UN DRUG CZAR REPORT SITTING WITH ANNAN

Fraud Investigation

UNITED NATIONS - Kofi Annan, the United Nations' Secretary-General, is
sitting on the results of a fraud investigation into activities of the
world body's drug czar.

The report has been kept confidential although the United Nations has been
open about criticizing management of the office, which is responsible for
combatting drugs and organized crime.

This week, the UN's internal investigations unit released three reports
accusing Pino Arlacchi, Executive Director of the Office for Drug Control &
Crime Prevention, of "heavily personalized" decision-making, poor
management and inefficiency.

But the findings of a probe into a "boat project" authorized by Mr.
Arlacchi have gone straight to Mr. Annan and may never be released.

Mr. Arlacchi is alleged to have given a yachting friend UN money to sail
round the world in his boat as part of an anti-drug campaign in 1995. "The
allegations [in the four reports] concerned mismanagement, and even some
fraud and misconduct," said Dileep Nair, head of the Office of Internal
Oversight Services, which produced the reports.

"Because of the sensitive nature of the allegations, we felt it proper to
make the [boat project] report first to the Secretary-General."

"Our role is not to make heads roll," he added. "Our role is basically to
put up a report."

However, the OIOS, which was set up as an independent watchdog against
fraud, mismanagement and waste at the world body, can release its reports
without approval from the Secretary-General.

Mr. Arlacchi has been the focus of controversy since a senior employee,
Michael von der Shulenburg, quit last year and accused the UN's drug czar
of waste, corruption and inefficiency.

Other officials have been similarly critical of Mr. Arlacchi, an Italian
sociologist and crime expert, who made his name a decade ago by setting up
an anti-Mafia unit in the Italian interior ministry.

Netherlands suspended its funding of the UN office, which has an annual
budget of about US$75-million. Britain and Germany also expressed doubts,
but Canada has continued its annual contribution of US$1-million.

"We're reserving our judgment in the short term pending review of these new
reports and anticipated management changes at the agency," said Carl
Schwenger, a spokesman for the Department of Foreign Affairs in Ottawa.

The United States has been generally pleased that Mr. Arlacchi's approach
to the fight against drugs is in line with the U.S. policy of interdiction
and supply reduction.

However, his agency works closely with the International Narcotics Control
Board, which recently ejected the United States from its ranks.

The OIOS began probing the drug program in February, saying it was due for
a routine management review anyway. Two of its reports highlighted the
agency's failure to communicate with other UN bodies about its programs,
leading to wasteful duplication.

They also said Mr. Arlacchi, who was appointed by Mr. Annan in 1997, had
failed to implement management reforms demanded by the UN's committee for
program and co-ordination.

The third report focuses on Mr. Arlacchi's heavy-handed style, which
"concentrated authority and decision-making in the executive director and
his front office without sufficient checks and balances."

Then there is the secret report on the boat project, which is described as
a bid to have the agency "sponsor a solo voyage around the world by a
sailor on a 90-year-old wooden boat in order to raise awareness of [the
drug program's] activities."

Mr. Arlacchi is reported to have given Denis Oren, a Swedish former tugboat
captain, US$52,000 to outfit the boat. The voyage was cancelled after
protests from staff, and the fate of the money is unknown.