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Viewing cable 06PARIS6435, U) USUNESCO ? ALARMING NEW INFORMATION ABOUT

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Reference ID Created Released Classification Origin
06PARIS6435 2006-09-26 14:56 2011-07-11 00:00 CONFIDENTIAL Embassy Paris
null
Lucia A Keegan  09/27/2006 09:41:07 AM  From  DB/Inbox:  Lucia A Keegan

Cable 
Text:                                                                      
                                                                           
      
C O N F I D E N T I A L        PARIS 06435

SIPDIS
cxparis:
    ACTION: UNESCO
    INFO:   POL ECON AMBU AMB AMBO DCM SCI

DISSEMINATION: UNESCOX
CHARGE: PROG

APPROVED: AMB:LOLIVER
DRAFTED: LEG:TMPEAY
CLEARED: DCM:AKOSS

VZCZCFRI668
OO RUEHC RUEHBR RUEHSO
DE RUEHFR #6435/01 2691456
ZNY CCCCC ZZH
O 261456Z SEP 06
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1692
INFO RUEHBR/AMEMBASSY BRASILIA 1677
RUEHSO/AMCONSUL SAO PAULO 0213
C O N F I D E N T I A L SECTION 01 OF 03 PARIS 006435 
 
SIPDIS 
 
FROM USMISSION UNESCO PARIS 
 
DEPARTMENT FOR IO/UNESCO, IO/FO, WHA/BSC, L/UNA 
 
E.O. 12958: DECL: 09/21/2016 
TAGS: UNESCO SCUL BR
SUBJECT:  (U) USUNESCO ? ALARMING NEW INFORMATION ABOUT 
UNESCO?S BRASILIA FIELD OFFICE 
 
REF: PARIS 6225 (notal) 
 
Classified by DCM Andrew Koss, reasons 1.4 (b) and (d). 
 
1. (U) This is an action request, please see para. 12. 
 
2. (C) SUMMARY.  In a private, off-the-record meeting with 
John Parsons (please protect), the Director of UNESCO?s 
Internal Oversight Service (IOS), Mission learned this week 
of a variety of disturbing new allegations, as well as 
unsettling new facts, that appear not only to widen the 
scope of irregularities surrounding UNESCO?s Brasilia Field 
Office (UBO) but also to heighten the stakes for UNESCO?s 
Director-General, Executive Board Members, and UNESCO?s 
reputation in how this problem is being addressed.  We were 
informed that the disturbing new information raises a 
number of concerns, among them the following:  the 
possibility that UNESCO could become a respondent in a 
Brazilian criminal prosecution; the specter of fraud or 
money laundering resulting from tens of thousands of 
alleged UBO travel missions that have been processed 
through the field office?s travel agency; Brazilian 
government pressure to blackball IOS Director Parsons and 
force his resignation; and a deepening appearance of a 
conflict of interest by UNESCO?s Deputy Director-General 
(DDG), Marcio Barbosa (a Brazilian national) vis--vis his 
oversight of the UBO issues. 
 
3.  (C) SUMMARY (continued).  As an Executive Board member, 
the U.S. faces tough choices about how to respond 
appropriately and responsibly to the UBO controversy within 
the broader context of U.S.-Brazil bilateral relations. 
 
4.  (C) BACKGROUND.  Among key issues for the upcoming 
session of UNESCO?s Executive Board (EB), is item 24 
entitled ?Report by the Director-General on the Re- 
Orientation of the UNESCO Office in Brasilia.?  An August 
2006 UNESCO external auditor?s report suggests that a 
number of issues remain unresolved.  Reftel reported 
Brazil?s Permanent Delegate?s recent meeting with 
Ambassador Oliver to discuss the UBO.  The message 
delivered was that the Brazilian government views that the 
irregularities attributed to the UBO have now been 
sufficiently investigated, reported upon and brought under 
control.  Brazil therefore seeks to remove this issue 
henceforth from further EB monitoring as a future EB agenda 
item.  As reported, this demarche backfired, only 
strengthening Mission?s resolve to get an objective 
assessment of the current situation regarding that field 
office.  Mission Legal Adviser?s subsequent telephone 
conversation with the external auditor?s office affirmed 
that there remain unanswered questions of potential 
concern. 
 
5.  (C) CIVIL AND POTENTIAL CRIMINAL LIABILITY.  We learned 
that in addition to a pending civil lawsuit relating to 
alleged malfeasance at UBO in which UNESCO is a respondent 
that has asserted immunity from Brazilian legal 
jurisdiction, prosecutors for the Federal District of 
Brasilia have informed Parsons that they are contemplating 
naming UNESCO as a respondent in a directly related 
criminal prosecution.  (Comment:  This same information was 
conveyed privately to the Mission?s Legal Adviser by the 
Deputy External Auditor during a recent phone 
conversation.)  It is not yet clear how such an indictment 
would be framed, but its issuance would constitute a major 
embarrassment for UNESCO.  Equally worrisome in this regard 
is Parsons? claim that a Brazilian court recently ruled 
that another UN organ, the UN Development Program (UNDP), 
was not entitled to immunity from legal jurisdiction by 
virtue of its international status.  Parsons asserted that 
the lawsuit against UNDP stems from that organization?s 
alleged failure to pay social security contributions for 
200 Brazilian employees.  Parsons informed us that UNESCO 
faces similar lawsuits (see para. 10) and could itself face 
non-recognition of its immunity as an international 
organization.  (Comment:  This recent Brazilian court 
decision is directly at odds with the assurances provided 
to the Mission?s DCM recently by UNESCO?s legal adviser 
that he is confident UNESCO?s immunity would be respected 
by Brazil?s courts.) 
 
6. (C) TRAVEL SERVICE IRREGULARITIES. Parsons reported that 
in a period of less than a year, UBO paid some $60 million 
for travel services, allegedly involving 30,000 (thirty 
thousand) travel missions for its employees.  We further 
learned that of these paid travel missions, there has been 
an average of one thousand cancellations per month. 
Parsons raised the rhetorical question whether the 
suspiciously high number of travel missions and 
cancellations had become a form of ?money laundering.? 
This observation resonates with the UNESCO external 
auditor?s most recent report noting critically that the 
agency selected by UBO to handle such travel services was 
chosen without competitive bidding and moreover that since 
2001 UBO has defied the auditor?s repeated recommendation 
that this travel service contract be opened for competitive 
bidding. 
 
7. (C) GOB EFFORT TO BLACKBALL IOS AND THWART 
INVESTIGATION.  We learned from Parsons that the GoB has 
launched a full-scale campaign to smear Parsons? name and 
reputation to such a degree that he is actively seeking to 
leave his post by year?s end.  Three members of his staff 
have informed him of their imminent departure as well, 
resulting from their refusal to be targets of a Brazilian 
vendetta for having competently conducted a needed 
investigation into palpable irregularities.  By year?s end, 
the IOS office could be completely decimated.  Parsons 
asked whether we could help to arrange for an American to 
replace him (he is a UK national).  He proposed that he 
change positions with the American who currently heads 
OSCE?s oversight office in Vienna.  (Comment:  Parsons, who 
did an excursion tour at the GAO, is a good friend of the 
U.S. and it would be in our interest to help him find 
onward employment.) 
 
8.  (C) AMERICAN SELECTED TO HEAD UBO REJECTED BY BRAZIL. 
Due to the irregularities that have come to light at UBO, 
the former UBO director (an Argentine national) was forced 
to resign and was to have been replaced by a USAID 
employee, Richard Goughnour, who was selected by UNESCO DG 
Matsuura.  Parsons told us that the Brazilian government 
has taken the highly unusual step of denying him agrement. 
It is not clear whether the DG is seeking a reversal of 
Brasilia?s opposition, but for the moment the post is still 
vacant.  In the meantime, Parsons said, the UBO is being 
run by a temporary director who is not up to the management 
tasks of restructuring UBO?s operations. 
 
9. (C) CONTINGENT LIABILITIES.  In addition to the lawsuit 
against UNESCO seeking breach of contract damages arising 
from the UBO, there are other contingent liabilities 
relating to lawsuits brought by some 45 contractors who 
allege that UBO has not made required social security 
contributions. 
 
10. (C) APPARENT CONFLICT OF INTERST FOR THE DEPUTY 
DIRECTOR-GENERAL.  Parsons reported that DDG Barbosa has so 
far failed to recuse himself from making senior level 
decisions regarding the UBO, and, worse, has in fact 
approved retroactively irregularities cited by the auditors 
and even visited a previously unauthorized satellite office 
of the UBO.  Parsons also told us that Barbosa unilaterally 
lowered the overhead charges on extra budgetary funds 
received by the Sao Paolo office from five to three 
percent, thereby causing a loss of over $600,000 to UNESCO. 
 
11. (C) COMMENT.  The combined effect of these various 
strands of actual and/or apparent irregularities has cast 
an even darker cloud over the Brasilia field office.  This 
cloud, if anything, would seem to compel more urgent and 
closer Executive Board ?due diligence? scrutiny and 
continued monitoring in the interest of Member States? 
oversight responsibilities and UNESCO?s reputation.  It 
seems increasingly clear that there remain a number of 
serious matters that need to be fixed at that office, 
despite the Brazilian government?s objections and its 
preference that they be minimized.  At the same time, on 
other important UNESCO issues (such as the education sector 
reform initiative being implemented by the ADG for 
Education, an American), we need Brazil?s support in order 
to achieve important USG goals for UNESCO.  We also need to 
walk a fine line with Barbosa, who has been a great help to 
the U.S. during the on-going review of the UNESCO science 
sector.  In addition, the effect of a hard-ball approach on 
the Brasilia office could affect our bilateral relations 
with Brazil.  We thus need to calibrate carefully how we 
play this issue, bearing in mind that the Executive Board 
meetings begin on September 26.  At the last Executive 
Board few other states supported us; most of our allies 
were conveniently out of the room or had gone home when 
this issue came up late in the evening.  The Brazilians and 
Uruguayans pushed back hard.  We would expect the 
Venezuelans to join them this time. 
 
12. (C) ACTION REQUEST.  In view of the foregoing 
discussion, please review previously drafted guidance on 
this issue and inform Mission soonest how firmly we should 
push at the EB meeting to uncover the full extent of 
irregularities at UBO and what recommendations we should 
put forward and/or support to resolve those concerns in a 
credible, effective way.  At a minimum, the Mission 
believes that we should support retention of the UBO issue 
on the EB agenda for further monitoring and reporting at 
the spring Board meeting and not in one year as the present 
draft proposes. 
 
OLIVER