[Senate Hearing 109-957]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-957
 
  U.N. HEADQUARTERS RENOVATION: NO ACCOUNTABILITY WITHOUT TRANSPARENCY

=======================================================================

                                HEARING

                               before the

                FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT
                     INFORMATION, AND INTERNATIONAL
                         SECURITY SUBCOMMITTEE

                                 of the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 20, 2006

                               __________

        Available via http://www.access.gpo.gov/congress/senate

       Printed for the use of the Committee on Homeland Security
                        and Governmental Affairs


                                 ______

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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
TOM COBURN, Oklahoma                 THOMAS R. CARPER, Delaware
LINCOLN D. CHAFEE, Rhode Island      MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah              FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico         MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia

           Michael D. Bopp, Staff Director and Chief Counsel
             Michael L. Alexander, Minority Staff Director
                  Trina Driessnack Tyrer, Chief Clerk


FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, AND INTERNATIONAL 
                         SECURITY SUBCOMMITTEE

                     TOM COBURN, Oklahoma, Chairman
TED STEVENS, Alaska                  THOMAS CARPER, Delaware
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
LINCOLN D. CHAFEE, Rhode Island      DANIEL K. AKAKA, Hawaii
ROBERT F. BENNETT, Utah              MARK DAYTON, Minnesota
PETE V. DOMENICI, New Mexico         FRANK LAUTENBERG, New Jersey
JOHN W. WARNER, Virginia             MARK PRYOR, Arkansas

                      Katy French, Staff Director
                 Sheila Murphy, Minority Staff Director
            John Kilvington, Minority Deputy Staff Director
                       Liz Scranton, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Coburn...............................................     1
    Senator Collins..............................................     6
Prepared statement:
    Senator Carper...............................................    33

                               WITNESSES
                         Tuesday, June 20, 2006

Hon. John R. Bolton, U.S. Permanent Representative to the United 
  Nations........................................................     8
Anne Bayefsky, Senior Fellow, Hudson Institute; Professor, Touro 
  Law Center; and Editor, www.EYEontheUN.org.....................    16
Claudia Rosett, Journalist-in-Residence, The Foundation for the 
  Defense of Democracies.........................................    19
Thomas Melito, Director, International Affairs and Trade, U.S. 
  Government Accountability Office...............................    22

                     Alphabetical List of Witnesses

Bayefsky, Anne:
    Testimony....................................................    16
    Prepared statement...........................................    41
Bolton, Hon. John R.:
    Testimony....................................................     8
    Prepared statement...........................................    34
Melito, Thomas:
    Testimony....................................................    22
    Prepared statement...........................................    74
Rosett, Claudia:
    Testimony....................................................    19
    Prepared statement...........................................    65

                                APPENDIX

Chart entitled ``Capital Master Plan Funding (in millions)''.....    94
Chart entitled ``Capital Master Plan''...........................    95
Questions and responses for the Record from:
    Mr. Bolton...................................................    96
    Ms. Bayefsky.................................................   103
    Mr. Melito...................................................   104


  U.N. HEADQUARTERS RENOVATION: NO ACCOUNTABILITY WITHOUT TRANSPARENCY

                              ----------                              


                         TUESDAY, JUNE 20, 2006

                                     U.S. Senate,  
            Subcommittee on Federal Financial Management,  
        Government Information, and International Security,
                            of the Committee on Homeland Security  
                                          and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:30 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Tom Coburn, 
Chairman of the Subcommittee, presiding.
    Present: Senators Coburn and Collins.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. The Subcommittee on Federal Financial 
Management of the Governmental Affairs and Homeland Security 
Committee will now come to order.
    I would announce at this time that the Senate has scheduled 
two votes at 2:45 p.m. We will make every effort to get through 
with our first panel, and then hold thereafter, and then vote, 
and then come back and resume.
    Less than a year ago, we had a hearing on this same topic 
concerning the $1.2 billion renovation fee concerning the 
United Nations Headquarters in New York City. Since that time, 
the price of the proposal, referred to as the capital master 
plan, has increased in price by 45 percent, is now at $1.7 
million, and it comes in at almost $700 per square foot for 
renovation.\1\
---------------------------------------------------------------------------
    \1\ The chart entitled ``Capitol Master Plan Funding (in millions) 
appears in the Appendix on page 94.
---------------------------------------------------------------------------
    To put it in perspective, the Ronald Reagan Building in 
Washington, DC, ground, land, every cost associated with it 
cost $263 a square foot. As you can see on our poster 
transparencies, the first principle of accountability, it has 
been almost impossible to get an itemized accounting on the 
money that has been spent thus far, as well as the cost 
projections that are coming from that.
    I would give credit to Fritz Reuter, in terms of the work 
he has done on materials, and costs associated with that. The 
people who have been advising this Subcommittee has felt that 
he has done a marvelous job in terms of his assessment of that. 
He pointed out, in addition to the already astronomical price, 
there are hidden execution costs that the United Nations has 
yet to consider.
    For example, there is no plan for the increased flow of 
traffic for security for hundreds of security workers. There is 
no plan for setting up a base of operations within the limited 
grounds areas. And there are no plans for inevitable delays in 
the nature of floor-by-floor renovations.
    In short, there is a lot missing from the proposal that 
could cause the project to take up to three times as long and 
cost at least twice as much. Even if the capital master plan 
price tag remains constant, and that is a big if, the U.S. 
share of the cost is going to be a half a billion dollars. That 
is on top of the regular dues of $423 million annually, plus 
all special contributions on the order of $2.4 billion. What is 
more, the United Nations is putting the cart before the horse a 
little bit. Despite the fact that the U.N. General Assembly has 
yet to formally approve the renovation proposal, the U.N. 
Budget Committee has gone ahead and asked for another $100 
million to start the project.
    Even if the capital master plan is workable, it will still 
be carried out by the same system that is responsible for the 
Oil-for-Food scandal, the largest financial scandal in history. 
Not one thing has changed in the U.N. procurement system since 
the world learned about the horrific and criminal misuse of 
funds intended to feed and medicate desperate Iraqis suffering 
under Saddam Hussein. Instead, the funds were diverted to 
kickbacks, illegal oil vouchers, corrupt officials, Saddam's 
palaces and cronies, and a slew of U.N. officials and vendors.
    You would expect with revelations of this nature, the 
United Nations would have fired those responsible, that all 
involved would have been indicted and prosecuted, and that 
massive reform would have been undertaken internally. Instead, 
the United Nations has not changed anything about how it does 
its business.
    The United Nations has not fired anyone responsible for the 
massive abuse of power, and global taxpayer dollars associated 
with the Oil-for-Food program. To make matters worse, recent 
media reports and internal U.N. audits suggest the entire U.N. 
procurement system is plagued by corruption. In fact, as of 
last month, some of the vendors involved in the unfolding 
scandal are still doing business with the United Nations. 
Incredibly, a majority of the U.N. Member States have dug in to 
maintain the inexcusable status quo. Ironically, on the same 
day in April when the U.N. Budget Committee authorized more 
spending on the renovation project, the committee also voted 
down Secretary Kofi Annan's very modest and meager reform 
package.
    I note that the countries who voted down these reforms 
contribute 12 percent of the U.N. budget. The 50 nations who 
voted for the reforms contribute 87 percent. Those of us who 
pay most of the bills were outvoted by those who contribute 
much less to U.N. operations.
    And yet, some of these developing countries are the very 
ones that are most dependent on U.N. programs and who, in 
theory, should most want efficient, transparent, effective, and 
honest United Nations operations. For planning, design, and 
pre-construction of the renovation project, the United Nations 
has appropriated $152 million, and spent $36 million to date. 
It has been impossible to find out where that money has been 
spent.
    We were here last year asking the same questions about the 
$20 million or so that was supposedly spent on planning and 
design. We have now spent twice that and we cannot get access 
to the contracts, the actual outlay, the disbursements, telling 
us what we bought for this money.
    I would note that all industry experts tell us that 
planning and design should never exceed 6 percent of the total 
cost of the budget. We are at that. And we are not anywhere 
near beginning.
    Lack of transparency with spending on the capital master 
plan is only an example. From the little we do know from leaked 
audit documents and investigative reporting, internal U.N. 
auditors themselves have complained that the lack of 
transparency in procurement and management is leading to gross 
problems and waste, fraud, and other criminal activity.
    They have found that nearly a third of the $1 billion in 
contracts that they looked at--they only looked at $1 billion--
was lost to mismanagement and corruption. The equivalent of the 
entire U.S. portion of this procurement was lost to corruption. 
If we could save our peacekeeping donations to this waste and 
fraud in just 2 years, it would more than fund the U.S. portion 
of the capital master plan.
    Thanks in large part to our witness, Ambassador John 
Bolton, we have a window of opportunity to bring about reform 
in the United Nations. The Ambassador and our allies insist 
that the United Nations adopt important reforms before the 
entire biannual budget is approved. The deadline is fast 
approaching when the money will run out, and instead of passing 
the reforms required to improve the rest of the budget, the 
United Nations has voted down the reforms.
    Mr. Ambassador, I have to tell you, I am not sure how I can 
go back to Oklahoma and tell the people that we should just let 
it go and send more of their hard earned money to a system that 
is plagued by corruption, waste, and fraud.
    Monday, I traveled to the United Nations and met with 
Representatives from G-77 countries, including Chile, Egypt, 
India, Pakistan, Singapore, and Thailand. When I made the case 
for full transparency within the entire U.N. system, something 
similar to the Freedom of Information Act, and online 
availability of contracts, each of these Representatives 
wholeheartedly agreed that the United Nations must become 
transparent.
    This position was especially heartening, considering that 
the G-77 represents the overwhelming majority of the U.N. 
Budget Committee where such changes originate. On this same 
trip, I met with U.N. Deputy Secretary, General Mark Malloch 
Brown. Mr. Brown not only fully endorsed my call for 
transparency, but he also stated that he believes that the 
United Nations is well on its why to this type of 
accountability.
    Before I traveled to the United Nations, I met with the 
Ambassadors of the top donors of the United Nations, Japan, 
Germany, and Great Britain. These countries, combined with the 
United States, contribute over 56 percent of the operating 
budget, and each represented and agreed that the United Nations 
must become transparent.
    With such overwhelming agreement from the U.N. Secretariat, 
the top U.N. contributors, and key representative of the 
largest block of the United Nations, it is possible to 
immediately enact a resolution that would completely bring a 
full and complete transparency to the United Nations.
    I hope that officials that I met with are true to their 
word at next week's U.N. budget meeting. And despite the 
possibility that reforms are undermined again, it will, at the 
very least, enact some type of freedom of information.
    Without full transparency, there will never be full 
accountability at the United Nations. There is a rumble growing 
outside of Washington. People are fed up with this Congress, 
writing blank checks and not demanding performance and 
accountability. American people are demanding that elected 
officials safeguard their money better than we have done thus 
far.
    Today, a year after our hearing on this topic, there has 
been a little bit of improvement on transparency, for how money 
gets spent. The U.S. taxpayer is the largest donor to the 
United Nations, and Congress must demand the following: First 
post every contract and disbursement related to every contract 
for the capital master plan on a publicly accessible website.
    Second, publicly commit to and begin working on expanding 
that level of transparency to all U.N. contracts, grants, and 
internal procurement.
    Once we see a commitment to transparency, we can talk about 
approving the capital master plan and the rest of the U.N. 
budget. We are not even asking it for reform, or to clean up 
the mess, or prosecution of corrupt individuals or vendors at 
this point. All that we expect to come.
    All that we are asking today is for sunshine. Transparency, 
opening up the books so that the public, the press, the Member 
States, and the United Nations itself can see and know what is 
going on.
    In my field of medicine, we cannot treat a disease until we 
diagnose it. That is just the first step. And without this 
fundamental commitment to accountability, Americans and indeed, 
all global taxpayers cannot, in good conscience, continue 
writing blank checks to the U.N. system.
    We will work with the U.N. Appropriations Committee as well 
in the future. I want to thank all of the witnesses to being 
here today, and I look forward to hearing your testimony, and I 
would recognize now our Chairman of our full Committee, the 
Hon. Senator Collins.
    [The prepared statement of Senator Coburn follows:]

                  PREPARED STATEMENT OF SENATOR COBURN

    Last July, this subcommittee held a hearing concerning the then 
$1.2 billion renovation proposal for the United Nations headquarters in 
New York City. Since that hearing, the price of the proposal, referred 
to as the Capital Master Plan, has grown 45 percent and is now priced 
at $1.7 billion. For a worksite that is over 2.5 million square feet, 
this would be $697/sq. ft. To put this into perspective, the Ronald 
Reagan Building here in Washington, DC only cost $263/sq. ft., but this 
was for a brand new building--not what should be a cheaper renovation.
    As you can see on our poster, transparency is the first principle 
of accountability. It has been almost impossible to get an itemized 
accounting for where these cost projections come from. So I have sought 
advice from construction experts in New York City to get their take on 
the project. They have pointed out that, in addition to the already 
astronomical price tag, there are hidden execution costs that the 
United Nations has yet to consider. For example, there is no plan for 
the increased flow of traffic through security for the hundreds of 
construction workers, there is no plan for setting up a base of 
operations within the limited grounds area, and there is no plan for 
inevitable delays due to the nature of floor-by-floor renovations. In 
short, there is a lot missing from the current proposal that could 
cause the project to take up to 3 times as long to complete at a cost 
many times higher than the current $1.7 billion price tag.
    Even if the Capital Master Plan's price tag remains constant--and 
that's a big ``if''--the U.S. share of the cost would be $485 million. 
That's on top of regular dues of $423 million annually plus all the 
special contributions, on the order of $2.4 billion. What's more, the 
United Nations is putting the cart before the horse a bit--despite the 
fact the U.N. General Assembly has yet to formally approve the 
renovation proposal, the U.N. budget committee has gone ahead and asked 
for another hundred million dollars to start the project.
    Even if the Capital Master Plan were workable--it will still be 
carried out by the same system responsible for the Oil for Food 
scandal--the largest financial scandal in history. Not one thing has 
changed in the U.N. procurement system since the world learned about 
the horrific and criminal misuse of funds intended to feed and medicate 
desperate Iraqis suffering under Saddam Hussein. Instead, the funds 
were diverted to kickbacks, illegal oil vouchers, corrupt officials, 
Saddam's palaces and cronies, and a slew of U.N. officials and vendors.
    You would expect with revelations of this nature, the United 
Nations would have fired those responsible, that all involved would 
have been indicted and prosecuted and that massive reform would have 
been undertaken internally. Instead, the United Nations has not changed 
a thing about how it does business. Not a thing. The United Nations has 
not fired anyone responsible for the massive abuse of power and global 
taxpayer dollars associated with the Oil For Food program. To make 
matters worse, recent media reports and internal U.N. audits suggest 
the entire U.N. procurement system is plagued by corruption. In fact, 
as of last month, some of the vendors involved in the unfolding scandal 
are still doing business with the United Nations.
    Incredibly, a majority of U.N. member states have ``dug in'' to 
maintain the inexcusable status quo. Ironically, on the same day in 
April when the U.N. Budget Committee authorized more spending on the 
renovation project, the committee also voted down Secretary General 
Kofi Annan's modest management reform package. I note that the 
countries who voted down these reforms contribute 12 percent of the 
U.N. budget. The 50 nations that voted for the reforms contribute 87 
percent. Those of us paying most of the bills were outvoted by those 
who contribute much less to U.N. operations. And yet some of these 
developing countries are the very same ones most dependent on U.N. 
programs, and who in theory should most want efficient, transparent, 
effective and honest United Nations operations.
    For planning, design, and pre-construction of the renovation 
project, the United Nations has appropriated $152 million and spent $36 
million to date. You would not believe how difficult it is to find out 
how that money has been spent. We were here last year, asking the same 
questions about the then-$20 million or so which was supposedly spent 
on planning and design. Now it's twice that, still being spent on 
planning and design, and we can't get access to the contracts, the 
actual outlays and disbursements telling us what we bought for this 
money. I note that industry experts tell us, as they told us a year 
ago, that design work should cost no more than 6 percent.
    Lack of transparency with spending on the Capital Master Plan is 
only an example. From the little we do know through leaked audit 
documents and investigative reporting, internal U.N. auditors 
themselves have complained that the lack of transparency in procurement 
and management is leading to gross problems with waste, fraud, and 
other criminal activity. They found that nearly a third of the $1 
billion in contracts that they reviewed was lost to mismanagement and 
corruption--the equivalent of the entire U.S.-paid portion of this 
procurement was lost to corruption. If we could save our peacekeeping 
donations from this waste and fraud for just two years, it would more 
than fund the U.S. portion of the Capital Master Plan.
    Thanks in large part to the hard work of our witness, Ambassador 
John Bolton, we have a window of opportunity to bring reforms. The 
Ambassador and our allies insisted that the United Nations adopt 
important reforms before the entire biennial budget is approved. The 
deadline is fast approaching when the money will run out, and instead 
of passing the reforms required to approve the rest of the budget, the 
United Nations has voted DOWN the reforms. I have to tell you, Mr. 
Ambassador, I'm not sure how I go back to Oklahoma and tell people that 
we should just let that go, and send more of their hard-earned money 
into a black hole.
    Last Monday, I traveled to the United Nations and met with 
representatives from G77 countries including Chile, Egypt, India, 
Pakistan, Singapore and Thailand. When I made the case for full 
transparency within the entire U.N. system--similar to the Freedom of 
Information Act here in the United States--each of these 
representatives wholeheartedly agreed that the United Nations must 
become transparent. This admission was especially heartening 
considering the G77 represents the overwhelming majority on the U.N. 
budget committee where such changes originate.
    On this same trip, I also met with U.N. Deputy Secretary-General 
Mark Malloch Brown. Mr. Brown not only fully endorsed my call for 
transparency, but he also stated that he believes the United Nations is 
well on its way to this type of accountability. Furthermore, before I 
traveled to the United Nations, I met with the ambassadors of top 
donors to the United Nations--Japan, Germany, and Great Britain. These 
countries, combined with the United States, contribute over 56 percent 
of the U.N. operating budget, and each representative agreed that the 
United Nations must become transparent.
    With such overwhelming agreement from the U.N. Secretariat, the top 
U.N. contributors, and key representatives of the largest voting block 
at the United Nations, it is possible to immediately enact a resolution 
that would bring complete transparency to the United Nations--a Freedom 
of Information resolution where member states, the press, and the 
general public have the right and ability to see exactly how the U.N. 
system is spending its money and conducting its business. I hope that 
the officials I met with are true to their word in next week's U.N. 
budget meetings and, despite the possibility that reforms are 
undermined again, will at the very least enact a Freedom of Information 
resolution.
    Without full transparency, there will never be accountability at 
the United Nations. There is a rumble growing outside the Beltway. 
People are fed up with Congress writing blank checks and not demanding 
performance and accountability. American people are demanding that 
their elected officials safeguard their money better than we have been. 
Today, a year after our first hearing on this topic, there has been 
little improvement in transparency for how money gets spent. The United 
States tax payer is the largest donor to the United Nations, and 
Congress must demand the following:

      First, post every contract and disbursement related to 
every contract for the Capital Master Plan on a publicly-accessible web 
site.
      Second, publicly commit to and begin work on expanding 
that level of transparency to all U.N. contracts, grants, and internal 
procurement.

    Once we see a commitment to transparency, we can talk about 
approving the Capital Master Plan and the rest of the U.N. budget. 
We're not even asking yet for a reform or clean-up of the mess or 
prosecutions of corrupt individuals or vendors at this point--although 
we expect that to come. All we're asking for today is sunshine--opening 
up the books so that the public, the press, Member States and even the 
United Nations, itself, can see what is going on.
    In my field of medicine, we can't treat a disease until we diagnose 
it. This is just a first step, and without this fundamental commitment 
to accountability, Americans, and indeed, all global taxpayers, can 
not, in good conscience, continue writing blank checks to the U.N. 
system. We will be working with the Appropriations Committee on this 
problem as well. I want to thank all the witnesses for being with us 
here today. I look forward to hearing your testimony.

              OPENING STATEMENT OF SENATOR COLLINS

    Senator Collins. Thank you, Mr. Chairman. First, let me 
thank you for convening this hearing today and giving us the 
opportunity to further examine how American tax dollars are 
being spent and, in some cases, misspent, by the United 
Nations.
    Given that the United States contributes so much to the 
U.N. budget, it is our responsibility to continually push for 
management reforms and transparency in U.N. processes and 
spending.
    Senator Coburn, I know that you share my fondness for 
Justice Brandeis' quote about ``sunshine being the best 
disinfectant.'' And I think that the work that you are doing is 
trying to shine more light into the dark corners of the United 
Nations. I hope that this hearing will help keep the pressure 
on the United Nations to be more transparent in its actions 
because a lack of transparency and a lack of oversight provide 
fertile ground for waste, corruption, and scandal, which will 
in turn further undermine the credibility of the United Nations 
at a time when we need to work to restore it.
    Let me indicate that I understand that the 54-year-old 
headquarters is badly in need of renovation. That is not the 
issue. I know that it is riddled with asbestos, that it lacks 
fire detectors, a sprinkler system, and other emergency safety 
devices. I know the United Nations has been working for some 6 
years on a renovation plan for the building. But I am very 
concerned about the escalation of cost and I am particularly 
concerned by the Subcommittee's findings that the square foot 
cost for the U.N. renovation is in the neighborhood of $697 per 
square foot, nearly three times the cost per square foot of 
building new State Department offices across the street from 
the U.N. building in New York.
    I am also concerned when I hear well-known developers tell 
us that the U.N. renovations can be accomplished at a fraction 
of the current cost estimate. So those are very troubling to 
me. I do not dispute that the building is in need of 
substantial renovations, but I am very troubled when I hear of 
escalating, apparently out of control, cost estimates, the 
difficulty in finding out exactly what is going on, which the 
Chairman has alluded to, and the fact that the cost estimates 
seem so high when compared to other building projects.
    So, I very much appreciate that the Ambassador is here 
personally today to shed some light on these very troubling 
issues. And I commend you, Mr. Chairman for pursuing this 
issue.
    [The prepared statement of Senator Collins follows:]

                  OPENING STATEMENT OF SENATOR COLLINS

    Senator Coburn and Senator Carper, I would like to thank you for 
convening this hearing today, giving us an opportunity to further 
examine how American tax dollars are spent--and sometimes misspent--by 
the United Nations. Given that the United States contributes so much to 
the United Nation's budget, it is our responsibility to continually 
push for management reforms and transparency in U.N. processes and 
spending.
    Senator Coburn, I know you share my fondness for Justice Brandeis' 
quote that a little ``sunshine is the best disinfectant.'' I appreciate 
the work from you and Senator Carper in trying to shine more light in 
the dark corners of the United Nations.
    I hope that this hearing will help keep pressure on the United 
Nations to be more transparent in its actions, because a lack of 
transparency and oversight provides fertile ground for corruption and 
scandal, which will further undermine the credibility of the United 
Nations, rather than restore it.
    Let me indicate that I understand the United Nations headquarters 
is badly in need of renovation. I know that it is riddled with 
asbestos, and that it lacks fire detectors, a sprinkler system, and 
other emergency safety devices. I know the United Nations has been 
working on a renovation plan. But I am very concerned about the 
escalation of cost. I do not dispute that the building is in need of 
substantial renovations, but I am very troubled when I hear of 
escalating cost estimates, the difficulty in finding out exactly what 
is going on, and the fact that the cost estimates seem so high when 
compared to other building projects.
    I thank you again for holding this hearing. I look forward to the 
light our witnesses can shine on management practices at the United 
Nations, particularly concerning the renovation of the U.N. 
headquarters.

    Senator Coburn. Thank you, Senator Collins. I should make 
something clear. It has been stated that Secretary Mark Malloch 
Brown stated that Americans do not value the positive 
contributions that the United Nations makes. Nothing could be 
further from the truth.
    We recognize this, but that is not an excuse to not ask 
that our money be spent wisely, appropriately, so that the 
things that the United Nations can do, in terms of making a 
difference in millions of peoples lives all over the world, 
will be more effective. And so that statement I took both 
personally as in error, but also somewhat insulting to the 
people of this country. We want the United Nations to be 
effective. We value its purposes and its goals.
    Let me introduce our first witness, Ambassador John Bolton 
was appointed by President Bush as the U.S. Permanent 
Representative to the United Nations on August 1, 2005. Prior 
to his appointment, he served as Under Secretary for Arms 
Control and International Security from May 2001, to May 2005.
    He spent many years of his career in public service with 
the Departments of State and Justice, as well as the USAID.
    Ambassador Bolton, we welcome you to the Subcommittee. As I 
said, we will try to get through with your testimony and you 
are now recognized.

    TESTIMONY OF THE HON. JOHN R. BOLTON,\1\ U.S. PERMANENT 
              REPRESENTATIVE TO THE UNITED NATIONS

    Ambassador Bolton. Thank you very much, Mr. Chairman, for 
holding this hearing today, and the opportunity to testify 
today and Madam Chairman, I appreciate your coming by, as well.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ambassador Bolton appears in the 
Appendix on page 34.
---------------------------------------------------------------------------
    Mr. Chairman, I have a written statement, if I could submit 
that for the record, and try and summarize it.
    I have to say, starting off, that I am very pleased with 
your chart up there, starting with the word accountability and 
going down through transparency and some of the other words 
that are exactly what we have in mind for our overall U.N. 
reform program, and I appreciate the Committee's and the 
Subcommittee's interest in the subject because it is entirely 
legitimate and we welcome the oversight and scrutiny that we 
get in support of this reform effort.
    Specifically, today, with respect to the capital master 
plan, there is no question that the existing U.N. buildings are 
in need of renovation. They do not meet the health and safety 
and fire standards that are required of other buildings in the 
State of New York, 4,300 people, roughly, work in the complex, 
and there are some 300,000 tourists a year that go through, 40 
percent of them are Americans. So, I think the case is made for 
the renovation. We are the U.N. largest contributor. We are the 
host country, so we have a lot of direct interest in insuring 
that what the United Nations calls the capital master plan, 
which is the name for the renovation, is carried out 
expeditiously and in a cost effective and transparent manner.
    The U.N. General Assembly is currently debating a number of 
proposed strategies as to how to accomplish the renovation of 
the existing buildings and we favor what is called Strategy IV, 
which involves building a temporary structure on the North Lawn 
of the U.N. Building and premises, so that the renovation of 
the office building and the conference space can be 
accomplished several floors at a time over a defined period.
    The estimate, as you said, for this Strategy IV, is 
approximately $1.8 billion, which we would bear 22 percent. 
What we did in evaluating the United Nations estimates was set 
up a U.S. Government-wide task force with representatives from 
the State Department, including the overseas building office, 
which is the entity within the State Department which has 
expertise on these matters, to evaluate the estimates and the 
task force's conclusion was that option 4 was the option to 
support.
    Now, we have worked within the General Assembly to try and 
provide the initial funds that the United Nations has needed to 
begin pre-construction work on the renovation. Approximately 
$20 million has been spent from the funds authorized by the 
General Assembly last month. Before further expenditure is 
allowed we think we need a decision from the General Assembly 
on which strategy to pursue.
    Our sense, as of this day, and literally, the Fifth 
Committee is meeting this week on this subject, but our sense 
as of today is that Strategy IV will be the one that is 
accepted. What we can and will do during the implementation of 
the renovation is to watch closely how the process unfolds, 
work with experts in our overseas building office and Members 
of Congress to try and provide the kind of transparency that I 
think would be necessary to insure that estimate is not 
exceeded.
    And that is a concern that we have and that we have 
expressed because we feel that it is important to try and 
accomplish this work in a cost effective manner. It is also, I 
might say, Mr. Chairman, consistent with our overall U.N. 
reform efforts. We are in the middle, right now, of a 
substantial effort on both management reform and on reviewing 
all of the U.N. actual programs, the so-called mandate review.
    We have not had success, to date, in the management reform 
area. A number of reforms, as I think you mentioned, proposed 
by the Secretary-General were defeated in a vote by the Fifth 
Committee a few months ago. But we continue to reach out to the 
countries within the G-77. We think that this is important to 
try and explain to them that reform is not simply a U.S. 
interest, but that it is in the interest of all of the member 
governments of the United Nations, because if the organization 
can become more effective, more efficient, more agile, more 
able to deal with contemporary problems, we and other countries 
are more likely to turn to it for the solution of those 
problems.
    We have also reached out in some unprecedented directions 
to try and get a better understanding on how these reforms will 
play out. Last week, I met with the leadership of the United 
Nations Staff Union, the first time to our knowledge that an 
American Ambassador has met with representatives at the Staff 
Union. They had some very interesting things to say that tied 
directly into concerns that we had about procurement reform and 
the like.
    The Staff Union is very concerned that the new whistle 
blower protection regulations and the new ethics office that 
has been created by the Secretary are not sufficient to provide 
real protection for potential whistle blowers. And the point 
they made was entirely congruent with our own thinking, and I 
think the thinking of the Committee and the Subcommittee, is 
that, at bottom, the problem with the procedure is that there 
simply is not enough transparency to protect U.N. Staff 
employees who might come forward with whistle blowing kinds of 
suggestions.
    The reforms that we are talking about are far reaching, 
there is no question about it. But let me just read, very 
briefly, a couple of sentences from Secretary-General Kofi 
Annan that I think exactly summarize our views. The Secretary-
General, in presenting his management reform suggestion, said, 
``The earlier reforms address the symptoms more than the 
causes, of our shortcomings. It is now time to reach for 
deeper, more fundamental change. What is needed, and what we 
now have a precious opportunity to undertake, is a radical 
overhaul of the entire Secretariat--its rules, its structures, 
its systems--to bring it more in line with today's realities, 
and enable it to perform the new kinds of operations that 
Member States now ask expect of it.''
    That is a very good statement of the U.S. position, Mr. 
Chairman, because of the importance that we see in that kind of 
radical overhaul of the entire Secretariat. And I will just 
close with one area of particular interest to us, and that is 
strengthening the independence and capabilities of the Office 
of Internal Oversight Services at the United Nations (OIOS), 
which was set up in the early 1990's as a result of then Under 
Secretary-General Dick Thornburgh's work. He was trying, as 
President Bush 41, last high appointment in the U.N. system 
trying to create an Inspector General for the United Nations, 
something that we are all familiar with in the U.S. Government. 
He was not able, despite really Herculean efforts, to get a 
truly independent inspector general's office. OIOS is what has 
resulted and it is this office that we are going to try and 
improve, strengthen and make more independent.
    Now, I will just read to you the estimate of David Walker, 
the Controller General of the United States of the GAO's 
assessment of the OIOS because I think this is important. The 
Controller General said, U.N. funding arrangements constrain 
OIOS's ability to operate independently as mandated by the 
General Assembly and required by international auditing 
standards OIOS has adopted. OIOS depends on the resources of 
the funds of the entities that it audits. The managers of these 
programs can deny OIOS permission to perform work, or not pay 
OIOS for services. U.N. entities could thus avoid OIOS audits 
and investigations and high-risk areas can be and have been 
excluded from timely examination.
    This is exactly the kind of problem identified by Paul 
Volcker in his role as an independent Commissioner examining 
the mismanagement and corruption found in the Oil-for-Food 
program. We think these are very necessary reforms that are 
needed generally, but I think would be particular helpful as 
the capital master plan unfolds in its implementation.
    Thank you very much, Mr. Chairman, Senator Collins. I would 
be very pleased to try and answer any questions you may have.
    Senator Coburn. Well, let us talk about OIOS for a minute, 
and in fact, it makes the presentation that it is an auditing 
agency, but it is at the mercy of whoever it audits; is that 
correct?
    Ambassador Bolton. That is essentially our conclusion. We 
think it really needs to be made independent, like inspector 
general offices are. I have seen, I can tell you of my own 
personal knowledge, examples of senior U.N. administrators who 
have blocked OIOS investigations and they have argued, well, 
you are interfering with our ongoing operations.
    I think there is a legitimate concern that operations not 
be interfered with, but there is no legitimacy to saying that 
OIOS cannot investigate allegations of mismanagement or 
corruption and that is something that needs to be instilled 
throughout the U.N. system.
    Senator Coburn. Is there anybody that you talked with in 
the United Nations that will verbalize the reason why they 
might object to sunshine and transparency on the operations of 
the United Nations?
    Ambassador Bolton. Well, I think nobody would say so in so 
many words. Nobody would say, we want to do all of this in the 
dark. But I think the unspoken obstacle that we find is that we 
are talking about practices that have built up over a 60-year 
period. None of this happened overnight. It is a way of 
operating that has been essentially without significant 
external oversight and transparency for a very long period of 
time.
    For example, a number of people have commented that the 
investigation that former Federal Reserve Chairman Paul Volcker 
did of the Oil-for-Food program overstated the extent of the 
problem because after all, what happened in the Oil-for-Food 
program was not untypical of the way other U.N. programs are 
managed. And I think that is true, and that is Chairman 
Volcker's central insight.
    Senator Coburn. Well, that is very telling.
    Ambassador Bolton. Exactly.
    Senator Coburn. Because if you are comparing to a very low 
standard, that it is not very surprising that nobody is 
reacting to it the way we are.
    Ambassador Bolton. The most important think Chairman 
Volcker said was that the problems, the mismanagement and the 
corruptions of the Oil-for-Food program did not begin with the 
Oil-for-Food program. They reflect practices and personnel that 
came from the central U.N. system and therefore, reform from 
Chairman Volcker's point of view was not simply fixing some 
problems from the Oil-for-Food program, but went directly to 
changes that needed to be made in the central U.N. management 
structure. And we concur with Chairman Volcker's analysis.
    Senator Coburn. Well, how does that fit with the billion 
dollars audited on peacekeeping operations where they found a 
third of it was on waste, fraud, and abuse?
    Ambassador Bolton. Well, this is a significant study, and 
this was an OIOS study. It was fairly limited, actually. It 
considered a little bit over a billion dollars worth of 
contracts over a 5-year period--just concluded--and if you add 
up the OIOS conclusions about fraud, waste, mismanagement, and 
effective spending, the range that they came up with out of 
that roughly one billion dollars of expenditures was somewhere 
between $268 and $310 million. And, as you pointed out in your 
opening statement, U.S. share of peacekeeping expenses is 27 
percent. So, 27 percent of a billion dollars is $270 million, 
which means that the potential area of waste, fraud, and abuse 
is exactly equal to the entire American contribution.
    It is a hard point to make to American taxpayers that our 
27 percent somehow got wasted. Now, there are various responses 
that have been made to OIOS. And look, they are not perfect any 
more than any other inspector general office in the U.S. system 
is. If people have different information, I think they should 
bring it forward and we can debate it. But whether it is $268 
million, or maybe it was just $258 million that was potentially 
misspent, this is a significant amount of money.
    One of the highest U.S. priorities is peacekeeping, so this 
is a matter of considerable concern to us, and I think 
appropriately so.
    Senator Coburn. Ambassador Bolton, does anybody have any 
idea what the total budget is for the United Nations?
    Ambassador Bolton. Well, there are ways of looking at the 
various agencies and components of the U.N. system and trying 
to aggregate their budgets, but even the United Nations, 
itself, would tell you, even the central U.N. financial office 
would tell you that they cannot give you a total figure. An 
analogous problem is that we cannot give you a total figure on 
what the U.S. contributions to the various--to the U.N. system 
as a whole as we can define. And, in some cases, the assessed 
contributions and the voluntary contributions funded under the 
150 accounts--but because many departments of the U.S. 
Government make their own contributions separately and 
aggregated those contributions into one number--I am not aware 
at the moment that we have such an aggregate number.
    Senator Coburn. I would just advise you that this 
Subcommittee has already asked the GAO for that. We are going 
to have that and we are going to know what it is.
    Ambassador Bolton. I would be very interested to know 
myself. Senator Coburn. I think it is just symbolic of the 
problems that nobody can ask you anywhere in the United Nations 
what the budget is for the United Nations. Nobody knows, and 
you cannot run any organization if somebody is not in charge 
and somebody does not know what the budget is.
    I am going to defer, for a moment, to the Chairman of my 
full Committee, Senator Collins.
    Senator Collins. Well, I just want to second your comment 
about the overall budget. The only other entity that the 
Federal Government devotes considerable resources to and the 
budget is not made public is for our intelligence agencies, and 
I would argue that the aggregate number for that should be made 
public to promote more accountability.
    I want to return, Mr. Ambassador, to the issue of the OIOS 
because that is supposed to be the U.N. equivalent of an 
inspector general. The Inspectors General throughout the 
Federal Government are the watchdogs for waste, fraud, and 
abuse. It seems to me what you have at the United Nations is a 
watchdog that is toothless, that has to get permission in order 
to investigate an act. And indeed, your written statement is 
even stronger than your oral testimony. You describe the office 
as itself becoming part of this opaque and inbred system.
    What specifically is the U.S. mission doing to promote true 
independence for the OIOS?
    Ambassador Bolton. There are several aspects, Senator. The 
first is that its budget has to be independent. It cannot go to 
the programs that it wants to inspect or audit and ask that its 
operations be funded.
    Second, it needs to be able, when it requires documents, 
computer disks, interviews with personnel, it needs to be able 
to get access to that information.
    Third, it needs to be able to operate without command 
influence from higher U.N. management, and I can say, I have 
been a senior official to a number of government departments, 
IG inspections can be difficult and people recognize that, but 
unless the inspector general can really operate independently, 
if top management can sit on their request, they are never 
going to be able to succeed.
    So, there are a range of things that we are trying to do. 
We have tried to promote more open access for the Under 
Secretary-General who is in charge of the office. And I just 
give you one example of how that has been frustrated when the 
Under Secretary was President of the Security Council in 
February, I invited Under Secretary-General Ahlenius to come 
and tell us about the audit on the procurement fraud and the 
then Chief of Staff, Mark Malloch Brown, now Deputy Secretary-
General, prevented her from speaking to the Security Council. I 
was quite concerned about that. I remain quite concerned about 
that.
    We, the members of the United Nations, the governments, the 
people who are paying the bills, should have direct access to 
OIOS reports and personnel so that we can understand better 
what the problems are so that we can try to fix the problems.
    Senator Collins. I hope that you will continue to push on 
that. I cannot help but think that if the United Nations had an 
independent IG, a real IG, that the Oil-for-Food scandal would 
have been discovered a lot sooner and that a lot of the 
procurement abuses also would have been detected earlier.
    So, I think this has to be a priority. In some ways, having 
an office that supposedly is the watchdog, but in fact is 
beholden to the people in the programs it investigates, is 
almost worse than nothing because it creates the appearance 
that is totally at odds with reality.
    Ambassador Bolton. I agree with you entirely. I think that 
is a real problem. I do not think it benefits the United 
Nations not to have a fully independent OIOS or inspector 
general, whatever one might want to call it.
    No institution is perfect. The U.S. Government certainly is 
not perfect. The IG offices perform an important function and 
it may cause some temporary embarrassment to individual 
employees who are not doing their jobs. But again, for the 
member governments, and this is a member government 
organization. This is not for the benefit of the Secretariat, 
we need these kinds of tools.
    We need other things that, for example, Chairman Volcker 
recommended, a really effective outside auditing capability, 
able to go in and oversee the existing internal audits and 
insure that the audit function is being carried out in a 
responsible fashion. These are not oppressive changes. They are 
changes that I think most people looking at any large 
organization would say are the absolute minimum that should be 
accomplished.
    Senator Collins. Is the OIOS looking at the cost growth in 
the renovations planned, and why the cost per square foot is so 
much higher than for what appears to be comparable renovation 
projects?
    Ambassador Bolton. I am not aware that they are looking 
into it. Their mandate so far has been simply looking at things 
that have already occurred, as opposed to more forward-looking 
kinds of investigations. But again, as we have seen, inspector 
generals can come up with all kinds of useful recommendations 
on reorganizations, restructurings of our cabinet departments, 
and I think a more independent OIOS could engage in some of 
these broader, more helpful activities.
    Senator Collins. I agree. Thank you, Mr. Chairman.
    Senator Coburn. I would just note for the record that it 
took an outside reporter to discover the Oil-for-Food scandal. 
It was not discovered within--and that is one of our witnesses 
today.
    Ambassador, should it be the U.S. position, in terms of 
funding the capital master plan, that there ought to be 
transparency and accountability and competitive bidding on this 
project?
    Ambassador Bolton. I think we ought to be able to find a 
way to do this. I have heard from many people in New York, and 
I would say that they undoubtedly have commercial interests of 
their own, but any number of people who say this could be done 
in different, more efficient, lower cost ways.
    Now, one of the reasons we turned to our overseas building 
office in the State Department is that they do have expertise 
in this matter, but I think that we need to keep them engaged. 
I hope we can keep them engaged over the life of the renovation 
so that the costs do not escalate.
    With Mr. Reuter departing, I think that is an unfortunate 
circumstance. Probably good for him personally but unfortunate 
for the organization. And I think that it is important that 
Chris Burnham, who is doing, in my view, an outstanding job as 
Under Secretary-General for Management, gets support from us 
and other major contributors to keep a tight rein for 
expenditures on the project.
    If the transparency were demonstrated, I think there would 
be confidence that if the program did run into difficulties 
that it was not through malfeasance or corruption, but that the 
difficulties were legitimate. So, I think it would strengthen 
support of the project to have it open and transparent.
    Senator Coburn. At the end of this month, the budget cap is 
probably going to come up for debate as our position that we 
are going to take in terms of increasing the OIOS office. Are 
the things that we are going to be demanding happen if this 
thing ends up being released? Are we going to make any 
progress, and how are we going to get there?
    Ambassador Bolton. Well, we are down really to a few days 
before the likely effectiveness of the budget cap. The European 
Union, Japan, and the United States have expressed very similar 
views on how we see this playing out. We all said it at a 
meeting of the G-77 conference, the developing countries, last 
week, where our view is that the best outcome would be that we 
all agree by consensus to lift the budget cap with significant 
reforms having been agreed to by June 30, and with a road map 
laid out in terms of the end of the year of how to accomplish 
the rest of the work.
    It is not realistic to think that we are going to 
accomplish everything by June 30. We understand that. We are 
not insisting on it. We think that we can have a plan of work 
for the rest of the year.
    We have identified three broad areas where we would like to 
see reform. First is the management area, what I call the 
traditional management tools, procurement, personnel, 
information technology, and so on.
    Second is the accounting, auditing, oversight, transparency 
area.
    Third is the program review area.
    We would like to see progress in all three areas or at 
least some combination that really gets us a good start. The 
major contributing countries hold that view. We are in 
negotiations now. It could go right to the last minute, but we 
are going to pursue these reforms because we think they are 
important.
    Senator Coburn. I want to ask you, just as our 
representative to the United Nations, that you can assure the 
American people that there is an accountability view, in terms 
of their dollars. Can you assure us that?
    Ambassador Bolton. I do not think I can, Senator. I mean, 
what I think I can assure you is that we are going to work very 
hard as the U.S. mission and State Department and the U.S. 
Government to achieve that. But right now, the problems 
identified by Chairman Volcker and the Oil-for-Food scandal 
largely remain. The reforms we would like to see put in place 
have not been put in place and we need to work to continue to 
achieve those reforms.
    Senator Coburn. Is there transparency at the United 
Nations?
    Ambassador Bolton. Not sufficiently. Not at all. And that 
is not just the American view. I think that if you have a 
chance to read that report by the Staff Union's Council, it 
makes for very interesting reading.
    Senator Coburn. And finally, I guess the key will be 
whether or not the United Nations is responsive, is on the 
basis of what happens in the next couple of weeks in terms of 
moving toward some of these changes of accountability.
    Ambassador Bolton. Well, it is a test for the United 
Nations, Senator. There is no question about it. And I hope 
that you and Senator Collins and other Members of the Committee 
will have the opportunity to stay involved in this issue 
because I know it is important to many Members of Congress on a 
bipartisan basis and it should be. It is important for all of 
us and the more work we do together I think increases the 
chances that we will be successful.
    But the grade so far is incomplete, at best.
    Senator Coburn. One final question. In my mind, the United 
States, given the size of this capital master plan, should put 
a maximum limit on what it will contribute to this. And if it 
is 23 percent of $1.8 billion, or whatever it is, but knowing 
how things work, $1.7 billion will soon become $2.2 billion, 
will soon become $2.5 billion, and I think it is a very 
important that we send a signal to the United Nations that we 
want transparency. We want open and honest accountability of 
this project. And we are going to insist on it.
    One of the ways we are going to insist is we are going to 
limit the amount of money that we are going to contribute to 
it, knowing that we are talking about, at a minimum, $700 per 
square foot to renovate a building.
    Ambassador Bolton. Well, I certainly hope they hear you in 
New York, Mr. Chairman.
    Senator Coburn. Well, I assure you that it is going to be 
on our Appropriations Bill. Mr. Ambassador, thank you. We have 
a vote on, which I have to take. We will take it very quickly--
we have actually two votes. I will get there and hopefully we 
will be back in about 15 minutes. We will resume the hearing 
then. The hearing is in recess until that time.
    [Recess.]
    Senator Coburn. The Subcommittee will come to order. 
Because of some flight delays and problems, I am going to 
introduce in the order in which I am going to ask for 
testimony. Dr. Anne Bayefsky is a Senior Fellow with the Hudson 
Institute, Professor at the Touro Law Center, editor of the 
website www.EYEontheUN.org.
    Before joining Hudson, she was an adjunct Professor and 
associate research scholar at Columbia University Law School, 
and has done extensive human rights work for many years.
    Claudia Rosett is a Journalist-in-Residence at the 
Foundation for the Defense of Democracy. She writes on 
international affairs with a focus on democratic movements and 
despotic regimes. She has been widely credited for breaking the 
Oil-for-Food scandal and other aspects of waste, abuse, and 
corruption at the United Nations.
    Currently based in New York, Ms. Rosett has reported from 
Asia, the former Soviet Union, Latin America, and the Middle 
East.
    Thomas Melito is the Director of International Affairs and 
Trade Team at the U.S. Government Accountability Office. He is 
responsible for GAO's review of international finance, both 
collateral institutions, including the United Nations, the 
World Bank, and the International Monetary Fund.
    His education includes a B.S. in Industrial Labor Relations 
from Cornell University, an M.A. and Ph.D. in Economics from 
Columbia University.
    Dr. Bayefsky.

TESTIMONY OF ANNE BAYEFSKY,\1\ SENIOR FELLOW, HUDSON INSTITUTE; 
  PROFESSOR, TOURO LAW CENTER; AND EDITOR, WWW.EYEONTHEUN.ORG

    Ms. Bayefsky. Thank you very much. I appreciate your 
invitation and I think the subject of the matter of today's 
hearing is of great importance. I appreciate your holding it.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Bayefsky appears in the Appendix 
on page 41.
---------------------------------------------------------------------------
    Today's headline is that the crisis at the United Nations 
has been averted. Secretary-General Kofi Annan has made a 
formal request for the spending cap to be lifted, and most 
observers assume that he has done so with the blessing of 
Secretary of State Rice, who has assured him that the United 
States will not vote against a resolution to this effect. At a 
news conference late last week, Annan said that ``the cap on 
the budget will be lifted. There will be no crisis.''
    To put the current situation into perspective, therefore, 
the whole dynamic has changed 180 degrees since the U.N. 
September summit, where world leaders committed themselves to 
U.N. reform. 10 months later, the crisis became the spending 
cap, not the failure to reform. The crisis was not the 
inability of an international organization dedicated to 
protecting us from threats to international peace and security 
to declare Iranian nuclear ambitions a threat and to sanction 
its government. The crisis was not a human rights commission, 
which had some of the world's worst human rights abusers 
deciding what counted as a human rights violation, replaced by 
a council with the likes of Cuba, China, and Saudi Arabia right 
back on. The crisis was not the Oil-for-Food scandal in which 
billions were stolen from people in need and used to maintain 
despotism at its worst. The crisis was not the sight of U.N. 
peacekeepers that raped their wards. The crisis was not the 
failure to stop genocide in Sudan by an institution founded on 
``never again.'' The crisis was not a U.N. renovation plan, 
hundreds of millions of dollars more than independent 
developers thought was necessary to do the job. The crisis was 
not 9,000 different mandates created by the United Nations 
haphazardly over decades, which have never been reviewed, 
consolidated or rationalized.
    No, the crisis was the G-77, the U.N. majority, the 
Secretary-General, and his Deputy, Mark Malloch Brown, was the 
so-called ``artificial leverage'' of linking the obligation to 
pay for the corruption and mismanagement to the corruption and 
mismanagement itself.
    So, what happened after the pages of ambiguous promises 
made in last year's summit? Faced with the prospect of 
endangering an entrenched culture of blank checks, and 
entitlements flowing in one direction, the U.N. majority and 
its secretariat had a lot to lose. So, they took the offensive 
and showed not the slightest reticence in making their demands 
plain:

     LDevelopment dollars fully directed by the 
recipient;
     Lno cost cutting, any dollar saved anywhere to be 
redirected to developing countries;
     Lthe retention of 97 percent of U.N. mandates 
without a question asked, a General Assembly which retains the 
power to micromanage as it sees fit;
     Lmore representation on U.N. bodies for developing 
countries;
     Lmore jobs in the U.N. Secretariat for their 
nationals;
     Land a guaranteed piece of the action in the U.N. 
multibillion dollar renovation plan.

    And yet it was not their audacity that attracted attention, 
it was the attempt by the American U.N. Ambassador and Members 
of Congress to say enough. American taxpayer deserved better. 
The deluge of U.N. hate speech which followed was voluminous: 
The U.S. was responsible for non-cooperation, politicization, 
conditionality. Deputy Secretary-General, Mark Malloch Brown 
decided to eschew the Un-eeze. He took direct aim at the 
ignorance of ``Middle America'' and the Administration's 
failure to do an adequate selling job.
    The Secretary General and his Deputy were worried about a 
possible paradigm shift. They even spoke of the United Nations 
facing a moment of truth. But that moment appears to have come 
and gone, despite the current state of U.N. ``reform.''

     LManagement reform has run into a brick wall with 
the G-77, majority taking the exceptional measure of using its 
voting power to tie it up in a never-ending demand for more 
reports.
     LNot a single one of the 9,000 mandates has been 
reviewed. The G-77 has mired the issue in a process debate, 
claiming that only 7 percent of the mandates can be discussed 
at all. Terrorism has yet to be defined. The working group 
meeting to draft a comprehensive convention against terrorism 
cannot agree on their next meeting date. The U.N. lead agent, 
the counter-terrorism committee, has not named a single 
terrorist, terrorist organization, or State sponsor of 
terrorism. And the Secretary-General's plan for a counter-
terrorism strategy is now subject to a debate about the 
legitimacy of armed struggle or killing selected men, women, 
and children.
     LMembership on the so-called reformed human rights 
council does not contain a single criterion other than 
geography.
     LThe price tag for the capital master plan 
continues to go up. Now on the table is a new idea, or an idea 
for a new building on the North Lawn, with the astronomical 
cost of over $1,000 dollars per square foot.

    From an American perspective, the price of U.N.-led 
multilateralism appears to be an affinity for self-
flagellation. But rather than some kind of harmless 
predilection, the hatred the U.N. fuels for America does real 
harm. The membership of the United Nations, where democracies 
are outnumbered and often work against each other, dooms its 
capacity to undertake a number of the major challenges of the 
21st Century. Until such time as we redefine multilateralism to 
serve the interests of democracies, we can expect to be 
undermined and demonized on the world stage.
    I hope the prospect of another blank check to those who 
resist reform will serve as a wake-up call, because the truth 
is, the crisis of confidence is as real today as it ever was. 
Thank you.
    Senator Coburn. Ms. Rosett, I have introduced you and I 
want to recognize you, but I want to say something publicly.
    Our founders were visionary in recognizing the power of 
free and open press. And all you have to do is look at the work 
of this witness to know what we know now what we would not know 
if we did not have an aggressive, free, and independent press.
    And she is a model for those who should be snooping around 
Washington, as well as New York, to expose to the American 
people a level of accountability that is not here. We are 
talking about the United Nations today, and she has done 
miraculous work in exposing the deficits there. But it is a 
challenge to everybody in your profession that they do the same 
type of level of investigative report, and their persistence 
and hard work and effort that you have demonstrated on your 
work in the United Nations
    Thank you, and you are recognized.

 TESTIMONY OF CLAUDIA ROSETT,\1\ JOURNALIST-IN-RESIDENCE, THE 
           FOUNDATION FOR THE DEFENSE OF DEMOCRACIES

    Ms. Rosett. Thank you very much for that extremely gracious 
introduction. And let me tell you a little bit today about what 
the United Nations still will not tell us. What I want to talk 
to you about, mainly, is the transparency and try and make it a 
little more concrete, starting with the fact that promises that 
Chairman Coburn, and Senators, that I hope will come to care 
about this issue, because it matters greatly. The promises that 
are already being made at the United Nations once again about 
transparency are, unfortunately, entirely disingenuous. And let 
me give you an idea of why.
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    \1\ The prepared statement of Ms. Rosett appears in the Appendix on 
page 65.
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    The thing that just jumps out over and over in many years 
covering many places, including corruption scandals in the 
former Soviet Union, which is where I came to recognize easily 
some of the patterns that are to this day, manifest at the 
United Nations. The United Nations bears a much closer 
resemblance to some of the despotisms I have covered than to 
any open and democratic system.
    And with Oil-for-Food, it is entirely correct that it was, 
in many ways, a fractal of the U.N. system. One of the many 
things that was a hallmark from the beginning was the refusal 
of the United Nations to answer even basic questions. Who were 
these contractors who were selling detergent to Saddam from 
Saudi Arabia, Syria, Yemen, and Sudan? What was going on with 
the amounts, and so on? And the other part of it was the 
refusal of the United Nations to tell us anything about 
problems which we now know, due to Chairman Volcker's 
investigation, and to other materials that have surfaced, they 
did know about at the time.
    Recall, although this is down the U.N. memory hole, in 
their own version of affairs, that at the end of the program, 
Secretary-General Kofi Annan praised it and its handpicked 
director. It was only later--in fact, he delegated it to his 
own interior audit service, the Office of Internal Oversight 
Services, first to investigate, before Congressional pressure 
and pressed revelations finally forced it out into the open.
    And to this day, the thing coupled with this lack of 
transparency, which I want to get to, is this lack of 
accountability. The two together are a poisonous, really 
poisonous brew. What you have is after all the investigations 
into Oil-for-Food, and the allegations by the U.N.'s own probe, 
that Bennan Sevan, the head of Oil-for-Food, took bribes. He is 
now living in Cyprus on full U.N. pension and when I queried 
the U.N. Secretary-General's office, did they pay for his 
moving expenses back to Cyprus, the answer was that is personal 
and confidential information and we will not tell you.
    Jump now to the U.N. procurement department, the site of 
many scandals already, if you go today to try and find out 
information about contracts the United Nations is currently 
involved with, you will find a list of registered vendors that 
gives nothing more than the date and country of origin--
actually, not even the date in all cases. There are no 
addresses, no contact names, no further details as to who these 
vendors really are, why they have been chosen and so on.
    On the contracts themselves, the United Nations will give 
you no more than a line item with the total price, the 
department, and so on. Basically, at your local grocery store, 
you would be offered beef with no idea how much, what cut, 
anything like that. This leaves you sort of looking through 
these contracts, asking yourself, and what is this arrangement 
with a Washington firm for consulting services for ``barrier 
removal for the widespread commercialization of energy 
efficient, CFC-free refrigerators in China, or stationary from 
Milan.''
    There is no way to tell. These may be legitimate 
arrangements. There is no way to judge. When you come to things 
as important as peacekeeping, these major contracts, which are 
part of the area now deeply embroiled, we know, in U.N. 
corruption, have simply vanished from the website altogether. 
You cannot get information on who is doing what.
    We know that one of the few, the only U.N. employee who has 
actually been arrested and convicted who has been subject to 
the Federal process all the way through to completion, 
Alexander Yakolvlev, in the U.N. procurement department, who 
appears to be the official mentioned in a U.N. internal audit 
who was involved in something like $2 billion worth of 
contracts.
    The United Nations has never released the full roster of 
contractors he was involved in dealing with. We know that he 
was involved in the selection of the Milan architectural firm 
that did the initial design study for the United Nations 
because that leaked to the press. The United Nations has never 
said this.
    The archives for the procurement department themselves have 
simply vanished from the website prior to 2005. These used to 
be there some years back. For some reason the United Nations 
has not explained, it uncoupled those within the past year. You 
cannot look back and even see the line item entries.
    May I skip through, in my written testimony, I have gone 
through some of the problems with the Oil-for-Food. One thing I 
would like to stress there, though, Mr. Volcker's Committee, 
for all of its contributions, has become part of the problem, 
for the reason that it is involved in the same secrecy that 
characterizes the rest. This is not an academic concern. His 
reports mention that U.N. agencies, some of the U.N. agencies 
in Iraq, were rife with corruption, but he says he did not have 
time and resources to follow the leads.
    He has not provided us with the underlying documentation 
for anyone else to follow them. That leaves large open 
questions. The other thing is, while Mr. Volcker's Committee 
put out documentation alleging that more than 2,000 companies 
had paid kickbacks to Saddam Hussein, he did not provide, 
again, the underlying documents and what this means is while 
countries that wish to pursue investigations may request them 
from the Volcker Committee, the rest of us have no access.
    What that means, precisely, is that countries such as 
China, Nigeria, Syria, Libya, Russia, and Sudan, which are not 
seriously investigating, get a free pass. In other words, the 
worst of Saddam's global market of money laundering is 
concealed. It is vital that these archives be brought out. The 
United Nations and Paul Volcker together have deep-sixed this.
    And, just a word on the ways in which this now works. The 
typical regimen at the United Nations is that they will say, 
yes, we have done something wrong and is that not terrible, but 
now we have fixed it. And it is not fixed. One of the things 
that they have done in the name of reform is set up a new 
Ethics Office.
    Three weeks after this was set up, the Secretary-General 
accepted a $500,000 cash prize from the Administer of the 
United Arab Emirates. This is a flagrant conflict of interest. 
You could not do that, say, in U.S. politics, and it was in 
public view, in some sense, the U.N. Secretary-General's Office 
announced the honor but not the cash prize. As the press began 
to dig into details and disclose that two people appointed by 
Secretary-General Kofi Annan had been on the jury, and one of 
the other jury members he subsequently appointed to head the 
U.N. environment program in Nairobi, Achim Steiner, Mr. Annan 
finally gave up the money to turn it over to relief efforts. He 
never acknowledged the conflict of interest involved. And here 
is the problem that leads us on.
    We, to this day, have no documentation of what actually 
happened with the money. We have to take his word for it. We 
are facing a further problem. The Ethics Office, when I queried 
them at the time, refused to comment and kicked it right back 
over to the Secretary-General's Office. It is a loop where 
there is no final accountability. And the Ethics Office has 
announced that there will now be, in the wake of all of these 
scandals, in which you had the head of the Oil-for-Food program 
depositing money into the bank account of his U.N.-employed 
wife, that there would now be financial disclosure by top U.N. 
officials, that they would be filling out financial disclosure 
forms.
    This is an Orwellian use of the term. These will not be 
disclosed to the public. They will be disclosed with the U.N. 
bureaucracy, vetted by the U.N. bureaucracy, and then dealt 
with in whatever way by the same bureaucracy that does not let 
us see in, does not bring into account people who do wrong.
    I have heard that the Secretary-General himself has not 
filed a financial disclosure form, although he has been making 
much of the new Ethics Office. I have queried his office about 
this, and they have not provided me with a simple yes or no. 
They will get back to me. I have come back to them again. It 
seems there is no way to get them to even disclose whether the 
Secretary-General has disclosed his financial interests.
    Furthermore, if you then ask, and who, then, vets this, and 
to whom are any irregularities then reported, it is all 
extremely unclear. There is no answer so far. This is just a 
system with no accountability and that leads us to the United 
Nations dodges and manipulations of the truth.
    May I just very quickly read you an exchange?
    Senator Coburn. OK.
    Ms. Rosett. It is typical of what happens to those who 
actually pursue legitimate questions about conflicts of 
interest, financial problems at the United Nations. This one 
concerns the rental arrangements from Mark Malloch Brown, the 
Deputy Secretary-General, who rents, we are told, a house on 
the estate of George Soros, outside of New York City. George 
Soros, according to Mark Malloch Brown himself, has 
collaborated extensively with the United Nations, including 
with the United Nations Development Program, while Mark Malloch 
Brown was running it, about 1\1/2\ or 2 years ago.
    And we are told that Mark Malloch Brown pays $10,000 a 
month rent, that this according to Mr. Brown, an arms' length 
transaction. There are many potential conflicts of interest 
here. This is somebody who has done business with the United 
Nations--I believe currently does business with the United 
Nations. And yet, here is the reply to the Times of London 
correspondent, James Bone, a highly competent, well informed 
journalist, who has been covering the United Nations very ably 
for years, who asked about this, was it not a conflict of 
interest. And Mr. Brown replied, ``it is of particular genius 
for you and your friends to take something which is of open 
knowledge to everybody is suddenly produced as some great 
guilty secret. Get back to the plenty of real stories that are 
around here. I see enough nodding heads in this room to know 
that there are enough real stories for you to pursue that you 
can stop dragging down everyone you touch, particularly 
yourself, by the way that you are behaving.''
    Mr. Bone had inquired about a potential conflict of 
interest, actually I think an obvious one, involving a very 
high ranking U.N. official who has since been promoted, and I 
will note that while Mr. Brown is talking about the Freedom of 
Information Act, he himself has never disclosed the forms that 
would give us any documentation of any of this.
    Senator Coburn. Mr. Melito, I am going to get you to close 
now, and then we can go to questions.

TESTIMONY OF THOMAS MELITO,\1\ DIRECTOR, INTERNATIONAL AFFAIRS 
        AND TRADE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Melito. Mr. Chairman, I am pleased to be here today to 
discuss the United Nations oversight and procurement process in 
the context of the U.N. capital master plan (CMP). The U.N. 
Headquarters buildings are in need of renovation. Since they no 
longer conform to current safety, fire, and building codes, and 
do not meet U.N. technology or security requirements.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Melito appears in the Appendix on 
page 74.
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    However, effective implementation of the CMP is vulnerable 
to the range of weaknesses existing in internal oversight and 
procurement practices. Today, I will share with you the 
findings of two reports that were released on these topics in 
April 2006.
    First, I will focus on the need to focus on the budgetary 
independence of the U.N. internal oversight unit, OIOS. We 
found that current funding arrangements adversely affect OIOS 
budgetary independence and compromise its ability to affect 
high-risk areas.
    Second, I will also focus on the assessment of the U.N. 
procurement processes according to key standards for internal 
controls. We found that to the extent that the CMP relies on 
current U.N. processes, implementation of the planned 
renovation is vulnerable to procurement weaknesses that we have 
identified.
    I will now highlight our main findings. First, U.N. funding 
arrangements constrain OIOS ability to operate independently as 
mandated by the General Assembly and required by international 
auditing standards. OIOS is funded by the U.N. regular budget, 
and 12 extra budgetary revenue streams. U.N. financial 
regulations severely limit OIOS ability to respond to changing 
circumstances by reallocating resources among these various 
revenue streams.
    As a result, OIOS cannot always deploy the resources 
necessary to address high-risk areas that emerge after its 
budget is approved. In addition, OIOS is dependent on U.N. 
funds and programs for resources as compensation for the 
services that it provides. This is a conflict of interest, 
because while OIOS has oversight authority over these entities, 
it must obtain their permission to examine their operations and 
receive payment for its services.
    Moreover, the heads of these entities have the right to 
deny funding for the oversight work OIOS proposes. By denying 
OIOS funding, U.N. entities have avoided OIOS audits, including 
high-risk areas.
    For, example, OIOS was prevented from examining high-risk 
areas in the U.N. Oil-for-Food program, where billions of 
dollars were subsequently found to have been misused. OIOS 
funding concerns are potentially relevant to the CMP, since the 
ultimate number of auditors who will work on the CMP and their 
funding sources have yet to be determined.
    OIOS reported that it had extra budgetary funds from the 
CMP for one auditor on a short-term basis, but that level of 
funding is not sufficient to provide the oversight coverage 
intended by the General Assembly. To increase oversight 
coverage, OIOS assigned an additional auditor exclusively to 
the CMP using funds from its regular budget.
    Let me now turn to our second finding addressing weaknesses 
in the U.N. procurement system. To the extent that the CMP will 
rely on the current U.N. procurement process, it is vulnerable 
to weaknesses that we identified in our April report. For 
example, the United Nations has not established an independent 
process to consider vendor protests.
    The lack of an independent bid protest process limits the 
transparency of procurement by not providing the means for a 
vendor to protest the outcome of a contract decision. Such a 
process could alert senior officials of failures by procurement 
staff to comply with policies and procedures.
    In addition, the United Nations has not demonstrated a 
commitment to improving the capabilities of its professional 
procurement staff, despite longstanding shortcomings. 
Furthermore, it has yet to complete action on specific ethics 
guidance for procurement officers.
    Due to significant control weaknesses in the U.N. 
procurement process, the United Nations has relied 
disproportionately on the actions of its staff to safeguard its 
resources. However, recent studies indicate that the 
procurement staff lacks sufficient knowledge of procurement 
policies, and the United Nations has made only limited progress 
towards adopting ethics guidance for its procurement staff.
    We also found that the United Nations has yet to 
incorporate guidance for construction in its procurement 
manual. In June 2005, a U.N. consultant recommended that the 
United Nations develop separate guidelines in the manual for 
the planning and execution for construction projects. These 
guidelines could be useful in planning and executing CMP 
procurements.
    In conclusion, the weaknesses in internal oversight and 
procurement we identified could adversely impact implementation 
of the CMP. However, these concerns should be considered within 
the context of the pressing need for renovation of the U.N. 
Headquarters complex.
    Mr. Chairman, this completes my prepared statement. I would 
be happy to answer any questions.
    Senator Coburn. Thank you. I am somewhat taken aback by 
your last statement. So, regardless of how sloppy it is, you 
want to do it?
    Mr. Melito. The issue is because of the age of the building 
and the state of some of the systems in the building, there is 
threat of catastrophic failures. Last fall they had a failure 
in the electrical system which caused the system to have part 
of it fuse, and they had a great threat of a fire, and they had 
to evacuate the building.
    If the electrical system was to fail catastrophically, if 
the heating and air conditioning system was to fail 
catastrophically, we would be faced with a situation where we 
would have to do very rapid renovation, very rapid procurement 
on the fly. So that just needs to be weighed against the issues 
of the system.
    Senator Coburn. I understand, but that is answering the 
wrong question. You can do both.
    Mr. Melito. Yes.
    Senator Coburn. If construction was started today, it would 
still take 5 years to finish it.
    Mr. Melito. Yes.
    Senator Coburn. Dr. Bayefsky, you painted a pretty dark 
picture of the United Nations. If you were queen for a day, 
what would you have us do to try to change, reorganize, 
improve, and place sunshine on the United Nations?
     Ms. Bayefsky. I think it is imperative that the United 
Nations have some competition, that there be an alternative for 
democracies to move together and work together----
    Senator Coburn. Another multilateral body?
    Ms. Bayefsky. Another multilateral front. It does not mean 
destroying the United Nations. It means defining what the 
United Nations can do, and what it cannot do, inherently, 
because of its membership, which is largely undemocratic.
    So, with that demarcation of what the United Nations is 
capable of doing, we should develop a multilateral alternative, 
much as Senator Frist has suggested, in fact, with respect to 
human rights protection, peace and security issues, the War on 
Terror, some of the major issues of the 21st Century. We come 
together as democracies and insure that membership is kept to 
democracies, much like the Council of Europe, a situation where 
one has to be a democracy in order to enter, but if countries 
improve their human rights and records of transparency and 
accountability and so on, can be admitted into the group.
    So, we provide an incentive for others to reform themselves 
in order to join. That is the kind of incentive program that we 
need to generate.
    Senator Coburn. I am going to ask all of you to respond to 
this. Given what each of you know about the weaknesses of the 
United Nations, the past history of waste, and what is 
demonstrated as corruption, that is the word that we should 
use. We should not call it something other than that. And 
mismanagement--what effect do you think total and complete 
financial transparency would have on that institution.
    Ms. Bayefsky. Well, if I may.
    Senator Coburn. Sure.
    Ms. Bayefsky. I am afraid I am one of those people who 
thinks that transparency is not the only answer. Yes, it is 
part of the answer, but the reality is that the composition of 
the United Nations means what we would see we would not like 
very much, anyway. There are 191 countries, 132 of them are 
members of the Group of 77. They hold the majority of power. 
The single largest voting block in the Group of 77 is the 
Organization of the Islamic Conference, that is 56 States. And 
the balance of power is therefore held by developing countries, 
with a very strong influence from the OIC. We saw how that 
played out at the Human Rights Council.
    Everybody says that the Human Rights Council is reformed. 
Nothing could be further from the truth.
    Senator Coburn. I agree.
    Ms. Bayefsky. And the consequence, therefore, is that they 
hold the cards. And so, we have to do more than shine the light 
of day on the organization. We have to make it clear that it is 
not good enough to have a body which thinks that the enemy is 
the United States. And unless we rethink multilateralism to 
suggest that the United States is at the forefront of 
democratization and everything that entails or the benefits 
that can bring, we will not have multilateralism which we can 
trust to tackle the major issues of our time.
    Senator Coburn. Ms. Rosett.
    Ms. Rosett. Well, first of all, if you could actually look 
into the details of the contract, you might learn more about 
the electrical failure than that it was some sort of 
catastrophic event. It is very difficult to prove with that 
information that is not the only version circulating in the 
building.
    The basic problem you have here is that there is no 
internal justice system at the United Nations. Top management 
can do whatever they want and they are not accountable to 
anybody. They operate under diplomatic immunity, and they are 
not accountable within their own system. They are completely 
outside the law. And basically, the problem this raises and 
says even when you do see something, even when you get 
transparency, nothing happens.
    In all of Oil-for-Food, nobody has been punished. And this 
has become an occasion for the Secretary-General to roam the 
globe at the moment saying, ``if there was a scandal, it 
involved maybe one staffer.'' That is just an absurd 
interpretation of what happened. But what you would see if you 
were actually flip on the light is, when you look in--I will 
guarantee you this, and that is simply what I have been able to 
discern looking through what they put out and what you are able 
to get through leaks and miserable employees lower down the 
pecking order and things of that kind is that within the U.N. 
system, you could almost certainly save enough in waste, fraud, 
abuse, excess, and so on, and then more than pay even for an 
overpriced renovation plan.
    In other words, if they actually stopped looking--the 
chronic pattern at the United Nations is looking for more 
money. They had a security council meeting or a General 
Assembly--they had a big cofab back in 1975 talking about the 
financial crisis at the United Nations. I do not have right in 
front of me the names, the mutations of the terminology over 
the last 30-some years, but basically, every year since then 
they have discussed--the names change occasionally, it is the 
urgent crisis, or the financial, or the current crisis. There 
is always a crisis. There is no accountability on the spending 
side.
    In fact, the U.N. sums for spending are given to us, for 
the most part, in big round figures for departments and areas--
$85 million for the Department of Public Information. People do 
not spend in big round figures. There is change. Could somebody 
please just account for that? For the things that would make it 
real.
    Senator Coburn. Is it true that if you really had sunshine.
    Ms. Rosett. Yes.
    Senator Coburn. On what was going on in the United Nations, 
that reform could come from that? Is there no shame associated 
with this situation and this organization? You could not shame 
people into behavior, at least on transparency and reform?
    Ms. Rosett. Well, shame and money seem to be the two 
lovers, and neither one of them has seemed to really have 
gotten much----
    Senator Coburn. But there is no transparency.
    Ms. Rosett. There is no transparency. Well, you can see 
some things. Again, a point that I tried to make in my written 
testimony, you can see in U.N. operations the general shape of 
scams. It is not hard to see how the frauds are probably taking 
place. They are elementary. They are standard. The difficulty 
is getting the details that actually tells you who is doing 
what.
    Senator Coburn. That is the transparency.
    Ms. Rosett. Exactly. Yes. Probably it would make some 
difference, and the difficulty is this. The United Nations will 
promise you transparency. In fact, they described Oil-for-Food 
as transparent. They described the procurement department to 
myself and a colleague in the media, George Russell of Fox 
News--it was our story that brought the name of Alexander 
Yakovlev into the press as somebody who was clearly engaged in 
something funny business in the procurement department.
    When we first went to see the procurement department, as we 
began reporting that story, they assured us that the 
procurement department had been through a reform and that they 
were transparent. Their website was transparent. They had no 
major concerns about corruption at all.
    Senator Coburn. Which is totally opposite of the testimony 
of Dr. Melito.
    Ms. Rosett. Yes. That is correct. In fact, they sent us off 
by saying that we did not ask about Alexander Yakovlev, per se, 
we went to ask are there any concerns about corruptions, 
scams--we were told it is all airtight. It has all been cleaned 
up. It is all fine.
    This is the pattern over and over. So, the test is real 
transparency, and I would suggest that does not consist of 
promises. We have had promises for years. It consists of the 
actual documents.
    Senator Coburn. Dr. Melito, your comments on that.
    Mr. Melito. Increased transparency is definitely a worthy 
goal. In the context of the CMP, it would definitely benefit 
CMP to be more transparent.
    I do want to give just two caveats to that. Certain 
security arrangements of the CMP would have to remain non-
public.
    Senator Coburn. That is understood.
    Mr. Melito. And also, certain business proprietary 
information would probably have to be assured----
    Senator Coburn. Give me a good example, because when I was 
in New York--the idea of proprietary information. Give me a 
good example of proprietary information that somebody would 
have who is going to do asbestos removal in the United Nations, 
or somebody that is going to do the new plumbing, or the new 
air conditioning units. What is the proprietary information 
that would allow them to black out the whole contract so that 
people could not see what we are spending and what we are 
getting for what we are spending?
    Mr. Melito. It usually comes down to issues of the 
individual firm's pricing structure in keeping that hidden from 
its own competitors. It does not necessarily get into their 
techniques, although it could, but it is usually about how much 
they are charging for that individual micro-things. But you 
could definitely release to the public the total cost. Total 
costs should be brought out.
    Senator Coburn. And the costs of their subcontracts.
    Mr. Melito. Again, with some caveats.
    Senator Coburn. Well, yes. So, what I hear is proprietary. 
That is the excuse to not tell you anything, because we have 
something proprietary. There is no rule within the United 
Nations today, other than their own rule that says that they 
have to have that. There is no bylaw in the United Nations that 
says that----
    Mr. Melito. The risk, though, is that if you are actually 
telling bidders in advance that their information would be 
public, they would not bid, which would then greatly inflate 
the price of the contract, because you would have a very narrow 
set of bidders, potentially.
    Senator Coburn. And by saying that, you are assuming that 
the price of the contract is not inflated today?
    Mr. Melito. I am saying that we have not made any analysis 
of that, but if it is a competitive system, you want more 
bidders.
    Ms. Rosett. If I might add, what we do know is that the G-
77, for example, thinks that they are entitled to some of these 
contracts by the fact of their geography, so that entitlements 
here are, according to the majority of the U.N. members, is not 
on the basis of anything remotely resembling the ability to do 
the job, but, in fact----
    Senator Coburn. Who you are friends with.
    Ms. Rosett. Correct.
    Senator Coburn. And that is why subcontracts and that is 
why transparency on contracting, and that is why an ability to 
challenge a contract, as you mentioned, in terms of, I think 
you call it a vendor protest, is so critical in the 
contracting.
    Ms. Rosett. May I just add to that, that there is a 
tradeoff here. It is not necessary for the United Nations, the 
State Department, the GAO, or anybody else to be quite so 
solicitous of U.N. suppliers. If you had a rule across the 
board that the bids, apart from, yes, something that would 
reasonably--something that would involve life or death matters 
immediately and could be--but the bids for things like 
stationary from Milan should be, simply, openly conducted, 
completely transparent.
    Yes, you might get a somewhat narrower set, but you would 
probably be eliminating the worst of the lot. And there is a 
whole element to this that is not being addressed at all, which 
is that United Nations, in its reach across borders, operates 
system-wide, beyond the reach of any one press corps, beyond 
the reach of any legal authority. You can leave for Cyprus, and 
nobody can bring you back. And one of the things that we have 
glimpsed, and in this case----
    Senator Coburn. And have your retirement, Ms. Rosett. Yes. 
Precisely. And pay you full pension and refuse to answer any 
questions about whether or not your moving expenses were paid 
back to your hometown. But one of the other things that George 
Russell and I have come across in reporting on the procurement 
department is that, in looking at a company that was involved 
with, we know, the guilty, convicted, Alexander Yakovlev, a 
company he had many connections with, I see services which went 
through many strange evolutions in its life and involved a 
number of contractors who still, I believe, were doing business 
with the United Nations.
    That was a company which had, as it turned out, and this 
took quite a deal of digging to find, connections that went 
back to the Muslim Brotherhood in Western Europe to contractors 
all over the place where you had no idea who was actually 
involved. When you are subcontracting, it may be all very nice, 
upfront, healthy, good work, but as soon as it becomes 
extremely opaque, which it is, you also have what Oil-for-Food 
became, basically, which is an enormous network that can be 
perverted into a global money laundering network. And you have 
the United Nations operating in the world's worst trouble 
spots. When you have corridors of diplomatically immune, opaque 
money all flowing in good works, this was what Oil-for-Food 
was.
    Under the blue U.N. label, you have enormous risks that 
start to come in about what else is going on under the U.N. 
label. And all of this, it would seem to me, argue for 
transparent bidding, even if it does raise the cost, you are 
making tradeoffs. Thank you.
    Mr. Melito. It is clear that GAO's position that U.N. 
procurement system, in general, has serious problems. And it is 
a systemic problem in terms of lack of investment and training. 
There is a real breakdown in terms of management's 
responsibility, who has to do what.
    When we reported on these deficiencies in April--I do want 
to say, though, that it is possible for the CMP to be sort of 
fire walled from these problems since it is a relatively 
focused and unique procurement. I do think the United Nations 
should isolate itself from these larger procurement problems, 
which would probably take several years, at least, to fix.
    Senator Coburn. Well, I want to assure you that the money 
that this country is going to spend is going to request that 
type of isolation, that type of control, or each year we will 
be fighting it on the floor and we just probably will not 
appropriate it unless we get that kind of assurance.
    Dr. Bayefsky.
    Ms. Bayefsky. I was going to add that there is another part 
of the puzzle--we have to ask what it is the United Nations has 
engaged in, the whole issue of so-called mandate review, the 
duplication issue. In other words, not only is money being 
spent in ways in which we cannot figure out its destination, 
but we are unable to determine what it is doing that is 
duplicative across the board. The mandate review process is 
very enlightening. The Secretary-General was asked to begin the 
process of mandate review by the September summit. Instead what 
he did was dump a list, literally, just a list, of 9,000 
mandates that the United Nations does, its program of work.
    And to date, when the budget cap is before us and expected 
to be lifted, not a single, solitary mandate has been reviewed. 
What does that mean in terms of where the money is actually 
going? One of the most obvious examples of duplication, which 
is driven by the interests of a certain number of U.N. 
countries, is the issue of the Palestinian agenda. There is one 
refugee agency for Palestinians, and one refugee agency for 
everybody else. There is one Department of Public Information 
for the Palestinians, (information on the question of 
Palestine,) and one Department of Public Information for 
everybody else. There is one Human Rights database for 
Palestinians and so the list goes. There is one U.N. division 
solely for Palestinians and nobody else has a single solitary 
division devoted to their work. The number of posts of U.N. 
Staff for the division of Palestinian rights has 16 people. And 
the number of posts for the entire Asia Pacific Division is 21. 
So, until we do mandate review, we do not know, clearly, what 
the United Nations is spending its money on, and what it could 
do to consolidate, rationalize, to save us an enormous amount 
of money.
    Senator Coburn. I do not know if you heard my opening 
statement. In visiting with key members of G-77, the Group of 
77, Secretary Mark Malloch Brown, as well as our Ambassadors, I 
got unanimity agreement for transparency. And I did not just 
say transparency. I defined transparency, open and honest 
evaluation availability online of everything that you are 
doing, all the way down through all the subcontractors.
    I have to agreement to that. Am I just ignorant or naive in 
thinking that they would agree to that, and then if we were to 
make that a condition to our contribution to the United 
Nations, we would not see some action?
    Ms. Bayefsky. Well, you raise the whole issue of conditions 
to our contribution, as such. I mean, the spending cap was the 
one way to force the issue of this reluctance to reform on 
multiple levels and everything that has been talked about 
today----
    Senator Coburn. That is the Administration's one way. That 
is not Congress' one way.
    Ms. Bayefsky. I hear you and I hope, indeed, that if and 
when the spending cap is indeed lifted, that there are 
alternatives. There are, of course, alternatives. Congress has 
already identified a number of ways in which they can review 
the budget and insist that it can be changed.
    One of the examples that I think bears some time 
considering is the issue of pedophilia. For example, the 
Congress put a very major condition on U.S.-U.N. funding and 
said that contributions for international organizations as a 
whole, not just the United Nations, are reduced by a $118 
million for every fiscal year, unless it can be certified that 
no U.N.-affiliated agency promotes pedophilia in one way or 
another. So that certification is required from the 
Administration.
    Other such requirements could be put in place which 
required a certification that no U.N. NGO, for example, is 
engaged in the encouragement of terrorism, racism or anti-
Semitism. And I think it behooves us indeed, to think 
creatively about potential ways of accomplishing the kinds of 
transparency and accountability that you are thinking of, 
should the spending cap be lifted.
    Senator Coburn. Just a thought. We are somewhat 
schizophrenic. If we were to have such limitations, sometimes 
our own State Department will fight us on some of those issues.
    Do you perceive that as a real issue, a real possibility?
    Ms. Bayefsky. Unfortunately, I do, yes.
    Senator Coburn. OK.
    Ms. Bayefsky. I see it very directly, day to day. We voted 
against the Human Rights Council, and the very same day the 
State Department said we are going to pay for it. The members 
had not even been elected yet and we are going to pay for it.
    Senator Coburn. Yes.
    Ms. Bayefsky. And now that it is elected, we are going to 
pay for it even more. Now, Cuba is going to lecture us on human 
rights. In fact, it did so in Geneva, today.
    Senator Coburn. All right. Any other comments. Ms. Rosett.
    Ms. Rosett. Yes. Just in brief. I often get the feeling in 
this kind of discussion that the fix is in. And it seems worth 
talking about because an old editor of mine, Bob Bartley, once 
said that sometimes, even when you see a bus going over a 
cliff, you cannot stop it but you can at least say, look, a bus 
is going over a cliff.
    And on this, there really are things that matter a great 
deal, here, as far as what we should be able to see. I have 
made up just a quick list for you.
    Here is what we need to see, and we need to see it in the 
interest, simply, as an institution with any integrity at all. 
The United Nations needs to be even more transparent then the 
best of its Member States, for the reasons that I just 
mentioned. It operates with nobody's real jurisdiction. It does 
not have to account to a free electorate. It does not have to 
account to itself. We should be able to see in full the 
procurement archives.
    I believe that they forfeited any rights to agreements of 
confidentiality with the degree of corruption we do know exists 
in there. This should go back until the mid 1990's. That is 
when some of the current scams originated. They are huge. They 
probably involve companies still doing business with the United 
Nations, which would love to bid in the shadow of the current 
secrecy arrangements on new contracts.
    Second, the archives of the Oil-for-Food investigation. I 
mean, if they want to winnow out the things where they truly 
believe that a witness' life is at risk, fine. But at the 
moment, the investigator who defected criticizing the 
investigation for going soft on the Secretary-General who has 
been promising you all of these things is under a 7-year court 
order, a gag injunction, where he cannot even talk about it.
    And we have never seen most of the underlying documents. We 
have been given a very precise set of conclusions that gives us 
a very fuzzy view of some of the U.N.'s activities. These 
archives are huge. They involve established patterns of how the 
U.N. operates. People who will be carrying forward into the 
next regime and who you will be depending upon. If they are 
still there, they occupy crucial roles, or will, where they 
will have to decide what happens.
    You need to see the archives of the Volcker investigation. 
We all do. Not just you, the Senate, we the public need to see 
this.
    Finally, I think that the least that could be done, in a 
measure of good faith, would be that these financial disclosure 
forms, which are supposed to be part of the U.N. compliance 
with ethics, the public should have full access to the 
Secretary-General's, the Deputy Secretary-General's, to the 
Under Secretary-General's--there is a huge roster at this point 
of people occupying those top three ranks--many Under 
Secretary-Generals, one of whom turned out to be taking, by his 
own admission, finally, payoffs from Saddam Hussein while 
working as Kofi Annan's envoy to Europe. And they roamed many 
parts of the globe doing many things.
    There are conflicts of interest already established, too 
much to go into now. But these should all be fully disclosed to 
the public. And the standard there should be that if we are 
going to have an institution like this, you have got to have 
that be the standard of transparency. Probably the only way to 
get that is the kind of competition you described.
    But that list, I think, is the minimum of what you should 
be looking for to have any faith in their promises at all.
    Senator Coburn. Put some teeth in the ethics process, 
because there are no teeth in the ethics process that they put 
in.
    Ms. Rosett. I think that is the difficult job that you face 
because there are no teeth in the ethics process right now. The 
moment in which I sent a note to them asking about the ethics 
of Secretary-General Annan taking a half a million dollars from 
the ruler of Dubai via a prize jury packed with his appointees, 
and they referred me back to the Secretary-General's office, 
after several rounds of ping pong, it was clear. This was going 
nowhere. They have no power to investigate. They have no power 
to enforce. Once again, this is an Orwellian world. This is a 
world where the labels do not mean what they say.
    Senator Coburn. A mirage.
    Ms. Rosett. It is called an ethics office. It is a cover up 
for not having an ethics office.
    Senator Coburn. Any final comments?
    Mr. Melito. I would just like to reiterate that the issues 
with OIOS really do make the CMP vulnerable. The United Nations 
needs to make sure that OIOS has the independence to at least 
oversee that project. And that can be done, because in case of 
peacekeeping, there is not a short source for oversight for 
peacekeeping. They can create something for CMP. And similarly, 
they should create some sort of firewall strategy which 
eliminates any risk that CMP procurement will have.
    Senator Coburn. Thank you. You each will receive some 
questions from the Subcommittee, if you would not mind 
answering some of those, within 2 weeks of receiving them, we 
would very much appreciate it. I do appreciate you preparing 
testimony and the work that you have done.
    The hearing is adjourned.
    [Whereupon, at 4:26 p.m. the hearing was concluded.]

                            A P P E N D I X

                              ----------                              

                  PREPARED STATEMENT OF SENATOR CARPER

    Since its establishment on June 26, 1945, the United Nations and 
its agencies have played integral roles in addressing global issues 
ranging from electoral assistance in Iraq and Afghanistan to 18 
peacekeeping missions around the world and hopefully, in the near 
future, Darfur.
    The United Nations is important not only to the international 
community, but also right here at home in the U.S. The United Nations 
employs over 40,000 people, including 1,400 Americans. As a major New 
York attractions, 40 million visitors having toured the buildings, 
contributing an estimated $800 million annually to our economy.
    The U.N. buildings have not been renovated since they were built in 
the early 1950s, with current problems including asbestos; lead paint; 
no sprinkler systems; and spaces that would be inaccessible to 
firefighters.
    And now, when a credible renovation plan is on the table, there are 
those who would use it as a political tool to force needed management 
reforms.
    In a post 9/11 world--I find it totally unacceptable that there are 
those who would play politics with people's lives. I understand that 
the United Nations requires reform and support these efforts, but not 
at the possible expense of the 40,000 lives of the Americans and others 
who work at the United Nations. What would happen if a fire were to 
break out or if there were a terrorist attack?
    The U.N.'s renovation plan has been reviewed by GAO twice, and is 
in the process of a third review. State Department and OMB have also 
taken part in the review process and all give the plan a clean bill of 
health. To my understanding the Administration supports the plan, and I 
look forward to hearing the Administration's position from Ambassador 
Bolton today.
    I, therefore fail to understand why the plan has yet to be 
implemented . . . and given that renovations will take years, why 
renovations and reforms simply cannot take place at the same time.
    I am also not the first to pose the question of embroiling the 
renovation's plan in politics. Fritz Reuter, the Executive Director of 
the U.N.'s renovation plan voiced similar concerns, and ultimately 
stepped down from his position from all accounts for similar reasons.
    It baffles me, Mr. Chairman why in your meeting with Mr. Reuter 
last week, that you did not insist that he be here today. He has the 
most knowledge of anyone on this topic and on best ways to move 
forward.
    That being said, I look forward to hearing testimonies from our 
witnesses today that really address the nuts and bolts of the 
renovation and any related issues of concern.

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