* U.N. report says agency retaliated against whistleblower
* Victim blames official now running UNDP Haiti programme
* UNDP denies corruption in Somalia, backs Haiti official
* Security Council report says much Somali food aid diverted
(Adds details of UN report on corrupt diversion of aid)
By Mark Trevelyan
LONDON, March 9 (Reuters) - The United Nations Ethics Committee has upheld complaints by a former employee of the U.N. Development Programme who said he suffered retaliation from the UNDP for alleging that its Somalia programme was corrupt.
The man, Ismail Ahmed, was transferred to another office without proper visa support, and the UNDP Somalia office later told a potential employer not to hire him because of his "silly non-proven accusations", Ethics Committee Chairman Robert Benson found in a report seen by Reuters.
A new UN Security Council report says that as much as half the food aid sent to Somalia is diverted to a network of corrupt contractors, radical Islamist militants and local UN staff members, the New York Times reported on Tuesday.
The report outlines such serious problems that it recommends Secretary General Ban Ki-moon open an independent investigation into the World Food Programme’s operations in Somalia, the paper said, noting diplomats had shown it the as yet unpublished document.
Ahmed has identified one of the main authors of the retaliation as Eric Overvest, a Dutch national who is now in charge of the UNDP office in earthquake-stricken Haiti.
Ahmed’s case has been supported by the U.S.-based Government Accountability Project (GAP), a non-profit organisation which backs whistleblowers in exposing corruption.
"A retaliator in Dr. Ahmed’s case was promoted and transferred to Haiti, where he was the Country Director for UNDP at the time of the devastating earthquake there," GAP said in a statement issued to Reuters.
"The move is a cause for concern as the ability of UNDP to monitor the disbursement of aid in Haiti has been severely compromised by the chaotic aftermath of the disaster."
UNDP spokesman Stephane Dujarric said that following the Ethics Committee ruling, "the matter of individual accountability" for the retaliation against Ahmed had been referred to the UNDP’s Office of Audit and Investigations.
"As that aspect is currently pending, UNDP is not in a position to comment further," he said.
He described Overvest as talented, dedicated and skilled in dealing with countries in crisis.
"We are extremely pleased with his critical work in Haiti, where he has been UNDP’s Country Director since 2009. Our investigation found no involvement on his part in any of the alleged corrupt activities," Dujarric said.
Overvest did not respond to emailed questions from Reuters on Tuesday. Dujarric said he would not be available for comment.
Ahmed says it was Overvest, then a deputy country director in the UNDP Somalia programme, who flew to Dubai in November 2007 and told the Somali Money Transmitters Association not to take him on as a consultant.
The U.N. Ethics Committee chairman’s report did not mention Overvest by name, but upheld Ahmed’s complaint of damage to his professional reputation.
"It is therefore concluded that the UNDP Somalia Country Office as a retaliatory act communicated quite openly in relation to the consultancy contract that ‘UNDP cannot accept Ahmed, who is making all these silly non-proven accusations, to work on a project UNDP was funding’," it said.
Ahmed, a British national, worked for the UNDP from 2005-7 on a programme to prevent Somalia’s money transfer system from being abused for money laundering and terrorist finance.
The Ethics Committee report upheld three of his complaints of retaliation but rejected four others, including allegations relating to the withholding of payments and non-renewal of his contract. Ahmed was awarded undisclosed compensation last month.
In his whistleblowing dossiers, first reported in May 2008 by Reuters, he alleged the existence of fraudulent payments and bogus contracts in the UNDP Somalia programme and said it had supported a company with suspected links to Islamist militants.
The company, Dalsan, collapsed in May 2006 and depositors lost more than $30 million, a blow to the Somali economy which depends heavily on remittances from nationals living abroad. The country faces an Islamist insurgency and has become a haven for pirates who extort huge ransoms by hijacking ships.
UNDP spokesman Dujarric said the agency had given "due consideration" to the corruption allegations and engaged an independent international forensic company to investigate them.
"The results of the investigation were that no corruption had occurred," Dujarric said, declining to name the investigating company or release the report.
Ahmed described the finding as "incredible", adding: "The fact they have refused to share any information clearly shows they have something to hide."
GAP International Program Officer Shelley Walden said it was unclear how widely or narrowly the UNDP was defining corruption.
"To a certain extent, this is a semantic trick bag as, strictly speaking, no U.N. agency finds that corruption has occurred. U.N. investigators are not agents of law enforcement ... Legally, UNDP neither clears nor arraigns anyone," she said. GAP urged the UNDP to make its report public.
"In the absence of the investigative report, GAP cannot determine if there was a good faith effort to investigate Mr. Ahmed’s disclosures," Walden told Reuters. "Indeed, a failure to disclose it suggests that UNDP is trying to hide something or inappropriately protect a malefactor."
The Security Council report suggests the food distribution system in Somalia needs completely rebuilding to break a corrupt cartel of Somali distributors, the New York Times said.
The report also says regional Somali authorities are collaborating with pirates, and Somali government ministers have auctioned off diplomatic visas for trips to Europe to the highest bidders, possibly including pirates and insurgents. (Additional reporting by Louis Charbonneau at the United Nations; editing by Tim Pearce)