The U.N. Food Programme's Rampant Corruption

The foreign-aid industry has had a bad news cycle. First, British newspapers were consumed with a spat between the British Broadcasting Corp. and Live Aid founder Bob Geldof over a BBC report that tens of millions of dollars of aid to Ethiopia during the 1984–1985 famine were used for arms. Now a more current and equally egregious scandal involving the world's largest humanitarian agency has spun out of Ethiopia's neighbor Somalia. A U.N. report released last week paints a damning portrait of the World Food Programme's operations there: an estimated 50 percent of food delivered by the U.N. agency is essentially being stolen—not only by the WFP's own personnel and contractors, but also Somalia's armed militias, some of whom are radical Islamists.

Somalia is not the first crisis for the agency. These new allegations join a series of recent missteps there that have brought its contracting and operations under scrutiny for its role in aid missions around the world, from North Korea to the Horn of Africa. And the report sent the U.N. backpedaling in its war of words with Washington over the Obama administration's decision to cut aid to Somali operations last year. What is going on at the WFP?

The ugliest revelations are in the report's details. Three Somali businessmen won about 80 percent of the agency's $200 million in transport contracts last year, in what is described as a 12-year-old "de facto cartel." One of them, Abdulqadir Nur "Enow," apparently staged a hijacking of his own trucks in order to sell the food. In another case, the report cites witnesses saying Enow's company sold hundreds of thousands of dollars of food aid in local markets, an outcome made possible by the fact that WFP depended on a local agency run by Enow's wife to verify his deliveries. Meanwhile, a second WFP trucking contractor, Abukar Omar Adaani, used his wealth to finance a rebel militia that launched an offensive in Mogadishu last year against Somalia's U.N.-backed transitional government and African Union peacekeepers. Adaani also persuaded the WFP to fund a road officials said was designed to give Islamist insurgents access to an airstrip, according to the report.

In response, the WFP has suspended contracts with the three businessmen and accused U.N. investigators of overstating the amounts of its trucking payments. (In January it suspended operations in some areas controlled by Islamist rebels.) The agency didn't respond to a question from NEWSWEEK about its knowledge of Somali trucking magnate Adaani's links to Somali insurgents, and it said that the Adaani-built road it had funded was meant for the delivery of humanitarian aid.

Except these aren't isolated problems. Next door, in Ethiopia (one of the largest recipients of food aid in the world), the WFP has spent millions on contracts with transport companies controlled by the country's increasingly authoritarian ruling party, NEWSWEEK has learned. In the country's eastern, Somali-speaking region, where nearly 2 million people receive food aid overseen by the WFP (along with other aid agencies) and where insurgents have long claimed the Ethiopian government uses food as a weapon, a mere 12 percent of food reached the people for which it was intended in 2008, according to figures from the U.S. State Department.

Meanwhile, for its $1.2 billion, three-year food-relief program in Afghanistan, the WFP's trucking and shipping costs for food were two to three times above commercial rates, according to an analysis by Fox News's George Russell published last month, which noted that less than 40 percent of the mission's budget was actually for food. Likewise an investigation by Russell last year also found WFP's planned shipping costs to send more than a half billion dollars of food aid to North Korea were inflated—prompting the agency to admit that some of its shipping budget went to companies owned by dictator Kim Jong Il's government.

As for the WFP, it says it doesn't know how the United States arrived at its calculations about aid deliveries in Ethiopia. In Afghanistan, it said the need to construct warehouses and replace trucks helped account for its high transit costs, and it notes that donor governments and agencies have funded less than a fifth of its North Korea operations. North Korea's remote location and lack of competition in shipping routes to the country also account for the high costs, Ramiro Lopes da Silva, a WFP spokesman said in an e-mail.

Admittedly, places like Afghanistan and Somalia are some of the most difficult countries in the world for aid agencies to work. Some leakage of aid is inevitable. But the U.N.'s agencies are notorious for their high administrative costs and the opacity of their spending. A 2008 Brookings paper coauthored by William Easterly, a well-known aid researcher, ranked 39 large aid donors on criteria including transparency, overhead costs, and selectivity of aid spending. The WFP, which received $4 billion in donations last year—including $1.8 billion from the United States—tied for last place (though the study noted that data from some agencies was unavailable).

The problem in part may be that U.N. aid agencies see themselves as accountable to the world's governments, which provide 92 percent of the WFP's funding, rather than to the public. Asked for data on its contracts with ruling-party trucking companies in Ethiopia—including one owned by a conglomerate whose No. 2 official is the Ethiopian prime minister's wife—the WFP said disclosing such information to the public would jeopardize "its ability to negotiate the best possible rates and delivery conditions." A spokesman did not respond to a request for how much it pays Kim Jong Il's government to ship food to North Korea.

Indeed, what's so unusual about the report on Somalia aid isn't just its conclusions, it's the mere fact that an independent body conducted a thorough probe into U.N. contracting and published its findings. As the Brookings paper notes, "it is a sad reflection on the aid establishment that knowing where the money goes is still so difficult and that the picture available from partial knowledge remains so disturbing."