Buying and Spending in a Country at War: How Has the UNHCR Been Performing in Ukraine? “Okay, but...” UN Auditors Say, Flagging a Few Problems

In an effort at accountability and transparency, the UN decided to audit its own refugee agency, UNHCR. More specifically, it sought to determine whether the agency, while responding to one of its largest and most difficult missions, had put all the necessary safeguards in place to control how the massive amounts of cash were being doled out in Ukraine and surrounding countries, and if emergency material such as tents and health items were being properly procured, managed and distributed to its intended recipients.

Russia’s attack on February 24, 2022, had been as sudden as an earthquake or a hurricane, but the rapidly-unfolding crisis that followed was of a different and unprecedented scale. Russia’s violent and sudden assault on its neighbor has created the largest refugee crisis in Europe since WWII. According to the UN’s own figure, as of May of this year, the conflict has displaced 13 million people within the country itself and sent a further 8 million Ukrainians onto the road, most of them scattered across Europe. And so, examining information from the very day of Russia’s attack to the end of 2022, the inspectors of the Office of Internal Oversight Services (OIOS)—the investigators of the UN’s most secretive and impenetrable units­—pored over the refugee agency’s records documenting ‘cash-based interventions (CBI)’ in Ukraine, Slovakia, Poland and Moldova, and, in parallel, the delivery of emergency supplies, such as toilet kits, tents, and heaters to mitigate the effects of winter. With its investigations closed, OIOS published its findings in three reports released in September. 

Both on the ground and in Geneva, UNHCR had moved swiftly: on March 10, it established a “Cash Hub” in Geneva, in its HQ in the Quartier des Nations. Between March 10, 2022, and December 31, 2022, UNHCR ended up spending $448 million, assisting almost one and a half million people. With multiple agencies and partners providing cash assistance to those affected by the war, OIOS wanted to know if the refugee agency had set up a system that would flag duplicate payments to the beneficiaries. It had.

“UNHCR instituted deduplication measures to prevent and detect duplicate payments,” the audit reveals, noting that “the measures were largely successful.” OIOS, however, did identify duplicate payments, prompting it to write that UNHCR’s deduplication measures “need strengthening.”

The review of five operations revealed that UNHCR paid $2,231,477 to 2,505 households that had also received payments from other agencies. OIOS also identified 154 individuals that were registered in more than one UNHCR operation. According to OIOS’s investigators, “the total amount paid to these individuals across UNHCR operations was $114,158. […] While this amount represented only a small percentage of the overall assistance, it nonetheless signaled the existence of control weaknesses,” it concludes.

The same audit also revealed that information provided by the Ukrainian government sometimes lacked transparency, and greater data control was needed to ensure the proper identification of eligible people. However, the burden of strengthening controls, OIOS states, doesn’t fall on the Ukrainian government, but on UNHCR. The audit therefore recommends that UNHCR enhance its information systems—a recommendation that UNHCR says it has followed.

The Management of Non-Food Items

OIOS conducted a concurrent audit over the same period of time and in the same countries to assess if the management of what it labels ‘non-food items (NFI)’ was “adequate and effective in meeting the needs of the affected population.” The OIOS investigation reveals that “UNHCR procured and managed NFIs totaling $186 million between February and December 2022.” The refugee agency, the investigators write, “met the fundamental needs of displaced populations.” However, they press, UNHCR needs to “strengthen controls over NFIs distribution modalities, monitoring and reporting, inventory management, warehousing and procurement.”

For instance, OIOS inspectors found that a few donations circumvented UNHCR’s controls and that in some cases items distributed by the UN agency’s partners were missing proper documentation. There were, the inspectors found, “weaknesses in the monitoring and reporting of distributions performed by partners.” As an example, one partner reported that 1,240 individuals received hygiene packs/kits in October 2022, but the distribution lists reviewed by the auditors indicated that almost a quarter of the beneficiaries received only soap, and not complete hygiene kits.

“The shortcomings occurred due to ineffective monitoring and oversight,” the audit concludes. As a recommendation, “the UNHCR Representation in Ukraine should strengthen its monitoring of government entities and partners.”

According to the auditors, insufficient procedures and documentation resulted in people not receiving what they needed as fast as they needed, despite the availability of emergency items in warehouses. Tents worth $2.2 million were in stock in Moldova, Ukraine and Hungary as of 19 May 2023, but only two per cent of them were released. Items such as shampoo and deodorant valued at a total of $4.4 million were also piling up in warehouses for many weeks before being distributed. 

In its response to the auditors’ findings, UNHCR explained the delays as a result of the challenges of operating in a country at war with a high level of mobility among the internally displaced population. Substantial quantities of NFIs were also transferred from Moldova to the Turkey/Syrian border after it experienced a massive and devastating earthquake situation in February 2023, UNHCR added.

The auditors acknowledge the challenges, while maintaining that there is a need to “improve inventory management and warehousing control arrangements,” and writing that UNHCR should “design, implement and maintain control mechanisms in storing and accounting for NFIs in a transparent and accountable manner. 

The procurement of some NFIs such as mattresses and heaters also proved to be problematic at times. Significant advance payments were made to suppliers to secure the delivery of large quantities of items, which carried significant financial risk. In their answers to OIOS’s investigators, UNHCR justified their decision by explaining that “large quantities were required and suppliers could not bear the costs of raw materials.” The investigators disputed this however, noting from their meticulous forensic analysis that upfront payments had been made to suppliers who had said there would be no issues sourcing items. One supplier that received a 90 per cent advance payment had in fact stated in their offer that the relevant items were “available in significant quantities.”

Overall, the three OIOS audits conclude that UNHCR’s actions in Ukraine, Poland, Moldova and Slovakia met the agency’s standards and procedure—with a few important buts, which all required remedial actions. “The cash-based interventions were generally adequate,” the UN inspectors summarize in one report; the refugee agency should “address the root causes of the duplication of payments,” they admonish in the second; while the third states that “the management of non-food items was generally aligned with UNHCR’s rules with a some exceptions noted for improvements.”

If the auditors’ reports read like nitpicking bureaucratic minutiae couched in dry accounting lingo, it’s because that is exactly what they are. But these documents have a much broader political significance: Questions are often asked, not just by Member States but also by the public, about the efficiency of the humanitarian sector—especially in the context of ‘compassion fatigue,’ which is itself sometimes driven by such concerns. With this in mind, these reports show the reality of the action of a UN agency in the midst of a war, and its ability to deliver on a mandate. In this particular case, the audits can also be seen as much-needed confidence boosters.

 -JC, with PHM