Ex-U.N. Official Spent Development Funds on Luxury Items, Probe Says

By Colum Lynch
Washington Post Staff Writer
Friday, March 27, 2009; 5:17 PM

UNITED NATIONS -- A former U.N. official who oversaw reconstruction funds in Afghanistan diverted half a million dollars from roads, schools and clinics to fund his luxury lifestyle, according to a confidential internal U.N. investigation.

The U.N. Procurement Task Force accused Gary K. Helseth, an American who headed the U.N. Office for Project Services (UNOPS) in Afghanistan from 2002 to 2006, in December of using the funds for lavish purchases, including first-class flights to Las Vegas and meals in posh restaurants in Copenhagen, Dubai, Florence and New York. Helseth oversaw more than $1 billion in reconstruction funds contributed by the United States and other international donors after the fall of the Taliban.

The probe is a cautionary tale about the risks of lax U.N. financial controls in Afghanistan as the Obama administration presses for a more central role for the United Nations in coordinating rebuilding efforts there.

The task force alleged that Helseth improperly used hundreds of thousands of dollars in funds from the U.S. Agency for International Development (USAID) for rent, a home renovation and luxury items. It also said he stole $65,000 in cash from a U.N. safe and billed the United States and other international donors more than $60,000 for entertainment, including opulent parties at his Kabul residence where guests dined on Beluga caviar, Norwegian salmon and foie gras.

"Mr. Helseth routinely treated UNOPS and project money as his own personal bank account," according to the 180-page report, which recommends that the United Nations refer the case to U.S. and Afghan authorities for criminal prosecution and that Helseth repay the United Nations around $480,000.

Helseth acknowledged that USAID funds had been improperly used for some expenses but denied stealing the money, according to a 72-page rebuttal that his lawyer, Paul K. Charlton, presented to the task force in November. Helseth says he spent liberally to entertain potential donors and to boost staff morale in a place where U.N. workers were frequently targeted by terrorists, according to the document.

Helseth maintains that the investigators did not appreciate the challenges of running a massive reconstruction operation in a war-wracked country that lacked a modern banking system. "Mr. Helseth is not guilty of fraud or embezzlement," the response said. "The allegations the task force is investigating are at the least factually unsupported, and in large part are materially false and based on false assumptions."

Helseth, through his lawyer, declined a request for an interview, citing the confidential nature of the investigation.

The Helseth report was intended to be the first stage in a three-part investigation that would examine the "severe lack of accountability and oversight" of the money he managed. The task force was also probing whether an American security company, United States Protection and Investigations, inflated charges for services by as much as $1 million.

But sources say the probe has stalled since the task force was dissolved Dec. 31. The United Nations, meanwhile, has blocked the unit's chairman, Robert M. Appleton, from taking up an appointment as chief of the U.N. investigations division, which is supposed to inherit the task force's caseload.

Top U.N. officials applauded Appleton's work but cited the lack of female or non-U.S. candidates on the short list for the job. Appleton, a former federal prosecutor, declined to comment on the investigation.

UNOPS Deputy Executive Director Vitaly Vanshelboim acknowledged "serious issues in the past in terms of our financial performance and internal controls" in Afghanistan. Vanshelboim, who reined in Helseth's spending, said his agency has sought to "strengthen those financial controls dramatically."

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