Linda Saputelli: “Direct elections would
in fact impoverish the contribution which retirees are currently able to make
to UNJSPB governance processes.”
Questions: What
contribution? How does one “impoverish” a
non-existent consultative process?
FAFICS (the Federation of Associations of Former
International Civil Servants) is the purported representative of UN retirees on
pension and other matters.
But, the findings of the comprehensive governance audit by
the UN internal auditors (UN Office of Internal Oversight Services, OIOS,
A/73/341) beg the question that many UN retirees have been asking for years:
Who does FAFICS actually represent?
Just as important, what does the FAFICS leadership want?
They’re UN retirees too. Shouldn’t we all want the same thing – a healthy and
sustainable Fund? But it’s never been clear what they want, besides the obvious
– power.
We, the active and retired UN staff, members and owners of
the Fund, pay for the participation of FAFICS representatives in pension
matters.
Yet the FAFICS leadership has not merely shown time and
again a lack of interest in our views. It’s tried consistently to silence and
discredit opposing voices: UN retirees and the UN
Participant Representatives to the Pension Board, who represent 85,000 active
UN staff.
How can a non-transparent, undemocratic, and
unrepresentative organization be held accountable for its actions?
How can UN retirees, and active staff (after all, we share
the same interests) get FAFICS to release its vice-like grip on our pension
system?
Who does FAFICS represent?
As the audit notes, FAFICS, which was created in 1971 and
has 61 member associations worldwide, and represents about a quarter of the
total number of UN beneficiaries.
This means that roughly three-quarters --more than 50,000 --
UN retirees and their dependents are not
members of FAFICS, and many have never heard of the organization.
How did FAFICS come to represent UN retirees?
FAFICS received official status in 2001 under the Fund’s
rules of procedures to represent UN retirees on the Pension Board, in a
non-voting capacity.
In 2006 the General Assembly took note of the Board’s
decision that the costs of two FAFICS representatives to the Board and one to
the Standing Committee “would be absorbed by the Board on a provisional basis
until 2008, at which time the Board would consider means for duly electing
beneficiary representatives” (para. 21 of the audit).
Direct elections never happened, which provides a clue to
the legendary symbiotic relationship between the former Fund Secretariat Chief
Executive Officer, Sergio Arvizu, and the FAFICS leadership.
In 2007, Arvizu supported continuation of the arrangement of
indirect representation, based on what the audit notes amounted to a
“speculative conclusion that was not based on any assessment or survey of
beneficiary aspirations” (para. 22).
The audit (same paragraph) further notes, “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) of
a total beneficiary population of 74,788 as at 31 December 2016”.
FAFICS’ outsize influence on the pension system
The FAFICS leadership has had a hand in important decisions
regarding our Fund for much of the past two decades. FAFICS strongly supported Arvizu’s promotion (he was the then Deputy Chief Executive Officer of the Fund Secretariat) to the post
of CEO in 2007.
The FAFICS leadership steadfastly supported Arvizu
as he took actions, documented by serial UN internal audits over several years,
that the latest audit, the comprehensive governance audit, describes as a
litany of conflicts of interest facilitated by his dual role as CEO and Secretary
to the Board (see annex).
FAFICS representatives may not have voting rights. But the
audit notes in recommendation 3 (page 10) that FAFICS representatives enjoy
privileges comparable to those of the UN participant representatives, except
voting rights, “without being elected by the total beneficiary population to represent
their interests.” (The Board rarely votes on issues).
FAFICS representatives’ outsize influence is augmented by
their membership on key committees, including the Assets and Liabilities
Monitoring Committee, the Standing Committee, and the Succession Planning
Committee.
Conflicts of interest
So egregious were the conflicts of interest uncovered by the
audit, that the Assembly (para. 13 of resolution A/RES/73/274) decided to split
the functions of the CEO and Secretary to the Board, by latest January 2020,
and called on the Board to establish a mechanism to mitigate such conflicts
between the Board and the Fund management (para. 25 of the resolution).
Concerning conflicts of interest specifically involving
FAFICS, the audit documents that in January 2018, a letter from the former
FAFICS president (Linda Saputelli), a current member of the FAFICS delegation
to the Board, was “circulated
electronically by the Fund to all registered beneficiaries, of whom the
majority were not FAFICS members” (paras. 26-27).
The letter stated, inter alia, that the ongoing backlog in
pension payments was “largely a thing of
the past”; questioned the Assembly’s authority to conduct a governance review
without prior discussion with the Board; and stated that the Board had the sole
authority to appoint or reappoint the CEO, and that the Secretary-General had
only the “administrative function to issue the contract".
The audit notes: “The circulation of such a letter by the
staff of the Chief Executive Officer gave the appearance of collusion between
FAFICS and the Fund secretariat to challenge the authority of the
Secretary-General and the General Assembly in governance matters of the Fund.”
Rejecting the audit
FAFICS joined other Board members at the annual meeting in
Nairobi in 2018, in rejecting the findings and recommendations of the audit and
referring the auditors to the Independent Audit Advisory Committee (IAAC) for
an allegedly flawed and unprofessional audit process.
The IAAC wrote to the Board Chair on 28 August 2019 stating
that it had found no evidence that the auditors failed to follow accepted
professional practices and standards in conducting the audit.
Confusing elections with democracy
In a position paper to the 2018 annual Board meeting, on
the audit recommendation for retirees to directly elect their representatives
to the Board, FAFICS accused both the auditors and the UN participant
representatives, who supported the recommendation, of exceeding their mandates, and for “attempting
to interfere in the internal working arrangements of an autonomous body”.
FAFICS further accused
the auditors of “confus[ing] the concept of direct elections with democracy”,
and declared itself “the sole legitimate representative organization of UNJSPF
retirees” (see below JSPB/65/R.61).
The FAFICS report to the 66th Session of the Pension Board, on the matter of direct elections, doesn't mince words: "This is a matter which the Board has considered to be outside its
authority and rejected again this year, despite the Assembly having asked...."
https://www.un.org/other/afics/sites/www.un.org.other.afics/files/faf-pdf-20190809-fafics_2019_report_on_the_pb_003.pdf
https://www.un.org/other/afics/sites/www.un.org.other.afics/files/faf-pdf-20190809-fafics_2019_report_on_the_pb_003.pdf
Busted on the Governance Working Group
The Board included a FAFICS representative (Warren Sach) in the
Governance Working Group despite the Assembly’s explicit directive in para. 13 of
its resolution A/RES/73/274, that composition of the working group should adhere
to the Board’s tripartite structure (governing bodies; executive heads;
participant groups), which excludes FAFICS.
There’s an obvious reason for the Assembly’s decision that
participation in the Working Group should have been confined to the tripartite
structure: the examples contained in the audit of conflicts of interest between
FAFICS and the Fund management.
Not surprisingly, the Working Group gave short shrift to some of the most important issues it was asked to consider (para. 14 of the resolution). It rejected outright
the proposal for direct election of retiree representatives; while paying lip
service to other important topics such as adjusting the Board’s
composition.
As mentioned above, the Working Group did manage to increase
the number of FAFICS representatives from four to six, circumventing a decision that only representatives, not alternates, may participate in the Board in future. (See links below to the
Governance Working Group report, part of the Pension Board report, A/74/331, as
well as to the sharply contradictory views of the UN Participant
Representatives on many of the issues, including direct election of retiree
representatives, for which they proposed a seat with voting rights).
The Working Group, also not surprisingly, decided to hang onto
the Assets and Liabilities Monitoring Committee of which Sach is a member,
which many Fund observers believe was set up to facilitate ending the
bifurcated structure of the Fund and merging assets and liabilities under the
authority of the CEO.
The governance audit notes in paragraph 46 that a “majority
of [the members of the ALMC] are not investment experts” and recommended that
the Committee be retired, noting (paragraph 47) that it has “essentially
functioned as an oversight committee in respect of the Office of Investment
Management through its extensive review of investment matters. Some of its
observations and recommendations have been technically questionable and
contradicted those of the Investments Committee”.
Representation without consent
As the audit points out (para. 22), only 25 per cent of UN
retirees are FAFICS members. Yet, this is what the FAFICS president had to say
about the more than 50,000 UN retirees and their dependents who are not members
of FAFICS, and many of whom have never heard of FAFICS: “In my mind they are
simply people who feel adequately protected by our action and don’t feel the
need to go the extra step to register with their local AFICS/FAFICS” (link
below to letter dated 19 October 2019).
There’s no need, as far as the FAFICS leadership is
concerned for people to consent to
others purporting to represent their interests.
http://unpension.blogspot.com/2018/10/six-pinnochios-for-fafics-president-20.html
http://unpension.blogspot.com/2018/10/six-pinnochios-for-fafics-president-20.html
We fund this involuntary representation
We, the members, and owners, because we pay for the
participation of FAFICS members on pension issues, fund this involuntary representation.
The audit notes in paragraph 25, that although the Assembly
agreed that the Fund would absorb the costs of participation of two FAFICS
representatives to the Board, and one to the Standing Committee, budget
documents show that over the past two biennia the Fund has been absorbing the
costs of six FAFICS representatives for each Board session, and that “There was no evidence that the Board’s
budget working group had raised questions about that discrepancy.”
Yet another clue to the symbiotic relationship between the
FAFICS leadership and the Fund management.
FAFICS must move away from our pensions
None of this is to say that FAFICS, which has existed since
1971, should pack up and close its doors. It’s to say that until and unless it
transforms its leadership and its procedures, toward operating in a transparent
and democratic manner, it should do whatever it wishes (lunches, boat
excursions, seminars on aging) but keep away from our pensions.
Likewise, none of this is to say that FAFICS leaders are
solely responsible for the culture of denial, obfuscation, and obstruction that
pervades our pension system, exemplified by downplaying of the causes and impact of the backlog, and rejection of the audit's findings and recommendations. It’s to say that FAFICS leaders are longstanding
-- and influential -- stalwarts in the culture despite their non-voting status.
Sach, because of his former positions of UN Controller and
the first (part-time) Representative of the Secretary-General for Investments,
occupies a central position in a hierarchy of deference typical of
the UN environment.
What causes a group of UN retirees – or any group --to
behave with imperiousness and lack of accountability and democracy? In this case, it's a symptom of the larger culture of entitlement and autocracy surrounding our
Fund.
As an example, the Board’s communiqué dated 26 July 2019, quoted
the board Chair, Philip Richard Owade (Kenya) a governing body (GA) member,
emphasizing a requirement of “duty with loyalty, discretion and conscience” of
all Board members.
Except that that would be the Board meeting about which the
UN participant representatives reported that they were intimidated and
physically threatened (link below).
http://unpension.blogspot.com/2019/08/un-pension-fund-staff-representatives.html
http://unpension.blogspot.com/2019/08/un-pension-fund-staff-representatives.html
Addressing the Fifth Committee last week, Owade stated that
“the Fund is in sound and solid footing, contrary to the propaganda mounted by
its detractors over the past 4 to 5 years”.
Who are these “detractors” of whom he speaks? Do they
include UN oversight bodies that have uncovered serious deficiencies and pushed
for essential reforms to ensure our Fund’s health and sustainability? Are the
findings of the governance audit and the Assembly’s resolution calling for
sweeping reforms mere “propaganda”?
Is he unaware or does he just want us to believe that good governance plays no role in our Fund remaining financially sound?
Is he unaware or does he just want us to believe that good governance plays no role in our Fund remaining financially sound?
How can FAFICS be held accountable?
There are challenges to holding a non-transparent,
undemocratic and unrepresentative organization accountable. There’s no
mechanism for impeachment. If there was,
we would certainly avail ourselves of it.
Does the fact that the representative of the Group of 77
last week busted the Board in the Fifth Committee for flouting the Assembly's directive
about adhering to the tripartite structure on the Working Group mean that they
will be sent back to the drawing board?
Fifth Committee members have shown that they’re not buying
the “no backlog” spin by the Fund Secretariat management, supported by FAFICS; or on the
independence of the Board Secretary.
One hopes the Committee will also ask hard questions about
the other issues the Board has botched or kicked down the road in its
Governance Working Group.
End taxation without representation
In the meantime, those of us who are members of our local
AFICS associations can withhold our dues until the FAFICS leadership changes.
At the very least we should refrain from funding an
organization that refuses to take our views into account, and worse, never
misses an opportunity to emphasize its entitlement and “sole legitimacy” to
represent us while too often taking actions that give every appearance of prioritizing interests other than the common good.
Annex
1.Membership of the FAFICS delegation to the Pension Board
2. FAFICS – exercising outsize influence
3. Enabling the former CEO
4. Anemic decisions by the Governance Working Group
5. Report of the Governance Working Group
6. Views of the UN Participant Representatives
7. Pension Board report 2019
1. Membership of the FAFICS delegation to the Pension Board
Of the six representatives on the FAFICS delegation to the
Board, four are FAFICS officers:
Marco Breschi, FAFICS president
Warren Sach, FAFICS officer and Vice-Chair of the Standing
Committee on Pension Issues
Linda Saputelli, former FAFICS president, Special Adviser to
the Bureau
Marashetty Seenappa is not a FAFICS officer
Alternates
Adriana Gomez, FAFICS Auditor
Mohammed Sebti, not a FAFICS officer
2. Exercising outsize influence
The governance audit (A/73/341) notes (para. 24) that a
FAFICS representative was invited to attend 7 of 14 meetings of the Assets and
Liabilities Committee, although she was not a member of the Committee, “whereas
the same privilege has never been accorded to any other representative or Board
member. “
In 2017 the Board approved the rules of procedure to allow
two FAFICS members to attend meetings of the Standing Committee and the Staff
Pension Committee, which the audit notes, “are essentially forums for
participants”, i.e, active UN staff (para. 28 of the audit).
Sach, the FAFICS Vice-chair of the Standing Committee on
Pension Issues, and a FAFICS representative on the Board, is a member of the
Assets and Liabilities Monitoring Committee and the Succession Planning
Committee. Former FAFICS president, Saputelli, Special Adviser to the FAFICS Board
and member of the pension delegation is also a member of the Standing
Committee.
Two members of the FAFICS pension delegation, Breschi and
Sach, served on the Board’s Succession
Planning Committee that last year chose a Deputy CEO in a process, according to
the governance audit, marked by “deviations
from established procedures, combined with the appearance of arbitrariness and
conflict of interest”. The candidate later withdrew from consideration. (Para.
86 of the audit).
The same FAFICS members were on the Committee last December
when it selected Janice Dunn Lee, former nuclear negotiator at the IAEA,
despite her “rather limited technical and financial knowledge of pension
funds”. She reportedly promptly stated that “rules were like guidelines” and
posted a video of an iguana in a UN-related Facebook group in a comment
concerning an article on whistleblower protection that mentioned that the UN
failed to hold Arvizu accountable for retaliation against three whistleblowers
in the Fund.
In March 2018, she tried to pre-empt an open letter from
retirees to the USG OIOS, pointing out the non-transparent and undemocratic
processes in FAFICS and asking her, in conducting the governance audit, to give
consideration to the need for direct election of retiree representatives.
Saputelli wrote to the USG, OIOS, stating, inter alia:
“Present arrangements
for elections ensure that all questions of substance are the subject of
informed consent about retiree matters at the levels of AFICS associations and
FAFICS. Direct elections would in fact impoverish the contribution which
retirees are currently able to make to UNJSPB governance processes.”
What contribution? How does one
“impoverish" a non-existing consultative process?
.
On August 29, 2017,
Saputelli wrote to the Chef de Cabinet, charging that a letter dated the same
day from the UN Participant Representatives to the Board (who represent 85,000
active staff members) as “replete with the repetition of unproved past
allegations and misrepresentation” and characterizing retirees mentioned in
their letter as “hav[ing] no standing whatsoever within the United Nations its
funds and programmes, and specialized agencies” (not even, presumably, as
members, and owners of the Fund, or as dues-paying members of FAFICS!).
There are indications that the FAFICS pension delegation
supported UN Human Resources' false advertisement last April for a
CEO/Pension Benefits Administrator for the Fund, despite the Assembly having
decided in paragraph 13 of resolution A/RES/73/274 to “replace the existing
post by two distinct and independent posts, namely, “Pension Benefits
Administrator” and “Secretary of the Pension Board”, by no later than January
2020”.
There’s no indication that the Board, or FAFICS, demurred regarding
the facilitation by UN Human Resources of Arvizu’s disability agreement through the
IAEA, where he never worked a day,
instead of the UN Staff Pension Committee.
3. Enabling the former CEO
FAFICS representatives were among the former CEO’s strongest supporters as, according to the audit (para. 60), he controlled the information flow to the
Board including his own performance evaluation;
abolished the quality management system established to hold him
accountable; proposed ending the bifurcated structure of the Fund and placing
assets and liabilities under the control of the CEO; launched the new IT system
despite knowing about its critical deficiencies; provided false information
about the Executive Office and abolished it; paid two former Fund staff members salaries and allowances estimated at $2.4 million for three years (2015-2018) after they had ceased working for the Fund; retaliated against whistleblowers and tried to
prevent them from taking their seats on the Board as elected members;
mismanaged procurement in paying almost $300,000 to consultants for an
evaluation of the IT system, which he presented to the Board as evidence of its
success, and which was later shown to exclude its shortcomings. (Paras. 59-60 of the audit).
FAFICS representatives joined the Board in pushing in 2016 for early renewal of
Arvizu’s contract without performance evaluation; supported him in grossly
underreporting the causes and extent of the backlog in pension payments
(reporting 3000 cases and only two years later acknowledging that the actual
number was 15,000, while claiming that the Fund is not responsible for cases
where all three documents are not available). (Para. 65 of the audit).
4. Anemic decisions by the Governance Working Group
An excerpt from the Pension Board report (below) shows the
anemic decisions made by the working group, on important issues of Board
composition, direct election of retiree representatives, terms of reference for
Board members, a system to avoid conflicts of interest, etc., with the exception of its robust decision to increase the number of FAFICS representatives and
maintain their hobby-horse, the Assets and Liabilities Monitoring Committee.
5. Report of the Governance Working Group
6. Views of the UN Participant Representatives
7. Pension Board report 2019
No comments:
Post a Comment