The UN World Food Program says its former Cambodia director Rebecca Hansen's swift

action in dealing with a widespread and systemic fraud involving rice destined for

the poor, "has been praised by the donor community as a model of transparency".

Asked by the Post why the WFP was initially unable to detect anything despite tipoffs

and WFP-branded bagged rice being openly sold in local markets, Ram Saravanamuttu,

acting Country Director, said: "On the contrary, WFP did uncover the fraud after

receiving initial and somewhat sketchy reports from one individual and the national

media."

The investigation began on February 28 when an unscheduled Saturday delivery from

a warehouse rang alarm bells. Several trucks did not arrive at the intended destination.

Saravanamuttu said: "Our investigation was exhaustive, involving inspectors

from WFP headquarters and teams of independent engineers. Around the world, WFP automatically

investigates reports of WFP rice being sold in commercial markets.

"In some cases, it is a question of small numbers of beneficiaries selling their

ration because they have other priorities, but in Cambodia we were facing a widespread

and systemic fraud involving many people other than our beneficiaries. It was difficult

to prove, but we did prove it and the appropriate steps are now being taken.

"It is extremely disappointing to learn that the neediest people in the country

are being deprived of humanitarian assistance. Many more Cambodians could have received

food aid and benefited from new roads and irrigation ponds had it not been for the

actions of those involved."

The diversion and coverup network involved a still unknown number, but possibly as

many as 100 people, including WFP staff, trucking companies, rice traders, Government

officials from two ministries, and commune, district and provincial authorities.

An estimated 4,000 tons of rice valued at $2 million, destined for the Food For Work

(FFW) scheme for poor rural areas, went missing over a 15-month period from January

2003 to April 2004. The extra rice was requisitioned with flawless paperwork from

WFP warehouses by the conspirators, by inflating road and canal building work specifications

and creating "ghost" workers.

Hansen said there was no evidence of a mastermind.

The Government has accepted responsibility and agreed to compensate WFP, and punish

offenders, but it is carrying out its own rigorous investigation, which includes

rechecking the WFP's own physical measurements of FFW work sites.

The FFW scheme operates in 12 provinces and typically involves 1,300 different work

sites at any time.

The Post put further questions to WFP's Saravanamuttu:

Post: How did WFP modify its control systems as a result of the fraud?

Saravanamuttu: "WFP strengthened its verification of the completed FFW projects.

To give you a few examples, WFP staff travelled to all the FFW project sites to see

whether the finished work conformed to the planned dimensions. The staff made sure

the names on beneficiary lists matched with real people and conducted a comprehensive

interview with them to find out whether they actually worked on the project and if

they did, whether they received their full entitlement of food. The release of food

from our warehouses now requires signatures from three people going up to the top

of the command chain. At the same time, WFP is working with the Government on safeguards

for the future. The goal is to make the FFW system immune to fraud."

Post: How many staff have been fired or resigned, at which locations; how many more

do you estimate will go?

Saravanamuttu: "Seven staff members have so far have either resigned or been

fired in connection with the fraud, both in our office in the capital and in all

three of the WFP sub-offices. We are continually monitoring our distribution procedures

for deviations, and while we hope that it will be unnecessary, we will take action

against any other staff members implicated in the incidents."

Post: What is the current operational status of the FFW scheme; has it virtually

ceased pending outcome of the Government investigations?

Saravanamuttu: "After the first diversion was confirmed on 28 February, WFP

suspended all new FFW projects. Our new relief operation is scheduled to go into

effect later this year. The new activities will not begin until we are confident

that the system will not be tampered with. Those projects already in progress have

continued, but under very strict surveillance and monitoring.

"We are working with the RCG on the investigation. We share information with

their officials but we have not received a formal report from them as such."

Post: A Government spokesman has publicly stated they have found significant flaws

in the WFP work site measurements and estimates; do you expect this will result in

a much reduced compensation offer to WFP.

Saravanamuttu: "We are working with the anti-corruption unit of the Government

in a spirit of cooperation and with the shared goal of ensuring that the generous

contributions of donor groups get to the needy people of Cambodia. It is inevitable

that there will be discrepancies in our respective data but we are agreed on the

need to arrive at the most accurate picture of the diversions so full compensation

can be made."

Sean Visoth, spokesman for the Government investigation, said he had nothing more

to say at this stage.

Rebecca Hansen, having completed her three year assignment as country director, left

Cambodia on August 27 to take a up a position as director of human resources at WFP

headquarters in Rome. She said her departure was not related to the fraud.

In our original story (August 27) some paragraphs had to be edited out for space

reasons, including the following:

Post: You say you have been open and transparent with stakeholders; why did you deny

knowledge of a major theft racket when the Post made two inquiries in April and May?

Hansen: "Because I was not asked whether we had discovered a major fraud. The

reporter asked about one truckload going missing. The fact is there was an accident

and the driver panicked, the load disappeared and the company reimbursed us for the

full amount of $2,500. Your other inquiry was about whether we had changed our FFW

operational and distributions systems and I said we were working on changes."

Following publication of the Post story, Son Chhay, National Assembly (NA) member,

representing the Sam Rainsy Party, issued a statement and series of questions September

1 to Heng Samrin, acting president of the NA.

The statement referred to recent World Bank and IMF reports raising concerns about

corruption discouraging foreign investment and how the country's public image had

been further damaged by revelations in the Post of a major fraud involving the WFP

and Government ministries.

Son Chhay said he wanted to see the Government taking effective measures to curb

and reduce corruption.