When
the UN Pension Fund’s former Representative of the Secretary-General for
Investments (RSG), Sudhir Rajkumar, left suddenly at the end of March, the Note
to Correspondents from the Secretary-General’s Spokesperson on 29 March 2020,
said that he had resigned and that the Secretary-General thanked him for his
service.
At
a virtual meeting of the New York UN retiree association, held on 23 June 2020,
the Acting RSG, Pedro Guazo, in response to a question, repeated a quote attributed to the SG's spokesperson in a media article that the RSG had left because of “personal and family reasons”. Guazo also
confirmed that the expected internal governance audit of the Office of
Investment Management (OIM) had been received.
OIM
governance audit
While
up to now, the matter of the situation in the Office of Investment Management (OIM)
was mired in “he said/he and she said” (the former RSG’s responses to
allegations by Fund staff representatives and a group of senior investment
officers), the recently completed audit of governance mechanisms and related
processes in OIM presents a picture of serious shortcomings in governance.
Reading the audit also raises questions about the apparent failure of the Secretary-General’s advisers in taking mitigating action and a possible lack of transparency in reporting to stakeholders on the circumstances surrounding the RSG's sudden departure.
Reading the audit also raises questions about the apparent failure of the Secretary-General’s advisers in taking mitigating action and a possible lack of transparency in reporting to stakeholders on the circumstances surrounding the RSG's sudden departure.
Some
highlights of the audit (see attached Annex for detailed elements)
The
audit notes that the merging of management and oversight functions as a result
of misinterpreting a change in the Secretary-General’s delegation of authority
to his Representatives, meant that the former RSG acted as both “player and
referee” over investment proposals, with the ability to “stifle critical review
…and compromise due diligence, including
risk analysis…” An added paragraph stated that the delegation of
responsibility and authority was “personal” and “may not be further delegated.”
The
merging of the management and oversight functions also weakened checks and
balances and diminished the role of the Investment Committee. The RSG proposed
not to reappoint two long-serving Committee members and nominated four new
members.
According to information not included in the audit, one of the nominees is the subject of media controversy (see 6 July 2020 article in ‘Institutional Investor’ linked in the Annex).
According to information not included in the audit, one of the nominees is the subject of media controversy (see 6 July 2020 article in ‘Institutional Investor’ linked in the Annex).
The
audit observes that given that the Fund, unlike other funds, is not protected
by national laws or justice systems whereby officials with fiduciary
responsibilities may be held personally liable for the actions, an effective
governance structure with segregation of critical roles is essential to avoid
concentration of power and perceived or actual conflict of interests “to assure
the soundness of investment decisions and maintain the confidence and trust of
the Fund’s stakeholders, including the Secretary-General.”
