UN rocked by flood of fraud cases

The United Nations has been hit by an unprecedented wave of fraud, waste and corruption. Officials at its antifraud investigation unit say they are expecting to have to run more than 350 inquiries by the end of the year - nearly twice the total for 1998, and a 50 per cent increase on last year. Thousands of staff, contractors and consultants have been interviewed in scores of countries.

The revelations will embarrass Kofi Annan, the UN Secretary-General, who is to welcome national leaders, including Tony Blair, to the 'Millennium Summit' in New York next week. The summit will be the biggest such meeting in the UN's history and Annan is hoping to convince sceptical heads of state that the UN has provided value for money and that its role should be expanded.

One senior investigator said last week that the UN investigations unit's workload was greater than ever. 'We are seeing more and more frauds and abuses of authority... There is a huge range of things to look at,' she said.

The alleged crimes being investigated by the unit, the Office of Internal Oversight Services, range from the petty - such as employees using UN offices to run their own businesses or using UN planes for personal travel - to the huge, such as million-dollar frauds.

The OIOS's annual report, due out next month, will reveal cases of sloppy management, lax enforcement, harassment and outright criminality. Last year the OIOS conducted 247 inquiries and claimed to have saved the UN more than $23 million (£15m). So far this year the unit has taken on 230 new investigations. It is working with dozens of international police forces - including Scotland Yard - on inquiries into the activities of United Nations personnel.

In one major success this year a former UN official was jailed for three-and-a-half years for embezzling $770,000 (£513,000) while working in the former Yugoslavia. Charles Kim, a former chief of travel for the UN mission in Bosnia-Herzegovina, worked with a local travel agency and an airline employee to falsify bills.

In another case, $700,000 (£466,000) was recouped after it had been misdirected into a private individual's account by a bank.

Other investigations have been into false claims of living allowances and education grants, the payment of $6m (£4m) for sub-standard supplies in Angola, mismanagement of a number of conferences and alleged fraud by a contractors.

The UN has been criticised for failing to tackle fraud and waste. The US government is refusing to pay more than about $1 billion until 'convincing measures' have been taken to improve the situation. The British Government has been similarly vocal in calling for reforms.

A senior investigator at the OIOS said last week that, as the UN had expanded, so had the fraud and the waste. Much of the expansion has been in peacekeeping operations which now account for around a fifth of the OIOS's inquiries.

The total budget for the UN for 2000-2001 is $2.53 bn (£1.68 bn). In spite of this, resources for the OIOS have not been increased, officials claim.

Peacekeeping operations are a focus of criticism. One recent independent report alleged that troops provided by member countries for peacekeeping missions were often inadequate. It said that, on occasion, they were unable to speak the language [of the country in which they were stationed] and totally under equipped.

'Some countries have provided soldiers without rifles, or with rifles but no helmets, or with helmets but no flak jackets... This must stop,' the report said. It also criticised the peacekeeping support staff. This year's OIOS report is expected to criticise peacekeeping administrators for falling to process claims for remuneration by member states who have supplied troops for UN interventions. Around £20m is owed to the UK.

A former UN officials told The Observer that the UN has 'an absurd and unaccountable system of abuse, embezzlement and ineptitude'.

Alan Parra, 39, who recently resigned his post as a senior official of the UN Commission for Human Rights, said: 'It's very difficult to dig out and punish abuse in an organisation where it is the norm. Of each dollar spent by the United Nations only an infinitesimal amount gets anywhere near the project on the ground.'

Last year's report was one of the OIOS's most hard-hitting. It revealed appalling problems at the UN mission in Angola. Air tickets worth more than $1.7m had been bought without explanation or approval and multiple submissions of invoices had resulted in double payments worth $30,000 (£20,000).

The report also referred to delays at the mission in Haiti which cost the UN $7.7m (£5.13m) and described how two fieldworkers on peace-keeping operations had successfully entered false benefit claims - for children and education - worth $196,000 (£130,000). A similar fraud was discovered in Nairobi.

Last week Parra described a series of cases that included: assistants to a senior official based in another country not realising for more than a year that their superior had died; an official report on the human rights situation in Czechoslovakia, written by an overworked official by 'cutting and pasting' a report from Colombia.

'It told us all about guerrillas and narco-traffickers. The words "Czech Republic" had just been pasted in,' Parra said.

He also criticised 'an addiction to perks and luxury'. When one UN official in Rwanda had wanted to interview the Canadian general in charge of peacekeeping forces there he had been told to arrange an itinerary with stays on the way out and back in Brussels, Paris and Geneva, Parra claimed.

In each of the cities the UN officials stay at, they pick up a daily subsistence rate that is sometimes worth more than £100.

'Whenever I travelled I always came back with a few hundred dollars in extra cash,' admitted Parra, 'So God knows what kind of money the top officials are coming home with. Frankly, I was amazed.'