By Matthew Russell Lee, Exclusive upload
UNITED NATIONS, February 28, followed up March 5 -- 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.
