How the culture of fear and abuse of power ruled UNOPS

29 November 2022 – Mukesh Kapila

Through the 16 articles in this series we have plumbed the depths of the sordid scandal that has degraded the good name of the UN Office for Project Services (UNOPS) and, indeed, damaged he United Nations itself.  The implicated UNOPS leadership tried to bluff its way through obfuscation. But the evidence was copious and clear.

This is  confirmed in two recent “third party reviews” by KPMG.  At the time of writing, only short summaries had been released publicly but I have seen the full reports. Their hundred pages, rich in facts and figures, are an admirably clear exposé.

The first report dissects how UNOPS screwed with its ‘Sustainable Investments in Infrastructure and Innovation (S3i) venture.   The second report complements this by examining how UNOPS’s controls, management, and governance were subverted to enable the egregious blunder.   

How the dangerous stupidity of S3i emerged

The reports outline how, when Ms Grete Faremo was appointed as Undersecretary-General and Executive Director in 2014, she connived with her deputy, Assistant Secretary-General Mr Vitaly Vanshelboim to mis-direct the UNOPS Executive Board to agree to an “extension”  of UNOPS’s mandate. That is how the ill-fated journey started, diverting UNOPS from its core UN mandate as a development assistance agency towards becoming a predatory and  profiteering business, the flagship of which was to be S3i.

Who was responsible? Analysing the KPMG reports suggests that Ms Faremo was equally – or even more – responsible for the plotting, scheming, and misleading that created the debacle. Not just Mr Vanshelboim as has often been suggested.  That was against the background that neither Ms Faremo nor Mr Vanshelboim had any track record of successful private sector enterprise.

And, of course, as the Board was unqualified to assess the ideas put to it, the Faremo/Vanshelboim duo found it easy to sell snake oil to them. The Board must take its own share of responsibility for allowing itself to get hoodwinked through failing to discharge its most fundamental duty  of diligence.

The fatal pathway

The reports lay bare a disastrous journey that started from the “strong top-down approach” instituted by Faremo/Vanshelboim. They centralised all power to themselves and deliberately appointed weak cronies to do their bidding. These are described by KPMG as senior management with  “lack of capacity and limited expertise”.

Weak and incompetent people often survive, and even prosper, through the “abuse of power” to intimidate others. That is what happened, as described in the KPMG reports. UNOPS leaders and managers (spanning the former Senior Leadership Team, EAC+, and regional directorates)  “created a culture of fear in the organisation”.  So much so, that those whose job was to provide checks and balances were thoroughly neutralised.

The result was that UNOPS’s previously established scrutiny processes that were standard in any agency handling billions of dollars – in both public and private sectors – were  deliberately ignored, bypassed, co-opted, or corrupted. All four of these phenomena occurred.

The reports outline how that happened in UNOPS  where “many critical oversight and segregation of duty elements were not implemented”.  That impacted on  risk management and flawed project design and monitoring as well as careless contracting and financial disbursement. The principal responsibilities here were with the Chief Legal Counsel and Chief Financial Officer who failed their duties.  

Other egregious failures included ignoring “red flags”, not investigating “whistle blowing” complaints properly, ignoring conflicts of interest, and exposing the organisation to “opportunity for fraud”.

The internal control machinery of UNOPS was, therefore, completely and fully compromised. This included the Internal Audit and Investigations Group (IAIG), Audit Advisory Committee (AAC), and the Ethics and Compliance Office.  Their integrity was not trusted as they were not independent of the top leadership.  Ultimately, they failed to discharge their functions to industry standards.  Worse, they appear to have victimised complainants and thus, in effect, facilitated the misdeeds they were supposed to guard against and correct.

The question still remains on whether all the blame can be laid solely on  the back of the Faremo/Vanshelboim duo.  The KPMG reports make clear that such massive organisational failures require acts of commission and omission at many levels. Thus, the whole of the former Senior Leadership Team  (SLT) was implicated. 

Going beyond the then SLT, there are questions about the roles of regional directors. While they had been removed from the SLT  at the time that the major misdeeds occurred, did they play a helping role? That questionable things were going on was talked about fairly openly in the corridors of UNOPS offices in Copenhagen, Geneva, New York  and elsewhere . They appear to have been aware of the initial grants given out in a questionable manner to WATO/SHS, as uncovered by the latest report of the UN Board of Auditors and other evidence.

UNOPS regional directors are senior officials of the United Nations, and the excuse of ignorance and fear is no self-defence. At the very least, they fell short of their duty to the UN code of conduct which required them to act against institutional wrong-doing. Not only did they not do that – but their actions and inactions had the effect of sustaining their abusive leaders in power while also deepening the culture of fear that infected the whole organisation.    The Regional Directors appear to have benefited in consolidating their own powerful professional positions from mismanagement at the top, and dispensations. 

Wider UN failure

The reports describe UNOPS’s “three lines of defence model”. But there is no safe place when an organisation is set on wilful self-harm. That is exactly  what UNOPS did when it holed its own inner defences, as outlined clearly by KPMG.   

The outer defence is provided by the wider UN secretariat’s oversight mechanisms. They include the Advisory Committee on Administrative and Budgetary Questions (ACABQ), and the United Nations Board of Auditors (UNBOA) both of which raised flags concerning UNOPS budgeting, especially concerning its burgeoning reserves that violated previously established policies and principles. They also referenced the questionable S3i investments including subsequent and increasing provisions for losses. These concerns were ignored.

The Joint Inspections Unit (JIU) of the UN system, an independent, externally-run body, “has issued several reports in recent years that are relevant to UNOPS”. They concern management and administration, audit and oversight, and ethics functions. They have pointed out that UNOPS does not comply with “the requirements of leading practices and good governance” and made several recommendations that remained unfulfilled.

The UN Secretary General also has an Office of Internal Oversight Services (OIOS). It has done an investigation report on S3i but not released it. It also received complaints about UNOPS including, in particular, about Mr Vanshelboim. But it did not investigate and passed on complaints to IAIS which also did not investigate.  One point for contention was whether UNOPS’s internal mechanisms or that of the wider UN had jurisdiction over concerning matters.

While these issues were debated in a leisurely manner over months and years, wrong-doers at UNOPS were free to carry on their misdeeds, without restraint or accountability. It is strongly evident that the oversight mechanisms of both UNOPS and UN have not just failed but served to create a climate of impunity that allowed such crimes to occur.

Reform at UNOPS

The Acting Executive Director of UNOPS, Mr Jens Wandel, has welcomed the KPMG reports and undertaken to implement the 43 recommendations addressed to him. Indeed, he has already been active in executing several of them because UNOPS’s shortcomings have been heavily trailered in previous months. 

Most significant is the pledge to return UNOPS to UN principles and values and to review its strategy and mandate so as to return the agency to  what it was good at and, presumably, away from rent-seeking and profiteering behaviour.

As I had originally demanded, UNOPS has also acknowledged over-charging and reduced some of the exorbitant prices and premiums it charged to other organisations and programmes.

Mr Wandel has also committed to a more collegiate approach within the organisation and with partners.  Greater investment in staff capacity building and more training are promised.

Many of  KPMG’s recommendations address oversight gaps and weaknesses, and new senior appointments by Mr Wandel signal  the move towards progressive change in the ethics, compliance, and organisational culture including better whistleblower protection. Better management and operational systems are also promised.

S3i in its previous form is dead. It survives as a shell at its Helsinki base, but it will not be making  any more investments. It may seek to develop a technical advisory role in the area of impact investing, but one wonders about its credentials to do that.  Who will want advice from a failed, corrupted entity? Or perhaps it may develop a useful business line lecturing about its faults and lessons learnt pour décourager les autres?

The five recommendations for the Board call for its modernisation and professionalisation including, in particular, establishing an audit and risk committee. These are the minimum improvements necessary for a Board that has presided over the most stunning failure of governance oversight of any UN agency, in living memory. 

A thorough independent review of governance –  taking the lead from these  UNOPS management reviews – is necessary.  This is even more crucial because the same Board governs two other big organisations – UNDP and UNFPA. What risks and problems may be lurking there?

Accountability and justice

UNOPS reform would be more credible if accompanied by holding accountable those who committed the abuses and wrongs. This should be accompanied by some attempt at restitution. 

The UN’s Office of Legal Affairs has been tasked to consider criminal prosecutions against incriminated parties and to recoup as much as possible of the millions lost by UNOPS through S3i’s questionable business partnership with SHS Holdings. Whether or not this succeeds or how long that takes remains to be seen.

If and when some funds are retrieved, the question arises: will there be restitution made to those funders and project partners including the hosted entities in Geneva from whom UNOPS profiteered shamelessly to build up its illegitimate reserves to gamble with potentially fraud-and-corruption tainted investment in S3i? 

UNOPS donors and project partners are the victims of the misdeeds and mismanagement  sanctioned by UNOPS and deserve justice. Even more so do the poor and vulnerable beneficiaries of UNOPS programmes who were ultimately did not get the help they desperately deserved  because their allocations were misapplied.  How will they – both funders and beneficiaries – who are  the real losers be compensated?

Meanwhile, it is good that those who masterminded these misdeeds have been removed – a demand that I had articulated in my earliest writings.  Executive Director Faremo resigned in disgrace, Deputy Executive Director Vitaly Vanshelboim has been removed pending some mysterious accountability process, and Chief Legal Counsel James Provenzano has been accelerated towards his retirement. Their principal collaborators on the former Senior Leadership Team,  CFO Marianne de la Touche, Regional Portfolios Director Honoré Dainhi, and Implementation Practices and Standards Director Nick O’Regan, have been removed from leaderships roles and given transitional sinecures – presumably pending their final exits.

Ironically, however,  retirement with generous UN pensions, or separations with extensive accrued benefits is hardly justice. When will they  be held to account and, if appropriate, penalised? 

Without meaningful accountability, there is no real closure for UNOPS or the wider UN under Secretary General Antonio Guterres. They can then be open to charges of cover-up.

A postscript: Why? 

The anatomy and physiology of the heist at UNOPS  has been clarified. But not its psychology. We know what went wrong, how that happened, and who was implicated. And I am sure that with all the fuss created, we will succeed in re-securing the door – even if this is after the horses have bolted.

So, the question that haunts me is: why? Specifically, why did so many senior and respected people of established reputation betray us? Were they greedy? Were they drunk with power?  Was it impunity from a sense of over-weening privilege  ? Was it arrogance from the perception that they were above the rules? Was it weakness that pushed them to obey their wrong-doing leaders without question? Or was it just contempt for ordinary people like their supposed colleagues, partners, donors, beneficiaries?

Each of the principal characters in this sorry drama must have had their own reason that excused their misconduct. This is known perhaps only to their conscience and hopefully to law enforcement if it calls.

But answering the basic question  of ‘why?” is important because although UNOPS will recover, the nasty taste of betrayed trust will linger for much longer.

Published by Mukesh Kapila

See http://mukeshkapila.org

15 thoughts on “How the culture of fear and abuse of power ruled UNOPS

  1. Executive board should make greater effort questioning UNOPS reports (all of them). Most of the information and statements in these reports constitute falsification and sham. Sadly, executive board can only rely on help of whistleblowers as UNOPS has developed a superb expertise in forgery in recent years. UN folks see us as an agency that can do all dirty job quickly and bypassing rules.

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    1. Well, the Board could do a few things to restore trust:
      – request that Kelley Swift (head of investigations) and Abdoul Dieng (who was the head of the audit unit until he was promoted to IAIG head!) be fired. How can they let IAIG be led by the same people who allowed this to happen? The irony is that they are getting more staff and are being promoted. This is ridiculous.
      – how can anyone have the courage to report misconduct after what happened to the whistleblower? @Abdi no whistleblowers will help the Board unless there is full justice for the whistleblower who exposed the misdeeds of UNOPS’ crooks;
      – easy for Abdoul to say “he is independent”. He should have done his job in difficult times, not now that he has everyone’s support!!! Same goes for Kelley, she should have investigated this mess for the past 5 years instead of covering up what the SLT doing. How much money did she get in exchange for her “inaction”?
      – nobody will trust UNOPS until Kelley Swift (US citizen) is fired and sent to jail.

      @ambassadorChrisLu it is time for you to intervene. Unless the entire composition of UNOPS investigations team is changed, more millions will disappear.

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  2. But what happens to former UNOPS employees who were gravely retaliated for reporting wrongdoings and misconducts? There needs to be re-opening of all personnel cases done by IAIG, PCG, Ethics and Legal who were simply mouthpieces and tools for the disgraced former ED, former General Counsel and former SLT. Each personnel who was retaliated by these culprits shall be given a chance for reinstating or settlement.

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  3. @Justice
    yes, that’s how it would work in a perfect world. But don’t be mistaken, this is not the first scandal UNOPS or other UN Agencies went through and it will be not the last one.

    Even now it continues here in HQ and in the regions. There are always very subtle messages to colleagues that are too outspoken, that challenge inappropriate authority and dirty games – “be carefully what you say or your contract won’t be renewed”.

    As long as we are operating with the ICA/LICA system, as long as colleagues are exposed to arbitrary abuse of power, without any means of a fair redress, nothing will change.

    I agree, it would be absolutely fantastic to see how all the Regional Directors would be held accountable, not only for their complicity in the recent s3I events by turning a blind eye because it could have an impact on their standing in the organization, but also for all the misdeeds they have performed in the past, with the only goal to please HQ, to look good in Grete’s eyes or to benefit personally in various ways.

    If we can see a new system that provides for an established line of communications, where whistleblowers can report directly to the Executive Board, then we have already achieved a lot.

    A common advice to all future whistleblowers in UNOPS, if you report, stay anonymous unless you already have decided to leave the organization, otherwise they will hunt you down and crucify you and no one will protect you. Just because Jim and Nick and some others will leave or already have left, nothing will change.

    Because top managers in our organization, whether here in HQ or out in the regions will ever be held accountable and brought to justice. Alone taking all the information revealed in Mukesh blog would be enough in the private sector to eliminate all Regional Directors and Senior managers in HQ.

    Or what shall we think about the fact that the KPMG investigation was just limited to s3I, no-one wants to dig deeper and rock the boat. Let’s move on, let’s bring in the big bucks, we will find other ways in the future how we can cheat our donors.

    Looking forward to retirement…..

    Sempre Fi

    John Derell

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  4. @John, yeah, Jens and the Board are pretty idiotic for not getting rid of all the people whose names are mentioned here.

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  5. (Arquivo, para nao o perder, apenas para referencia futura)

    Ian, you, I and anyone with enough experience with this organization knows the answers to all the questions you raise here, very well. Until someone is actually handcuffed at the United Nations, for all to see and taken to jail and actually serve their sentence, nothing will change. For decades now, millions of dollars have been wasted on reform exercises, after reform exercises that are almost never fully implemented. Give me the name of a single senior official, at the highest levels, who has ever been held accountable inside the United Nations, for misconduct – just one. As you have reported, just one person disappeared $70 million dollars recently. What happened with Benon Sevan in the ‘Oil-For-Food’ Iraq scandal? We all saw how he was helped to escape international (american) justice. UN rules and regulations are broken and violated at will and nobody is ever held accountable. Why should they bother to change? Any new body that is created to address any of these concerns, once it is in existence, it is corrupted – again – immediately, rendering the entire effort completely useless and worse, just a waste of more money. For instance, you have the issue of racial discrimination and other abuses, against staff members of african descent that’s been there for decades now. Nobody talks about it. What happened to the Secretary-General’s Taskforce, created following the George Floyd’s case and the Black Lives Matter movement? The media never follows up any of these issues, all the way to conclusion. They move on to something else. The perpetrators know all of these so, they just sit it out and wait for the momentum to pass. That’s how it’s been for decades now. Nobody cares. I am not telling you anything new here. You know it, and I know it. We all know the drill. In order for the United Nations to be rescued, from those who do the most damage to it and, be made a better Organization, a truly independent outside oversight is needed!!!

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  6. I and anyone with enough experience with this organization knows the answers to all the questions you raise here, very well. Until someone is actually handcuffed at the United Nations, for all to see and taken to jail and actually serve their sentence, nothing will change. For decades now, millions of dollars have been wasted on reform exercises, after reform exercises that are almost never fully implemented. Give me the name of a single senior official, at the highest levels, who has ever been held accountable inside the United Nations, for misconduct – just one. As you have reported, just one person disappeared $70 million dollars recently. What happened with Benon Sevan in the ‘Oil-For-Food’ Iraq scandal? We all saw how he was helped to escape international (american) justice. UN rules and regulations are broken and violated at will and nobody is ever held accountable. Why should they bother to change? Any new body that is created to address any of these concerns, once it is in existence, it is corrupted – again – immediately, rendering the entire effort completely useless and worse, just a waste of more money. For instance, you have the issue of racial discrimination and other abuses, against staff members of african descent that’s been there for decades now. Nobody talks about it. What happened to the Secretary-General’s Taskforce, created following the George Floyd’s case and the Black Lives Matter movement? The media never follows up any of these issues, all the way to conclusion. They move on to something else. The perpetrators know all of these so, they just sit it out and wait for the momentum to pass. That’s how it’s been for decades now. Nobody cares. I am not telling you anything new here. You know it, and I know it. We all know the drill. In order for the United Nations to be rescued, from those who do the most damage to it and, be made a better Organization, a truly independent outside oversight is needed!!!

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  7. Grateful to UNOPS colleagues who gathered courage to tell it all. Believe me all the bad elements and their accomplices will leave one by one and if the system is not able to hold them accountable, God will punish them. However, the damage they caused either to hardworking personnel and to the reputation of the organization is irreparable.

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  8. Mass exodus from UNOPS HR related functions. What is cooking? Victoria and Evil Alejo, what are you waiting for? How many more lives do you want to destroy?

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  9. …. and we are still scratching the surface. The issue is not UNOPS management, WB protection or S3i. The real problem is the commercial nature of the organization (this is not to defend the behavior of the management – they must be held accountable). Can you imagine USAID as “self-sustained” agency charging commissions from those whom it is helping? How come that for the last 25 years UNOPS has had a monopoly on demining dipping into the peacekeeping budget? Why are most of the IT support people are hired through UNOPS? How come nobody in UNOPS was held accountable for trying to charge up to 30% overhead from its clients? Why has UNOPS been legally declared “a part of the Secretariat” and made exempt from competitive procurement? The whole raison d’être of UNOPS was to avoid oversight and short-circuit the process. Yes, the UN needs a proper project Org and UNOPS staff offers a lot of expertise and dedication. The staff should be retained but the agency needs a full resetting on a different budgeting and operating principles. Appointing another well-intended Nordic to fix the Danish kingdom will put out the scandal but result in similar issues down the road. Just ask Mr.M.

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  10. @Dmytro Dovgopoly
    indeed, you can compare it with the labors of Hercules, slaying the Lernean Hydra. You cut off one head and 2 will grow instead.
    S3i is just the iceberg and the manifestation of symptoms that have their origin much deeper in the fabrics of UNOPS, which have changed over the years from a UN Agency that was once all about helping the poor, to a monstrous and greedy organization that has no resemblance with the values of the United Nations.

    Removing a few SLT members will not change anything. Management throughout has been infested with the new style of “Profit above all”.
    There are countless stories about colleagues warning Regional Directors about the negative impacts of over-charging clients but all that was brushed aside, because the RD’s were competing over who can present higher numbers to Grete and Vitaly.

    And some were working frantically ….. not to make the organization a better place for personnel….. but how to increase their power and build up their own kingdoms.

    We all know our ICA colleagues that work 60, 70 hours a week, during weekends and holidays to keep projects going, to make sure, medicine is delivered to the people in need. Are they compensated for their overtime, do they have access to the healthcare and pension fund? No, because they are not staff, they are just expendable consultants but we all forget too often, that it is the ICA and the LICA workforce that keeps this organization running.

    But they are being exploited, overworked and undervalued. Shame on the guys that foster this system and build their own careers on the backs of the ICA’s and LICA’s, Shame on you Moin’s, Sanjays, Banas, Fabrizio’s, Dionyssia and all your likeminded friends here in HQ.

    If UNOPS management will net be revised and renewed from the bottom to the top, nothing will change, we just replace one system person with another.

    Sempre Fi

    John Derrel

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  11. When will the investigations about the kickbacks received for moving the Africa Regional Office to Abidjan starting?
    Will UNOPS also investigate the recruitment of non- qualified staff in Africa Region?
    The Executive Assistant is no longer in chains. She can spill the beans.

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  12. @Tatiana, seems you still do believe in St. Claus huh? If s3would not have been exposed by a whistleblower and then Mukesh provided this platform where we all can share without being crucified, nothing would have come to the surface, all would have been brushed under the rug.

    That’s how UNOPS works, and you know it best, you have seen your fair share of the work. I have heard plenty of stories from colleagues in the field, where Regional Directors have forced Country Directors to increase their delivery and revenue forecast so the Regional Office would look good here in HQ. And when the insane demands could not be met, all the blame was put on the country offices and the Country Director.

    And they all know who they are Sanjay, Fabrizio, Moin and the other wanna be kings.

    Africa is a special case and we are all waiting to count the beans, I am just afraid no one will care, unless the donor and the Executive Board will be interested.

    Sempre Fi

    John Derrel

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  13. @John Derrel Board will ask what’s done about all kinds of internal failures. But no time for psychiatric evaluations at this point.

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  14. @GL, your words in gods ears and that of the Executive Board. Over the last almost 20 years I saw a lot of s… going down the UNOPS drain. All the little and big scandals for which no one was ever held accountable. The EB has asked in the past 1000s of questions, so did external audit. Nothing changed.
    I believe it when I see it.

    Sempre Fi

    John Derrel

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