UN TO PROBE CRIME AGENCY'S ALLEGED MISMANAGEMENT

10-Day Investigation:

Money Reportedly Given To Sailing Friend Of UN Office's Executive Director

UNITED NATIONS - The United Nations yesterday said it will probe
allegations of mismanagement and questionable spending at its drug and
crime agency, which recently declared war on organized crime.

The investigation will include payments allegedly made through a UN
office in Moscow to Dennis Oren, who has been described as a sailing
associate of Pino Arlacchi, executive director of the UN Office for
Drug Control and Crime Prevention (UNDCP).

Mr. Oren, a Swede, was not formally employed by the world body and had
no drugs or crime-fighting expertise. However, in a recent memorandum,
a senior agency official accused Mr. Arlacchi of approving a project
that would have seen Mr. Oren sail around the world giving information
on drugs to young people over the Internet.

The project, part of the UN's 50th anniversary celebrations, never
took place, reportedly because of questions about who owned the
sailboat Mr. Oren planned to use.

Michael von der Schulenburg, who spent 20 months as director of
operations and analysis at the Vienna-based UNDCP, claimed in a Dec. 6
memorandum that Mr. Oren received funds in his personal account for
the purchase of a vehicle and office equipment.

"This was done although there was no particular project, and although
Captain Oren did not hold a UN letter of appointment," Mr. von der
Schulenburg said in the memorandum, which he attached to a letter
resigning his post.

"It is not clear how much was paid, if Captain Oren had indeed
purchased a vehicle and office equipment, or to which account the
payment was charged."

Mr. Arlacchi, a former member of the Italian Parliament, has said he
and Mr. Oren have met only a few times. He dismissed Mr. von der
Schulenburg's charges as the work of a disgruntled former employee.

In a reply to Mr. von der Schulenburg, Mr. Arlacchi accused him of
"blatantly attempting to damage the image of the organization."

Canada contributes more than US$1-million a year to the UN drug
agency, which launched an international campaign in December to battle
organized crime in Italy, Russia and elsewhere.

Mr. von der Schulenburg's letter and memo, which were obtained by the
National Post, charged that Mr. Arlacchi's management style had
"demoralized ... and paralyzed its staff."

Employees perceived as being disloyal to Mr. Arlacchi are "banned to
the field," Mr. von der Schulenburg wrote. "Nigeria appears to be a
preferred destination for undesirables."

Other critics have come forward among the seven senior officials who
have resigned from the agency in the three and a half years Mr.
Arlacchi has been executive director.

Jean-Francois Thony, a French magistrate who headed the agency's fight
against money laundering, said he quit last year over dissatisfaction
with the work of a consultant appointed by Mr. Arlacchi.

The consultant, an Italian, had been promised US$10,000 for a
particular project. But the material he handed in was not original,
said Mr. Thony.

Tony White, a former Scotland Yard officer who headed the agency's
drug law enforcement division for three years until last May, claimed
in a recent interview that personal contacts rather than merit had
become the ticket to promotion at the agency.

The UN probe will be conducted by the Office of Internal Oversight
Services (OIOS). The probe will begin on Feb. 5 and last about 10
days, said Sandro Tucci, a UNDCP spokesman.

"It's a normal procedure which we asked for and which will form an
additional part of an audit on the direction of the UNDCP," he said.