26 March 2022 – Mukesh Kapila
How tens of millions of dollars got stolen through fraud and corruption at the top echelons of the United Nations Office for Project Services (UNOPS) has come under focus through previous articles in this series.
The sordid saga so far
The first piece on 4th March outlined the rotten business model at the core of UNOPS, and how rentier behaviour and profiteering from the use of aid funds allowed Executive Director Grete Faremo, and her Deputy Vitaly Vanshelboim to abuse their authority to accumulate large reserves, in violation of UNOPS rules prevailing at the time.
The second article on 9th March illustrated how the Nest Egg was exploited via a dubious partnership with a private company to make a video game and song. This broke all sound business principles. Further, spending US$5 million that way without tangible outcome was hardly a legitimate advancement of UNOPS’s development mission.
But it was useful for the Faremo/Vanshelboim duo to test the methodological foundations of the much bigger fraud that quickly followed, via the creation of UNOPS’s extraordinary initiative, Sustainable Investments in Infrastructure and Innovation (S3i). This appears to have got into bed with other shady parties. At least US$ 58 million got “lost” while delivering nothing for the poor of several countries it was supposed to benefit.
Mr Vanshelboim has been fingered for the fraud and put on administrative leave but may escape accountability as he is due to leave UNOPS shortly. Meanwhile, Ms Faremo has made good use of him as scapegoat. As described in the third article of 22nd March, she has started an energetic cover-up that includes intimidating staff, and putting out copious lies and excuses. Like claiming, for example, that she knew nothing of what was going on, although they shared an open-plan office in Copenhagen for some years.
No one thinks that Mr Vanshelboim could have pulled off this massive heist on his own. So, we look here into the principal actors who enabled him. They are the members of the Executive Director’s Senior Leadership Team, her personally-appointed “Syndicate”.
As the Director of Regional Portfolios with principal oversight of the day-to-day operations of UNOPS across all continents, what was Honoré Dainhi up to when some $60+ million was misappropriated under his nose?
Mr Dainhi complained about his disturbed “work life balance” at the Global Leadership Meeting on 9th March. He grumbled that his weekend had been ruined by public disclosure of criminal misdemeanours in his organisation. The suave Mr Dainhi was rendered sleepless but not speechless. He said that he felt “bad and sad”, and confessed: “Of course, we have screwed up something really bad… it is a reality”. He sounded annoyed that accurate information had escaped UNOPS, even as he acknowledged the fraud and corruption.
Mr Dainhi is right to be worried. He was on the ad hoc committee called ‘EAC+’, a specially enhanced Engagement Acceptance Committee, created personally by Grete Faremo to rubber stamp her rash gamble of tens of millions through most dubious private enterprises.
Why did Mr Dainhi ignore the red flags thrown up by UNOPS’s internal diligence procedures and agreed to the transfer of large sums to a company that was not selected competitively? As the director-of-directors, he oversees all geographies where UNOPS operates. Why was he strangely blind to the goings-on at UNOPS/S3i and its special purpose vehicle – a private company that now looks defunct. S3i has been described by an insider as “nothing but a syndicate of a well-connected mafia based on patronage”.
Does Mr Dainhi know if they delivered any concrete outputs? He is strangely reticent to answer. One example, out of many will suffice. It comes from his home patch: Mr Dainhi was also Africa director. “In 2020, the Governor of Ekiti State, Nigeria announced that 50 000 houses were to be constructed under UNOPS/S3i. How many houses are completed so far? The Governor’s own achievement from this deal is the recruitment of his ‘friend’ at one of the UNOPS Country Offices in Africa on instructions from one of The Big Boys in UNOPS.”
Mr Dainhi has been at UNOPS since 2016 having previously spent 16 years in the private sector, mostly at Shell. It is not clear what his private sector values brought to UNOPS, other than to profit at all costs, honesty and probity be damned. His previous form is revealed from his position as CEO of Talem Africa (Supreme Group). The Group admitted to massive fraud in supplies provision to U.S. troops in Afghanistan and had to pay “US$389 Million in fines, damages, and penalties”. Mr Dainhi was referenced there as “Supreme commercial division president” may feel that the losses at UNOPS are chickenfeed.
The Legal Counsel
A key – perhaps the most important – enabler of the wrongs at UNOPS appears to be James Provenzano, the most powerful man in UNOPS. He is feared by all, including Ms Faremo herself. It is unclear what terrifying hold he has on her. But it is enough to compel her to favour him with three distinct roles.
First, he is Director of UNOPS’s New York office, with supreme hiring-and firing rights over his staff, akin to ancient baronial rights over serfs.
Second, as Executive Chief Procurement Officer, Mr Provenzano ultimately rules on all contracts for products and services; major suppliers must keep him on-side to have any hope of winning business. Of course, there can be many creative ways of sweetening a deal.
Third, as General Legal Counsel, Mr Provenzano is lawmaker, jury, judge, and executioner, rolled into one. In comparison, even the most abusive world regimes at least try to show of separation of powers.
It is said that all power corrupts, and absolute power corrupts absolutely. The Provenzano role is riddled with conflicts-of- interest, with numerous examples of his intimidatory influence. He appears to be an ardent practitioner of the Roman Law principle of “Do ut des” – or “I give so you may give” i.e. reciprocity in awarding favours, and conversely, revenging any perceived wrongs.
There is a spooky resemblance with the apparently untouchable New York Mafia. Mr Provenzano has considered himself untouchable over many years. He is on a permanent contract and a comfortable retirement beckons unless he is brought to account.
Meanwhile, Mr Provenzano has a new buddy, William Axelsson. Directly appointed (i.e. without competitive process) by Ms Faremo to head a new Executive Board and External Relations Office in New York, Mr Axelsson is a oleaginous Swede who was originally hired thanks to the close relationship between Ms Faremo and Mr Axelsson’s father. Axelsson Jr. originally learnt the dark arts of manipulation and intimidation under the mentorship of Moin Karim, the Regional Director for Europe and Central Asia.
Protected by Mr Provenzano, Mr Axelsson enjoys ruling his roost with impunity, including brazenly lying to the UN ID and pass office to illegally obtain staff passes for individual contractors. This is a severe breach of UN security. Mr Axelsson’s personal and professional conduct has led to several complaints by long-suffering staff. However, as per standard UNOPS protocol to cover-up wrong-doings, it is the complainants that are victimised.
Mr Provenzano appears to operate best by improperly influencing or coercing his associates and subordinates. He has previous form with the mishandling of corrupt procurement at UNDP. Subsequently at UNOPS, he has admitted that his son is a potential beneficiary of his decisions. To favour your family in any way is a mortal sin against UN rules.
However, the Provenzano père et fils have been cleared by his hand-picked deputy Legal Counsel Hafida Lahiouel and defended personally by Ms Faremo. Ms Lahiouel has been most industrious in rapidly clearing many legal S3i innovation files that had been pending for many months because of red flags raised by several Copenhagen-based lawyers . These were the same files Ms. Faremo claims could not be reviewed by James Provenzano who had apparently recused himself. But he was working behind the scenes through his recently-hired “marionette” (Ms Lahiouel) who appears to have been co-opted into the fraudulent masterplan. A reasonable question is if Ms Lahiouel benefitting from some of the US$ 60 million in exchange for her legal blessing of dubious transactions?
No doubt, the conspiracy was made easier through complementary white-washing via Kathryn Higgs, the Director of Ethics and Compliance (who has conveniently just resigned to avoid facing the music). It does help the masterminds when the Ethics Office reports directly to the Executive Director. What Ms Higgs apparently got in return for her co-operation was help to rid her of a thorn in her flesh, Helen Davey (who was reassigned to work with James Provenzano on a P5 post without going through a competitive process and whose salary is now being charged to the government of Mexico).
Thus, a captured Ethics and Compliance function is worse than useless; it becomes the cancerous virus that erodes the organisational corpus. Scores of staff have complained that they are not protected if they come forward with their concerns. Instead, they are intimidated and fired from their positions. Their shocking stories deserve articles of their own.
Also neutered is Ms Faremo’s Internal Audit and Investigations Group (IAIG), the director of which is currently under recruitment.
Several personnel have reported a strong link between Kelley Swift (Investigations Manager), James Provenzano and Hafida Lahiouel. It appears that while the audit and investigations function is based in Copenhagen, Kelley Swift was first transferred to New York and then promoted thanks to James Provenzano’s strong support. The exchange-of-favours culture has jeopardized the important oversight and checks and balances that are critical in a large organization handling billions of dollars on behalf of taxpayers.
The IAIG has a line to the Board but is practically structured to report to the Executive Director. The job profile of the head requires the ability to “balance the independence of the IAIG function while maintaining strong relationships with the Senior Leadership Team and Global Leadership Management Team”, as well as to be a “trusted adviser to the ED”. The departing Ms Faremo is on the imminent panel to recruit the director. Under this farcical arrangement, how could the unlucky appointee be allowed to, and seen to be, conducting genuinely independent investigations on Syndicate members while being required to maintain “strong relations” with the same suspects?
That is not all. UNOPS also invited its own staff to invest in its dodgy enterprises, thereby co-opting them into its questionable endeavours. In an email sent to several UNOPS personnel, Jonas Svensson, the now-departed Head of Global Innovation and Technology at UNOPS (a Provenzano-endorsed appointment), operating under its Social Impact Investing Initiative (a Provenzano-approved initiative), invited staff to invest US$20,000 each in Custom Corals, the company whose CEO was no other than the son of Mr Provenzano. The propriety of the approach appears to have been cleared by General Counsel Provenzano himself and Ethics Director Kathryn Higgs. It is not known how many staff responded and invested their funds in Nick Provenzano’s company.
Other Syndicate members
Beyond Messrs Dainhi and Provenzano, the Senior Leadership Team includes Marianne de la Touche, the Chief Financial Officer & Director of Administration, Nick O’Regan, the Director of Implementation Practices and Standards, Peter Browne, Director of Communications, and Tushar Dighe, Chief Information officer and Director of Information Technology.
Ms Faremo must have decided that Ms de La Touche brought valuable experience from her previous profession promoting cognac and champagne, Christian Dior and Bulgari, at the 64.2 billion Euros luxury brands group LVMH. So, signing-off on some US$58 million at UNOPS must have been a trifling matter for Ms de la Touche. Presumably also trifling was her authorisation of the post-fraud write-off (although write-offs were previously virtually unknown at UNOPS). Perhaps she could justify why?
Mr O’Regan is the ultimate UN insider with decades of experience in several missions from where he acquired much wisdom to strengthen UNOPS practices and standards. He prides himself on his “evidence-based approach relying on data and fact-based planning”. Unfortunately, the reverse seems to be happening in UNOPS. Nevertheless, it would be enlightening to hear what data and facts he considered when he too gave his nod to Grete and Vitaly? How can UNOPS justify breaking sacrosanct human resources rule by promoting him to a senior director (D2) position without the mandatory university degree?
The information and communications duo of Mr Browne and Mr Dighe have principal roles in controlling what news leaks out of UNOPS and how the happenings are ‘spun’ for internal and external audiences. A glance at the UNOPS website reveals that it is nothing more than a front to puff up the organisation, and burnish Ms Faremo’s image with her empty speeches and photo-ops. There is no useful or transparent information on its projects and activities, evaluations and lessons learnt, accounts and audits. (The information is available elsewhere on deeper delving including through the “OneUNOPS” system available only to insiders). So, Messrs Browne and Dighe may wish to reveal what they have been ordered to hide?
Is UNOPS in ‘air crash’ mode?
At the 9th March Global Leadership Meeting, Mr Dainhi likened UNOPS’s travails to an air crash. As he said, an airline company that operated 3000 flights safely may have to shut all of them down when it has one fatal crash. But is that fair?
To answer him, it is not just fair but essential to ground all aircraft of the crashed model – as happened with Boeing’s 737 Max – to rectify faults, revise procedures and re-train pilots. Something comparable is needed at UNOPS.
It is also true that sometimes the company itself does not survive a fatal crash, as happened with Swissair after its Flight 111, known as the “UN shuttle” between New York and Geneva, crashed on 2nd September 1998; (I still mourn two lost friends: the brilliant Jonathan Mann, the first director of WHO’s Global Programme on AIDS, and the saint-like Pierce Gerety, UNHCR director of operations for Central Africa).
The good news is that the totally re-engineered Boeing Max is back in the air, and Swiss has re-emerged as a stronger airline with radically altered management. The equivalent of that is what UNOPS must do.
Mr Dainhi is right in using the ‘air crash’ metaphor for UNOPS. So is Mr Provenzano when he proclaimed at the 16th March Global Leadership meeting that the recent fraud and corruption will not crash UNOPS.
Yes, UNOPS will survive because it is a valuable global asset that does many good things in many places with, by and large, thousands of people working honestly and hard. But Grete Faremo and her coterie must understand that the organisation is bigger than individuals. Especially, senior individuals that badly let down rank and file colleagues through their venal conduct, let alone betraying the poorest on our planet.
UN Secretary General Kofi Annan said at the homage to the 9 UN staff killed in Flight 111:
“It would be boastful to state that our actions change the course of history, but it would be wrong — and just as destructive — not to recognize that our work does have importance and does make a difference.
“As we have come under criticism in recent years from those who may not understand what we do, we have been singularly blessed in the gift of colleagues such as those we honour today — for they provide an exemplary sense of our mission.
“You have only to look at the lives of these nine — indeed, some of the world’s best — to understand what the United Nations is and does when it is at its best.
“Friends, there is never any one moment when we can declare victory in the fight for good, for peace, for life.”
Kofi Annan’s words could equally apply today at UNOPS’s ‘air crash moment’, The travesty is that Co-pilot Vitaly Vanshelboim deliberately downed the plane while Captain Grete Feremo was out, greeting the first class passengers. Meanwhile, Navigator James Provenzano was gleefully misrouting the aircraft as Second Officer Honoré Dainhi was busy colouring the charts with pretty crayon, and Engineer Nick O’Regan couldn’t be bothered to do routine safety checks. Chief Purser Marianne de la Touche was occupied counting the spoons and flight attendants Peter Browne and Tushar Dighe were busy entertaining the passengers.
The best homage that the current UNSG, Antonio Guterres, can pay to the victims of the UNOPS crash is to hold the whole crew fully accountable.
Meanwhile, senior managers beyond the SLT, such as regional and functional directors who, with honourable exceptions, are tainted by cowardice or self-interest and closed their eyes, would be wise to reach for their oxygen masks and flotation devices. It will be a rough ride.
But the destination is clear. Grete Faremo, her Syndicate, and their self-serving hangers-on in several directorates can’t be allowed to ruin UNOPS. Especially in our present troubled times, there is a lot to do and we need UNOPS more than ever. That is why UNOPS deserves all our support to purge itself and re-emerge cleaner and better, with regained world trust.