UNDP BRATISLAVA: Cheque Fraud Investigation

THANKS TO WIKILEAKS.ORG

This report is protected under the provisions of paragraph 18 of ST/SGB/273 of 7 September 1994

STRICTLY CONFIDENTIAL

OFFICE OF INTERNAL OVERSIGHT SERVICES INVESTIGATIONS DIVISION

REDACTED REPORT OF INVESTIGATION

ID CASE NO. 0580/03

23 May 2005

I. INTRODUCTION

1. This report deals with a case of cheque fraud which was investigated by the Investigations Division of the Office of Internal Oversight Services (ID/OIOS) between October 2003 and March 2005.

2. The United Nations Office in Nairobi (UNON) reported to ID/OIOS that the United Nations Development Programme (UNDP) in Bratislava, Slovakia had made payments to an individual based on falsified documents for a total of US$10,079. Although the investigation did not establish who perpetrated the fraud, it was able to establish how the fraud was committed. The investigation also examined certain aspects of the control systems found within the finance office, UNDP Bratislava, where the fraud occurred.

3. This report provides a description of the evidence collected by the ID/OIOS Investigators, the findings, and makes a number of recommendations to assist management in preventing this type of fraud.

II. ISSUES

4. Can the fraudulently induced payments be recouped?

5. Was this fraud facilitated by a United Nations staff member and, if so, can that individual be identified?

III. APPLICABLE LAW

6. Staff Rule 101.2(g) Staff members shall not intentionally alter, destroy, misplace or render useless any official document, record or file entrusted to them by virtue of their functions, which document, record or file is intended to be kept as part of the records of the Organization.

7. Staff Regulation 1.2 (b): Staff members shall uphold the highest standards of efficiency, competence and integrity.

8. Staff Regulation 1.2 (g): Staff members shall not use their office or knowledge gained from their official functions for private gain, financial or otherwise, or for the private gain of any third party, including family, friends and those that they favour.

9. Staff Regulation 1.2 (i) Staff members shall exercise the utmost discretion with regard to all matters of official business. They shall not communicate to any Government, entity, person or any other source any information known to them by reason of their official position that they know or ought to have known has not been made public . . .

10. Fraud under Slovakian Criminal Code, 1961: Article 250, from Act 140 of the 1961 Slovakian Criminal Code whereby - “any person who does harm to the property of others or enriches himself....... and causes harm or damage is guilty of fraud”

IV. BACKGROUND

11. Per agreements between UNDP, UNHQ and UNON, UNDP country offices provide a range of administrative services, including cash disbursements, related to programme implementation for United Nations agencies. The UNDP country offices record the layout of funds on Inter Office Vouchers (IOV) and bill the various agencies for these services on a monthly basis by preparing a Report AT 036 for each agency, which has appended to it copies of all IOVs for that agency for the month. The original AT 036 report and its attachments are sent to UNDP HQ New York by diplomatic pouch and a copy is sent to the agency. Report AT 036 is thereafter filed in the UNDP country finance files. In UNDP Bratislava, copies are not kept of the attachments and the Report AT 036 does not enumerate them. This office processes about 25 cash disbursements a month.

12. In October 2003, UNON Finance was reconciling its accounts with UNDP Bratislava and noted there was an outstanding IOV from August 2002. UNON Finance could not locate the August 2002 Report AT 036 or its attachments. It requested these materials from UNDP Bratislava and determined that there were two cash disbursement vouchers which could not be reconciled: two lump sum payments to The Consultant, in the amounts of US$5,814 and US$4,265, for travel to Johannesburg and Monrovia to attend Ozone Secretariat conferences in August 2002 and September 2002 respectively.

13. UNON finance determined that these two vouchers were based on a genuine travel request authorization which had been sent from UNON to the UNDP Bratislava office on 25 June 2002. The two travel requests of The Consultant changed certain details of the genuine fax, including the name of the payee, the date, comments and the UNON fax number which is unique to each UNON fax and is assigned in the UNON cable room, but retained, amongst other items, the names and signatures of the authorizing officers, and the Travel Request number, which is specific to each request.

14. UNON finance concluded that the faxes which instructed UNDP Bratislava to make these payments were forged. Furthermore, UNEP confirmed that there were no meetings in Johannesburg and Monrovia in 2002, that The Consultant was not UNEP’s consultant, and that payment of lump sums to consultants for travel was irregular in any event.

V. INVESTIGATIVE DETAILS

15. ID/OIOS learned that the genuine and the forged faxes were received by the registry clerk of the UNDP Bratislava registry office and, in the normal course of business, forwarded by email to The Finance Department Supervisor, and to Finance Assistant 1. The Finance Department Supervisor then forwarded the genuine fax to the travel department for processing, but neither The Finance Department Supervisor nor Finance Assistant 1 forwarded the forged faxes elsewhere.

16. Finance Assistant 1 then emailed “The Consultant” on both occasions to notify him of the authorization of payment and he and “The Consultant” exchanged emails to arrange the time and means of his collection of the payment. On both occasions “The Consultant” presented himself at the UNDP office. On one occasion, he logged in with his signature and identification number, but there was no sign-in record the other time. “The Consultant” met with someone from the finance department, probably Finance Assistant 1, although Finance Assistant 1 has no recollection of meeting him. In keeping with accepted practice within UNDP Bratislava and Slovakia as a whole, whoever met with “The Consultant” had him write his name and identity details on the back of the respective checks. However, UNDP Bratislava does not keep an independent copy of such information. “The Consultant” also signed a cash disbursement form and subsequently cashed both checks.

17. ID/OIOS obtained copies of the checks from the bank and acquired the identity details from the back of the check. ID/OIOS consulted with the Slovakian police and found that neither “The Consultant” nor his company were in their databases and the police concluded that the identity materials provided by him when he picked up the checks were likely to be false. ID/OIOS also found that the email account used by “The Consultant” to arrange collection of the cheques at UNDP Bratislava had been discontinued.

18. ID/OIOS examined copies of the forged faxes which had been retained in the UNDP Bratislava registry database. These copies had a header with UNON’s sender details, but unlike the UNDP Bratislava hard copies in the finance files and those which had been forwarded to UNON in October 2003, the registry copies also had a footer which reflected that they had actually been sent from a store which provides fax services in a shopping centre near the UNDP Bratislava office.

19. Finance Assistant 1 claimed he had not noticed the footer on them. When ID/OIOS asked why the photocopies of the forged faxes in the UNDP finance file did not have the footer, he disclaimed responsibility for the photocopying.

20. At the time of these incidents, two photocopying assistants had been working on an ad hoc basis at the finance office and had access to departmental files. Photocopying Assistant 1 was a relative of The Finance Department Supervisor, and Photocopying Assistant 2, was the daughter of Finance Assistant 2. Photocopying Assistant 2 assisted her father periodically without pay. OIOS was informed that the two assistants helped in the preparation of the end of month financial returns, which included retrieving documents from various files, copying them and returning them to the files. Photocopying Assistant 1 was working at the finance office at the relevant time period, but it has not been fully established when Photocopying Assistant 2 worked at the office. No timesheets were kept for either assistant.

21. Review of procedures at UNON, UNEP Narobi and UNDP Bratislava in connection with payments of this sort showed that

• UNDP Bratislava relies on the authorizing signatures on the faxes and does not verify their authenticity with the agency;

• UNDP Bratislava maintains a sign-in sheet which requires a signature and identity information, but it was kept haphazardly at the time of these incidents;

• UNDP Bratislava disperses cheques upon proof of identity, which is recorded on the back of the cheque, and the payee signs the original cash disbursement voucher upon receipt of the cheque, but the finance office does not retain a copy of the payee’s proof of identification;

• UNDP Bratislava does not maintain a mail log;

• While procedures for reconciling accounts between UNON and UNDP were in place, UNON did not attempt to reconcile the August 2002 UNDP Bratislava account for more than a year after it was purportedly submitted; and

• UNEP Narobi stated that it has had several problems with fraudulent payments by UNDP offices.

VI. FINDINGS

Issue One: Can the fraudulently induced payments be recovered from The Consultant? 22. ID/OIOS, with the assistance of the Slovakia police, has not been able to ascertain the identity of “The Consultant.” However, “The Consultant,” if identified and found, would be subject to prosecution under the Slovakian penal code.

Issue Two: Was this fraud facilitated by a United Nations staff member and, if so, can that individual be identified?

23. ID/OIOS has established that the genuine UNON fax number was photocopied and altered to produce The Consultant’s fax requests. It has also established that the forged faxes were transmitted locally, which suggests that this fraud was carried out in Slovakia.

24. Whoever forged the faxes had to have access to the genuine fax and knowledge of the format and function of the travel requests and the procedures used in processing these requests.

25. The fact that UNON finance did not receive the Report AT 036 and the appended IOV although the cover letter to UNON was filed at UNDP Bratislava, suggests that someone with knowledge and access manipulated the system to delay discovery of the fraud. Furthermore, the photocopies of the forged faxes which were filed with the Report AT 036 were copied without the identifying footer, which also suggests an intent to delay discovery of the fraud.

26. Consequently, it is highly probable that this fraud was facilitated by a UNDP Bratislava staff member, probably in the finance department, but ID/OIOS Investigators were not able to determine who was responsible.

27. If a staff member is found to have facilitated this fraud, he could be charged with violation of Staff Rule 101.2(g), Staff Regulation 1.2(b), (g) and (i), and would be subject to prosecution under the Slovakian penal code.

VII. RECOMMENDATIONS

28. In the light of the preceding findings and conclusions, OIOS makes the following recommendations:

Recommendation 1: It is recommended that UNDP revise the system in place for verification and payment of travel authorization requests to enhance and safeguard procedures and prevent fraud. (Rec. No. IV/03/580/01)

Recommendation 2: It is recommended that UNDP Bratislava retain copies of identification provided by payees to assist in later identity check requirements. (Rec. No. IV/03/580/02)

Recommendation 3: It is recommended that UNDP Bratislava avoid nepotism and maintain proper records time and pay records for part time employees. (Rec. No. IV/03/580/03)

Recommendation 4: It is recommended that all Agencies utilizing the services of UNDP use the Atlas electronic payment and financial accounts system which checks the authenticity of an authorization and creates an electronic log of events. (Rec. No. IV/03/580/04)

Recommendation 5: It is recommended that the United Nations establish a secure intranet website for travel claims which would permit authorization levels for receiving and making payments, and offer a built in electronic audit tracking facility. (Rec. No. IV/03/580/05)

Recommendation 6: It is recommended that UNDP request the Slovakian Police to investigate this matter. (Rec. No. IV/03/580/06)

United Nations Joint Inspection Unit (Oversight Body) Releases Report Evaluating Ethics in the UN System

by Shelley Walden on June 09, 2010 ( The Whistleblogger / 2010 )

The United Nations (UN) Joint Inspection Unit (JIU) – an independent oversight body of the UN mandated to conduct evaluations and investigations system-wide – has just released an insightful report on “Ethics in the United Nations System.” JIU found that:

There was a strongly held perception throughout the United Nations System of a pervasive culture of secrecy in the decision-making processes of the organizations and little or no accountability. Against this background, there was little staff buy-in to the ethics function, which was viewed merely as a management device that did nothing to address the underlying problems. Without staff confidence and staff involvement, however, the ethics function will struggle to make an impact. It is of paramount importance, therefore, that the ethics function operates independently of management. (p. 11, emphasis added)

GAP predicted this problem in 2007, when UN Secretary-General Ban Ki-moon issued a bulletin that fractured the jurisdiction of a single system-wide ethics office – which was responsible for applying a uniform set of standards – with proliferating ad hoc internal ethics offices and whistleblower protection polices. The JIU report explains some of the problems with the ethics system created by this bulletin and suggests solutions. But although the JIU makes some constructive recommendations, it fails to issue the one that would do the most to remedy the problem: create one ethics office and whistleblower protection policy for the whole UN system.

The JIU does make recommendations that would move the UN system in this direction. For example, the report recommends that organizations that are too small to establish separate ethics offices create a joint or shared ethics office. Also, the JIU recommends that standards for whistleblower policies be harmonized across the UN system. GAP agrees, but would add that these policies should be rewritten to, at a minimum, meet the standards set out in the original UN Secretariat policy. As they now stand, many of these policies fall far short of the Secretariat’s SGB/2005/21.

Other key recommendations from the report include that:

• “To ensure that only the best professional are appointed to head the ethics function in United Nations system organizations, there should be competitive recruitment open to both internal and external candidates on an equal basis.” (p. iv) Also, the executive heads should ensure that “the vacancy announcement for the appointment of the head of the ethics office in their respective organizations is prepared in full consultation with the staff representatives” and that “a staff representative serves on the appointment board for the selection of the head of the ethics office.” (p. 10)

Moreover, the JIU discouraged

“the practice of appointing staff members who are close to retirement to head the ethics function, as has been the case in several organizations. While these individuals may bring valuable organization-specific knowledge to the post, they are unlikely to have the required experience in ethics. A direct internal appointment by the executive head outside of normal recruitment processes is also problematic. These have been major concerns among the staff in the organizations…” (para. 40)

Although these recommendations appear to be a step in the right direction, they do not ensure that staff representatives’ “deep mistrust concerning the recruitment and selection of the heads of ethics office” (para. 43) will be addressed. To ensure impartiality and staff buy-in, the executive head should be required to obtain the “consent” of the staff union before making this appointment, rather than just “consult” with unnamed “staff representatives.”

• “In cases where a prima facie case of retaliation or threat of retaliation has been found by the organization’s ethics office and the internal oversight office declines to undertake the investigation, the executive head, or the head of the ethics office, should refer the matter to the Joint Inspection Unit for investigation.” (p. v)

This recommendation could result in more whistleblower retaliation complaints being investigated. It could also result in more independent investigations, as the JIU does not report to the head of the respective agency, fund or programme, the way an internal investigative unit would.

• “Legislative bodies should direct their respective executive heads to ensure that the head of the ethics office submits an annual report, or a summary thereof, unchanged by the executive head, directly to the legislative body, together with any comments of the executive head thereon.” JIU also recommended that the head of the ethics office have “informal access to the legislative bodies which is enshrined in writing.” (p. vi)

These are excellent suggestions that will lead to increased oversight and independence of the ethics offices.

• “Legislative bodies should direct their respective executive heads to put forward proposals for an internal mechanism to be established that would set out the modalities for the ethics office and/or the internal oversight service to investigate or undertake reviews of allegations brought against the executive head of the organization, including reporting the outcome of the investigation or review directly to the respective legislative body.” (p. 21)

This recommendation was made because:

“Recent high-profile cases that have been widely publicized have shown that executive heads can and do act with impunity in the absence of effective internal mechanisms to investigate allegations of wrongdoing against them. While the JIU has the mandate to receive and investigate allegations against executive heads, it is more likely that the alleged wrongdoing will be reported to an internal entity in the first instance, such as the ethics office or internal oversight service. As these entities report directly to the executive heads, and have only limited or no access to the legislative bodies, their independence to carry out an investigation or a review of the alleged wrongdoing, be it non-compliance with financial disclosure, fraud, etc., is seriously circumscribed.” (para. 85, emphasis added)

A good example of an Intergovernmental Organization (IGO) executive head acting with impunity is former World Bank President Paul Wolfowitz. Similarly, in 2008 misconduct allegations were brought against the International Monetary Fund (IMF) Managing Director. (p. 15-16) There are also numerous other cases in which high ranking officials have acted with impunity, such as Peter Smith, the highest-ranking US official at the United Nations Educational, Scientific and Cultural Organization (UNESCO).

Although the JIU is right to suggest that there be mechanisms in place to investigate allegations brought against the executive head of the organization, it would have been better for the JIU to suggest that 1) it maintain its authority to investigate such allegations or, 2) that one independent body be established to investigate any complaints made against the head of any UN organization. The JIU suggestion that executive heads put forward proposals for how they would have their own misconduct evaluated is especially problematic This is like having a suspected criminal select his own police officer and jury.

But enough with the recommendations; let’s get to naming and shaming. According to the JIU, the following organizations are failing to deliver an adequate ethics function:

• The International Civil Aviation Organization (ICAO), the International Maritime Organization (IMO), the World Intellectual Property Organization (WIPO) and the United Nations World Tourism Organization (UNWTO), which have all failed to establish an ethics function.
• The World Meteorological Organization (WMO), which supposedly shares an ethics office function with the Universal Postal Union (UPU), but failed to fund it in 2010-2011.
• The International Labour Organization (ILO) and the International Atomic Energy Agency (IAEA), which both have funding levels that are “minimal in relation to the size of these organizations.”
• The specialized agencies and IAEA, where “whistleblower protection policies are largely absent, or only just being developed.”

According to the JIU, the ILO – the global body responsible for drawing up and overseeing international labor standards – has a particularly inadequate ethics function, as the ILO legal advisor is responsible for this function. Similarly, at the IAEA, human resources management serves in the ethics role, which is a serious conflict of interest, as retaliation often takes the form of an adverse administrative action approved by the human resources department. According to the JIU, these deficient arrangements are surpassed only by the World Health Organization (WHO), which failed “to create any kind of ethics post at all, in spite of the considerable size of the organization.” (para. 37)

So at ILO and IAEA, the fox guards the henhouse, whereas at WHO there is no guard at all. This is bad news for whistleblowers, who will inevitably be swallowed up whole.

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Shelley Walden is International Officer at the Government Accountability Project, the nation's leadingwhistleblower advocacy organization.

MDTF fails to provide access and reporting to Donors on use of their funds in Myanmar, Iran and DPR Korea

The question is:

CAN ANDREW MITCHELL HELD UNITED NATIONS ACCOUNTABLE ?

HOW SERIOUS IS HE?

In accordance with the UN rules and MoU on Multi Donor Trust Funds (MDTFs) and Joint Programmes (JPs), signed between various UN Agencies, Donors and MDTF Office (Bisrat Aklilu is Exec Coordinator), each programme approved and funded by the MDTFs and JPs was required to provide annual narrative and financial progress reports.

The problem is that UNDP does not want the world and most importantly the tax-payers from Donor Countries to know exactly where their money are being spent in countries like North Korea (DPR Korea), Myanmar, Iran and Zimbabwe.

Everyone that wants to go to MDTF's Web Site, would find it impossible to access any information about these countries. Click here to visit their website: http://mdtf.undp.org.

UNDP has promised that would provide "full transparency over use of programes and projects" and that would have instructed all its Country Offices to post in their respective websites detailed informations about their projects/programmes expenditures.(Ad Melkert's Letter to Amb. Mark Wallace of USUN)

Meanwhile the UNDG Protocol on MDTF Reporting promised the following:

1. Each Participating UN Organization will provide the AA with the statements and reports prepared in accordance with its accounting and reporting procedures, as set forth in the MOU and SAA of the particular MDTF /JP/ One UN Fund.

2. The AA will in turn provide the donors and the Steering Committee (in the case of One UN Funds, the AA will provide to the Resident Coordinator who will provide them to the donors and the Steering Committee) with the consolidated statements and reports, based on submissions received from each Participating UN Organization prepared in accordance with the schedule set forth in the applicable MOU and/or SAA of the particular MDTF/JP/ One UN Fund.

3. This consolidation of reports by the AA will comprise of a synthesis of the individual reports submitted by each of the Participating UN Organizations along a format agreed upon with the Participating UN Organizations (and Resident Coordinators in case of One UN Funds) and donors. The AA’s Progress Report consolidation will be exclusively based on information and data contained in the individual progress reports and financial statements submitted by Participating UN Organizations and does not constitute an evaluation of the MDTF/JP/ One UN Fund nor the performance of the Participating UN Organizations. The AA will submit the report it has consolidated to the Participating UN Organizations and the Steering Committee (Resident Coordinator for One UN Funds) for review and approval before submitting it to donors.

4. Since donors reserve the right to discontinue future contributions to MDTFs/JPs/ One UN Funds if reporting obligations are not met as per the signed SAA, the AA will notify the Steering Committee and work to ensure that delays in the submissions of narrative and financial reports by a Participating UN Organization will not jeopardize the integrity and future activities of the MDTF/JP/ One UN Fund. In case an agency consistently does not meet its reporting obligations, the specific case should be brought by the AA or the UN Chair/ Co-chair of the Steering Committee to the ASG group (Advisory Group of UNDG) for resolution.

Seem that once again UNDP is trying to hide from the public how they spend their 15 Billion Dollars every year.

Maybe Andrew Mitchell of United Kingdom should start his inquiry on how British Tax Payers money is spent with UNDP's MDTF...

'A million aid watchdogs' promised

Key steps are said to have been taken in the creation of a new independent aid watchdog, International Development Secretary Andrew Mitchell has said.

He has also announced the UKaid Transparency Guarantee that will ensure 'full information' on spending will be published on the Department for International Development website.

DfID is one of only three government departments to be exempt from recent Treasury enforced cuts.

The government argues that overseas aid is morally right, but it also acknowledges that taxpayers deserve evidence that their money is spent effectively.

Mitchell said: "We need a fundamental change of direction – we need to focus on results and outcomes, not just inputs. Aid spending decisions should be made on the basis of evidence, not guesswork. That is why we have taken the first steps towards creating a new independent aid watchdog.

"The UK Aid Transparency Guarantee will also help to create a million independent aid watchdogs – people around the world who can see where aid money is supposed to be going – and shout if it doesn't get there."

He also defended investment in international development:

"Development is good for our economy, our safety, our health, our future. It is, quite simply, tremendous value for money: the best return on investment that you'll find anywhere in government.

"British aid pays for five million children in developing countries to go to primary school every day. That's roughly the same number as go to primary school in Britain yet it costs only 2.5 per cent of what we spend here. That's real value for money."

ActionAid welcomes new transparency for UK aid

Reuters and AlertNet are not responsible for the content of this article or for any external internet sites. The views expressed are the author's alone.

The new Development Secretary Andrew Mitchell has announced full transparency for British government aid, with all spending by the Department for International Development to be published on its website.

Mr Mitchell said that whilst giving aid was morally right and in Britain’s national interest, British taxpayers needed to see where the money was going and that it was being well spent.

In response, ActionAid UK Executive Director Richard Miller said:

“ActionAid has long campaigned for citizens in poor countries to have information about aid provided in their name. We are therefore delighted with the Secretary of State’s announcement of increased transparency in aid spending.
"It will hopefully establish a new standard of openness and encourage scrutiny by citizens in countries receiving UK aid, as well as assuring UK taxpayers that aid is reaching the poorest."

Politicize aid? It already is – and good too

DANIEL KORSKI

On Thursday, Andrew Mitchell rolled out the government’s first overseas aid initiative – a transparency watchdog – and took to the airwaves to explain the idea. It makes particular sense in a downturn to ensure that taxpayer’s money is well spent but also to give voters the feeling that independent assessments are carried out to guarantee value for their money.

On Newsnight, the International Development Secretary ran into a criticism, often voiced by the aid community – that the Conservatives are too willing to “militarise” aid or to “politicise” it. He dealt with the criticism robustly – but I want to have a go too. Because while these are snappy sound bites they miss a number of fundamental points.

Development assistance, unlike humanitarian relief, is an inherently political business. Long-term growth and poverty-alleviation only takes place when developing countries decide to organise their affairs – their regulatory systems, their monetary and fiscal arrangements, their police-and-justice institutions and so on -- in ways that facilitate growth in the long-term and allow for the distribution of the proceeds of that growth to the poorest citizens. What developed countries can do – with their money, market access, and technical assistance – is create incentives for developing countries to arrange their affairs in the best possible manner. If doing this in somebody else’s country is not political, I don’t know what political is.

Then to the charge that poverty-focus, DFID will now fund a war-hungry MOD. It is patently clear that if the government as a whole is committed to stabilising fragile states, or undertakes a military intervention, then all the departments need to support this aim - including DFID. It is a government department, not an NGO. At the same time there are clear rules for what aid money can be spent on, and frankly also clear limits of what can be done in the most unstable situations. Senior DFID staff like to cite the absence of evidence for the ability to win, as the military would call it, hearts and minds. The military in turn use anecdotal data or outputs (for example, kilometres of roads surfaced or vehicle checkpoints built) to argue that money spent in Helmand does make a difference.

The academic literature is divided on the subject. A large US study found that an increase in certain kinds of quick impact expenditure in Iraq was associated with a reduction in levels of violence, particularly after 2007. But other research has found little or no evidence of a positive association between spending money and violence.

My experience in Bosnia, Iraq and Afghanistan tells me that there is still a lot we don’t know about what works in extreme situations like Helmand or Basra, and being categorical either way makes little sense. Far better to explore the conditions that have to be met for aid to have any positive impact in violent contexts on the attitudes of the local population towards their state. It is often not the tangible results of aid that matter most, but the intangible impact of the way it is delivered that enables a state to resolve its problems. For example, helping a local community develop a common sense of identity, and to take action on specific issues, can strengthen their willingness to stand up to intimidation by insurgents.