Open letter to FAFICS (Federation of Associations of Former International Civil Servants) and associate members
17 July 2018
Dear FAFICS members and associate members,
As you know, the AFICS/NY governing board has acceded to the FAFICS president’s request for support of her candidacy for the position of FAFICS vice president, in the upcoming election on 20 July 2018. I am writing to request that you kindly consider the following information in casting your vote.
You may recall the General Assembly’s request to the Secretary-General to entrust the Office of Internal Oversight Services (OIOS) with a comprehensive audit of the governance structure of the Pension Board (resolution 72/262, para. 8).
Among the audit’s findings are conflicts of interest between FAFICS representatives to the Board and the Fund management; a discrepancy (for the last two biennia) in the absorption by the Fund of the cost of six retiree representatives to attend each Board session instead of three as approved by the GA and the Board; the dissemination of erroneous information by the FAFICS president, including about the backlog in pension payments; electronic circulation to beneficiaries (including the vast majority who were not FAFICS members) by the Fund Secretariat of a letter from the FAFICS president of January 2018 that “gave the appearance of “collusion between FAFICS and the Fund’s Secretariat to challenge the authority of the Secretary-General and the General Assembly in governance matters of the Fund…”; and attendance of two retiree representatives to the meetings of Staff Pension Committees “which are essentially a forum for participants…. further increase[ing] the influence of FAFICS in the Fund’s governance structure.”````````````````````````````` .
The audit quotes from the letter of the outgoing president of AFICS Australia, of February 2018, in which she urges that the “the FAFICS leadership should be strongly reminded by its members that its task is to protect, defend and advance the rights of all United Nations retirees, not those of the CEO…..”. The audit further notes that “This statement is consistent with complaints from other retirees that FAFICS was engaged in protecting the CEO’s interests instead of retirees’”.
The audit includes among its recommendations that retiree representatives are “directly elected through a transparent and democratic process similar to participants’ representatives so that the elected individuals are accountable to beneficiaries and fully represent their interests on the Board.” An excerpt from the OIOS governance audit pertaining to FAFICS is attached as an annex to this letter.
You may recall that the GA’s action in calling for a comprehensive OIOS audit of the governance structure of the Fund was prompted by issues detailed in the reports of UN governing bodies and internal and external audits related to the Fund Secretariat, including but not limited to the following:
- attempts by the CEO to change the structure and financial rules of the Fund;
- launch of the IT system (IPAS) without inclusion of top-priority benefit types, and internal audit (OIOS) findings of weaknesses that increased manual processing and the system’s susceptibility to security breaches, and contributed to an unprecedented backlog in pension payments.
- the build-up and severe underreporting of the backlog in pension payments, now acknowledged by the Fund in its March 2018 newsletter to affect 15,000 new retirees, separation cases and survivors.
- irregularities in procurement management, including a 2.2 million contract with consulting firm PriceWaterhouse Coopers (PWC) of which $1.8 million of the total was not spent on services specified in the contract.-
Among her actions in support of the CEO and against the interests of retirees and beneficiaries, the FAFICS president wrote to OIOS on 1 June 2016 attempting to block the internal audit of the unprecedented details in pension payments (OIOS audit 2017/002).
The FAFICS president participated in unsuccessful attempts in 2016 to push through a recommendation by the Pension Board for early reappointment of the CEO, and again in 2017 for a second five-year term, on both occasions on the basis of an outdated performance evaluation. The Secretary-General reappointed the CEO in December 2017 for a second three-year term (instead of five years as initially recommended by the Board), subject to close monitoring of his performance by the Board, with continuation of his appointment to be reconsidered based upon a further recommendation by the Board this summer.
Other major findings of the OIOS audit include a need for strengthened governance in ensuring the Board’s independence from the Fund’s management; effective performance management to promote a culture of accountability; utilizing resources in accordance with legislative decisions; proper succession planning for the DCEO and CEO; setting the appropriate tone with regard to integrity and ethical values; and as mentioned above, facilitating transparent and democratic retiree representation.
As noted by the UN participant representatives to the Pension Board in their 13 June broadcast: “After much work, the evidence for change is building up. The audit requested by the General Assembly has identified important and urgent issues. We hope the Board will take these seriously. In any case the General Assembly will have to take action.”
Action to address the audit’s findings of shortcomings in the governance of our Fund will depend on the good faith efforts of those in positions of authority and trust to ensure proper implementation.
The FAFICS president has acted consistently throughout the events that prompted the GA’s request for a governance audit, to support the Chief Executive Officer at the expense of retiree interests, control and manipulate the flow of information to AFICS associations worldwide.
For the sake of our collective interests, FAFICS members and associated members must support FAFICS leaders who will effectively represent the interests of UN retirees worldwide.
Excerpt from the draft audit
“In 2007, the CEO presented a note to the board on a possible process for election of beneficiaries’ representatives …In 2008, after debating the issue, the Board deferred the subject and has since maintained the status quo; FAFICS continues to sit on the Board in a non-voting capacity even though it represents only 18,500 beneficiaries (approximately 25 per cent) out of a total beneficiary population of 74,788 as of 31 December 2016.
OIOS is of the view that the Board needs to determine the appropriate number of seats to be allotted, with voting rights, to beneficiaries’ representatives who are directly elected through a transparent and democratic process similar to participants’ representatives so that the elected individuals are accountable to beneficiaries and fully represent their interests on the Board.
As noted in General Assembly resolution 61/240, in 2006, the Board decided that it would absorb the costs related to two retiree representatives attending the Board’s sessions and one retiree representative attending the Standing Committee’s meetings. However, budget documents of the last two biennia (2016-2017 and 2018-2019) show that expenses relating to the participation of six FAFICS representatives (four primary, two alternate) in each Board session were absorbed by the Fund. There was no evidence that the Board’s budget working group raised questions about this discrepancy.
General Assembly resolutions 70/248, 71/265, and 72/262 repeatedly expressed concern at the delays in receipt of benefits by some new beneficiaries of the Fund. The reports of the Fund’s internal and external auditors likewise raised concern about delays and inefficiencies in pension processing, including understatement of the “backlog” reported by the Fund’s management on the United Nations intranet. However in its letter of January 2018 to beneficiaries, FAFICS stated that delays in pension processing were “largely a thing of the past” even though Fund’s Secretariat was able to process only 52 per cent of the initial separation cases in January 2018 within 15 days of receipt of all required documents against the target of 75 per cent set by the Board. Furthermore, the Fund acknowledged that it still had some 15,000 pending cases relating to retirees, their survivors or transfers which require follow-up. The Board of Auditors recently concluded that there was an overall drop in the Fund’s efficiency in benefit processing during 2017 with 5,537 actionable cases (or 36.6 per cent of the total) pending as of 31 December 2017.
The same letter of FAFICS also questioned the General Assembly’s authority to undertake a governance review without prior discussion with the Board; it also stated that the Board has the “sole authority” for appointment and reappointment of the CEO whereas the Secretary-General only has the “administrative function to issue the contract”. The Fund’s Secretariat circulated this letter electronically to all registered beneficiaries, including the vast majority who were not members of FAFICS. The circulation of such a letter by the CEO’s staff gave the appearance of collusion between FAFICS and the Fund’s Secretariat to challenge the authority of the Secretary-General and the General Assembly in governance matters of the Fund, even though the CEO was to be appointed/reappointed by the former on the recommendation of the Board, and ultimately accountable to the latter. In a letter of February 2018, the outgoing president of a retiree association affiliated to FAFICS informed her constituents that “the FAFICS leadership should be strongly reminded by its members that its task is to protect, defend and advance the rights of all United Nations retirees, not those of the CEO…..”. This statement is consistent with complaints from other retirees that FAFICS was engaged in protecting the CEO’s interests instead of retirees’.
Furthermore, based on a proposal made by FAFICS in 2017, the Board approved an amendment to the rules of procedure and terms of reference for SPCs and their secretaries to allow for two retiree representatives to attend the meetings of SPCs which are essentially a forum for participants. This further increased the influence of FAFICS in the Fund’s governance structure.
The Board should establish appropriate mechanisms to avoid conflicts of interest between retiree representatives and the Fund’s management.”
 Letter dated 7 December 2017 from the Chef de Cabinet addressed to the Pension Board Chair