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29–504 PDF 2007

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

(

(II)

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

SUSAN M. COLLINS, Maine, Chairman 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

LINCOLN D. CHAFEE, Rhode Island 

ROBERT F. BENNETT, Utah 

PETE V. DOMENICI, New Mexico 

JOHN W. WARNER, Virginia 

JOSEPH I. LIEBERMAN, Connecticut 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK DAYTON, Minnesota 

FRANK LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas

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 

GEORGE V. VOINOVICH, Ohio 

LINCOLN D. CHAFEE, Rhode Island 

ROBERT F. BENNETT, Utah 

PETE V. DOMENICI, New Mexico 

JOHN W. WARNER, Virginia 

THOMAS CARPER, Delaware 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

MARK DAYTON, Minnesota 

FRANK LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas

KATY FRENCH, Staff Director 

SHEILA MURPHY, Minority Staff Director 

JOHN KILVINGTON, Minority Deputy Staff Director 

LIZ SCRANTON, Chief Clerk 

(III)

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

(1)

1The chart entitled ‘‘Capitol Master Plan Funding (in millions) appears in the Appendix on 

page 94. 

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 con- cerning 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

To put it in perspective, the Ronald Reagan Building in Wash- ington, 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. 

2

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-byfloor 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. 

3

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. 

4

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 

5

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. 

6

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 

7

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 contribuVerDate 0ct 09 2002 09:37 Aug 27, 2007 Jkt 029504 PO 00000 Frm 00011 Fmt 6633 Sfmt 6601 C:\DOCS\29504.TXT SAFFAIRS PsN: PAT
8

1The prepared statement of Ambassador Bolton appears in the Appendix on page 34. 

tions 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. 

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 

9

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 socalled 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 

10

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? 

11

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 Oilfor-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, 

12

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. 

13

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 

14

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 

15

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. 

16

1The prepared statement of Ms. Bayefsky appears in the Appendix on page 41. 

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. 

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, 

17

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 SecretaryGeneral, 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:

• Development dollars fully directed by the recipient; 

• no cost cutting, any dollar saved anywhere to be redirected 

to developing countries; 

• the 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; 

• more representation on U.N. bodies for developing countries; 

• more jobs in the U.N. Secretariat for their nationals; 

• and 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. 

18

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.’’

• Management 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. 

• Not 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. 

• Membership on the so-called reformed human rights council 

does not contain a single criterion other than geography. 

• The 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. 

19

1The prepared statement of Ms. Rosett appears in the Appendix on page 65. 

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. 

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 

20

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 

21

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 accept- ed 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, 

22

1The prepared statement of Mr. Melito appears in the Appendix on page 74. 

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 11⁄2 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. 

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. 

23

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 highrisk 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, 

24

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. 

25

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 

26

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 

27

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. 

28

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 proVerDate 0ct 09 2002 09:37 Aug 27, 2007 Jkt 029504 PO 00000 Frm 00032 Fmt 6633 Sfmt 6601 C:\DOCS\29504.TXT SAFFAIRS PsN: PAT
29

curement. 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 SecretaryGeneral 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——

30

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 

31

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 SecretaryGeneral 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? 

32

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.] 

(33)

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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