Exclusive: Somalia funds dry up after aid diversion report: U.N.

GENEVA (Reuters) - A U.N. report that found aid for Somalia had been diverted to militants has caused funds to dry up even though the allegations are unsubstantiated, the top U.N. humanitarian official for Somalia said.

An armed militant from Somalia's Hizbul Islam rebel group maintains order during a demonstration against the presence of the African Union (AU) peacekeepers on the outskirts of Mogadishu February 12, 2010. REUTERS/Ismail Taxta

Washington is withholding millions of dollars of aid fearing it benefits al Shabaab rebels loyal to al Qaeda who control much of central and southern Somalia and want to impose a harsh version of sharia law in the Horn of Africa country.

In a letter obtained by Reuters on Thursday, U.N. humanitarian coordinator for Somalia Mark Bowden said the allegations had created an “adverse climate of public opinion about Somalia” despite increasing needs.

He was referring to a report by a U.N. panel of experts monitoring compliance with U.N. sanctions against Somalia and Eritrea that said up to half the food aid for needy Somalis was being diverted to a network of corrupt contractors, al Shabaab militants and local U.N. staff.

“The U.N. Country Team is concerned that these estimates of diversion are not apparently based on any documentation but rather on hearsay and commonly held perceptions,” Bowden said in the letter dated March 23.

“They do not provide the evidential basis for discussion that was the hallmark of previous Somalia Monitoring Group reports,” he added.

He said U.N. agencies were doing their best to manage “financial, operational and reputational risks to the U.N.” in a complex environment long dominated by a war economy.

“This is already affecting flows of humanitarian assistance and will inevitably make it more difficult to sustain a humanitarian lifeline to central and southern Somalia at a time when there are increasingly high levels of child malnutrition,” Bowden said of the allegations.

Agencies describe the lawless nation as the world’s worst humanitarian crisis after fighting killed at least 21,000 people and forced more than 1.5 million from their homes since early 2007. It has the world’s highest malnutrition levels.

The Somalia Monitoring Group also said a Somali businessman linked to al Shabaab who likely received a ransom paid for kidnapped aid workers was a contractor for both the World Food Programme (WFP) and the U.N. Children’s Fund in Somalia.

Bowden said the U.N. was looking at establishing a “database of perpetrators or facilitators of kidnapping,” but needed to assess its feasibility, utility and associated risks.

His letter was addressed to Mexico’s U.N. envoy Claude Heller who chairs the Security Council sanctions committee on Somalia and Eritrea. Heller said earlier this month that Security Council members want an outside investigation into the charges.

WFP executive director Josette Sheeran reiterated on Thursday that her agency’s internal investigation had found no proof that its staff or partner organizations diverted aid.

“We have seen zero evidence,” she told a news briefing in Geneva. “We welcome any external investigation.”

The WFP suspended its work in southern Somalia in January because of threats against its staff and because al Shabaab was demanding payments for security.

“Somalia is definitely the most dangerous and complex operation we face,” Sheeran said.

Editing by Michael Roddy