UN: OIOS REPORT ON FRAUD AND CORRUPTION

1. Summary. The report of the Office of Internal Oversight
Services (OIOS) on the investigation conducted by the
Investigations Task Force (ITF) into fraud and corruption
allegations at Pristina Airport (A/60/720) will be considered
by the Fifth Committee during its 2nd resumed session that
begins May 22. The report documents a serious lack of
accountability by Harri Holkeri, the former Special
Representative of the Secretary-General (SRSG) for the UN
Interim Administration Mission in Kosovo (UNMIK), including
UNMIK,s complete failure to provide oversight and a system
of internal controls that resulted in the abuse of public
funds by Pristina Airport staff. The report details the
nature of the ITF investigation and incorporates comments
throughout by the former SRSG including that the ITF lacked
jurisdiction in the matter and that, in any event, the
alleged corruption was not widespread. During the recent
consideration of the report by the Advisory Committee on
Administrative and Budgetary Questions (ACABQ) (reftel), the
Deputy SRSG repeated the assertion of the former SRSG that it
was outside of OIOS, jurisdiction to report to the GA on the
results of ITF investigations. The Deputy SRSG also refused
to address specific allegations of wrongdoing and defended
those accused. End summary.



2. The OIOS report on the investigation conducted by the
Investigations Task Force (ITF) into fraud and corruption
allegations at Pristina Airport was issued on March 14, 2006
following a decision taken in mid-2003 by the OIOS, the
European Commission's European Anti-fraud Office (OLAF), and
UNMIK to establish an Investigations Task Force (ITF) to
identify fraud and corruption in UNMIK as well as in all
publicly owned enterprises in Kosovo and those institutions
funded from the Kosovo consolidated budget. The decision to
establish the ITF resulted from an investigation in 2002 by
OIOS and OLAF into the fraudulent activities of a staff
member of the Kosovo Energy Company, KEK, which led to the
criminal conviction of the staff member. The report includes
background information on the structure of UNMIK, reviews
events leading up to the investigation, addresses the lack of
adequate internal audit arrangements in UNMIK, documents
UNMIK,s responsibility for the administration of the
airport, discusses OIOS, obligation to report the matter to
the GA and includes comments by the SRSG. Noting that the
ITF submitted 33 reports to the SRSG between August 2004 and
June 2005, the report summarizes the most significant cases
including several that resulted in criminal referrals.
(Note: Current OIOS Under Secretary-General Inga-Britt
Ahlenius served as Inspector-General in Kosovo prior to
assuming her present duties. She has made clear in both
private conversations with USUN and publicly that she is
committed to rooting out the corruption she encountered while
in Kosovo. End note.)



3. In summary, the OIOS concluded that the 33 case reports
strongly supported the assessment that fraud and
mismanagement were rife and that UNMIK,s lack of oversight
of the finances, management and personnel of the airport led
directly to the abusive practices. The report includes 11
recommendations designed to ensure proper accountability at
the airport and to prevent further fraud and corruption
including that:

-- UNMIK cooperate with the Kosovo government on the creation
of a viable, long-term anti-corruption entity responsible for
administrative investigations in the public sector;

-- UNMIK monitor the cases referred to the Department of
Justice and report to DPKO and the ITF on the results of the
cases;

-- the performance of all managers of Pristina Airport be
evaluated in light of the ITF investigations;

-- adequate resources be made available to conduct regular
external audits for each of the publicly owned enterprises to
assist in improving systems of control and reducing the
opportunities for fraudulent activities;

-- UNMIK, through Pillar IV (which is responsible for public
institutions and infrastructure reconstruction), conduct
training for all staff in the publicly owned enterprises on
adherence to rules, both financial and administrative,
relevant to each of the publicly owned enterprises;

-- UNMIK take the actions recommended in the individual ITF
reports in a speedy and effective manner; and

-- the Secretary-General share this report with the Security
Council.





4. It is expected that the Fifth Committee will take note of
the report of the OIOS.

BOLTON