At the $79.4 billion United Nations pension fund, continuing tensions came to a head this month when the UN participant representatives to the pension board — elected representatives of 85,000 active UN staff members — wrote on Dec. 2 to the General Assembly body that oversees the fund about their concerns on a range of issues regarding the fund’s administration and governance.
The fund has a long history of whistleblowers calling attention to dubious actions and malfeasance by the fund’s leadership that have been later substantiated by internal audits. In this latest flareup, tensions are bound to intensify unless Secretary-General António Guterres steps in to end a pattern of unsavory actions by the board against the UN participant representatives.
The saga this month has entailed one heated letter after another. In response to the representatives’ Dec. 2 letter, the board chair, Martha Helena Lopez, one of Guterres’s four UN executive heads representing him on the board and the UN’s assistant secretary-general for human resources management, wrote on Dec. 8 to the chair of the Fifth Committee, charging the representatives with unethical conduct, breach of board confidentiality, code of conduct and procedure and violation of board governance.
Lopez’s letter also accused the representatives of violating staff rule 1.2(j), which requires that staff members “shall not seek to influence Member States, principal or subsidiary organs of the United Nations or expert groups in order to obtain a change from a position or decision taken by the Secretary-General.”
Lopez was referring specifically to the UN representatives’ appeal to the Fifth Committee that it deny a request by Guterres, as the fund’s fiduciary for investments, the authority to borrow money for the fund to invest in derivatives. They stated that this was an earlier plan from Guterres’s former representative for investments, Sudhir Rajkumar, proposed against the advice of the fund’s senior investment officers.
The representatives cited a lack of research on how the borrowing would be carried out and related risks, recalling the detrimental role of derivative trading in the 2008 financial crisis. Their concerns come amid serious deficiencies revealed by a recent investment governance audit (A/75/215) substantiating their allegations of conflicts of interest and lack of safeguards in decision-making, among other matters, in the investment office under Rajkumar’s leadership. He resigned in March 2020.
In response to Lopez’s letter to the Fifth Committee, the UN representatives wrote to Guterres on Dec. 12, referring to her accusations, noting that staff rule 8.1 (e) strictly prohibits retaliation against a staff representative in exercising his or her functions; and that paragraph 32 of the Standards of Conduct of the International Civil Service prohibits their discriminatory or prejudicial treatment. These principles, they added, have also applied to elected representatives of the UN staff pension committee and the board from the fund’s inception in 1949.
They’re not a “small sub-group” of participant representatives, as Lopez claimed, but elected representatives of two-thirds of UN common system staff. Moreover, their letter to the Fifth Committee chair was about issues in the board’s annual report (A/75/9) as well as Guterres’s report on investments (A/C.5/75/2), which are both public documents.
In addition, they said, “General Assembly members have welcomed [their] views, as they have sought the views of other Board members and observers, on areas of concern.”
On Dec. 15, the UN chef de cabinet, Maria Luiza Ribeiro Viotti, responded for Guterres to the UN representatives that Lopez’s accusations regarding breach of board governance are up to the board to resolve; that Guterres takes his responsibility as fiduciary seriously; that the UN representatives had urged the Fifth Committee to reject certain positions and recommendations in Guterres’s report to that body; and that he wished to remind them of their obligations under staff rule 1.2(j).
Where does Guterres’s response leave the UN representatives? It could expose them to more retaliation from the board leadership for their truth-telling amid an environment of weak UN whistleblower protection and it risks disenfranchising their 85,000 constituents.
For some of the four UN participant representatives (and two alternates), their efforts in truth-telling have already exacted a high personal and professional cost. One representative, a pension fund staffer, has been marginalized in her career. She and another representative — both fund staff members — have been the targets of failed legal challenges by the board to try to prevent them from taking their seats on the body. Another representative was unlawfully suspended from the board last year.
In attempts to silence them, the board has instituted onerous and selectively enforced confidentiality requirements. It has also attempted to change the fund’s rules and regulations to prevent fund staff members from being elected to membership on the board. A governance audit (A/73/341) described these moves as working against good governance, accountability, transparency and fairness.
There’s no indication that Lopez has mitigated any of these retaliatory and discriminatory behaviors toward the UN representatives, either in her capacity as one of Guterres’s own representatives on the board, as board chair or as head of UN human resources. She has held that post since August 2017.
In addition, it should be noted that although the UN ethics office substantiated, and the UN administration accepted, that Sergio Arvizù, the former chief executive of the UN pension fund, had retaliated against three of its staff members, Lopez took no action on this finding.
One of the most disturbing findings in a recent independent governance study, done by Mosaic Governance Advisers (annexed to the board’s annual report, A/75/9), was that among board members, there was “confusion about the roles and mandates of the board” and a lack of clarity about the legal and organizational status of the fund and the board’s fiduciary responsibilities.
In his response to the UN representatives’ letter, Guterres appears to be looking the other way in a clear test of the UN’s reputedly weak whistleblower protection system, where continuing tensions among the fund’s fiduciaries risks deflecting attention from their responsibility to protect the life savings of the fund’s participants and beneficiaries.
Effective oversight of the fund must start with Guterres’s executives on the board collaborating more fruitfully with the UN representatives to ensure the best interests of the representatives’ 85,000 constituents and all UN staff members and beneficiaries dependent on the fund’s performance.
Guterres himself must also act to ensure that Lopez and the other executive board members move to resolve differences and competition among the board’s constituent groups for the benefit of all stakeholders as well as the reputation of the UN.
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We welcome your comments on this article. What are your thoughts?
Loraine Rickard-Martin is a co-founder and chief executive of Compliance and Capacity Skills International, a nonprofit firm specializing in global sanctions. She is a former senior political affairs officer in the Security Council Affairs Division of the UN Department of Political Affairs. She was also secretary of the UN Secretary-General’s high-level panel on threats, challenges and change in 2003-2004; a lecturer on UN sanctions at Columbia University’s School of International and Public Affairs; and a member of the UN Board of Inquiry into the death of two members of the UN Group of Experts in the Democratic Republic of the Congo. She is a co-author of “The Evolution of UN Sanctions: From a Tool of Warfare to a Tool of Peace, Security and Human Rights” (Springer, 2017).
This is just awful that someone could be marginalized in their career in the way you describe. They should shake the dust of the fund off their feet and demand that the SG transfer them elsewhere in the UN where they are better appreciated. Bon courage, brave colleague. A question: you say six participants representatives: 4 members & 2 alternates. Why did only 5 sign that letter to the GA? Wasn’t there unity in the 6?
One participant representative recently retired.
Thank you, Michelle. Please wish them a happy retirement and thank them for their service. What happened to the 16,000 people like me who never got a ballot in your election. Can you explain why we were excluded?
In response to two comments, the actual number of UN participants represented by the UN participant representatives as per the Board report (http://undocs.org/A/75/9 page 174) is 85,363.
85,363 is the number of REPORTED participants, NOT the number of ACTIVE (i.e. employed and contributing) participants as the article states. Included in the overall reported participants number are 11,651 INACTIVE participants. See page 159 of the quoted A/75/9, Note 18, para 169 of the AUDITED financial statements. The reported (ACTIVE + INACTIVE) number of 85,363 comes from an unaudited annex to those. The UN Family has a disproportionate share of these INACTIVE participants, nearly 11 for every 100 ACTIVE participants. Given the very high proportion of Withdrawal Settlements in the UN Family relative to most other member organizations, and particularly Field Operations (peacekeeping) many of these inactives may be general service field staff separated after relativity brief service but hoping to re-enter the UN, and/or those vested (more than 5 years service) who have a right to either a Deferred Benefit or Withdrawal Settlement but chose to take advantage of the three-year grace period to make their benefit election. None are paying into the Fund (i.e. they are INACTIVE) or are ever likely to in the future. Most will probably opt for a withdrawal settlement. With the massive decline in peacekeeping staff numbers since 2010 when REPORTED UN Family number were higher than they are now at 85,617, despite very strong growth in the humanitarian UN Funds and Programmes (UNICEF, UNHCR in particular) in that time, I fear that few of those INACTIVES hoping to re-enter UN service may have that opportunity. Conservative forecasts based on publicly available information from the SG himself, and the Fund, suggest that on current trends, the UN Family will have a (large) MINORITY of ACTIVE participants in the Fund, actually employed and working for UN Family entitles, perhaps as soon as eight years from now (2029). Certainly sometime in the 2030s. Even now that ratio is estimated at 57.1% and falling fast. ACTIVE UN Family participants have never exceeded 77,406 in recent years (even counting those thousands working elsewhere in the system) and are in decline. The UN Family will need the burgeoning other member organizations of the Fund more than ever in years to come.
I’m really pleased we have committed former staffers like Loraine fighting to expose needless risk taking and protect the integrity of our investments, and that Pass Blue is there to disseminate these concerns widely.
Derivatives are among the financial instruments that led to the crash of the Great Recession, and they were facilitated by a supposedly progressive Bill Clinton. I’m astounded that SG Guterres is choosing to let this saga continue after the thankful departure of Sudhir Rajkumar.
Not quite sure what responsibilities President Clinton (born 1946) should bear for derivative financial instruments in the crash of the (1930s) Great Recession/ Deptession. Adds a whole new meaning to “futures”. Seriously, though, for investment professionals, derivatives used properly, like anything else, are a very useful tool. I’m sure that the UN Treasury (and national and corporate treasuries all over the world) use them daily very effectively to mitigate risks. They may be particularly useful for hedging the currency risk (vs. US$) associated with investing in emerging markets and capturing the upside risk (benefit) of asset growth in those booming economies, without the generally downside currency risk. There is a constant call for the Fund to invest in these economies, rightly so. One thing limiting thst is the ability to manage such risks. An aversion to derivatives because based on mismanagement by some people in the past does not serve well the people who need that investment most. Even the G77 in the GA are not against them; they just want to understand them better. Anything good can be misused for bad. A car in the wrong hands can be used to kill just as a gun in the right hands can be used to save life. Merry Christmas and a Happy and HEALTHY New Year.
Salim was clearly referring to the crash of 2008 and its aftermath, which is widely referred to in popular culture as “The Great Recession”. And Bill Clinton was indisputably one of the architects of that crash during his time in office.
Before you criticize others John it helps to get certain basic facts straight yourself.
Thanks so much for the clarification of the relative U.S. popular culture terms, Joseph. All clear now. Much appreciated. It’s perhaps that “crash” tends to be used elsewhere to describe the events of 1929, whereas “crisis” or “GFC” is used for the events of 2008. I hope you understand and will forgive my confusion. No one is criticizing anyone here. The serious point of my comment was that derivatives are not inherently bad if used properly, just as futures, put and call options, margin lending, securities lending and short-selling are all part of a sophisticated portfolio manager’s toolkit. In the right hands, they can do a lot of good. And in the context of the Fund, where opportunities in the mature markets of the “developed” world, particularly in fixed income, are increasingly limited and where there is always political pressure to invest in emerging markets, derivatives (whatever their Presidential affiliation) may well help with that diversification my mitigating (hedging) various risks. Happy New Year. May it be a healthy one.
The stock market crash of Sept. 29, 2008, was the largest crash in human history at the time and held that dubious distinction until the corona crash of this year. Although I do feel a bit petty arguing about nomenclature I am genuinely surprised that someone with your financial pedigree had never heard of the “Great Recession” before or believed that the second largest stock market crash in human history was not regarded as such.
UN Participants’ representatives received much feedback from both participants and beneficiaries upon realizing (from the ACABQ report) that there is a request to use certain derivatives .
UNJSPF regulations (Article 18), do not permit the use of these tools due to the requirement to change title of securities held in the name of the United Nations in trust for us the beneficiaries of the Fund.
Only after the necessary rigorous risk review, cost benefit analysis performed, a detailed strategic plan – in writing – provided, a number of related OIOS https:/undocs.org/A/75/215) recommendations implemented should the General Assembly be asked to make a decision like this.
The Assembly has never previously passed resolutions that violate the UNJSPF regulations or make exceptions to them.
Here is a link that a beneficiary forwarded to us a few days ago after requesting that we look into this matter, and advising that as trustees we would do well to read this document.
It is a good read and fully justifies our position on this matter. There is no need to rush.
To be elected as a PF Board member, representing UN active staff, does not give extra powers than any of the 33 Board members, not even within the 11-strong Participants Group. It is time to reach out to the rest of that group and arrive to common positions. l am persuaded that Staff representatives from other UN bodies (7 out of 11) have the very same “staff-interests protection” in mind when performing their duties. l was for several years a UN Staff Rep at the PF Board and know first-hand that many times we need to leave our egos at the door
You are right – as stated by the UNAT in 2017-UNAT-807 (paragraphs 32 and 33) no member of the Board has more “rights and privileges” than any other member of the Board – contrary to attempts being made to create a “bureau” that would give as few as 4 board members more authorities than others.
As a current participants’ representative I am also not as convinced as you are that specialized agency representatives have the same “staff-interest protection” in mind when performing their fiduciary duties. [See https:/undocs.org/A/75/9 – page 266/366 paragraphs 57-63]
This had really hit home during the peak of the backlog (2017/2018) when a majority of those suffering were from the UN Secretariat, Funds and Programs. We provided a number of anecdotes of the hardships reported by many UN participants awaiting benefits, especially from the global south, which demonstrated how the UN pension and related benefits provides a social security safety net, even for extended families.
Our fellow participants representatives refused to support the UN Participants’ proposal for partial payment in an amount of 80% of the staffs’ own contributions.
UN Participants’ Representatives have since the beginning of our term, known that our fiduciary duties mean 1) undivided loyalty to the fund’s beneficiaries 2) the duty to follow the regulations of the Fund, 3) advocate for and act in the interest of all participants and beneficiaries, 4) duty to limit fund expenditures and 5) duty to perform meaningful oversight.
Conversely our colleagues from their actions have declared loyalty to the Fund (management) and to the employer agencies, and have not always complied with these fiduciary responsibilities but instead made proposals that would weaken the governance of our Fund.
Additionally, in apparent ignorance of the fact that the UNJSPF is a public pension fund which requires higher standards of transparency and accountability, their actions over these years have been only to attempt to silence the voices of UN Participants’ Representatives; by muting our microphones, falsely claiming that we have breached confidential information and falsely claiming that we have violated ethical standards.
N.B. The only definition of what is confidential information is provided in UNJSPF Administrative Rule B.4 – equating to certain personal demographic information provided by participants to the fund.
We are all reminded of history still in the making, that misinformation can bring even the strongest democracy to its knees, if not for the vigilance and voices of those who dare speak truth to power.
Carlos: Thank you so much for your wisdom and for your distinguished service to the Fund and Board in years past. It is on the shoulders of giants such as yourself that the considerable achievements of subsequent Boards are built. Even today, many greatly value your ongoing selfless service to beneficiaries through FAFICS, with its immutable mandate from ECOSOC, and more specifically through Latin American AFICS.
You are perfectly correct that the Participants’ Representatives from the other 20+ organizations in the Fund take their roles most seriously with the very same high fiduciary concern you describe for the interests of all participants. They continue as always to stand ready to work with your UN Family successors in a respectful, co-operative and collegial manner in the interests of all participants, and in observance of the best UN governance practices: respect, trust, consensus, and respect for consensus. In fact, the highest praise is heard for the UN Participants’ Reps employed by UNICEF and UNHCR in the way they contribute so constructively to the Board committees they serve on. I speak from personal experience regarding my fine UNHCR colleague.
Three corrections, if I may:
1. Leaving the situation of your own excellent FAFICS Representatives aside, NO ONE is elected to the Board. People are elected TO THEIR SPC (or appointed in the case of Executive Head Reps such as Ms. Lopez). Those SPCs then DELEGATE people to the Board. The UNSPC is in a uniquely privileged position where all 20 (100%) of its members and alternates may automatically go forward to the Board, and where travel for all of those – alternates included – is paid for by the Fund. That 20 is more than three times the number allowed of any other SPC (and exceeds the total size of any other SPC, in many cases by a factor of three). The financial support and time release they enjoy is so much more automatic and generous. So the misimpression that the UNSPC Participants’ Reps are elected to the Board is quite understandable.
2. With the sophisticated federative structure of the Board bequeathed to the Fund (which has actually been federative from 1950) in 1987 by the GA in its wisdom, based on a very well-considered proposal by the UNSPC itself, after a two-year consultative process with the governing bodies of other member organizations, there are actually SIXTEEN Participants’ Representatives. Eleven of these have voice AND vote; five have voice ONLY. So necessary and effective in a tripartite Board which the GA requires to function by consensus wherever possible, thus avoiding the clear disadvantages of “majority rule”. Very elegant.
3. You refer to “staff” representatives. That term more correctly refers to people elected to serve on staff representative bodies (SRBs). Those who serve on the SPCs (and thus Board if so delegated) are PARTICIPANTS’ Representatives, serving staff in the capacity of those staff as participants in the Fund. Not all staff members are Fund participants so it cannot be any other way. There is a very significant difference in the dynamics and the responsibilities of the two roles. Many Participants’ Representatives are also staff representatives but most of those who are distinguish between the two roles in a professional manner. They can draw the line between the often adversarial stance SRB Reps may need to take vis a vis management in particular, and the the more consensus-oriented, fiduciary, supportive and oversight approach required of Participants’ Reps. Many would argue that much of the Fund’s challenges over recent years lie in the unwillingness or inability of a few to stay on the right side of that line.
Happy New Year. May it be safe and healthy.
It is important to get the numbers right in any debate. There are by no means 85,000 ACTIVE UN Family participants. According to the Fund’s consulting actuaries, as of 31-Fec-19 (latest public figures), there were 77,240. This is actually a decline on the numbers of the last actuarial study in 2017. Furthermore, according to the SG’s own figures when compared to those reported by the Fund, many thousands more counted in that 85,000 are contracted through UNDP and UNOPS but actually work for other UN system organizations. They appear to have been disenfranchised from the previous elections for UN participants reps. In fact the electorate for that was some 16,000 less than the numbers reported by the Fund several months before the election. And that election was reportedly run by some of the very people who were elected, including control of electors lists. Strange, eh? Clearly, one cannot claim to represent people that were denied a ballot or did not even exist as active participants at the time of the vote. Debate is good, but not based on dodgy numbers.
According to the UNJSPF Pension Board report A/75/9 (https://undocs.org/A/75/9), the audited financial statements as at 31 December 2019 show a total of 85,363 United Nations participants.
United Nations duly elected participants’ representatives have actively advocated for all 207,000+ current and future beneficiaries and especially for those Mr. Levins mentions have been disenfranchised. Board reports over the last few years have referred to several proposals we have made, that would inter alia 1) make provision for partial payments to alleviate hardship during the backlog [2015-2019] 2) reduce the number of forfeitures by requiring improved pro-active follow-up procedures by the fund.
UN Participants’ Representatives have also strongly advocated for fair and equitable representation in proportion to active participants of the fund, which the General Assembly has been requesting since its 42nd session and which would mean an end to the current arrangement which results in a minority rule which favors certain beneficiaries over others.
As a representative of Specialized Agency participants who make up one-third of the active (non-separated) participants of the Fund, you (Mr. Levins) have not at all advocated for the disenfranchised but have spent the last 3.5 years advocating only for disenfranchising even more active participants, by promoting an amendment to Article 6 of the regulations which excludes several hundred more prospective candidates for the pension Board – the actual pension experts among the active staff who are in the best position to represent active participants.
This disingenuous concern for the disenfranchised is a disservice to beneficiaries of the Fund.
Bravo to our elected participant representatives for speaking truth to power to defend our pension fund! Every improvement to the fund has been because of their interventions. Instead of instructing his people to retaliate against them, Antonio Guterres should instruct his people to support them. Why is he playing these games?
Nowhere near 85,000 UN active participants. Check with the actuaries.