses have never been used, according to UN computer system personnel. These whistleblowers, outraged at the waste and of accountability they say is pervasive, have directed Inner City Press to the documentary evidence of the phantom contract.  In the UN's online Procurement database, the information about the Seibel purchase from Oracle is substantially less detailed than from other purchases. For other purchases, the specifications of the procurement are online, often dozens of pages. For this purchase from Oracle, there are no online specifications.

    Internal whistleblowers tell Inner City Press that worse than the mis-management that led to the purchase of 30,000 licenses well before they would or even could be used is the cover-up that has occurred afterwards. They also identify as problematic the UN's contracting with EMC Corporation to purchase licenses for a program called Documentum, ostensibly to replace the UN's Official Document System for the UN's "Enterprise Content Management" system, ECM.

The flawed contracting began under the tenure of Eduardo Blinder, who has since migrated to the even less overseen International Computing Center, to which the UN Secretariat outsources much of its work and procurement.  More recently, the person responsible for the waste is the Officer in Charge who replaced Blinder, Chandramouli Ramanathan.

  In the UN's basement, Ban Ki-moon's Secretariat's CRM and ECM are being considered for the UN's Fifth (Budgetary) Committee. But the Committee members have never been informed of the waste that has occurred.  Nor has the Office of Internal Oversight Services, embroiled in its own scandal, done anything.

  In a draft of the pending resolution provided to Inner City Press by a budget committee source, the Secretary-General is criticized for proceeding with CRM and ECM before making any proposal to the General Assembly. 

  Inner City Press has asked Ban's spokesperson Michele Montas about this critique from the General Assembly. Video here. Ms. Montas said she would have no comment at all until after the Assembly vote on the resolution which she said might not take place until Christmas Eve.  But there has still been no comment. Watch this site.

SATYAM: New procurement scandal shows scale of U.N.D.P problems

FoxNews yesterday brought into daylight another UNDP procurement scandal.

Procurement and the U.N. have often made for uncomfortable bedfellows, but when the organisation trumpeted its reform of a system that had come under increasing scrutiny in recent years, it finally seemed that the days of scandal were at an end….or so we thought.

Now, an investigation by FOX News has revealed that a firm that was suspended from the World Bank list of authorised vendors in February 2008, still received over $4m from the United Nations Development Programme (UNDP).

The reason? Well, according to UNDP officials, as they are a legally separate U.N. agency they are not bound to honour the World Bank - Procurement Service sanctions (sounds familiar).

The irony – not lost on those unforgiving souls at FOX – is that the UNDP is the premier agency through which the U.N. operates in most of the 160 countries it currently services, and is a leading figure in the program known (rather unfortunately given the current circumstances) as “One U.N” – a scheme designed to rationalise the delivery and efficiency of U.N. services across the globe.

Satyam, currently called "Indian Enron" - an IT outsourcing is the company who dealt with World Bank (WB) and other UN agencies, were dropped by World Bank after being involved in a high profile corruption scandal with Bank Officials.

However, documents obtained by FOX suggest that the ink was barely dry on the order to remove it from its list of vendors at World Bank than the UNDP was considering using the company to fulfil an order or "reviewing, removing and storing its HQ's- IT internal records".

The news is likely to come as a devastating blow to the U.N. and U.N.D.P., but clearly illustrates the procurement challenges facing such a vast organisations. This leopard, it seems, will need more time to convince a sceptical public that it has changed its spots.

The U.N.: Satyam's Spreading Stain

Monday , January 12, 2009

By George Russell

The World Bank, a cornerstone of the United Nations' global anti-poverty effort, failed to tell the rest of the world organization that it had banned now-imploding Satyam Computer Services last February from further business following a corruption probe — and thus allowed the U.N. to enter into a $6 million deal for technology services with Satyam as recently as this July, FOX News has learned.

U.N. officials were still silent in the wake of questions sent to them by FOX News last week about the $6 million deal between the U.N. Secretariat and Satyam Computer Services, the Indian communications technology company that is embroiled in the largest financial fraud in that country's history.

Details of the contentious contract, reference number PD/C0102/08, are prominently displayed on a U.N. Procurement Department website, commonly accessed by procurement officials from across the U.N. system.

• Click here to see the contract award announcement.

The contract award notice proclaims that Satyam was hired effective July 18, 2008, through July 13, 2013, to work on "E/Staffing/Talent Management Software, Implementation and Training Services" — all within the sensitive U.N. human resources management system.

What made the contract a shock was that it came into force five months after the World Bank — the world's largest anti-poverty lender and a key member of the U.N. system — banned Satyam as a supplier for eight years, after a three-year investigation revealed extensive improper financial dealings with a top World Bank official. The investigation was one of the most extensive in the bank's history. The official involved, chief information officer Mohamed Muhsin, was escorted from the building in 2005 before his scheduled retirement, and permanently banned from the World Bank in 2007.

At the time of the investigation and banning, Satyam had been declared a "strategic partner" with the World Bank in all of its information processing activities, and had received hundreds of millions of dollars in World Bank business since the partnership was announced in 2002.

In fact, the World Bank has only been grudgingly and partially forthcoming to anyone about Satyam. In the wake of FOX News stories in October through December that revealed the improprieties scandal and the Satyam ban, the World Bank admitted late last week to the Wall Street Journal that it kept Satyam's eight-year punishment a secret from the general public.

Click here to see the FOX News story about the debarment.

Late Sunday, the Bank suddenly put on its website announcements of Satyam's banning, along with two other software companies that were banned in 2007 for improper activities. That sudden spate of World Bank transparency came after FOX News on Jan. 5 sent a variety of questions about the recent U.N. human resources contract to senior U.N. officials, who acknowledged their receipt. Despite promises to respond, the questions had not been answered before this article was published. Questions forwarded on Jan. 8 to World Bank spokesman Carl Hanlon were not even acknowledged.

But FOX News' examination of the latest $6 million deal has revealed that the institution kept its sanctions against Satyam and the other banned firms secret from the rest of the United Nations. That secrecy came even though the Bank and more than a score of U.N. organizations supposedly keep each other informed of their dealings through a variety of unified procurement sites, and have pledged to free their multibillion dollar supplier systems from scandals that have dogged the U.N.procurement system, in particular, since 2005.

The World Bank and other U.N. institutions have another place to inform each other of important anti-corruption decisions like the Satyam ban. They all sit together on a 28-member committee known as the U.N. Inter-Agency Procurement Working Group. According to a mission statement for IAPWG, adopted in 2006, the group exists "in order to promote the strategic importance of Procurement and Supply Chain Management in program and service delivery in a transparent and accountable manner." It also aims to further "the efficiency and effectiveness of the procurement function within the UN System, through ... collaborative procurement arrangements, simplification and harmonization of procurement practices, and by fostering professionalism amongst staff that are responsible for procurement."

Click here to see the working group's membership.

To discover whether the World Bank had informed the IAPWG of its actions against Satyam, FOX News queried yet another U.N. organization, the United Nations Development Program, one of whose officials has been named as the working group secretary. A reply from a UNDP spokesman disclaimed responsibility for managing the talking shop, but underlined that UNDP itself only learned initially about the World Bank sanctions against Satyam from "media reports."

UNDP says it thereafter "proactively" approached both the World Bank and Satyam about those reports, and "as a result of these conversations, UNDP took a decision not to renew a one-year service contract with the organization, signed in December 2007. UNDP has since begun "to evaluate the phase-out while minimizing the risks to our information systems," the spokesman added. "UNDP currently has 11 Satyam technical consultants working on its information systems."

"It is worth noting," the spokesman added, "that UNDP's review of the published World Bank list of barred vendors did not turn up Satyam's name, in spite of such references in the media to Satyam having been debarred."

FOX News asked U.N. procurement officials whether it had specifically queried the World Bank or other U.N. institutions about any blemish on Satyam's record, as part of its due diligence before awarding the most recent Satyam contract. To date, FOX News has received no reply.

FOX News also asked the World Bank whether it had received such a request for information from any U.N. procurement officials and added an additional question: whether the World Bank would expect any other U.N. organization to reply if the World Bank itself sought information on a prospective supplier. To date, receipt of those questions has not been acknowledged.

Now that the Satyam scandal has expanded into a $1 billion fraud and the arrest of its top officials in India, the World Bank's decision to keep the rest of the U.N. in the dark about its sanctions against Satyam raise many more questions.

Among them: how many other parts of the U.N.'s far-flung and decentralized network of institutions have made deals with Satyam, and how many have deals still in place? What jobs do Satyam contract employees fill in the rest of the U.N. system?

Most intriguingly: were the financial improprieties Satyam committed at the World Bank — which involved providing preferential shares to a top official who was instrumental in making the firm a strategic partner of the bank — repeated anywhere else in the U.N. system?

And above all, to what extent does the World Bank-Satyam case reveal that the U.N.'s scandal-ridden procurement system — which spends billions annually — is still badly broken, and the will to clean it up remains unfocussed at best?

That question has been raised frequently about the U.N. since the notorious Oil for Food scandal of 2004 and again in 2005, after FOX News revealed a variety of corruption schemes by Alexander Yakovlev, a Russian senior employee in the U.N.'s multibillion-dollar procurement system — the same system where Satyam's current $6 million contract also remains. U.N. investigators subsequently described the procurement system as wrapped in "systematic abuse," "a pattern of corrupt practises" and a "culture of impunity."

In the wake of those scandals, the U.N. has repeatedly promised to implement reforms, including formation of a special procurement task force to root out corruption. But that task force expired at the end of 2008, when the U.N. General Assembly, under pressure from Russia, among other nations, starved the task force of funds.

By that time, the U.N. had already demonstrated that sanctions against corrupt practices in one part of the U.N. system didn't translate into similar actions in other parts.

In January 2007, FOX News revealed that within a month after the U.N. Procurement Department banned an Italian firm, Corimec S.A., from its vendor lists, the United Nations Development Program gave the same firm a $2.1 million contract for emergency housing kits. The reason: UNDP officials declared that as a legally separate U.N. agency, they were not bound to honor the procurement service sanction. (Corimec has since been rehabilitated as a U.N. vendor, after installing an anti-corruption compliance program.)

At least back then, however, the U.N. Secretariat was giving public lip service to the anti-corruption drive. At the time that FOX News published its report on Corimec, the main overall U.N. procurement website, known as the U.N. Global Marketplace, proclaimed on its home page that "United Nations agencies participating in the U.N. Global Marketplace strictly enforce a policy of zero tolerance concerning unethical, unprofessional or fraudulent acts of UN contractors. Accordingly, any registered company that is found to have undertaken unethical, unprofessional or fraudulent activities will be suspended or forbidden from continuing business relations with the United Nations."

When FOX News inspected the U.N. Global Marketplace site prior to publishing this article, that statement no longer appeared on the website's home page.

George Russell is executive editor of FOX News.

US Media report on UNDP Corruption in Procurement Office (Krishan Batra Chief Corruption Officer for UNDP continue in his job)

UN Board of Auditors confirm that Krishan Batra of UNDP Procurement issued contracts to individuals and entities in the terrorist list of the UN

Security Council resolution 1267 (1999)

233. The committee established pursuant to paragraph 6 of Security Council resolution 1267 (1999) oversees the implementation by Member States of the sanctions imposed by the Security Council on individuals and entities belonging or
related to prohibited organizations, and maintains a list of individuals and entities in that respect.

234. The UNDP Contract Asset and Procurement Management User Guide (sect. E, 4.0) requires all procurement officials to verify entities with which business is conducted “against the United Nations Security Council 1267 Committee’s list of
terrorists and terrorist financiers”.

235. The Board noted during its audit visits to country offices that no controls were in place to ascertain compliance with Security Council resolution 1267 (1999) and the requirements of the UNDP Contract Asset and Procurement Management User
Guide prior to the appointment of suppliers.

236. The Board recommends that UNDP, prior to dealing with prospective vendors, ensure that they are not listed on the Security Council list of prohibited suppliers.

Another UNDP Procurement fiasco at Malawi electoral body

Massive procurement fiasco is bedeviling the Malawi Electorate Commission (MEC) which prompted  UNDP to suspend further disbursement of funds to the electoral body under the US$28 million "Support to Electoral Reform and Elections in Malawi Programme", Nyasa Times has gathered.

Under the agreement which was signed in May 2008 between the Government of Malawi, MEC and UNDP focusing on strengthening management and technical capacity of MEC to conduct credible elections on 19th May 2009, the $28 million through the MEC Trust Fund comprises $14 million from donors (DfID-UK, EU, GTZ-Germany, Irish Aid, Norway, USAID) $1 million from UNDP and $13 million from Government of Malawi. 

UNDP conducted as assessment of MEC's capacity in the areas of financial accountability and procurement systems with a view to determining both the cash transfer modality and the scope of support needed if MEC was to be able to meet both its immediate and longer term responsibilities.

MEC was rated as "significant risk" in terms of its previous record in misappropriating donor funds. As a result, it was agreed that UNDP would use the direct payment modality - i.e. that MEC's contractors and suppliers are paid directly by UNDP.

The procurement saga in question relates to the procurement of election materials in particular the purchase of voter registration equipment like cameras, transformers and other gadgets which are now breaking down and threatening to impact negatively on the preparation for the 2009 general elections.

Nyasa Times understands that the tender of $75,000 was fraudulently awarded to an Australian company through the influence of Frank Vassallo, the Chief Elections Consultant at MEC, who is himself an Australian.

“There is strong evidence linking Vassallo to this bogus company which was specifically formed in readiness for this tender. In fact one of the companies that bid for the tender lodged a formal complaint regarding the fact that the Australian company lacked a track record in the supply of registration equipment but this was ignored by the Commissioners through the advice of Vassallo who is himself an interested party,” said a source in the Commission. 

The Commissioner told Nyasa Times that the cameras, transformers and other voter registration technology that were supplied are “very cheap” and “of very poor quality”.

“Indeed from day one the equipment has been constantly breaking down because they are not robust enough to withstand the continuous use in harsh conditions,” the source pointed out.

MEC insiders said Vassallo has naturally blamed the breakdown of the equipment to "stupid" Malawian camera operators who cannot handle new technology because of their poor technical background.

However, Nyasa Times check at registration centers indicated that Camera Operators are technically qualified individuals.   

The Commissioner also took a dig Vassallo saying he is not qualified to hold the position of Chief Elections Consultant and made available his CV to Nyasa Times where it indicated has a secondary school certificate.

Vassallo previously worked as a mere clerk for the Australian Elections Commission where he rose to the position of senior clerk. He was dismissed from the Electoral Commission of Zambia last year where he was working prior to joining MEC because of non performance.

“In readiness for the procurement scam Frank Vassallo engineered to have the Stores section transferred under him and also recommended the dismissal of Edward Jeke MEC's Procurement Manager to be replaced by Philip Mwangobole the Procurement Consultant who in reality is just a novice in procurement matters but is Vassalo's right hand man to facilitate fraudulent procurement practices,” informed the sources in MEC.

MEC's committee on Finance and Administration headed by Ronald Nkomba vetoed the decision to have Mwangobole appointed as MEC's Procurement Manager because he lacks qualification and experience while Jeke has a Masters degree in Economics and is a Fellow of the Institute of Purchasing & Supplies (UK) with over 20 years experience.

“Vassallo has also influence the transfer of the Warehouse Section from Procurement, which is now being run by Max Campos the Election Logistics Consultant who is bogus and without the required qualifications and experience.” 

Campos operates from Lilongwe under Vassallo's instructions instead of Blantyre where the MEC headquarters is located and where all other consultants are operating.

“The truth of the matter is that the logistics of the registration exercise has been ably handled by the hardworking Harris Potani the recently promoted Deputy Chief Elections Officer and Henzily Munkhondya, the Southern Region Elections Officer,” pointed out the Commissioner.

He accused Vassallo for trying to “scuttle” the Finance Department by recommending the removal of Anderson Msonthi the Head of Finance to be replaced by McCarthy Phiri the Financial Consultant.

“It is no secret that both Jeke and Msonthi are on Vassalo's hate list because they have put a stop to his underhand and deceitful tactics,” noted the source.

“Vassallo is greatly feared and abhorred by all the MEC staff except a few bootlickers like Tenyson Singini and Kingsley Rudi whom he has promoted and positioned in critical areas within the Electoral Services department with express instructions to spy for him.”

 MEC spokesperson Fergus Lipega could not immediately comment.