4 April 2022 – Mukesh Kapila
Letter addressed to the President of the Executive Board of UNOPS
Copenhagen, 4th April 2022
H.E. Ms Yoka Brandt, Permanent Representative of the Netherlands to the United Nations in New York, PRESIDENT, EXECUTIVE BOARD OF UNOPS (& UNDP, UNFPA).
Dear Madam President, Excellency,
I refer to the 25th March letter from the UNOPS Executive Director, Ms Grete Faremo, seeking the Executive Board’s guidance. I write in the global public interest, in solidarity with thousands of concerned current and past UNOPS personnel as well as other donor and client stakeholders. They are extremely disappointed and angered by grave wrong-doings at UNOPS, for which they seek accountability.
My locus for doing so is my own standing as a former senior official of the United Nations system, including at UNOPS. I have also been a major governmental funder of the UN system and UNOPS. I have both commissioned and been a client of UNOPS services in various senior roles. Like you, I have also served on some UN agency boards. My international experience in development aid, humanitarian action, human rights, and global health in many multilateral institutions, has spanned some 40 years. This can be consulted here, if needed, and via innumerable official and public references.
I would be grateful if you could kindly share this communication with your Executive Board members with, I hope, prospect of formal discussion during a Board session. Meanwhile, this is shared with the UN Secretary-General Mr Antonio Guterres, Deputy Secretary-General Ms Amina Mohammed, and Assistant Secretary-General Mr Ben Swanson at UN OIOS. It is also shared with the Permanent Representatives of all Member States at the United Nations in New York, accompanied by a request for onward transmission to all Capitals. In the interests of transparency, it is also published openly.
The matter at hand concerns the potential loss of around US$60 million of donor and client funds under the charge of UNOPS. There is strong prima facie conclusion that these funds were mis-directed by wilful senior-level mismanagement at UNOPS including potential fraud and corruption.
In her 25th March letter to you, Ms Faremo offers the defence of separation from mainstream UNOPS by stating that the “challenges” are limited to S3i and refer to the period before 2019. This is disingenuous. S3i (and a predecessor WATO initiative) were special projects of UNOPS itself, designed and executed by UNOPS leadership, operated under rules and authorities bestowed by UNOPS, and financed from UNOPS reserves. As such UNOPS is wholly responsible and accountable for them.
Neither did the “challenges” cease in 2019. First, the questionable post-reduction of interest charges took place in 2020. Second, the highly unethical request made to UNOPS staff to fund Nick Provenzano’s (son of the UNOPS Legal Counsel) company was made in January 2021, and several S3i innovation projects were approved under questionable circumstances in January/February 2022. Third, the Executive Board’s approval of a specific S3i reserve continues to allow the possibility of transfer of funds to entities associated with the fraudulent scheme. Finally, although UNOPS is currently engaged in legal action to recover misappropriated funds, most of the staffing and processes that created the problems are still in place, thereby compromising the recovery process.
You are aware that Assistant Secretary-General Vitaly Vanshelboim, former Deputy ED and CEO of the S3i initiative has been accused, in numerous public statements, by Ms Faremo for being solely responsible through “possible misconduct”, even as the long-running investigation by the UN Office for Internal Oversight Services (OIOS) is yet to rule on this. The Board hardly needs reminder that it is a principle of justice that a person is considered innocent under proved guilty. Ms Faremo appears to be bent on perverting that course.
Regardless of the case against Mr Vanshelboim, it is not credible that he could have acted alone to divert such large sums by evading stringent UN rules and multiple layers of UNOPS checks and controls. That points towards negligence or connivance on the part of Ms Faremo and her Senior Leadership Team of Honoré Dainhi, Marianne de la Touche, Nick O’Regan, Jim Provenzano, and Peter Browne. Other key officials in critical compliance and clearance functions, namely Hafida Lahiouel, Paul Lucas, Kelley Swift, and Kathryn Higgs, also bear responsibility and must be held accountable.
In her 25th March letter to you, Ms Faremo denies the charges that have been levelled at her, that is that she has herself undermined the functions of diligence and accountability including legal, financial oversight, ethics, and human resources management. The Executive Director is deliberately concealing and mis-representing the truth. Some of the arguments can be seen in articles dated 4th March, 9th March, 22nd March, 26th March, and 3rd April, accessible from here. Fuller evidence can be found in the internal records of UNOPS, once they are made openly available. Ms Faremo has not been transparent or candid in her previous briefings to the Board.
Therefore, the investigation that Ms Faremo has fought hard to limit to Mr Vanshelboim, must be widened to identify all conspirators and ensure all due accountabilities. This is vital to learn all lessons, conduct corrective reforms in structure and procedures, and ensure the future integrity of UNOPS.
As Ms Faremo has said, placing Mr Vanshelboim on administrative leave “is a precautionary step in order to allow an administrative process to be conducted fairly”. For the same reason, it would be prudent to place the Executive Director and SLT on administrative leave too, pending conclusion of the wider investigation.
There is a further urgent reason to do this. There is mounting concern that, over these weeks, UNOPS may be tampering with the evidence needed for investigations. UNOPS leadership has also embarked on a strong and expensive campaign of suppression and intimidation of staff who have spoken up on the wrong-doings or are thinking of doing so. This is a violation of its own whistleblower and other ethical and staff protection policies. This is to be understood against the long-standing context of its flawed top structure whereby the crucial control and compliance functions report directly to the Executive Director. The concentration of power and influence, and non-separation of powers, allows Ms Faremo a degree of impunity unknown in other UN agencies or, indeed, in any well-governed modern enterprise.
The Board is also advised to recognise that egregious fraud and corruption at a UN agency can’t be treated as just an administrative matter to be handled through internal UN procedures. Grave offences appear to have been committed that are more appropriately examined by the law enforcement authorities of a state with jurisdiction. That could be Denmark where UNOPS is headquartered or the United States where the Board is located or Finland where UNOPS/S3i is housed. The Board should ask the UN Secretary-General to lift the immunities and privileges of relevant officials to permit that.
The Board could also consider setting up genuinely independent external scrutiny, using the precedence of the Volcker Inquiry into the Iraq ‘Oil-for-Food’ Programme that led to the then UN Secretary-General Kofi Annan accepting “ full responsibility for his own failures and regretted his lack of diligence in pursuing investigations of alleged misdeeds.”
Meanwhile, it is also safer for the Board not to rely solely on Ms Faremo and her implicated senior officials as the sole conduit for receiving information that, as said already, is unreliable. The Board could consider measures such as confidential hearings that allow staff and other stakeholders to raise their concerns, and for relevant documents to be openly released.
In concluding, Madam President:
The fraud and corruption at UNOPS occurred because of mismanagement, misconduct and misuse of authority among UNOPS leadership who also manged to avoid and subvert Board governance. But this only happened because the organisation was allowed to stray from the high values and standards of the United Nations, and also through the ill-considered expansion of its mandate and scope, going beyond operations into policy dimensions for which it was not founded. The vulnerabilities thereby created at UNOPS continue to place it at huge future risk.
It follows that the Board should take the opportunity of the current crisis to review and revise the overarching policies and strategies that led to these vulnerabilities including the profiteering business modalities that allow UNOPS to accumulate obscene levels of reserves, and drive it towards reckless behaviours. That is not how UN agencies should conduct themselves, under any circumstances.
The arrival of the new Executive Director is awaited with great anticipation and should be accelerated, as a long transition is not in the interests of the agency, especially its hard-working staff serving faithfully at the frontlines of complex needs.
At such a critical moment in history, we need UNOPS more than ever. Decisive action to restore trust in it has never been so necessary nor so urgent.
With assurances, Excellency, of my highest consideration,
I remain, yours most sincerely,
Professor Mukesh Kapila, CBE