U.N.’s Water Funds Go Down Drain in Somalia

The United Nations has devised a novel way to deliver millions of bottles of mineral water to the 27,000 multinational peacekeepers serving in the heat of this equatorial land.

Every day for the past month, the United Nations has spent, on average, $2.75 to deliver a bottle of water that it bought for just 46 cents--the end product of a system so convoluted and unchecked that it cost the world body’s member states tens of thousands of dollars daily.

The huge mineral-water markup--which underscores the lack of accountability in a powerful international organization now on the brink of bankruptcy--is partly attributable to the failure of the United Nations’ unprecedented $1.5-billion military operation to secure the Somali capital of Mogadishu and the roads linking it with peacekeeping posts elsewhere in the country.

But as the General Assembly reconvened last week amid cries of poverty and allegations of mismanagement, the U.N. method of buying and delivering so basic a commodity as water to troops in Somalia illustrates a procurement process out of control.

According to interviews conducted in recent weeks with contractors, cargo handlers, pilots and U.N. employees in Mogadishu, Nairobi and Tel Aviv, here’s how the system fails:

Under a contract--never advertised nor bid but quietly given to an Israeli company that for years has supplied U.N. operations elsewhere with duty-free goods--the U.N. office in Somalia buys a 46-cent bottle of Israeli water from a middleman in Tel Aviv.

The middleman spends $300,000 to ship 150 containers that include the water plus other goods he sells for private profit in Mogadishu from the Israeli port of Eilat, through the Gulf of Aqaba, down the Red Sea, through the Gulf of Aden, around the Horn of Africa and finally into Mogadishu.

But the journey doesn’t end there.

The hundreds of cases of Israeli Eden water are then trucked a few miles to Mogadishu’s airport, with some of the cargo sometimes lost to armed looters and hijackers along the way. The remaining cases are placed on leased Southern Air Transport C-130 cargo planes that cost the United Nations $30,000 more a day. The planes deliver the water in a shuttle service between Mogadishu and troops posted in far-off rural towns, largely because the roads are too dangerous for convoys.

After the long and expensive journey, this is the irony: U.S. military commanders, who ran the multinational operation to pacify Somalia until May 4, had been buying and transporting most of their supplies from Kilimanjaro Mineral Water Ltd. in neighboring Kenya for less than half the price--and delivering it for a fraction of the cost.

There’s more. Despite the recent thaw in relations between Israel and its neighbors, several Arab armies participating in the U.N. force refuse to drink the Israeli water, clearly marked with Hebrew characters. So the United Nations is paying tens of thousands of dollars more each month to bring in Arab mineral water for troops from Saudi Arabia, Kuwait and the United Arab Emirates, a middleman based in Dubai said.

There is no evidence to indicate corruption on the part of U.N. officials in Mogadishu, where sources blame the high cost of business on renegade Somali warlord Mohammed Farah Aidid and his guerrilla war against the world organization and its peacekeepers. The urban warfare, combined with a resurgence of clan fighting in the countryside, has endangered the roads that U.S. Marine and Army forces had pacified as key supply routes during their successful campaign to feed an estimated 2 million starving Somalis, which lasted from December to May.

With armed ambushes and land mines a daily threat, the United Nations insists that it has no choice but to charter costly cargo planes to supply distant outposts--a reality it did not anticipate when it awarded the Israeli contract.

(U.N. officials cited the same justification for an even more costly daily helicopter taxi, which costs tens of thousands of dollars to shuttle employees on leased Russian helicopters from their residential compounds in Mogadishu to the sprawling U.N. headquarters a few miles away.)

But beyond the issue of procurement, supply and logistics, there is a broader system of self-interest built into the overall U.N. budget for the Somalia operation, the most expensive mission in the history of U.N. peacekeeping and one that commanders here have billed as a blueprint for future operations. The budget clearly shows that the overwhelming majority of the $1.5 billion allotted for Somalia will go simply to cover the U.N. peacekeeping mission; less than one-tenth of it is earmarked for Somali development projects.

Most of the money, in fact, will go to governments of the 28 nations that sent troops here. And most of the rest is allocated to private contractors supplying logistics support for troops--contractors such as Texas-based engineering giant Brown & Root Inc. and to dozens of smaller companies like Israeli-owned Classica Overseas Ltd., an offshore company created for tax and logistics reasons on the Mediterranean island of Cyprus by the Israeli company Classica International Ltd.

In a recent interview in his small office at Tel Aviv’s Jaffa port, Classica President Gulio Hassan confirmed that he never bid on the U.N. mineral-water contract and that it was never advertised. It was part of a larger contract he signed with the United Nations in April. That was before U.S. Marine commanders turned over the Somali operation in May, recommending, among other things, that the world organization continue to buy its drinking supplies not from Classica but from Kenya’s Kilimanjaro Mineral Water.

The contract between Classica and the United Nations is, in Hassan’s words, “very open-ended.” It reads, in part, “Classica Overseas Ltd. has been appointed as duty-free shops supplier” for the U.N. mission in Somalia. Hassan confirmed that, under contract, his company has supplied everything in Somalia from duty-free cigarettes, liquor, candy bars and ballpoint pens for troops to bulletproof vests for civilian U.N. employees.

But Hassan also confirmed that the long-distance water operation he and the United Nations have designed for Somalia has been beset by problems, among them the breakdown of the Egyptian vessel that carried Classica’s first water shipment to Mogadishu. The delay of several weeks last June caused a crisis among U.N. troops and forced Classica to buy an emergency supply--from Nairobi-based Kilimanjaro.

“Really, we are losing money on the water,” Hassan insisted, adding that his company is making larger profits on supplying duty-free goods to U.N. operations in Lebanon and elsewhere in the Middle East. When asked why, in the face of problems, he continues with the Somalia contract, he said: “Because I will make money. Now, it’s investment. By the end, I make money.”

Under a procurement system that is largely free from any independent scrutiny, the U.N. relationship with Classica has produced little criticism outside a small circle of suppliers and contractors in Nairobi and Mogadishu, including cargo plane contractors, who roll their eyes at the seeming absurdity of their daily water-delivery missions, and among Kenyan business people like Robert Linck.

Linck is managing director of Kilimanjaro, which is Africa’s largest provider of mineral water. He said U.S. forces had concluded that Kilimanjaro was the best of more than three dozen samples tested when U.S. commanders set up their huge operation here in December.

Linck’s bottom line: The United Nations could buy water from him for far less and deliver far more of it throughout Somalia for the same price. But, he added, no one from the United Nations ever formally asked him.

In an interview last month, Linck said that the U.N. procurement officers in Mogadishu and Nairobi informally approached him for a price. “They said they wouldn’t go higher than $3.50 a case for 12 1.5-liter bottles--delivered in Mogadishu,” he said. “I could come close, but I couldn’t match that.”

Apparently, neither could Classica. Hassan said in an interview that he is charging $5.50 a case--$2 more than the price quoted to Linck.

Further, the leased planes that deliver the Israeli water from the Somali capital to outlying towns fly empty every day from Nairobi to Mogadishu, where they pick up the stockpiled Israeli water. If Kilimanjaro had won the contract, the same aircraft could bypass the war-torn capital entirely, carrying twice as much water each day across the shorter distance from Nairobi.

“I find the whole thing difficult to believe,” concluded Linck, who said he lost millions of dollars in investment preparing for the U.N. contract. “It was a pleasure working for the Americans because they were so efficient. You know, we weren’t even allowed to take their procurement people out to dinner” because of the appearance of impropriety.

As for the U.N. officials? “Actually,” he said, “I’m really quite pleased that I don’t have to deal with them now. I don’t know what’s going on in there. I don’t think anyone does.”

* SOMALIA EFFORT CRITICIZED: Sen. Sam Nunn questioned the U.N. manhunt for warlord. A12