UNDP sets the record straight on Afghanistan fund

13 May 2012

The Wall Street Journal articles published on 10 and 13 May 2012 imply weak and ineffective management of a major internationally-funded program in Afghanistan. We disagree.

The United Nations Development Program (UNDP) has strong institutional oversight and accountability mechanisms in place to minimize the risks of fraud in Afghanistan, where we—like other international agencies, donors and NGOs—operate in an extremely challenging environment.

The articles refer to the Law and Order Trust Fund for Afghanistan (LOTFA), which is part of our program in Afghanistan and helps increase security by training the Afghan National Police—including through payment of salaries. It is audited every year by a globally respected and independent third party auditing firm.

The 2011 audit conducted by KPMG of the project’s expenditure – which will be made available to stakeholders shortly - concluded that there were no financial irregularities.  In addition, a comprehensive evaluation of the previous LOTFA phase, also conducted by an external evaluation firm, found no cause for concern.

Any documentation that is brought to our attention that could point to the possible existence of corruption or irregularities in the activities of LOTFA will be investigated.

UNDP is committed to preventing, identifying and addressing all acts of fraud that involve UNDP funds or programmes.  UNDP has zero tolerance for fraud and incidents of fraud will be investigated in accordance with established investigation guidelines.   Should evidence show that allegations of fraud are true, appropriate action will be taken in line with UNDP rules and regulations. Any such investigations are undertaken by an independent office – the Office of Audit and Investigations. Here is a link providing details on how to make a report requesting investigations and other information on the Office of Audit and Investigations: http://www.undp.org/content/undp/en/home/operations/accountability/audit/office_of_audit_andinvestigation.html

UNDP also noted with concern statements in the WSJ articles citing comments attributed to the Monitoring and Evaluation Committee (MEC), the Afghan anti-corruption body, describing a "pattern of bad behavior" at LOTFA, and that the Fund is vulnerable to corruption. However, the MEC report released 9 May makes no reference to “bad behavior”. It does however recommend improved oversight and monitoring and UNDP is committed to diligently following up on this.

Moreover, UNDP would like to set the record straight on the following additional allegations in the first piece:

1/ A 10-seater sofa set and four tables costing $6,000—which the article refers to as “luxury furniture” that might not even have been purchased – were procured with full procedural checks and are still being used in the office of the head of the Afghan Border Police.

2/ The purchase order of a paper shredder, mentioned in your report, matched its $800 price. The purchase was in line with UNDP’s procurement policy and was only approved after the project justified its need for a more robust product.

3/ On the staffing issue, the WSJ story alleges that some contractors “do not work and are simply paid by LOTFA.’’  Please note that, precisely because we are fully aware of this risk, a system was established for all the staff in the Ministry of Interior in key departments to work under contract. Payments to staff are only processed after the examination of monthly attendance sheets submitted to supervisors, who sign off on the entire process.

Finally, the WSJ’s first article stated that two US oversight agencies "raised some questions" about the management of LOTFA. In this connection, please note that, until a few years ago, because of poor banking infrastructure, most police salaries were paid in cash. In 2007, only 700 were paid through a direct electronic fund transfer system. Four years later this number jumped to over 100,000—an extraordinary achievement in the context of Afghanistan that helps to significantly reduce the risk of fraud.

New technologies such as web-based electronic payroll systems and mobile phone fund transfers are being rolled out and tested to further reduce the risk of fraud even in parts of the country with no banking system.      

UNDP and its team in Afghanistan remain committed, in the midst of huge security challenges, to working transparently, constructively and collaboratively with all partners, including anti-corruption bodies, to further enhance the oversight and quality of programs in the collective effort to improve the lives of the men, women and children of Afghanistan.