WASHINGTON, Feb. 15 /PRNewswire/ -- Robert Massey, CEO of Cotecna
Inspection, S.A. said today that his company was "selected fairly on objective
grounds" to perform a "limited and technical role" under the United Nations
Oil-for-Food program.
Mr. Massey made his comments in testimony before the Permanent
Subcommittee on Investigations of the Senate Committee on Homeland Security
and Governmental Affairs. Mr. Andre Pruniaux, the former Cotecna Senior Vice
President who had responsibility for the company's OFF program activities,
also testified.
"Cotecna was selected fairly and on objective grounds including price,
responsiveness to the request for proposals and expertise. We performed our
limited and technical role professionally under extraordinarily difficult
circumstances," Mr. Massey said.
It was also important to note, Mr. Massey said, that "Cotecna had no role
whatsoever in the financial aspects of the program. And finally, the
employment of Kojo Annan was exclusively in connection with the company's
substantial work in West Africa. It had absolutely no relationship to
Cotecna's selection for the Oil-for-Food program."
Mr. Massey and Mr. Pruniaux provided detailed explanations of the very
real differences between freight inspection and freight authentication and
explained to the Committee how the authentication program was managed on the
ground in Iraq. They discussed in detail what Cotecna was permitted to do --
and not do -- under its UN contract. They also provided the Committee with a
written response to a UN Audit report which addressed Cotecna's role in the
authentication program.
Prepared testimony is attached and is posted at http://www.cotecna.com.
Statement by Robert Massey
February 15, 2005
Mr. Chairman and distinguished Members, good morning. My name is Robert
Massey. From 1993 to the present, I have been the CEO for Cotecna Inspection
S.A. in Geneva, Switzerland. Cotecna served as independent inspection agent
for humanitarian goods entering Iraq in the UN Oil-for-Food Program between
1999 and 2003. Thank you for this opportunity to address the Subcommittee.
You have received my written statement. Therefore, my prepared oral
statement will make only four points.
First, Cotecna was selected fairly on objective grounds including price,
responsiveness to the RFP and expertise. Second, we performed our limited and
technical role professionally under extraordinarily difficult circumstances.
Third, we had no role whatsoever in the financial aspects of the program.
Finally, the employment of Kojo Annan was in connection with the company's
substantial work in West Africa, exclusively and had absolutely no
relationship Cotecna's selection for the OFF Program.
I will elaborate on these four points in no particular order.
Between 1992 and 1996, the inspection mission in the UN humanitarian
programs for Iraq changed, becoming much more limited.
In 1992, Cotecna was competitively selected in the first international
call for tender for a UN program to monitor Iraq's purchase of humanitarian
goods. The company's 1992 draft contract would have provided for Cotecna to
perform price verification, pre-shipment inspection and post-landing
inspection. The 1992 program was never implemented, however, because the UN
and Iraq did not reach agreement.
In 1996, Cotecna participated in a new UN call for tender -- this time
merely for the authentication of goods. "Authentication" -- a service unique
to the UN Program, compares the shipping documents accompanying the goods and
the goods themselves against UN documents and database, confirming the goods
actually arrived. Authentication was developed by the UN as one of several
steps in the process for paying suppliers under the OFFP.
Cotecna did not begin to authenticate shipments in 1996 because the UN
awarded the contract to another company.
This leads to my next point: Cotecna's limited technical role under the
1998 contract did not place us in a position to detect illegal payments by
suppliers.
I can best explain our role by specifying what we did and did not do.
Cotecna was contracted to, and did: compare the UN documents and database with
the shipping documents accompanying all Oil-for-Food goods crossing the Iraqi
borders at specified locations; did visually check 100% of these goods (and
more closely examine a 10% random subset); and did test whether 100% of
foodstuff was "fit for human consumption."
Cotecna was not contracted to, and did not: verify that foodstuff shipped
was of the grade contracted; did not assess the value of goods; did not
interdict prohibited goods outside the program; did not perform any task with
respect to goods not voluntarily presented; and did not select the goods
imported, establish their specifications, choose suppliers, negotiate or
verify prices, designate sales intermediaries, establish sales commissions or
handle funds for the payment of goods.
Your invitation asks me to describe my or my company's knowledge, if any,
of illegal payments by suppliers to either UN, Cotecna or Iraqi officials. My
company and I have no knowledge of any such payments to anyone. We as
inspectors with a limited and technical role were in no position to have such
knowledge.
My third main point is that: Cotecna performed its job well and fully in
accordance with its mandate.
My colleague Andre Pruniaux will explain this point in more detail. Let
me make only two related observations.
First, while limited and technical, Cotecna's mission was difficult and
sometimes ambiguous. There were, for example, ambiguities concerning how and
whether Cotecna was to test the "quality" of foodstuffs, and how extensive
Cotecna's physical "inspections" for all goods should be. Largely, our role
was clarified over time through communications with UN OIP, although formal
contract amendments did not always follow.
After 1998, Cotecna asked the UN to expand the company's scope of work to
include services supporting price verification. The UN declined because it
saw itself as solely responsible for this task.
My final point is that the UN properly awarded Cotecna its contract.
Before I discuss the 1998 UN procurement, let me say that Kojo Annan played no
role in helping Cotecna obtain the UN contract.
A detailed timeline provided with my written statement places his work for
us in its proper African context. His employment with us had nothing to do
with Iraq and everything to do with West Africa.
Cotecna hired him in late 1995 to work in Lagos, Nigeria on Cotecna's
government pre-shipment inspection contract there. He resigned in December of
1997, some months after the Nigerian administration terminated Cotecna's
contract. Because of his marketing skills in Nigeria and Ghana, Cotecna
subsequently hired him to work under a ten-month consultancy agreement, which
included a non-compete clause. In January 1999, after conclusion of the
consultancy agreement, we negotiated a new and enforceable non-competition
agreement providing compensation, as required under Swiss law.
There was a clear business rationale for these arrangements: in 1999 and
2000 Cotecna was pursuing inspection contracts in Nigeria and Ghana, and did
not want Kojo Annan available to the competition. As reflected in the
provided timeline, the intense competitive environment in Nigeria and Ghana
continues until this day.
Cotecna was awarded the UN contract in 1998 based on our proposal, which
offered the lowest cost and highest technical expertise, as well as experience
working in harsh conditions. Along with the handful of other inspection
companies worldwide, Cotecna learned of the UN's October 9, 1998 RFP per
standard procurement procedures. Cotecna had in the past been awarded UN
contracts, had been selected for the unimplemented 1992 program and had been
invited to bid on the new OFF Program in 1996.
Mr. Chairman, under the unusual and restrictive conditions I have
described, Cotecna fully met its obligations to the United Nations. I am
proud of Cotecna's performance in this program.
From the outset, Cotecna has cooperated fully with this subcommittee's
investigation. This concludes my prepared statement. I would gladly answer
any questions.
PREPARED FOR DELIVERY
Short Statement by Andre Pruniaux
to the United States Senate
Permanent Subcommittee on Investigations
Committee on Homeland Security and Governmental Affairs
February 15, 2005
Mr. Chairman and distinguished Members of the Subcommittee, thank you for
inviting me to speak today. My name is Andre Pruniaux. I served as Senior
Vice President of Cotecna Inspection S.A. between 1998 and 2004. As such, I
managed Cotecna's operations in Africa and the Middle East, including its work
as independent inspection agent for humanitarian goods in the United Nations'
Oil-for-Food Program ("UN-OFFP").
Today, I will describe:
1. Our negotiation of the 1998 OFFP contract with the UN.
2. How we carried out our duties.
3. Our working relationship with the UN OIP.
We worked on this program from early 1999 to late 2004, so there is a
great deal of information for me to cover in a short time. Everything I
describe today is detailed in my written testimony and the extensive records
that Cotecna has produced to investigators.
Cotecna received the OFFP tender in late 1998. We found that the tender
was broadly worded and did not provide detailed technical and process
specifications. We found the lack of detail surprising as the program had
already been in operation for 2 years.
Although not mentioned in the tender, the UN imposed the use of their
existing Lotus Notes system upon us during the negotiations. We had proposed
using our in-house IT and communications systems and had fixed the contract
price on this assumption. At the time, we did not know that much about Lotus
Notes but our IT team understood that communication costs would be higher and
the system less efficient. To accommodate their Lotus Notes requirement, the
UN agreed to a price increase even before finalization of the original
contract.
When we arrived on the ground in Iraq, the conditions were worse than
anticipated. The inspection sites had recently been evacuated and were in
disarray. We had only one month's lead time from contract award to
implementation. No Standard Operating Procedures existed when we assumed
responsibility, although procedures unique to the OFFP were demanded of us.
An example of the initially vague scope of work concerns the testing of
foodstuffs to ensure only that they were "Fit for Human Consumption." This is
not a recognized concept within our industry. We had to work out what the UN
wanted by making suggestions that they would accept or reject until we knew
exactly what they intended our mandate to be. These clarifications were not
documented in formal contract amendments but were agreed ad hoc and then
reflected in the Standard Operating Procedures we developed for the program
and which the UN approved.
If there was any doubt about whether or not we should authenticate a
shipment because the paper work was incomplete or a shipment arrived at the
wrong crossing, we would consult with the UN in NY and get their decision.
These frequent consultations resolved many of our mandate's ambiguities.
However, it still seems to have left room for confusion amongst outside
observers, such as the UN auditors, as to our performance as well as the scope
of our work.
We also found that in reality the UN Lotus Notes system was cumbersome and
unsuited for the authentication purpose. Replicating data between our servers
in Iraq and the UN's in New York often took days and the system often crashed.
Then we would start the data replication process over, causing us to expend
many more man hours. The Lotus Notes system was controlled by the UN and was
the only way supplier contract information was electronically transmitted to
us.
The system shortcomings significantly impacted upon the workload of
inspectors who had to work long hours, often through the night. For example,
the system meant that we had manually to fax, often 2000 or more
authentication sheets from Iraq through to New York each night.
Due to the design of the system, the audit trail was manual. It could take
hours to track a single delivery -- think of this in terms of over 30,000 plus
contracts some of which involved several thousand individual deliveries.
As you can see, the program presented significant challenges. I will now
explain how we worked with UNOIP staff to overcome these challenges.
Cotecna developed SOPs for every aspect of the mandate. We established a
three level internal oversight and audit process. These were carried out by
Team Leader at each site, the Contract Manager in Amman and our Head Office in
Geneva. The Contract Manager position was introduced by Cotecna, at our own
cost, to ensure efficiency and compliance. We also would hire technical
experts as required, for example customs specialists and financial auditors.
The Contract Manager would be in daily contact with inspectors on the ground
and would also conduct detailed field audits of each site on average every two
months. I would also conduct my own on-site reviews twice a year and there
were semi-annual management meetings in Amman and Baghdad, which the UN OIP
staff would attend when possible.
We communicated with the UN OIP daily, providing them with detailed
reports as to the precise level of authentication activity at each site. We
also provided reports on the pending authentications. The UNOIP regularly
visited and audited our sites, and I would visit New York 2 or 3 times a year
for working sessions with the UNOIP.
In conclusion, Cotecna met the terms of its mandate in full. In order to
deliver the best service possible, we insisted on 100% visual inspection of
all imports. We also put in place a contract manager and we hired up to 30
surplus inspectors to allow for strenuous shift demands and sufficient rest
and recuperation for our inspectors in Iraq. We took these steps at our own
expense. We developed clear SOPs that the UN approved.
Mr. Chairman, I am confident that Cotecna met and exceeded its obligations
under the UN mandate, and we did so under what I think all would agree were
difficult circumstances. This concludes my prepared statement. I would be
happy to answer your questions.
SOURCE Cotecna Inspection, S.A.
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Related links:
http://www.cotecna.com
CONTACT:
Ginny Wolfe, +1-202-261-2880, for Cotecna
Inspection, S.A.
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