Pension Fund: UN General Assembly calls for checks and balances audit, 26 December 2017

NOTE: See relevant section (Administrative Expenses of the United Nations Joint Staff Pension Fund) of General Assembly resolution A/RES/72/262 adopted on 24 December 2017 below this article. 

As we move into 2018, the Secretary-General has addressed chronic problems besetting our Pension Fund by replacing the head of investments and placing the Chief Executive Officer on probation (three-year reappointment with continuation subject to an annual performance review).

Now the General Assembly, fed up with slow implementation by the Fund of the recommendations of the 2016 UN Board of Auditors report, zeroes in on lax oversight by the Pension Board, and requests in a year–end draft resolution a review of checks and balances between the Board and the Fund leadership.

Specifically, the GA, in paragraph 8 of its draft resolution “Requests the Secretary-General to entrust the Office of Internal Oversight Services with conducting a comprehensive audit of the governance structure of the UN Joint Staff Pension Fund Board, to include a review of the checks and balances between the Board and the Pension Fund leadership, and to submit its report with key findings to the General Assembly at its seventy-third session ….”.

UN Pension Fund: If wishes were horses...and the struggle continues, 21 December 2017

UN pension fund: If wishes were horses; and the struggle continues.

Yes, we wanted more. Did anyone who cares about a healthy Fund really hope that UN Secretary-General Antonio Guterres would reappoint the Fund’s Chief Executive Officer Sergio Arvizu for three more years -- so we could have the pleasure of watching him bungle on, even for a single year, under lax oversight by a complicit Pension Board?

Of course not.  But it wasn’t realistic to expect that the Secretary-General would have sent Arvizu packing on 31 December, given the array of forces determined to force through another outcome. On simply a practical level, had by some miracle the Secretary-General made that decision, Arvizu, for the sake of fairness and decency, would have had to have been informed months ago and a search committee set up to pick his replacement.

We know that didn’t happen; and while I can’t speak for the UN staff unions, in response to some who have expressed dismay about the outcome, on Facebook and by email, my own view is that this is as good as we could have hoped for given the circumstances. Put another way, what we have here is nothing short of an example of shooting for the moon in the hope that if we miss, we’ll land somewhere better than the alternative.

And we indeed landed in a space much better than the alternative: that the CEO would have sailed into another three-year term, albeit with oversight provisions but without an annual performance review to determine whether or not he continued. Thankfully, we already knew we had dodged a new five-year term, the powers arrayed on his behalf having successfully dismissed the preponderance of evidence of mismanagement, perhaps with a promotion to Under-Secretary-General, and full strength to continue business as usual.

Pension Fund CEO on probation: UN Secretary-General Guterres to Pension Board: Do your job. 20 December 2017

UN Pension Fund CEO on probation. Secretary-General tells  Pension Board: do your job.  

A few months ago, UN Secretary-General Guterres showed his willingness to listen and act on his pledge to hold UN managers accountable. On 19 October 2017, he appointed Sudhir Rajkumar to replace Carol Boykin as his Representative for Investments at the UN Pension Fund, which has experienced chronic investment underperformance and other managerial deficiencies.

Now, the Secretary-General, through his Chef de Cabinet, Maria Luiza Ribeiro Viotti, has informed the Pension Board chair, Annick Vanhoutte, by letter dated 7 December 2017, that he has  accepted the Board’s recommendation to reappoint Chief Executive Officer Sergio Arvizu for a second term of three years. However, Arvizu' s continuation will be subject to an annual review of his performance. The practical effect of this decision is that the Fund’s CEO has been placed on probation, with a renewable one-year contract based on the Pension Board’s report of his “progress in addressing performance issues of the Fund.”

UN Staff Unions: Procurement scandals and cover-ups at UN Pension Fund, SG urged not to renew its CEO, 14 December 2017

FROM THE UN STAFF UNIONS: Procurement scandals and cover-ups at pension fund; SG urged not to renew its CEO

"UN Secretary-General António Guterres has been requested by the Pension Fund Board to extend the contract of CEO Arvizú by three years. Given the abundance of information showing our pension fund being managed outside the rules, we ask Mr. Guterres to seriously consider whether an extension would be in the interests of ensuring management accountability at the UN.'

"From: "BROADCAST-UNHQ" <broadcast-unhq@un.org>
Date: 14 December 2017 at 21:34:13 CET
To: "HQ NY Secretariat"
Subject: FROM THE UN STAFF UNIONS: Procurement scandals and cover-ups at pension fund; SG urged not to renew its CEO
Reply-To: "Ian Richards" 

This message is sent by UN staff unions on behalf of the UN participant representatives to the Pension Board.
(version française en bas de page)

Dear Colleagues,

We would like to share with you two recently-issued OIOS audits on the UN Pension Fund.
The procurement audit http://www.ccisua.org/wp-content/uploads/2017/11/2017_110_PWCProcurementIrregularities.pdf focuses on a $2.2 million contract with consulting firm PriceWaterhouse Coopers (PWC) and notes that of the total, $1.8 million was not spent on services specified in the contract. Thus costs could have been inflated due to lack of competitive bidding for the $1.8 million of services and greater use of partners costing $475 an hour. It appears that procurement rules may also not have been followed.

The second audit

http://www.ccisua.org/…/upl…/2017/11/2017_104_IPASIssues.pdf  covers the implementation of the new system for paying pensions, called IPAS, whose poorly managed implementation left newly retiring staff with no income for more than nine months. It notes that a number of important elements with IPAS, including relating to payments for widows and orphans, were noted as critical, even as the system was reported to the Board and external stakeholders as being ready to implement. It could be argued that given these issues were known prior to implementation, they should have been addressed, which would have to a large extent avoided the payment backlog.

Both audits are in line with the report of the UN Board of Auditors.http://www.un.org/ga/search/view_doc.asp?symbol=A/72/5/Add.16

This comes shortly after the UN Appeals Tribunal ruled that the Fund acted illegally in excluding two board members that had been elected by UN staff and who were known to be critical of the performance of Fund CEO Sergio Arvizú. http://www.un.org/…/…/files/unat/judgments/2017-UNAT-807.pdf and  http://www.un.org/…/…/files/unat/judgments/2017-UNAT-801.pdf

The General Assembly, meeting on 5 December also raised concerns about service quality and transparency https://www.un.org/press/en/2017/gaab4261.doc.htm

UN Secretary-General António Guterres has been requested by the Pension Fund Board to extend the contract of CEO Arvizú by three years. Given the abundance of information showing our pension fund being managed outside the rules, we ask Mr. Guterres to seriously consider whether an extension would be in the interests of ensuring management accountability at the UN.

This article from the UN Pension Blog is also worth reading:
10 December: UN Appeals Tribunal rules on unlawful actions by Pension Board http://unpension.blogspot.ch/2017/12/un-appeals-tribunal-rules-on-unlawful.html

15 November: Long overdue: A new boss at the UN Pension Fund and a reformed Board http://unpension.blogspot.ch/2017/11/long-overdue-new-boss-at-un-pension.html

Kind regards,

Mary Abu Rakabeh
Ibrahima Faye
Ndeye Aissatou Ndiaye
Bernadette Nyiratunga
Ian Richards
Michelle Rockcliffe

UN participant representatives to the Pension Board

-----------------------------

Ce message est envoyé par les syndicats de l’ONU de la part des Représentants du personnel de l'ONU auprès du Conseil d'administration de la caisse des pensions.

Chers collègues,

Nous aimerions partager avec vous les résultats de deux audits menés par l'OIOS en relation avec la Caisse des pensions.

Le premier audit http://www.ccisua.org/wp-content/uploads/2017/11/2017_110_PWCProcurementIrregularities.pdf… (en anglais seulement) concerne un contrat d'achat d'une valeur de 2,2 millions de dollars signé avec la firme "PriceWaterhouse Coopers" (PWC).Cet audit a montré que la somme de 1,8 millions de dollars n'a pas été dépensée en contrepartie des services mentionnés dans le contrat. Par conséquent, les coûts pourraient avoir été gonflés en l'absence d'un appel d'offres concurrentiel et du recours aux services de partenaires payés 475 dollars de l'heure.

Le deuxième audit (http://www.ccisua.org/…/upl…/2017/11/2017_104_IPASIssues.pdf 

(en anglais seulement) concerne l'adoption du nouveau système de paiement appelé IPAS, dont l'introduction inadéquate a laissé un nombre de nouveaux retraités sans revenus pendant plusieurs mois. L'audit montre qu'un nombre important d'éléments de l'IPAS n’étaient pas prêts (comme le calcul des indemnités pour les veufs et orphelins) et malgré cela le système a été présenté au Comité mixte (conseil d'administration) et aux parties prenantes externes comme étant prêt à être introduit. Il est fort probable que si ces questions avaient été traitées en avance, l'on aurait pu éviter, dans une large mesure, le retard dans le versement des indemnités.

Ces deux audits renforcent les conclusion du rapport du Comité des commissaires aux comptes des Nations unies http://www.un.org/ga/search/view_doc.asp?symbol=A/72/5/Add.16

Ces rapports suivent deux jugements du Tribunal d’appel selon lesquels la Caisse des pensions a agit de manière illégale en voulant exclure deux membres du Comité mixte, élus par le personnel de l’ONU. (Ces membres avaient critiqué auparavant l’Administrateur de la Caisse, M. Sergio Arvizú.) http://www.un.org/…/…/files/unat/judgments/2017-UNAT-807.pdf

et http://www.un.org/…/…/files/unat/judgments/2017-UNAT-801.pdf

L’Assemblé générale, réunit le 5 décembre, a également soulevé des soucis au niveau de la qualité du service fournit et de la transparence (https://www.un.org/press/en/2017/gaab4261.doc.htm

Le Comité mixte a demandé au Secrétaire général, M. António Guterres de renouveler le contrat de l'Administrateur Arvizú pour trois ans. Au vue des nouvelles informations démontrant une zone de non-droit au sein de l’administration de la Caisse, nous demandons au Secrétaire général de revoir de près si un tel renouvellement irait dans le sens de l'obligation redditionnelle des fonctionnaires de l'ONU.

Nous vous encourageons à lire ces articles (en anglais seulement) publié dans le UN Pension Blog :
10 December: UN Appeals Tribunal rules on unlawful actions by Pension Board http://unpension.blogspot.ch/2017/12/un-appeals-tribunal-rules-on-unlawful.html

15 November: Long overdue: A new boss at the UN Pension Fund and a reformed Board http://unpension.blogspot.ch/2017/11/long-overdue-new-boss-at-un-pension.html Kind regards,

Avec nos meilleures salutations,

Mary Abu Rakabeh
Ibrahima Faye
Ndeye Aissatou Ndiaye
Bernadette Nyiratunga
Ian Richards
Michelle Rockcliffe

Représentants du personnel de l'ONU auprès du Conseil d'administration de la caisse des pensions

Fifth Committee raises concerns about the UN Pension Fund, 11 December 2017

Concerns Raised about Service Quality, Failure to Meet Investment Return Target, as Fifth Committee Discusses United Nations Pension Fund Budget

With the assets of the United Nations Joint Staff Pension Fund totalling a record $62 billion at the end of October, delegates today expressed concern over the quality of service it provided to its more than 200,000 participants, as well as its failure in 2016 to meet its return‑on‑investment target, as the Fifth Committee (Administrative and Budgetary) took up the Fund’s proposed budget for the biennium 2018‑2019.

With officials of the Fund making the case for a bigger budget to hire more staff to service an ever‑growing worldwide clientele, speakers also emphasized the need for transparency and for strong risk management, including anti‑fraud measures, for the entity that extends pensions and benefits for the United Nations and 23 other international organizations.. .

CLICK TO READ FULL ARTICLE

https://www.un.org/press/en/2017/gaab4261.doc.htm

UN Appeals Tribunal rules on unlawful actions by Pension Board, 10 December 2017

On 27 October 2017, the UN Appeals Tribunal ruled that the actions of the UN Pension Board to block two elected UN participant representatives from the  Board were unlawful (UNAT Judgment No. 2017-UNAT-807; Rockcliffe (Appellant) v.United Nations Joint Staff Pension Board (Respondent); Counsel for Appellant: George G. Irving; Counsel for Respondent: Sergio B. Arvizú, and Judgment No. 2017-UNAT-801; Faye (Appellant) v. United Nations Joint Staff Pension Board (Respondent); Counsel for Appellant: self-represented; Counsel for Respondent: Sergio B. Arvizú, links below to the judgments).

Recall that two recent internal audits of the Fund secretariat conducted by the UN Office of Internal Oversight Services and completed in October 2017, revealed disturbing findings about lax controls and management in the Fund secretariat as CEO Sergio Arvizu’s five-year contract nears its end on 31 December 2017 (Nos. 2017/104, 2017/110). 

UNAT's ruling is further indication that for the sake of the Fund, Arvizu must go and that the Board, which lacks oversight and transparency, is in need of reform. The Board appears to have ignored OIOS audit 2017/02 on the backlog in pension payments in pushing for a three-year contract extension for Arvizu at its July meeting. It then hopped on board a claim of conflict of interest posited by the Fund's Chief, Risk Management and Legal Services (para. 3 of the judgment) backed by Arvizu --related to a 1992 legal opinion which had never been put into effect and which UNAT found to be baseless -- to try to block the two duly elected participant representatives from the Board.  

In the Fund secretariat, the buck stops with Arvizu, but a triumvirate of senior managers shares responsibility for mismanagement detailed in OIOS audits and other reports, and must all be held accountable, including for the recent rejection by the UN Board of Auditors of the actuarial valuation for 2017 because of unreliable data provided by the Fund --yet another managerial mishap on which the Board failed to exercise its oversight role. 

Quote from the Rockcliffe judgment, identical to the Faye Judgment : “It is the ruling of the Appeals Tribunal that Ms. Rockcliffe as a duly elected member of the UNSPC has the same rights and privileges which are bestowed on other UNSPC members and she ought not to be denied those rights. We therefore order that Ms. Rockcliffe is granted access to all relevant Pension Board documents. We further order that she is allowed to participate and function as an elected member to the UNSPC in all relevant areas including the preparations for the Pension Board sessions and meetings and its constituent groups, committees and working groups.”