United Nations Secretary-General António Guterres asked a top official at a UN agency to resign on Saturday, shortly after bohobarmadrid published an article describing how the agency had provided $61 million in loans and money to a single British family, a senior UN official said.
The United Nations Office for Project Services, a little-known agency for operational projects, ventured into territory no other UN agency had trod: in 2015 partnering with the private sector for profit by operating as an investment bank. Now, according to UN auditors, it could lose as much as $22 million in bad debt.
The scandal has shocked and embarrassed the UN, several diplomats and staffers said, at a time when it is asking millions of dollars in aid from donor countries for the war in Ukraine and other crises. An internal investigation into the transactions was completed on Thursday, but the findings have not been made public.
The United States, which sits on the UN agency’s board of directors, said its leadership must address the allegations and be held accountable. In a series of tweets on Sunday, Chris Lu, US ambassador to the UN for management and reform, called for a comprehensive overhaul of the agency’s “business model, governance structure and staffing.”
“At the very least, we believe that the UNOPS leadership has missed clear warning signs, failed to provide the necessary oversight and took unacceptable risks with funds,” mr. Lu tweetedusing the abbreviation for Office for Project Services.
An official statement from Mr Guterres on Sunday said he had accepted the resignation of Grete Faremo, a former Norwegian minister and the agency’s executive director, who personally approved the loans. Ms Faremo had entrusted tens of millions of dollars to a British businessman, David Kendrick, after meeting him at a party in New York City in 2015. Ms. Faremo’s office also gave a $3 million grant to a group run by Mr. Kendrick’s 22-year-old daughter, Daisy, to raise awareness about the threats to the world’s oceans.
In a letter sent to her staff early Sunday morning and obtained by The Times, Ms Faremo offered another account of her resignation. She said she resigned on Friday because “without knowing the full story, it happened on my watch.”
“I acknowledge my responsibility and have decided to resign,” she said.
Ms Faremo appeared to blame her deputy, Vitaly Vanshelboim, who was placed on administrative leave in December as the UN investigated the transactions. After citing the investigation and Mr Vanshelboim, Ms Faremo said that “a shocking breach of trust hurts and has deeply shocked the organization”.
But the senior UN official, who asked not to be named because he was not authorized to speak officially, said Ms. Faremo was told to resign. Mr Guterres, the official said, decided to act quickly after the Times article appeared in an effort to restore donor countries’ confidence in the organization.
The UN Ambassador to Lebanon, Amal Mudallali, tweeted: “Unbelievable!! Who is hiring these UN officials? Why there is no oversight!!”, linking to the Times article.
In fact, both Ms Faremo and Mr Vanshelboim were among the top officials at the UN and were appointed by Mr Guterres.
In his statement, Mr. Guterres said he was grateful for Ms Faremo’s commitment and dedication to the organization. Her resignation took effect on Sunday. Guterres has appointed an interim director, Jens Wandel, as he searches for a replacement, the statement said.
Mr Wandel “has a clear track record of working on UN reforms,” said Farhan Haq, the UN’s deputy spokesman. Mr Wandel, a longtime UN man from Denmark, where the agency’s headquarters is located, most recently served as Mr Guterres’ special adviser on reform.
It remains unclear whether Mr Wandel will have the mandate in his temporary role to initiate meaningful reforms. A senior UN official said any reform or restructuring of the agency is at the discretion of its board of directors, which is made up of a group of member states including the United States.
Mr Lu said on Sunday that the board of directors had demanded a full briefing with the agency to be held shortly.
A spokesman for the US mission to the UN said a board briefing was scheduled for May 16 before Ms Faremo resigned on Sunday and that the board was preparing for it pending further notice.
In a separate statement on Sunday, the UN agency said it had no access to the internal UN investigative report and was eagerly awaiting the findings. It said it “already implemented continuity plans to ensure that Ms Faremo’s departure will not affect regular project activities.”