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UN Auditors Allege Widespread Purchasing Fraud

The United Nations is investigating allegations of fraud and corruption totaling tens of millions of dollars in its purchasing operations. Eight U.N. officials have already been suspended, and a new system for protecting whistleblowers (employees who report fraud) has triggered a flood of fresh accusations.

U.N. Undersecretary-General for Management Christopher Burnham says an internal audit of procurement practices has raised serious allegations and concerns of fraud and abuse. The audit was completed last Friday, but earlier in the week, eight employees in the peacekeeping procurement division were placed on leave with pay pending the outcome of a criminal investigation.

Mr. Burnham came to the U.N. late last year from a similar position in the U.S. State Department. He says since then, revised rules designed to protect employees who report corruption have prompted hundreds of fresh leads about millions of dollars worth of alleged fraud.

"I think the potential abuse could go into tens of millions of dollars," he said. "It could go higher than that, but we're in the middle of looking at 200 different cases, reports of abuse, and if men and women of the United Nations continue to show the courage they have in the last six months, I expect that figure to go up. "

Mr. Burnham would not identify those placed on administrative leave, but U.N. officials privately confirmed that among them is Assistant Secretary-General for Procurement Andrew Toh.

Washington's U.N. Ambassador John Bolton called the conclusions of the internal study "very disturbing". He said the report indicates a culture of corruption at the United Nations.

"What it demonstrates again is the need for the massive management reform we have been calling for," he said. "The evidence we now have, according to this report, is of procurement, mismanagement and fraud on a worldwide basis, throughout peacekeeping operations, as well as here in central U.N. procurement."

Ambassador Bolton suggested that blame for the corruption goes all the way to the top of the U.N. management structure.

"The U.N. charter says very clearly that the U.N. secretary general should be the organization's chief administrative officer," he said. "We are original intent people in the Bush administration, and we look at the words of the charter, it says chief administrative officer, and that's what we're looking for. We need one, and we need one soon."

Last month, an independent review by the Deloitte and Touche management firm concluded that the U.N. procurement service is poorly managed, to the point where the staff does not know even basic rules governing its work. The procurement department handled almost two billion dollars in purchasing for peacekeeping operations in 2005.

Auditing of the procurement division began after purchasing officer Alexander Yakovlev pleaded guilty in U.S. federal court last year to wire fraud and money laundering.

An investigation into the U.N. run Iraq oil-for-food program had accused Mr. Yakovlev of accepting nearly one million dollars in illegal payments from contract-seekers.