TOP U.S. OFFICIAL AT UNESCO RESIGNS AMID QUESTIONS OF FISCAL IRREGULARITIES  (MaximsNews.com, U.N.) by Mehri Madarshahi

UNITED NATIONS - / www.MaximsNews.com, UN/ - 20 March 2007 -- A report just released by the Auditor-General of UNESCO, the President of the French Cour de Compte (the General Accounting Office), presided by a well-known French political figure, Philippe Seguin, led last week to the resignation of the highest ranking American official in charge of Education Sector at UNESCO.

Before assuming this position he was the founding President of the California State University Monterey Bay campus and a one-time Republican Congressman from Vermont.  

In his letter of resignation to UNESCO's Director-General, Smith stated that on 9 February he had received "... a written threat against my life, received through the mail at my home.

After receiving the death threat, I can no longer tolerate the working environment at UNESCO.  For each of us, there is a limit to what we will endure in the name of "doing the right thing. The threat against my life, and the subsequent weak follow-up, has taken me past that limit at UNESCO. The expiration of my first contract on June, 17th gives me an opportunity to review my future service to UNESCO.”   

His current two-year contract with the Organization would have expired on 17 June 2007.  

Last Friday, 16 March, the Director-General sent a message to the UNESCO staff stating that "Mr Peter Smith, Assistant Director-General for Education, has tendered his resignation, which I have accepted, and which is effective immediately. I wish to reiterate my full commitment to the aims of the Education Sector strategic reform, which will continue.  All necessary steps will be taken to ensure that UNESCO achieves its goals in education”.  

What happened to proper checks and balances?   

The Audit report by Mr. Seguin will be presented to the Executive Board at its upcoming session in April 2007 (see UNESCO document 176 EX/139), one of the governing bodies of the Organization.   

The report documents that Mr Smith had awarded …. contracts in less than a year, with a total value of US$ 2.145 million – equivalent to 5.7% of the total contractual services of the Organization for the biennium - to one particular consulting firm, Navigant Consulting of Chicago.  

The auditors faulted that in the process exceptional and dispensatory procedures were used, avoiding proper process of competitive bidding and selection of consultants. Fees were not negotiated and provisions of the Administrative Manual of the Organization – designed to protect the Organization – had not been respected.  

According to the financial regulations of UNESCO, such payments could only have been made if there was a waiver issued by the Organization. Instead, payments were structured in such a way that 4 of out of 8 contracts to Navigant, signed by Mr. Smith, were issued in amounts below US$ 100,000, suggesting an effort to avoid obtaining required waivers.  

The Auditors also indicated that they had not found any documented exchanges or record of negotiation with the contractor as to the price and value of services rendered or expected.  

In reacting to the findings by the Auditors, the ADG/ED noted that “the fractioning of the contracts into four, each under 100,000, was not intended to bypass the Contracts Committee but it was rather to enable the rules of UNESCO.  He added that the Contracts Committee, therefore, was not consulted as the threshold of $100,000 had not been reached”.  

The auditors noted that waivers for proper procedures of bidding for the same vendor were supposed to be granted only once every 12 month and under condition of non-repeat of contract. Furthermore, it was stipulated in the rules that recourse to outside expertise must be temporary.   

Should the unavailable expert knowledge become “permanently necessary, the sector is required either to establish a temporary post or recruit someone to fill an existing post”.  

The audit report asserts that, once the competent officers in the Executive Office of the Education Sector had drawn Mr Smith’s attention to the procedural requirements, he removed the authority from the Administrative Officer concerned and transferred him. Mr. Smith subsequently sought the approval of the Contracts Committee for amounts exceeding the limit of US$ 100,000, including contracts in an amount of US$ 800,000, $400,000 and $549,955.  

The minutes of the Contracts Committee show that at points some members refused to sign the minutes of the meeting for lack of transparency of the competitive bidding and backed up their refusal with a memo to the ADG/Administration a.i. (at the time the Deputy Director–General).  

Nevertheless, other members of the Contracts Committee chose to conduct a pro-forma evaluation and moved to approve the contracts. In their accompanying letter, “they regretted that the Education Sector has not paid adequate attention to the established procedures”.  The objections of the Legal Advisor in particular were then overridden by the affirmative decision of the Deputy Director-General.  

The audit report also points out that five contracts concluded between June and December 2005 were financed from the regular budget of the Education Sector, although these expenditures had not been envisaged in the Organization’s regular budget for this period. The Audit report further casts doubt on whether any authorization had been obtained for the sixth contract worth $400,000.  

Further investigation revealed, however, that the contract was originally valued at US$1.2 million.  ADG/ED had split the contract into two segments of US $400,000 and US $800,000.  This was done in order to indicate that the 800,000 charge represented a discounted rate, far below that of KPMG, BCG and other competitors.  The report also found that the payment claims were signed by the Assistant Director-General of the Education Sector instead of the contracting firm, i.e., Navigant Consulting.   

The audit report concludes that Mr Smith had retained Navigant Consulting on a “preferential basis” without required scrutiny of its background, relevant experience or areas of competence.  According to its website, Navigant was specializing in legal counseling, dispute, military technology, litigation, healthcare and energy areas – with scant reference to the educational exigencies of the Organization.  

The Executive Board had requested the Director-General to ”develop a management framework for a decentralized and results-oriented education program reflecting UNESCO’s specific contributions, especially in capacity-building for Member States, institutes and field offices at the international, regional and country levels”.  Furthermore, it had encouraged the Director-General “to consider appropriate organizational changes which may be necessary in order to implement the above mentioned management framework”.  

Following the recent adoption by UNESCO and its four co-convening “Education For All” partners (UNDP, UNFPA, UNICEF and the World Bank), which was supported by the G-8 at its St. Petersburg summit, UNESCO had moved to assume a leadership role in coordinating the global education for all movement particularly at the country level.  

It remains to be seen how this most recent upheaval will impact the ability of the Organization to deliver and to dispel questions that might arise at a time when the Organization’s governing bodies are called to decide about the UNESCO’s budget for 2008-2009.  

by Mehri Madarshahi, MaximsNews Paris Correspondence.

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