UN probes allegations of corruption, fraud

(Adds number of confirmed cases, details)

By Louis Charbonneau

UNITED NATIONS, Jan 10 (Reuters) - A U.N. internal investigative unit has found an unexpected amount of fraud and abuse at the United Nations and is currently investigating 250 cases, including alleged sexual and financial offenses.

"Our caseload has been very steady over the last three months, around 250 cases," Inga-Britt Ahlenius, head of the U.N. Office of Internal Oversight Services (OIOS), told reporters. "We found mismanagement and fraud and corruption to an extent we didn't really expect."

Ahlenius said two-thirds of the cases being reviewed related to peacekeeping missions. Around 80 involved possible sexual exploitation and abuse.

The former chief auditor of Sweden held the news conference in response to media reports suggesting that there has been widespread fraud related to U.N. peacekeeping contracts.

She said investigators have already confirmed that contracts worth around $600 million involved fraud at some level. The total U.N. peacekeeping budget for 2007-2008 exceeds $5 billion.

Overall, Ahlenius said that the OIOS and its Procurement Task Force had so far submitted to U.N.'s top management 25 reports detailing mismanagement, fraud and corruption.

Robert Appleton, head of the Procurement Task Force, a temporary body set up in 2006 after corruption was revealed in the U.N. oil-for-food program in Iraq, said only a minority of U.N. contracts were irregular and many allegations could not be substantiated.

"There's no question that some of the large contracts here have been tainted, but in terms of the number of contracts, it's not anywhere near the majority," Appleton said.

Ahlenius said the OIOS had begun urgently reviewing a $250 million contract the United Nations signed with a unit of U.S. defense firm Lockheed Martin Corp (LMT.N) without competitive bidding to build five peacekeeping bases in Sudan's war-torn western region of Darfur.

"We have been mandated by the General Assembly to carry out a review of the circumstances," she said.

U.N. Secretary-General Ban Ki-moon has come under fire for awarding the contract to Lockheed unit Pacific Architects and Engineers Inc without opening the field to competitors.

The OIOS review will be part of a wider review of all such single-source contracts, Ahlenius said.

The U.N. General Assembly passed a resolution in December criticizing Ban for his decision and demanding the OIOS review. Ban said current U.N. rules allowed him to award such contracts in exceptional cases where only one supplier was considered able to deliver at short notice. (Editing by Cynthia Osterman and Alan Elsner)