GA/AB/3636
22 October 2004
Budget Committee Continues Debate on Board of Auditors Reports, Scale of Assessments
(Issued on 21 October 2004.)
NEW YORK, 19 October (UN Headquarters) -- The United Nations must pursue accountability at the highest levels, several speakers said this morning as the Fifth Committee (Administrative and Budgetary) continued its discussions on the findings of the Board of Auditors.
The representative of the Republic of Korea highlighted the fact that a number of organizations had taken little heed of previous Board recommendations, and he asked who would be held responsible for that negligence. He also wanted to know what action would be taken by the Secretariat after hearing the presentation of the Board’s Chairman on the “strange behaviour and serious management irregularities” under the former director of Investment Management Service of the United Nations Joint Staff Pension Fund.
The representative of the United States added that Member States had stressed repeatedly the need to hold officials in the Organization responsible for their actions. That was also matter of great interest to the staff, he said, citing a survey of integrity within the United Nations that showed staff believed that accountability was generally not pursued with regard to the high-level management of the Organization. He asked about the status of the accountability panel that was supposed to look into that issue.
In response, the Director of the Office of the Under-Secretary-General for Management, Jessie Rose Mabutas, said that while an accountability panel had been established two years ago, it needed to be strengthened. A proposal had been made to broaden its scope to include the systemic cross-cutting issues, peer review of managers at the Under-Secretary-General level, and review how delegation of authority was being exercised.
Several speakers noted that the General Assembly, in its resolution 57/278, had asked the Secretary-General and the executive heads of funds and programmes to examine governance structures, principles, and accountability -- reiterating the need for such review. They also repeated several themes first raised during yesterday’s discussions on the Board’s reports, including concern over the financial consequences of late implementation of the auditors’ findings, variance in the reporting methods of several organizations that received modified opinions from the Board, and the matter of the Organization’s end-of service liabilities that remained unfunded.
Also today, as the Committee continued its consideration of the scale by which Member States’ contribution to the Organization’s budget are calculated, speakers stressed the importance of basing such methodology on the countries’ capacity to pay. In that connection, Qatar, speaking on behalf of the “Group of 77” developing countries and China, noted with concern that many of the Group’s member States were negatively affected by the application of the methodology adopted in 2000. Concrete proposals were needed on measures to avoid substantial increases in the assessment of developing countries.
[One of the main features of the revised scale was a reduction of the maximum rate of assessment, or ceiling, from 25 to 22 per cent. Following the application of the new ceiling to the Organization’s main contributor -- the United States -- the points arising as a result of the change were distributed pro rata among other States, except for those affected by the floor (0.001 per cent) and the least developed countries ceiling.]
Under the new methodology, Jamaica’s assessment had increased by 275 per cent, that country’s representative said. He encouraged the Committee on Contributions to ensure that such volatile movement in the rates be avoided in the next scale, to be applied in 2007. There was a need for some stability and balance. He reminded colleagues that the old principal of the scheme of limits -- which the Fifth Committee had apparently outlived or outgrown -- had been applied to ensure there were no excessive rates of increase from one scale to another.
China’s representative, however, pointed out that the current scale was the result of long, hard negotiations by the entire membership, based on the capacity to pay and careful weighing of all factors. Noting that the scale was fixed through 2006, she added that maintaining the stability of the scale methodology, and thereby minimizing uncertainties, was conducive to the normal functioning of the Organization, which was particularly critical during this period of reform.
Also speaking today were representatives of Canada (also on behalf of Australia and New Zealand), South Africa (on behalf of the African Group), Libya, Turkey, Ukraine, Jordan, Slovenia (on behalf of the Federal Republic of Yugoslavia successor States), Syria, Cuba, Brazil (on behalf of the Rio Group), Japan, Mexico, Egypt and Uruguay. Answers to questions from the floor were also provided by the Chairman of the Board of Auditors, Shauket Fakie; the United Nations Controller, Jean-Pierre Halbwachs; and the Chairman of the Committee on Contributions, Ugo Sessi.
As the Committee concluded its consideration of its pattern of conferences agenda item, Angela Kane, Assistant Secretary-General for General Assembly and Conference Management, provided responses to questions raised in the debate, and Geoffrey Ngomuo, of the Information Technology Services Division, addressed the issue of general public access to the Official Documents System (ODS). The Committee also discussed the question of delays in access to the garage during peak hours, with the Assistant Secretary-General for Central Services, Andrew Toh, responding to questions from delegations.
The Committee will meet again at 10 a.m. Thursday, 21 October.
Background
The Fifth Committee today was expected to continue its debate on the Board of Auditors’ reports, Scale of Assessments, and Pattern of Conferences. (For additional information, see Press Releases GA/AB/3632 and GA/AB/3635.)
Statements
JENNIE CHEN (Canada), also speaking on behalf of Australia and New Zealand, emphasized the value of the work of the Board of Auditors, particularly for improving management, transparency, and accountability in the various organizations. While appreciating the quality of the Board’s reports, they joined others in regretting the serious delay in documentation, which undermined the Committee’s ability to put those reports to the best use.
Among the main points she highlighted was the situation leading to the Board’s inability to express an audit opinion concerning the accounts of the United Nations Office for Project Services (UNOPS). She wondered about the status of the implementation of the Board’s recommendations and was keenly interested in the three-phase “work-out” programme proposed by UNOPS. She echoed the concern voiced yesterday by the Netherlands, on behalf of the European Union, about the need for modified opinions for a number of funds and programmes.
The countries she spoke for remained concerned about the sizeable end-of-service liabilities that were still unfunded, she said. Long-term financial plans must be instituted. When might they expect the report requested last year by the General Assembly asking the Secretary-General to make proposals addressing that problem? she asked.
It had also been two years since the Board recommended that the United Nations enhance its capacity for internal audit in the information and communication technologies (ICT) area, given the huge risks associated with that sector, she said. That appeared not to have been done. Regretting the delay, she urged the Office of Internal Oversight services (OIOS) to treat that matter as a priority. She generally supported the Board’s recommendations for a comprehensive, system-wide review aimed at improving coordination of ICT efforts. She welcomed elaboration on how such an exercise could be developed.
Recommendations by the Board must be systematically implemented, and senior management should establish firm deadlines and monitoring procedures to ensure that they were, she said. At the fifty-seventh session, the countries she spoke for had asked the Secretary-General and the executive heads of funds and programmes to examine governance structures, principles, and accountability -- but that was not done. She urged the Secretary-General to undertake that examination to help the membership ensure that governance and accountability methods corresponded to current needs and good institutional practice.
KAREN LOCK (South Africa), speaking on behalf of the African Group, reiterated the Group’s full support for the work of the Board of Auditors. In particular, it appreciated continued efforts of the Board to ensure that the principles of fair presentation and full disclosure of financial statements were adhered to. She joined the Advisory Committee on Administrative and Budgetary Questions (ACABQ) in commending the Board for the improvements in the structural presentation of its reports, as well as greater clarity and transparency of the Board’s observations and recommendations on highly technical issues. Also encouraging were the efforts of the Board to streamline the audit reports, in accordance with resolution 57/278.
Continuing, she noted a relatively low implementation rate of the Board’s recommendations for the period ended 31 December 2001, as well as recurrence of a number of recommendations from previous audits. She invited the administrations of the organizations involved to fix responsibility and set achievable time frames for the implementation of the recommendations. She also noted the Advisory Committee’s view that a statistical approach might not be sufficient to monitor the follow-up of the implementation, in many instances.
Stressing the need for full and timely implementation of the recommendations of oversight bodies, she said that the Group concurred with the main findings and recommendations of the Board. The Secretariat must take the necessary action in that respect. The United Nations and its funds and programmes should take concrete steps to implement the recommendations and present information on any constraints that could hamper their full implementation.
Turning to financial issues, she noted modified opinions on four organizations. While in the case of the United Nations Development Programme (UNDP), the United Nations Population Fund (UNFPA) and the United Nations International Drug Control Programme (UNDCP), the Board had emphasized certain concerns without qualifying its audit opinion, the Group expressed concern over the fact that the auditors had been unable to provide an opinion on the financial statements of the United Nations Office for Project Services. She noted with concern the precarious financial position of UNOPS, which could result in significant cutbacks in its operations. The Board had highlighted the common themes that its audits of the 16 organizations had revealed, and she noted the explanation of the Board that all recommendations might not apply equally to all those entities. Further examination of cross-cutting issues could result in further streamlining of the reports of the Board and enhance the benefits of its concise report.
She was encouraged by the assurances of the Board that the financial statements of the United Nations were consistent with the accounting standards, she said. The efforts of the administration to institute improvements in the presentation of the financial statements were also encouraging. The financial report and statements of the administration should contain sufficient information to enable users to have a good understanding of the operations and performance of the Organization for the financial period concerned. It was commendable that the administration had made progress in reviewing and cancelling prior unliquidated obligations in the financial statements for technical cooperation activities that were no longer valid, and in writing off losses in cash, receivables and property. She trusted the Secretariat would make similar strides in other areas highlighted by the Board.
Turning to management issues, she said that the Group recognized recent efforts to coordinate ICT activities across the United Nations system, but shared the views of the Board and the ACABQ that a comprehensive and system-wide initiative should be undertaken to coordinate ICT strategy and developments. She welcomed the recommendations to increase joint procurement, conduct post-implementation benefit audits, ensure the implementation of information security policies, improve ICT audits, improve the costing of ICT and provide training to staff on ICT strategy matters. Those recommendations would enhance greater inter-agency cooperation with regard to ICT.
She also touched upon the increasing practice of the Board to expand performance audit and the fact that the average implementation rate of programmed outputs for 2002-2003 was 84 per cent. She also noted that 4,324 outputs had been terminated. All mandated programmes should be monitored and adjusted, if necessary, and fully implemented in accordance with the rules and regulations governing programme planning and the budget. She welcomed steps to improve procurement planning and supported the recommendations aimed at ensuring independence of the personnel involved, fully implementing the code of ethics, sharing best practices, evaluating the performance of suppliers, improving the training of staff, increasing the vendor database and avoiding delays in procurement. The Group attached great importance to the efforts of the Organization to ensure a more equitable procurement system.
On human resources management, she said it was imperative to facilitate the continuous upgrading of skills. Priority and perspective conferred by senior management on training and staff development were generally in conformity with international best practices and principles. She urged the administration to address the structural and management weaknesses identified by the Board.
She also welcomed the coordination and collaboration among the oversight bodies in the planning of audit activities. The ACABQ had rightly pointed out that such interaction would ensure the optimal use of audit resources and ensure better complementarity of effort and wider coverage of audit areas. The Group was concerned to note that none of the organizations had taken any steps to address the request of the General Assembly to the Secretary-General and the heads of funds and programmes to examine governance structures, principles and accountability throughout the United Nations. She urged the administration to expedite the governance review requested in paragraph 6 of General Assembly resolution 57/278.
Mr. GANBOUR (Libya) associated his delegation with the statement made by the representative of South Africa on behalf of the African Group. He stressed the important role played by the Board of Auditors in reviewing the role and performance of United Nations entities and identifying inadequacies. He welcomed the findings and recommendations of the Board, and also the recommendations of the ACABQ regarding financial statements. He urged organizations, funds, and programmes to expedite measures to act on recommendations that had yet to be implemented. He also registered concern over the deterioration of the financial situation for a number of funds.
PARK YOON-JUNE (Republic of Korea) said that his delegation attached high importance to the Board’s financial auditing of the United Nations system as a whole, and fully supported its findings and recommendations. However, he expressed deep concern over the late submission of those crucial reports. Noting that the Board had submitted reports on time in July, he asked why they were not distributed in a timely manner as planned.
He noted that, by the end of May 2004, 46 per cent of the Board’s recommendations were fully implemented, while the remaining were in progress or not implemented at all. If the United Nations and its funds and programmes had implemented all the recommendations on time, it would have saved precious financial resources. What were the reasons for delays in implementation? he asked.
His delegation concurred with the Board that a United Nations-wide initiative should be undertaken to coordinate ICT strategy, and that a reformed methodology should be adopted to determine the total cost of ICT for the Organization. What had been done in that regard? On the matter of end-of-service and post-retirement liabilities, he was concerned that future liabilities exceeding $300 billion were unfunded as of 2003. What plans did the Administration have for resolving that issue?
The Board had repeatedly documented that the administration should review the 63 trust funds that were no longer active and close those no longer needed. What had prevented the administration from closing those funds, and what was the plan going forward? Also, he was disturbed that some organizations had not provided the Board with the information it needed, thus forcing it to issue unqualified opinions.
He joined previous speakers, including the African Group, in highlighting the fact that some organizations had taken little heed of previous Board of Auditors recommendations and asked who was responsible for that negligence. He also wanted to know what action would be taken by the Secretariat after hearing the presentation of the Board of Auditors Chairman on the strange behaviour and serious management irregularities under the former director of the Investment Management Service of the United Nations Joint Staff Pension Fund.
CIHAN TERZI (Turkey) supported the position of the European Union and stressed that accountability was the cornerstone of all financial reporting. Exertion of control and accountability requirements for the resources entrusted to the organizations was a process of governance. He was very concerned that, out of 16, four organizations had been unable to get an unqualified opinion of the Board of Auditors. That meant that, to some extent, their financial statements were not fairly presented in all material respects, in accordance with the identified reporting framework. Moreover, since the Board’s auditing and reporting scope encompassed not only financial statements, but also operational and compliance audits, it was possible to see almost system-wide problems, which included a lack of good governance and internal control system; a lack of common comprehensive accounting, clear rules and regulations; and a lack of harmonized implementation, transparency and accountability.
The reports provided many details on the situation in individual organizations, he continued. It was important to put in place a working institutionalized rational system, with clear rules and accountability procedures. Adequate, sound accounting and financial disclosure standards, and proper formal internal and external control mechanisms, provided the needed tools. The United Nations and its funds and programmes still had inconsistent, out-of-date accounting treatments and inefficient financial presentation and disclosures. However, all United Nations organizations had a lot in common and there was a need to apply uniform rules and disclosure practices.
On management practices, he said that the reports before the Committee disclosed serious deficiencies. Some organizations did not have adequate audit capacity; ICT policies were not sufficient; and some organizations did not have an internal audit charter regarding the purpose, authority and responsibility of the internal audit function. Some 960 project audit reports indicated: internal control weaknesses; no formal risk assessment mechanism; insufficient corruption and fraud risk assessment; and a lack of cash flow forecasting and investment policy. Given the fact that many of those recommendations had already been made in previous years, it was fair to say that the problems had become chronic. Even for irregularities, there was no indication of action for accountability.
The General Assembly had addressed the heart of the matter in resolution 57/278, requesting the Secretary-General and executive heads of the funds and programmes to examine corporate governance structures, principles and accountability standards. However, no significant progress had been achieved so far. That kind of environment exposed the Organization to many risks. Systemic problems required an integrated approach and organizational restructuring, which was very difficult in long-established organizations. He believed there was merit in considering system-wide corporate governance principles, as well as detailed accounting and financial disclosure standards. Formal, sufficient and authorized internal control mechanisms were needed for every organization. Accountability and responsibility provisions, tools to measure good management practice, were also needed.
Organizations should modify and adjust their structures, create checks and balances, and harmonize practices to create coherent, rational implementation, he said. However, such a study should not be a reason to take time not to do anything. Every organization should implement the recommendations of the auditors.
Responding to comments from the floor, SHAUKET FAKIE, Auditor-General of South Africa and Chairman of the Board of Auditors, said that the Board remained committed to rendering a professional service to the Organization and to enhancing its contribution to accountability and good governance. He was pleased to note the continued importance attached to the work of the Board.
The Board shared the concerns over the late issuance of its reports, he continued. The delegate from the United States had requested the Board’s views on what could be done to improve the timeliness of documentation. At this stage, he could only suggest that the administration identify the underlying causes that had resulted in the delays and take appropriate actions to avoid such a recurrence in the future. He also took note of the comments regarding the rate of implementation of recommendations and the impact thereof. The Board would also continue to facilitate the administration’s assessment of the impact of implementing the recommendations, noting that it was the management’s responsibility. It would closely monitor the implementation of the recommendations and consider ways to enhance their format and classification. He also agreed that the administration’s actions to implement the recommendations should be based on a clear time frame and allocation of responsibility.
The Board would continue with its efforts to address cross-cutting themes and streamline the reports, so that Member States could optimize benefits from its audit reports, including the concise summary report, he said. Responding to the comments by the representative of Turkey, he clarified that the Board had not qualified its audit opinion on four organizations. It had issued unqualified opinions with emphasis of matter paragraphs for the UNDP, the UNFPA and the UNDCP. It had been unable to express an opinion on the financial statements of UNOPS for the biennium 2002-2003.
Responding to the comments by the Netherlands on behalf of the European Union regarding the need for a sharper focus on ICT, he said that the Board had devoted a lot of attention to that issue in the past. Proper ICT management was fundamental to successful operations and the Board would consider that area in its plans for the biennium 2004-2005 audits, bearing in mind that additional resources might be required to cover the costs of specialized expertise that may be needed. He also noted the request on obtaining an assessment on whether the steps taken to rectify the critical situation of UNOPS had been adequate. However, such an assessment should be carefully weighed in order to ensure: that it did not impede the Board’s independence; that respective responsibilities of the Board, the ACABQ and the administration were respected; and that the Board’s role was in line with its mandate.
Responding to a question from the United States regarding the OIOS, he said that the Board did not consider the particular aspect raised as a high-risk area. However, it might be mutually beneficial to discuss the review of OIOS in informal sessions.
JEAN-PIERRE HALBWACHS, Controller, responded to comments and queries regarding four areas: trust funds; treasury; liabilities, and the organizations’ presentation of finances.
Regarding trust funds, he agreed that more needed to be done to close those that had been inactive. He noted that the closure was done in three parts – first, one must settle outstanding liabilities, then attribute the unspent balance to individual donors, then carry out correspondence and come to an agreement with donors on what to do with those balances. That last step was often the most time-consuming, as donors did not always respond. The procedure had been changed so that currently, if the donor did not respond to the notification, the United Nations would send the money in the form of a cheque. Some progress had been made this year, and they were in the process of closing some 30 trust funds. That process would continue, but it should be noted that the closure of inactive trust funds was not the highest priority.
On the treasury, and concerns raised regarding the lack of cash flow forecasting, his department had some doubts internally about the utility of such methods. For cash-flow forecasting to work, the Organization would have to receive contributions in a timely and predictable manner, which everyone knew was not the case at the United Nations. Nevertheless, they would take a second look.
He objected to the conclusion that there was a lack of investment policy at the United Nations Office in Geneva. As a matter of fact, the Geneva Office followed the United Nations common policy guidelines for investment, so there was no serious breach in management there. End of service liabilities was a complex issue on which they had spent significant time. Liabilities of more than $1 billion would have to be financed. A report on that matter was almost ready, and should be available by January or February 2005.
On the harmonization of the presentation of financial statements, he noted that all organizations in the United Nations system adhered to the United Nations’ accounting standards. Those standards provided for a good degree of commonality, but they also provided for differences to account for differences between organizations. For example, an organization that was entirely dependent on voluntary funds may have different accounting needs. They would continue to review to what extent further harmonization of presentation was desirable.
JESSIE ROSE MABUTAS, Director, Office of the Under-Secretary-General for Management, noted that the European Union, Canada, South Africa, and the Republic of Korea all had questions regarding what action was taken on the General Assembly resolution requesting a review of governance and accountability mechanisms within the United Nations system. As mentioned earlier, the UNDP had taken that issue to a high-level committee on management, which would review and assess what provisions were required by the Assembly resolution. A specific course of action was agreed, and some representatives would coordinate with the Board of Auditors to start the consultation process. Some specialized agencies had different governing bodies, so that complexity should be taken into account. The Committee would be updated on any progress in future reports.
Regarding the implementation rate of recommendations, her department had started a dialogue with the Board of Auditors to streamline the process of submission and evaluation of responses by external auditors, and would pursue that further. They were considering automating the whole process of audit follow-up.
The United States, Canada, South Africa, and the European Union had also raised the question concerning UNOPS. The deputy executive director of UNOPS would be available during the informals to answer questions and discuss the steps the organization was taking to address the issue. She would respond to questions regarding the Pension Fund when that agenda item was discussed.
Mr. TERZI (Turkey) expressed gratitude for the explanations provided and added that he was aware of the reports regarding the four organizations in question. In his speech, he had carefully stated that “in some extent, their financial statements are not fairly presented, in all material respects in accordance with the identified reporting framework”. He believed that statement was correct. The fact was that a modified report had been given.
THOMAS A. REPASCH (United States) made some points on the responses. Regarding the trust funds, he noted that Member States often did not provide the Organization with instructions on what to do with the closed trust funds. Regrettably, the United States was one of those countries. He agreed with the change in policy of letting Member States know that, if they did not notify the United Nations on what to do, a cheque would be issued and “that would be that”. That seemed to be a good incentive.
On the investment policy for the Geneva Office, his impression was that the Board of Auditors had “come down a little harder” than the Controller had indicated. He wanted to pursue that matter further. Regarding the OIOS, he accepted the answer that the issue of whether the mandate had been implemented was not a high-risk issue. However, one of the keys to the success of that body was its independence. If an internal audit organization was not independent, it was not going to be very effective. Thus, he was not clear why that was not a risk factor affecting the audit system.
On the issue of accountability, Member States had put an emphasis on accountability, particularly with regard to the need to hold the officials in the Organization accountable for their actions. The staff of the United Nations was also interested in that. Earlier this year, the survey of integrity within the United Nations had shown that United Nations staff believed that accountability was generally not pursued with regard to the high-level management of the Organization. There should be an even-handed application of that principle. For example, a while ago an individual in the United Nations Conference on Trade and Development (UNCTAD) had been found to have stolen a significant amount from the Organization. Following an investigation, he was banned from Switzerland. What was lost in the process, however, was that the person who supervised the thief was not held accountable, although he knew what was going on. Moreover, in the meantime, he had gotten two promotions.
Not enough attention was paid to the systemic issues of accountability, he said. Member States had been told that an accountability panel was to be formed to look at such cases. In that connection, he wanted to know how the panel had been used to pursue accountability in more recent cases. It was not only the Member States, but the staff, as well, who were interested in it. High-level officials should not get away with misbehaviour.
In response, Ms. MABUTAS said that, indeed, an accountability panel had been established two years ago. That body had met a few times. Recently, lessons learned in making the panel more effective had been addressed. The conclusion was that the focus of that body was very weak, and a proposal had been made to broaden its scope to include the systemic cross-cutting issues, peer review of managers at the Under-Secretary-General level, and review how the delegation of authority was being exercised. That could strengthen the accountability panel.
MISHAL AL-ANSARI (Qatar), speaking on behalf of the “Group of 77” developing countries and China, noted with concern that many of its Member States were negatively affected by the application of the current methodology. The Group would like to see in the future report of the Committee on Contributions concrete proposals on measures to avoid substantial increases in the assessment of developing countries. They reiterated that the main principle of the methodology must be the capacity of Member States to pay.
Regarding multi-year payment plans, the Group reiterated its position that it should remain a voluntary mechanism to be used to help Member States pay their arrears. That mechanism must not be used to pressure Member States, already in a difficult situation, and definitely not in relation with granting waivers under Article 19. The Group, registering concern that some recommendations in the Committee on Contributions report contained substantive discussions, requested the Committee to be guided by its mandate as a technical body.
JERRY KRAMER (Canada), speaking also on behalf of Australia and New Zealand, welcomed the progress made in developing an appropriate method for calculating price-adjusted rates of exchange for use when market exchange rates did not offer suitable conversion rates for calculating the scale of assessments. They urged the Committee to finalize the methodology at its next session, so that technical issue would be clear before the next scale negotiation.
The report also identified a good idea to encourage both the payment of arrears and of assessment on time, which, simply put, was that interest income would be apportioned to Member States that paid their assessments within a specified time. Unlike other ideas that had been criticized in the past, that was a positive incentive, not a penalty.
Third, they accepted the judgement of the Committee on Contributions that it may not be feasible to develop specific standard criteria to guide the consideration of requests for ad hoc adjustments to rates of assessment. Finally, he registered concern about how some applications under Article 19 of the Charter had been handled. The phenomenon of last-minute, oral applications on the floor of the Fifth Committee undermined a carefully calibrated system. Review of applications by the Committee on Contributions was the mechanism for rigour, discipline, and accountability, irrespective of the factors that may govern subsequent ultimate decisions by the General Assembly.
ANDRIY NIKITOV (Ukraine) stressed the importance of the issue and commended the Committee on Contributions work on the elements of scale methodology, adjustment of rates and multi-year payment plans. It was obvious that, through the years, the scale had undergone changes reflecting processes in the world economy. In that regard, he noted with satisfaction that joint efforts undertaken by Member states had led to a proactive approach towards the establishment of a successfully functioning and stable scale. He supported the conclusion that it was vital to promote stability in the scale methodology.
The report of the Committee on Contributions stated that the Committee had considered possible systematic criteria for deciding when market exchange rates should be replaced with price-adjusted rates of exchange or other appropriate conversion rates for the purposes of preparing the scale. His position was to apply price-adjusted rates of exchange only in specific cases related to the corrections of other indexes. Regarding the multi-year payment plans, he believed that they should remain a voluntary tool for Member States seeking the rescheduling of their payments and should not be imposed on any State or automatically linked to other measures.
MOHAMMAD TAL (Jordan) supported the position of the Group of 77 and China and reasserted that the capacity to pay should be the main criterion in calculating the assessments of Member States. The application of that principle would make it easier for developing countries to pay their dues, instead of burdening them beyond capacity. Elements of the scale should be carefully considered, taking into account countries’ ability to absorb the economic changes and the main statistical ways of calculations. He supported the view that the methodology so far had not taken into account the changes in the economy. It was important to achieve a clearer picture of purchasing power of every country.
He then turned to paragraph 9 of the Committee on Contributions report that dealt with the discussion on the concept of relative price-adjusted rates of exchange, which reflected the movement of domestic prices relative to those of the United States, rather than their absolute movement. The Committee on Contribution had decided to consider the matter further at its next session, and he requested further information on that methodology.
Continuing, he reiterated the importance of timely, full and unconditional payment of dues by all Member States. However, in view of difficult circumstances, certain countries, in particular developing ones, were unable to fulfil their responsibilities. In view of importance of the financial stability of the United Nations, he appealed to all those countries to pay their dues as soon as their financial situation allowed them to. He also commended those States that had submitted multi-year payment plans and appealed to them to adhere to those plans to the best of their ability. As for measures to encourage payments, he indicated his rejection of any punitive measures, since the majority of countries with debt were developing countries experiencing economic difficulties.
WANG XINXIA (China) noted that her delegation aligned itself with the comments made by Qatar on behalf of the Group of 77, but added that the current scale methodology was the result of long, hard negotiations by the entire membership based on the capacity to pay, and carefully weighing all factors. Maintaining the stability of the scale methodology, and thereby minimizing uncertainties, was conducive to the normal functioning of the Organization in all areas, which was particularly critical during this period of reform. Noting that the scale was fixed through 2006, she expected that the Committee on Contributions would continue to provide expert opinion and recommendations.
Regarding multi-year payment plans, her delegation endorsed the conclusions and recommendations of the Committee on Contributions, noting that the multi-year payment plan was a useful tool in reducing the arrears of Member States. But such plans should be voluntary in nature and not be linked automatically with other measures. She noted with appreciation that a number of countries had implemented multi-year payment plans and hoped to see more follow suit. She agreed with the suggestion by the Committee on Contributions that ad hoc adjustments to the rates of assessments may, by their very nature, be best considered on a case-by-case basis.
ONDINA BLOKAR (Slovenia), speaking as well on behalf of Bosnia and Herzegovina, Croatia, former Yugoslav Republic of Macedonia, Serbia and Montenegro, noted that the arrears of the Federal Republic of Yugoslavia remained unresolved, and there were a number of associated legal, financial, and political issues. The agreement on successor State issues entered into force in June 2004, providing an institutional framework for successor States to address outstanding issues, including financial issues.
The five successor States of the Federal Republic of Yugoslavia stood ready to work toward a solution in current session. Regarding the outstanding assessed contributions of the Federal Republic of Yugoslavia, there were a number of pending questions that were more or less technical in nature, and the exact amounts needed to be clarified. They proposed that the Fifth Committee defer deliberations until the resumed session in March 2005 and requested that the Secretariat hold a meeting with the five successor States to determine the exact arrears of the Federal Republic of Yugoslavia.
Mr. GANBOUR (Libya) said that it was important to continue with the methodology on the basis of the countries’ capacity to pay. He was disappointed that, in considering the scale, the Committee on Contributions had depended on the statistical points, instead of the capacity to pay, in setting Member States’ assessments. His country’s dues had increased by 100 per cent. Such an increase was unjust, as it did not reflect accurately his country’s economic situation. When the methodology was reviewed in 2006, the principle of the capacity to pay should be taken into account.
NAJIB ELJI (Syria) associated himself with the statement by Qatar on behalf of the Group of 77 and China, and reaffirmed the need to adhere to the principle of real capacity to pay as the basis of any future scale methodology. Taking note of the Committee on Contributions’ preliminary consideration of the future scale, he said that it was necessary to concentrate on the optimum way of adhering to the capacity to pay. He also believed that price-adjusted rates of exchange should be applied to some countries, since it tackled the distortion in the calculation of the gross domestic product (GDP).
Regarding multi-year payment plans, he stressed that they must be voluntary in nature. He did not agree with those who believed that such plans should be mandatory or linked to the consideration of exemptions under Article 19. That ran counter to the Charter. In the context of statements made that all countries with arrears must present multi-year plans, he expressed reservations regarding the opinion of the Committee on Contributions. That body had exceeded its mandate, linking consideration of exemptions to new conditions. He also expressed grave concern regarding the discussions in the Committee on Contributions on the measures to encourage States to pay their dues. The Committee on Contributions seemed more and more inclined to enter into discussion of issues entirely in the purview of intergovernmental bodies. The Committee on Contributions must focus on positive measures to encourage States to pay their dues.
In conclusion, he expressed surprise at the comments of the Committee on Contributions in paragraph 29 of its report regarding the differential application of budgetary surpluses of peacekeeping operations. The Committee had not been asked to discuss the question of surplus balances, and he asked it to provide justification in that regard. He also had reservations on the discussion described in paragraphs 30 and 31 of the report on the question of arrears, since that position was not accepted by the General Assembly. He appealed to the Committee on Contributions to adhere to its mandate, since that body played an important role in the work of the Fifth Committee.
STAFFORD O. NEIL (Jamaica) supported the statement made by the representative of Qatar, speaking on behalf of the Group of 77 and China. His delegation wanted to reaffirm the importance of the principle of capacity to pay, which should apply to everyone. He was encouraged that the Committee on Contributions was already looking at various aspects of the procedures and statistical formulae that could be applied to the next scale of assessments for 2007-2009. In considering those approaches, he urged the Committee on Contributions to learn from the lessons of the past, look at the problems that arose, and seek ways to avoid them in the future.
There were problems, he stressed, which were related to the very significant increases in assessments for some Member States. Such volatile movement in the rates of increase should be avoided, as there was a need for some stability and balance. He reminded colleagues that the old principal of the scheme of limits -- which the Fifth Committee had apparently outlived or outgrew -- was applied to ensure that there were no excessive rates of increase between one scale and another.
Regarding ad hoc adjustments, the Committee on Contributions did not feel that there should be a particular mechanism or a set of criteria to guide them in reviewing cases that were “exceptional and extraordinary” in nature. His delegation was concerned that, if the case-by-case approach were used, how would the affected countries be brought into the picture? Would there be a process of consultations?
While not proposing any specific criteria or mechanism, he encouraged the Committee on Contributions to continue to look at ways and means of ensuring that some of the differences that occurred previously could be avoided when they did the scale. In the case of Jamaica, for instance, the country sustained a considerable increase of 275 per cent. That was largely the result of a change in the method of conversion.
NORMA GOICOCHEA (Cuba) endorsed the statement by Qatar on behalf of the Group of 77 and China. Her delegation also reasserted its concern about the negative impact the revised ceiling on the assessment rate had had on a number of developing countries. Certain countries, the majority of which were developing countries, saw excessive increases. Her delegation, supporting the statement by Jamaica, believed that the Committee on Contributions must look at criteria for attenuating fluctuations between one scale and the next.
Regarding the criteria for ad hoc adjustments, her delegation agreed with the recommendations of the Committee on Contributions but noted that exceptional circumstances should also be taken into account in the statistical basis used to calculate assessments. For instance, many States suffered from natural disasters and other environmental events, but the economic data used as the statistical basis for calculating assessments was not adjusted to take into account recent events that have had a disastrous impact on many countries.
She noted that many of the recommendations of the Committee on Contributions did not have a technical character, per se, but rather were of a political nature. Her delegation endorsed the statements made by previous colleagues, especially by the Group of 77, regarding the need to maintain the voluntary nature of payment plans. As mentioned by Jordan, non-compliance with payment plans should not be used as a justification for punitive measures.
CAIO MARIO RENAULT (Brazil) said that the Rio Group supported the statement by Qatar on behalf of the Group of 77 and China.
SHINICHI IIDA (Japan) commended the good work of the Committee on Contributions. However, quite a few speakers in the debate had expressed dissatisfaction with the current scale methodology, and he shared their opinion. The current scale must be reconsidered to better reflect the status and responsibilities of Member States within the Organization. However, it was necessary to concentrate on that issue in 2006 –- not the current year.
DIEGO SIMANCAS (Mexico) supported the Group of 77, and added that an increase in assessments should reflect the economic situation of a country. For example, an increase of 275 per cent for Jamaica was not reflective of its real economic situation. Mexico’s new assessment also did not reflect its economic reality. Such a situation was also not in the interest of the Organization.
UGO SESSI, Chairman of the Committee on Contributions, responding to comments, thanked the members of the Fifth Committee for their kind remarks on the work of the Committee on Contributions and assured them that he would report to the Committee on the debate. The representative of Turkey raised the question of data used in preparation of the scale. In that connection, he said that using reliable, verifiable data was a major preoccupation of the Committee. The Statistical Division collected the data from Member States, regional commissions and international organizations. That was a normal part of the Division’s regular activities, although they intensified in the years the scale was considered by the Committee on Contributions.
Responding to the comments on the need for the Committee on Contributions to be guided by its mandate, he said that the point was well-taken. He assured the delegates that the Committee would continue in the future to act as a real technical body, composed of experts acting in their personal capacity. Had the Committee gone too far in dealing with Article 19 if the Charter? Maybe, but making recommendations on Member States’ voting rights in the General Assembly represented a very delicate and important issue. In its deliberation, on the one hand, the Committee was called upon to be concise and, on the other, to provide all the information the Fifth Committee needed, as well as its reasons and rationale for its recommendations. Its goal was not to overburden the Fifth, and to be as transparent as possible.
Regarding the paragraph dealing with the conversion rates, he said the Committee on Contributions would continue to examine ways and means of using different exchange rates for countries where real problems were detected. Finally, on measures to encourage payment, he said the Committee had been dealing with that issue since 1998, under the instructions given by the Fifth. It was up to the Fifth Committee to tell the Committee on Contributions what measures it wanted pursued.
As the Committee turned to the agenda item on the Pattern of Conferences, ANGELA KANE, Assistant Secretary-General for General Assembly and Conference Management, responded to a number of questions raised in previous meetings.
Some delegates had asked for an explanation as to why the Secretariat’s focus was on the four-week, rather than the six-week rule for providing documents in advance of their scheduled consideration. She stressed that the Secretariat had not departed from the six-week rule and pointed out that the report on the department’s reform states that compliance with the six-week rule remained the final goal. The Secretariat had established an interim goal of four weeks in order to track progress.
The rate of compliance with the six-week rule during this session stood at 40 per cent so far, but that figure would change as new reports were released. Only at the end of the session was it possible to determine compliance for the session as a whole. The compliance rate went up for the main part of the General Assembly last year, with compliance at 50 per cent.
As to the list of bodies most affected by delays in the issuance of documents, relevant information could be found in Annex I of document A/59/159, which provides data on availability on a week-by-week basis during the session. Noting that data for the 59th session would change as things progressed, she said that, as of the end last week, there were 263 reports issued -- 131 of those (50 per cent) were issued six weeks prior to consideration of the agenda item. In the case of the Fifth Committee, which had the most documents to consider, 52 of the 95 reports were issued six weeks prior to consideration of the item (however, those figures did not include the reports of the ACABQ). The compliance rate was lowest for documents provided to the Second Committee, for which only 6 of the 25 reports were issued by that time frame.
Regarding the posts abolished and net savings generated by printing on demand, she noted a reduction of 13 posts, but stated that no staff member was let go or penalized. There was a cost benefit of about $5,000 a month for materials that were no longer part of the printing process.
Responding to a request for statistical information about the delay between digital posting and paper printing of documents, she said that there were no such statistics, but that no document was posted on the Official Document System (ODS) until it was printed on paper in all six languages. However, she noted that once a document was posted electronically, it was immediately available, whereas published reports still had to be distributed. Some delays could occur at that stage. Hard copies were generally made available at the delegation counter the day after they were printed.
Noting Kenya’s concern regarding the overlap of dates between the meetings of the Commission on Sustainable Development (CSD) and United Nations Human Settlements Programme (UN-HABITAT), she said that the Committee on Conferences had taken note of the problem. The bureau of the governing council would further discuss that matter today.
The long-term strategy by the Secretariat to tackle the vacancy problem in Nairobi was working, she said, and the vacancy rate for interpreters had improved. However, there was a high turnover rate. They hoped to bring the vacancy rate down to 10 per cent, and Nairobi continued to advertise the posts. Regarding Arabic translation, they looked forward to the results of the recent interpretation exams and a new mobility policy in translation services.
The utilization of conference services at Nairobi had steadily increased over the years, and the office was aggressively marketing its facilities. Nairobi had produced paper brochures, was reaching out to organizations across Africa, and was in the process of improving its Web site.
Some delegates had expressed disappointment that interpretation was not available during the videoconference meeting with the Committee on Conferences. In fact, there was a regrettable interruption in the transmission of interpretation to other duty stations due to a technical problem in New York.
GEOFFREY NGOMUO, of the Information Technology Services Division (ITSD), addressed the issue of general public access to the ODS, explaining that there were six distribution access levels, ranging from general to restricted. For public access to the ODS, the first four patterns -- derestricted, general, limited and provisional -- were allowed.
Ms. GOICOCHEA (Cuba) requested that answers be provided in writing. She also took note of the answer on the 13 posts eliminated as a result of posting documents electronically. However, that issue had not been addressed when the Fifth Committee considered the budget for 2004-2005.
Mr. ELJI (Syria) agreed that receiving written answers would be useful. As for the ODS, he had not completely grasped the pattern of distribution or levels of access. He hoped that related details would be provided in writing. Someone from the Information Technology section should be available when related issues were discussed in informals.
Other Items
ANDREW TOH, Assistant Secretary-General for Central Services, responded to concerns raised yesterday by the representative of Egypt about the United Nations Parking Garage. After consulting with several colleagues, including with members of the Fifth Committee, who regularly drove into the garage, it seemed that any delays were no more than was ordinary, he said. There were five security officers assigned to the entry point. If there were any other specific questions, he would investigate matters further.
YASSER ELNAGGAR (Egypt) objected that the word-of-mouth survey described by Mr. Toh was not scientific and was an insufficient basis for him to come up with the assessment that there were no delays in entering the United Nations garage. He said that a number of factors should be considered, including how many cars were in the parking garage, what was the timing of traffic into the garage, how long did it take to do a security check, and did the security check for cars owned by delegates or members of the Secretariat get the same treatment as commercial vehicles.
He also asked how many security officers were working at the Secretariat and what were their responsibilities. He added that the issue would remain on Egypt’s agenda until there was a satisfactory response.
Mr. TAL (Jordan) asked why some cars parked in the garage were blocked by other vehicles. He said that his own car had been blocked repeatedly, and asked what measures could be taken to ensure that such an inconvenience was not repeated.
The representative of Uruguay stated that there was a problem with the entrance to the United Nations garage and that the Secretariat should take measures to resolve the problem. Delays caused problems for delegates, but also for traffic flow. Perhaps city representatives might be included in any discussions on the issue. During peak hours, there were few security officers available to inspect vehicles. Noting that he had been coming by car to the United Nations for years, and that his delegation was not consulted, he offered a number of suggestions -- such as more security staff at peak times to inspect vehicles, a separate lane for diplomatic vehicles, and perhaps no commercial vehicles between 9 and 10 a.m. He would like to share his experiences and come up with solutions.
Mr. ELJI (Syria) underscored the point that the problems were faced during the peak time, especially between 9 a.m. and 9:30 a.m. He asked whether priority to enter the garage could be given to cars with diplomatic plates and whether it was possible to increase the number of security officers. He wondered also whether it was possible to open access to the garage from 43rd Street and First Avenue.
Chairman of the Committee DON MACKAY (New Zealand) said that the Security Service was in “a balancing act” to implement security measures and assure speedy access to the garage. It was clear from today’s comments that problems were greater on some days than others. At 8.15 a.m., when he entered the garage, there was usually no line, maybe six cars and five security officers, plus a supervisor. Assuming they must take a break at some point, perhaps the timing of that could be looked at to cope with the peak periods. Some helpful suggestions had been made from the floor regarding ways of expediting access to the garage. Having to wait for half an hour surely represented a problem.
Mr. TOH replied that all vehicles were treated in the same manner, with the exception of commercial vehicles that had to go through the canine unit. The Security service was in constant touch with local authorities regarding such issues as traffic, which had been a problem since the United Nations was established 50 years ago. The complex had been built for 50 States, and now the membership had grown to 191. The infrastructure was not designed for that kind of traffic.
The issues raised today revolved around traffic patterns during peak periods, he said. No commercial vehicles were allowed to enter between 9 a.m. and 10 a.m. It was also necessary to keep in mind that traffic flow was unpredictable, depending on the events scheduled at Headquarters. He appreciated the feedback and would provide appropriate statistics to the Committee. A request had also been made for 88 additional security officers, for their number today was less than in 1987, due to attrition during zero growth and budget reductions.
Mr. ELNAGGAR (Egypt) said that his delegation would abide by the rules until it had sufficient information. At the same time, he highlighted the importance of verifying information before putting it before the Committee. For example, he recalled that several delegations entering between 9 a.m. and 10 a.m. had witnessed commercial vehicles in the garage.
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