Smoke and mirrors in the UN Pension Board's communique, 21 September 2018

After roundly rebuking the UN Office of Internal Oversight Services (OIOS) and rejecting its findings and recommendations in July, the UN Pension Board has put its efforts in full swing to discredit OIOS and its governance audit (requested by the General Assembly) along with any publicity about its own dysfunction. https://www.passblue.com/2018/08/27/the-un-pension-fund-board-rejects-an-audit-of-its-work/

First the Chair of the Board, John Levins (WFP), joined in August with UN officials from management, human resources and legal, to block the UN participant representatives to the Board from disseminating information to their 85,000 constituents about the Board meeting through the UN internal broadcast system. http://unpension.blogspot.com/2018/08/what-un-participant-representatives-did.html

Now the Chair and his cohorts have taken the unusual step of publishing a communiqué that elevates the art of smoke and mirrors, being much more notable for information it omits than for what it includes. http://unpension.blogspot.com/2018/09/pension-board-communique-21-september.html

Readers will be none the wiser that the Board did not even consider three prior audits by OIOS (on the pension payment backlog; implementation of the troubled IT system; or irregularities in procurement management), because it’s audit committee didn’t submit them for consideration.

Nor that the communique’s mention of “concerns over the methodology” used by OIOS in conducting the audit, disguises wholesale rejection by the Board of this latest audit’s findings and recommendations.

Nor that by reporting OIOS to the GA’s Independent Audit Advisory Committee, the Board hopes to so discredit OIOS that the GA will shelve the audit’s findings and recommendations, along with the need to adjust the composition of the Board, separate the dual function of CEO and Secretary of the Board to address conflicts of interest between the Board and the Fund management, and strengthen Board oversight.

Readers may not grasp that where the communiqué describes failures in the Fund's IT system as “typical of most large ERP implementations”, the reality is that this OIOS governance audit, and previous audit 2017/104,  found that CEO Sergio Arvizu prematurely launched the system while fully aware of critical problems.

When the communiqué refers to a “work-in-progress inventory, higher than what is acceptable to the Board”, the reality as noted by the governance audit is 15,000 cases of backlogged pension payments that the fund failed to report until January 2018.

Buried under two full paragraphs of verbiage in the communiqué about “senior management and succession” are OIOS's findings that the Board failed to do succession planning, and circumvented its own procedures in a process mired (according to OIOS) in “deviations and arbitrariness” in selecting a candidate for the position of Deputy CEO who reportedly didn’t meet the requirements of the job.

At the time of the communiqué the Board clearly knew about the withdrawal of the candidate for the position of DCEO, but declined to mention it.

The Board Chair has now revealed that: “Regrettably, after the work of the Search Panel, the decision of the Board, and positive reference checks” the candidate has withdrawn. Yet he and the Board disregarded the concerns of the UN participant representatives about the selection process, and the audit’s recommendation that it be restarted.

The obvious reason for the candidate’s withdrawal relates to publicity (in the above Passblue article and in an open letter to the Chef de Cabinet dated 10 August 2018) that, as gleaned from publicly available information, the candidate   “appears to fall far short of the 15 years of experience in a pension fund or social security system required by the UN job vacancy.” But this information is not included in the communiqué.

Along with the information that the DCEO candidate withdrew, is information that the Secretary-General, on the recommendation of the Board, has appointed the current DCEO, Paul Dooley, as Acting CEO at the ASG level, in the absence of the CEO on sick leave.   He may very well be the choice candidate for Acting CEO in the Board’s upcoming selection process for a candidate  “for appointment as Acting CEO from 1 January 2019 for as long as required”.

Most readers would not know that Dooley was the subject in 2006 of OIOS ID case No. 0543/05, concerning actions related to the awarding of “nine contracts, without competitive bidding”, for a total value of $1.893,450.38, to his supervisor in a job he held prior to joining the UN, in an "appearance of conflict of interest and favouritism towards [the former supervisor]."

Quote from the investigation report: “ID/OIOS noted with surprise that Deloitte & Touche (an international company with over 100 years history and world-wide presence and thousands of employees) scored lower in the area of “Web experience” than [the] small company established in 1985 located and operated …. from the basement of [the former supervisor’s] home. The technical evaluation was performed in UNJSPF by a team in which Dooley participated as the Chief of IMSS”.

Recommended action against Mr. Dooley (unspecified in the OIOS report except as ID Rec. No. IV05/543/01) was reportedly never implemented, and Mr. Dooley was appointed as DCEO in 2013. 

One may well ask “who cares?” After all, as the relentless messaging from the Fund, the Board, including in its communiqué,  and FAFICS, constantly stresses, the house is standing; the foundation seems solid (for now); and there’s no sign that retiree pension checks are in danger.

What’s a little dysfunction, or even corruption, among friends?

Why worry that information about 15,000 cases of backlogged pension payments was withheld for years, and that the Board whitewashes this fact in its communiqué?

Why worry that the Board appears not to have learned any lessons from the late payments fiasco that saw thousands of new retirees wait up to 9 months to receive their first pension payment?

Why worry now that CEO Arvizu, as noted by the audit, abolished the quality-management policy set up to hold him accountable to the board; tried to alter the fund’s bifurcated structure, which keeps the fund’s investments out of the board’s control; amended the fund’s administrative and financial rules; restricted the authority of the board of auditors, and oversaw irregularities in procurement management?

Why worry that the Board clearly sees no need to give merit to OIOS findings and recommendations to address these problems and indeed moves to discredit the UN internal auditors with the GA?

Given the consistent whitewash in the Board’s, the Fund management’s and FAFICS’ pronouncements, it’s no surprise that the UN participant representatives had no inkling of the Board communiqué before it was issued, although they have full rights and voting privileges as Board members.

Nor is it surprising that the UN participant representatives have not had an opportunity to comment on the draft of the Board's report, which is now undergoing translation.

OIOS’s exhortation to the Board in its audit summary to strengthen its governance and oversight of the Fund, including by “setting the appropriate tone with regard to integrity and ethical values”, isn’t based only on its recent experience of Fund operations and lack of Board oversight, but it appears to have fallen on deaf ears.

The communiqué demonstrates that the Board perceives a public relations battle that it must win at any cost. Among its contentions is that confidential information is being “leaked with misleading commentary”, so the Board “sees it as essential, in future, for adequate resources to be made available to the fund to ensure a professional communication function, required for proper outreach to its 205,000 stakeholders.”

The Board Chair, who’s worked in the Fund in the past and has longstanding relationships with the Fund management, is in New York on mission for the Fund.

Given that, reportedly, the Board did not approve his mission and that he was asked to clarify how he obtained his ticket but declined to reply,  it appears that the Fund management approved the air ticket (business class from Rome) and DSA, for a mission, paid for by us, the owners of the Fund, whose purpose and mandate remain unclear.

There is unofficial information that his mission includes lobbying against the OIOS governance audit’s findings and recommendations. 

There is also information that he is resurrecting a longstanding objective of the Fund’s management to remove it from the UN. This time, he is approaching it from a different angle, by lobbying to remove pension fund staff from the UN New York and Geneva staff unions through which they are currently represented, and to put them in their own stand-alone association, thereby weakening opposition to the Fund’s removal.

Collective vigilance regarding our Fund has resulted in successive internal UN audits that confirmed allegations about Fund mismanagement and efforts to undermine our Fund’s structure and institutions; along with a lack of Board oversight that allowed these issues to fester in the first place.

Collective vigilance brought a new RSG for investments; a CEO reappointed for three instead of five years, with continuation of his contract dependent on oversight and performance evaluation. It also brought the DCEO candidate’s withdrawal of his candidacy.

We, the Fund’s owners, must continue to connect the dots and call out incompetence and deliberate obfuscation, despite the best efforts of some to mislead us.