Scandal shakes the UN and gives us lessons in how to reform it

Although we lump them all together as the UN, the United Nations system has 37 bodies and numerous other programmes, each with its own purpose, tasks and, of course, acronym. You could be forgiven if you have never heard of one of them: Unops, the United Nations Office for Project Services.

This is the workhorse of the UN system ― providing just about any service in any sector ― albeit for a hefty fee. That includes backroom project administration, procurement, personnel recruitment, payroll handling, financial management, logistics and infrastructure. Unops is a big business, with gross assets approaching $4 billion, operating in 80 countries through 12,000 personnel.

But it made headlines this month, for all the wrong reasons, when UN Secretary General Antonio Guterres forced the resignation of Unops executive director Grete Faremo. This also embarrassed Norway, a major UN funder, because Ms Faremo is a former Norwegian politician and cabinet minister, and her ignominious departure echoes the 2018 downfall of another senior Norwegian, Erik Solheim, who headed the UN Environment Programme.

Ms Faremo’s transgressions include questions about her Sustainable Investments in Infrastructure and Innovation (S3i) initiative. It appears, according to the results of a UN audit, that Unops leaders discarded their own ethical and transparent business rulebook to bestow millions of dollars on a single business partner, a holding company called Sustainable Housing Solutions (SHS), chosen without the competition, diligence and safeguards that are mandatory under UN procedures.

The UnopsS partnership with SHS was supposed to build a million affordable houses for poor people in six places: India, Pakistan, Nigeria, Ghana, Guinea and the Caribbean. Not a single house has yet been built, while $22 million of the nearly $60m investment has been written off. It is doubtful the rest will be recouped any time soon.

Over the years, misconduct, mismanagement, fraud and corruption have been uncovered in several UN agencies. However, the Unops case is unique because what happened there is alleged to have occurred with the careless connivance of its top leadership. For those familiar with the UN’s history, it evokes a parallel with the notorious UN Oil-for-Food Programme in Iraq, which hastened the end of former secretary general Kofi Anan’s tenure.

The Unops problem emerged only because a whistleblower had the courage to complain. Their reward, they say, was harassment and intimidation, an experience that the organisation’s staff have attested is not uncommon at Unops. Beyond this case, however, wider questions about multilateral principles, integrity, accountability, oversight and governance arise.

The UN’s ideals are outlined in its poetic founding charter, which simmers with idealism and brings hope for the downtrodden everywhere. The UN is there to bring succour without personal benefit. Obviously, its work must be paid for somehow, but it is not supposed to profit from human misery, or turn its programmes into profit-making opportunities. And yet, that is exactly what Unops did, by overcharging other UN agencies for its services, which allowed it to accumulate huge reserves of about $286m. Of that sum, about $100m was then put aside for gambling, through shaky business investments such as S3i.

The development marketplace is very crowded, with many agencies. It is unsurprising they compete with diverse business models to advance their specific niches. This is a perverse consequence of a plethora of poorly funded organisations and donors’ ramshackle funding policies. Reform of the UN system’s financing is long overdue, but don’t hold your breath.

This is because of a distortion of incentives arising from the way the UN is managed. UN agencies have governing boards composed of member states. They set policy, endorse strategy, approve budgets, supervise the achievement of results and hold executives accountable. But with a revolving door that allows the governors and governed to exchange places, it is better not to ask too many awkward questions from the agency you may join one day. Joining one of these agencies, moreover, allows one to benefit from large, untaxed UN salaries and associated immunities and privileges. This can be a subtly corrupting form of conflict of interest that can erode integrity, especially for those from governments that do not pay their staff at the same level.

Besides, in today’s multibillion-dollar agencies, governance oversight requires highly developed subject-matter knowledge as well as organisational development skills. With exceptions, these are too often lacking in the diplomats who attend executive boards; they have rarely built their careers working in the kinds of programmes they are now meant to oversee. It is often not difficult for persuasive agency directors to bamboozle them into endorsing all sorts of pet schemes.

One might think twice before investing personal funds in the stock of an unprofessionally run company that may lack proper risk controls and accountability-and-compliance mechanisms. And yet, that is the risk governments sometimes take when they finance multibillion-dollar UN agencies that are later found to have had such faults. The evidence suggests that this may have been the case at Unops: its oversight body was asleep on the job.

When the risks result in disaster, the system is not geared in a way to avoid repeating its mistakes. UN personnel enjoy privileges which mean they cannot be pursued by national law enforcement authorities for wrongdoing occurring on their territory, unless the UN secretary general waives their immunity. But that very rarely happens, because it is often easier and more face-saving for the UN if personnel who have done wrong leave quietly. It remains to be seen whether those responsible for the malign practices at Unops will be held accountable beyond resignation. That may change, but thus far, nothing has been said by the UN leadership to suggest this will be the case.

Moreover, even when the UN investigates its own, it tends to be a closed, internal affair in which it is the prosecutor, judge, jury and executioner, all in one. And its supreme investigations authority, the Office of Internal Oversight Services, rarely publishes its full reports. This makes public accountability even more difficult.

If the UN, of all places, becomes a space where accountability is difficult, then serious self reflection is needed for the world that came together to found it. The UN system is an undoubted global public good that came out of the horrors and sorrows of the Second World War. The world needs it more than ever today, because the many crises it faces from conflicts and disasters will only increase with climate change and other environmental and social stresses. Because no nation can tackle these on their own, the world needs ever more multilateral co-operation, at the core of which is the UN.

But we get what we deserve and, ultimately, the UN is only as strong as the nations that comprise it, as well as the sincerity of their resolve to make it an engine for collective good. The Unops debacle is much more than a story of egregious misdeeds within the agency. It gives pause for reflection that, too often, we take the UN for granted or we allow it to be neglected, abused or misused for narrow self interests.

Continuing to do that is perilous, and ultimately a tragedy for our global commons.