By George Russell and Claudia Rosett, Fox News
Thursday, March 15, 2007
Nearly two years after a FOX News story led to the discovery of widespread corruption in the United Nations' multi-billion-dollar procurement department, revelations in a U.S. federal courtroom last week by one of the corrupt U.N. officials testifying against another show that the rot continues.
Signs of the problem spilled out in testimony that a gigantic Russian-based air transport company paid at least $700,000 in "consulting" fees to a United Nations procurement officer, in an arrangement involving at least 10 to 12 U.N. contracts awarded to the firm.
The value of the contracts is unknown -- and the U.N. refuses to divulge it -- but based on fragmentary evidence obtained by FOX News from U.N. Web sites and other sources, the total easily runs into tens of millions of dollars.
Both offering and accepting inducements of any kind is a violation of U.N. regulations, which supposedly results in punishment not only for the employee but also for the contractor, who is, according to the rules, liable to be cut off from further U.N. contracting.
Yet even after those revelations, delivered by the man who took the money, the company that broke those rules, Volga-Dnepr Airlines, can still be found on a list of firms currently authorized to do business with the United Nations.
Contacted by FOX News by e-mail to discuss the charges and the company's current relationship with the U.N., a spokesman for Volga-Dnepr declared that "at the moment we would refrain from any comments on the subject."
In fact, Volga-Dnepr's name can be found twice on the so-called U.N. vendors' list, listed both as Volga-Dnepr Ireland (vendor ID 14515) and as a Russian firm, Volga-Dnepr Airlines (ID 6006). Such multiple registration is also forbidden under U.N. regulations.
Volga-Dnepr is a globe-girdling air transport concern that was founded in 1990 amid the crumbling ruins of the Soviet Union. It currently claims, on its corporate Web site, to hold 56 percent of the international market for carrying extra-heavy and oversize cargo -- a type of transport especially important for U.N. peacekeeping forces, which move large numbers of troops, supplies and heavy equipment, such as vehicles, around the world.
Volga-Dnepr's main work-horse is the Antonov-24 jumbo cargo airplane, the Russian equivalent of the U.S. military's C-5 Galaxy.
The same Web site proudly proclaims that "Since 1992, the Volga-Dnepr Company has always participated in U.N. peace-keeping and humanitarian missions. The Company enjoys the official U.N. carrier status since 1994, and has been on the U.N. supplier roster since 1995."
The allegations against Volga-Dnepr were leveled during the trial, which concluded last week, of Vladimir Kuznetsov, formerly the highest-ranking Russian diplomat at the United Nations.
At the time of his arrest, in September 2005, Kuznetsov was head of the U.N. General Assembly's Advisory Committee on Administrative and Budgetary Questions (ACABQ), which supervises the U.N. budget. (Kuznetsov was found guilty of money-laundering, and could face up to 20 years in prison. He awaits sentencing in June.)
Volga-Dnepr's payments were tallied at the trial by the chief witness against Kuznetsov: Alexander Yakovlev, also a Russian, and a 20-year veteran of the U.N. procurement department, who pled guilty to money laundering and corruption charges in August 2005, after a FOX News story revealed his secret Caribbean bank account.
Without admitting to taking bribes from Volga-Dnepr, Yakovlev testified that he had illegally set up what he described as a private consulting firm to assist companies in preparing bids for U.N. procurement contracts.
In violation of his U.N. impartiality Yakovlev further testified that after meeting Volga-Dnepr's president, Alexey Isaikin, he had agreed to act as a consultant with Volga-Dnepr on some 30 to 40 contracts, and that the firm had won "10, 12" of them.
The bulk, he testified, had been won in 2000 and 2001, but he had also accepted money from Volga-Dnepr in late 2004 or perhaps early 2005. (Payments, he testified, were contingent on Volga-Dnepr winning contract bids.)
Some of that money found its way from Yakovlev's offshore bank account into another secret Caribbean bank account established by Kuznetsov.
Volga-Dnepr is evidently proud of its U.N. connections. The Volga-Dnepr corporate Web site makes frequent mentions of its U.N. efforts, ranging from peacekeeping airlifts in Congo (2001), Uganda (2003), Liberia (2003) and Sierra Leone (2004), to its support for U.N. coalition forces in Afghanistan.
The airline claims it was the first air transport firm to fly into Afghanistan in December 2001 after the U.N. launched its offensive, under U.S. leadership, to topple the Taliban. Now its transport services cover a wider range of activities, including supply services for the world-wide oil industry.
The company has prospered accordingly. During the period from 2000 to 2005, Volga-Dnepr's air cargo sales, according to the company's annual report, blossomed from about $99.5 million to $467.8 million.
Information concerning contract awards to Volga-Dnepr does not show up on the U.N.'s procurement department Web site, which despite repeated U.N. promises of transparency remains highly opaque.
But other records obtained by FOX News show that Volga-Dnepr's Irish subsidiary won $30 million in U.N. contracts in 2005, chiefly for "freight forwarding." Volga-Dnepr got about $18.6 million in 2004, mostly for the same services. FOX was unable to obtain similar records for 2000 or 2001.
When asked by FOX about the nature of the contracts referred to by Yakovlev in court, the value of those won by Volga-Dnepr, names of competitors for the contracts, and reasons why Volga-Dnepr has remained on the U.N. vendor's list, U.N. spokesmen refused to provide any specifics, saying only that the matter was "under investigation" and a conclusion may be released in "due course."
That was presumably a reference to the work of a special 16 member U.N. procurement fraud task force, set up after a confidential U.N. audit in late 2005 uncovered what it called "systematic abuse" and a "culture of impunity" within the U.N.'s procurement department, especially in relation to the U.N.'s ballooning peacekeeping budget.
The task force is said to be investigating some 200 contracts awarded under questionable circumstances. The U.N. has refused to confirm whether the Volga-Dnepr contracts are among them.
Nor are the Volga-Dnepr contracts the only ones that Yakovlev admitted to "consulting" on during the Kuznetsov trial. The procurement veteran admitted to accepting upwards of $250,000 in 2000 for work he did on successful contracts for an Italian firm, Cogim, which provided prefabricated buildings to U.N. peacekeepers.
Cogim's top executives were charged in Italy last June in connection with the Yakovlev payments. And Cogim's name no longer appears on the U.N. vendors' list as an approved supplier.
In the case of Volga-Dnepr, however, the company not only appears to have retained its U.N. contractor status, but the Russian government instead of launching an investigation into the activities of one of its flagship cargo carriers has apparently confined itself to protesting the guilty verdict reached by a U.S. jury in the case of Kuznetsov.
George Russell is executive editor of FOX News. Claudia Rosett is a journalist-in-residence with the Foundation for the Defense of Democracies.
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