Review Finds WIPO Management Fraud Possible; Members May Act

An independent review of management practices at the UN World Intellectual Property Organisation found that widespread allegations of fraud in recent years could have occurred, and made recommendations for improvements.

The finding is likely to lead to further action by WIPO member governments to strengthen safeguards against illegal or unethical practices.

“Member states are keen on this,” said Brooks Robinson, spokeswoman for the United States mission in Geneva. “The US has been pushing for a year. We’re not about to stop. This is very high on our agenda.”

The allegations, involving financial and personnel practices reaching back to 1996, came from within and outside the fast-growing organisation. Some allegations relating to Geneva construction contracts involve millions of Swiss francs, and are the subject of an ongoing criminal investigation by the Swiss federal authorities.

The review was conducted during autumn 2005 by the Geneva office of international consulting firm Ernst and Young. The 28-page Ernst & Young report on WIPO states:

“We cannot conclude that certain employees of WIPO and the third parties concerned might have committed any fraud or dishonest acts. Experience shows, however, that certain weaknesses in the management of the organisation, such as described in this report, constitute a factor which might lead to irregularities being committed.”

Robinson said the United States does not have specific knowledge of criminal acts at WIPO, but “we have observations that the management situation is inadequate. That’s at the heart of our concerns.”

She said that normally any organisation with questions raised about its practices would have inspectors and regulators “down its throat the next day.”

Old and New Allegations Surface

During its review, Ernst and Young also encountered new allegations, it said. These were in addition to some that came out in the international press in spring 2005. Allegations investigated include possible bribery in the selection of a company to renovate WIPO’s headquarters building in 2000. A senior WIPO official allegedly received 325,000 Swiss francs from an individual who allegedly was paid by the winning company. The review includes a detailed chronology of events related to the contract.

These allegations were documented in the October 2005 so-called Volker report of the Independent Inquiry Committee into the UN Oil-for-Food Programme. Ernst and Young recommended WIPO implement overdue recommendations for the construction project made by the Swiss Federal Audit Office.

Other allegations relate to a 2003 contract for the construction of a new WIPO building; the construction of a personal swimming pool and home security system for WIPO Director General Kamil Idris; recruitment and promotion practices for personnel; and pre-approved, abnormally high rental terms for an outbuilding used by WIPO. Additional allegations were made but not delineated in the report, and information has been sent separately to the WIPO external auditor, Ernst and Young said.

About 20 people used a whistle-blowing facility put in place, about 50 were interviewed, and some telephone discussions were held, the firm said.

WIPO Seeks End To Scrutiny

WIPO hopes the review represents the end of the investigation of its practices. The organisation issued a press release on the day the review was sent to member states highlighting the absence of a concrete finding of fraud. But WIPO failed to mention the equally clear finding that an environment exists for such fraud and that many of the allegations could not be disproved.

“This report brings to an end the recent allegations and unfounded attacks on the organisation that have appeared in the news media,” WIPO declared.

But WIPO members, including the Group B developed nations and several large developing countries, have pressed for a full reckoning of WIPO management situation and are unlikely to let the subject rest.

The US mission’s Robinson said that WIPO’s press release says “they found nothing.” But, she said, “Our take is quite the opposite. This report is very damning.”