Deloitte Consulting LLP has been selected to perform a full financial and internal control audit of the United Nations (UN) procurement system that oversees the Iraq oil-for-food programme. The audit will focus on internal controls and procedures, operations, and staffing. The procurement office has been placed under the direct authority of UN Controller Warren Sach who made the announcement naming Deloitte as auditor. The audit began this week and should be completed before October.
Secretary-General Kofi Annan ordered the external audit in response to the Third Interim Report of the Independent Inquiry Committee (IIC) finding that former procurement officer Alexander Yakovlev solicited kickbacks, although the bribes were taken outside of the procurement operation. Yakovlev has since pleaded guilty to three counts of wire fraud, conspiracy to commit wire fraud, and money laundering in federal court. He allegedly accepted bribes totaling almost $1 million.
“The investigation is on him and whoever else helped him in the procurement department,” said a UN official on condition of anonymity. The report also found that former Executive Director of the UN Office of the Iraq Programme, Benon Sevan, benefited illegally from his role in the $63 billion Iraq oil-for-food programme.
This is the largest humanitarian project ever attempted by the UN. An independent panel headed by Paul Volcker found evidence of Sevan’s improprieties while the UN Office of Internal Oversight Services (OIOS) found evidence that lead to major contributors to question the programme’s internal controls governing procurement procedures and awarding of contracts.
The necessity for an external audit came when the OIOS drew strong criticism for their failure to detect problems with the procurement department initially. With the current evidence, there is an additional fear that the procurement corruption may be more widespread than currently realized.
These charges were uncovered the UN’s oversight office and an independent panel headed by Paul Volcker. Volcker is a former U.S. Federal Reserve Chairman. Secretary-General Annan pledged a vigorous investigation to restore the effectiveness of the procurement department and ensure a scandal such as this will not occur again.
Speaking with the Associated Press, Christopher Burnham, UN Undersecretary-General for Management, said the primary goal of the current audit is “to ensure that member states can have complete faith in the integrity” of the procurement division.