Is the UNOPS reform glass half-full or half-empty?

29 August 2022 – Mukesh Kapila

Photo by Michelle Riach on Pexels.com

In exposing misconduct and mismanagement at UNOPS through a dozen or so articles in this series, some common themes have emerged to explain how egregious misdeeds including profiteering, fraud, and corruption got embedded at the United Nations Office for Project Services (UNOPS), enabled by an unaccountable leadership that enjoyed widescale impunity.  These factors came together in the explosive failure of UNOPS’s dodgy S3i initiative that sustained multi-million-dollar losses.

The UNOPS (and UNDP, UNFPA) Board meeting on  29th August to 2nd September in New York will consider progress with UNOPS reform, initiated after the appointment of Mr Jens Wandel as Acting Executive Director.  Available Board papers  and other information coming from within UNOPS provide useful insights.  Several governments and UNOPS partners have got in touch for my analysis that is openly offered in this article.

A systemic failure of oversight

By any standard and over many years, the  UN Secretary General Mr Antonio Guterres, his UN Secretariat, and the UNOPS Executive Board have been failing their oversight role. It took a globally-publicised scandal shaking the foundations of the wider UN system to rouse them.  The suspension or severe restriction and conditionalising of UNOPS funding from important  governmental and multilateral donors such as the US, EU,  Global Fund and World Bank finally compelled action.  

At the core of the UNOPS debacle was lack of supervision and oversight.  The irony is that the highly-bureaucratic UN system is not short of oversight bodies. But UNOPS is a past master at ignoring them or doing as little as possible as late as possible.

Thus, a staggering 150 recommendations for UNOPS action, from the UN Board of Auditors, Joint Investigations Unit,  Advisory Committee on Administrative and Budgetary Questions (ACABQ) and UNOPS’s own Internal Audit and Investigations Group – several  of them going back at least two years – are still open. 107 of them are promised to be implemented by the end of 2022.

While this is awaited, it is fair to point out that several of UNOPS’s open recommendations depend on system-wide actions to be taken.  However, the Secretary General  has been in no hurry  to take remedial action to reduce the myriad risks and vulnerabilities to the UN’s  integrity. This is good news for extra-slippery entities such as UNOPS as it provides excuse and alibi for continuation of its own shady practices.

Therefore, it is no wonder that trust in the UN system  is at its lowest since its foundation – at a time that the United Nations is needed more than ever.

Internal control systems

The Board demanded a third-party review of “UNOPS internal control systems, risk management and overall governance structures including an assessment of the integrity of the wider UNOPS portfolio”. This is quite a hotch-potch of issues lumped together. They are also complex matters raising questions of methodology as well. Unsurprisingly, this review is somewhat delayed. It is supposed to report by the end of November. Only a rushed, superficial approach will allow this deadline to be hit. Inevitably, that has the possibility of affecting the credibility and utility of this review.     

Ethics review

As with other internal control functions that had been ‘captured’ by a self-serving UNOPS leadership, the Ethics Office has been heavily – and justifiably – criticised for failing its duty. The Board  has demanded an independent third-party review; this is not expected to report until well into 2023.

Meanwhile, a new ethics policy and an “operational instruction on protection against retaliation” have been instituted over recent days.  We wait to see how they work out in practice.  A lot depends on the competence , integrity, and independence of whoever is appointed to a renewed Ethics Office.  

Internal audit and investigations

A core accountability problem was the functioning of UNOPS’s Internal Audit and Investigations Group (IAIG).  Executive Board decision DP/2022/27 asked for a comprehensive review of its independence.  This has been conducted but, ironically, it was an internal IAIG self-assessment and not an external third-part review as with the  other Board-demanded studies. Why was that the case?

Nevertheless, the  report confirms that IAIG was just a creature of senior leadership and management. It was appointed by and reported to the Executive Director with no independent right of access to the Board.  (Why the Board and its Audit Advisory Committee allowed this to continue for so many years is not addressed in this report; a separate assessment is needed for that). 

IAIG budgets and access to information crucial for its investigations were subject to haggling with senior management. As they were themselves under the IAIG’s remit, there was an obvious conflict of interest. Indeed, the report acknowledges that there were many instances when IAIG enquiries were curtailed, diverted, or ignored by top and senior management. The charge by lower-level staff that IAIG had double standards is effectively proven.

Indeed, the report confirms that IAIG investigators self-censored when reporting investigations that implicated senior management.  It says bluntly that the UNOPS structure “not only deters whistleblowers, but it also fails to allow IAIG to freely and independently challenge UNOPS senior management without fear of improper influence or retaliation”.

The report seeks to pin exclusive blame on the “Executive Office”, a coy reference to the disgraced Executive Director Grete Faremo and Deputy ED Vitaly Vanshelboim. They can be easily scapegoated, now they are safely-departed. However, a careful reading of the report makes evident that fraud, corruption, and personnel abuse and exploitation found fertile ground in UNOPS through the self-serving culture that was the prevailing norm.  That included the former Senior Leadership Team  and regional directorates, all of whom are still in office.

There is no shadow of doubt left by its own self-admission that IAIG was an egregious failure. However, there is no expression of regret or apology in the report that is shameless in pleading for understanding on the grounds that IAIG was under-resourced, and itself a victim of top and senior management. That should not excuse IAIG’s own directors and staffing for lacking the professional courage, ethics, and principles  to stand up against the wrong-doings going-on under their nose.

Instead, IAIG personnel pursued their own self-preserving path and caused grave hurt and harm to very many UNOPS personnel by actively conniving with the corrupted senior leadership. These IAIG staff disgraced their profession and need to be held accountable, in their own right.

Mr Wandel is acting to strengthen IAIG’s independence through his new Operational Directive OD.ED.2022.01 dated 23rd August. This is good but the credibility of implementation depends on whether the earlier IAIG leadership and staff implicated in egregious malpractices remain in position.

Profiteering

It is a principle of transparency in public administration that a publicly-funded report is publicly available. However, Deloitte’s 51-page report on UNOPS reserves, costing US$105,000 in consulting fees, has been removed from the UNOPS website. Availability is now restricted to governments by application to Mr William Axelsson, a protégé of the disgraced Ms Grete Faremo and a former Deloitte’s employee who is now the UNOPS Head of External Relations in New York – after a spell in UNOPS Geneva as expert practitioner of the dark arts under Mr Moin Karim. (Eager readers  who want the Deloitte report can send me their email to receive a copy, if they are rebuffed by Mr Axelsson).

The Deloitte report is excellent and full of facts and figures that explain why UNOPS feels compelled to withdraw it from public view.  It confirms well-known criticisms and provides a useful precis of where UNOPS ignored or bypassed advisories from the UN’s oversight bodies. Poor financial literacy in the Board also meant that it was easily bamboozled.   

In short, the report confirms that over many years,  UNOPS made obscene profits from donor-funded operations,  the impact of which was to cheat poor and vulnerable beneficiaries who needed UNOPS projects most.   UNOPS profits averaged approx. US$45 million  per year and a whopping US$90.4 million in 2021, when the COVID-19 pandemic brought a further opportunity to profit from the world’s desperation.  

These surpluses mean that by the end of 2021, UNOPS’s net assets had grown to more than 250% of the minimum reserves required for the agency’s financial viability. Obviously, such a windfall was too tempting for a venal UNOPS management and explains, in part, the rush into the highly questionable S3i venture.

Deloitte’s comments also hint at the lack of clarity and transparency over UNOPS’s so-called “growth and innovation” reserve which spawned a designated S3i reserve. The loosely-defined scope of the innovation fund reads more like a ‘slush fund’ that the UNOPS leadership can use for all sorts of tasks and functions that would, under any normal agency, be clearly identified as part of its routine operating budget; for example, implementing its own strategic plan. In principle that includes the possibility of UNOPS management able to reward friends with favours around so-called innovation projects. It is easy to see how such a system can be easily manipulated or corrupted.

The key issue now is on what to do with the accumulated excess reserves. Deloitte-suggested options include UNOPS returning the money to the projects and donors it had cheated. But figuring out what to reimburse to whom would be very cumbersome and generate huge transaction costs. A related option to distribute the excess to all member states or to a common UN fund such as the Resident Coordinator system smacks of an invitation to benefit from ‘immoral earnings’.  It is also unfair as not all states are UNOPS contributors or beneficiaries.

Perhaps,  the most practical option is to reduce future project fees to significantly below actual costs, so that to exhaust past excess profits. UNOPS will then have  to ensure that its future pricing structure does not recreate the profiteering problem.  There is considerable scope for this as explained in a previous article that outlined how UNOPS’s rapacious business model works, exemplified by its Geneva office under the exploitative leadership  of its Europe Director, Mr Moin Karim who generated huge immoral profits for the agency. 

A new business model?

Sensing the writing on the wall, UNOPS Chief Finance Officer, Ms Marianne de la Touche  rushed out an internal management note on 24th August indicating that UNOPS is reducing its fees and charges with effect from 29th August (coinciding happily with the start of the Board meeting).

The note promises greater transparency confirming, inter alia,  that its prevailing business practices are anything but… Most significantly, it promises that UNOPS will no longer charge an additional premium for risk unless there were exceptional circumstances. That was a major scam that inflated its fees and charges.

No details have been publicly released on the new model‘s variables, assumptions, and computations. Obviously, it was rushed out under pressure of the imminent Board meeting. 

Initial internal staff reactions are that of bafflement.  Ms de la Touche’s note says that the new pricing applies to new projects – the presumption here being that existing projects will continue to be bled for outrageous profits on current terms.  With so many other qualifications and caveats outlined in Ms de la Touche’s note, it appears that  the ‘new model’ may well be a smoke-and mirror visualisation of the ‘old model’.    

S3i accountability

The written Board papers are silent on S3i – the original fire that burnt the UNOPS house – other than confirming that all its investments have been suspended. A third-party review of S3i oversight and its internal control systems is to be commissioned, with a report due in November.

Meanwhile, there is no update on progress with retrieving lost funds or any legal actions underway to visit accountability upon external partners or internal staff who may have connived with potential fraud and corruption.

Presumably, a fuller update to Board members will be provided by Mr Wandel. But the longer the lack of transparency continues with respect to enquiries and findings round S3i, the more the suspicion grows that the UN system is engaged in a cover-up of what actually happened, despite any lesson-learning exercises for the future.  

UNOPS senior management changes

As is well-known, former Executive Director Faremo and Deputy Executive Director Vanshelboim have departed in disgrace. However, it is unclear if they are going to be held accountable for mismanagement and misconduct, or if they will be allowed to fade away discreetly, cushioned by their lucrative pensions and other emoluments, as is usually the case in the UN system.

In recent days, it was encouraging to hear that Chief Legal Counsel, Mr James Provenzano will not be allowed to serve out his full term till his retirement next year. Instead, he will leave at the end of 2022. Internal sources suggest that he will probably go sooner – around October – to enjoy a long ‘terminal’ leave.  For the hundreds of staff who have suffered indescribably due to him, his departure cannot come too soon. Apart from the former ED and Deputy ED who had titular authority, Mr Provenzano is probably the most important creator of the greedy shark culture created at UNOPS which ultimately thrashed the agency’s reputation.  Will Mr Provenzano be held accountable for his own misdeeds and egregious transgressions?

Close behind is  Mr Honoré Dainhi, UNOPS Director for Regional Portfolios  i.e.  ultimate master of all continents under whose remit abuses proliferated everywhere, while UNOPS country and field staff were degraded and denigrated.  In past days, he has been stripped of his title, and demoted just to the directorship of Africa. This does not bode well for the continent which needs most help.

These are small steps for accountability at UNOPS. But insufficient. Other key co-conspirators such as a CFO Marianne de La Touche,  Communications Director Peter Browne, Implementation and Standards Director Nick O’Regan,  and Europe Director Moin Karim remain in post. 

Several existing directors are even aspiring for the two new Assistant Secretary-General positions, and busily lobbying at present.  Indeed, it would be a travesty – adding insult to injury – if they remained in position for too long or, worse, even got promoted. 

Is the UNOPS reform glass half full or empty?

Some changes do appear to be underway at UNOPS. While the reform train seems to be moving in the right direction, stakeholders have been so deeply betrayed by UNOPS that regaining their trust will take more than bare intentions or cosmetic changes. The best to be said so far is that the UNOPS reform glass is still half empty.

For the glass to be half full needs not just structural, systems, and process reforms but hard accountability for the wrong-doings of individual UNOPS senior leaders, most of whom remain in position.

Frankly, Mr Wandel has done only the easy stuff so far, in a plodding bureaucratic manner that is a no-brainer.  Akin to the froth on top of a glass of beer being poured out. Whether Mr Wandel has the courage or stamina to make the real transformational shift at UNOPS remains to be seen.

Published by Mukesh Kapila

See http://mukeshkapila.org

78 thoughts on “Is the UNOPS reform glass half-full or half-empty?

  1. @Gerit, @ Mariah C.
    fully agree, but it is not only about restoring trust from our beneficiaries. We have a system that over the years of Grete’s leadership has become so toxic and has turned colleagues that were once decent people into power-hungry individuals that are driven by greed and by “who looks better in the eyes of the beholder” = Corporate Management.
    Power corrupts that is true but it also takes two for a tango. Grete who created this system and the colleagues that willfully followed her lead. Colleagues that have thrown UN values over board and embraced “running UNOPS like a Private Firm” but without Board of Directors.

    But they all sit still in their chairs and we have not heard any statements of remorse or an apology. To the contrary, they happily continue their witch-hunt and are still supported by PCG and Victoria.

    The independent review just needs to look into, how recruitment was done in the Asia Office and in the Geneva Office, it would be enough to have plenty of cases for the tribunals.

    The SLT members need to go and with them the Regional Directors to clean the house. PCG needs to be reformed and the leadership should also let go because they were complicit in retaliation.
    Why did PCG or Victoria or anyone here not speak out when J. Provenzano retaliated against the whistleblower? Was it because Grete was still in the office and it was easier to look the other way and keep quiet?

    And now, suddenly all talking about fairness and values and change, how pathetic, a bunch of spin-less followers, without guts to stand up against tyranny and abuse.

    This is not over yet by far.

    It is just the beginning, the Executive Board will receive more and more material in the days to come.

    Sempre Fi

    John Derrel

    Like

    1. Wandel should first ensure all the rotten apples are sent home. These people are known, their misdeeds are known. The havoc they are continuing is visible.

      Like

  2. In light of the ongoing independent review, UNOPS personnel are urged to be truthful to the reviewer. It is unfortunate that the scope is limited to S3i and control systems. The reality is there is more rot in UNOPS.

    Like

  3. The more things change, the more they remain the same. In Copenhagen corridors, everyone is talking about how difficult or impossible to change and undo Grete’s legacy. S3i culprits are hard at work to destroy of what is left of UNOPS because the writing is on the wall.

    Like

  4. The only thing at UNOPS that needs to be reviewed is the areas Jim P ever led: Ethics, PCG, Legal and NY office. All the shameless acts will be uncovered. S3i is just one of the dirty laundry that got out.

    Like

  5. @Oo
    agree, but you would still capture only 50% of all cases. You would miss out on everything that happened in the region’s and never made its way to PCG or Legal or Ethics.

    You can be sure that the skeletons in Moins, Sanjays, Fabrizio’s and Banas closets are nothing short of what happened in S3i. But it is less about $$ but more about how personnel is being exploited, power abused and donors over charged so the RDs can have their own empires.

    Sempre Fi

    John Derrel

    Like

  6. Wheels of justice gind slow but grind fine. The bad elements are still around and for them is business as usual but they will be in for a surprise. Watch this space.

    Like

  7. Wheels of justice gind slow but grind fine. The bad elements are still around and for them is business as usual but they will be in for a surprise. Watch this space.

    Like

  8. How sad! This was a perfect opportunity for UN leadership to redeem itself. An organization which is forever preaching transparency and accountability is keeping reports under the carpet. Wandel you may need to dig deeper on the cries of UNOPS staff. Harassment and retaliation is even more now open than before.

    Like

  9. It is always seems impossible until it is done but there is light at the end of the tunnel. The results of the independent review will be shared with the board this month. As expected, all former SLT members were accomplices in the S3i fraud. Recommendations were also send to the Ethics Office so that some of these individuals can be investigated for retaliation. Don’t give up just yet colleagues!
    The information you are sharing with EB members is useful.

    Like

  10. Well, maybe some will get a slap on the wrist but the larger part of them will get off and all will be buried. Look how Grete got off, Norway felt embarrassed and everything was brushed under the carpet. Maybe they will nick Vitaly and a few others but that’s all.

    And don’t forget, it is not S3i, the problems are much wider and deeper. If that is not addressed it is all just a farce and a cosmetic exercise.

    The SLT and Grete and Vitaly alone were not able to create such a wide spanning system, that was done with most of the other senior figures in HQ here and especially with all the Regional Directors.

    So hold your horses, I have seen too much in UNOPS, nothing will surprise me.
    The new ED needs to clean house on a global level.

    Sempre Fi

    John Derrel

    Like

  11. Check the unops.org website…kpmg report…action plans etc

    Some interesting language in the kpmg report: p.4-6 & 7….

    Recognition in language of the suppressive, fear based & retaliatory mngmt culture of UNOPS..uhh.HQ & EO…and capacity…thank christ this was said…also…how does an intern go to ica1 & ica2 in short periods & “advise” in ips & pm of field based 10+ yrs..or hq persinnel that have worked in every single group..HR..procurement….PM …finance and ICT…amazing

    Lets see what real changes are manifested… a real review of some of the personnel & especially staff & interconnected personal relationships that perpetuate their positions despite complaints would be extremely positive…

    Oh their delivery, NER & NR was high..should not be carte blanche to exploit people..abuse them & toss to the side …uhhh looking at you GVA…

    Like

  12. We welcome the new HR Director and we hope her first assignment is to abolish the so called internal Grievances section which was used to witchhunt competent employees by Jim and Honore

    Like

  13. Why are the investigators hiding the allegations of kickbacks involved in the relocation of moving the Africa Regional Office to Abidjan?

    Like

  14. How relieving is it to read that the corrupt narcissistic former SLT is send home.
    UNOPS colleagues don’t give up your fight in exposing all wrongdoings.
    Remember the recruitment of Honore’s Assistant from G5/6 to an ICA1 Partnerships Analyst position with zero experience in the field while qualified candidate were sent home. Don’t forget the recruitment of the clueless Senior Partnerships Advisor for AFRO who he later moved to PLG but could not cope because her incompetence was exposed. Not to talk about the Deputy Regional Director with a 3 year degree which could not be verified but he insisted that she must be recruited anyway, because she is from the oil industry.

    Like

    1. This is not surprising. An ICA1 infranstracture analyst was elevated to an ICA3 Infrastructure Advisor position in 3 years and now being fronted for a Country Director position.

      Like

  15. Thank you Mukesh for providing this platform. I am happy to see that Wandel is at least acting on some of the recommendation provided by UNOPS personnel. But why is he quiet on rotten HR and Internal Grievances section by Victoria and her so called blue eyed Alejo? How many more people should suffer at the hands of dictatorial Regional Directors?

    Like

  16. The damage caused by S3i is irreparable but nothing compared to the really corruption going on at UNOPS. Can someone investigate the kickbacks given to the senior managers for the Procurement of wheat in Ethiopia?

    Like

  17. The mills are grinding slowly but they are grinding. Compared with the results of the external assessment (KPMG – most of the wording was softened and indeed it was very unfortunate that all was just limited to S3i) the real impact is so far reaching and UNOPS Senior management is just quiet.

    Last week I had a few drinks with friends from another UN Agency but I am not sure how long I can call them friends. A number of donors is withholding funding to the UN and all because of UNOPS, one can imagine, how thrilled they are about us.

    And we don’t even have the decency or the guts to stand up and say “Sorry, we have screwed up”. No, we are keeping bragging what a wonderful agency we are. It is so disgusting.

    And what will change if S3i is dismantled and the SLT is send home? Not much, because the real problems are going much deeper.

    @Yolanda, agree, maybe 1 head of the Hydra was cut off but the other dragons in the regions are happily continuing their game.

    It has been said that Sanjay in Bangkok instructed his henchmen/women to increase the pressure on the personnel in the country offices to ensure they won’t talk to donors directly and people are threatened with the discontinuation of their contracts if they get out of line or communicate with the Executive Board.

    And here in HQ, Victoria is still running around like the Queen “untouchable”.

    Wandel, make some decisive moves before we suffer more damage and repetitional loss or before the real bad stuff is coming to the surface. There are still some old-timers here in Copenhagen and we know where the skeletons are buried.

    Sempre Fi

    John Derrel

    Like

  18. Mismanagement and Corruption is everywhere. What was exchanged between Honore, Vitaly and Grete to agree for the Africa Regional Office to be moved to Ivory Coast? We know that AFDB officials turned down their bribes. Should we bring in KPMG for another assessment?

    Like

  19. @Henry B,

    reckon KPMG has done their job, now it would be time to bring in the competent law enforcement and justice authorities to get some cases ready for court and the SG should finally revoke some immunities from the crooks.

    Sempre Fi

    John Derrel

    Like

Leave a Reply to Carl Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: