The ASYCUDA Myth Part 2:  United Nations Audit Reveals Collusion, and Conflicts of Interest

We've prepared a series of upcoming posts over the next 2 weeks regarding ASYCUDA that might draw some interest and discussion.  A few months ago, I had posted a blog on ASYCUDA called: “The ASYCUDA Myth Part 1: Is UNCTAD fostering a No-Bid Sole Source Contract for ASYCUDA World?”  This post can be accessed here and discussed the various tactics employed by UNCTAD to secure a sole source deployment of ASYCUDA under the guise of a misleading feasibility study.

The next in the series (posted here today) is called, “The ASYCUDA Myth Part 2:  United Nations Audit Reveals Collusion, and Conflicts of Interest”, and is based on the United Nations Office of Internal Oversight services (OIOS) audits in 2008 and 2012.  Surprisingly, many in our community are still unaware of these reports and the internal conflicts they exposed. Personally, I only discovered them in the last year.  If you are in anyway involved in trade facilitation, customs modernization, and/or capacity building in the developing world, it is very important to understand the specifics of ASYCUDA development to date and where this system is likely headed.

This blog will be followed by 2 more blogs in the next 2 weeks called,

“The ASYCUDA Myth Part 3:  Where is ASYCUDA Millennium?”

and ;

“The ASYCUDA Myth Part 4:  Time to Open Source.” 

I hope these blogs are enjoyed and prompt much discussion to make the positive change that is desperately needed.

Someone mentioned this to me lately, and it rang true.  "Ensure your organization is transparent, or someone else will”.  Let’s begin by looking at a series of non-transparent events initiated by UNCTAD representatives over 20 years ago.

A decent background can be found here in a UN Office of Internal Oversight Services (OIOS) Audit performed on UNCTAD/ASYCUDA in 2008.  Here is a summary:

Between 1993-1998 UNCTAD developed ASYCUDA World as a replacement for ASYCUDA ++.  In 1997, while still under contract with the ASYCUDA Programme, an UNCTAD consultant established a shell company in Bulgaria (Called Strategy Object) and developed an application framework to be used in ASYCUDA World called “SOCLASS”.  During this period, UNCTAD simultaneously chose SOCLASS as a necessary and required piece of middleware for ASYCUDA World.  No market survey or open tender was conducted by UNCTAD to procure this sudden requirement for the system. Strategy Object was sole sourced to provide this middleware platform for ASYCUDA World.   The need and the provision for this external technology strangely occurred at exactly the same time.   It was later determined by the OIOS audit in 2008 that this action was in contravention of UN Financial Rule 107.5.

During this time while ASYCUDA World was being developed, the external Strategy Object Consultant continued to work in direct conflict -on contract as a developer of ASYCUDA World.  The 2008 OIOS Audit established a finding of “Collusion” between the ASYCUDA Program Coordinator and the Strategy Object Consultant, -as an undue advantage was given to Strategy Object.

In 2002, the ASYCUDA program coordinator left UNCTAD to become the head of Webb Fontaine.  Simultaneously in 2002, Webb Fontaine became the single distributor of SOCLASS (outside of Strategy Object) and later filed a trademark for SOCLASS in 2004. 

Since this time, Webb Fontaine and Strategy Object remain the sole distributors of this required license for any deployment of ASYCUDA World.  License costs are reported to vary from country to country but some discussions place the cost to be as high as $500,000 USD (for a 5-year license) and as low as 35,000 USD (annually) depending on number of users.  Regardless, the costing strategy seems arbitrary and deviates from member state to member state.

                                             Source:http://www.customstoday.com.pk/

                                            Source:http://www.customstoday.com.pk/

For reference, the audit reports and findings can be found here:

https://usun.state.gov/sites/default/files/organization_pdf/139328.pdf

https://usun.state.gov/sites/default/files/organization_pdf/199282.pdf

Summary of OIOS Investigation Findings:

1.      Non-competiveness in the selection of SOCLASS middleware from Strategy Object

2.      Appearance of collusion

3.      Failure to ensure that recipient countries receive fair conditions and prices.

4.      Supplier risk assessment and due diligence check was not implemented.

5.      Absence of a written contract

6.      Conflict of Interest

If ASYCUDA is operational in 90 countries at this stage, then this could mean as much as 45M USD has not being accounted for within the UN purview.  If true, then this scheme is obviously egregious and blatantly wrong.    So many questions persist following the 2009 and 2012 OIOS audits of UNCTAD and ASYCUDA World.  Where has this money gone?  How many current and ex UNCTAD employees have shares in Strategy Object?  Staying silent has allowed this situation to grow out of control.  Why has UNCTAD allowed this to continue?  Why do member states comply with this external licensing?  Why do other IGOs fund and support the ongoing roll out of this rudimentary system? 

Why did UNCTAD ignore the findings and recommendations from the 2008 OIOS audit? 

Are the internal senior executives aware of this history and will Deputy Secretary General, Isabelle Durant , Secretary General, Mukhisa Kituyi, and the DG of the United Nations Office in Geneva, Michael Mohler take action to establish the appropriate checks and balances?

Please stay tuned for the next 2 parts in this series on ASYCUDA.