Summary

In 2006, the new senior management team in UNOPS initiated a full investigation into internal allegations about the misuse of UNOPS funds and the breaching of accounting and procurement policies in Afghanistan between 2002 and 2006.

Management then requested a range of external investigations, five out of six of which are now complete. These revealed that former weaknesses in UNOPS financial control and management structure had led to errors during the rebuilding of infrastructure in Afghanistan after the fall of the Taliban regime.

UNOPS acknowledges and regrets the serious mistakes that were made in Afghanistan during this period.

The question of whether there was criminal misconduct is still under investigation. The individual involved is no longer working at the organization and UNOPS is not permitted to discuss specifics regarding this ongoing investigation.

UNOPS finds such alleged misconduct completely unacceptable and has complied with all investigations. UNOPS has reimbursed all money owed to its clients as a result of errors or potential misuse, and will address any new issues if they come to light.

The organization has already implemented all recommendations raised by the investigations and today UNOPS is more professional than ever. UNOPS is committed to continuing to implement reforms that strengthen the organization's management and financial control and has received clean external audits for the biennium’s 2006-2007 and 2008-2009.

Reforms implemented to date include:

• the creation of an internal audit and dedicated investigative function
• the application of robust financial controls including mandatory use of electronic financial management tools
• the introduction of a UNOPS ethics officer and whistleblower protection
• a comprehensive information disclosure policy
• the recruitment of better qualified senior managers and financial staff stricter procurement rules and training
• circulation of clear rules and limits regarding hospitality expenses
• full financial disclosure by personnel

Background

Afghanistan USAID projects

The U.S. Agency for International Development (USAID) provided employment and much needed infrastructure such as bridges, roads and clinics to the people of Afghanistan after the fall of the Taliban regime, with most work done between 30 September 2003 and 31 December 2006.

Delivering projects in Afghanistan was an extremely complex undertaking. Most projects were in rural, remote and often inaccessible and insecure areas. The projects emphasized the creation of employment opportunities, the completion and repair of infrastructure, and provision of needed services to improve the well-being of the local communities. Much of the work involved the repair of roads, bridges, wells and clinics. The vast majority of these projects were completed successfully. For example, between 2002 and 2007 UNOPS built almost 900 kilometers of rural access roads in Afghanistan.

Charges

Weak management and financial controls in the period between 2002 and 2006 led to the alleged improper use of USAID money by a former UNOPS staff member and the diverting of funds to projects outside Afghanistan.

Investigation and response

The first investigation into the charges was launched by UNOPS itself after concerns were raised by whistleblowers.

In late 2006 members of UNOPS staff informed the new senior management team of allegations involving the misuse of project and administrative funds and serious breaches of accounting and procurement policies that occurred between 2002 and 2006 in Afghanistan. The new management immediately initiated an independent investigation into the alleged charges.

The initial report raised further questions, and although the alleged wrongdoer had already separated from the organization, UNOPS asked the UN Office of Internal Oversight Services (OIOS) to look into matters further.

OIOS assigned the investigation to their Procurement Task Force (PTF) which arranged six investigations into UNOPS activities. Only one of these is at present incomplete and UNOPS has settled in full all the respective issues presented by OIOS.

The PTF – OIOS report was completed on 31 December 2008 and was subject to internal United Nations review.

The report highlights that: “It is important to note that the current Administration of UNOPS was not in place during the time period under examination. Throughout the investigation, UNOPS senior management gave the Task Force wide latitude and the independence which was required, and directed the complete cooperation by all UNOPS staff members. These officials should be lauded for their acts of transparency and the request for, and acceptance of, an independent investigation.”

As a result of the internal United Nations review the Under-Secretary-General for Legal Affairs has now provided a copy of the report to the United States Mission to the United Nations. It is now in the hands of the US authorities to decide if any legal action should be taken in regard to the allegations. UNOPS has and will cooperate fully with US authorities in the investigations.

UNOPS has reimbursed money owed to its clients as a result of errors or misuse, and will address any new issues if they come to light. UNOPS has already implemented all the PTF recommendations included in their report and will deal fairly but firmly with any proven wrongdoers.

Management reforms

In December 2009 the United States Government Accountability Office (GAO) published a report noting that current management has made “significant progress in improving UNOPS’s financial position and in making changes to its systems that are designed to address the deficiencies highlighted in numerous UN oversight organizations’ audits and investigations.”

The report also states that in areas such as data reliability, the completion of investigations and ethics reporting there is still need for improvement. UNOPS took note of these comments and included them in its ongoing management reforms.

UNOPS has created an internal audit and investigation function, has endeavored to recruit better qualified senior managers and financial staff, applied robust financial controls including mandatory use of electronic financial management tools, strict procurement rules and training, more competitive staff recruitment, circulation of clear rules and limits regarding hospitality expenses, full financial disclosure by personnel, a comprehensive information disclosure policy and the introduction of a UNOPS ethics officer and whistleblower protection.

These reforms have already produced tangible results. In particular, after three consecutive biennia of qualified audit reports, UNOPS received unqualified audit opinions from external auditors for the biennia 2006-2007 and 2008-2009. And as a result of the much-improved internal controls, in August 2008 the UN Comptroller removed all limitations on working with UNOPS which had been in effect for over two years.

More detail on UNOPS management reforms.

UNOPS would also like to counter any impression that the organization did not fully cooperate with the GAO investigation. UNOPS worked closely with GAO over 17 months, however as an entity of the UN, the organization is bound by the ‘single audit principle’ approved by the UN General Assembly that gives the UN’s external auditors the exclusive right to audit the accounting records and financial statements of the UN. As GAO notes in their report: "The United States supports the "single audit principle" and we note that GAO has successfully completed a body of work reviewing UN entities in which we successfully gained the voluntary cooperation of UN entities to perform our work. We had similar cooperation from UNOPS and had access to sufficient information to complete the review.”

The GAO refers to several reports and investigations by different audit and investigative bodies. It should be stressed that all these reports relate to the period 2002-2006. UNOPS received unqualified audit opinions from external auditors for the biennia 2006-2007 and 2008-2009.