| Case Study - The UN Oil-For-Food-Programme |
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A. Background on the United Nations Oil-for-Food Program
In April 2004, United Nations Secretary General Kofi Annan appointed an independent, high-level inquiry (The Independent Inquiry Committee or "IIC") to investigate the administration and management of the Oil-for-Food Program in Iraq. Following this, the United Nations Security Council unanimously adopted Resolution 1538 (2004), which endorses the inquiry and calls for full cooperation in the investigation by all United Nations officials and personnel, the Coalition Provisional Authority, Iraq, and all other Member States, including their national regulatory authorities.
The IIC hired Dispute Analytics in May 2004 to assist in this historic and complex investigation.
B. The Issues
Dispute Analytics staff were an integral part of the IIC Forensics Team for over 18 months throughout the completion of the Committee’s massive investigation. Our staff led or assisted in numerous investigative tasks, including inter alia:
- Assessment of the program’s oversight functions including internal and external audit;
- Analysis of work performed by key program vendors the Escrow Bank and the Goods Inspectors;
- Analysis of the UN Treasury’s investment of program monies;
- Analysis of accounting policies and procedures and controls;
- Investigation into misuse of program funds for the hiring of a high-level staff unrelated to the program;
- Analysis of administrative costs incurred by the UN
This last task related to the analysis of the propriety of the almost $1 billion in administrative fees charged by the United Nations in implementing and running the program. Our staff performed a detailed review of the UN’s accounting transactions through electronic querying, review of thousands of pages of supporting documentation and numerous witness interviews. The salient question was whether the UN misused or otherwise profited from its 2.2% share of Iraqi oil proceeds.
C. The Analysis
Following the acquisition and analysis of 7 years and $64 billion in programme accounting transactions and financial statement audit reports, Dispute Analytics honed in on a particular task undertaken by the UN Agencies in 2003 after the fall of Baghdad. Our staff compiled detailed evidence to support the conclusion that the UN agencies were paid over $65 million in administrative fees for work related to this particular task. Based on a combination of document review, analytical procedures and witness interviews, our staff further concluded that the Agencies had actually incurred costs amounting to only a fraction of that amount, approximately $15 million. Our analysis resulted in the Committee’s determination that the UN had overpaid its own agencies by as much as $50 million.
As a result of these findings, the Committee formally requested the UN to return these monies to the people of Iraq. To date, over $35 million of these monies have been returned.
To read additional details about this work, please follow this link to the IIC’s final report.
