The UN Pension Board’s
communiqué of its 66th session in Nairobi that ended on 26 July 2019
(link below) contains a status report by the Representative of the
Secretary-General for Investments, and very little else of substance.
Nor is there mention of
unprecedented levels of physical threats and intimidation, as well as shouting,
jeering, and banging on tables, aimed at duly elected UN participant
representatives. But it has much to say about establishing a Code of Conduct and related enforcement that's apparently urgently required for self-regulation.
This communiqué follows the tactic of previous Board messages in its false implication that investment performance exists in a vacuum with no reference to, let alone dependence on, effective governance.
“The long-term financial stability of the Fund
was reconfirmed,” crows Acting CEO Janice Dunn Lee – none of whose
responsibilities include investments -- before she leaps to reinforce the fiction
that “there is no backlog of entitlement cases”.
Short on substance
The only other signs of
substance in the communiqué relate to choosing a new “CEO/PBA” (Chief Executive
Officer/Pension Benefits Administrator); agreeing to “re-adjust” Board composition;
and approving the Fund’s budget that includes increasing the staff of the
Office of Investment Management.
The communiqué’s paucity
of substance is particularly perverse given that the Board had before it
sweeping reforms for implementation contained in General Assembly resolution
73/274, and other major issues for its Governance Working Group to review and submit
its findings to the Assembly's next session. (See annex below).
In addition, papers
submitted by the UN participant representatives on partial payments of benefits,
preventing forfeitures, and limiting abuse of the pension system by those on
non-renewable contracts, were either not supported or shelved by the board.
Threats and intimidation
In one of the cases of
physical threats directed at the UN participant representatives (who collectively represent 85,000 participants/active staff), she decided not to recuse herself during interviewing of the candidates for CEO/PBA (see information below on two UNAT judgments in her favor).
Board members, reportedly led by participant representatives of the UN specialized agencies, supported by the Board Chair and FAFICS, insisted that she leave the room.
Board members, reportedly led by participant representatives of the UN specialized agencies, supported by the Board Chair and FAFICS, insisted that she leave the room.
When she declined to do so, she was ordered to remove herself “voluntarily or involuntarily”. Only
intervention by the Secretary-General's appointees to the Board prevented her
physical removal from the room.
Another UN participant
representative was suspended by the Board Chair from the last day and a half of
the Board’s deliberations, based on allegations that he had breached
confidentiality. In fact, he had merely commented on a public position paper
circulated by an external party supporting the downsizing of the pension fund’s
Geneva office. No rule or regulation was breached.
Here again, when the UN
participant representative declined to leave the room, he was reportedly not
allowed to speak or participate in reviewing the Board’s draft report. Some members, in contempt of his status as a
duly elected member of the Board, even called for an OIOS investigation and
disciplinary action.
Bone of contention
As background, an issue that the Assembly is attempting to address with its reforms, which persists as a bone of contention, relates to the current Board composition, whereby the UN has two-thirds of Fund members and occupies one-third of Board seats, while the UN specialized agencies have one-third of Fund members and occupy two-thirds of Board seats, and are loth to correct the imbalance.
Bone of contention
As background, an issue that the Assembly is attempting to address with its reforms, which persists as a bone of contention, relates to the current Board composition, whereby the UN has two-thirds of Fund members and occupies one-third of Board seats, while the UN specialized agencies have one-third of Fund members and occupy two-thirds of Board seats, and are loth to correct the imbalance.
Transparency and
accountability
The 2018 comprehensive UN internal governance audit (A/73/341) describes clearly the deleterious impact of excessive
confidentiality requirements on the Board’s transparency and accountability.
It notes in paragraph 72 that one of the effects of the current confidentiality
requirements is to preclude Board members from obtaining expert advice on the
implications and consequences of Board proposals. The auditors also note that
many of the restricted documents are in fact not confidential “and should be
made available to Fund stakeholders, who may not be assured of accountability
if the required transparency and access to information are absent”.
Silencing tactics
Past Board Chairs have attempted
to discredit and silence the UN participant representatives, including
attempting to block them from using the UN internal broadcast system to provide
information to their constituents (link below).
The Board tried twice
and failed to ban a duly elected UN participant representative from taking her
seat at the Board. In response to both
cases, the UN Appeal Tribunal (UNAT) ruled in her favor and ordered that she be
allowed to take her seat on the Board. Indeed the regulations are clear that
the Board cannot pick and choose its own members.
On 29 March 2019 the UNAT ruled that the actions of the Pension Board were “egregious”
in failing to comply with its previous order (link below).
Stacking the Governance
Working Group
It’s not surprising that
the Board would use whatever tactic or pretext it felt necessary to silence or eject from
its proceedings any member with dissenting views. The comprehensive governance
audit on which Assembly reforms are based, notes that of its major
recommendations that the Board rejected last year at its Rome meeting
(including requiring terms of reference for Board members; adjusting the composition and developing a rotation scheme for the Board, and
modalities for direct election of retiree representatives; retiring the Assets
and Liabilities Committee; and separating the roles of CEO and Board
Secretary), only the UN participants among the Board members supported these
recommendations.
The Board stacked the
Governance Working Group which the Assembly requested to review and report on these
issues, and included FAFICS representatives (UN retiree representatives) who
are forcefully opposed to the recommendations supported by the UN Participant
Representatives, in direct contravention of the GA directive in paragraph 14 of
its resolution, that the working group “should adhere to the tripartite
structure of the Board.” (FAFICS is not a member of the tripartite groups: governing bodies; executive heads; and participant representatives elected by staff members).
Investments
Given calls for more frequent investment reporting by the RSG, we note his views on reporting on “weekly or monthly changes in asset value figures” and “reacting
to short-term market movements”, and that it's unclear that one is necessarily
related to the other. (See the
communiqué for details of his report).
We also note his
commitment “to a change management process which embraced the themes of
communication, inclusion, empathy, and support for adaptation”. (We’re unable
to recall encountering “empathy” -- clearly in short supply in the Nairobi
meeting -- in a previous UN document.)
Kicking the can down the
road
We’ll have to wait and
see from the Board’s eventual report what action it took or intends to take on the
range of important GA reforms (some are listed in the annex below). If recent history is any indication, expect the Board to try to kick the can down the road on Assembly directives and issues to review, for as long as it thinks it can get away it. We hope to be able to count on the Assembly to continue its push for compliance with these vital reforms.
Need for self-regulation
While showing no obvious resolve in addressing its own conflicts of interest, or its non-transparent
and bullying behavior, the Board, according to the communiqué, required a
certification from each member to “exercise its duty with loyalty, discretion
and conscience” and decided to develop a Code of Conduct with related
procedures and enforcement.
“The Board must maintain
its integrity and authority”, thunders newly elected Board Chair Ambassador
Philip Richard Owade from Kenya.
Given their shameful behavior in
Nairobi, some Board members clearly need to recognize that instead of reinventing the wheel in
establishing its own code of conduct, the Board could begin with respecting the UN’s existing
Code of Conduct “To Prevent Harassment, Including Sexual Harassment, at UN
System Events (link below).
The Board’s dismal record
on transparency and democratic practices is set out in excruciating detail in
the comprehensive governance audit. It must move without delay to establish its
own integrity by demonstrated action to implement General Assembly remedial
measures aimed at address its shortcomings and lax oversight.
Annex
Some Assembly
directives in resolution A/RES/73/274:
A: For Board implementation:
(10) Conduct an
independent assessment of the Fund’s IT (IPAS) system; (11) develop an
electronic signature system to facilitate the certificate of entitlement
process; (13) replace the post of CEO by two distinct and independent posts,
i.e, Pension Benefits Administrator and Secretary to the Board; (19) review the
provisions of the declaration on confidentiality and conflict of interest and
develop standard operating procedures; (25) establish appropriate mechanisms to
avoid conflicts of interest between the Fund management and Board members; (27)
enhance the processing of pension payments and increase efforts to address
delays and outstanding cases; (28) tie the performance of senior managers to
the proportion of cases processed and the number of outstanding cases; (29)
reconstitute the Executive Office.
B. For review by the Board’s Governance Working
Group and submission of its findings to the GA’s next session
14(a) Terms of reference and self-evaluation
methodology of Board members; (b, c, d) composition and size of the board;
allocation of seats; and a scheme for rotating seats in a fair and equitable
manner; the role of retiree representatives and modalities for directly
electing them to the board; (g) retire the Assets and Liabilities Committee.
Note: the Board notes in the communiqué that it “agreed
that the total number of Board seats with voting rights would remain at 33.
There was a re-adjustment to accommodate larger member organizations that had
joined the Fund more recently”. However,
the Assembly in paras. 14 and 15 of its resolution, requested the Board to review and submit its key
findings to its next session, not to “agree” on any change in Board
composition.
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