May 3, 2007 | Fox News

Global Air Carrier Suspended in U.N. Procurement Investigation

Co-Authored with George Russell

The grinding investigation of scandal in the United Nations’ multi-billion-dollar procurement department — an inquiry that has gone on for more than a year — is more secretive than a conclave of cardinals in search of a new pope, and with no definitive result in sight.

But every now and then, odd signs float up — and the latest signal is not promising. A battle has erupted between U.N. investigators and a global air carrier, SkyLink Aviation, Inc., which does some of the world body’s most important heavy lifting. In the skirmishing, the U.N. has suspended the firm from its list of approved contractors.

This sanction was never announced, but has been discovered by FOX News through a comparison of U.N. suppliers lists dating back to mid-March, when SkyLink quietly vanished from the roster. By various accounts, the suspension is a pressure tactic aimed at ending the apparent stonewalling of a probe into a wide array of graft allegations in the U.N. procurement department. So far, it does not appear to have worked.

SkyLink is a privately-owned, Canadian-based firm which has been involved over many years in some of the U.N.’s most sensitive operations, in places such as Asia, Africa and the Middle East. It has also weathered at least two procurement suspensions in the past. In both previous cases, the firm was cleared and restored to normal vendor status.

Describing itself on its web site as a “global leader in rapid deployment of peacekeepers and international humanitarian aid,” SkyLink provides services such as passenger and cargo charters, and aviation-related goods such as fuel, which is used in huge quantities by U.N. peacekeeping missions..

According to U.N. officials, SkyLink was doing roughly $100 million in fuel supply business with U.N. peacekeeping forces in Sudan at the time its name was dropped from the vendor list, on March 16. Since 2000, the U.N. has awarded contracts to SkyLink worth roughly $140 million all told, according to the UN procurement department. Most of these deals have involved supplying fuel for U.N. peacekeeping missions.

In a press conference on March 15, the chief of U.N. Procurement, Paul Buades, made no mention that the SkyLink suspension was in the works.

Queried by FOX News about the quietly revised vendor list, UN officials said that Skylink was erased due to its alleged “noncooperation” with the work of the U.N.’s special Procurement Task Force on a case unrelated to SkyLink’s Sudan fuel supply contract.

The current suspension is open-ended, but a U.N. official, on background, told FOX News that reinstatement would only come when there was a “conclusive assessment” by the Procurement Task Force. When that might be expected, the U.N. would not say.

The U.N. Procurement Task Force was appointed some 14 months ago to plumb the depths of corruption in U.N. procurement, after a FOX News investigation in 2005 led to the resignation, arrest and subsequent guilty plea of U.N. procurement officer Alexander Yakovlev on money laundering and corruption charges.

Questions quickly spread well beyond Yakovlev. Another U.N. procurement official, Sanjay Bahel, is due to stand trial in New York federal court later this month, charged with fiddling millions worth of U.N. contracts in exchange for bargain rates on a luxury apartment in Manhattan. Bahel says he is innocent.

More broadly, a draft copy of a confidential U.N. internal audit done before the launch of the Task Force, and obtained by FOX News, found that in a sampling of roughly $1 billion in major U.N. procurement contracts, nearly one-third involved waste, corruption or other irregularities.

Skylink executives have not responded to questions emailed by FOX News, asking for their explanation of events surrounding their firm’s suspension.

But FOX News has learned that the struggle over Skylink’s alleged noncooperation is connected to the U.N.’s investigation of a former head of procurement, assistant-secretary-general Andrew Toh. He was suspended from his duties last year, when investigators first began digging into the procurement swamp. At the time, Toh was head of the U.N.’s Office of Central Support Services (OCSS), which includes not only procurement but a wide variety of the U.N.’s security, maintenance and other internal operations.

U.N. officials initially questioned by FOX News about the SkyLink suspension made no mention of Toh, but FOX News has learned from other sources that Skylink’s responses to investigators are considered significant to the outcome of his case.

Toh, a native of Singapore, was one of eight U.N. officials placed on suspension last year, and the only one who currently remains in limbo. Since then, six of the eight have returned to U.N. duties; the seventh is the now-indicted Sanjay Bahel. The U.N. said at the time that Toh’s suspension with pay, as well as that of the others, did not presume guilt on their part.

Toh’s lengthy suspension has been attacked in a variety of U.N. forums by Singapore’s mission to the U.N. In March, a Singaporean diplomat called it a “travesty of justice.”

Toh, until his suspension, was the highest ranking Singaporean official in the U.N. bureaucracy. FOX News has subsequently learned that Toh has been formally accused by the U.N.’s chief of human resources management, Jan Beagle, of gross misconduct in connection with his tenure in office.

Toh himself confirmed the charge in an email exchange with FOX News, saying “I have been charged for misconduct supposedly for wrongdoings that took place during my watch even though I was not directly supervising the Procurement Division at the time. He added that “I have rejected the charges for numerous reasons.”

Toh has launched his own counter-suit through the U.N.’s labyrinthine internal justice system, including a claim for damages. “As this is an ongoing matter,” Toh wrote, “I am afraid I will not be able to release any details at this stage.”

The U.N. did not respond to repeated FOX News questions about the charges against Toh.

In what is by now a familiar pattern of obfuscation, the U.N.’s surreptitious sanctions against SkyLink in March came at almost exactly the same time as the world body publicly announced the suspension or removal of four other firms from the U.N.’s vendor roster.

Among those suspended was another air cargo giant, Volga-Dnepr Airlines, based in Russia, which had lingered on the approved vendor list even after former procurement official Alexander Yakovlev testified in open court more than a week earlier that Volga-Dnepr had paid him at least $700,000 in “consulting fees” involving at least 10 to 12 contracts signed with the U.N. Volga-Dnepr’s removal was announced by the U.N. the day after a FOX News story reported the U.N.’s failure to act.

Yakovlev was testifying as a government witness in the trial of another corrupt U.N. official, Vladimir Kuznetsov, formerly the head of the U.N. General Assembly’s budget oversight committee. Kuznetsov was found guilty March 7 of laundering some of the procurement “consulting” fees paid by U.N. contractors to Yakovlev.

U.N. officials have told FOX News that the suspension of SkyLink at almost the same time as the action against firms named by Yakovlev was pure bureaucratic coincidence.

While the U.N. has been a substantial customer of Skylink, the air company’s operations appear to extend well beyond U.N. business. According to its website, SkyLink was founded in 1980 in Canada as a tour operator, but soon spun itself into a variety of other air cargo, charter and flight service businesses. A privately held firm, its board of directors includes a former Canadian defense minister.

SkyLink currently lists subsidiaries in the U.S., Italy, Germany, Russia, Sudan and the Middle East, and claims that its clients include the Canadian Government, the Italian Interior Ministry, the World Food Program and the U.S Immigration and Naturalization Service, among others.

The firm has also been involved in Afghanistan and Iraq. In April 2005, five SkyLink employees and eight others were killed when their charter helicopter was shot down near the Iraqi village of Tikrit, birthplace of Saddam Hussein.

SkyLink has engaged in a number of high profile humanitarian relief and charity efforts, including tsunami relief, and charitable donations in other disaster areas.

SkyLink’s business ties with the U.N. date back to 1990, and have often drawn U.N. praise. But in 1993, SkyLink was suspended for the first time from the U.N. vendor roster after a competitor brought allegations of bidding irregularities on Skylink helicopter leases. Eight U.N. officials were also suspended at the time — including Alexander Yakovlev .

A U.N. judicial panel later exonerated them all, and the U.N. paid SkyLink some $7 million in compensation for lost work and damage to its reputation as a result of the suspension.

In 1997, the firm was suspended again for two years as a result of further allegations of bid manipulation. A U.N. arbitration committee eventually rejected the allegations, but also rejected the demand by SkyLink that the U.N. pay some $50 million in compensation.

Claudia Rosett is a journalist-in-residence with the Foundation for the Defense of Democracies. George Russell is Executive Editor of FOX News.