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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]
Date: Wed, Mar 2, 2011 at 10:56 AM
Subject: Your questions on Umoja
To: Matthew.Lee [at]
Cc: Martin Nesirky [at]

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 and

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: [ ]

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]
Date: Fri, Mar 4, 2011 at 10:56 AM
Subject: Response to your reporting on the Umoja project
To: Matthew.Lee [at]
Cc: Martin Nesirky [at]>

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 ( 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.

Click here for Inner City Press' March 27 UN debate

Click here for Inner City Press March 12 UN (and AIG bailout) debate

Click here for Inner City Press' Feb 26 UN debate

Click here for Feb. 12 debate on Sri Lanka

Click here for Inner City Press' Jan. 16, 2009 debate about Gaza

Click here for Inner City Press' review-of-2008 UN Top Ten debate

Click here for Inner City Press' December 24 debate on UN budget, Niger

Click here from Inner City Press' December 12 debate on UN double standards

Click here for Inner City Press' November 25 debate on Somalia, politics

and this October 17 debate, on Security Council and Obama and the UN.

* * *

These reports are usually also available through Google News and on Lexis-Nexis.

Click here for a Reuters AlertNet piece by this correspondent about Uganda's Lord's Resistance Army. Click here for an earlier Reuters AlertNet piece about the Somali National Reconciliation Congress, and the UN's $200,000 contribution from an undefined trust fund.  Video Analysis here

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