Thursday, August 6, 2015

Pension matters: when the wolf goes after the fox! 6 August 2015

I’m taking a stab at making sense of the AFICS/FAFICS President’s  recent actions as set out in her letter to the Secretary-General dated 4 August 2015 and her  “Highlights from the 2015 Pension Board meeting” dated 5 August 2015 (both posted on the blog and on the AFICS website).

The AFICS/FAFICS letter to the SG sounds some of the right notes  -  notes that eerily evoke the tune some of us have been singing for quite some time and to which she seemed to turn a deaf ear up to now.

Granted, she says the issues she’s now ‘uneasy’ about have emerged from the Pension Board meeting. Perhaps if she’d listened to her constituents more closely, she could have had a head start before the meeting.  

Essentially, she says, there’s an “anomalous situation” that's "diluting leverage and authority", "could politicize" and "erod[e] confidence in the governance of investments”, and  overall "[put] at risk the system of checks and balances in the Fund. The situation requires the SG’s prompt correction. Among the issues are that the job of Investment Committee Chair, who resigned suddenly last year, has not been filled. Investment Committee members are being offered one-year rather than three-year terms. Plus there’s deficient regional representation.

These “anomalies” that are endangering the health of our Fund are all under the purview of the RSG, in charge of the Investment Management Division. The RSG herself has apparently been despatched to confess the deficiencies to the SG.  The AFICS/FAFICS President, however, appears to either want to get to the SG first, through her letter, or to ensure that the RSG doesn’t leave out any salient details.  

Now things get a little murkier. The AFICS/FAFICS President insists in her letter that any new Draft Financial Rules for the Fund must be a “joint exercise” between the CEO and the RSG, consistent with the principle of “bifurcation”, within a “single framework” with “all efforts [made] through a collaborative and consultative approach”.

Let us pause here to attend to our whiplash before continuing.  Perhaps we need to go to the “Highlights from the 2015 Pension Board” meeting for further clues, including the possibility of “bifurcation” (also called split personality) in the AFICS/FAFICS President’s own actions.

The report mentions that the Fund was “not on track” with processing client needs within 15 business days and needs to improve client servicing. Let us also pause to recall that the MOU is largely about staff management relations and its potential for negatively impacting morale and performance among Fund Secretariat staff, many of whom are concerned about the CEO’s increased leeway for favoritism and retaliation. So there’s a connection between the MOU and improved client servicing, right?

Apparently not in the tAFICS/FAFICS President’s view as she delivered a tongue-lashing to staff and retirees (her dues-paying constituents) alike regarding the MOU as follows:

 “FAFICS recognized” that updating the MOU was a matter for the CEO, RSG and OHRM and “should not concern retirees or others,” she huffed. The problem with staff and retirees is that we refuse to believe the assurances and reassurances by UN officials at the “highest levels”, she puffed. There’s no structural change involved! And even if there were the system of checks and balance would prevent that!  Our “mistrust”, “polemics” “agitation” and  “distraction” have caused “damage” to the image of the UN and the Fund as well as worried retirees needlessly and hampered the Funds ability to invest and operate. More transparency, release of the documents, was needed to “calm the waters” of “speculation” and “controversy”!

To sum up the AFICS/FAFICS President's own seeming bifurcation:  there’s an “anomalous” situation with Fund investments that needs to be corrected by the SG promptly – some of the issues  she’s been strenuously denying and dismissing for some time now. She’s suddenly sufficiently “uneasy” about the continuing health of our Fund to write to the SG asking for his “prompt correction.” It's about time. No doubt she’s also uneasy about the action by USG for Management Takasu in his 10 July 2015  to put the new MOU on ice, citing as he did so, staff and retiree concerns.

The MOU is not the business of her constituents, the AFICS/FAFICS President says, but it’s clearly her business to continue to stalwartly support the CEO’s efforts!  From where, if not from her own constituents, does that mandate derive, we might ask.

Now, we’re not questioning the soundness of the issues raised about investment policy in the AFICS/FAFICS’ letter to the SG.  But what exactly is meant by the seeming contradictions in relation to the Draft Financial Rules for the Fund?  Why has the AFICS/FAFICS President never thought to write to the SG about retiree concerns regarding the new MOU, the subject of two petitions signed by more than 16,000 participants and beneficiaries? Is the AFICS/FAFICS President engaged in yet another effort to support a power grab by the CEO? Is this a case of the wolf going after the fox?

Some other unanswered questions raised by the “Highlights”: who recommended to eliminate funding for two advisory positions to the RSG, one on hedge funds and another as a general investments adviser? Given that the RSG was reported on 17 June 2015 by the AFICS/FAFICS President in a meeting with retirees to have deliberately leaked and later retracted information to the press about a movement toward riskier alternative investments, such as hedge funds, is it possible the posts being eliminated are precisely those that enhance checks and balances on the investments side of the Fund?

Now I’m essentially a city person. I haven’t spent a lot of time on the farm. But I know enough to recognize that when the wolf goes after the fox, the chickens had better not assume it’s with their welfare in mind.

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