Budget Committee Calls on United Nations to Boost Investigation into Corruption, Funds Mismanagement in Wake of Fraud Allegations

GA/AB/4166
13 October 2015
Seventieth Session, 4th Meeting (AM)

Budget Committee Calls on United Nations to Boost Investigation into Corruption, Funds Mismanagement in Wake of Fraud Allegations

Delegates today called on a United Nations oversight body to boost its capacity to investigate corruption, mismanagement of resources and sexual abuse, as the Fifth Committee (Administrative and Budgetary) began its examination of such functions, amid fraud allegations involving a former General Assembly President.

“Given the recent news reports about potential corruption and fraud by senior United Nations diplomats, it is all the more imperative that OIOS [Office of Internal Oversight Services] work with management to ensure that guidelines regarding fraud are clear and any breach be investigated immediately,” said the representative of the United States.

The representative of the European Union Delegation recalled the Secretary-General’s remarks that “those serious allegations go to the heart of the work of the United Nations” and “there will be no tolerance for any corruption at the United Nations”.   Regarding recommendations by the OIOS during the latest reporting period ended 30 June 2015, the speaker urged the United Nations programme managers to set and adhere to target dates for implementation.

The OIOS’s operational independence also came under scrutiny, with Switzerland’s delegate, speaking also for Liechtenstein, noting that the OIOS’s alleged embroilment in certain management decisions called its independence from management into question.

The representative of South Africa, speaking for the “Group of 77” developing countries and China, expressed concern about high vacancy rates in the OIOS’s Investigation Division.  There must be an innovative solution to address that chronic element, which negatively impacted its ability to deliver its given mandate, she said.

Despite those challenges, delegates commended OIOS for its public posting of audit reports, efforts to improve its own operations and, above all, its important role in supporting the Secretary-General in his oversight responsibilities.

David Kanja, Assistant Secretary-General and Acting Head of the OIOS, introduced the body’s report on its activities from 1 July 2014 to 30 June 2015 (document A/70/318(Part I)), as well as related documents (documents A/70/318 Corr.1 & Add.1).

He said the Office issued 324 oversight reports, including 12 to the Assembly.  During the reporting period, 1,031 recommendations had been made to improve internal control, accountability mechanisms and organizational efficiency and effectiveness, with financial implications totalling $10.5 million.  Of those recommendations, 109 were classified as “critical” to the Organization.

Christopher Mihm, Chairman of the Independent Audit Advisory Committee (IAAC), presented that body’s report on its activities from 1 August 2014 to 31 July 2015 (document A/70/284).  He said that one of IAAC’s mandates was to advise the Assembly on how United Nations management was complying with recommendations made by its oversight bodies, including the Board of Auditors, the OIOS and the Joint Inspection Unit.

Also today, the Fifth Committee continued its general discussion on the proposed 2016-2017 programme budget.

The representative of the Russian Federation said that the proposed reform of the Office of the United Nations High Commissioner for Human Rights was not transparent and was premature for budget appropriation.  He said he was also disturbed by frequent requests to shift extrabudgetary resources to the regular budget.

Yukio Takasu, Under-Secretary-General for Management, addressed some issues raised by delegates on the proposed budget, primarily a concern that the Secretariat had “creatively” interpreted a General Assembly resolution on the budget outline to implement arbitrary cuts.

Also speaking on the biennium budget were the representatives of the Republic of Korea, Cuba and the United Republic of Tanzania.

The Fifth Committee will meet again at 10 a.m. on Wednesday, 14 October, to discuss the Organization’s financial statements and the reports of the Board of Auditors.

Proposed Programme Budget for Biennium 2016-2017

At the outset, the Fifth Committee (Administrative and Budgetary) returned to the examination of the 2016-2017 programme budget, continuing its discussion that began Monday.

JAESIN KO (Republic of Korea) emphasized the importance of budgeting that prioritized mandates and the carrying out of activities rather than incremental budgeting.  The Assembly recently adopted or would adopt significant resolutions, the financial resources of which were not included in the current budget proposal, including the 2030 Development Agenda, initiatives in peace and security, and resolutions adopted by the Human Rights Council.  The Committee would scrutinize their effect on budget requirements.  Recosting had been a major factor in budget increases for the past two decades.  His delegation would address recosting for 2014-2015 and 2016-2017 in a comprehensive manner.  He stressed the need to comprehensively examine staffing requirements.  Staff costs accounted for up to 70 per cent of the Organization’s total budget.  Welcoming the freezing of nearly 60 posts made possible through efficiency gains, he, however, called for close examination of the entire staffing table.  He strongly supported the Secretary-General’s reform initiatives, such as Umoja, the International Public Sector Accounting Standards (IPSAS) and Mobility and Global Service Delivery Model, and he looked forward to seeing concrete benefits from those initiatives.

DMITRY PODLESNYKH (Russian Federation) noted the Secretary-General’s budget proposal for 2016-2017, before recosting, slightly exceeded the expenditure ceiling set by the Assembly, but still represented a reduction from the previous budget.  He looked forward to the submission of more information on recosting in due course.  His delegation would also examine staffing resources, especially for new activities, taking into account the view of the Advisory Committee on Administrative and Budgetary Questions.  Restructuring regional architecture must be accompanied by more detailed plans and information, and required the Fifth Committee to take into account discussions on other concerned bodies.  Proposed reform of the Office of the United Nations High Commissioner for Human Rights was not transparent and was premature for budget appropriation.  He said he was disturbed by frequent requests to shift extrabudgetary resources to the regular budget.  While an absence of voluntary funding could be a cause for suspending programmes, it could be used as a ground for shifting extrabudgetary resources to the regular budget.

JAVIER ENRIQUE SANCHEZ-ASCUY (Cuba), associating with the “Group of 77” developing countries and China, as well as the Community of Latin American and Caribbean States (CELAC), stressed that mandates were “the fruit of sensitive negotiations” and thus required adequate resources once adopted.  The budget was not a mere technical document to determine whether the Organization was cost-effective or not.  It was the best demonstration of Member States’ commitment to fulfil mandates and the best tool to turn words into action.  He also stressed the importance of predictability for funding and the principle of common but differentiated responsibility of Member States to contribute, based on their capacity to pay.  He voiced concern about the interpretation by some States and the Secretariat of Assembly resolution 69/264 of 29 December 2014 to implement arbitrary cuts.  Regarding restructuring regional and field offices, any proposed changes must be presented to the Assembly with detailed information, because it was the 193-nation body’s purview to reorganize and prioritize mandates.  He also called for a “democratic” debate to evaluate the impact of resources for special political missions on the regular budget.

YUKIO TAKASU, Under-Secretary-General for Management, addressed some issues raised by delegates in the course of discussion on Monday on the proposed budget, primarily a concern that the Secretariat had “creatively” interpreted General Assembly resolution 69/264 of 29 December 2014 on the budget outline to implement arbitrary cuts.

He assured the Committee that the Secretary-General was guided by the decisions of the Assembly contained in that resolution, as well as other relevant resolutions.  The Secretary-General had initially proposed $5.741 billion as the outline for 2016-2017.  But after lengthy negotiations, the figure was reduced to $5.558 billion through “efficiencies” of $30 million and “further reductions” of $15 million.  In other words, a cut of $45 million was clearly part of that political agreement.

There were several ways of implementing mandated activities with resource constraints, he said.  Programme managers must find the most cost-effective way, including by redistributing the workload of existing staff; increasing productivity and efficiency through the use of new tools; reducing administrative and common support expenses; and finding more economical methods of official travel, consultancy recruitment, and procurement of supplies and equipment.

The $30 million reduction through “efficiencies” would come from a cut of $17.6 million in staff costs by abolishing or freezing vacant posts and $12.4 million in non-staff costs, such as consultancies, official travel, and supplies, he said.  The “further reductions” of $15 million would be achieved by abolishing or freezing posts, reducing staff travel and other measures.  Those proposed cuts were made in full coordination with programme managers to ensure that they would not hinder full and effective implementation of mandates.

The representatives of the United Republic of Tanzania and Cuba said they would like an opportunity to further deliberate on the matter during informal consultations, noting that they still did not understand where those cuts had come from.

Office of Internal Oversight Services & Independent Audit Advisory Committee

DAVID KANJA, Assistant Secretary-General and Acting Head of the Office of Internal Oversight Services (OIOS), introduced the body’s report on its activities from 1 July 2014 to 30 June 2015 (document A/70/318(Part I)), as well as related documents (documents A/70/318 Corr.1 & Add.1).

He said the Office issued 324 oversight reports, including 12 to the Assembly.  During the reporting period, 1,031 recommendations had been made to improve internal control, accountability mechanisms and organizational efficiency and effectiveness, with financial implications totalling $10.5 million.  Of those recommendations, 109 were classified as “critical” to the Organization.

The Office had implemented its own improvement measures, including the acquisition of a web-based audit management system, enhancement of capacity to conduct performance audits, and the establishment of a fraud investigation team funded by extrabudgetary resources.  The Office would hold itself accountable for deliverables.

CHRISTOPHER MIHM, Chairman of the Independent Audit Advisory Committee (IAAC), presented the body’s report on its activities from 1 August 2014 to 31 July 2015 (document A/70/284).  He said that one of IAAC’s mandates was to advise the Assembly on how United Nations management was complying with recommendations made by its oversight bodies, including the Board of Auditors, the OIOS and the Joint Inspection Unit.  He welcomed the significant progress made in the implementation of the Board of Auditors’ recommendations, in particular those related to peacekeeping operations.  But the number of unimplemented the OIOS recommendations to peacekeeping operations and the Office of High Commissioner for Refugees (UNHCR) rose sharply due to an increase in the number of unsatisfactory reports.  That was an issue of concern requiring a concerted effort to address the weaknesses identified.  IAAC would select one or more of the six identified enterprise risks for detailed assessments of what had been done and what could be done to manage the risks.

Assembly resolution 69/307 of 25 June 2015 invited IAAC to examine the operational independence of the OIOS, in particular in the area of investigation, he said.  IAAC found that the OIOS lacked agreed-upon and clearly defined guidance and protocols on striking the appropriate balance between advising management and maintaining its operational independence.  It should develop such guidance and protocols.  The OIOS’s Investigation Division did not have an official manual.  OIOS should finalize the investigation manual without delay.  IAAC was aware that OIOS’s three divisions had gone through several peer reviews in recent years, but the Assembly should mandate a holistic review of the Office.

Regarding fraud, management noted that it was working on an anti-fraud policy, he said.  While that would be an important first step, the policy’s implementation was key.  Opportunities existed for oversight bodies to collaborate on and coordinate monitoring and assessment of progress in the implementation of the newly adopted Sustainable Development Goals.  The OIOS should reach out to other internal audit and evaluation entities across the United Nations system to develop such collaboration.

KAREN LINGENFELDER (South Africa), speaking for the “Group of 77” developing countries and China, expressed support for the operational independence of OIOS and its role to assist the Secretary-General in fulfilling his internal oversight responsibilities.  The Group was concerned that the credibility of the Office related to operational independence was called into question.  As for the recommendations by the OIOS, all stakeholders should ensure that they were implemented to mitigate risks across the Organization.  The Group was still concerned about high vacancy rates in the Office’s Investigative Division.  There must be an innovative solution to address that chronic element, which negatively impacted the Office’s ability to deliver its given mandate.  The Group also carefully examined comments, observations and recommendations by IAAC, including a request to re-examine the operational independence of OIOS, and looked forward to informal discussions on those matters.

JAN DE PRETER, a representative of the European Union Delegation, welcomed the Office’s continuous efforts to look for ways to improve its own performance, and noted that the publication of internal audit and evaluation reports, made permanent last year, helped Member States and the public better understand the Office’s work.  It was important that critical recommendations made by the Office were implemented fully.  To that end, there was a need for more efficient monitoring processes, he said, urging programme managers to set and adhere to realistic target dates for the implementation of recommendations.  On the recent charges and allegations against a former Assembly President, the Union concurred with the Secretary-General in stating “those serious allegations go to the heart of the work of the United Nations” and “there will be no tolerance for any corruption at the United Nations”.

MATTHIAS DETTLING (Switzerland), speaking also for Liechtenstein, said that the operational independence of OIOS was being questioned by both Member States and the public, following the Office’s alleged embroilment in certain management decisions.  Maintaining operational independence and at the same time advising management was a challenge to any internal audit.  That challenge was even more compounded by the Office’s participation in the Management Committee meetings.  It was, therefore, important to carefully define that role to safeguard the Office’s independence.  His delegation was also questioning if bringing together the audit, investigation and evaluation functions under one roof was truly conducive to the overall independence of the Office, considering the very different nature of the relationship the three divisions had with management.  The Assembly should endorse IAAC’s recommendation to mandate a holistic review of the Office.  He also pointed out that the United Nations had recently been vulnerable to fraud and had faced criticism for not effectively countering sexual exploitation and abuse in field missions.

ISOBEL COLEMAN (United States) noted concerns about underreporting of fraud, urging OIOS to more proactively address the issue.  Given the recent news reports about potential corruption and fraud by senior United Nations diplomats, it was all the more imperative for the OIOS to work with management to ensure that guidelines regarding fraud were clear and any breach be investigated immediately.  However, her delegation was concerned about any attempt to transfer all investigations to the OIOS, given its limited capacity to complete investigations timely and proactively.  The OIOS should focus on serious cases of fraud, mismanagement of resources, corruption, and sexual abuse and exploitation, including through the use of forensic auditing.  She also stressed the importance of evaluation capacity, which was critical to programme performance and effectiveness, calling for an increase in performance audits, rather than compliance audits.  The Assembly should mandate a comprehensive review of the Office.

For information media. Not an official record.