22 April 2022 – Mukesh Kapila
If there was a competition for the least trustworthy communications from a development agency, the United Nations Office for Project Services would be the undoubted champion. Scrolling its website is a singularly uninformative experience. UNOPS has never been transparent about the ups and downs that are normal for any enterprise operating in the real world. Instead, its strategy is simply to burnish its own image – and especially that of its Executive Director, Grete Faremo.
That means taking liberties with facts, hiding those that are inconvenient, and spinning the rest into a smokescreen to blind us. These talents were evident when Ms. Faremo met with the President and Bureau of its Executive Board, earlier this week. It was embarrassing to observe how she fumbled her way to answering the basic but pointed questions addressed to her.
The obfuscation practiced routinely by Ms. Faremo and her Senior Leadership Team reflects the contempt with which they hold their stakeholders – staff, governing board, clients, partners, donors, beneficiaries, public. Also their sense of impunity against accountability.
That has meant many months of silence from UNOPS followed by occasional random, reactions that are downright misleading. These are supplemented by lies to its staff and Executive Board. They concern the misplacement and wider institutional implications of dispensing over US$ 60 million via its pet child, the Sustainable Investments in Infrastructure and Innovation (S3i) initiative. Misconduct, mismanagement, fraud and corruption are strongly suspected.
The latest UNOPS statement hides more than it reveals
The UNOPS communications approach is not just dishonest but also incompetent. It appears to be reaching its limits. This is evident from the piqued, dismissive tone of its latest Statement of 17 April. However, it appears that the public airing of its misdoings through previous articles in this series and via this Devex article, has obliged the UNOPS leadership to descend from their lofty heights.
They are finally realising that pertinent questions will never go away without full and truthful answers. Many governments and donors have now started questioning their support for UNOPS. Anything that touches its bottom-line is most likely to awaken UNOPS leaders, the most financially avaricious in the UN system. Meanwhile, the UNOPS Statement is disingenuous in several ways.
Why has it taken UNOPS so long to admit wrong-doing?
The UNOPS Statement indicates that it took till December 2021 to acts on misdeeds in relation to S3i, by suspending its chief executive, Vitaly Vanshelboim, with whom Ms. Faremo was literally sharing her office for many years.
The Statement obscures the fact that misdeeds were suspected as early as 2017 when US$5 million was gifted by UNOPS to a strange entity “We are the Oceans (WATO)” which Ms. Faremo has subsequently admitted publicly that it did not deliver. And yet, several of the key directors involved in WATO were the same that UNOPS/S3i subsequently favoured in its new partner Sustainable Housing Solutions (SHS). Let’s recall that WATO/SHS were chosen at a New York cocktail party instead of going through a procurement process. If compliance issues were pointed out as far back as 2017, why did UNOPS investigators (Paul Lucas and Kelley Swift) disregard them?
Subsequently, further internal objection was raised in 2018 in relation to the Mexico renewable energy project. This was also brushed aside. With internal UNOPS ethics, audit and complaints functions – all reporting personally and directly to Executive Director Grete Faremo – they were unwilling to act. The UN’s Office of Internal Oversight Services (OIOS) was approached in 2019 but also without effect.
The UNOPS Statement claims it started its own internal investigations in 2020. Why so late? Meanwhile, money continued to flow to UNOPS/S3i partners against which concerns had been expressed. Why did Ms. Feremo and her top associates continue to sign off on “eight investments worth $63 million”, despite claiming to be conducting internal investigations at the same time? The UNOPS Statement glosses over such inconvenient truths.
UNOPS can’t be trusted to do its own S3i evaluation
UNOPS has now been forced to acknowledge that it has “significant challenges” that need immediate attention through an “accelerated independent comprehensive evaluation of S3i”. This is a complete reversal of its previous assertion to wait till the end of 2023.
The Bureau of the Executive Board of UNOPS are to be commended that, at this week’s meeting, they demanded the hapless Ms Faremo to produce forthwith all the diligence and related documents. Will she comply in a speedy manner or is she currently busy fabricating the necessary documents or cleaning-up the inconvenient evidence that she actually ignored at different times over several years?
Meanwhile, the EB must ensure that it does not leave the conduct of the evaluation to the scheming of the Executive Director and her Senior Leadership Team (SLT). Under the current climate, UNOPS evaluations cannot be trusted for their independence and integrity.
The EB must, therefore, take full charge of the evaluation process and ensure that its scope and terms of reference are truly comprehensive i.e not just limited to examining the S3i business model. It must also examine how and why the UNOPS leadership made it most critical decisions when creating S3i and allocating funding through it.
Evaluation questions to ask include, for example: how and why were UNOPS’s own rules for grants, procurement and contracts used, abused, or bypassed? How were its own systems and procedures, including its project scrutiny and appraisal committees, involved or ignored? Why and how was SHS selected without a competitive process?
What diligence was conducted by whom, and considered or over-ruled by senior UNOPS decision makers i.e. SLT, and ultimately, Ms. Faremo herself, before her decision to hand over tens-of-millions to SHS? What risks were identified and mitigations put in place, noting that SHS does not appear to have had a significant and relevant business track record? For example, what financial guarantees were sought or precautions taken to protect UNOPS/S3i funds? Why were these funds given in advance?
Who designed S3i including which internal staff and external consultants and advisors were involved? What was the peer review quality control process, and how did this comply with or differ from UNOPS statutory quality assessment processes that routinely apply to all its projects? What metrics of results and impacts were devised for the S3i initiative and what social impact sector studies and benchmarking were done by comparison with other comparable social impact ventures?
How was the subsidiary advisory committee of S3i selected and what statements of conflicts of interest obtained from them? Have S3i committee members disclosed any pre-existing relationships with UNOPS, for example, any association with Ms. Faremo or other past or present senior staff, and have any emoluments or benefits been received by them from this or other UNOPS programmes? What role has the S3i advisory committee played in appraising and endorsing its policies, strategies, and operations?
The EB should ensure that it has the final say in deciding on the selection of the evaluators who must be truly independent i.e. they must not have held previous contracts from UNOPS nor enjoyed personal association with Ms. Faremo and SLT members. Needless to say, they must also have the financial, auditing, forensic analysis and other necessary skills.
The evaluators should have free, unhindered access to all internal UNOPS documents and communications. It will be prudent for them to operate from independent premises with their own fire-walled IT systems. That is because UNOPS has advanced penetration (“hacking”) capabilities and its staff report that their communications are routinely monitored.
S3i is not separate from UNOPS
The UNOPS Statement compounds its mendacity by claiming that S3i is a separate initiative, thereby implying that its misdoings are somehow separate from that of UNOPS. However, it was UNOPS funds that went into S3i, allocated through UNOPS procedures and by decision of UNOPS leadership. The S3i former Chief Executive, Vitaly Vanshelboim, is an UN Assistant Secretary-General and Deputy Executive Director of UNOPS.
S3i was presented to and approved by the UNOPS Board. Ms. Faremo has used S3i to exemplify her brilliant and innovative business leadership of UNOPS. And in trying to attract additional investment, S3i has been leveraging its UN and UNOPS name and connections.
Thus, if S3i was conceived, birthed and nurtured by UNOPS , and is still being weaned there, then what is it if not a full-fledged part of UNOPS? Its UNOPS parents cannot avoid their accountability for what has happened there, by trying to offload that as a separate S3i matter that has nothing to do with them.
UNOPS losses are significant and inevitable
The Statement indicates that “S3i funds are at risk but to date, no funds have been lost”. This is accounting double-speak when, in the words of one of its principal donors, the United States on 1 February 2022, UNOPS had already made a “bad debt allowance which represents 40% of all funds invested through the S3i initiative as of December 31, 2020”. How can Ms. Faremo, a self-proclaimed business wizard, justify decisions that expect to lose so much? Perhaps she might be luckier at the roulette wheel?
The US went on to call for a halt on any “further transfers to the S3i reserve without explicit Executive Board approval. And we expect any such requests to be supported by detailed justifications including project specific proposals”. UNOPS has, in the past, never shared such documents with its own oversight body. Why not? What has it hidden away?
UNOPS is now incurring substantial legal and other expenses trying to recoup what it can of the questionable advances made to SHS. The prospects for recovery are unknown as UNOPS does not offer any transparency over what efforts it is making and the jurisdictions under which it is pursuing the debtors.
Why does UNOPS have to lie about the true financial implications of its highly-questionable decisions?
Lack of compliance with UN oversight guidance
The Statement claims that it has always “co-operated and complied” with UN oversight authorities such as its Board of Auditors, Legal Affairs, Ethics Office, and Internal Oversight Services (OIOS), as well as its own Executive Board.
That is a highly debatable assertion. The UN OIOS under Asst Secretary-General Ben Swanson originally avoided looking into UNOPS on grounds of lack of jurisdiction (which can obviously be disputed). Delving into the reports of UNOPS accounts, audits, and comments from the UN’s ACABQ, several areas of concern appear to have been either ignored or finessed by UNOPS in its usual manipulation of form over substance.
Ms. Faremo suggests that the Executive Board has approved all she has done; that is classic CYA strategy on her part. Examining the available Board papers of the past few years, it is clear that Board has never been fully and transparently informed on S3i strategies, decision pathways, risks and mitigations.
If UNOPS wishes to run itself in a business-oriented manner, it should adopt the practices of well-governed corporate entities. Instead, it seems that UNOPS is more akin to a private family company whose owners feel that they can behave like a mom-and dad shop. Ms. Faremo and her SLT seem to think that they own UNOPS as their private property, rather than working with the ethos of servants of the public good.
One cannot help wondering if an informed, engaged governance would allow the chief executive of a company to risk tens of millions of dollars in the cavalier way that UNOPS appears to have done?
However, any failure of UNOPS governance is not entirely its fault. It was set up a long time ago as part of the same governance that also oversees UNDP and UNFPA. How much it can truly focus on UNOPS is not clear. Also, if it is still like in the days when I was part of such governance, it is largely composed of diplomats and administrators from member states who may not have all the skills needed to oversee today’s multi-billion UN agencies.
In conclusion, UNOPS is massively‘under-governed and, while this suits the authoritarian personality of Grete Faremo who see herself as supreme arbiter of all that happens at UNOPS, it does the global public a grave dis-service. Professionalisation and reform of UNOPS governance is long overdue.
‘Fake’ or disguised social media accounts?
The Statement claims that there are fake social media accounts commenting on UNOPS matters. If so, it should provide more information on which accounts it considers to be “fake” so that they can be sanctioned and removed.
It is much more likely that these so-called “fake accounts” are instead, ‘disguised’ legitimate accounts who have been frustrated in their desperate attempts to get heard. Far too many of UNOPS personnel – past and present – are afraid to speak up openly because those who do so are intimidated, penalised, silenced, and sacked from the organisation. Also, there is no whistleblower protection at UNOPS.
UNOPS leadership would be better advised to focus less on victimising those expressing genuine concerns, and more on tackling the issues and complaints they have raised.
All UNOPS funding is unsafe
The Statement seeks to reassure donors by arguing that only S3i funding is at stake and, therefore, the rest of the organisation is safe to receive funds to continue business as usual.
This is manifestly absurd. It is the current UNOPS practices and leadership (aka ‘business as usual’) that have landed the agency in the soup and lost tens of millions of dollars. The same people continue to lead the rest of its US$3.4 billion business. Any prudent donor will know that all funding to UNOPS is currently unsafe.
That is why several donors and partners are currently re-examining their relations with UNOPS, and are suspending funding. Others should do the same until Grete Faremo leaves along with her discredited SLT cabal of James Provenzano, Honore Dainhi, Marianne De La Touche, Nick O’Regan and Peter Browne. Also, their Special Conspirators: Kelley Swift and Hafida Lahiouel, must exit with them.
The sooner that happens, the better for corrective reforms to be instituted at UNOPS. Only then will the world regain trust in its important works.