FAO - CONFERENCE (31st Session)

The Advisory Committee on Investments (ACI)

65. - The ACI has been in existence since 1977. Its original terms of reference, which still applied at the time of writing this report, called for the committee to "advise the Director-General, on a confidential basis, on:

various types of investment media suitable for FAO, including but not limited to money market investments;
the list of banks and financial centres to be used by FAO in making money market investments and investments ceilings for individual banks and financial centres as considered appropriate in the light of the current developments;
financial returns and exchange rates considerations applicable to 1. and 2.;
any other related matters referred to by the Director-General."

Apart from FAO and WFP senior staff, other committee members were the representatives of the World Bank, the International Monetary Fund, the Bank for International Settlements and the Bank of Italy, respectively. In 1997 a representative from the Organization's custodian was added, but dropped from the committee in 1999.

66. - According to the Organization, the ACI has been functioning well as a committee that advised the Treasury Unit and the Director-General on issues of treasury strategy and policy, as well as giving some specific technical guidance. It did not see the ACI functioning effectively in a monitoring role. My staff noted however, that the ACI, which was meant to meet twice a year, had only met once in recent years (24^th Session on 18 May 1998, 25^th Session on 28 May 1999 and 26^th Session on 26 May 2000). Furthermore, the committee members had little opportunity to follow up on the implementation of their recommendations since the minutes of the ACI were transmitted to them usually months after the meeting. In addition, the external committee members received no additional information in between annual meetings. It led the ACI to request, at its 26^th Session on 26 May 2000, "to be kept abreast of any significant changes of FAO investments activities before meetings".

67. - I strongly support this request to keep the ACI regularly informed on investment activities. I further recommend that consideration be given to reinforce the role of the ACI by:

reviewing its terms of reference;
issuing the meeting records in a timely manner;
re-examining the committee's composition and limiting its membership to external members only.

As already observed by the Organization's consultant in his 1998 report, the major function of the ACI should be, in my opinion, to have outside members give senior management an independent opinion on the policies, operations, performance and plans for the investment function. I noted that assistance on technical matters was spontaneously offered at the above-mentioned 26^th Session.

The internal committees

68. - The new investment policy guidelines and procedures approved in June 1997 provided for the establishment of the following two internal oversight committees:

a Credit Committee (CC), which responsibility was to determine and review credit guidelines and exposure, and
an Investment Committee (IC), which was to be responsible for reviewing the Organization's overall investment strategy and performance.

The Director-General approved the establishment of these two committees in September 1997. This constituted an improvement compared to the previous situation. The FAO long-term investments were supposedly under the oversight of the UN Investment Committee (UNIC), but only superficial supervision had, in fact, been exercised for years. The improvement was, however, only apparent since the two new internal oversight committees had none or very little activity in 1997 and 1998.

69. - Even though the UNIC exercised little supervision, its decision in 1998 not to continue overseeing FAO long-term investments led to a review of the overall committee arrangements. At its 24^th Session (18 May 1998) the ACI recommended to fold the two oversight committees into one effective IC. The Director-General agreed to this recommendation on 6 August 1998. In addition to senior FAO management staff, representatives from IFAD and the Bank of Italy, respectively, were to compose the new IC (seven members plus the committee's secretary). The terms of reference were set as follows: the committee was to recommend to the Director-General investment policies and strategies for each distinct pool of assets, as well as credit risk policy and specific treasury hedging and borrowing transactions.

70. - It was only on 17 May 1999 that the first IC's meeting was organised. A representative from the consulting firm contracted by FAO for treasury matters was also in attendance. Since he also attended the subsequent meetings, I recommend that the committee's composition be formally revised to provide for such. Changes to the committee's terms of reference were discussed at this first Session and it was proposed that the committee be given additional responsibility for recommending:

"the appointment, monitoring and where necessary, termination of external managers on the basis of pre-agreed criteria;
the appointment of such other agents and advisors, including custodian banks, consultants, attorneys, actuaries and accountants as it deems necessary and the determination of appropriate fees for such services."

At the time of writing this report, my staff had not been provided with evidence that the Director-General approved these changes. They were, however, informed that the Director-General was informed of the committee's recommendation through a draft copy of the minutes of the meeting, but through oversight, formal approval was not requested at the time and that it would be corrected.

71. - Two other sessions took place in 1999, on 20 October and 10 December, respectively, but the internal committee had no activity since. It was meant to meet four times a year, but no meetings took place in 2000, and none so far have been scheduled for 2001. I strongly recommend that it resume its sessions as soon as possible. At the time of writing this report, my staff was informed of the Organization's intentions:

to have the internal Investment Committee meet at least half yearly to review the treasury plan of operation and take up any monitoring or performance issues;
to forward the minutes of its meetings to members of the Advisory Committee on Investments.

These measures would be implemented as soon as the staffing situation in Treasury be resolved. [para. 207]

"Oil for food" programme

Audit scope

72. - In 1999 and 2000 my staff carried out a review of the administrative, financial and procurement arrangements of the Programme known as "oil for food" and its implementation by FAO since its origin. The audit was based on questionnaires and interviews with staff in the Special Relief Operation Service (TCOR), the Central Accounting, Reporting and Control Service (AFFC) and the Administrative and Finance Procurement Service (AFSP). It was also based on a detailed review of all the purchase orders issued in 1999 over US$ 1 million (eight in total for a cumulative amount of US$ 22 million). A follow-up of the issues raised by the three internal audit reports previously issued was also conducted.

Background

73. - In August 1990 the Security Council Resolution (SCR) 661 imposed comprehensive sanctions in Iraq exempting food and medicine and established the 661 Committee to oversee implementation of the sanctions. Throughout 1991 the United Nations expressed grave concern over the humanitarian situation and proposed various measures (notably in SCR 706 and 712), which would permit Iraq to sell limited quantities of oil in return for humanitarian supplies. In April 1995, the Security Council adopted Resolution 986 as a "temporary measure to provide for the humanitarian needs of the Iraqi people". The SCR 986 authorised Member States, for a period of 180 days, to permit the import of petroleum and petroleum originating in Iraq sufficient to produce a sum not exceeding a total of US$ 2 billion. The funds this generated were to be credited to an escrow account, called the Iraq Account, to be used to meet the humanitarian needs of the Iraqi population as well as other purposes. After extended negotiations, a Memorandum of Understanding (MOU) was signed on 20 May 1996, between the United Nations and the Government of Iraq.

74. - Under the terms of SCR 986, the revenues raised were divided as follows:

30% to the UN Compensation Fund;
66% to finance the import of humanitarian supplies to Iraq; this component, which was referred to as the "oil for food" programme, was devoted to the 15 central and southern Governorates for 53%, and to the three northern Governorates for 13%. The Government of Iraq was responsible for implementation of the programme in the 15 central and southern Governorates. The UN agencies concerned implemented the programme in the northern Governorates of Dohuk, Erbil and Suleimaniyah on behalf of the Government;
2.2% for the UN costs in administering the programme; this amount was designed to cover, on the one hand, the implementation of the 13% account and, on the other hand, the supervision of the Iraqi Government's implementation of the 53% account;
0.8% for the administrative costs of the UN Special Commission (UNSCOM);
1% to the escrow Iraq Account.

75. - The programme was initially implemented in December 1996 for a six-month period as per SCR 986. Subsequent resolutions extended the programme for an additional six-month phase each, the last one being SCR 1330 of 5 December 2000 (Phase IX). The ceiling of US$ 2 billion on oil exports was maintained for Phase II and III and increased to US$ 5.2 billion for Phases IV and V, but the low price of oil made that unreachable. The SCR 1266 recognised the earlier shortfalls and allowed Iraq to export an additional US$ 3 billion worth of oil in Phase VI. On 17 December 1999, the SCR 1284 removed the ceiling on Iraqi oil export and established the United Nations Monitoring, Verification and Inspection Commission (UNMOVIC) to replace the former UNSCOM.

FAO's role and funding arrangements

76. - Under the above-mentioned framework, FAO was in charge of the implementation of the programme regarding its agricultural component. Like other UN agencies, the Organization supervised the Iraqi Government's implementation of the programme in the central and southern Governorates and directly implemented the programme in the three northern Governorates. The terms and conditions of FAO's intervention were defined by an MOU concluded with the United Nations on 14 and 16 October 1997. Both parties signed a revised MOU on 19 October and 9 November 1998.

77. - According to the revised MOU, allocations of funds were made to FAO biannually:

under the 13% account for the procurement of humanitarian supplies to northern Iraq;
under the 2.2% account to cover administrative and operational costs, including the costs related to observations activities, in central and southern Iraq.

Actual funds were made available to FAO in instalments on the basis of review of FAO's projected monthly cash requirements. They were deposited into the interest bearing bank account opened for such, while a Trust Fund was established to account for them.

78. - As stated in section 250.113 of the FAO manual, "in principle, the Organization makes no financial commitments and disburses no funds under a Trust Fund until funding has been received. Advance financial arrangements may be made in exceptional circumstances". For the Iraqi programme, the FAO agreed to commit funds allocated to it without having physically received the cash. Delays in the transfer of funds requested from the United Nations Office of the Iraq Programme (UNOIP) might therefore expose the Organization to a temporary cash deficit. Such a situation indeed occurred in September, October and December 1998, but did not recur since. On the contrary, the Organization had subsequently the tendency to request more than sufficient advance funding.

79. - In this regard, the UN Board of Auditors noted, in their report on the audit of the escrow Iraq Account for the period ended 31 December 1999, that the UN Treasury granted FAO additional advances although substantial balances of the previous amounts given had not been cleared. More specifically, of the US$ 25 million advance from the 13% account granted in July 1999, only US$ 6,785,602 was disbursed as at September 1999. The granting of another advance of US$ 5 million brought the outstanding balance to US$ 18,214,398 as at 31 December 1999. At the time of writing this report, my staff was informed of the improvements made in determining the level of advance funding. As a result, the cash balance available in January 2001 was in the range of US$ 1.1 million.

80. - As for other programmes or projects implemented or executed by FAO, the difficulties experienced in the implementation of the new management information systems as of May 1999 led to delays in the recording of expenditure. This situation, which made financial monitoring more difficult, affected the reliability of the monthly reports to UNOIP showing disbursements and commitments. Furthermore, these monthly reports from July to September 1999 suffered delays. At the time of writing this report, my staff was informed that action was being taken to correct the delays in recording field expenditures. A mission has been planned for March 2001 to start the implementation of FAS in the field.

Support costs

81. - According to the MOU, FAO was allowed to charge programme support costs at the rate of 3% of the actual disbursements made from the funding provided. This reduced rate (compared to the standard one of 5% for emergency activities) was accepted by the Organization in consideration of the volume and value of the assistance to be provided. As provided for in the revised MOU, these support costs were paid out of the 13% account and 2.2% account, respectively. In its above-mentioned report, the UN Board of Auditors questioned the payment of 3% support costs against both accounts. The Board was subsequently informed that starting with Phase VIII, in July 2000, programme support costs due against the 13% account would be charged to the 2.2% account as well.

Applicable rules and regulations for procurement

82. - According to the article 2.2 of the revised MOU between the United Nations and the FAO, the latter procures the humanitarian supplies agreed by the UNOIP "following the clearance, in each case, of its application, by the 661 Committee for items which are to be imported to Iraq". Article 2.3. of the MOU further stipulates that "all services shall be carried out in accordance with the applicable regulations and rules of the FAO".

83. - However, the review my staff conducted disclosed that the procurement process in place during 1999 for the Iraqi programme diverged from the rules and regulations defined by section 502 of the FAO manual on two points.

The first divergence had to do with the fact that when TCOR prepared a list of items needed, the corresponding purchase requisition was not raised accordingly, contrary to section 502.31 of the FAO manual. It was only the list of items needed that was forwarded to AFSP for processing and submitted to the 661 Committee for clearance, respectively.
The second divergence was related to the Procurement Committee. Its consultation was required above the US$ 100,000 limit in the case of direct procurement (section 502.9 of the FAO manual) and for procurement actions processed after invitations to bid and implemented either through purchase orders or contracts, where specific conditions applied (section 502.103 of the FAO manual). In the case of the "oil for food" programme, however, the Procurement Committee was never consulted beforehand, but only informed post factum.

84. - As a consequence, once the above-mentioned list of items required was forwarded to AFSP, the subsequent sequence of events was as follows:

Following AFSP issuing the invitations for bids, a written evaluation of the bids received was prepared with the input of the TCOR and, if deemed necessary, with the one of the technical divisions concerned. It was only at the stage that the actual purchase requisitions were raised.
Prior to the issuance of the purchase orders, the 661 Committee's clearance normally had to be obtained. In two cases, my staff noted though that the 661 Committee's clearance was only obtained after. However, the change introduced as of mid-2000 prevented such recurrence. From then onwards, the document submitted to the 661 Committee for its clearance was no longer the list of items prepared by TCOR, but the actual purchase orders prepared, although not issued to the chosen supplier.
Within 90 days of their issuance, the relevant purchase orders were forwarded to the Procurement Committee for review with the supportive documents. In one case though, my staff noticed that the Procurement Committee examined the purchase order 144 days after its issuance.

85. - The practice of a post factum Procurement Committee review resulted from the application of a so-called "Emergency procedure", which my staff found questionable. The reason was related to the unclear legal basis of this derogatory procedure, which was initially established in 1992 to deal with the procurement activities covered by the Special Emergency Programme for the Horn of Africa (SEPHA). While procurement was normally effected through Headquarters, it instituted Procurement Missions, which were given exceptional authority to initiate procurement in the field, and provided for a waiver of prior submission to the Procurement Committee for procurement actions in excess of US$ 100,000. In 1994 the procedure was extended to other countries designated at the time as meeting emergency countries and became operative for a certain period of time, renewable if necessary.

86. - In 1996 such emergency procurement arrangements were considered as "on going", with only the number of countries involved being changed on a monthly basis. Although they were included in the "FAO Emergency Preparedness and Response Manual" issued in 1998, they had not been completely formalised in section 502 of the FAO manual. While provisions for emergency Procurement Missions did indeed exist (section. 502.24), the waiver of the Procurement Committee was not provided for. Should the Organization decide to continue with such arrangements, I recommend that they be given a legal basis by amending the present FAO manual. I further recommend that the issuance of the purchase requisitions comply with the existing rules and regulations.

Procurement process

87. - The post factum Procurement Committee review was meant to speed up the purchasing process. Since, at the time of the review, the Procurement Committee met on the second Thursday of each month, the emergency procedure allowed, at the maximum, a time gain of one month in the purchasing process. While it could be considered long in absolute terms, the examination of the eight purchase orders above US$ 1 million, issued in 1999, disclosed that the time gained in doing so was relatively limited compared to the delays of the whole process.

It took the 661 Committee between 12 and 116 days to approve an application for the importation of supplies and equipment into Iraq.
On average, 68 days lapsed between the submission of the application to the 661 Committee and the issuance of the purchase order.
Altogether, 198 days lapsed in average between the submission of the application to the 661 Committee and the actual delivery of the goods.

88. - The review of the above-mentioned purchase orders also disclosed that the suppliers had been chosen on the criterion of the best delivery prime factor in four cases. However, the delivery date mentioned in the purchase order had been met in only one case. For the four remaining purchase orders, which had been awarded on another criterion, the delivery date had never been met. Altogether, the delays encountered ranged from nil (one case) to 88 days (one case), with a delay above one month for 63% of the cases. It should be further noted that, in three cases, these delays were computed on a partial delivery date. In the absence of such information in the file, the delays up to the complete delivery could not be computed. My staff also noted that the reasons for the late deliveries were not always kept on file.

89. - According to the tender specifications applicable to all the orders reviewed, if goods did not reach final destination by the promised date, FAO would apply a penalty clause of 2.5% per week. This clause was in fact applied in one case, for which the supplier was charged with a penalty of US$ 5,800. In another case, for which the delay was also attributable to the supplier, a discount of US$ 14,000 was obtained. When the cause of delay was the late approval of the 661 Committee or a change of entry point, the clause was not applied. It was also not applied when the delivery was only partial. In one case, my staff could not determine if the waiver was justified or not since the reasons for the delays were not known. I would, therefore, recommend that this information always be kept on file, and that the practice regarding the penalty clause, which was currently left to the discretion of AFSP, be formalised.

90. - Between 1996 (beginning of the "oil for food" programme) and 2000, the global value of procurement actions processed by AFSP almost tripled from US$ 61 million to US$ 156 whilst the number of staff decreased by 14% from 50 to 43. My staff could not ascertain whether, before the Iraq programme, AFSP was adequately staffed or not. They merely noted that the share of the Iraqi procurement in the overall procurement had risen from 7%, in 1996, to 65%, in 2000. They also noted that the procurement actions related to the programme were not only more important in value but also more complex to process.

Conclusion

91. - The "oil for food" programme was initially designed, under SCR 986, as a temporary measure. Its subsequent numerous renewals changed the nature of the operations. From the simple distribution of seeds and fertilisers in Phase I, FAO has moved on to implementing short term humanitarian rehabilitation programmes, such as agricultural irrigation, drought relief, livestock production, extension services, agro-meteorology and agro-industries rehabilitation. The combination of the surging oil prices and the removal of the ceiling on Iraqi oil export by SCR 1284 made the programme reach unprecedented financial importance. It has become the largest programme ever managed by FAO in its history. At the time of writing this report, my staff was informed that financial, technical and managerial measures were being taken by FAO to face the increasing size of the Programme and strengthen its financial control, both in the field and at Headquarters. An evaluation of these measures will be carried out by my staff during the three-week field mission they will conduct at the end of March 2001.

TeleFood

Background

92. - In 1997 the FAO decided to launch, within the framework of the World Food Day, an initiative to raise public awareness on food security and appeal for financial contributions in support of a programme for grassroot-level projects against world hunger and malnutrition. This initiative was publicised through a worldwide television programme known as TeleFood and was repeated in 1998 and 1999, each campaign for collection of funds beginning on 1 April and ending on 31 March of the following year. The 1998 campaign produced US$ 1,440,000 coming from 43 different countries (five countries collecting more than US$ 50,000 and 25 countries collecting less than US$ 5,000). For the 1999 campaign, an amount of US$ 2,790,000 was recorded as at 31 December 1999. It was received from 24 different countries (one country providing more than US$ 1 million, three countries collecting more than US$ 50,000 and 16 countries less than US$ 5,000).

93. - In my previous report, I had mentioned that 87 bank accounts devoted to TeleFood operations were opened in 1997. Since then the Organization managed to reduce the number to 62. Further reduction was not possible because of the policy of having separate Headquarters controlled bank accounts for Telefood collections, in order to keep the collection process separate from the FAOR accounts. I had also recommended that, should special audit arrangements be deemed necessary, their implementation be more strictly monitored. In fact existing local audit contracts were extended to include TeleFood.

Reporting

94. - The TeleFood contributions were recorded in the TeleFood Special Fund (TSF), which was treated as a Trust Fund. In my opinion, a reporting under "Other Funds" would have been more in line with the Conference Resolution 3/97, which authorised the establishment under Financial Regulation 6.7 of:

"a) A special fund to receive the proceeds collected through the TeleFood appeal, which proceeds will be used for the purpose of financing concrete grassroot-level projects, including those established under the Special Programme for Food Security, to help the poor farming families in the developing world produce more food; and
b) A trust fund to receive sponsorship and other private and public voluntary contributions for financing the costs relating to the promotion and coordination of the TeleFood operation worldwide".

Furthermore, the provisions in the FAO Manual for non-governmental Trust Funds and private sector donors did not apply to TeleFood voluntary contributions since the donors could not approve a well identified project through any agreement specifying the "obligations of the donor and FAO for implementation of the project".

95. - My staff noted that some private donors, among the most generous ones, (at least three) requested the funds to be spent in some determinate areas or countries. Their intention, which has not been formalised in a written agreement but only expressed in letters to the Organization, was duly taken into account in the overall allocation of the funds. As a consequence, within the TSF, three project accounts were opened to enable a separate reporting requested by those donors.

96. - In view of the above, while acknowledging that neither the Conference Resolution 3/97 nor the Financial Regulation specified what a Special Fund is, or how it should be recorded, I recommend that income and expenditure for TeleFood projects be reported in the FAO's Books as "Other Funds". I also recommend that a clear distinction be made between true TeleFood proceeds, to be recorded under the above mentioned Special Account, and other proceeds, which considering the special requirements of the donors should be subject to a Trust Fund Agreement.

Use of contributions

97. - As at 31 December 1999, 461 micro projects were approved using funds collected from the first two TeleFood events since the proceeds of the 1999 campaign were only programmed in 2000. The spending on those projects was, however, limited with only US$ 2.29 million expenditure recorded as at 31 December 1999 against US$ 3.69 million total proceeds. If, altogether, only 62% of the contributions had been spent, the ratio amounted respectively to 76% for the 1997 campaign contributions (US$ 1.71 million expenditure for US$ 2.25 million proceeds) and 40% for the 1998 ones (US$ 576,000 expenditure for US$ 1.44 million proceeds). With the inclusion of the 1999 contributions, the ratio decreased to 55%, as at 31 December 2000, with US$ 3.6 million expenditures for US$ 6.4 million contribution.

98. - Contrary to the instructions issued to the FAO Representatives, the review of the financial statements disclosed that small amounts were disbursed for consultancy, office stationery, office supplies and duty travel. Actual amounts could have been larger since, although the chart of accounts allowed a detailed description of the expense, a lot of transactions were posted as "miscellaneous" or "other field supplies". As a consequence, more than 50% of the total expenses for the biennium could not be immediately, or clearly, identified. Moreover, the procedures for reporting were only defined in December 1999 but never implemented since then. My staff was informed that the new procedures that were issued in 2000 would provide easier reporting and control of the financial situation of each Telefood project in each country.

99. - According to a decision taken in May 2000, the 1997 campaign funded projects were eventually closed in November 2000. The 1998 campaign funded projects were expected to be closed in May 2001, and the remaining funds re-programmed. My staff was informed that, as underlined in the latest version of the guidelines for Telefood projects, all projects should from now on be closed three months after their planned project completion date and that the accounts for each annual campaign would be closed on a year to year basis.

Cost of the collection of TeleFood funds

100. - The way the TeleFood fund raising was managed entailed the following three categories of costs:

expenditure charged to the sponsorship Trust Fund;
expenditure directly supported and paid by non-cash contributions, which were not recorded in FAO's books and did not appear in the financial statements; and
expenses incurred by the Organization using its own resources (human and material) to design and promote the operations.

101. - The first category of costs had never been clearly identified. The amounts charged to the sponsorship Trust Fund as at 31 December 1999 were very low. Only the sponsorship contributions related to the 1999 Italian TeleFood event were registered in FAO's Books. Cash contributions received and used in the field to fund local TeleFood events had not been recorded either as a result of lack of detailed procedures issued to FAO Representatives. The reconciliation carried out on an ex-post facto basis disclosed that the cash element of sponsorship contributions to FAORs has not been significant so far (US$ 95,000 for 1998 and US$ 57,000 for 1999). Nevertheless, they should be accounted for.

102. - The expenditure directly supported by the non-cash contributions (second category of costs) could be very significant and equivalent to a substantial financial contribution. From a management point of view, the most substantial contributions in-kind, especially when they were associated with cash sponsorship donations to cover the expenditure of an action directly in FAO's name or guidance should be valued and retained in the information and reporting system for TeleFood.

103. - As far as the expenses incurred by the Organization using its own resources (third category of costs) were concerned, it should be noted that TeleFood was developed as an extension of the World Food Day, and that these two events generated common costs. For the 1999 campaign, over US$ 1 million was spent for both events (US$ 480,000 for the cost of staff assigned predominantly to World Food Day/TeleFood and US$ 550,000 for non-staff costs). The fundamental objective of these events being raising awareness on food security, the raising of funds from voluntary contributions was only a side-component. As a result, no direct comparison between, on the one hand, the rather limited proceeds of the fund-raising operation (US$ 2.79 million for the 1999 campaign) and, on the other hand, the overall cost (in terms of both efforts and funds) could be made.

MANAGEMENT MATTERS

Human resources management

Audit scope

104. - In mid-1999 my staff audited the human resources management in FAO. They analysed the evolution of the FAO workforce as well as the policies implemented by the Organization to manage it according to set objectives or constraints. They also examined the distribution of responsibilities and the role of the Personnel Division (AFP), at the time, with a focus on the recruitment procedures. The following paragraphs cover the period 1998-99. Since then there have been a certain number of organisational changes and measures taken, in particular the streamlining of the procedures. They have been incorporated in the paragraphs where appropriate in order to give a more up-dated view of the human resources management of the Organization.

Human resources organisation

105. - The organisation of the human resources management has been greatly modified since 1995, as a result of the structural changes in Headquarters and the decentralisation process. The establishment of Management Support Units (MSUs) in Headquarters and subsequently in the Regional Offices had led to a change in the functions previously performed by AFP. Consequently, at the time of the review, the delineation of roles was as follows:

The AFP had responsibility for human resources strategy, policy and overall human resources planning and development.
The Department MSUs were in charge of the administration of the personnel, which essentially covered the area of processing staff entitlements.

Initial transitional difficulties were noted as the MSUs and AFP needed time to handle properly their new functions. As the MSUs received increased responsibilities, new personnel units had to be set up in each Department and subsequently in all the Regional Offices. The AFP also had to adapt to its new role. In the absence of a Director of the Personnel Division, the post remained vacant for nearly one year, from June 1997 to June 1998, the Assistant Director-General (ADG), Officer-in-charge, ensured continuity of management direction.

106. - Contrary to what was prevailing between AFP and the out-posted Officers before the introduction of the structural change, there was no hierarchical link between AFP and the MSU's Personnel Officers who were only accountable to their Department Head. As the responsibilities were split among different units, uniformity of treatment of staff and insurance of the compliance to the Organization's rules required proper co-ordinating and monitoring tools to be established. The Personnel Officers Meetings (POMs), which replaced the former Meetings of Unit Personnel Officers (MUPO) as of November 1995, regularly gathered together all Personnel Officers from the Headquarters MSUs with Personnel Officers from AFP. They have progressively become an instrument for building common approaches to complex problems, interpretation of rules, standardising practices and changing procedures.

107. - With the implementation of Oracle applications in May 1999, the MSUs have been subsequently dismantled and revamped into one single Management Support Service (MSS) within the Administration and Finance Department (AF). The change, which was effective September 2000, did not have any impact on AFP's functions. The personnel transaction responsibilities, previously exercised by the MSUs, were in fact re-centralised in the MSS with the objective of ensuring greater consistency of treatment.

Evolution of the number of FAO staff

108. - Since 1995 the financial situation of the Organization resulted in a significant reduction of its staffing. The decrease was particularly high for project funded posts (minus 43%) but also involved, to a lesser extent, (minus 15.5%) those established under the Programme of Work and Budget (PWB). Such a drastic reduction was reached through a strict control over staff requirements. As far as the PWB funded posts were concerned, this control was performed through the biennial budgeting cycle and the Establishment machinery. Moreover, since 1994, measures were taken to freeze the recruitment process. Exceptions required a submission to the Director-General, through the Establishment Committee. Since then, those measures have been relaxed for professional posts only, within the limit of the authorisation given by the Conference in terms of established posts for the biennium. But they have been maintained for all general service posts with only a few exceptions granted. In fact, my staff noticed that, at the time of their review, recruitment of only six general service external candidates was allowed in 1998.

109. - The policy pursued regarding the type of contracts granted upon appointment had been another tool used to control the staffing levels. Prior to 1990, the duration of the contracts depended on the classification of the posts to be filled. Some staff members directly benefited from a continuing appointment while others always remained on fixed term contracts. Subsequently, it was decided that all appointments should be granted on the basis of fixed term contracts subject to renewal or conversion after six years of continuing satisfactory service. Then, in 1996, the Director-General decided that fixed term contracts should coincide, as far as possible, with the end of the biennium for staff members assigned on established posts included in the PWB. Confirmed in 1999, this policy provided the Organization with some flexibility to adjust the volume of their fixed term-contracts to the resources available.

110. - However, the ratio of continuing versus fixed term contracts remained high. Regarding the posts funded on the PWB, it remained nearly unchanged since 1995 (around 63%) on the whole, but with heterogeneous situations between Headquarters and the field. In Headquarters, the already high ratio of continuing contracts continued to increase from 76.8% in 1995 to 84.8% in 1999. In the field, it remained at a low level, around 25%. This was mainly due to the general service staff, with a ratio of continuing contracts of more than 96% for Headquarters and only 17% for the field. This reflected the different rules applied for the granting of continuing contracts between Headquarters and the field. With regard to the local staff of field offices, unlike the situation at Headquarters, if it became necessary to close the office, there would be no possibilities for redeployment. Accordingly, no continuing appointments were granted. The same policy applied to staff members serving on field projects, the rationale being that projects and project funding were of a "determined" duration, and, especially for professional staff, of a very specialised nature.

111. - With nearly all general service staff being employed on a continuing contract, instruments other than natural attrition and the above-mentioned freeze on recruitment proved necessary to downsize staffing in line with budgetary constraints. The Organization had to enter into specific redeployment exercises aiming at the separation of their staff in excess of their financial resources. To monitor the redeployment, the Task Force created in 1995 was authorised in 1996 to implement measures in order to separate those staff members whose internal reassignment proved impossible. Such terminations were necessary on a significant scale. They were concluded directly with the incumbent whose post was abolished or, within triangular arrangements, with the participation of staff members whose post was not abolished but who agreed to take voluntary redundancy. For the 1996-97 biennium, 102 agreed terminations due to abolition of posts or restructuring were concluded, accounting for US$ 4.43 million.

112. - For the 1998-99 biennium, in its Resolution 7/97 the Conference "noting that the Programme of Work and Budget (PWB) [had] been approved with a zero nominal growth, noting further that this budget [implied] the redeployment or separation of staff members" established a special US$ 12 million spending authority. As disclosed in the financial statements, redeployment and separation costs amounted to US$ 10,576,000 for the biennium. To avoid the renewal of such additional costs in an insecure financial environment, and with the prospect of the foreseen replacement of most of Headquarters workforce in the coming years [paras. 124 to 125], I recommend that the Organization use all the tools available such as human resources planning, managing recruitment levels and types of contracts to allow more flexibility.

The use of other human resources

113. - The employment of external collaborators was an area where FAO procedures and practices were found to be particularly complex. There have been eight reports on the issue since 1980. All of them made tough criticisms and strongly recommended simplification and consolidation of the different contractual arrangements. In fact, to hire external collaborators, the Organization used at least seven contractual arrangements. As they were originally designed to meet specific needs, they had different characteristics in terms of status, entitlements or payment procedures. The picture was made more complex as some of the contracts were used in the specific context of the Partnership Programme, with different approval processes, funding or reporting requirements. Following an extensive consultation process involving technical divisions, a new pro forma contract with five annexes was drafted. It was planned to be implemented in January 2000. An administrative circular was supposed to announce to the Organization the introduction of the revisions, but at the time of writing this report, it had still not been issued.

114. - The extreme diversity of FAO contractual arrangements resulted in a very unclear picture of the number of consultants hired and the expenses for the Organization. This was due to the fact that in the legacy systems (Finsys/Persys), different payment channels for consultants coexisted some being paid through Persys as regular staff, others from the traditional payable module of Finsys. Since no automated process ensured the consolidation of data, the information had to be gathered by AFP from the MSUs processing the transactions. The process not only proved to be cumbersome and costly, but also failed to generate comprehensive and timely issued reports. As a result, my staff could not be provided with any reliable figures for the 1998-99 biennium. The use of Oracle for the complete biennium should hopefully solve the problem for the 2000-01 one.

115. - Based on the few figures provided by the Organization, the comparison between the expenditures recorded in 1995 and 1998 as "other human resources" in Finsys, showed an increase of 9% in the overall use of external collaborators and 13% for the consultants only. This increase reflected a conscious policy of the Organization to give managers (budget holders) greater discretion to deploy resources in line with their needs. Contrary to the recruitment of staff members, which was decided by the Director-General through a complex administrative machinery [paras. 126 to 130], managers had the authority to hire consultants within the limits of their budget. Many deliberately kept particular professional posts vacant for a period of time in order to deploy consultants on a series of short-term assignments. Recruitment delays and difficulties (identification of suitable qualified candidates for example) also led to the assignment of consultants.

116. - According to the Organization's rules, consultants should not be employed on a continuous basis, but for short term or intermittent periods for less than one year. Their appointments could be renewed for a total period employment of less than 12 consecutive months. The review carried out by my staff disclosed that out of the 30 consultants who received the highest cumulated remuneration in 1998 (a total of US$ 2.5 million), 11 (36.7%) had been employed on a continuous basis through the granting of a succession of contracts with breaks of less than six weeks in-between each one. Six consultants (20%), who had been granted contracts with longer breaks in-between (e.g. up to 3 months), had in fact been working with FAO since 1994. For 1999, out of the 30 consultants who received the highest cumulated remuneration, nearly half of them (14) were also on the 1998 list.

117. - Indeed, the interruptions and renewals through different types of contractual arrangements allowed the provisions of the FAO manual sections to be formally respected. However, I consider that such practice let consultants work as substitutes for permanent staff members and perform necessary duties for the FAO on a continuous basis. According to the Organization, the need for these appointments of longer duration was the inevitable consequence of the reduction in the number of staff. At the time of writing this report, my staff was informed of its intention to include provisions for such in the revised FAO manual section on personal service agreements.

118. - In addition to their honoraria, consultants receive daily subsistence allowances whenever their duty station is away from their homebase. The rules applicable to these allowances were the same as for FAO staff: a reduced rate was granted after 60 consecutive days and a further reduction was effected after 120 days of continuous service. For the consultants, this additional expenditure could be quite significant. In fact, the total amount of subsistence allowances paid to the 30 consultants who received the highest cumulated honorarium in 1998, reached US$ 622,262, accounting for 25% of their honorarium, and for the 11 consultants appointed on a continuous basis, the percentage increased to 27%.

119. - While some of the Organizations' overheads were indeed lower for consultants (no UN Joint Staff Pension Fund contributions, reduced medical insurance contributions, no reimbursement of national taxes, no accrued leave), other factors had to be taken into account. The complexity of FAO's contractual arrangements and the practice of their regular renewing generated a significant amount of administrative work and costs. It is my opinion that to limit costs and side effects, the Organization should implement, without delay, the streamlining it has been pursuing for the past five years. I recommend that the conditions of services and contracts be standardised and that a control and monitoring system over the corporate use of external collaborators be put in place. At the time of writing this report, my staff was informed that all the preparatory work had been completed on the contractual streamlining. Its implementation was awaiting completion of systems development work to allow its management on an electronic basis. It was expected that the new system be fully implemented by 30 June 2001.

Geographical Mobility of FAO staff

120. - Since 1995 FAO has remained an Organization with a high proportion of its staff working at Headquarters (53.7% in 1995 and 52.6% in 1999). Over the period, two opposite factors were noted. The majority (66%) of the new decentralised professional posts were indeed filled by transfers from Headquarters to the Regional Offices. However, the impact that the decentralisation had on the ratio of Headquarters versus field staff was compensated by the drastic reduction of the number of project staff working in the field. They accounted for less than 14% of the Organization's workforce in 1999 compared to 22% in 1995.

121. - The review conducted also showed that professional staff had become less mobile than they were in 1991. In 1998 among the ones who had been working in FAO for more than five years, 76.5% remained on the same post. In 1991 the percentage was only 71.8%. The situation was even worse when only the professional staff working in Headquarters were taken into consideration. The percentage, which was 77.8% in 1991, reached 84.5% in 1998. Significantly, I noticed that staff rotation was an area where little research was available in FAO. The most recent report, dated 1991, was issued by a Working Group established to review the advantages of introducing a staff rotation system. It concluded that such a system would improve the Organization's efficiency, that the basis for its introduction existed and that only minor adjustments would be required. Some proposals were indeed made in 1994 and subsequently in 1997 but were not implemented. I recommend that the development of a rotation system be looked into and that a cost and benefit analysis be carried out.

Criteria for Recruitment

122. - My staff noticed that great attention was being given to the nationality of candidates as prescribed by Article VIII. 3 of the FAO Constitution states that "in appointing staff, the Director-General shall, subject to the paramount importance of securing the highest standards of efficiency and of technical competence, pay due regard to the importance of selecting personnel recruited on as wide a geographical basis as is possible". The geographical and linguistic balance within Departments was monitored through the regular issuance of ad-hoc reports, in order to seek out nationals from countries not or under-represented.

123. - More recently the gender distribution was defined as another priority. In 1994, the Director-General set the goal of bringing the proportion of female staff to equal 35% by the year 2001. A programme of action for women was formulated covering the 1996-2001 period. In 1999, under AFP's guidance who prepared a list of measures for achieving gender balance, Departments were asked to establish gender balance targets for professional posts, and subsequently received regular follow-up reports. The result of this voluntary policy was that the proportion of women in the total staff increased from 18% in 1994 to 20% in early 1999. The improvement encompassed the senior management levels with a number of women at the Director-level that increased from six to 15 from 1994 to 1999.

124. - In terms of age, FAO's workforce had a mature profile at the time of the review, with an average age of 49 for professional and 45 for general service. As mentioned in a study conducted in 1999 to prepare the Human Resources Action Plan, this was not at the time a new phenomenon but it tended to be more pronounced, with notable differences though among the staff categories. As at December 1998, nearly 52% of the professional staff were above 50 years of age, while the percentage was only 33% for general service. Employees under the age of 40 represented only 17% in the professional category and 32% in the general service one. The more mature profile of FAO staff resulted partially from the sharp decrease in recruitment since 1995. It was also due to the increasing length of service, which amounted according to the above mentioned study, to more than ten years (131.3 months) for professionals and more than 15 years for general service staff (187 months).

125. - As its workforce was ageing, the Organization would be faced with the need to replace a high proportion of its staff in a limited number of years. A study conducted in May 1999 demonstrated that over a quarter of professionals and nearly 10% of general service staff would meet their mandatory retirement age between 1999 and 2004. As a result, recruitment appeared a critical issue for FAO and the tools recently developed, such as multiple submissions and roster vacancy announcements were expected to provide the necessary economy of scale and improvements in terms of delays and efficiency. It was also considered that the recruitment of younger staff members would help the Organization to loosen the constraints in terms of the workforce's age profile. The recruitment of young professionals was one key strategy outlined in the Medium Term Plan for AFP for the period 2002-2007. At the time of writing this report, my staff was informed that this issue had already been presented to, and discussed by, the Human Resources Committee. In addition, in the context of the preparation of the PWB for 2002-03, Departments had been encouraged to reduce the grade of some posts in order to provide for the hiring of younger staff.

Recruitment process

126. - Since 1988 recruitment has been identified as an area of poor performance in FAO. The delays noticed in the selection process have urged the Organisation to conduct three successive managerial reviews, which all disclosed a need for streamlining. However, the distribution of roles for recruitment existing at the time of the review was still complex and cumbersome, with delegations of authority and procedures that depended not only on the category of the posts to be filled but also on their funding and location.

For posts funded in the PWB, the decision remained with the Director-General for the ones above the G2 level. But before reaching the Director-General's Office for decision, the proposal had to go through an eight step process of approval in Headquarters, which resulted in additional delays of up to three or four weeks.
For posts funded by projects, the decision was delegated to the operating unit that could be located in Headquarters or in the Regional Offices. Accordingly, the MSU responsible for handling the recruitment depended on the assignment location of the officer in charge of the project. Such a criterion made the delineation of responsibilities between MSUs in Headquarters or in Regional Offices more difficult to identify.

127. - Whatever the funding of the post was, the recruitment process for general service staff in FAO was found to be too complex as well as unnecessarily costly and time-consuming compared to the level of the staff recruited (drivers, secretaries, etc.). Because of the limited recruitment at Headquarters [para. 108], this applied mostly to decentralised offices where it resulted in unavoidable misapplications of the provisions of the manual sections regarding the employment of casual labourers. While waiting for Headquarters decision, casual contracts had often to be renewed beyond the maximum limit authorised of three months. It is my opinion that the current distribution of responsibilities should be further streamlined. For posts funded in the PWB, I recommend that the decision to recruit general service staff at all levels (from GS1 to GS7) be delegated to the Regional and Country Representatives. Should the present freeze on recruitment be lifted for Headquarters, the authority for the final decision on the recommendation of the General Service Staff Selection Committee should be delegated to the Department Head.

128. - For recruitment of professionals, the decision was to be taken by the Director-General, on the basis of the recommendations of the Professional Staff Selection Committee (PSSC) and of the Department concerned. The only exception concerned professional posts funded on projects up to the P5 level. In that case only, the decision was taken by the operating unit concerned. With even more cumbersome and fragmented processes, the time taken to fill professional posts was more than 52 weeks, as at February 1998. It was decided in August 1998 to eliminate the clearance of the Establishment Group before the issuance of vacancy announcements and to transfer to the MSUs all of the administrative functions after the issuance of the vacancy announcements.

129. - At the time of writing this report, my staff was informed of the following changes introduced in mid-2000 to streamline the recruitment process.

A reduction in the range and volume of material required to be presented to the selection committee was implemented.
Line managers had been delegated the responsibility for managing the selection process from receipt of applications to submission to the selection committee.
New computer systems to support the recruitment process had been implemented (Applicant Tracking and Vacancy Announcement Monitoring systems), and increased use was being made of the Internet for posting of vacancies and receipt of applications

Following the introduction of these measures as of mid-2000, the average total time taken from the point of advertisement to the decision by the Director-General, which amounted to 270 working days in 1999, reduced to 188 working days at the time of writing this report.

130. - The review also disclosed that the recruitment of professional staff in FAO was also characterised by a huge amount of work, mainly performed by the MSUs at the time. In 1997 and 1998, the 144 and 190 vacancy announcements issued generated a volume of 8,500 and 10,000 applications respectively, most of them coming from candidates outside FAO and the UN system. In fact, tools to group the announcements, such as multiple submissions or rosters of eligible candidates, had not been used on a large scale. Since the review, my staff was informed that the changes mentioned above introduced were also aimed at reducing the number of applications and improving their handling.

Appraisal system

131. - At the date of my staff's review, the appraisal system was found to be incomplete and fragmented. The most comprehensive element was the probationary period review, introduced in 1981. For newly recruited staff or for those holding a fixed term employment, confirmation of employment and conversion of contracts were subject to a formal assessment of performance. But as soon as the employment was confirmed, or the contract converted, only professional staff was subject to a formal and regular appraisal. This was introduced in 1981 for professional staff serving in the field, and in 1986 on a trial basis for the rest. It was confirmed, in 1987, for those professional staff serving at Headquarters and renamed the Performance Appraisal and Achievement Record (PAAR) system.

132. - Several attempts had been made to introduce a comprehensive and consistent approach.

In November 1988 the extension of the PAAR to the general service staff was introduced on a trial basis for 12 months. The scheme was not extended as an ongoing system since during the consultation process with the staff representatives no agreement was reached on the future performance appraisal system.
In 1996 the Director-General decided that the development of a comprehensive appraisal system should be a priority. As a result, a working group was established to make proposals. However, in view of the number of issues raised by the staff representatives and managers, the Director-General considered that there was need for further discussion in order to reach agreement on a system which would receive overall support while introducing improvements in human resources management.
During the course of 1997 and early 1998, AFP reviewed the system proposed in line with the comments made. As mentioned in the Human Resources Action Plan developed in 1998-99, the next agreed course of actions was to work in conjunction with Departments to design and implement a performance appraisal system, which would be part of an integrated performance management system.

133. - The appraisal system in FAO not only suffered from its insufficient coverage. In practice, when an assessment was made, it also appeared as an administrative exercise. In fact, managers tended to consider it as a time-consuming burden. The reason for such a negative appreciation was that there were no consequences for the different levels of performances acknowledged. The only exception concerned the probationary period review. But for those staff holding a continuing contract, the identification of different levels of performances was not tied to rewards or sanctions. As a result, the performance appraisal tended to be seen as an exercise with questionable utility and very low credibility.

134. - As mentioned above, the establishment of a performance appraisal system remained one of the objectives in the AFP's work plan. I recommend that priority be given for the system to be implemented as soon as possible. At the time of writing this report my staff was informed of the fact that the International Civil Service Commission (ICSC) was conducting a review on the UN pay and benefits system, a key component of which being the linkage between pay and the staff member's performance and/or contribution to organizational goals. Since FAO participated in this review, the Organization should be able to use this experience to address the sensible issue of how to create a link between the ranking of performances and the granting of awards for its own staff. Cash awards might be considered through a more selective approach regarding WIGSIs, while non-cash awards could also be granted in the form of better career opportunities. As FAO has evolved towards more decentralised structures, such opportunities are easier to offer. Through adequate training programmes and increased staff mobility, it would allow FAO to ensure a comprehensive career development strategy to the individuals that meet the Organization's goals.

Publications

135. - During the biennium, my staff reviewed the management by the General Affairs and Information Department (GI) of the publications policy of the Organization and the functioning of the four pool accounts, namely:

The Editorial Services Pool, which provided multilingual editorial services to technical divisions for the publication of certain titles both in print and electronic form in the five official languages of the Organization.
The Translation Services Pool, which provided translation services for official meeting documents and other designated documents and publications.
The Interpretation Pool, which provided interpretation services to FAO meetings, Conference and Council as well as to other UN agencies.
The Internal Printing Pool, which printed pre-Session and in-Session documents for FAO official meetings, Conference and Council.

While the last three pools were operated through the Conference, Council and Protocol Affairs Division (GIC), the first pool was operated through the Information Division (GII) together with the Information Products Revolving Fund (IPRF). The IPRF was a separate fund set up under Financial Regulation 6.9 for the purpose of receiving the proceeds of sales of information products and the revenue from advertising in, and sponsorship of, such products.

136. - In May 1996 the Programme and Finance Committees adopted a new financial framework for the handling of documents and publications, which gave individual departments and offices the option to have their documents or publications processed internally or externally. This flexibility was motivated by the need to reduce costs by bringing competition between GI and external vendors. It had been noted that the rates being charged out by the pools greatly exceeded those charged in the market place for similar services, mainly because the pools had to cover staff costs.

137. - According to the Organization, the strategy of "deregulation" was successful in reducing costs and increasing the efficiency of the provision of services provided by the pools. In the "Report on efficiency savings" provided to the Council at its 119^th Session in November 2000, it was estimated that US$ 12 million per biennium would be saved as a result of the new arrangements and the use of remote translations for the Regional Conferences. However, the strategy had some adverse unforeseen side effects. The review my staff made disclosed that the control on the Organization's publications was weakened and the financial equilibrium of the pool accounts compromised.

138. - Whereas previously, GI had total control because all work was channelled through it, the 1996 decision should have enabled the Department to exercise a coordinating function. However, since the new procedural controls were not in place when the reform was implemented, Headquarters' divisions and Regional Offices developed their own publications policy, without informing GI about what was published externally. As a result, GI could not perform its new oversight function properly and a comprehensive and precise view of what was published by the FAO could not be obtained. It was only in early 1999 that corrective action was taken. The Director-General approved the Corporate Communication Policy and Strategy and formally established the Corporate Communication Committee (CCC) on 4 March 1999. Subsequently, the CCC approved Organization-wide publishing norms and standards to enable the departments and GI to carry out their respective roles.

139. - The financial equilibrium of the GI pool accounts was also affected by the market-oriented approach implemented in 1996. With actual expenditures of US$ 21.9 million for the 1998-99 biennium (IPRF included), the deficit at the end of the biennium amounted to US$ 0.9 million. However, the individual performance of the pools varied considerably. As the introduction of a free market approach meant that the level of business granted to GI could not be guaranteed, some pools were in a better position than others to evolve from a simple cost transfer arrangement into a new modality, which required an adjustment of staffing and costs to the volume of work. The GIC Translation and Interpretation Pools were able to reduce unit costs and operate with a high portion of flexible outsourcing. The reverse was the case for the GII Editorial Pool, which had to maintain its workforce because of a less predictable demand resulting from the "deregulation" strategy.

140. - As recommended by my staff, this situation led to the abolition of the GII Editorial Services Pool effective 1 January 2000, the concomitant transfer of all staff costs to the Regular Programme and the allocation of a Regular Programme budget for operations expenses equal to half of the present external costs. Editorial work above this amount, if required, would be outsourced by GII and would continue to be backcharged, but at cost. Other measures, reflected in the approved 2000-01 Programme of Work and Budget included:

The transfer of the post of the head of the IPRF to the Regular Programme in order to remove overhead management costs, as it had been done in the 1996-97 biennium for the pools. The IPRF had a deficit of over US$ 400,000 for the 1998-99 biennium, which was covered by the General Fund. The figures shown in note 9 to the financial statements took this replenishment into account.
The provision of US$ 1.1 million under a new programme entity entitled "Programme for the improvement of language coverage".

141. - The last measure was designed to address the decline in language coverage, acknowledged in a document reviewing the language policy in FAO presented to the Programme and Finance Committees in May 1999. In theory, the new financial framework for the handling of documents and publications could have indirectly benefited language coverage by reducing the unit cost of translation and interpretation services, thus allowing divisions to deliver more for the same amount of money. However, the technical divisions, which were simultaneously facing significant reductions in their budgets, responded, in part, by reducing the number and downgrading the category of publications and the number of languages into which they were translated. At the time of writing this report, my staff was informed that several actions were being implemented to improve the balance in the five official languages.

Special Programme for Food Security (SPFS)

Introduction

142. - Based on a review of the Organization's priorities, programmes and strategies conducted in 1994, the Director-General proposed that FAO should launch a Special Programme for Food Security (SPFS), focused on Low-Income Food-Deficit Countries (LIFDCs). The programme was unanimously approved by the FAO Council in June 1994 and commenced its operations in late 1994. This approach was endorsed by the World Food Summit held in Rome in November 1996, which called for concerted efforts at all levels to raise food production and increase access to food in 86 LIFDCs, with the objective of cutting the present number of malnourished people in the world by half, by the year 2015.

143. - The choice I made to review the implementation of the programme was not based on its financial importance, which was relatively small. A budget of US$ 9.237 million was provided for the 1998-99 biennium under the Regular Programme (Technical Cooperation Programme - TCP - funding excluded). From the inception of the programme in 1994 to 31 December 1999, total expenditure amounted to US$ 24.5 million only. However, the fact that the programme was supposed to be implemented in a large number of countries enabled Organization-wide comparisons. Furthermore, the innovative approach taken in many respects made the review more pertinent.

144. - My staff's review of the programme was initiated at Headquarters in 1998 and pursued during the field visits conducted in 1999 and 2000. Out of the nine country offices visited, the programme had been launched, but not implemented in one country, and implemented in seven others (three in Africa, two in Asia, one in South America and one in the Middle East). Implementation began in 1995 for five of the countries selected, which constituted a representative sample of the 15 countries where the SPFS first started, and in 1997 for the other two.