Despite
Scathing
Audit of PWC Wrongly Selected, UN Claims All Fine With Umoja
By
Matthew
Russell Lee
UNITED
NATIONS,
March 5 -- Even in those instances when the UN is
forced to catch itself in irregularities, in overpaying for services,
hiring friends and cronies, rather than answer questions or take
action, it makes accusations of error and clings to the status quo.
A
year ago, Inner
City Press wrote
and asked
Secretary General Ban Ki-moon's spokesman Martin
Nesirky about a pattern of hiring fraud, including the doctoring of
resumes to omit previous supervisory relationships, documented in
resumes leaked to Inner City Press by a whistleblower.
While
there was
not definitive answer at the time, an audit by the UN's Office of
Internal Oversight Services verified all of these irregularities,
resume doctoring and more, including overpaying
PriceWaterhouseCoopers for a contract for the UN's Enterprise
Resource Management, called UMOJA.
Inner
City Press
asked Nesirky for a response, but received more. Finally last week
Inner City Press exclusively published
the complete
OIOS audit -- click here to view
-- and
on the morning of March 1 asked Nesirky in writing:
Paragraph
73
of the OIOS
audit states that Angela Kane accepted responsibility
for identifying who should be held accountable for procurement
irregularities relating to her department's award of a contract to
PriceWaterhouseCoopers. The same paragraph states that her office
agreed to issue a report within 30 days, the deadline of which would
have been September 24th, 2010. So the question is, did Angela Kane
identify who was responsible for these irregularities by September
24, 2010, and who, if anyone, was held accountable? Does Angela Kane
still believe that Paul van Essche is the right man for the job, and
did she know Mr van Essche prior to his appointment as Umoja chief?
Nesirky
didn't
respond to the question, or even acknowledge receipt of the e-mail.
So at the noon briefing, Inner City Press in person asked
him:
Inner
City
Press: on OIOS, I had wanted to ask this; it has been a long
time brewing. Almost a year ago there was this, issues arose about
the hiring within the Umoja project, about Paul van Essche hiring
friends and colleagues in violation of rules. And now the OIOS
report itself has become public, and in it, it says, it’s pretty
damning, it talks about PricewaterhouseCoopers not being a low
bidder; talks about all the hiring, and it says, Angela Kane said
that she would respond to this report and take action in some way on
accountability by 24 September last year, 2010. So, I am wondering, I
know you didn’t; I am not sure if you have issued some kind of a
statement about this yet, what action has been taken on this OIOS
report about systematic problems within the $300 million Umoja
project?
Spokesperson
Nesirky:
Two things: One is that we’ve answered at length and on
more than one occasion on this topic, and I don’t really have
anything to add except, for a second point, which is that some
aspects of the audit report are being still closely studied, to look
at what action may be needed. And that is all I have to say on it.
Inner
City
Press: But I mean, if it paints a picture of hiring
irregularities, and is PricewaterhouseCoopers, given this report, do
they still have the contract? What, I just want, I know that you
have issued something, but I am not sure as to the two main
components, the head of Umoja and PWC; what’s happening?
Spokesperson
Nesirky:
We’ve issued quite a lot of detailed responses to
questions on this from you and from others, and I don’t have
anything further to add.
Inner
City
Press: But I haven’t really seen the response.
Spokesperson
Nesikry:
I don’t have anything further to add at this point,
Matthew.
Later
on March 1,
Inner City Press e-mailed Nesirky asking to see these supposed
previous answers:
“What
answers have you previously provided to the media inquiring about the
OIOS audit of Umoja, and what's the basis of your statement today at
noon that you have provided extensive answers to such questions.
Please provide the answers you referred to.”
UN's Ban & Kane over left
shoulder, CMP Alderstein at right, action on OIOS on ERP not shown
The next day,
Nesirky sent this:
From:
UN
Spokesperson - Do Not Reply [at] un.org
Date: Wed, Mar 2, 2011
at 10:56 AM
Subject: Your questions on Umoja
To: Matthew.Lee
[at] innercitypress.com
Cc: Martin Nesirky [at] un.org
Hi
--
you had received the following answers on Umoja on 14 February; we
have nothing to add at this time.
[Q]
Last week you said you were still developing a response to the WSJ
story about OIOS having found serious irregularities concerning Paul
van Essche's management of the Umoja project. In March of last year,
you confirmed in response to my question that OIOS was undertaking a
separate investigation of van Escche's role in concealing his prior
relationship with a subordinate he hired for the project.
Now
it
is reported that “Van Essche... hired one official, who had been
turned down for a lower post, to a more senior position when he took
over the project, the report said. This official was hired after he
changed his CV to remove Van Essche’s name as his supervisor in
three previous jobs, the report says.”
Question
1
Please
this morning provide an update about these two investigations -- what
were the results of them, and what action is the SG taking, if any?
And does the SG still believe that Mr Van Escche is the right man for
implementing the Umoja project?
The
questions
raised relate to issues that were reported in August 2010
in an internal audit conducted by OIOS. As part of that audit
process, management responded to the findings and recommendations. In
some cases the recommendations were accepted and implemented and
in other management undertook to conduct further examinations in
order to close the recommendation. This examination by management
is still in progress and we have no further comment to make at this
stage.
Question
2
Also,
please confirm that Ludovic van Essche, who worked for the UN, was
Paul Van Escche's father, and that Paul Van Escche's mother knows and
visited Angela Kane recently. Also, please state the status of Ms.
Kane as head of the Department of Management, and when she will give
the next of her promised briefings.
The
UN
Secretariat is not aware of any person by the name of Ludovic van
Essche being a UN employee. Ms. Kane does not know Paul van Essche's
mother and has never met her.
But
back on
February 15, Inner City Press had asked a follow up question, which
Nesirky never answered or acknowledged:
In
light
of yesterday's van Essche family answers, please see
http://news.rootsweb.com/th/read/BELGIUM-ROOTS/1998-10/0909790152
and
http://bit.ly/gXn2BG
Is
this
Paul van Essche's father? Does Ms. Kane not know him? Again,
what is Ms. Kane's status as head of the Department of Management?
When will she belatedly give a briefing?
Not
only has
Angela Kane not given a briefing, Nesirky has not even acknowledged
the repeated request that she give one. In the interim, after Inner
City Press' exclusive publication of the OIOS audit, in connection
with a meeting of Kane's Department of Management, the following
e-mail was widely sent out in the Department of Management by a
whisteblower or reformer, including the OIOS audit as
exclusively published by Inner City Press
From:
[ ] @gmail.com
Today,
Ms.
Kane is conducting a Town Hall on Accountability in the UN. What
a hypocrisy? Attached is an audit report of a division reporting
directly to her. What has she done about it? Nothing!!! Any other
person doing half of this would have been immediately suspended or
fired. According to OIOS, there before has there been a single
person who violates as many serious rules and in such a short time.
Ms.
Kane,
accountability is not lip service. It is through actions –
direct and indirect. And also appearing to be accountable. Leaders
set examples for everyone to follow; not set up different rules for
themselves and their friends.
Many
attendees
forwarded this e-mail to Inner City Press, and reported on growing
questions about Ms. Kane and more senior UN leadership. Finally,
after refusing to answer or acknowledge questions or requests for a
briefing by Ms. Kane, on Friday March 4 Nesirky's office sent the
following, which despite substantial contradiction by the OIOS report
itself, we publish in full:
From:
UN
Spokesperson - Do Not Reply [a] un.org
Date: Fri, Mar 4, 2011
at 10:56 AM
Subject: Response to your reporting on the Umoja
project
To: Matthew.Lee [at] innercitypress.com
Cc: Martin
Nesirky [at] un.org>
In
response
to your queries related to the Umoja project I would like to
share some clarifications:
The
article
of the Inner City Press entitled "UN
Corruption Scandal
in ERP Extends from Hiring & PWC to Capital Master Plan",
dated 28 February 2010, contains a number of errors.
There
is
no "corruption scandal" related to the Umoja project as
the title of the article erroneously suggests.
No
vendor
was favoured over other bidders during the selection process.
Bids were compared on a like-for-like basis rather than at face value
to ensure a common factor for evaluation. The evaluation was
conducted on an overall best value for money basis, and PwC received
the highest combined score.
Prior
to
the awarding of the contract, the case was referred to the
Headquarters Committee on Contracts for review to ensure adherence to
the UN Financial Regulations governing procurement. The Committee
examined the summarized technical and financial evaluations of the
proposals received from vendors and concluded that no breach of UN
financial rules occurred in the procurement process.
The
allocated
budget for project design services has not been and indeed
cannot be exceeded, as the contract and the UN financial rules
prevent any expenditure from going above the budgetary limit. So
under any circumstances, the vendor cannot bill the Organization
above the specified budgetary limit. Payment under the contract is
contingent on the actual delivery of services.
The
OIOS
report that you refer to is an audit report that was prepared as
part of regular programme of work of the Office of Internal Oversight
Services. As per standard practice, accepted audit recommendations
have been referred to the substantive areas and are at various stages
of implementation.
Umoja
maintains
a "zero tolerance" policy, insisting on 100 per
cent compliance with the UN's rules, regulations and ethical
directives. It is an initiative that is fundamental to the
Secretary-General's ability to provide an efficient, transparent and
service-oriented Secretariat. Umoja will enhance accountability,
transparency and internal controls for all types of resources.
While
we publish
this in full, it should be compared to the OIOS audit
itself, and to
the timeline above. Among many others, this question remains
unanswered:
Paragraph
73
of the OIOS audit states that Angela Kane accepted responsibility
for identifying who should be held accountable for procurement
irregularities relating to her department's award of a contract to
PriceWaterhouseCoopers. The same paragraph states that her office
agreed to issue a report within 30 days, the deadline of which would
have been September 24th, 2010. So the question is, did Angela Kane
identify who was responsible for these irregularities by September
24, 2010, and who, if anyone, was held accountable? Does Angela Kane
still believe that Paul van Essche is the right man for the job, and
did she know Mr van Essche prior to his appointment as Umoja chief?
This
UN
does not appear to be accountable or well run, including to many
of those who work within it and of the wider public. Watch this site.
* * *
UN
Corruption
Scandal
in ERP Extends from Hiring & PWC to Capital
Master Plan
By
Matthew
Russell
Lee, Exclusive upload
UNITED
NATIONS,
February
28 -- A year ago in March 2010 Inner City Press
asked the UN and wrote
about corruption in the UN's Enterprise
Resource Planning or UMOJA program, with the UN dodging questions
about detailed hiring irregularities.
On March
9,
2010,
Inner City Press asked
Inner
City
Press:
Umoja, which is the ERP or Enterprise Resource Planning,
Inner City Press received these documents that seemed to, that
indicate that the head of the program, Mr. Paul van Essche, hired a
colleague or friend of his, John Solem, who doctored his PHP,
Personal History, to delete all references to Mr. van Essche having
been previously his supervisor. These are documents. What I want to
know is whether you can confirm that OIOS [Office of Internal
Oversight Services] was informed of this, if there is an
investigation of this and when it will be finished, and what the
penalties are in the UN system for altering documents in order to be
able to hire friends and cronies?
Spokesperson:
Let
me find out.
The
UN's own
Office of Internal Oversight Services investigated the hiring
violations and confirmed them, also finding procurement
irregularities in contracts to PriceWaterhouseCoopers.
When a short
article on this appeared, Inner City Press asked Secretary General
Ban Ki-moon's spokesman Martin Nesirky for the UN's response. He said
that one would be forthcoming, then later declined to comment.
Now
Inner City
Press has obtained
and
is publishing the OIOS report, which is worse
than previously reported. PWC was not the low bidder; the UN's
Department of Management won't even commit to adopting rule about
soliciting and taking Best and Final Offers.
The
irregularities
extend to the UN Capital Master Plan, into which an additional $100
million in US Tax Equalization Funds are being poured, so far with no
paperwork.
Not
addressed in
the report is that UMOJA chief Paul von Essche took New York Knicks
basketball tickets from PWC just when they were getting the contracts
despite not being the low bidder.
While
the
OIOS
report leaves names out, here's an insider's account and exegesis of
the OIOS report:
Procurement
Issues
1.
PWC
was once a major player in ERP system integration business
but sold that practice to IBM in October 2002
(http://www-03.ibm.com/press/us/en/pressrelease/491.wss). This was
after the Enron-Arthur Andersen scandal and there was a call to
separate audit and consulting practices. When PWC bid for the UN
contract in 2008, it was re-entering the integration market.
2.
The
UN uses two-envelops bidding process (technical and
financial), which is normal in public sector. The panel for the
technical evaluation, which was set up by the Project Director, was
deemed as unfit. The high ratings of the panel gave PWC an advantage
even though as a new player it was not the lowest cost bidder, as
typical of new entrants.
3.
There
was no BAFO or cost for deliverables - meaning there is no
true cost or time limit for PwC services. When the UN failed to reach
a contract with SAP, PwC continued to report to work even though
there was no application to work with. The negotiation with SAP
ultimately lasted for 16 months. During that time, PwC continued to
work
4.
Each
contract in the UN has an NTE (not-to-exceed) amount which
serves as a ceiling for amount to be expended. To exceed that
amount, the Headquarters Committee on Contract must approve. Mr. van
Essche exceeded the amount with PwC without HCC approval. (Audit
Report)
5.
In
submitting its bid, PwC used profiles of people who did not
show up. (Audit Report)
6.
A
typical ERP implementation requires a single system integrator
that stays with the project till conclusion. The project director
changed broke the integration services into (Design and Build). That
piece-meal approach that favored PwC, as a new entrant, which quite
simply did not have the resources for a life cycle integration
services at the time of bidding.
7.
To
curb any unfair advantage PwC may have for the next phase
(Build), Procurement Division proposed that PwC does not participate
in the next phase. But again, Mr. van Essche persuaded the UN that
PwC would install a firewall to ensure that its staff preparing for
the next bid have not worked on the project or information about the
project aren’t transferred from current project staff to those
preparing proposals for the next bid. Unfortunately, there are no
mechanism to ensure the integrity of that firewall. Is the UN
monitoring PwC emails or movement of its people?
8.
A
separate contract for the provision of strategic services was
entered into with Deloitte. However, many of the deliverables agreed
to under this contract were assigned to PwC by the Project Director.
The lack of BAFO, conversely the open-ended service contract under
which the Project Director can assign anything to PwC makes all of
this possible. All PwC has to do is submit attendance and other
administrative charges and the UN pays. Some of the deliverables
assigned to PwC are project charter, business case, project plan and
strategy.
9.
After
winning the contract, PwC provided free office
accommodation to the project for over three months. When questions
were raised about the practice, the Project Director altered an
invoice for services (man-day) in order to show that accommodation
was actually paid for.
Hiring
Corruption
1.
Mr.
Jon
Solem and Mr. van Essche have been friends for more than 15
years. In fact, the VA was specifically tailored to Mr. Solem’s
expertise. The title was changed; Mr. Solem changed his resume as
well removing any mention of Mr. van Essche as his previous
supervisor and the fact that he was a P4, two levels below the level
of the new post he was applying to. It should be noted that Mr. van
Essche chaired the two panels the interviewed Mr. Solem for the P5
and D1 posts and was fully of aware of the changes of Mr. Solem’s
resume.
2.
The
other D1 VA was used to hire Ms. Ann Kerney, another friend
of Mr. Paul van Essche.
3.
Some
of the friends he brought in include: Mr. Robert Holden as
a P5 and without any selection. Under a special arrangement made
solely for Mr. Holden, he works two weeks in NYC and two weeks in
Geneva because his family refused to move to NYC. Mr. Holden and Mr.
van Essche have been friends for 17 years now dating back to
Cambridge Technology where they worked in early 90s. Mr. Holden did
not participate, even remotely, in preparation of the business case
for the project.
4.
Since
the audit, the practice has continued. Mr. van Essche
has also brought in two more friends – Ms. Patricia Dann as a P5
and Mr. Ronald DeGroot (a naturalized Canadian of South African
descent) as a P5 as well. This was based on temporary VAs. Each of
these VAs were specifically tailored to suit these external
candidates. Mr. deGroot is also listed on Paul’s best friend Jon’s
PHP as a reference.
5.
Mr.
van Essche has also sent resumes of friends for recruitment
by consulting companies he has hired to work for the project. Two of
such candidates are Brad Manila and Hugh Jetha. These friends were
hired by PWC and another was hired by Deloitte. By recruiting them
through the consulting companies, they can maximize their
renumeration such as paid travel and hotel as well as a hefty $175
per hour. Brad and Hugh reside in Florida and commute weekly to NYC.
6.
It
is true that there were no background checks done on Mr. van
Essche hiring. There was an anonymous letter claiming that he had
inflated his background. Including claims that he owned a company
called Left Brain when the company was founded by one Richard King.
When auditors requested a record of the background checks, they were
informed that he got lost while offices were being relocated as a
result of CMP.
7.
The
audit alleges the hired persons were qualified based on a
review of their PHP but that is because the VA/TVAs were specifically
designed for these people.
Now what
will the
UN do? The spokesperson's office has so far refused to comment. Angela
Kane, who applied for and it's said was initially give post at
the top of the UN in Geneva, now won't get that post, which is being
given an Italian spokesperson says to Carlo Trezza. Inner City Press
has repeatedly asked that Ms. Kane belatedly give a briefing and take
questions but this hasn't happened. Watch this site.
, 
