UN DRUG AGENCY FIASCO EXPOSED

New Evidence Questions Competence Of Vienna Hq's Italian Director

Evidence of gross mismanagement and possible corruption at the Vienna
headquarters of the United Nations agency fighting drug crime has been
obtained by The Observer .

It casts further doubt on the competence of the agency's executive
director, Pino Arlacchi, a former Italian senator who made his name
fighting the Mafia. His contract will not be renewed when it expires in
February.

Arlacchi has already been bitterly criticised for his leadership of the
agency, where staff morale is at rock bottom. But with the change of
governments in the US and Italy he has lost key allies and funding.

The Bush and Berlusconi administrations are unlikely to maintain their
countries' subsidies to the agency and the Dutch government has already cut
its contribution.

There have been a number of searching inquiries into the UN Office of Drug
Control and Crime Prevention as well as criticism of Arlacchi's
intimidating style and of abortive programmes mounted by the agency.

His fate was sealed last month when UN Secretary-General Kofi Annan
circulated a blistering report on the agency by the Office of Internal
Oversight Service.

He added his own statement, which said: 'The Secretary-General takes note
of its findings and concurs with its recommendations and notes that
measures are being taken to correct the issues addressed in the review.'

The report, prepared in February, recalled among other things the collapse
last year of a $250 million, 10-year plan to eradicate drugs from
Afghanistan drawn up with the collaboration of the Taliban. But the funds
dried up and it was closed down without staff being told. A similar fiasco
was reported in Pakistan.

Then there was the organisation of a military force to crack down on the
drug trade in central Asia. In Tajikistan in 1991, the agency set up what
the report called 'a well-trained, mobile and armed entity (whose staff is
salaried at a level considerably higher than the national one)'. But again
the money ran out.

Another instance of mismanagement came with what has come to be known as
the 'boat project'. The initial idea, the report said, was that the agency
should sponsor a solo round-the-world voyage on a 90-year-old wooden boat
to 'raise awareness' of the agency's activities.

The captain was supposed to sail into ports and persuade young people to
keep off drugs. It did not make it round the world.

The report concluded that mechanisms for co-ordinating and overseeing
programmes and assessing their impact were not functioning, there was
insufficient consulation, delays and a lack of accountability and clear
lines of command that 'paralysed decision-making'.

New evidence in The Observer's possession from agency insiders suggests
examples of waste and lack of proper accounting for the agency's assets,
although there is no evidence that Arlacchi knew of these. They include:

* The $100,000 refurbishment of a senior official's office, done twice
because the first attempt was found to be unsatisfactory;

* The purchase of a new Mercedes 300 at a cost of $100,000 to replace a
two-year-old Audi 80;

* The purchase of several large television sets, satellite dishes and
valuable Chinese vases, none of which can be found;

* The purchase of 20 portable phones, including two satellite phones and
faxes which far exceeded the needs of the office in question;

* The ordering of 'a substantive quantity' of one official's own books (for
which it is believed he received a royalty) to give out as gifts;

* A contract with a PR firm without any bidding process for the UN General
Assembly's Special Session on Drugs at a cost of $400,000.