At the individual level, former president of the UN General Assembly, John Ashe, has been charged by U.S. federal prosecutors with taking bribes in exchange for using his influence in his official capacity, both during his General Assembly presidency and while serving as the UN ambassador of Antigua and Barbuda. Mr. Ashe allegedly endeavored to push through lucrative business deals in Antigua and China on behalf of his benefactors. The bribes he is alleged to have received were said to be channeled through the Sun Kian IP Group Foundation, controlled by indicted Chinese billionaire Ng Lap Seng, and through the Global Sustainability Foundation, whose CEO Sheri Yan served as an adviser to Mr. Ashe.
However, the current UN corruption scandal is about more than just a high profile UN official who allegedly abused his office for personal gain. The scandal has led to broader questions at the institutional level regarding funding relationships between private foundations and the UN Office of South-South Cooperation, which is housed within and is overseen by the United Nations Development Programme (“UNDP”). Doubts have been raised about the rigor and integrity with which the UN vets the companies and their affiliated private foundations who seek to make donations to the UN. In order to keep the money flowing into UN coffers and make up for shortfalls in member state contributions to agency budgets such as the UNDP and its various parts, at least some UN offices appear willing to sell to private donors an opportunity to associate themselves with the image of noble sounding UN causes such as sustainable development. The unvetted donors can then exploit this opportunity to promote their own commercial interests. This amounts to “pay to play “image laundering as well as potential steering of business the donors’ way.
When confronted with a scandal involving particular individuals at the UN, the UN’s bureaucratic defense is that such conduct, while very regrettable, does not reflect the values of the UN as a whole and is an isolated case of individual wrongdoing. Then, in response to the negative publicity, some sort of after the fact inquiry is undertaken.
In John Ashe’s case, while serving as the UN ambassador of Antigua and Barbuda, he arranged to have a letter he addressed to UN Secretary General Ban Ki-moon treated as an official United Nations document, which in its revised version in 2013 included a specific reference to Ng Lap Seng’s company, the Sun Kian IP Group. Mr. Ashe’s letter mentioned support among member states for “the launching of the Global Business Incubator, Permanent Expo and Meeting Centre” and stated that “Sun Kian IP Group of China has welcomed the initiative and will serve as the representative for the implementation of the Permanent Expo and Meeting Centre for the countries of the South.” Mr. Ashe was allegedly paid through intermediaries acting on behalf of the company whose commercial interest in building the permanent expo center in Macau he was reportedly attempting to push through official UN channels.
The new president of the UN General Assembly, H.E. Mogens Lykketoft, promised reforms in his office that would emphasize more transparency, impartiality, accountability and professionalism going forward. He acknowledged, however, that his office would be of little help to federal law enforcement officials in their further investigation of Mr. Ashe’s activities while serving as General Assembly president because “we have no access whatsoever to documents from earlier PGA [President of the General Assembly] offices.” He added that relevant information might be available from other parts of the UN. However, it has not been confirmed to date whether this is the case.
Even if all the records pertaining to Mr. Ashe’s tenure as General Assembly president were available, they would not tell the whole story. Ng Lap Seng and his company’s foundation arm did not limit the alleged exploitation of their UN contacts to Mr. Ashe. Earlier this year Ng Lap Seng had signed a funding agreement with the Director of the UN Office for South-South Cooperation at the time, Mr. Yiping Zhou. Under the agreement, Sun Kian IP Group’s affiliated foundation arm would contribute $5 million a year for three consecutive years to a UN multi-partner trust fund, to be set up by the UN Office for South-South Cooperation. Last August, just a month before his arrest, Ng Lap Seng appeared along with Mr. Zhou and Mr. Ashe at the High-level Multi-Stakeholders Strategy Forum on South-South Cooperation for Sustainable Development held in Macau. The United Nations used $1.5 million contributed by the Sun Kian IP Group Foundation to help pay for the forum conference. Said Mr. Zhou at the forum: “My thanks also go to our partner Sun Kian IP Group Foundation whose invaluable generosity has made this event possible.”
With the blessing of the forum’s organizer, the UN Office for South-South Cooperation, the co-branded forum sponsored by the Sun Kian IP Group Foundation was used in part for the purpose of endorsing the Sun Kian IP Group’s business initiative to build a permanent South-South expo and conference center in Macau. In other words, a high-minded UN-private sector partnership arrangement became a vehicle to promote a purely commercial venture. And in the process, the Sun Kian IP Group effectively bought the right to place its foundation affiliate’s name and logo prominently alongside the UN Office for South-South Cooperation’s name and logo on each page of the official High-level Multi-Stakeholders Strategy Forum brochure. Indeed, the Sun Kian IP Group Foundation’s name and logo appear above a photo of UN Secretary General Ban Ki-moon and the United Nations logo.
After news of the charges against John Ashe were made public, the UN Office for South-South Cooperation said it was not going to accept the rest of the $15 million pledged by the now reputationally compromised Sun Kian IP Group Foundation. In full damage control mode, Jorge Chediek, the current Director of the UN Office for South-South Cooperation, told the Associated Press that the $1.5 million allotted for the Macau forum conference had been accounted for, with no evidence found of misuse. However, officials of the UN Office for South-South Cooperation have declined to speak with investigative journalists delving in depth into the interlocking relationships between their UN office and the Sun Kian IP Group Foundation and its principals, including Ng Lap Seng, as well as the Global Sustainability Foundation.
Questions abound. Why, for example, did the UN bureaucracy wait nearly four weeks after the arrest of Ng Lap Seng by U.S. authorities, on charges of making false statements regarding $4.5 million in cash that he had allegedly snuck into the US since 2013, to decide to refrain from taking the remainder of the $15 million contribution from Ng Lap Seng’s foundation? Why did the UN Office of South-South Cooperation decide to organize, with sponsorship and co-branding by the Sun Kian IP Group Foundation, the Macau High-level Multi-Stakeholders Strategy Forum on South-South Cooperation for Sustainable Development held in Macau in August 1015 well after the Sun Kian IP Group had been expelled from the UN Global Compact in April 2015?
Most importantly, why did the UN Office of South-South Cooperation allow its website to be used to ballyhoo the Sun Kian IP Group Foundation-sponsored forum’s purported endorsement of the "creation of a permanent South-South Expo [Center] in Macau"? Ng Lap Seng’s commercial ambition was evidently to build such a permanent UN conference center. He had sought former UN General Assembly President and former UN Ambassador John Ashe’s help to bring the UN system on board. Ng Lap Seng‘s alleged use of his company’s foundation to purchase Mr. Ashe’s help – the same foundation that funneled money to the UN Office of South-South Cooperation to organize and promote the forum where the permanent expo center idea was given such traction – is a key part of the complaint filed by U.S. prosecutors against Mr. Ashe and others, including Ng Lap Seng himself.
The UN Development Programme, of which the UN Office of South-South Cooperation is a part, has issued guidelines on how it expects its personnel to work in collaboration with the private sector. One rule is that UNDP will not engage with businesses that systematically fail to demonstrate commitment to meeting the principles of the UN Global Compact. Given the Sun Kian IP Group’s expulsion from the UN Global Compact in April 2015, the UN Office of South-South Cooperation’s subsequent acceptance of money and willingness to organize a forum sponsored by the Sun Kian IP Group’s foundation arm may well have violated this rule.
Another rule is that the UNDP’s engagements with the private sector must allow the UNDP to remain impartial. The UNDP’s guidelines warned that there must not be even an “implied UNDP endorsement to any company or product or service.” The UN Office of South-South Cooperation clearly crossed that line when it allowed itself to be used as a vehicle for organizing a forum that endorsed its private sponsor’s commercial proposal for the building of a permanent expo center in Macau.
The UNDP has also published what it calls a “risk assessment tool,” which is described as “a step by step guide to the actions required by UNDP staff when assessing the risks and benefits regarding engaging with the private sector.” It sets out a rigorous risk evaluation process to inform a decision as to whether the UNDP should engage with a private sector party and instructs: “If the risks are assessed as too high, withdraw from the engagement.”
Among the high risk industry sectors listed in the UNDP’s risk assessment tool is “gambling.” Ng Lap Seng, among his other commercial interests, has a significant stake in the casino industry. Yet the UN Office of South-South Cooperation doubled down on its engagement with Ng Lap Seng and his foundation.
The UNDP’s risk assessment tool box also calls for consideration of any “past and /or present ethical issues that pose potential reputational risks to UNDP” that might arise from a potential partnership with a private sector party. Even a cursory Google search would have revealed information raising ethical concerns about the Sun Kian IP Group chairman Ng Lap Seng’s past behavior. One red flag in this regard would have been widely reported allegations of large donations he is said to have made through an intermediary to President Bill Clinton’s team in the 1990’s, which were reportedly later returned due to legal concerns about their source. Evidently, either no serious search of such public domain information was done by the UN staff or it was simply ignored. Even worse, the UN Office for South-South Cooperation appears to have done nothing to re-examine its relationship with Ng Lap Seng’s company foundation between the time that Ng Lap Seng was arrested in September 2015 and when the criminal complaint against the former president of the UN General Assembly John Ashe and his alleged ties to Ng Lap Seng were made public
The UN Secretariat says its Office of Internal Oversight Services (OIOS) will conduct an audit of the interactions between the UN and both the Sun Kian IP Group Foundation and the Global Sustainability Foundation. This is little more than window dressing. The UN’s internal investigatory mechanisms are ill-equipped to ferret out any serious instances of wrongdoing, especially after the special United Nations Procurement Task Force, a group of experts assigned to the OIOS with the requisite skills to detect and root out fraud and corruption within the UN, was disbanded several years ago.
Richard Bistrong, the CEO of Front-Line Anti-Bribery LLC, experienced firsthand the robust nature of the UN Procurement Task Force's investigatory prowess while it was in existence. In his case, the task force vigorously followed a trail starting with the investigation of a third party’s alleged corrupt dealing to a contract with the UN in which Mr. Bistrong himself was involved on behalf of the company he was then working for. Not only did the task force pursue its investigation leading to Mr. Bistrong. It turned over information it had gathered to the U.S. Department of Justice, which in part led to his being the target of a criminal investigation for violating the Foreign Corrupt Practices Act. He pleaded guilty and decided to help law enforcement authorities in the U.S. and United Kingdom in other corruption cases by agreeing to go under cover.
Mr. Bistrong, whom I interviewed for this article, said that when the procurement task force was disbanded, there were to his knowledge approximately 100 active investigations underway. About 50 companies had already been debarred and 4 people were incarcerated after the task force shared the information it had collected with the U.S. Department of Justice (including UN staffers and Mr. Bistrong). Following the disbanding of the task force, there were neither any UN-pursued follow-ups to the pending investigations nor any new fraud investigations that have led to publicly disclosed debarments or prosecutions.
In a guest post on the FCPA blog, where he is a contributing editor, Mr. Bistrong noted the proactive, hands-on approach of the United Nations Procurement Task Force towards ferreting out corruption within the UN system. He contrasted this approach, based on his own personal experience, with the UN bureaucracy’s lackadaisical approach towards such corruption since the procurement task force’s disbanding, as exemplified by its wholly reactive handling of the current scandal:
“The new charges were the result of a focused FBI investigation with the UN as a bystander. In my case, an investigation started within the UN and was then shared with the DOJ. In any organization, results are driven by focus and commitment, as the UN's pursuit of me and others demonstrated. Given the Procurement Task Force's record of success -- and I have the prison card to prove it -- we should be asking why the PTF's funding expired, and why the UN became a bystander to perhaps the biggest corruption investigation in its own history.”
The UN OIOS audit of the interactions between the United Nations and both the Sun Kian IP Group Foundation and the Global Sustainability Foundation is limited in scope. The auditors appear to be tasked with only examining whether the monies received from the private foundations were properly accounted for and spent by the UN Office of South-South Cooperation. There do not appear to be any current plans to examine whether the UN Office of South-South Cooperation properly applied the UNDP’s stated guidelines and risk assessment tools in vetting its funding partners in the private sector, such as the Sun Kian IP Group Foundation and the Global Sustainability Foundation, as well as any middlemen involved in bringing UN officials and the private foundations together in the first place.
The current corruption scandal at the UN is much more than just about one former General Assembly president, as serious as the allegations against him appear to be. There is an increasing trend of private sector engagement in the funding of noble sounding UN initiatives such as sustainable development. Systemic corruption will continue to contaminate the United Nations as a whole as long as it accepts contributions from companies or their affiliated foundations which are motivated to use their contributions as a means to launder their public images and gain unfair business advantage.
Public corruption can appear in various forms. First, individual office holders may violate the public trust, abusing their positions of authority to peddle influence for money. The public institutions which they are supposed to serve may not be inherently corrupt themselves but they may enable such schemes by virtue of inadequate internal controls. Second, and potentially more pernicious, is institutional corruption. This can occur when the institution itself systematically permits, even encourages, donations of money and in-kind contributions in return for such benefits to private concerns as steering of business and image laundering. The United Nations is currently caught in the crosshairs of a widening scandal that contain alleged elements of both individual and institutional corruption.
