United Nations Procurement: The Scandal Intensifies

If you're a rogue nation in need of peace keepers and provisions, your time may be running out to bribe the United Nations' procurement team. It looks the ringleaders of poster child for public sector mismanagement and misspending are finally exiting the circus stage. A recent article in Supply Management has a thorough update on the UN procurement scandal (which we previously covered on Spend Matters here (scroll down for post) and here. kudos go out to Supply Management for their continuing coverage of the story.

What are some of the latest highlights? According to the article, "one senior officer has admitted to charges of fraud, money laundering and conspiracy amounting to "hundreds of thousands of dollars". Two recent audits of the function cite "lack of internal controls" and management oversight as causes of potential waste, fraud and corruption. Eight staff are on "special leave" pending ongoing investigations and the UN and US authorities are looking into more than 200 cases of alleged fraud."

Apparently, "procurement is now considered the "rotten apple of the UN", a former UN chief procurement officer confided to SM. Morale is at rock bottom and staff are reportedly falling sick under the strain." In my book, they should be sick, after wasting our tax dollars (everyone's taxes indirectly fund the UN, like it or not). So what are we spending our money on? A recent report on the scandal concluded that within the UN, "there is a "systematic failure" by management to take corrective action, leading to a "culture of impunity" ... A censored version of the report -- which omitted names of places, suppliers and staff -- seen by SM found instances of waste, overestimated budgets and possible fraudulent activities."

How bad is it? "The report reviewed 27 major contracts totalling $1 billion over the past five years covering common items such as food, fuel and transport. Of the 24 peacekeeping missions currently in operation around the world, the report found procurement irregularities in seven of them ... Examining 27 major contracts, the OIOS found $110 million-worth of expenditure was "insufficient or lacking" justification; $61 million bypassed financial rules and procurement procedures, while mismanagement of vehicle parts resulted in losses of a further $46 million. And mismanagement of suppliers' performance bonds -- a percentage of the contract value held in case the supplier does not perform - had potential losses of $36 million ... The report found indications of "bid rigging" and "favouritism" in five contracts worth $48.6 million awarded to a single supplier by one purchasing officer ... Lastly, it noted unclear payment terms in contracts resulted in overpayment of $7 million in a further two missions."

Yikes. As I've said before, this is not Spend Management!

Jason Busch

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