In the private sector, it's difficult to justify procurement fraud in any way to shareholders (sometimes its enough to land the executives who knew about it in jail). At the UN, however, procurement fraud is an almost venerated tradition. After all, when your shareholders are captive and take the form of hundreds of nations (very few of which manage their own buying effectively), it's pretty easy to get away with the equivalent of Spend Management murder. But it's going to be even easier in the future. And that's because according to a major cable news network the UN is now cutting back on its own investigation of internal fraud. Yes, you read that correctly. According to Fox News and the AP, "The United Nations has cut back sharply on investigations into corruption and fraud within its ranks, shelving cases involving the possible theft or misuse of millions of dollars, an Associated Press review has found."
Is this cutback on policing a reward for good behavior? Not on your 30-hour-a-hour a week life (OK, 35 when the cameras are rolling). The story notes one example from earlier in the decade, where "more than 2,200 companies from some 40 countries colluded with Saddam Hussein's regime to bilk $1.8 billion from a U.N.-administered oil-for-food program for Iraqi humanitarian relief." As a result of this fraud, the UN "established a special anti-corruption unit, the Procurement Task Force … that uncovered at least 20 other major schemes affecting more than $1 billion in U.N. contracts and international aid." The UN shelved the program in 2009, perhaps believing it had instilled a new culture of responsibility inside the international spending body (which directly controls a $5 billion budget "and whose extended agencies and funds spend at least $20 billion a year more").
As a result, "over the past year, not a single significant fraud or corruption case has been completed, compared with an average 150 cases a year investigated by the task force. The permanent investigation division decided not to even pursue about 95 cases left over when the task force ceased operation, while another 80 unfinished cases have languished." The rest of the article is an incendiary bombshell of reporting, providing a history and rationale behind the cuts, not to mention scores of examples where investigations had begun but were since dropped on cases where fraud clearly existed. All of which leads me back to the title of this post: sometimes the best way of reducing procurement fraud in the first place is by stopping the search for it. Adhering to the rigorous standards of the UN, if you can't find it, perhaps it never existed. Right.
In other news headlines courtesy of Bureaucracy Today, a Spend Matters exclusive channel, the UN has officially named its primary source of news and analysis for 2010: The Onion.