Document of the Week: Aid Donors Blast UNDP for Resisting Appeals to Fight Corruption

A dozen wealthy donor states press the United Nations Development Program to investigate allegations that funds were misappropriated from a Russia climate program it managed.

By , a senior staff writer at Foreign Policy.
Smoke spews from the stacks of a nickel plant in Monchegorsk, Russia
Smoke spews from the stacks of a nickel plant in Monchegorsk, Russia
Smoke spews from the stacks of a nickel plant in Monchegorsk, Russia, on Feb. 5, 2008. MAXIM MARMUR/AFP via Getty Images

The United Nations’ premier development agency has resisted appeals from its wealthiest donors to conduct an independent investigation into alleged corruption and mismanagement by U.N. personnel and consultants working on a controversial environmental project in Russia aimed at mitigating the impact of global warming, according to internal U.N. documents.

In August 2019, Foreign Policy published a lengthy investigation into alleged corruption in an environmental program managed by the U.N. Development Program (UNDP) in Russia, triggering a major push by donor states for an independent investigation into potential mismanagement and corruption at the agency.

The following month, the UNDP interim associate administrator, Mourad Wahba, sought to assure key Western donors, including the Netherlands, New Zealand, and Sweden, that the agency took the allegations of corruption seriously, and he proposed having the U.N.’s internal watchdog, the Office of Internal Oversight Services, conduct an investigation.

The United Nations’ premier development agency has resisted appeals from its wealthiest donors to conduct an independent investigation into alleged corruption and mismanagement by U.N. personnel and consultants working on a controversial environmental project in Russia aimed at mitigating the impact of global warming, according to internal U.N. documents.

In August 2019, Foreign Policy published a lengthy investigation into alleged corruption in an environmental program managed by the U.N. Development Program (UNDP) in Russia, triggering a major push by donor states for an independent investigation into potential mismanagement and corruption at the agency.

The following month, the UNDP interim associate administrator, Mourad Wahba, sought to assure key Western donors, including the Netherlands, New Zealand, and Sweden, that the agency took the allegations of corruption seriously, and he proposed having the U.N.’s internal watchdog, the Office of Internal Oversight Services, conduct an investigation.

But the donors expressed concern that the U.N. had reneged on the pledge. “This offer appears to have been subsequently retracted,” according to a draft letter prepared in January by those three countries. “Given the seriousness of our concerns, we hope that UNDP will reconsider its position and formally request OIOS investigate its handling” of the Russia project, according to the draft letter, which was obtained by Foreign Policy. UNDP never did.

In a written response, a UNDP spokesperson said that the development agency never retracted the offer. The spokesperson, who requested anonymity, confirmed that the development agency had proposed the Office of Internal Oversight Services investigate the project. If that was unacceptable to the donors, the spokesperson added, UNDP suggested that another U.N. investigative unit conduct the review. It remains unclear why the U.N. didn’t conduct the review itself.

In the end, UNDP decided to press ahead with an independent review of its handling of the Russia program. If the review finds cause for further investigation, UNDP will “pursue that route with a U.N.-mandated body.”

Tensions between UNDP and its wealthiest contributors peaked in March, when a dozen donor states, including Australia, Canada, France, Japan, and the United States, signed a confidential letter to UNDP’s administrator, Achim Steiner, that underscored the exasperation they had faced in prodding the development agency to dig deeper into the allegations.

The March 5 letter—which we are publishing as our Document of the Week—voiced frustration that the donors’ request for reinvestigating the case “has not materialized.”

“We consider that a reinvestigation by an independent body is essential to address our concerns, to satisfy requirements of some of our national auditors, and to sustain our confidence that similar problems will not occur in future UNDP programs,” according to the letter, which was cited in a recent story by the Financial Times. “Allegations of potential misconduct within the United Nations Development System will inevitably endanger the faith in its entities and the system overall.”

The U.N.’s handling of the $7.8 million Russia project has raised broader concerns about the U.N. development agency’s ability to assure donor countries that it can reliably distribute hundreds of millions of dollars in international funding for environmental projects.

The UNDP program, designed to curb greenhouse gas emissions in Russia by encouraging energy efficiency, had been plagued by allegations of corruption and mismanagement since shortly after its inception in 2010. An internal 2017 audit found “strong indicators of deliberate misappropriation” of millions of dollars in funds.

UNDP has acknowledged that its handling of the Russian project “fell short of its required standards.” But a UNDP investigation into the allegations, carried out by its internal corruption watchdog, the Office of Audit and Investigation, found no evidence that funds had been misappropriated. The agency informed donors at the time that it “does not believe that a technical review … would produce evidence or indication of misconduct.”

Donor nations were dissatisfied with UNDP’s own investigation and demanded an independent review of its handling of the Russia program. Such a review, they wrote in the March letter, “will provide answers to many of the questions and concerns we have raised which, after UNDP’s reviews and investigations, are still outstanding. This review will determine whether wrongdoing, including misappropriation of funds occurred and, if so, identify the persons or entities responsible.”

In response, the U.N. hired an outside consultant, Amitav Rath, to conduct a review of the U.N.’s management of the program, which is almost complete. The purpose of the review, however, was not to hold potential perpetrators accountable for a crime, but to help UNDP “further refine controls, risk management and governance arrangements.” Only the UNDP’s internal watchdog, which has already concluded that no wrongdoing occurred, “has the sole responsibility to investigate alleged individual misconduct,” the organization wrote.

“We have established an independent Office of Audit and Investigations and rely on that office to conduct the required audit,” a UNDP spokesperson said. “We would be breaching the independence of the office if we requested external parties to re-investigate their work.”

Colum Lynch is a senior staff writer at Foreign Policy. Twitter: @columlynch

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