April 25, 2006 | FoxNews.com

United Nations Probes Sale of Irreplaceable Stamp Archive

Co-Authored with George Russell

Amid the many scandals at the United Nations, a new mystery now looms. What happened to the world organization's unique and valuable postal archive — in effect, the U.N.'s own stamp collection, one of the crown jewels of its past and a popular point of contact with the global public?

Auditors from the U.N.'s investigative arm, the Office of Internal Oversight Services (OIOS), are currently putting the last touches on an investigative report that has taken months to complete, and that aims to determine exactly what happened — and why — to the U.N.'s rare and much-admired collection of materials that belong to the United Nations Postal Administration.

The audit report has not yet been “finalized,” meaning it is soon to be submitted to senior U.N. managers for comment before being handed on to Secretary-General Kofi Annan, and the U.N. General Assembly.

One thing that investigators know for certain about the archive: In a discreet but historic auction carried out in a quiet suburb of Geneva, Switzerland, all of it — more than a metric ton of prized material, dating from as early as 1951 — was sold off to a single bidder on May 12, 2003. The collection included original artwork for U.N. stamps, unique so-called die proofs to test the faithfulness of design reproduction, printing proofs and other rarities, along with hundreds of thousands of other stamps, reflecting many of the most colorful aspects of U.N. history.

The auction itself was carried out in entirely legal fashion. The price it fetched — $3,068,000 — was hailed on a variety of stamp collecting Web sites as a world record price for a single lot sale at a stamp auction. Click here to view the U.N. Art and Archives, Reference Catalogue (pdf).

But for the U.N., it was no coup, even though, according to officials familiar with UNPA finances, the UNPA netted “some $2.5 million” from the Swiss auction deal. The reason: according to U.N. sources, the archive sale may well have taken place without the permissions required by the regulations of the U.N. Secretariat for the disposal of such important U.N. property.

Within months of the Geneva auction, the U.N. postal archive was resold, then resold again, in proper legal fashion — but in all likelihood for sums that underscore the historic loss to the United Nations. While the prices for the subsequent transactions were not disclosed, stamp collecting experts were quoted on the Web site of a philatelic publication, Stamp Magazine, as saying that the archive had “fabulous profit potential — perhaps three or four times what was paid for it, if it is broken up.”

And broken up the archive now undoubtedly is — though how far the collection was dispersed is also unknown.

The postal archive sale may be yet another instance of what Paul Volcker's investigation into the Oil-for-Food scandal described as “systemic problems in United Nations' administration,” involving lack of accountability, oversight, or even basic clarity in the organization's activities. Despite the historic importance of the postal archive, senior U.N. officials contacted by FOX News professed to know nothing about it — including some in departments specifically charged with approving or blocking the dispersion of U.N. historical material.

Official consent forms required under Secretariat rules for the disposal of archival material have not been found in archival records, according to sources familiar with those records. Nor can U.N. sources familiar with the archive section recall any discussion or find any record of approval for the postal archive sale. As one of these archival veterans told FOX News, “I don't recall anything about it.”

The only official U.N. documentation that has been publicly released was a letter dated Feb. 4, 2003, and signed by a senior U.N. official, which formed part of the auction catalogue for the initial Geneva sale. This letter noted simply that the unique offerings “constitute all known items to exist of this kind.” Click here to read Feb. 4, 2003 letter (pdf).

It is unclear whether the sale was ever authorized by the appropriate U.N. officials — including Annan, whose office said in response to questions from FOX News that it would have no comment pending receipt of the OIOS audit.

But it would seem from the U.N.'s own rules, barring express permission of the chief of the U.N.'s archives and records management section, the collection should not have been sold. In fact, U.N. regulations issued in 1991 by then Secretary-General Javier Perez de Cuellar, and still in effect today, declare that U.N. historical materials, which undoubtedly include the postal archive, are deemed “inviolable” by the world organization. Without explicit permission, their removal from U.N. premises is expressly forbidden.

The 1991 regulations also explicitly states that the chief archivist should make the judgment on “which records have sufficient historical or other value to warrant their continued preservation as the archives of the United Nations.” Click here to view the Secretary General's Bulletin (pdf).

It is possible that the OIOS audit will offer up another way that the archive's removal and sale was approved, but the official disposal rules don't seem to allow for one. Moreover, while the archive sale was widely noted in the cloistered world of stamp collecting, the U.N. itself seems to have made little or no effort to tell the world about the disposal.

While the U.N. Postal Administration web site continues to extol the U.N.'s role as a unique stamp-producing entity, with more than 1,000 different stamps issued over the past 55 years, it makes no mention of the 2003 archive sale. Nor is the auction mentioned in a review of the Postal Administration's performance conducted by the secretary general's office and presented to the U.N. General Assembly in November 2003, the first such report after the Geneva auction.

The report, aimed at ending financial losses at the UNPA after a $2.9 million loss in 2000-2001 (the U.N. operates on a two-year budget cycle) urged a variety of marketing and streamlining changes, but made no mention of the asset sale as a means of stanching the red ink.

The existence of the secret OIOS effort to trace the decisions involved in the postal archive sale were disclosed to FOX News by several U.N. officials. They were officially confirmed by U.N. Under Secretary General for Management Christopher Burnham in an exclusive interview with FOX News earlier this month.

Burnham says he personally noticed the “anomaly” of a small profit in the traditionally loss-making postal operation and asked for an explanation. Burnham then declined comment on most aspects of the investigation because Annan and the U.N. General Assembly had not yet been briefed on the results. Said Burnham: “I believe you will be able to have answers in a very short amount of time.”

Burnham did not rule out the possibility that wrongdoing might be discovered in the postal archive sale. If so, he said, “we are obligated to pursue all avenues available to us to give restitution to the United Nations and bring perpetrators to justice.”

To date, the only U.N. official publicly identified with the sale is the man who signed the letter that was included the auction catalogue. He is Andrew Toh, currently Assistant Secretary General of the Office of Central Support Services (OCSS), which includes the UNPA. According to the letter in the Geneva sales catalogue, Toh was then serving as Director of the U.N.'s Facilities and Commercial Services Division.

Toh, who has held his current job since February 2003, is one of eight U.N. officials who was placed on “administrative leave with pay” — effectively suspended — in the wake of revelations about the ongoing procurement scandal. The U.N. emphasized at the time that the suspension was not intended to imply any wrong-doing on Toh's part. Toh himself told FOX News that he and the others have been unjustly placed “in limbo.”

When questioned by FOX News about his postal archive letter, Toh declared that he couldn't recall the circumstances of the sale, and said that the process leading up to the auction “all started years before.”

He said that decisions regarding the sale were largely made by two other men: Anthony Fouracre, head of the UNPA from 1992 through 2002; and Toshiyuki Niwa, who held Toh's current position at OCSS from 1998 through the end of January, 2003, and is now a Deputy Executive Director of the United Nations Children's Fund, UNICEF.

While he declared that he did not recall “specifics” of the archive sale plan, Toh told FOX News that the original motive was “something to do with bringing in additional income” for the ailing UNPA, which, while popular with the public, had been losing millions of dollars for years. The idea, Toh said, was “to develop additional seed money for UNPA.”

When contacted by FOX News, Niwa declared that he was “not aware of the sale,” and warned that his memory of that time was “kind of hazy.” The person really familiar with the details, he said, was Toh, who was “de facto my deputy.”

Niwa said he had taken part in “some discussions in a general context” of the UNPA's money-losing problems, “the details of which I do not recall” but didn't know “what action was taken.”

For his part, former UNPA chief Fouracre, declared in a brief telephone interview with FOX News on April 19 on that he was planning a memorial service for his deceased mother-in-law in Minnesota, and could not respond until the following week.

Contacted again on April 24, he had traveled to Britain to be at the bedside of his own mother, who had suffered a serious heart illness, and said he would not be able to discuss the archive auction for at least another week. Even then, he said, without access to U.N. records “my memory is uncertain.”

According to an interview that Fouracre gave on the eve of his retirement to an online stamp collecting Web site, Stamp2.com, in November, 2002, funds from the postal archive auction were intended to support a United Nations Philatelic Museum that is located at the local U.N. headquarters in Geneva. That museum, he told his interviewers, “had what we needed” in terms of archival resources, implying that the postal archives at U.N. headquarters in New York were redundant. But according to other stamp industry website sources, the Philatelic Museum's collection in Geneva was closed to the public in December, 2003, due to lack of funds.

For his part, David Feldman, the owner of the Swiss auction firm David Feldman S.A., which carried out the original sale of the postal archive, was clearly proud of the unique challenges that the UNPA archive posed for his auction house, and how his firm responded to them. The archive sale is mentioned on the firm's Web site.

Formal discussions with the United Nation over the sale, he told FOX News in an e-mail interview, dated back to 2001 when his firm was invited by the U.N. procurement department to compete for the auction contract by tender. At first, Feldman lost out in the bidding, but after Sept. 11, he said, the U.N. apparently decided to hold the auction outside of New York.

“We were chosen presumably as Geneva would give a more international, neutral and cosmopolitan look to the auction,” he said.

Feldman says that he worked with UNPA chief Fouracre, who “has also been a personal friend for years” on the subsequent organization and classification of the U.N. archive materials, which arrived in 74 large boxes. The cataloguing effort took seven months.

Asked about Toh's letter about the exclusive nature of the archive, Feldman said that aside from receiving the signed letter, “I never met him and he took no direct part in the matter, at least not with us.”

All of the auction house's subsequent efforts, Feldman said, had as top priority “to obtain the best financial result possible for UNPA.” To achieve that aim, the auction house used a provision of Swiss commercial law that first allowed them to offer the archive in smaller lots first at the sale, then add up the winning sums, add 10 percent, and challenged bidders to beat that price on a winner-take-all basis. When the winning bid topped $3 million, he said, it exceeded all of his expectations.

The sole winner of the Geneva auction bid was Arthur Morowitz, CEO of a Manhattan-based firm called Champion Stamp Collection. Morowitz is also secretary of the American Stamp Dealers Association, an industry group. When contacted by FOX News, Morowitz declined to comment on the sale, or the subsequent resale of the postal archive.

Even before leaving Geneva, however, Morowitz had been contacted by another U.S. auctioneer, Greg Manning, head of a New Jersey auction firm named Greg Manning Auctions, Inc (GMAI), since renamed the Escala Group. Escala is now the world's largest stamp and coin auction house, and its stock is traded on NASDAQ.

Manning told FOX News he “did not have the pertinent mechanism in place” to take part in the Geneva auction himself. But, he says, he bought the entire archive over the telephone from Morowitz for a sum Manning would not disclose.

Six months later, at his auction galleries in West Caldwell, N.J., Manning put the rarest and most unique items in the U.N. archive up for auction once again — more than 2,000 items in all. They ranged from artists' drawings for the earliest U.N. stamps in 1951 to approved models for special anniversary issues to unique rarities celebrating peacekeeping operations and national member states.

The handsome, hard-bound catalogue (pdf) for the November 18-21, 2003, sale runs to nearly 500 pages. It contains suggested prices for each item, which, Manning told FOX News, were set deliberately low, from $150 to as high as $10,000. The aim was to create a 100 percent sellout—which occurred, Manning said, with most of the estimated prices surpassed by “two, three, four or five times.”

He declined to give the total revenue from the sale. Stamp industry insiders, however, say that the auction brought in $1.2 million.

This auction, however, was only the tip of the UNPA's archival iceberg. After the sale, Manning still retained “hundreds of thousands” of individual items from the archive, less unique than the top-line items but still in highly limited quantity. These, he says, he disposed of throughout 2004 to other private customers.

A “significant amount” of these items, he said, went to a single firm: Afinsa Bienes Tangibles, a Madrid-based firm with two Spanish shareholders that is considered to be one of the most important retail stamp-selling companies in the world. While it sells stamps to collectors, Afinsa also warehouses many of its clients' collections in special vaults, contained in an elegant restored palace that was once the home of Spain's Papal Nuncio.

Afinsa and Greg Manning's company, in fact, have a unique mutual relationship, which deepened dramatically between the time of the Geneva UNPA auction and Manning's resale of the U.N. archive.

In August 2003, just three months after the Geneva auction and its buy-up of the U.N. archive, what was then GMAI signed a 10-year supply contract with Afinsa, making it the Spanish firm's exclusive supplier of $1 billion worth of stamps over the life of the agreement. Over the next two months, GMAI bought out seven of Afinsa's own auction houses and some of its surplus stamp inventory for resale to other buyers.

By September 2003, Afinsa had increased its holdings in Manning's company from some 10 percent to roughly 67 percent through a series of stock swaps. By the time of his U.N. archive sale in New Jersey, Manning had become in effect the junior partner in an Afinsa subsidiary.

The new arrangement “worked very well,” Manning told FOX News, in guaranteeing an income stream for his firm. “We had something they needed. This business depends on a flow of material.”

Since 2003, GMAI has embarked on a spree of acquisitions in the U.S. and abroad that turned the company into a globe-girdling stamp and coin empire, with annual sales last year of $895 million. (Among other things, the company, renamed Escala Group last September, is the largest single reseller of gold coins from the U.S. mint.)

The U.N. archive auction is by no means the biggest or most lucrative stamp auction that Manning has conducted. He considers the U.N. material “somewhat esoteric. Essentially in a specialist niche.”

Nonetheless, he added, “finding an archive is a rare thing. It creates a lot of excitement in the market.” The U.N. auction, he said, also “gave high level collectors more material to put into their collections. When they exhibit, the rarity factor gives them a better chance with judges.”

As it happens, high-level collectors will abound at the most important stamp exhibition in the world, the decennial World Philatelic Exhibition, which will be taking place from May 27 to June 3 in Washington, D.C. One member of the gala stamp fair's board of directors is ASDA's Arthur Morowitz, original buyer of the UNPA archive.

Auctioneer Greg Manning said “I'd be amazed if not a number of collectors who bought items” from his own UNPA auction were exhibiting their collections during the fair.

Looking at Manning's handsome 2003 auction catalogue, it's easy to agree with the UNPA's Web site, which extols the UN agency's stamp products in glowing terms. “The beauty, uniqueness and special significance of U.N. stamps,” it says, “combined with their individual, often intriguing histories and original configurations, continue to be a source of fascination and of great value to the collector.”

But the only way now to see the full array of original rarities from the U.N.'s dismembered archive is to obtain a copy of the Greg Manning auction catalogue. Some examples are still available on eBay.

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



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