UN Pension Fund – as the new Fund Secretariat head comes in, the old guard goes rogue - - again, 21 February 2020

Rosemarie McClean, the Pension Fund’s Chief Executive of Pension Administration (CEPA) started her new job on 2 January.  But she is not yet physically in New York. Reports are that she will continue to telecommute from Toronto until the end of the month, while she recovers from injuries she sustained when she was hit by a car last December.

The longer it takes for McClean to get to New York the more time for the Fund’s old guard – in the Fund Secretariat, on the Pension Board, and in FAFICS (the retiree representative organization) -- to double down on resisting the Assembly's attempts at governance reform.  As they unilaterally revise the Fund's regulations and change its rules of procedure to clamp down on dissent, while perhaps hoping as well to pre-empt reforms, one wonders what chance the new CEPA has of helping to bring about meaningful change. 

Unilaterally changing the Fund’s regulations

Last week, elements among the old guard unilaterally revised the Fund’s Regulations. They cannot do that without the Assembly’s approval. But they did it anyway, and posted them on the Fund website.  

Of course, they are trying to hide behind the Assembly’s decision to amend the regulations to reflect the new title of Chief of Pension Administration (paragraph 7 of Assembly resolution A/RES/74/263).

Replacing the post of CEO

In 2019,  the Assembly decided to replace the post of Chief Executive Officer with two “distinct and independent” posts of  Pension Benefits Administrator and a Secretary of the Pension Board (paragraph 13 of resolution A/RES/73/274). 

The Assembly made the decision in response to the OIOS comprehensive governance audit (A/73/341) that described the myriad ways that the dual role of CEO and Secretary of the Board had resulted in conflicts of interest among the Fund management, the Board, and FAFICS.

This new title -- CEPA -- reportedly came about as a result of negotiations when McClean learned that she had applied for the job of CEO, misleadingly advertised, but offered the job of Pension Benefits Administrator instead.

Revising much more than titles

When they got their hands on the regulations, the old guard did not stop at revising titles. Many of the revisions have substantive implications that violate Assembly directives, and cannot simply be redlined out of existence.

Assembly’s sole authority to amend the regulations

Given that the Assembly, has “sole and ultimate authority to approve amendments to the Regulations governing the Fund” as it asserted most recently in paragraph 21 of resolution 73/274, the old guard has zero authority to post revised regulations that have not been approved by the Assembly through the Board!

What’s the old guard up to?

The changes are clearly aimed at undermining the functions and independence of the Secretary of the Board. As such, they flagrantly violate the Assembly’s directive in paragraph 11 of resolution 74/263, “that the Secretary of the Pension Board shall be fully independent from the Chief Executive of Pension Administration and the Representative of the Secretary-General” and shall report directly to the Board.

Changing the composition of the Board without authority

And the only guard did not stop at trying to gut the functions of the Secretary. While they were at it, they also took their red pen to the Fund’s rules of procedure,  making unauthorized changes to the Board’s composition-– to reduce the number of seats allocated to ITU and UNIDO by half a seat and allocate a seat to IOM.

This was one of the options for changing the Board’s composition that the Board’s governance working group (GWG) included in its report (annexed to the Board’s report, A/74/331).

But the Assembly did not accept any of the GWG’s recommendations, on any topic. 

Using confidentiality as a weapon

For good measure, the old guard inserted confidentiality requirements (A.5 of the rules of procedure) predicating access to Board documents and attendance at the Board on the signing of a confidentiality declaration.

Never mind that the governance audit (paragraph 72) took the Board to task for onerous and unnecessary confidentiality requirements, noting that: “OIOS is of the view that many of the restricted documents are, in fact, not confidential in nature 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”.

The sad fact is that the Board has time and again used confidentiality as a weapon against the UN participant representatives to the Board who have stood their ground against the old guard on issues that are vital to the interests of their 85,000 active UN staff constituents while also filling the gap left by FAFICS in advocating for UN retirees.

Institutionalizing a bureau to bypass democratic decision-making

In addition, the old guard makes further revisions in the rules of procedure aimed at institutionalizing a system they have  been abusing for some time now by concocting a “Bureau” of the Chair, two Vice-Chairs and a Rapporteur  (mostly old guard members, of course) to circumvent decision-making practices in the Board and Standing Committee, and often aimed at depriving the UN participant representatives of a voice.

Pre-empting the independent external entity?

The Assembly has asked the CEPA to engage “an independent external entity with expertise in pension fund governance matters to conduct a comprehensive and objective analysis” of most of the same issues that the Assembly last year asked the Board’s governance working group to review (paragraph 8 of resolution 74/26).

Besides size, composition, and allocation of seats on the Board, the issues include terms of reference for the Chair and members of the Board, and issues of conflict of interest – issues that the GWG spectacularly flubbed, hence the Assembly’s decision to engage an independent expert. 

Perhaps the old guard, in rushing to make changes to the Fund's regulations and rules, believes it can   pre-empt any reform recommendations that an independent expert might make?  

The former Acting CEO melts down

While these machinations were going on, there were reports that the former Acting CEO, Janice Dunn Lee, whom the UN Administration said would be separated on 31 December, was still employed by the UN on 31 January, when she is said to have resigned.

There is a report circulated by a proclaimed eyewitness that on 27 January, in the UN health insurance office, in the presence of several former and current staff, Lee announced in the waiting room that she was in charge of the UN Pension Fund, and railed that she was leaving the UN which was  filled with liars and corruption from top to bottom, with a Fund that was at risk of vanishing.

And she’s reportedly still on board

Something must have happened to rile her up, and apparently something else happened to calm her down. As of two days ago she was reported to be still roaming the halls of the Pension Fund, her UN employment status unknown.

  

Same old guard, same old tricks

Lawless behavior isn’t new to the old guard. They are the same people, some of whom are in charge of risk, legal and operations in the Fund Secretariat, who ran the Fund under the previous CEO and continue to do so now; the same people who have run the Board and its Committees; and the same people who have maintained an iron grip on FAFICS. Many of these people have been in those positions for years, if not decades. They are masters of obfuscation, even in the face of the Assembly's determined efforts at reform. 

These are among the same people who rejected most of the findings and recommendations of the comprehensive governance audit A/73/341); denigrated the internal auditors and reported them to the Independent Audit Advisory Committee, which  exonerated the auditors; who supported the former CEO through gross underreporting of the causes and extent of an unprecedented pension payment backlog; through irregularities in procurement management; through retaliation against whistleblowers; through attempts to block elected UN participant representatives from taking their seats at the Board, which the UN Appeals Tribunal described as “egregious” behavior.

They are also the same people who attempted to push through renewal of the CEO’s appointment for a second five-year term; attempted to silence UN participant representatives who disagree with their positions; violated the Assembly's directive by including FAFICS representatives in the governance working group; paid short shrift to the issues the GWG was supposed to review; and as the UN participants reported, tried to intimidate and physically threaten them at last year’s Board meeting in Nairobi and suspended one of them from the board.

Will the CEPA stand her ground?

With the old guard up to its old tricks, McClean who’s a seasoned veteran of pension administration but new to the UN system, has her work cut out for her.  She has to depend on the old guard to navigate the Fund system.

What will McClean do to bring credibility and legitimacy to reported performance on benefits processing? What will she do about the reported $45 million of benefit forfeitures in 2018?

The Assembly has charged her with the important task of selecting an independent expert to consider governance issues that are crucial to the Fund’s welfare.

One wonders about the chances of this actually happening, even with the Assembly’s specifications that the engagement must be done “drawing on the expertise of the Procurement Division of the Secretariat ….through a transparent and competitive procurement process.”

Financial stability requires good governance

The old guard show by their every move, including this latest debacle of unauthorized revisions to the Fund’s regulations, that they have no intention of abiding by principles of transparency or accountability.  

The Fund, founded in 1949, is 70 years old and its market value, the highest it has ever been, is around the same number -- $70 billion.  No matter how much the old guard blusters about the Fund’s financial stability as a way to silence critics of their abysmal governance practices, Fund members are not fooled. 

The reality is that some of old guard’s antics would be amusing were Fund members  unaware of the fact that financial stability does not exist in a  vacuum, but rather, depends on stable and effective governance, which the old guard appears more determined than ever to resist.