Sunday, August 6, 2017

UN Secretary-General Guterres: Change the Pension Fund CEO now, 6 August 2017


The saga of managerial deficiencies in the UN Pension Fund isn’t new. It’s been festering for years. Recently, the Secretary-General decided not to renew the three-year contract of the Representative of the Secretary-General (RSG) for Investments, Carol Boykin, and advertised her post.

That’s good news for the assets side of the Fund which has been plagued by chronic underperformance under Boykin’s tenure.

So far we haven’t been as fortunate on the liabilities (Secretariat) side of the Fund where CEO Arvizu continues to lobby hard to save his job.

Last month, the Pension Board took up the issue of the extension of Arvizu’s five-year contract which expires in December 2017. He was pushing for promotion to the level of Under-Secretary-General as well.

The Participant Representatives labored long and hard at the Pension Fund meeting to get agreement on the following recommendation (link to the full UN Staff Unions article on Facebook below):

“The reduction to three years of the second term, with no possibility of renewal, installation of special oversight measures, a search committee to find a successor and a limit on the CEO’s ability to start new projects without Board approval, is the result of a long and difficult session. It nevertheless sends a strong signal.”

The Staff Unions stress in their message that “the Board’s decision on renewal is only a recommendation to the Secretary-General who alone must make the final decision.”

It’s a valiant effort. Reports are legion of the unpreparedness of many Board Members who turn up once a year for five days and are expected to make decisions on complex policy matters for which they’ve received hundreds of pages of background material only a few days in advance.

More than a  few Board members were very likely unfamiliar at the outset of the meeting with Arvizu’s managerial deficiencies as documented in a resolution of the General Assembly, and reports of the Board of Auditors, ACABQ, and OIOS.

Some Board Members very likely had no idea that the Board of Auditors’ report (A/71/5/Add.16, paragraphs 9, 11, and 12) found functional deficiencies in the implementation of IPAS and in client servicing, delayed entitlement and benefit payments, and a related lack of a system to follow up on missing documentation.

Several also very likely were unaware that the ACABQ report (A/71/621, paragraphs 5, 8, and 10) found that remedial measures to address the backlog in the payment of pension benefits, including the end-to-end review and establishment of a focal points network, should have been carried out earlier.

More than a few probably had no idea that the ACABQ report also noted the high number of vacant posts, and observes that the increase in the number of separation and associated claims could have been anticipated.

One can safely bet that some Board members had not heard that the OIOS audit (2017/02 cited managerial deficiencies related to the backlog in the payment of pension benefits, such as a failure to assess and act in a timely manner to mitigate risks (18), including risks arising from missing or erroneous functions in IPAS (19); failure to address a sharp drop in benefit-processing performance from 2013 to 2016 (39); failure to include all types of outstanding cases in reporting the backlog  (49); failure to fill longstanding vacant positions (24); and a poor client servicing record (e.g.,  only 3, 7, and 4 per cent of phone calls answered by the Fund in February of 2014, 2015 and 2016) (33).

Undoubtedly the Participant Representatives and like-minded members were instrumental in ensuring that the Board take account of these important reports in order to have the full picture in evaluating Arvizu’s performance.

Readers may also see my letter to the Members of the Board on UN Pension Blog on this topic sent on 22 July 2017 prior to the Board meeting (link below).

Reports are that the FAFICS president (our UN retiree representative organization) gave her usual ardent support to the CEO's cause.  Never mind the thousands of pending cases of beneficiaries that he failed to report in the backlog, many of them widows and orphans, still waiting to be paid, and the fact that this pitiful and shameful situation developed as a direct result of managerial deficiencies under Arvizu's watch, as detailed in the above reports. (It was the FAFICS president, after all, who sent a [leaked] email to OIOS last June striving to discourage an audit of the backlog in benefit payments).

The UN Staff Union’s update also states the following: “The Board considered a number of audit reports from OIOS and the Board of Auditors. Some were quite damning, raising among other things non-cooperation by the Fund’s management with auditors, incorrect figures supplied to the actuaries resulting in the actuarial report having to be dropped, and false information provided to UN staff on the size of the payment backlog.”

A reduced three-year term with strings attached was far from the outcome the CEO and his cohorts expected.  So far, he's been waging a successful, in his view, lobbying campaign pushing back at reports of managerial deficiencies under his watch. In February 2016, the UN Staff Unions initiated a petition to the Secretary-General, in the face of the unprecedented backlog in benefit payments,  requesting that he replace the CEO with someone capable of doing the job.

His supporters were undaunted. In response, they initiated their own petition to save the CEO in the name of the “UNJSPF staff.” A total of seven of the CEO’s stalwart supporters signed on before the petition was closed, either voluntarily or involuntarily (link below).

It’s going to take more than a petition to save the CEO’s job now. A Participant Representative mentioned in the FCUNS Facebook group the protracted “tractations” (deal-making) in the Pension Board as members sought  to “give him a way to exit with dignity.” Supposedly, the three-year term was Board Members’ idea of a “dignified exit.”

Which begs the question: What about the dignity of the thousands of beneficiaries, including widows and orphans, who remain unpaid and whose existence the CEO continues to deny?

Let’s give a thought to their dignity, and their suffering. A three-year "dignified exit" for Arvizu does a grave disservice to the serious findings of managerial deficiencies by the Fund's governing bodies. It also adds grave insult to injury for thousands of suffering beneficiaries who continue to wait for payment in vain. 

The Secretary-General responded to concerns about management of the Fund's assets by advertising the RSG's post. 

He must do the same on the liabilities side by advertising the CEO's post now in preparation for change in December 2017 when his contract expires, not three years from now.

Thousands of unpaid beneficiaries deserve it. The continued health of our Fund depends on it.

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