UN's Environment Program is an Administrative Mess, Internal Study Reveals

EXCLUSIVE: The United Nations Environment Program, the flagship for environmental consciousness and creation of a new era of “global environmental governance,” doesn’t know how its money is spent or even who it may be dealing with when it comes to hundreds of corporate, public and non-governmental partners that are “key” to fulfilling its mission, according to a confidential internal study obtained by Fox News.

UNEP, a $450 million U.N. organization, is also an administrative mess, which ignores its own financial rules, and sometimes doesn’t even reveal who is authorized to sign its checks, the study says.

UNEP apparently agrees. It has accepted all 17 recommendations contained in the internal study, and is currently attempting to enact them.

According to the study, that process is supposed to be completed by the end of this month.

In response to questions from Fox News, a UNEP spokesman declared that “The recommendations of the auditors are now being implemented by UNEP under a practical and agreed time-scale and via a Task Force and, as is standard practice, we report back to the [U.N. auditors] every six months”.

There are quite a few important things to fix. Among other failings, the study says that UNEP:

-- doesn’t adequately check out the credentials of its partners, especially in the private sector;

-- doesn’t even keep adequate records of who it is partnering with, or how well they do at the projects they promise to accomplish;

--has failed to keep track of millions of dollars raised by some partners, and passed on by UNEP to others outside the normal U.N. financial accounting system;

--frequently fails to include “essential” information on financial documents;

--lets officials who don’t have the proper authorization sign off on payouts;

--and has sometimes used high-minded partnership arrangements to cover purely commercial ventures.

Moreover, the global organization has sometimes failed to enforce its own rules for staff disclosure, leading to cases of apparent conflict of interest and potential self-dealing. And sometimes, UNEP departed from its normal legal paperwork entirely, as in the case of a licensing deal with the Thomson Reuters Foundation to use UNEP-generated news stories on a humanitarian website, AlertNet, apparently without going through proper channels.

The 25-page report by the U.N.’s internal watchdog Office of Internal Oversight Services (OIOS) was published on Dec. 30 last year under the dry title “UNEP Project Delivery by Partnerships.”

Click here to read the full report.

The study, which was forwarded to UNEP Executive Director Achim Steiner after incorporating his own management team’s responses, covers a 25-month period from January 2008 to April 2010.

During roughly that time, the report notes, UNEP “entered into partnerships with over 750 partners” ranging from private corporations to governments to civilian non-governmental organizations in deals involving at least $65 million.

Those dry figures, however, understate the importance of partnership arrangements to UNEP, and increasingly to the entire U.N., in an era of shrinking budgets and increased skepticism about the global organization’s ability to deliver on its expanding mountain of political, economic and social mandates.

With less than a half-billion dollars in its 2010-2011 budget, UNEP is one of the smaller members of the U.N. constellation of funds, agencies and programs (the U.S. contributes about $6 million a year directly to the total). But it has some of the most grandiose ambitions: to remake the world economic and environmental order, reshape human patterns of production and consumption, and help shift trillions of dollars in wealth from rich to poorer nations.

Its mission, as described on the UNEP website, is to “provide global leadership and encourage partnership in caring for the environment by inspiring, informing and enabling nations and people to improve their quality of life without compromising that of future generations.”

In other words, partnership is fundamental to its globe-changing strategy, which will reach a new crescendo next year at the U.N.-sponsored World Summit on Sustainable Development, to be held in Rio de Janeiro in May 2012, where the U.N. hopes a new framework of “global environmental governance” will get at least ceremonial endorsement.

What the OIOS study reveals, however, is that when it comes to its own partnership arrangements, UNEP very often operated in a governance fog.

Among some of the higher-profile cases cited in the report:

--in the case of a long-standing partnership with the pharmaceutical giant Bayer, largely focused on youth and the environment, UNEP was only able to account formally for 297,000 euros (more than $430,000 at current rates) of Bayer donations to the program, even though Bayer had donated more than $12.2 million at that point. Most of the money was channeled directly to various other partners and vendors by UNEP “to avoid the cumbersome U.N. process,” the report says. The Bayer partnership is slated to continue through 2013.

According to a Bayer spokesman, in response to questions from Fox News, the pharmaceuticals company and UNEP “report to each other on the partnership projects implemented by each of them on a regular basis in a steering committee. The steering committee also decides on the annual allocation of the funding provided by Bayer for the implementation of the various projects.”

Nonetheless, the OIOS auditors urged UNEP to “immediately” quit bypassing the U.N. accounting system, and UNEP agreed, while saying it is cooperating with an “ongoing” OIOS investigation to determine who is accountable for any unauthorized use of the money.

--in the case of another longstanding partnership, with the Thomson Reuters Foundation (charitable arm of the global news and information group), OIOS auditors noted that a longstanding deal to put UNEP-generated news stories on a foundation website called AlertNet was dubbed a “license,” a term not included in standard UNEP partnership agreements. “It was not clear why a standard legal instrument was not used instead,” the auditors declared.

Nor was there evidence that the arrangement had been reviewed and approved, as required, by a central quality control agency, the report says. It added: “Unauthorized deviations from standard legal templates may result in legal issues for UNEP and may lead to significant financial losses.”

The auditors recommended that UNEP’s administration should henceforth “ensure full compliance with the use of legal templates,” quit bypassing the approval department. UNEP agreed.

Contacted by Fox News, a Thomson Reuters Foundation spokesperson noted that the “License Agreement” was signed on July 10, 2009, and has no specific time limit. “No exclusivity or priority in the use of UNEP material is granted to the Foundation,” the spokesperson said, and noted that the foundation had signed similar deals with the World Health Organization, the UN High Commission on Refugees, UNICEF and the World Food Program.

When it comes to lesser-known partners, UNEP was equally improvisational—and very trusting.

As the auditors noted, when it came to making cash advances to working partners in the field, “the initial advance was almost always 75 per cent of the agreed budget, regardless of whether the partnership was new or not.” There was usually no documentation “justifying the need for significant initial advances.”

In the case of one unspecified project with the environment ministry of Mali, where bureaucratic corruption is rife, the full budget of $200,000 was advanced up-front. Not only was this beyond the authorized limit for the type of funding agreement used, but “it was not clear how the [UNEP] division would ascertain whether the project achieved its objectives.” Reason: the money was just a payment toward a bigger Mali fund-raising project.

In the case of a similar payment to the environment ministry of Gabon, the auditors noted, “the activities never took place and no outputs were delivered.”

Among other recommendations, the auditors proposed, and UNEP agreed, that projects should be examined by an external auditor.

The list of transgressions rolled on and on, and in many cases the OIOS auditors cited a similar cause: UNEP’s seven major operating divisions apparently did not talk to each other very much, or to the central Administration under Steiner, who took over UNEP in 2006. Instead, senior staffers at the division level seemed to do whatever they thought was appropriate.

In one example of the resulting chaos, the auditors noted that a divisional director had signed an $858,000 deal with a completely separate U.N. agency, even though his signing authority was limited to $200,000.

In the same vein, the auditors noted that “an organization-wide corporate strategic approach for the identification of partners did not exist,” and UNEP officers often used word of mouth or Internet searches to find them.

Once found, there was no established due diligence process to vet them and document the results. In many cases, auditors inferred, UNEP was simply trying to get around its normal commercial procurement process.

In general, when it came to managing its partnerships, the one thing UNEP apparently didn’t do was act as UNEP.

Or, as the OIOS auditors put it, the organization “does not have a centralized database for management of partnerships. Currently, the divisions manage their partnerships without any guidance and consultation with other divisions. In most cases, individual project ... officers had their own filing and archiving system, making it difficult and time consuming to obtain consolidated data on partnership.”

The OIOS recommendation for the promise was relatively simple: UNEP needs to centralize, starting with the partnership data base, along with “procedures clearly identifying the overall responsibility and custody for information management.”

In response, UNEP promised to do so, and have it done by the end of June, 2011.

Whether that will happen on time, of course, is another question. Near the time when the auditors’ analysis of UNEP’s partnership arrangements was completed, OIOS issued a list of previous audit recommendations across the U.N., including UNEP, that were still not implemented.

Some of the previous OIOS recommendations to UNEP, which were still not accomplished, dated back from three to 12 years.

George Russell is executive editor of Fox News and can be found on Twitter @GeorgeRussell.