The head of a U.N. agency that last year oversaw US$3.4 billion in projects around the world resigned on Sunday after auditors and news outlets questioned tens of millions of dollars in agency spending on a new impact-investing initiative.
Grete Faremo, executive director of the Copenhagen-based United Nations Office for Project Services, said she was stepping down immediately and hoped it would let her agency, known as UNOPS, "focus on its vital work" after the distraction of yet another one of the U.N.'s corruption-tinged spending scandals that have surfaced in various agencies over recent decades.
“It has been my great privilege to lead UNOPS. I continue to be proud of UNOPS’ achievements and unprecedented growth over these last eight years,” Faremo, a former high-ranking Norwegian politician and government official, said.
“While we still do not yet know the extent of the failures in connection with the Sustainable Infrastructure Investments and Innovation (S3i) initiative, we do know that they occurred on my watch and I acknowledge my responsibility and have decided to step down," she said.
Less than half a year ago Faremo put S3i's chief executive on leave after learning of an investigation into the initiative by the U.N.'s Office of Internal Oversight Services, which, according to Faremo, has still not shared its report or findings with UNOPS.
Her resignation came in the wake of investigative reports by The New York Times and Devex into alleged wrongdoing involving tens of millions of dollars in questionable spending and loans, with potential losses of at least US$25 million.
Those media reports followed up on U.N. whistleblower Mukesh Kapila's blog posts exposing the questionable dealings of UNOPS' senior leadership. Kapila, a professor emeritus of global health and humanitarian affairs at U.K.'s University of Manchester, has extensive experience with international organizations.
'Funds are at risk'
U.N. Secretary-General António Guterres' office said it accepted Faremo's resignation and appointed Denmark's Jens Wandel, a U.N. career diplomat and special adviser for reforms, to serve as UNOPS' acting executive director while Guterres and the UNOPS executive board search for a permament replacement. "He will be granted all the necessary support to ensure a smooth transition," Guterres' office told reporters.
UNOPS acknowledged in April, in response to news reports, that there have been "significant challenges" with the Sustainable Infrastructure Investments and Innovation Initiative and eight investments totaling US$63 million, but said it is "committed to a rigorous and comprehensive process to address any possible misconduct and maladministration claims and will hold all persons responsible to account."
It said the S3i initiative is separate from UNOPS' regular project activities. "S3i funds are at risk, but to date, no funds have been lost, and UNOPS will pursue all available legal remedies to protect its operations and assets, including the recovery of outstanding payments owed to UNOPS," the agency added.
The controversy revolves around a series of tens of millions of dollars in loans that UNOPS made to a main S3i contractor, Singapore-based Sustainable Housing Solutions Holdings, or SHS Holdings, that were meant for planning to build more than 1 million affordable homes in developing nations. The audit investigation is focused on S3i’s chief executive Vitaly Vanshelboim, a U.N. career official from Ukraine who oversaw UNOPS' lending to SHS Holdings.
The eight investments were supposed to be used to build homes in the Caribbean, Ghana, Guinea, India, Nigeria and Pakistan.