Procurement Task Force: Report on OPG Industries Inc. and the United Nations Pouch Unit (PTF-R001-07), 2 Feb 2007
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United Nations Office of Internal Oversight Services (UN OIOS) 2 Feb 2007 report titled "Report on OPG Industries Inc. and the United Nations Pouch Unit [PTF-R001-07]" relating to the Procurement Task Force. The report runs to 61 printed pages.
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United Nations Nations Unies
OFFICE OF INTERNAL OVERSIGHT SERVICES
PROCUREMENT TASK FORCE
This Report is protected under the provisions of
ST/SGB/273, paragraph 18, of 7 September 1994
REPORT
ON O.P.G. INDUSTRIES INC. AND
THE UNITED NATIONS POUCH UNIT
Report no. PTF-R001/07
Case no. PTF/037/06
This Investigation Report of the Procurement Task Force of the United Nations
Office of Internal Oversight Services is provided upon your request pursuant to
paragraph 1(c) of General Assembly resolution A/RES/59/272. The Report has
been redacted in part pursuant to paragraph 2 of this resolution to protect
confidential and sensitive information. OIOS' transmission of this Report does
not constitute its publication. OIOS does not bear any responsibility for any
further dissemination of the Report.
2 February 2007
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OIOS PROCUREMENT TASK FORCE
REPORT ON O.P.G. AND UNITED NATIONS POUCH UNIT
REDACTED AND STRICTLY CONFIDENTIAL
___________________________________________________________________________________________________________
TABLE OF CONTENTS
I. INTRODUCTION ............................................................................................................................. 1
II. ALLEGATIONS ................................................................................................................................ 1
III. APPLICABLE LAW ......................................................................................................................... 3
IV. METHODOLOGY ............................................................................................................................ 5
V. INVESTIGATIVE DETAILS........................................................................................................... 5
A. O.P.G. INDUSTRIES INC. .............................................................................................................. 5
1. Company Background........................................................................................................ 5
2. Vendor Registration and First Complaints ........................................................................ 7
3. The United Nations Office at Nairobi ................................................................................ 9
4. The United Nations Logistics Base in Brindisi ................................................................ 12
5. The United Nations Mission for the Referendum in Western Sahara .............................. 16
6. The United Nations Operations in Cote d'Ivoire ............................................................. 17
7. O.P.G.'s removal from the vendor roster ........................................................................ 18
8. O.P.G.'s later reappearance under different company names......................................... 19
9. Loss Calculation .............................................................................................................. 21
B. THE POUCH UNIT ....................................................................................................................... 23
C. THE UNITED NATIONS MISSIONS AND OVERSEAS OFFICES ..................................................... 32
1. The Receiving and Inspection Units................................................................................. 32
2. The Pouch Services .......................................................................................................... 35
3. The Procurement Sections ............................................................................................... 35
4. The Finance Sections ....................................................................................................... 37
D. HEADQUARTERS PROCUREMENT .............................................................................................. 37
VI. FINDINGS........................................................................................................................................ 38
A. O.P.G. ........................................................................................................................................ 38
B. THE HEADQUARTERS POUCH UNIT .......................................................................................... 40
C. THE UNITED NATIONS MISSIONS AND OVERSEAS AGENCIES .................................................. 40
VII. CONCLUSIONS .............................................................................................................................. 41
VIII. RECOMMENDATIONS................................................................................................................. 42
IX. APPENDIX A: LOSS CALCULATION � O.P.G. POUCH SHIPMENTS TO THE UNITED
NATIONS MISSIONS..................................................................................................................... 43
X. APPENDIX B: O.P.G. SHIPMENTS BY POUCH 2003-2005..................................................... 56
XI. APPENDIX C: O.P.G. CHRONOLOGY ...................................................................................... 57
i
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OIOS PROCUREMENT TASK FORCE
REPORT ON O.P.G. AND UNITED NATIONS POUCH UNIT
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___________________________________________________________________________________________________________
I. INTRODUCTION
1. The following report is the result of an investigation conducted between July 2006
and January 2007 by the Procurement Task Force ("the Task Force") of the Office of
Internal Oversight Services ("OIOS"). The Task Force was created on 12 January 2006
to address all procurement matters referred to the OIOS. The creation of the Task Force
was the result of perceived problems in procurement initially identified by the
Independent Inquiry Committee into the Oil-for-Food Programme.
2. Under its Terms of Reference, the Task Force operates as part of OIOS, and
reports directly to the Under-Secretary-General for OIOS. The remit of the Task Force is
to investigate all procurement cases, including all matters involving procurement bidding
exercises, procurement staff and vendors doing business with the United Nations ("the
United Nations" or "the Organisation").
3. The matter set forth herein concerns a company which acted as a vendor with the
Organisation providing certain items to the Organisation's various peacekeeping
missions. This Report details the misuse and fraudulent use of the diplomatic pouch to
transfer goods to the Missions. The effect of this action was that the Organisation
suffered monetary losses and damage to its reputation. Further, the Diplomatic Pouch
was misused contrary to the Conventions.
II. ALLEGATIONS
4. Article 105 of the Charter of the United Nations provides that "[t]he Organization
shall enjoy in the territory of each of its Members such privileges and immunities as are
necessary for the fulfillment of its purposes" to ensure that the pursuit of the United
Nations' duties will not be impeded in any unnecessary way.1
5. Diplomatic privileges accorded to the Organisation in recognition of this purpose
include the right to use "Diplomatic Pouch Bags" ("pouch") for the distribution of
official documents and other material deemed necessary for the use of the United Nations
Missions.2 According to international convention such pouch bags are inviolable in that
the pouch cannot be opened or detained and the importation of any items entering a host
country through the use of the pouch is not within the jurisdiction of customs officials nor
are the items subject to import taxes.3
6. Breaches of these diplomatic privileges may prevent national authorities from
important income resources and distort the functioning of the local markets.
7. Contraventions of diplomatic law not only expose the United Nations to the risk
of legal liability but also jeopardize its reputation in the host countries. An example of
1
Charter of the United Nations, ch. XVI, art. 105, para. 1 (26 June 1945).
2
Convention on the Privileges and Immunities of the United Nations, art. 3, secs. 9 and 10 (13 February
1946); ST/AI/368 (10 January 1991) (Instructions Governing United Nations Diplomatic Pouch Service).
3
Convention on the Privileges and Immunities of the United Nations, arts.2 and 3, section 7 and 10 (13
February 1946).
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such a result is seen in 2006, when Osman Osman, a United Nations mail clerk allegedly
used the United Nations diplomatic pouch to smuggle khat, an illegal drug grown in East
Africa, into New York. Mr. Osman was arrested by US Federal Authorities and has been
charged with illegal drug distribution. A number of other individuals were arrested as
well.4
8. It is therefore important that procedures are in place to prevent any commodities
not for the use of the Mission or even illegal goods from benefiting of the diplomatic
privileges.
9. To ensure the security of its official correspondence and the integrity of these
diplomatic privileges the United Nations established a Diplomatic Pouch Service which
is administered by the Commercial Activities Service of the Facilities and Commercial
Services Division.5
10. This investigation examines the improper use of the diplomatic pouch.
11. On 6 September 2005, the then Chief of Procurement Service at the United
Nations Operation in Cote d'Ivoire ("ONUCI"), Ms. Helen Dodd notified the
Procurement Service at the United Nations Headquarters in New York ("the Procurement
Service") that a company named O.P.G. Industries Inc. ("O.P.G.") had been delivering
goods to ONUCI using the United Nations Diplomatic Pouch Service, while at the same
time charging the United Nations for freight costs in their invoices.6
12. Similarly, two months later, on 1 November 2005, the former Deputy Chief of
Contracts and Procurement Section at the United Nations Office at Nairobi ("UNON"),
Ms. Linda Telles informed the Procurement Service that UNON had similar experiences
in connection with their procurement from O.P.G. Industries in 2001.7
13. As a result of these complaints, in or about 2006, the matter was referred to the
Task Force for a full investigation.
14. The investigation has focused on the following issues:
(i) whether the Diplomatic Privileges granted to the United Nations were
contravened by the use of the Diplomatic Pouch System for the shipments of commercial
goods;
(ii) whether O.P.G. fraudulently charged the Organisation for freight costs for
their shipments through the pouch;
(iii) the extent of losses to the Organisation caused by O.P.G.'s misuse of the
pouch;
4
United States Southern District of New York Press Release (26 July 2006).
5
ST/AI/368(10 January 1991) (Instructions Governing United Nations Diplomatic Pouch Service); Office
Commercial Service Sector Organigram.
6
Helen Dodd email to Christian Saunders (6 September 2005).
7
Linda Telles email to Jayantilal Karia (1 November 2005).
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(iv) whether United Nations staff member(s) or official(s) were involved in the
misuse of the diplomatic pouch or engaged in inappropriate conduct in relation to O.P.G;
and
(v) whether the United Nations procedures and rules are sufficient to
safeguard the integrity of the Diplomatic Pouch System.
III. APPLICABLE LAW
15. This matter is examined under, and in light of, the Charter of the United Nations,
the Convention on the Privileges and Immunities of the United Nations, the applicable
United Nations Rules and Regulations and the relevant concepts of criminal law.
16. The following provision of the Charter of the United Nations is of relevance:
(i) Article 105 that "[t]he Organization shall enjoy in the territory of each of
its Members such privileges and immunities as are necessary for the fulfillment of its
purposes."8 Consequently, the General Assembly by resolution of 13 February 1946,
approved the
17. The following provisions of the Convention on the Privileges and Immunities
of the United Nations are relevant:9
(i) Article II, Section 7(a): the United Nations, its assets, income and other
property shall be "exempt from all direct taxes."
(ii) Article II, Section 7(b): the United Nations, its assets, income and other
property shall be "exempt from customs duties and prohibitions and restrictions on
imports and exports in respect of articles imported or exported by the United Nations for
its official use."
(iii) Article III, Section 10: "the United Nations shall have the right to use
codes and to dispatch and receive its correspondence by courier or in bags, which shall
have the same immunities and privileges as diplomatic couriers and bags."
18. The guidelines and procedures for the use of the pouch are set down in
Administrative Instruction ST/AI/368 of 10 January 1991:10
(i) Paragraph 3: "[r]estrictions on the content of the diplomatic pouch: The
following matter may be sent in the diplomatic pouch: (a) Official correspondence,
documents and printed matter of which individual packages must not exceed 35 pounds
or 16 kilograms; (b) Articles intended for official use appropriate for inclusion in the
pouch, where shipment by other means is not feasible."
8
Charter of the United Nations, ch. XVI, art. 105, para. 1 (26 June 1945).
9
Convention on the Privileges and Immunities of the United Nations, secs. 7, 10, arts. 2-3 (13 February
1946).
10
ST/AI/368 (10 January 1991) (Instructions Governing United Nations Diplomatic Pouch Service).
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(ii) Paragraph 5: "[e]very effort must be made by executive/administrative
officers and pouch certifying officers to limit the weight and quantity of material
transmitted by pouch."
(iii) Paragraph 7: "[a]s a means of identifying the originating office and for
accounting purposes, all pouch items . . . must have a bar-code label affixed thereto and
the name and return address of the sender clearly indicated. Items not bearing a bar-code
label will be returned to the sender."
19. The following provisions of the Staff Regulations of the United Nations are
applicable to this matter:
(i) Regulation 1.2(b): "[s]taff members shall uphold the highest standards of
efficiency, competence and integrity. The concept of integrity includes, but is not limited
to, probity, impartiality, fairness, honesty and truthfulness in all matters affecting their
work and status."11
20. The following provision of the Staff Rules of the United Nations is relevant:12
(i) Rule 112.3: "[a]ny staff member may be required to reimburse the United
Nations either partially or in full for any financial loss suffered by the United Nations as a
result of the staff member's negligence or of his or her having violated any regulation,
rule or administrative instruction."
21. ST/AI/2004/3 defines the conditions for the implementation of staff rule 112.3 as
follows:13
(i) Section 1.3: "[f]or the purposes of the present instruction, "gross
negligence" is negligence of a very high degree involving an extreme and willful or
reckless failure to act as a reasonable person in applying or in failing to apply the
regulations and rules of the Organization."
22. The following provision of the United Nations Procurement Manual is of
relevance:14
(i) Section 4.2.5(1): "[t]he UN shall communicate to the Vendors during the
registration phase, in the solicitation documents and in the contract documents that all
UN vendors shall adhere to the highest ethical standards, both during the bidding process
and throughout the execution of a contract."
23. The following concepts of criminal common law are applicable to this matter:
(i) Fraud: commonly, fraud is defined as an unlawful scheme to obtain
money or property by means of false or fraudulent pretences, representations, or
promises. A scheme or artifice has been repeatedly defined as merely a plan for the
accomplishment of an object. A scheme to defraud is any plan, device, or course of
11
ST/SGB/2006/4, reg. 1.2(b) (1 January 2006). This is a long-standing provision of the Staff Regulations.
See, e.g., ST/SGB/1999/5, reg. 1.2(b) (3 June 1999).
12
ST/SGB/2002/1 (1 January 2002).
13
ST/AI/2004/3 (29 September 2004).
14
United Nations Procurement Manual, Rev. 02, sec. 4.2.5(1) (January 2004).
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action to obtain money or property by means of false or fraudulent pretences,
representations or promises reasonably calculated to deceive persons of average
prudence.
IV. METHODOLOGY
24. The Task Force's investigation included interviews with numerous witnesses, the
review and analysis of a significant number of documents, and extensive examination of
electronic media and evidence.
25. The Task Force collected and reviewed extensive documentation from the United
Nations Headquarters and twelve United Nations Field Missions and Overseas Offices,
including procurement files, bids, requisitions, receiving and inspection reports, payment
instructions, and related correspondence of the purchase orders and contracts involved.
26. The Task Force investigators further examined the United Nations Headquarters
Pouch Unit's ("Pouch Unit") printed and electronic documentation relating to O.P.G.
27. The Task Force interviewed a significant number of United Nations staff
members in the Headquarters' Mail Operations Unit, Procurement Service and
Department for Safety and Security. Interviews were also conducted with the United
Nations staff members in various locations at UNON, ONUCI, and the United Nations
Mission for the Referendum in Western Sahara ("MINURSO"). The Task Force
investigators further contacted representatives of O.P.G. and its affiliated company.
28. Where available, electronic evidence was gathered.
29. The Task Force's investigation has faced a number of challenges including the
fact that certain files, such as procurement files obtained from the United Nations
Missions were found to be incomplete and the lack of compulsory process outside of the
United Nations System.
V. INVESTIGATIVE DETAILS
A. O.P.G. INDUSTRIES INC.
1. Company Background
30. O.P.G. is a New York City based supplier of personal computers, accessories and
office equipment.15 It commenced its business in 1981 and was incorporated in the State
of New York on 17 September 1991.16 At all relevant times, O.P.G. was located at 140
58th Street, Bldg 5-B, Brooklyn, New York, 11232.
31. The company's representatives as listed in the United Nations Vendor
Registration File are:
15
Procurement Service Vendor Listing (27 October 2005) (registered as United Nations vendor no. 3049).
16
Dun & Bradstreet Business Information Report (21 March 1996).
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- Eden C. Reeves (Sales Manager);
- The Subject (Sales Manager);
- Joe Scott (Manager); and
- Don Thompson (Service Manager).
32. Mr. Eden C. Reeves is a former United Nations staff member. He was appointed
as Associate Accountant at the Office of the Commissioner for Namibia on 18 July 1984.
From November 1990, until his retirement in April 1997, he worked as Finance Officer
for the United Nations Economic Commission for Africa ("ECA"). Prior to his
retirement in 1997, while he was appointed as Chief of the Disbursement Unit in Addis
Ababa, Mr. Reeves falsified ECA cheques and defrauded the United Nations of more
than US$36,000. Internal records reflect that Mr. Reeves subsequently paid the money
back to the Organisation, and is currently retired.17 The Task Force was not able to reach
Mr. Reeves under any of the contact details available and no further information was
available as to his whereabouts.18 It also does not appear that any disciplinary action was
sought against him.19
33. The Subject was contacted by the Task Force and claimed to be highly interested
in discussing his case and his unjustified removal from the United Nations vendor roster
with the Task Force. Asked about the contact details of Mr. Joe Scott and Mr. Don
Thompson, the Subject stated that "they were all still around."20 He informed the Task
Force that he would call to schedule an appointment for an interview, but the Task Force
has not received any response by the Subject. All further attempts by the investigators to
reach the Subject have failed.21
34. The Task Force investigators tried to identify the company's other manager "Mr.
Joe Scott", and it appears that Joe Scott is an alias name of the Subject. Staff Member 1,
Procurement Assistant at the Procurement Service told the Task Force investigators that
the individual who had initially introduced himself as the Subject later introduced himself
as Joe Scott.22 It is remarkable that, although this fact became known to a procurement
assistant at the Procurement Service, it did not raise concerns about the integrity of the
supplier O.P.G.
35. Although the investigators could not identify the subject named "Mr. Don
Thompson", there is substantial reason to assume that this name too, may be another alias
of the Subject. Correspondence under the name of Mr. Thompson has repeatedly been
sent from the Subject's email address.
17
Report of the Office of Internal Oversight Services IS/0109/97 (4 April 1999). Mr. Reeves admitted to
OIOS investigators that he had stolen over $30,000 prior to his retirement in 30 April 1997 and
subsequently had paid the money back through his UN Joint Pension plan account. OIOS recommended
referral to local Ethiopia law enforcement; Eden Reeves personnel file.
18
The Task Force note-to-file (18 January 2007).
19
Eden Reeves personnel file.
20
The Task Force note-to-file (12 January 2007)
21
Id.
22
The Task Force note-to-file (11 January 2007).
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36. The Task Force visited O.P.G.'s company location in an industrial section on 58th
Street, Brooklyn, New York, but found the office facilities vacated. The Task Force was
told by the building's manager that O.P.G. had been evicted in September 2006 by the
New York City marshals for failure to pay rent.23
2. Vendor Registration and First Complaints
37. On 25 March 1996, O.P.G. was registered under the current United Nations
vendor roster as approved vendor no. 3049 although purchase orders date back as early as
1993.24 Although the procurement registration procedures required potential suppliers to
submit audited financial records in order to verify the financial background of the
companies, O.P.G. was approved and registered with only a printout of an unaudited
financial statement.25
38. On 3 June 1996, the Procurement Service received a letter dated 16 May 1996
from a law firm representing Hewlett Packard ("HP") complaining that it suspected
O.P.G. of using, selling, and refurbishing HP toner cartridges improperly. The letter
cautioned that the United Nations may have been a victim of O.P.G.'s activities and
provided information on various company names under which O.P.G. operated:26
Figure: M. Morgan Cherry & Associates, Ltd. to the United Nations (16 May 1996)
39. An advisory note referring to this letter was subsequently placed in the
Procurement Database, cautioning Procurement Officers against using O.P.G. The letter
23
The Task Force note-to-file (12 January 2007).
24
United Nations Purchase and Transportation Service Vendor Listing (8 November 1996). As O.P.G. was
a registered vendor prior to 1996, the Task Force requested all O.P.G. files from archives but as of 24
January 2007 no earlier registration files could be found. Grace Montelibano email to the Task Force (24
January 2007) (stating O.P.G. purchase orders (hereinafter "POs") were found dating back as early as 1993,
but the Procurement Service was unable to determine any earlier POs as all POs prior to 1993 do not
indicate vendor name).
25
Vendor Application receipt and evaluation form (28 February 1996); O.P.G. Balance sheet and Income
statement for the year ended 28 February 1995.
26
Morgan Cherry & Associates letter to Michael McCann (16 May 1996).
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also identified that the company utilized several aliases to conduct its business, a clear
red flag. However, only four months later, on 8 November 1996, this note was deleted
from the system.27 Staff Member 2, former Procurement Officer at the Procurement
Services who had deleted this note, could not recall the circumstances as to why, other
then they were told by the Supplier Committee to do so.28
40. Further, just four months later, on 12 March 1997, Osborne Jackson, then the
Deputy Director of the Statistics Division lodged an additional complaint against O.P.G.
with the Procurement Service and Transportation Division for its "irresponsible
service."29 Again, O.P.G. was suspected of having sold a remanufactured Toshiba
computer notebook to the United Nations.
Figure: Osbourne Jackson facsimile to Allan Robertson (12 March 1997)
41. The matter was brought to the attention of Sanjaya Bahel, the then Officer-in-
Charge of the Procurement and Transportation Division, who recommended the
suspension of O.P.G. from consideration in subsequent bidding exercises.30
42. The matter was also brought to the attention of the HQ Supplier Roster
Committee, which - in its meeting of 20 June 1997 � held that O.P.G. shall be excluded
from future bidding exercises.31
43. However, just one month later, on 15 July 1997, Mr. Allan Robertson, then the
Officer-in-Charge of the Procurement and Transportation Division informed the Subject,
O.P.G.'s representative, that "because O.P.G. was not given the opportunity to fully
respond to all the complaints, [they] should only be suspended from future United
Nations procurements for the period ending 31 December 1997."32 Thereafter, in January
1998, the company was re-registered as an approved supplier.33
44. From June 1996 and continuing to or about April 2005, O.P.G. engaged in
substantial business with the Organisation. An examination of purchase orders reflects
that at least US$1,469,911 worth of business was awarded to O.P.G. by the United
27
United Nations Purchase & Transportation Service Vendor Listing (8 November 1996).
28
Staff Member 2 interview (24 January 2007).
29
Osborne Jackson letter to Allan Robertson (12 March 1997).
30
Sanjay Bahel note to Mr. Jackson (30 May 1997).
31
Allan Robertson letter to the Subject (30 June 1997).
32
Allan Robertson letter to the Subject (15 July 1997).
33
Vendor 3049 Abstract (14 January 1998).
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Nations Headquarters alone.34 Significantly, in July 2002 the company was further
awarded a one year systems contract for the provision of FLUKE Optiview Network
Analyzers in the amount of US$1,890,200.35
45. In addition, purchase orders totaling at least US$2,875,051 were issued to O.P.G.
by 13 different United Nations Field Missions and Overseas Offices between 2002 and
2005.36
46. In 2001, however, complaints began to arise at UNON that O.P.G. was misusing
the pouch for their commercial shipments and improperly sending goods to the mission
through the use of the pouch service.
3. The United Nations Office at Nairobi
47. In June 2001, Ms. Linda Telles, the then Deputy Chief, Contracts and
Procurement Section at UNON, discovered an incident in which UNON was charged
US$4,474.40 by O.P.G. for the shipment of 52 boxes of toner cartridges through the
pouch.37
Figure: British Airways World Cargo Air Waybill (4 June 2001)
34
Procurement Service, List of Purchase Orders issued from 13 June 1996 to 14 April 2005 (19 August
2005).
35
Contract no. PD/C0149/02 between the United Nations and O.P.G. Industries Inc. for Provision of Fluke
Optiview Integrated Network Analyzers (signed by Sanjay Bahel and the Subject on 26 July 2002).
36
Calculation based on records provided by 13 Missions. However, records by the Pouch Unit and
Procurement Services indicate that goods were shipped to 20 UN Missions and Overseas offices.
37
Air Waybill no.125-85274523 British Airways World Cargo (4 June 2001).
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48. It is clear that under the terms of the Purchase Order for the toner cartridges they
should have been shipped by commercial means of transportation and not through the
pouch as the delivery terms of the Purchase Order stipulated "Delivery Duty Unpaid
Nairobi" or "DDU Incoterms 1990."38
49. Incoterms are trade terms established by the International Chamber of Commerce
in order to provide a set of international trading rules. The use of Incoterms establishes
the respective contractual obligations of the buyer and seller. Commonly used terms are
"Delivery Duty Unpaid or DDU" meaning that the vendor shall pay for transportation
costs and bear all risk until the goods have been delivered to the final point at the
destination or named place in country of importation; and "Carriage and Insurance Paid
to or CIP" meaning the vendor shall pay for the transportation costs and bear all risks
until the goods have been delivered to the port of destination.39
50. In the case of O.P.G. shipments, delivery terms of the Purchase Orders stipulated
DDU and CIP.40 Thus, O.P.G. had to deliver goods at its own risk to the respective
missions. The company was further responsible for arranging necessary insurance and
commercial freight forwarding. These costs were therefore included in O.P.G.'s prices
and invoices.
51. Included in the purchase amount of US$23,435 was the cost of the "Carriage and
Insurance" for the shipment to Nairobi ("C.I.P. Nairobi") meaning that the seller bore the
expense of the delivery of goods and the cargo insurance to the place of destination:41
...
Figure: Purchase Order no. 2001-20-40508/EM (14 May 2001)
52. O.P.G., however, billed the mission for freight and insurance costs, despite the
fact that the goods were actually shipped free of charge for the vendor through the pouch.
53. As a result, O.P.G. engaged in double dipping � achieving free shipment and then
billing for transportation costs that were actually not incurred. UNON was twice
victimized, once through the use of the pouch by the vendor for a commercial shipment,
and again when it was charged for transportation costs not in fact incurred.
38
Purchase Order no. 2001-20-40508 (14 May 2001) (for provision of toner cartridges).
39
Export911, "International Commercial Terms (INCOTERMS),"
http://www.export911.com/e911/export/comTerm.htm.
40
See, e.g., Purchase Order no. 2001-20-40508 (14 May 2001) (for provision of toner cartridges).
41
Export911, "International Commercial Terms (INCOTERMS),"
http://www.export911.com/e911/export/comTerm.htm.
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54. On 24 August 2001, Ms. Telles sent a facsimile communication to Mr. Don
Thompson, an O.P.G. representative, informing him that the use of the pouch for
commercial cargo was not only illegal but also constituted an abuse of the duty free
privileges extended to the Organisation by the Government of Kenya:42
Figure: Linda Telles facsimile to O.P.G. (24 August 2001)
55. On 26 July 2001, Don Thompson sent an email to Gideon Nzuve, the then
Receiving and Inspection Officer at UNON, defending O.P.G.'s use of the pouch to
transport its goods to the missions, stating that the option to ship goods via the pouch was
discussed with some of the United Nations agencies based upon losses sustained through
commercial transportation.43 Although it is unclear, Mr. Thompson suggests that the
issue of approval for the use of the pouch was discussed when these issues were raised
with the mission. However, he does not represent that such authorisation was thereafter
provided. Mr. Thompson stated that the agencies "had been very receptive to the
POUCH option" provided that "prior approval" by the agencies was given:44
Figure: Don Thompson email to Gideon Nzuve (26 July 2001)
56. As a result of this incident in June 2001, UNON researched their records dating
back to 1996 and discovered that O.P.G. had been using the pouch for its shipments since
1996 while at the same time charging the Organisation for the purported freight costs of
their deliveries.45 The purported freight charges the company had claimed to have
incurred and bill to the Organisation was in the amount of US$5,209. These amounts
were subsequently recovered and deducted from an open invoice issued by the company
in 2001.46
57. The matter was brought to the attention of the Pouch Unit on 27 July 2001 when
Simon Towett, from the UNON registry, in an email to Raphael Lindo, Mail Assistant at
42
Linda Telles facsimile to O.P.G. (24 August 2001) (Att. D. Thompson).
43
Don Thompson email to Gideon Nzuve (26 July 2001).
44
Id.
45
Linda Telles facsimile to Don Thompson (2 November 2001).
46
Linda Telles memorandum to David Hastie (25 July 2002) (Mr. Hastie was the Chief Accounts Section,
of BFMS).
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the Headquarters Mail Operations Unit, explicitly asked that the Pouch Unit seek
UNON's authorisation before accepting goods from O.P.G. Industries:47
Figure: Simon Towett email to Raphael Lindo (27 July 2001)
58. The then acting Chief of Headquarters' Mail Operations Unit, Mr. Gerson de
Almeida was also notified of the issue. He was copied on an email Ms. Telles sent to
Raphael Lindo on 28 August 2001.48
59. However, UNON did not alert the Procurement Service. The Task Force
investigators were told by Staff Member 3, the current Chief of the Procurement, Travel
and Shipping Section, that due to the culture of poor communication and coordination
between Headquarters and Missions, the matter was not brought to the attention of the
Procurement Service.49
60. Furthermore, although these practices were discovered, O.P.G. was not removed
from the UNON vendor roster. Staff Member 3 told the Task Force investigators that
O.P.G. had been temporarily removed from the UNON vendor list but was reinstated
when the company's representatives promised to improve.50
61. UNON continued its business transactions with O.P.G. until 2003 when a new
incident of freight fraud was discovered. On 16 June 2003, UNON received a "freight
collect" invoice from DHL for US$376.90 on a shipment that had been sent by O.P.G.,
although freight costs again were included in O.P.G.'s quotation and invoice.51
62. From 2000 until its removal from the UNON vendor roster in 2003, purchase
orders in the amount of US$87,169 were issued to O.P.G (see Appendix A).
4. The United Nations Logistics Base in Brindisi
63. On 8 August 2001, Mr. Lindo, Mail Assistant, notified all United Nations Pouch
Officers by an email communication warning them of O.P.G.'s corrupt practices of using
the pouch while at the same time charging the Missions for freight costs:52
47
Simon Towett email to Raphael Lindo (27 July 2001).
48
Linda Telles email to Raphael Lindo (28 August 2001) (copied to Mr. Gerson de Almeida).
49
Staff Member 3 interview (21 April 2006).
50
Id.
51
Linda Telles letter to Don Thompson (1 July 2003).
52
Raphael Lindo email to Pouch Officers (8 August 2001).
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Figure: Raphael Lindo email to Pouch Officers (8 August 2001)
64. On 7 September 2001, Hubert Price, Chief Administrative Officer at the United
Nations Logistics Base Brindisi ("UNLB"), sent a facsimile to Mr. de Almeida, Head of
Mail Operations Unit at Headquarters, advising him that UNLB had also received goods
procured from O.P.G. via the pouch and requested confirmation that procedures were in
place to prevent any further reoccurrences.53 Mr. Price sent two follow-up facsimiles to
Mr. de Almeida again requesting confirmation that appropriate pouch procedures were in
place.54
65. Incidents of improper use of the pouch by O.P.G. in UNLB were discovered on
24 July 2001, when the Chief General Services UNLB was called by Italian authorities to
verify the correct use of the pouch, as a shipment of 14 boxes containing goods from
O.P.G. was delivered to Rome.55
66. Upon research by the then Chief of Procurement, Lisa Langlois, it was discovered
that O.P.G. had used the pouch for their shipments since 1997 without prior authorization
by UNLB.56
67. Ms. Langlois' investigation had revealed that O.P.G. had charged freight costs for
these shipments on at least four separate occasions, although the terms of the purchase
orders, again, stipulated that regular means of transportation should be used and that the
vendor should pay for freight and insurance.
68. In this context, Daniela Esposito, from UNLB Procurement sent a facsimile to
O.P.G. on 2 August 2001 requesting that Mr. Thompson "provide a full explanation . . .
[and] . . . confirm that this will not happen again in the future."57
69. In his written response of 6 August 2001, Mr. Thompson claimed that the
unauthorized use of the pouch was an "oversight," and that O.P.G. would not use the
53
Hubert Price facsimile to Gerson de Almeida (7 September 2001).
54
Hubert Price facsimiles to Gerson de Almeida (27 September and 18 October 2001).
55
Hubert Price facsimile to Gerson de Almeida (7 September 2001).
56
Pompeo Leopardi email to Lisa Langlois (23 November 2001).
57
Daniela Esposito facsimile to O.P.G. (2 August 2001).
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pouch without prior approval. Mr. Thompson also represented that their staff had been
instructed not to send goods by pouch unless requested and authorized by the Mission:58
Figure: Don Thompson facsimile to UNLB (6 August 2001)
70. In another facsimile to UNLB, dated 18 February 2002, Mr. Thompson further
stated that "[their] staff has now been instructed to discontinue using the pouch for all
deliveries."59
71. Subsequently, UNLB recovered freight costs of US$1,083.00 from O.P.G.60
72. In his facsimile to Mr. de Almeida, Mr. Price expressed his concern about the
misuse of the rights and privileges of the United Nations and - again - requested that no
commercial goods be accepted by the Pouch Unit without prior authorisation by UNLB:61
Figure: Hubert Price facsimile to Gerson de Almeida ( 7 September 2001)
73. After repeated requests by UNLB, Mr. de Almeida finally replied on 30 October
2001, stating that the use of the pouch had been an accepted practice for several years due
to the difficulty of shipping commercial goods to certain regions by regular means of
transportation.62 He confirmed that the Unit would no longer accept such items without
prior approval by the requesting office:63
58
Don Thompson facsimile to Daniela Esposito (6 August 2001).
59
Don Thompson facsimile to Marina Kravchenko (18 February 2002).
60
Clorinda Gigante facsimile to O.P.G. (6 September 2001); Don Thompson facsimile to Clorinda Gigante
(6 September 2001).
61
Hubert Price facsimile to Gerson de Almeida (7 September 2001).
62
Hubert Price facsimile to Gerson de Almeida (27 September 2001); Hubert Price facsimile to Gerson de
Almeida (18 October 2001).
63
Gerson de Almeida facsimile to Hubert Price (30 October 2001).
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Figure: Gerson de Almeida facsimile to Hubert Price (30 October 2001)
74. Although UNLB contacted the Pouch Unit, the matter was not brought to the
attention of the Procurement Service. Staff Member 4 told the Task Force investigators
that UNLB had discussed whether the issue should be reported to the Procurement
Service, but that the problem was considered to have been resolved once Mr. de
Almeida's reply was received.64
75. Despite this incident UNLB continued to procure goods from O.P.G. until the
company's final removal from the Headquarters vendor roster in 2005. The records
provided to the Task Force indicate that from the year 2000 until 2005 14 purchase orders
in the amount of approximately US$498,985 were issued to O.P.G (see Appendix A).
76. Although not reflected in the records obtained, the Task Force has identified that
O.P.G. again used the pouch for deliveries to Brindisi in 2003 and billed the Mission for
the freight charges notwithstanding the fact that the company did not incur any such
charges. On 31 March 2003, a box containing items procured under Purchase Order no.
3LBB-20003 was delivered to the Pouch Unit and accepted for dispatch.65 Once again
the mode of delivery stipulated under this Purchase Order was "DDU Incoterms 2000."
Freight charges of US$2,000 were included in O.P.G.'s invoice and paid for by UNLB.66
77. The Task Force calculated that O.P.G. claimed a total amount of freight costs of
approximately US$2,883, although these shipments were made through the pouch and the
company did not incur this expense. UNLB recovered from O.P.G. US$883; however,
US$2,000 of fictitious freight costs were never recovered or reimbursed by O.P.G. (See
Appendix A). This calculation does not include the actual costs incurred and paid by
UNLB for the use of the pouch.
64
Staff Member 4 interview (9 January 2007; Staff Member 4 email to the Task Force (12 January 2007).
65
The Pouch Unit Compact Disc, Outgoing Mail folder, Log no. 3277.
66
Purchase Order no. 3LBB-200003 for Provision of Toner Cartridges (19 February 2003), O.P.G. invoice
no. 39531 (26 February 2003), UNLB request for payment (11 April 2003).
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78. Despite the explicit warnings from Mission officials in Brindisi and Nairobi, staff
at the Pouch Unit continued to accept goods from O.P.G. for dispatch through the pouch.
Although requested by the Task Force, staff members of the Pouch Unit were unable to
supply any documentation that the use of the pouch was ever authorized by any of the
Organisation's requisitioning offices.67 When interviewed by the Task Force, Staff
Member 6 stated that no measures were set in place by Mr. de Almeida to ensure that
prior authorisation was sought from the receiving offices before goods from commercial
vendors were accepted for transmission via the pouch.68 Thus, O.P.G. was able to
continue its fraudulent practices unchecked and uninterrupted. Based on the Pouch
Unit's records, 108 O.P.G. shipments were sent to 17 United Nations missions between
the years 2003 and 2005.69
5. The United Nations Mission for the Referendum in Western
Sahara
79. The records provided to the Task Force by the Pouch Unit indicate that, between
2003 and 2005, O.P.G. used the pouch for their shipments to 17 different United Nations
offices (see Appendix B).70 According to these records, the UN Mission that received the
majority of O.P.G.'s pouch shipments was MINURSO. The files indicated that from
2003 to 2005 alone, O.P.G. used the pouch for shipments to MINURSO on at least 31
separate occasions.71
80. According to the procurement files provided to the Task Force by MINURSO in
October 2006, MINURSO issued 38 purchase orders totaling US$232,817 to O.P.G.
between 2002 and 2005. (See Appendix A). However, none of the files contained any
indication that the procured goods were delivered through the pouch. Delivery terms
were exclusively "DDU" and except for one shipment, freight costs were charged by
O.P.G. for all purchase orders.
81. However, when the Task Force visited MINURSO, Staff Member 7, one of the
procurement assistants, told the investigators that O.P.G. consistently used the pouch for
their deliveries to MINURSO, although the terms of the purchase orders clearly
stipulated that commercial mode of transportation should be used. Staff Member 7
asserted that change orders were raised and freight costs deducted from O.P.G.'s invoices
whenever such cases were brought to his attention. However, Staff Member 7 confirmed
that freight costs might have been paid in several other cases.72
82. The Task Force found that this had happened in several cases. O.P.G. claimed
freight costs for a total amount of US$7,546 for shipments that were actually made
through the pouch.73 Only US$2,848 of these fictitious freight charges were recovered
67
Staff Member 5 interview (26 July 2006).
68
Staff Member 6 interview (28 November 2006);Staff Member 12 (26 January 2007).
69
The Pouch Unit Compact Disc, Outgoing Mail folder.
70
The Pouch Unit Compact Disc.
71
Id.
72
Staff Member 7 interview (21 November 2006).
73
See Appendix A, "Loss Calculation � O.P.G. Shipments to the United Nations Missions."
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from O.P.G.74 The costs incurred and paid by MINURSO for the use of the pouch for the
delivery of these items are not included in this calculation.
83. The Task Force has also identified several change orders and notes-to-file issued
by Staff Member 7 where freight costs had been deducted from the original purchase
orders.75 Credit memos issued by O.P.G. confirmed that the matter �again- was
discussed with O.P.G.:
Figure: Staff Member 7 note for the file (5 May 2004)
84. Staff Member 7 confirmed that O.P.G. was certainly aware that the use of the
pouch was not allowed for their shipment to MINURSO, as he and other procurement
assistants had telephone conversations on this matter with Joe Scott, an O.P.G.
representative. Staff Member 7 further confirmed that there was no reason to use the
pouch for shipments to MINURSO as goods could easily be shipped to the Western
Sahara via commercial means of transportation.76
85. Although the former Chief of Procurement, Debbie Bolipata, signed the change
orders issued by Staff Member 7 and therefore was on notice of O.P.G.'s activities, the
Task Force could not find any indication that the matter was ever brought to the attention
of the Procurement Service.
86. Again, O.P.G. was able to continue its fraudulent practices until 2005 when
ONUCI informed the Procurement Service that they had also been charged freight costs
for shipments through the pouch.
6. The United Nations Operations in Cote d'Ivoire
87. On 5 September 2005, Ms. Helen Dodd, the then Chief of the Procurement
Section at ONUCI, was notified by the Chief of the General Services Section, Mr.
Godwin Oguzie, that a shipment of 26 boxes of computer equipment and security
cameras from O.P.G. had arrived through the use of the pouch.77 These items had been
procured from O.P.G. on 24 May 2005.78
88. The Purchase Order again stipulated that the method of delivery was "DDU
Incoterms 2000." O.P.G.'s quotation and the Purchase Order included freight costs of
US$19,000.79
74
Id.
75
Id.
76
Staff Member 7 interview (21 November 2006).
77
Godwin Oguzie email to Helen Dodd (5 September 2005).
78
Purchase Order no. 5OCI-300656 (24 May 2005).
79
Id.
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89. When contacted by ONUCI, the Subject, O.P.G. Senior Representative, stated in
an email to Ms. Dodd, dated 8 September 2005, that O.P.G. faced problems in delivering
goods to Ivory Coast by regular means of transportation. The Subject claimed that the
company's freight forwarder, DHL, was reluctant to ship to Abidjan and that they
therefore consulted with the Pouch Unit and asked to "try their system." He further
stated that they would have used the pouch only for "some deliveries (6 P.O.?s) [sic] over
the past 5-6 months."80 On 12 September 2005, the Subject sent another email to Ms.
Dodd and "apologized for this oversight."81
90. The Task Force investigators interviewed procurement officials as well as
officials in the General Services Section at ONUCI who unanimously confirmed that
there have never been problems with DHL or other shipping companies delivering goods
to the Mission.82
91. ONUCI was able to identify several other cases where freight costs had been
charged and paid to O.P.G., although deliveries were made through the pouch.83
According to Ms. Dodd, the value of all "fake" freight costs was subsequently deducted
from an outstanding bill.84 However, records provided by the Pouch Unit to the Task
Force show that more shipments were actually made through the Pouch than previously
identified by ONUCI.85
92. Since its inception in May 2003, ONUCI issued 17 purchase orders to O.P.G. for
a total amount of US$332,289.86 The Task Force calculated that during this period
O.P.G. claimed a total amount of freight costs of approximately US$24,316 on at least 10
separate occasions, despite the fact that the pouch was used for these deliveries.
Although US$22,107 was deducted from an outstanding invoice, approximately
US$1,940 in freight costs were overpaid by ONUCI and were not recovered or
reimbursed by O.P.G.87 This calculation does not include the actual cost incurred and
paid by ONUCI for the delivery of these items through the pouch.
7. O.P.G.'s removal from the vendor roster
93. On 6 September 2005, Ms. Dodd sent an email to Mr. Christian Saunders, then
the Chief of the Procurement Service, and notified him of O.P.G.'s misuse of the pouch
for their shipments to ONUCI.
94. Mr. Saunders replied that same day via email and requested that all Chief
Procurement Officers ("CPO") check their business transactions with O.P.G. He
80
The Subject email to Helen Dodd, (8 September 2005).
81
The Subject email to Helen Dodd (12 September 2005).
82
Staff Member 8 interview (14 November 2006); Staff Member 23 interview (15 November 2006).
83
Staff Member 9 interview (15 November 2006).
84
Helen Dodd email to Grace Montelibano (21 November 2005).
85
For further details, see Section V.A.9; CD provided by UN Pouch Unit, folder Outgoing Mail.
86
See Appendix A, "Loss Calculation � O.P.G. Shipments to the United Nations Missions."
87
Id.
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suggested that the matter be referred to OIOS for investigation and possible forwarding to
the relevant authorities.88
95. On 9 September 2005, Mr. Saunders referred the matter to Ms. Barbara Dixon,
the then Director of OIOS, for further investigation.89
96. The matter was subsequently brought to the attention of the Headquarters Vendor
Review Committee ("VRC") which, in its meeting on 20 October 2005, recommended
the removal of O.P.G. from the United Nations vendor roster including all field offices.90
97. On 25 October 2005, Mr. Warren Sach, Assistant Secretary-General, Controller
informed the Subject about this decision.91 On 2 November 2005, O.P.G. was removed
from the United Nations vendor roster.92
8. O.P.G.'s later reappearance under different company names
98. The Task Force found that the Subject, who was formerly operating under the
company name of O.P.G., is still engaged in, and seeking to do further business with the
United Nations Headquarters and Field Missions under various company names and
aliases.
99. On 17 November 2005, Mehboob Rahman, Officer-in-Charge of the Procurement
Section at the United Nations Interim Administration Mission in Kosovo ("UNMIK")
notified Mr. Karia, Officer-in-Charge of Procurement that UNMIK received a request
from a company named Technology & Communication Supply Co. ("TCS") to be
included in UNMIK's vendor roster. Upon review of the Supplier Registration Form, it
was discovered that the telephone number provided as well as "City" and "Zip code"
fields in the company's mailing address were the same as the one associated with
O.P.G.93
100. A similar case was brought to the Procurement Service's attention on 29
November 2005, when Mr. Gronnerod, Officer-in-Charge, Procurement Section at the
United Nations Interim Force in Lebanon ("UNIFIL") informed Mr. Karia by facsimile
that UNIFIL had recently received a request for registration from TCS as well. The
information provided by TCS, namely telephone numbers and the address included on the
request again were identical to those of O.P.G.94
101. In May 2006, a company named Express Distributors, LLC ("Express
Distributors") was registered as a supplier with the United Nations Mission in Liberia
88
Christian Saunders email to Helen Dodd (6 September 2005).
89
Christian Saunders memorandum to Barbara Dixon (9 September 2005).
90
Vendor Review Committee no. VRC A 10-05 (20 October 2005).
91
Warren Sach letter to the Subject (25 October 2005).
92
Jayantilal Karia memorandum to all Procurement Service Staff Members (2 November 2005).
93
Mehboob Rahman facsimile to Jayantilal Karia (17 November 2005).
94
Christian Gronnerod email to Jayantilal Karia (29 November 2005).
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("UNMIL").95 Again, contact details provided by the company were the same as those of
O.P.G. In fact, the Subject is listed as a registered agent for Express Distributors.96
102. On 30 June 2006, UNMIL issued a purchase order for the supply of medical
equipment to Express Distributors.97 On 13 July 2006, Danny Gohari, representative of
Express Distributors, sent an email to UNMIL Procurement Section, asking if they "could
arrange a United Nations Pouch delivery . . . The Pouch is familiar with these shipments
and could get your purchase order delivered properly."98 On 31 August 2006, the
purchase order was canceled due to the company's unprofessional and incompetent
work.99
103. Express Distributors was registered as approved Vendor No. 25280 under the
Procurement Service vendor roster on 10 August 2006.100 In October 2006, the company
was awarded a contract by the Procurement Service for the provision of digital cameras
for an amount of US$8,299.00.101
104. The Task Force visited the office address listed by Express Distributors located at
701 Flatbush Avenue, Brooklyn, NY 11223, and found that the company operates out of
the backroom of a pharmacy and consists of one individual, Mr. Gohari.102
105. Mr. Gohari did not comply with the investigators request for an interview and
claimed to have nothing to do with O.P.G. Mr. Gohari did provide a response to written
questions posed to him through email. According to Mr. Gohari, he was approached by
the Subject who asked him whether they wanted to do business together. In his written
response, Mr. Gohari stated that the Subject joined Express Distributors as Vice President
after O.P.G. closed operations in early 2006. He further stated that Express Distributors
had no contact with any Pouch Unit personnel and claimed that the company had never
used the pouch for their shipments.103
106. According to the correspondence found in UNMIL's procurement files, Express
Distributors is also doing business with the UN Stabilization Mission in Haiti
("MINUSTAH") and other "UN Organisation[s]."104 In Mr. Gohari's email response to
the Task Force, he confirmed that purchase orders for a total amount of US$80,895 have
been issued to Express Distributors by MINUSTAH, the Procurement Service and the
United Nations Mission in the Democratic Republic of Congo ("MONUC").105
95
Ksenija Thompson letter to Express Distributors, LLC (11 May 2006).
96
Danny Gohari email to the Task Force (11 January 2007).
97
Purchase Order no. 6MIL-201224 (30 June 2006).
98
Danny Gohari email to Alkhirisheh Ghazi (13 July 2006).
99
UNMIL note-to-file (31 August 2006) (6MIL-201224 (Express Distributors)).
100
Grace Montelibano letter to Express Distributors (10 August 2006).
101
Purchase Order no. P-G-19980 (16 October 2006).
102
The Task Force note-to-file (5 January 2007).
103
Danny Gohari email to the Task Force (11 January 2007).
104
Danny Gohari email to Julius Parker UNMIL (2 May 2006).
105
Danny Gohari email to the Task Force (11 January 2007).
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Figure: O.P.G. Chronology
9. Loss Calculation
107. In order to determine the overall loss to the Organisation caused by O.P.G., the
Task Force requested all records pertaining to O.P.G.'s shipments from the Pouch Unit.
The Task Force further requested all records pertaining to purchase orders issued to
O.P.G. from all United Nations Field Missions and Overseas Offices.
108. The Pouch Unit does not maintain comprehensive records of all outgoing
shipments. Records are kept only in cases when especially valuable or important
documents are transmitted by the pouch, and so called "Summaries of Enclosures" are
issued, which indicate the name of the sender but do not specify the contents of the pouch
boxes. Electronic records of outgoing pouch shipments were only available from the year
2003.
109. Although the Pouch Unit's records do not allow a complete and accurate analysis
of all outgoing shipments, the documents obtained by the Task Force indicated that from
2003 to 2005 alone, O.P.G. used the pouch for shipments to 17 Missions and Overseas
Offices worldwide (see Appendix B).106
106
The Pouch Unit Compact Disc.
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110. The Task Force therefore sent multiple requests for the provision of relevant files
pertaining to O.P.G. to the Procurement Departments of 20 United Nations Field
Missions and Overseas Offices. As a result of poor recordkeeping and limited record
retention policies at Headquarters and Missions, the Task Force was unable to obtain
complete files and records to properly calculate the number of shipments and total loss to
the Organisation.
111. Based on the information provided, the Task Force concludes the following:
between 2000 and 2005 at least 192 purchase orders were issued to O.P.G. by 13 United
Nations Missions and Overseas Offices for an amount of approximately US$2,875,051
and freight costs of at least US$180,926 were included in these purchase orders. The
Task Force was able to identify that approximately US$60,970 had been charged for
freight costs by O.P.G. although deliveries were actually made through the pouch.
Without all pertinent records, the Task Force was unable to calculate the total loss but it
is clear that this sum projects only a percentage of the actual loss caused to the
Organisation.
Figure: Loss Calculation Spreadsheet
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B. THE POUCH UNIT
112. The Pouch Unit, a sub-unit of the Mail Operations Unit, is administered by the
Commercial Activities Service of the Facilities and Commercial Services Division:
Figure: Organisation Chart Commercial Activities Service
113. Andrew Toh was the Director of Facilities and Commercial Services Division
(currently Commercial Activities Service) from November 2000 until July 2003. Ms.
Joan McDonald became Director of Commercial Activities Service upon Mr. Toh's
promotion to Assistant Secretary - General for Office of Central Support Services in
2003.107
114. Although Mr. Toh, and subsequently Ms. McDonald, were ultimately responsible
for the Pouch Unit, there is no evidence to indicate that that this issue was ever raised
beyond the level of Chief of the Mail Operations Unit, Mr. de Almeida, in 2001 or
anytime thereafter.
115. The Pouch Unit is headed by the Chief of the Mail Operations Unit, Staff Member
12. It is staffed by 16 Mail and Pouch Assistants at the General Service Level including
one supervisor and two assistant supervisors for both the outgoing and incoming pouches.
107
Andrew Toh email (5 October 2006); Staff Member 10 interview (26 January 2007).
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Figure: Organisation Chart Mail Operations Unit
116. According to its website, the Pouch Unit is responsible for the dispatch of
pouches containing diplomatic material to all United Nations offices overseas as well as
UNDP offices, Information Centers and integrated offices, UNICEF country offices, and
the Field Administration and Logistics Division ("FALD") Field Missions (presently 194
destinations worldwide).108
117. The Unit operates under Section 10 of the Convention on the Privileges and
Immunities of the United Nations, which states that "[t]he United Nations shall have the
right to use codes and to dispatch and receive its correspondence by courier or in bags,
which shall have the same immunities and privileges as diplomatic couriers and bags."109
118. The guidelines and procedures for the use of the pouch are set forth in
Administrative Instruction ST/SGB/368, which stipulates in its Section 3 the restrictions
on the contents of the pouch as follows:
(a) The following matter may be sent in the diplomatic pouch: Official
correspondence, documents and printed matter of which individual
packages must not exceed 35 pounds or 16 kilograms;
108
United Nations Intranet, "Pouch Services," http://iseek.un.org/m210.asp?dept=279.
109
Convention on the Privileges and Immunities of the United Nations, Adopted by the General Assembly
of the United Nations on 13 February 1946.
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(b) Articles intended for official use appropriate for inclusion in the pouch,
where shipment by other means is not feasible.110
119. According to the Administrative Issuance the authority to transmit
correspondence through the pouch is delegated by the "Chief of the Buildings
Management Section" to Pouch Certifying Officers at Headquarters and offices away
from Headquarters. These Pouch Officers should certify with their signature on the
sealed envelope that the contents are in accordance with the Diplomatic Pouch
regulations. Pouch Officers are accountable for any violation of these regulations.111
120. According to the Administrative Issuance bar codes shall be distributed by the
Mail Operations Unit to administrative or executive offices. These bar-code labels
indicate name and return address of the sending office and thus serve as a means of
authorization and identification of the sending office.112
121. ST/AI/368 clearly stipulates in paragraph 7 that "[i]tems not bearing a bar code
label will be returned to the sender."
122. The Task Force found that contrary to these clear regulations, staff at the Pouch
Unit for years accepted commercial goods for dispatch without verifying bar codes or any
other form of authorization by any of the responsible departments.
123. Although officials in UNON and UNLB repeatedly requested measures to be
implemented to ensure that authorisation by the responsible offices was given before
goods from O.P.G. were accepted for dispatch through the pouch, no such efforts were
made.
124. The Pouch Unit was unable to provide the Task Force with any documentation
showing that any of the various offices in question ever requested that the goods provided
by O.P.G. be sent by them through the pouch. In fact, staff members interviewed at the
procurement sections in the Missions unanimously confirmed that they had never
requested goods to be sent by the pouch.
125. Staff Member 6, Mail Assistant at the Mail Operations Unit, told the Task Force
that O.P.G. started using the pouch for its deliveries in the early 1980s. As FALD was
expanding very fast, and shipment by other means often difficult, many commercial
suppliers would have used the pouch for their deliveries to the Field Missions at that
time. He further stated that the primary reason to transmit commercial goods through the
pouch was to avoid customs, as in many host countries the import of US originating
products would not have been possible.113
126. According to Staff Member 6, the Pouch Unit regularly accepted goods for
shipment whenever a purchase order number was attached to the shipment indicating that
the respective items were for "official" use. He stated, however, that the Pouch Officers
110
ST/SGB/368 (10 January 1991).
111
Id.
112
Id.; Staff Member 5 interview (26 July 2006); Staff Member 12 interview (18 July 2006).
113
Staff Member 6 interview (1 August 2006).
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never saw the original purchase orders and that, in practice, goods from O.P.G. were
accepted even without a purchase order number.114
127. The Task Force investigators found on the Summary of Enclosures that there were
many O.P.G. shipments that did not indicate purchase order numbers or contents.
128. Staff Member 13, the then Chief of Section stated in an email to Ms. Joan
McDonald, Director of the Facilities and Commercial Services Division, stated that they
"do not open the boxes so [they] do not know what the contents are."115
129. The Task Force investigators were therefore unable to determine what the pouch
boxes actually contained and whether these contents were indeed goods procured by the
Missions.
130. Staff Member 6 told Task Force investigators that O.P.G.'s vice president, the
Subject, used to come to the Pouch Unit and deliver goods in person. As the Subject held
a United Nations identification card, and was in close contact with the Missions, Staff
Member 6 stated that everybody assumed that the Subject was somehow related to FALD
and not a commercial supplier.116
131. The Task Force investigators found that the Subject was indeed issued a United
Nations Affiliate Pass on 8 July 1999.
132. No information or documentation could be obtained as to who issued or
authorized that a pass be issued to the Subject, nor did anyone in Security recognize the
department listed in this only remaining record:117
114
Id.
115
Staff Member 13 email to Joan Mc Donald (19 July 2006).
116
Staff Member 6 interview (1 August 2006).
117
Paul Jankowsky email to the Task Force (10 November 2006).
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Figure: Personal Information Sheet for the Subject
133. Staff Member 10 was shown the Subject's pass and she identified the department
"ESD" listed on this form as the Electronic Services Division that is now currently part of
the Information Technology Services Division. She confirmed that historically, vendors
who regularly came to the United Nations to manage their contracts, were issued badges
but they had to be approved by an authorized individual and she did not know who would
have approved this badge as she had never heard of O.P.G. prior to the Task Force's
investigation in 2006.118
134. Although a security gate is located at the UNHQ loading dock which should have
been appraised of the delivery of goods to the Headquarters, the Subject had uncontrolled
118
Staff Member 10 interview (26 January 2007).
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and unlimited access to the building with this Ground Pass from June 1999 to September
2000.
135. According to Staff Member 6, Mr. de Almeida was informed about the misuse of
the pouch in Nairobi, as was everybody else in the Pouch Unit.119
136. Staff Member 5, Supervisor of the Pouch Unit, Mail Operations Unit, who has
worked for the Pouch Unit for the last 30 years confirmed that shipments from O.P.G.
were regularly accepted when a purchase order number was attached to the parcel,
although he admitted that, according to ST/AI/368 commercial goods from vendors are
not meant to be sent by the pouch. Staff Member 5 denied that the incident in Nairobi
was ever brought to his attention. He told the Task Force investigators that he assumed
that in the case of O.P.G. an oral or written agreement must have existed between the
Missions permitting O.P.G. the use of the pouch. Although requested by the Task Force,
Staff Member 5 did not provide a copy of any such agreement or authorization.120
137. Staff Member 11, Assistant Supervisor, and staff member of the Mail Operations
Unit since 1980, described it as normal practice to receive and send O.P.G.'s shipments
through the pouch. He confirmed that deliveries were often brought by the Subject in
person. Staff Member 11 claimed that he was not aware that there were problems with
O.P.G. or that their shipments should not be accepted by the Pouch Unit.121
138. Staff Member 12, the current Chief of the Mail Operations Unit succeeded Mr.
Gerson de Almeida in April 2002. Although aware of ST/AI/368, Staff Member 12 told
the Task Force investigators that the Pouch Unit regularly accepted goods from external
suppliers whenever a purchase order number attached to the parcels would indicate the
official nature of the items contained. She stated that purchase order numbers indicated
that the goods were meant for official use and thus such items would be accepted for
shipment without further examination. 122
139. When asked about O.P.G., Staff Member 12 stated that she had not been aware
that this company even existed prior to the Task Force's investigation as neither her
predecessor, Mr. de Almeida nor any of the other pouch staff had informed her that there
had been problems with O.P.G. using the pouch. She further claimed that she has never
seen a representative of the company within the United Nations premises:123
119
Staff Member 6 interview (1 August 2006).
120
Staff Member 5 interview (26 July 2006).
121
Staff Member 11 interview (26 July 2006).
122
Staff Member 12 interview (18 July 2006).
123
Staff Member 12 interviews (18 July 2006 and 26 January 2007).
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Figure: Staff Member 12 interview (18 July 2006)
140. However, the Task Force has identified email correspondence between Staff
Member 12 and the Subject and Don Thompson in which the subject of O.P.G. shipments
and delivery of O.P.G. goods through the pouch was discussed.124 One such email
reflects that on 15 October 2003 the Subject requested Staff Member 12's assistance in
connection with a lost pouch delivery:125
Figure The Subject email to Staff Member 12 (15 October 2003)
124
Staff Member 12 emails to Don Thompson (31 October and 5 November 2003); The Subject email to
Staff Member 12 (15 October 2003).
125
The Subject email to Staff Member 12 (15 October 2003).
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141. Only two weeks later, on 31 October 2003 Staff Member 12 sent the following
email to Mr. Thompson:126
Figure Staff Member 12 email to Don Thompson (31 October 2003)
142. When interviewed by the Task Force, Staff Member 12 was presented with this
email. She stated that at the time she was new to the position and was still learning about
the mail operations. Therefore, she explained, her focus would have been on the issue of
missing shipments and insurance and not who sent the email; her primary focus was on
the process. Staff Member 12 stated that she did not recall the name of the Subject or
O.P.G., in fact she thought O.P.G. was an acronym for "Overseas Pouch something."127
143. Staff Member 13, Chief of the Special Services Section since 1992, confirmed
that the Mail Operations Unit regularly accepts shipments when accompanied by a
Packing Slip indicating the purchase order number. He further confirmed that the Pouch
Unit did not see the actual purchase order.128
144. When interviewed by the Task Force, Staff Member 13 at first stated that he only
became aware of O.P.G.'s misuse of the pouch in 2006 when he was given Mr. Price's
facsimile of 7 September 2001 containing information that O.P.G. used the pouch for its
shipments to UNLB.129
145. Advised by the Task Force that the issue was brought to the Mail Unit's attention
as early as 2001, Staff Member 13 then stated that he did recall a problem with O.P.G.
126
Staff Member 12 email to Don Thompson (31 October 2003).
127
Staff Member 12 interview (26 January 2007).
128
Staff Member 13 interview (1 August 2006).
129
Id.
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and that he had agreed in a meeting with Mr. de Almeida that commodities from O.P.G.
should no longer be accepted for shipment via the pouch.130
146. However, when invited to review his record of conversation, Staff Member 13
withdrew his former statement and claimed that he was not made aware of the problems
with O.P.G. prior to the Task Force's investigation. He stated that "as Chief of the
Section it was not proper for him to say he had not been made aware" and that he had
made the statement during his first interview with the Task Force out of
embarrassment.131
Figure: Staff Member 13 interview (1 August 2006)
147. The Task Force has not identified evidence that Staff Member 13 had been
notified of this issue prior to 2006.
148. The former Chief of the Special Services Section, Mr. de Almeida, retired in
2005. Task Force investigators were not able to contact Mr. de Almeida through any of
the addresses available in order to pose questions to him about the assertions made by the
staff members interviewed.
130
Id.
131
Id.
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C. THE UNITED NATIONS MISSIONS AND OVERSEAS OFFICES
149. The Task Force sent multiple requests for documentation pertaining to business
transactions with O.P.G. to all UN Missions and Overseas Offices.
150. The documents obtained did not contain any indication that any of the Missions
ever brought the issue to the Headquarters' attention or took action against O.P.G. On
the contrary, the records provided to the Task Force indicated that in most cases freight
costs were included in O.P.G.'s invoices and paid by the Missions without objection.
151. In order to determine the deficiencies of measures in place that enabled a
commercial supplier to abuse the diplomatic privileges granted to the United Nations for
several years, the Task Force visited the following Missions:
UNON;
ONUCI (original complainant); and
MINURSO, the Mission that according to the Pouch Unit's records received the
majority of pouch deliveries from O.P.G.
152. The Investigations focused on the following departments:
1. The Receiving and Inspection Units
153. Each DPKO Field Mission has a Receiving and Inspection ("R&I") Unit. The
R&I Unit receives, inspects, and certifies the acceptance or rejection of supplies and
equipment delivered to the Mission.132
154. A copy of each purchase order is provided to the R&I Unit by the Procurement
Section in advance of every delivery. On receipt of the purchase orders, the R&I unit
opens case files for every expected delivery. Incoming deliveries from commercial
freight forwarders are handed over to the R&I Unit after clearance through the United
Nations Movement Control Unit (MOVCOM). Incoming pouch shipments are delivered
to the Mission's Pouch Offices first and then handed over to R&I for inspection.133
155. According to the Property Management Manual for the United Nations Missions,
R&I staff are obliged to inspect all items received and ensure that items are supplied
according to the specifications and terms and conditions of the relevant purchase order
or contract. Goods and equipment shall be checked to ensure that specifications have
been met regarding quality, quantity, delivery date and any other special instructions
given to the vendor.134
156. The R&I Unit maintains records of all incoming shipments. These R&I reports
confirm acceptance or rejection of supplies and equipment in accordance to the purchase
132
Staff Member 14 and Staff Member 15 interview (14 November 2006).
133
Staff Member 16 interview (22 November 2006); Staff Member 14 and Staff Member 15 interview (14
November 2006).
134
Property Management Manual for United Nations Peacekeeping Missions and Missions administered by
DPKO, ch. 4, secs. 4.3, 4.14.4 (1 January 2000).
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order specifications. Anomalies and/or discrepancies are to be identified and recorded on
a Discrepancy Report that is forwarded to the CPO for appropriate action.135
157. In 2001, when O.P.G.'s misuse of the pouch came to light in Nairobi, Ms. Telles
sent an email to UNON's receiving and inspection officers asking them to pay attention
to the delivery terms of the purchase order when preparing the R&I report and reproached
them for their lack of initiative and failure to read the terms of the purchase orders:136
Figure: Linda Telles email to Receiving and Inspection Assistants ( 27 July 2001)
158. However, when interviewed by the Task Force investigators, staff at various
receiving and inspection units stated that, although the Mode of Delivery is part of the
R&I report, they did not consider it to be within the responsibility of the R&I unit to
verify whether the delivery of goods had been made according to the conditions set forth
in the purchase order.137
159. The Task Force investigators were told that the Mode of Delivery on the R&I
report is created automatically from Procurement's Mercury System which is based on
the specifications of the purchase order and cannot be changed by the R&I Unit.138
Therefore, they are unable to change or indicate a different mode of Delivery on the R&I
report, nor are any another records or discrepancy reports kept when goods are received
by the pouch instead of commercial modes of transportation.139
160. After completion of the receiving process one copy of the R&I report is sent to
the Procurement Section and another copy is sent to the Finance Section for processing of
the vendor payment. In general no other records are forwarded to the Procurement
Section or the Finance Section that would enable them to identify that the shipments were
135
Staff Member 14 and Staff Member 15 interview (14 November 2006); Staff Member 18 (22 November
2006).
136
Linda Telles email (27 July 2001).
137
Staff Member 17 interview (22 November 2006); Staff Member 16 interview (22 November 2006);
Staff Member 14 and Staff Member 15 interview (14 November 2006).
138
Staff Member 16 interview (22 November 2006).
139
Id.
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made through the pouch and, therefore, freight charges should not be approved and
paid.140
161. None of the officials in the R&I Units were familiar with the use and restrictions
of the pouch. Staff members of the R&I Unit at MINURSO told Task Force investigators
that they assumed that O.P.G.'s deliveries through the pouch were part of the normal
procedure as nobody ever complained. In fact, one R&I officer told the Task Force that if
the Delivery Mode on the R&I Report said "Air" (as seen on the R&I Report in Figure) it
could also refer to the pouch since those deliveries were also made by airline
transportation.141
Figure: Receiving and Inspection Report (sample)
140
Staff Member 19 interview (22 November 2006); Staff Member 8 interview (14 November 2006); Staff
Member 20 interview (21 November 2006).
141
Staff Member 17 interview (22 November 2006); Staff Member 16 interview (22 November 2006);
Staff Member 14 and Staff Member 15 interview (14 November 2006).
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2. The Pouch Services
162. The Pouch Services at the United Nations field Missions operate as units within
the General Services Section and are bound by ST/AI/368.
163. When interviewed by the Task Force, the current Pouch Assistant at MINURSO
stated that she has never been properly instructed on her duties and responsibilities, as
communication with her predecessor, who should have familiarized her with her new
function, was difficult because of language differences. The Pouch Assistant was not
familiar with the relevant administrative instruction or any other guideline concerning the
use of the pouch.142
164. The Supervisor of the Mail and Pouch Unit at ONUCI told the Task Force
investigators that he was "aware but not too familiar" with ST/AI/368. He stated that he
was currently updating the Missions' internal pouch guidelines.143
165. Both the Pouch Assistant in MINURSO and the Supervisor in ONUCI stated that
the Pouch Officers at the Missions did not query incoming shipments from the Pouch
Unit even when they contained commercial goods because they assumed that these
deliveries must have been "authorized" as they came from the Pouch Unit in New
York.144
3. The Procurement Sections
166. The United Nations Procurement Practitioner's Handbook of November 2006
stipulates that: "In all situations, the procurement officer is responsible for following up
and ensuring that the actions of the supplier and the UN organization are in line with the
contractual responsibilities."145
167. However, neither this Handbook nor any other Guidelines contain any detailed
guidance concerning the manner in which the receipt and transport of commodities is
properly undertaken and that responsibility is properly borne by the Organisation's staff.
168. The United Nations Field Finance Procedure Guidelines stipulate that to "improve
control over invoices received by the missions" vendors' invoices should be directly sent
to the Mission's Finance Unit.146 The processing of invoices, which was formerly
accomplished by procurement service, has been transferred to the Finance Sections in the
course of this reform.
169. Although Airway Bills and other records documenting the mode of delivery
should be maintained in the contract files in order to ensure that suppliers meet their
142
Staff Member 21 interview (22 November 2006).
143
Staff Member 22 interview (15 November 2006).
144
Id.; Staff Member 16 interview (22 November 2006); Staff Member 17 interview (22 November 2006);
Staff Member 23 interview (15 November 2006).
145
UN Procurement Practitioner's Handbook, Chapter 3.10, p. 119 (November 2006).
146
Field Finance Procedure Guidelines, Rev. 1, ch. 3.2.1, p. 34 (February 2006) (discussing processing of
invoices with obligations).
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contractual obligations under the terms of delivery, the Task Force has found that these
documents were often missing in most files.
170. Only one procurement official interviewed by the Task Force could confirm that
he was checking shipping documents provided by the vendor against the terms and
conditions of the purchase orders. This procurement official deducted freight costs from
O.P.G.'s invoices when the use of the pouch was brought to his attention, but could not
confirm whether this practice had been followed by other procurement officers. 147
171. The Task Force's investigation has shown that this had not been done in many
cases. The Task Force investigators were told by another Procurement Officer that the
mode of delivery was not verified as "there was no reason to suspect that there was
something wrong with the deliveries."148
172. Another Procurement Officer stated that procurement depended on the
information provided by either the R&I or the Pouch Unit as they were not involved in
the actual receiving process, and therefore could not know how the goods were
delivered.149
173. Even the current Chief of Procurement at MINURSO held the view that it was
exclusively the responsibility of the Mission's Finance Section to check and verify
shipping documents against the delivery terms of the purchase order and invoice.150
174. Furthermore, although problems with O.P.G. were widely known in the Missions
for years, the Task Force could not find any indication that the matter has ever been
brought to the attention of the Procurement Service.
175. For example, Staff Member 25, Procurement Assistant at ONUCI, stated that
O.P.G.'s misuse of the pouch was already known at the United Nations Mission in East
Timor as early as 2000.151
176. The current Chief of Procurement at MINURSO also told the Task Force
investigators that he recalled having problems with the company during his time in East
Timor in 2003.152
177. Staff Member 26, Procurement Assistant at UNIFIL experienced the same
problems with O.P.G. during her time at the United Nations Mission in Bosnia and
Herzegovina ("UNMIBH") between 2000 and 2003.153
178. Staff Member 3, UNON's Chief of the Procurement, Travel and Shipping Section,
told the Task Force investigators that the matter was not brought to the attention of the
147
Staff Member 7 interview (21 November 2006).
148
Staff Member 24 interview (15 November 2006).
149
Staff Member 25 interview (14 November 2006).
150
Staff Member 20 interview (21 November 2006).
151
Staff Member 25 interview (14 November 2006).
152
Staff Member 20 interview (21 November 2006).
153
The Task Force note-to-file (7 November 2006) (regarding telephone conversation with Staff Member
26).
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Procurement Service in 2001 due to the culture of "poor communication and
coordination" between Headquarters and Missions at that time.154
4. The Finance Sections
179. The Finance Section's vendor unit is responsible for the processing of all of the
invoices issued by vendors for goods and services provided to the Mission.155
180. As set forth in Chapter 3.2 of the United Nations Field Finance Procedure
Guidelines the following procedures must be implemented to improve control over
invoices received by the Mission:
"All vendors' invoices have to be directed by the vendor to the Mission's
Chief Finance Officer for payment. The Finance Section should further
receive all R&I reports, which should have the certification from the
receiving unit indicating that the goods have been delivered and
accepted."156
181. On receipt of the original invoice, the Finance Section has to ensure that invoiced
goods are identical to those itemized in the purchase orders and R&I report and that
invoice prices match those on the purchase order.157
182. However, no provision could be found explicitly stating that shipping documents
shall be provided by the vendor before freight costs are paid in order to ensure that goods
have been delivered in accordance with the delivery terms of the purchase order
183. When interviewed by the Task Force investigators, staff at the Missions' finance
sections confirmed that they would check the terms and conditions of the purchase orders
against invoices, R&I reports and shipping documents prior to processing the vendor
payment. They further confirmed that freight charges should be verified and matched
against the relevant shipping documents.158
184. However, as the investigation has shown, this was not done in many cases and
O.P.G.'s invoices were paid without prior verification of the Mode of Delivery.
D. HEADQUARTERS PROCUREMENT
185. The Task Force could not identify any indication that the abuse of the pouch by
the Subject and O.P.G. was ever formally brought to the attention of the Procurement
Service prior to 2005.159
154
Staff Member 3 interview (21 April 2006).
155
Field Finance Procedure Guidelines, ch. 3.2, p. 33 (February 2006) (discussing processing of vendor
payments).
156
Id.
157
Id.
158
Staff Member 19 interview (22 November 2006); Staff Member 27 interview (22 November 2006).
159
Staff Member 26, former procurement assistant at UNMIBH stated in a telephone conversation that they
had experienced problems with O.P.G. during her time in Bosnia between 2000 and 2003. Staff Member
26 could not remember whether the matter was brought to Headquarters attention. She opined that the
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186. However, correspondence stating that the pouch was to be used to ship the
company's catalogs to the United Nations Offices was identified in O.P.G.'s Vendor
Registration file. This correspondence had been distributed amongst the Service Support
Team of the Procurement Service in September 1999:160
Figure: Eden C. Reeves letter to the United Nations (29 July 1999)
VI. FINDINGS
187. Based upon its investigation, the Task Force finds the following:
A. O.P.G.
188. O.P.G., a New York City based company, was a supplier of commercial goods to
the Organisation and many of its peacekeeping Missions commencing in 1996,
approximately, and continuing through and until October 2005. During this time, the
company, with full knowledge of the wrongfulness of its actions, improperly used the
Diplomatic Pouch service to transport goods to the Organisation's Missions in violation
of the privileges granted to the United Nations under the Convention of the Privileges and
Immunities. These actions were not approved by the Organisation, and continued despite
former CPO of UNMIBH, Mr. Francois Chapais, might have filed a formal complaint. The Task Force was
not able to corroborate this information as Mr. Chapais retired from the United Nations in 2003 and will not
be available for an interview until 1 March 2007. The Task Force notes-to-file (7 November 2006 and 9
January 2007).
160
Eden Reeves facsimile to the United Nations (29 July 1999).
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the fact that the company was specifically directed to refrain from the use of the pouch to
ship its goods. The egregiousness of O.P.G.'s acts were further compounded by the fact
that the company often billed the Organisation for its shipments despite receiving the
benefits of free transport of its items through the use of the Diplomatic Pouch. As a
result of such actions, the company was improperly personally enriched and the
Organisation was defrauded by suffering losses for O.P.G.'s false billings for freight
charges which were in fact not incurred.
189. Based upon all facts and circumstances, as well as the reasonable inferences to be
drawn therefrom, it is evident that O.P.G., and its principal executive officers, the Subject
also known as (a/k/a) Joe Scott, and Don Thompson, engaged in a criminal scheme to
defraud the Organisation through false and fraudulent representations, fraudulent
practices, and the submission of invoices seeking reimbursement for charges which in
fact had not been incurred. The scheme further consisted of the practice of charging the
Organisation for freight costs for their deliveries to several of the Organisation's
Missions and Overseas locations, while at the same time shipping their items free of
charge through the use of the Diplomatic Pouch.
190. In furtherance of the scheme, the company presented the Organisation with false
documents seeking payment for transportation costs which in fact had not been incurred.
O.P.G. purposefully included such costs in quotations, purchase orders, and invoices
although these costs were effectively never borne by the company. It is clear that
O.P.G.'s claim that the presentation of such documents and these incidents were the
product of accident is without credibility in light of the sheer number of cases and the
numerous instances in which the practice was brought to the attention of O.P.G. and the
company was instructed to cease its activities. Despite these admonitions, the company
and its officers pursued this strategy in a number of the Organisation's Missions,
continued to use the Diplomatic Pouch for ordinary commercial shipments, and
improperly receive reimbursement for transportation fees not due and owing to them.
191. As a result of the scheme, the Organisation suffered quantifiable losses at least in
the amount of US$60,970 (US$33,707 of which was recovered). It is quite likely that
this figure is underestimated as the investigation only focused upon 13 Missions in which
records were available but incomplete, while several other Missions records were unable
to be examined at all.
192. The Task Force further finds that the Subject was improperly granted full access
to the United Nations premises and was improperly issued the United Nations
identification. Holding a United Nations Ground Pass, the Subject was able to deliver
goods directly to the Pouch Unit without prior security clearance, where the boxes
containing the goods were accepted without examination of the contents. The ability of
the company to gain direct access to the Pouch Unit effectively aided the scheme, and
was a factor in allowing for its continuation. However, the gross negligence of the
United Nations staff also played a major role in perpetuating the scheme.
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193. The evidence gathered by the Task Force demonstrates that the Subject's
fraudulent efforts continue as he seeks to do business through aliases and through other
corporate identities.
B. THE HEADQUARTERS POUCH UNIT
194. The Task Force has not identified evidence of purposeful collusion in the scheme
on the part of any staff member at the Headquarters Mail Operations Unit or the Pouch
Unit.
195. However, the Task Force's examination of this matter under the relevant United
Nations Staff Rules, Administrative Instruction and the Convention of the Privileges of
the United Nations results in the following:
196. Staff at the Pouch Unit, in breach of the Convention of the Immunities and
Privileges of the United Nations and the corresponding provisions in Administrative
Instruction ST/AI/368, accepted goods from O.P.G. and other commercial vendors for
dispatch through the pouch without proper approval or authorization by the appropriate
United Nations entities.
197. The former Chief of Mail Operations, Mr. de Almeida, failed to appropriately
respond to this abuse of the pouch system when it was brought to his attention in 2001.
198. Mr. de Almeida and Staff Member 13, the recently retired Chief of the Special
Services Section, failed in their duties to implement and enforce procedures to protect the
interests of the Organisation and this failure resulted in a financial loss to the
Organisation of at least US$60,970.161 This figure constitutes a very conservative
estimate of the loss in light of the fact that the Task Force was unable to examine all the
pertinent documents for shipments of items by O.P.G. In addition, Mr. de Almeida and
Staff Member 13 failed in properly exercising their supervisory functions and allowed
O.P.G.'s efforts to continue when the company's privileges should have been curtailed
and the company firmly barred from use of the pouch to transport its goods.
C. THE UNITED NATIONS MISSIONS AND OVERSEAS AGENCIES
199. The Task Force could not identify any form of collusion or participation in
O.P.G.'s scheme on the part of the United Nations officials at the field Missions and
Overseas Offices. However, the investigations revealed the following:
200. That O.P.G.'s billing practices of repeatedly charging freight costs while using the
pouch was widely known amongst procurement officials and other United Nations staff
members at Missions and Overseas Offices. As a result of poor communication between
the Organisation's personnel in the United Nations Missions and Headquarters, and
insufficient instruction given to the United Nations staff in the Missions, O.P.G.'s
nefarious behavior was not brought to the attention of the United Nations Headquarters
161
See Appendix A, "Loss Calculation � O.P.G. Shipments to the United Nations Missions." The
Organisation has recovered approximately US$33,000 of this loss.
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until 2005. The lack of notice to appropriate officials in the Headquarters Procurement
Service and the Office of Central Support Services enabled O.P.G. to continue their
fraudulent activities undiscovered and undeterred for many years.
201. The Task Force has found that instruction of staff at the United Nations Field
Missions on the use, purpose and restrictions of the pouch service was insufficient to
prevent the misuse of the diplomatic privileges granted to the Organisation for the
transmission of its items in international transit.
202. Further, clear responsibilities of the parties involved in the process were not
delineated. Many United Nations staff members were, and continue to be, unfamiliar
with the policies concerning the use of the Diplomatic Pouch Service which are in
existence. This lack of proper procedures as well as awareness and sense of
responsibility amongst staff members also contributed to O.P.G.'s ability to continue its
activities undiscovered and uninterrupted for many years.
203. Further, it is clear that the contents of shipments of goods through the Diplomatic
Pouch are not sufficiently and consistently examined, exposing risks that the pouch will
be used for improper and even illegal means. This risk came to fruition recently as
several individuals were arrested for using the pouch to transmit illegal contraband
internationally. Such a method of shipment is particularly attractive to smugglers
because shipments by pouch are not examined by customs officials.
VII. CONCLUSIONS
204. The Task Force finds that the Subject and the company O.P.G. engaged in a
criminal scheme to defraud the Organisation in violation of the common law, and Title
18, United States Code, Section 1343. The Organisation was a victim of the scheme.
205. The Task Force concludes that the former Chief of the Mail Operations Unit did
not properly exercise his managerial functions by failing to take corrective measures once
the scheme was identified; not ensuring that O.P.G. and the Subject were denied access to
use the Pouch Unit for commercial shipments; and not informing other officials in the
Organisation of the unauthorized and illegal activity, all in violation of United Nations
Staff Regulation 1.2(b).
206. The former Chief of the Special Services Section did not properly exercise his
managerial functions by failing to implement and enforce procedures to protect the
integrity of the Diplomatic Privileges granted to the Organisation.
207. The Task Force concludes that the personnel in the Pouch Units at the
Headquarters in New York and in the Missions were generally derelict in their
responsibilities and functions once irregularities in the use of the pouch were identified
and it became known that O.P.G. was improperly billing for shipments costs not actually
incurred.
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VIII. RECOMMENDATIONS
208. The Task Force recommends that the matter be referred to national prosecutorial
authorities in the host country to pursue violations of federal criminal law identified
herein.
209. The Task Force recommends that the Organisation consider pursuing a civil
lawsuit to recover losses sustained as a result of O.P.G.'s fraudulent and illegal actions.
210. The Task Force recommends that O.P.G. be permanently removed from the
vendor roster in all its forms, and that efforts be made to ensure that the Subject a/k/a
"Joe Scott," Mr. Don Thompson, and Mr. Eden C. Reeves do not engage in business with
the Organisation indirectly or through another corporate identity hereafter. The Task
Force further recommends that Express Distributors be removed from all of the
Organisation's vendor rosters, and that a review be conducted to ensure that no other
current vendors are related to, or connected with, O.P.G. or the Subject.
211. The Task Force recommends that Administrative Bulletin ST/AI 368 be reviewed
and updated to more clearly delineate the manner in which goods can be shipped by a
Department to another United Nations entity, and that Staff in the Missions and at
Headquarters with any involvement in international transportation of items be trained on
the proper uses of the Diplomatic Pouch.
212. The Task Force recommends that measures be put in place to ensure and enforce
communication between the Procurement Service at the Headquarters and the
Procurement Sections at the Organisation's various Missions, including the establishment
of a Global Vendor database where Missions may report issues with vendors, including
corrupt, illegal and improper practices.
213. The Task Force recommends that measures be put in place to ensure and
encourage information sharing between the Procurement Section and Mail Operation
Units to prevent the re-occurrence of the failings identified herein, and to ensure the
integrity of the use of the Diplomatic Pouch as well as the reputation of the Organisation.
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IX. APPENDIX A: LOSS CALCULATION � O.P.G. POUCH
SHIPMENTS TO THE UNITED NATIONS MISSIONS
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MONUC PURCHASES FROM O.P.G. IN 2002-2005
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MONUC PURCHASES FROM O.P.G. IN 2002-2005
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MINURSO PURCHASES FROM O.P.G. IN 2002-2005
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BONUCA PURCHASES FROM O.P.G. IN 2003-2005
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UNOCHI/ONUCI PURCHASES FROM O.P.G. IN 2004-2005
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UNON PURCHASES FROM O.P.G. IN 2000-2003
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UNLB PURCHASES FROM O.P.G. IN 2001-2005
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UNIFIL PURCHASES FROM O.P.G. IN 2000-2005
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MINUSTAH PURCHASES FROM O.P.G. IN 2004-2005
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X. APPENDIX B: O.P.G. SHIPMENTS BY POUCH 2003-2005
United Nations Missions
MINURSO MONUC ONUCI BONUCA MINUSTAH UNAMSIL OTHERS
2713 6822 25812 5897 26460 3751 ICTR
5225 16573 26151 25751 26971 15123 32907
6150 16547 32511 31621 35432 15124 35430
6412 16607 34911 33449 35433 15152 UNMEE
6892 16614 35172 33714 35837 23924 6600
16874 16675 35212 35594 35844 25398 6601
16881 26308 35416 37981 37352 33057 24111
16886 33668 35685 37940 36002 26198
16908 30124 36162 36335 25444
16912 34290 37545 33173
26527 35067 37705 UNMIL
22662 35999 27852
22663 36265 Ndjamena
22913 36266 36391
LOG No.* 23540 36558 36752
23981 36926 Niamey
24269 37173 25802
24440 37946 Nouakchott
24602 37962 26008
25033 38455 Phnom Penh
25246 38466 36658
26668 38467 UNMIK
25549 39172 23922
22754 Tunis
24631 33434
25093 Dakar
31935 25420
32542 25801
33010 UNLB
34187 3277
34865
Total O.P.G. Pouch Shipments: 108
Note:
*Outgoing pouch shipments are recorded as Log No.
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XI. APPENDIX C: O.P.G. CHRONOLOGY
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Categories: Democratic Republic of Congo | Republic of Congo | Cote D'ivoire | Ethiopia | Haiti | Kenya | Kosovo | Lebanon | Liberia | Mali | Namibia | United States | Western Sahara | Leaked files | 2009 | 2009-01 | Analysis requested | International organization | United Nations Office of Internal Oversight Services | 2007 | 2007-02 | English