Updated

Two whistle-blowers exposed evidence-tampering by a top official within the U.N. office that is supposed to investigate corruption in the world body's operations and suffered retaliation for it, a U.N. judge has ruled.

The ruling and other recent opinions by the U.N. Dispute Tribunal show that the world body still struggles to hold itself accountable despite the promised reforms since a vast scandal involving its oil-for-food program with Saddam Hussein's regime in Iraq.

The cases focus on the U.N. Office of Internal Oversight Services, an independent internal watchdog created at the insistence of the United States that oversees the conduct of officials, staff and more than $23 billion that the U.N. spends annually on behalf of governments around the world.

Despite U.N. efforts to keep their case from public view, the two whistle-blowing investigators from OIOS won a public hearing in October. The judge said their case exposed the "extraordinarily toxic interpersonal relationships that existed at the time amongst a few individuals at the higher echelons of OIOS and, in particular, within its Investigations Division."

The case precedes the tenure of current OIOS head Carman Lapointe, who said the U.N. hasn't decided whether to appeal the ruling but is working hard to improve oversight.

"I hope that 2014 will be a turnaround year," Lapointe said. "We can and do make a difference for the better, at times in spite of ourselves."

OIOS was created two decades ago but failed to detect and prevent the scandal involving 2,200 companies from some 40 countries that colluded with Saddam Hussein's regime to bilk $1.8 billion from a U.N.-administered oil-for-food program for Iraqi humanitarian relief in the years before the U.S.-led invasion in 2003.

After that embarrassment, the United Nations in 2006 established a special anti-corruption unit, the Procurement Task Force, that uncovered at least 20 major schemes affecting more than $1 billion in U.N. contracts and international aid. But at the beginning of 2009, the U.N. closed the agency and diverted its work to the OIOS Investigations Division.

In a ruling last month, Judge Goolam Meeran said the Investigation Division's deputy director, Michael Dudley, "admitted to altering and withholding evidence" in an investigation and had retaliated against the investigators assigned to the case, Florin Postica and Ai Loan Nguyen-Kropp.

The judge awarded Postica and Nguyen-Kropp $40,000 each for moral damages "of a high order" — an amount well more than twice the norm — and $10,000 for legal costs, but the ruling doesn't require OIOS to punish Dudley.

The case originated from a complaint Dudley took from a U.N. staff member in January 2009 that U.N. physicians were using or improperly prescribing controlled narcotics. After evidence leaked to a blogger at the U.N., Postica and Nguyen-Kropp accused Dudley of altering and withholding related evidence, concluded the complainant in the case had "malicious intent" and recommended the case be dropped.

But after the investigators flagged their concerns about Dudley, the U.N. put them under formal investigation and bad-mouthed them to other international organizations, according to the ruling.

Dudley also threatened to report Inga-Britt Ahlenius, then head of OIOS, to U.S. officials and U.N. Secretary-General Ban Ki-moon for incompetence unless she agreed to "protect" him, the judge said. Ahlenius supported Dudley, as did Angela Kane, then head of U.N. management, and OIOS investigators Suzette Schultz and Beverly Mulley, according to the ruling.

There was no comment from the two whistle-blowers or Dudley. All still work for OIOS.

The Government Accountability Project, a Washington-based nonprofit group dedicated to whistle-blower protection, praised the ruling. "The Dispute Tribunal has repeatedly shown itself to be independent and willing to confront the (U.N. secretary-general) when warranted," international program director Bea Edwards said Friday.

Concerns about Dudley, an American and career U.N. official, had emerged before the case. His previous boss in Geneva warned Ahlenius in a September 2007 confidential memo that he had improperly closed a case and compromised the reputation of the U.N.'s refugee agency. Ahlenius hired Dudley nonetheless as a deputy director of investigations and elevated him to acting investigations director. The division's management under Dudley was criticized by some employees in a staff survey in late 2008.

An Associated Press investigation found in 2010 that the U.N. cut back sharply on investigations after the Procurement Task Force was closed and its work was shifted to OIOS, and that Dudley had a record of closing cases before investigations were complete and not actively pursuing cases begun by the task force.

Under Dudley's charge at OIOS, for example, nothing came of a task force report that showed $1 million a day flowing out of a safe in a U.N. project office in Kabul that was part of $850 million intended for Afghanistan's rebuilding and elections from 2002 to 2006. And the U.N. took no action after finding about half of the $350,000 in U.N. funds intended to launch a radio station for women in Baghdad was improperly used.

The U.N. had an opportunity to improve the oversight body in 2009 when Ahlenius nominated the chair of the Procurement Task Force, Robert Appleton, to run the Investigations Division.

The former U.S. prosecutor's nomination, however, was blocked by Ban amid an internal dispute over hiring, a move that U.N. Dispute Tribunal Judge Coral Shaw declared illegal when Appleton challenged the action and won $30,000 in damages. But by the time of the 2012 ruling, Appleton already had another job.

A review of the reports submitted by OIOS to the General Assembly through mid-2013 shows that the U.N.'s oversight functions still have not completed any major corruption cases since the task force was disbanded.