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U.N. Procurement Scandal: The Case of the Official Who Never Was

Trouble in the United Nations Procurement Division is now well established as the world organization’s successor scandal to Oil-for-Food.

Two U.N. officials have already been arrested, leading to one guilty plea so far. Hundreds of millions of dollars worth of contracts have been questioned, and earlier this week, an independent consulting report described the U.N. purchasing department — which spends the bulk of taxpayer dollars contributed to the U.N. — as inept, disorganized and ripe for malfeasance.

Amid that morass, one of the most intriguing mysteries to date involves the curious case of the senior official who did not take charge: Sanjaya Bahel. In a memo (pdf) issued by his superiors this summer, Bahel, 55, was announced as the new chief of procurement, just as major revelations of corruption began to surface. But Bahel did not end up in the job.

What happened?

One strong possibility is that Bahel is being targeted by at least some of the federal and U.N. investigators who are currently working their way through procurement, as part of an investigation announced by Secretary General Kofi Annan. But U.N. officials won’t say. In a recent interview, the U.N.’s new under-secretary for management, Christopher Burnham, noted that the United Nations does not disclose names when it is carrying out an investigation of its personnel.

But Burnham did confirm in an interview with FOX News that, in the wake of a proven corruption case this summer and amid allegations of further wrongdoing and conflicts of interest in the U.N.’s purchasing department, “we have reopened a number of aspects of past investigations.” Burnham would not disclose the names of any of the people who are the focus of these renewed probes, but a FOX News investigation finds strong signs for thinking that Bahel’s case is one of them.

Bahel, a native of India, currently heads the United Nations Commercial Activities Service (CAS), as well as the United Nations Post Office. Prior to that, he worked from 1995 to 2002 in the U.N. Procurement Division, mostly in the Field Procurement section. Field Procurement deals with supplies for U.N. peacekeeping operations, which account for a large chunk of the procurement office’s spending of well over $1.3 billion per year. Bahel eventually became chief of the section.

Field Procurement is also the section where convicted bribe-taker and longtime U.N. procurement officer, Alexander Yakovlev, worked prior to his exposure by FOX News last June. A FOX News investigation revealed that Yakovlev possessed a secret Caribbean bank account and that his son worked for a U.N. supplier, in violation of the organization’s rules. Yakovlev was arrested on Aug. 8 and pleaded guilty to conspiracy and money laundering. Investigators found nearly $1million dollars in bribes in his Caribbean account.

On July 17, a month after the FOX News report on Yakovlev appeared, a top U.N. manager announced that Bahel, as part of a general management shuffle, would be returning to procurement — this time as its chief. The same announcement declared that Bahel, unlike any predecessor, would report directly to the man who wrote the memo: Andrew Toh, the assistant secretary-general in charge of the U.N.’s Office of Central Support Services (OCSS), which covers a host of internal U.N. bureaucratic functions.

Instead, the entire reshuffle was placed on hold by the secretary general’s office. On Aug. 15, one week after Yakovlev’s guilty plea, procurement was removed from Toh’s overall command and placed under the direct supervision of the U.N.’s new controller, Warren Sach, until an investigation of the scandal can be completed. Burnham now says that will take until next June.

FOX News has learned that in 2003 and 2004, Bahel was the subject of extensive U.N. audit investigations concerning his tenure in procurement from 1999 to 2002, which raised serious questions about his professional behavior. Those investigations resulted in two secret U.N. audit reports, which FOX News has obtained.

In both cases, Bahel was alleged to have bent U.N. rules and procedures to the benefit of Indian-owned companies, one of them owned by the Indian government. Significantly, Bahel himself is not only a U.N. official; he holds a dual posting as an official of the government of India’s Defense Ministry. Specifically, Bahel is a member of the Indian Defence Auditing Service (IDAS) and is listed on the IDAS personnel directory as being "on deputation" to the U.N. According to U.N. insiders, this means that he could revert to his Indian government ranking if his employment contract with the United Nations is not renewed when it expires in March.

In the first complaint against Bahel, covering a period from April to September 2002, U.N. auditors found that an Indian-owned company named Thunderbird Industries LLC had been allowed to register as a U.N. supplier without fulfilling a variety of requirements for financial records, technical ability to fulfill the contract, corporate references or even corporate registration. The auditors also charged that Bahel hampered procurement officials who tried to find the information.

In September 2002, the company was awarded a contract worth nearly $21 million to provide engineers to peacekeeping operations in the Congo. That contract was placed on hold, before Thunderbird was officially notified of the bid, by the then head of procurement, Christian Saunders, who discovered it had been pushed through while he was on vacation.

Even though Thunderbird was supposedly unaware that it had gained the contract, another U.N. supplier in the Congo soon complained that Thunderbird’s CEO, Nishan Kohli, had arrived at their workplace, announced Thunderbird as the new engineering supplier, and tried to hire the rival firm’s workers. In January 2003 Saunders called for the audit investigation. A month after that, Bahel left procurement for his new job in the Commercial Activities Service.

The audit report was sent on to U.N. investigative watchdogs at the Office of Internal Oversight Services, to decide whether Bahel should be charged with improperly steering contracts to outside suppliers in violation of U.N. rules. The final version of the audit report was issued on Nov. 11, 2003, and signed by the under secretary-general for Internal Oversight Services, Dileep Nair. (Nair has since left the U.N., embroiled in his own scandal of improper use of funds and allegations of sexual harassment.)

The document soft-pedaled Bahel’s alleged offenses, offered mild changes in procurement’s procedures and suggested that the offending company be removed from a list of qualified U.N. suppliers. Nonetheless, it declared that Nair’s office was “still investigating whether [Bahel] should be held personally accountable.”

The second audit report was issued on Sept. 21, 2004, and directed to the head of investigations at OIOS; it took a much sterner view of Bahel’s behavior. The report examined eight contracts for computers and electronic supplies that were approved by procurement between 1999 and 2002 and were worth more than $72 million. It found signs of fraud in five of them and did not rule out possible fraud in the remaining cases. All of the contracts were with a single company, Telecommunications Consultants India Limited (TCIL), owned by the Indian government and headquartered in New Delhi.

The second report explicitly charged that Bahel “appeared to have deliberately cancelled completed bids whenever they could not be awarded to TCIL, and then called for replacement bids that were eventually awarded to TCIL. There were also indications that established procurement procedures were manipulated in order to favour this vendor. Furthermore, in two cases, TCIL bid prices had been altered to the vendor’s advantage after the bids had been opened.” A junior procurement officer, Walter Cabrera, who reported to Bahel at the time and who is still in procurement, was named in the report as being involved with Bahel in some of the questionable procedures. (Cabrera did not return a call from FOX News.)

Intriguingly, the companies named in the separate reports are connected. The CEO of Thunderbird Industries LLC, Nishan Kohli, is identified in the 2003 audit report as the son of a man, Nanak Kohli, who is described as the designated U.S.-based representative of TCIL for dealing with the United Nations. According to the audit report, Nishan Kohli also identified himself on his Congo trip as a representative of TCIL.

FOX News sent e-mail queries to TCIL headquarters in New Delhi, requesting clarification of the Kohli relationship to the Indian firm, but to date has received no reply.

Today, there is little public evidence that Thunderbird Industries LLC even exists. The company maintains a semi-constructed Web site that declares the firm to be a “wholly owned venture of the Kohli Group serving Government and Private Enterprise clients in the telecom and IT industry.” It boasts a corporate headquarters at 928 Broadway, Suite 1205, in New York, N.Y.

FOX News visited the Manhattan office listed on the Thunderbird Web site, only to discover that it was occupied instead by three chiropractors. Thunderbird, they said, had moved to another office in the same building, but further inquiries revealed that the company had left 928 Broadway more than a year ago.

Calls to an office telephone number listed on the Thunderbird Web site were diverted to a tape-recording that did not mention the company’s name.

TCIL, on the other hand, is a very real government-owned company established by the Indian government in 1978 under the auspices of the Indian Minister of Telecommunications and Information Technology. According to its Web site, it is involved in engineering and telecommunications consulting, working in more than 45 countries, principally in the developing world.

TCIL’s supplier business with the United Nations, as outlined in the audit reports, has chiefly involved acting as a middleman in the sale of products by well known international manufacturers. In at least one case studied by the U.N. auditors, TCIL was allowed to sell satellite test equipment manufactured by U.S.-based Agilent Technologies to U.N. peacekeeping forces at a price 16 percent higher than the lowest bidder — even though the lowest bidder was Agilent itself. The U.N. auditors found it “more than likely” that Bahel had used a questionable technicality to disqualify the original winning bid.

FOX News e-mails to TCIL asking about the U.N. audit reports and any further U.N. investigation went unanswered. But TCIL itself remains on the procurement department’s authorized list of vendors — a strong indication that in any investigation attached to the 2004 report, TCIL was cleared of wrongdoing.

After the second audit report, Bahel’s case was also submitted for further investigation to Barbara Dixon, director of OIOS’s investigative arm. FOX News e-mails to Dixon about the disposition of his case went unanswered.

Bahel himself did not return telephone calls from FOX News. But his subsequent tenure in CAS would seem to indicate that OIOS had cleared him of all charges, or at least, that no disciplinary action was taken against him.

Toh, the man who tried to move Bahel back to Procurement, told FOX News emphatically that OIOS had “cleared him completely.” Toh, as it happens, knows Bahel well. He had himself been head of the Procurement Division from 1999 to 2001, serving as Bahel’s direct boss.

Toh explained that his abortive announcement that Bahel would report directly to him also had nothing to do with the just-building Yakovlev corruption scandal, but instead was intended to lessen the workload on the person who would normally supervise Bahel.

“None of it had to do with the Yakovlev affair,” he said.

None of it, that is, except the blockage of Toh’s management shuffle, which is intended, he said, to last until investigators have sorted out the extent of the scandal.

Toh himself is skeptical that the new round of investigations will find much. “I am to this day not convinced that what Yakovlev did had anything to do with the U.N.,” he told FOX News. “I don’t see how anybody could beat our system.”

Burnham’s new round of investigations, which will involve a detailed “forensic audit” of Procurement Division contracts for the past several years, should address that challenge. And, Burnham told FOX, it will also include an examination of the Office of Internal Oversight Services and the entire U.N. internal system of justice.

George Russell is Executive Editor of Fox News. Claudia Rosett is journalist-in-residence at the Foundation for the Defense of Democracies.