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Unrwa Audit Finds Mismanagement, but Doesn’t Back Critics’ Terror Charges

October 10, 2006
See Original Daily Bulletin From This Date

An audit of UNRWA, the U.N.-run relief group delivering assistance to millions of Palestinian refugees, depicts a scattered organization scrambling to catch up with 21st-century financial and information practices. U.S. Congress members seized on the U.N. audit as vindication of their claims that the agency is unaccountable, potentially allowing terrorists to work under its aegis, but a pre-publication copy of the audit obtained by JTA finds little basis for those criticisms. The audit is due to be published in coming weeks.

U.S. Reps. Mark Kirk (R-Ill.) and Steven Rothman (D-N.J.) have threatened to use the audit to block further appropriations for the U.N. Relief and Works Agency, an action that some fear would hamper U.S. efforts to prop up Palestinian moderates.

The audit also is not the clean bill of health UNRWA officials have suggested. Instead, it depicts a messy bureaucracy coming to terms with a vast staff scattered throughout the Middle East.

Procurers in Jordan and the Gaza Strip are unfamiliar with reporting procedures and sometimes take months to report purchases, it says. Data collection is not standardized throughout the agency, which has field offices in Gaza, Jordan, Lebanon, Syria and the West Bank, and which employs more than 26,000 staff to deal with 4.3 million refugees, including 1.6 million in Gaza and the West Bank.

One of the audit’s 18 recommendations is that UNRWA should “establish policies and procedures on results-based management to provide for strategic planning, setting of targets, monitoring processes, promoting effective management decisions and reporting on performance.”

Not within the audit’s purview were political questions that have vexed the agency in recent years, including whether it allows its workers to maintain ties with Hamas, the terrorist group now running the Palestinian Authority; or whether it controls the content of textbooks used in UNRWA schools, which are believed to contain anti-Semitic material. A JTA investigation earlier this year exposed UNRWA’s lax approach to the terrorist activity often planned and carried out from UNRWA camps.

Citing the audit, Rothman and Kirk, members of the U.S. House of Representatives’ Foreign Operations Appropriations Subcommittee, wrote to U.S. Secretary of State Condoleezza Rice, threatening to block appropriations for UNRWA unless she takes steps to “correct a documented record of UNRWA’s lack of financial integrity, poor management and failure to comply with U.S. anti-terror law.”

“It would be difficult for us and other members to continue funding UNRWA at current levels unless we can be assured that U.S. taxpayer dollars are not subject to the type of mismanagement highlighted in this report,” the letter concludes.

Cutting funding for UNRWA could be a threat to Rice, whose trip to the region last week aimed to revive Palestinian-Israeli peace negotiations. Some observers believe the effort requires an infusion of cash to prop up P.A. President Mahmoud Abbas, a relative moderate from Fatah who was elected separately from the Hamas-led Cabinet.

Transferring money to the Palestinians is fraught with legal and political difficulties, because Hamas is designated as a terrorist group, and Rice has identified UNRWA as an appropriate conduit. The money would be in addition to the $108 million the United States already funnels to UNRWA, about a fifth of its budget.

State Department officials would not comment on the congressmen’s letter or the audit except to say that both were being reviewed.

Much of what Rothman and Kirk allege does not jibe with a close reading of the audit:

The congressmen tell Rice that the audit reveals “no plan to implement past recommendations by auditors.” In fact, the audit says that of 45 recommendations in the last audit, conducted in 2003, 35 have been fulfilled; three are in the course of being implemented; and seven have not been carried out.

JTA has obtained a recent internal UNRWA progress report addressing the seven unimplemented recommendations from 2003. It says that four have since been fully or partly implemented; of the other three, responsibility for one — pension reforms — has been transferred to the U.N. General Assembly.

The congressmen note that the audit board rejected as incomplete an initial financial report presented in March.

“UNRWA’s leaders could provide no detail on why information provided to the board of auditors was incomplete,” the letter to Rice says. “We remain troubled that such inaccurate information was presented to the U.N.’s own auditors…”

The audit does, in fact, record explanations for the financial report’s inadequacies, and its overall tone suggests disorganization rather than a cover-up. The audit notes discrepancies between one balance sheet that included outside programs and one that did not.

UNRWA amended the statement, and the auditors said the final report “presents fairly” UNRWA’s financial position.

The congressmen say UNRWA has “poor quality, inexperienced staff with little training or procurement expertise.” However, they don’t mention that the audit confines the problem to Gaza and cites “the available pool of candidates” there as a factor; it urges training.

Referring to a staff provident fund, the congressmen say, “we do not know who is eligible to receive these funds or exactly how much is owed.” In fact, the audit says clearly that members of the fund — who must be local hires and who must contribute to the fund — are eligible for loans.

The audit faults the fund’s failure to apply the appropriate interest rates and recommends applying a standard interest system, but also notes that the resulting deviation from the $46.5 million dollars owed is “not material.”

The Kirk and Rothman letter revives allegations that UNRWA staff left the agency to run for the P.A. Parliament on a Hamas ticket, though such claims were not the purview of the auditors. UNRWA spokesmen previously have said there was only one such staff member, and he has not been rehired since the election.

UNRWA’s formal response to Kirk and Rothman has been to describe their letter as a “gross mischaracterization” and to note that the audit is “unqualified,” meaning only that it is offered without reservations. That does not address the audit’s 18 tough recommendations, many of them having do with what the audit portrays as seat-of-the-pants and even chaotic management at UNRWA.

Oddly, Rothman and Kirk ignore what may be the audit’s most stunning revelation: UNRWA has given up claims to land and buildings it previously had been listed as owning.

“UNRWA stated that it did not have any control over the refugee shelters constructed. Therefore, UNRWA had derecognized the land and buildings,” the audit said.

It did not explain UNRWA’s decision to suddenly give up capital amounting to as much as $400 million.

That could have far-reaching political consequences: Disclaiming the property could insulate UNRWA from responsibility for terrorist acts plotted in refugee camps. It also opens questions about who does own the properties — possibly Arab governments or landowners with claims that predate Israel’s 1948 founding, when refugees rushed into the area.

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