Head of UN agency resigns after loan scandal

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According to a senior UN official, the United Nations Secretary-General, António Guterres, requested that a top official at a UN agency resign on Saturday, shortly after The New York Times published an article describing how the agency had given out $61 million in loans and grant money to a single British family.

The United Nations Office for Project Services, a little-known agency for operational projects, forayed into uncharted terrain in 2015, partnering with the private sector for-profit and acting as an investment bank. According to United Nations auditors, it might lose up to $22 million in bad debt.

According to diplomats and employees, the scandal has rattled and humiliated the United Nations at a time when it is appealing to donor countries for millions of dollars in help for the Ukraine war and other problems. An internal inquiry into the transactions was concluded on Thursday, but the results were not made public.

The United States, which sits on the UN agency's executive board, said its officials needed to confront the charges and be held accountable. Chris Lu, the US Ambassador to the UN for Management and Reform, called for a full assessment of the agency's “business model, governance structure, and personnel" in a series of tweets on Sunday.

The @UN has completed an investigative report into possible wrongdoing. The report should be released immediately.

At a minimum, we believe that @UNOPS leadership missed clear warning signals, failed to provide necessary oversight, and took unacceptable risks with funds. 2/3

— Ambassador Chris Lu (@AmbUNReform) May 8, 2022

Guterres on Sunday released a statement in which he accepted the resignation of Grete Faremo, a former Norway minister and the agency's executive director. 

Faremo had committed tens of millions of dollars to David Kendrick, a British businessman he met at a party in New York City in 2015. Ms. Faremo's organization also provided a $3 million grant to Daisy Kendrick, Mr. Kendrick's 22-year-old daughter, to raise awareness about risks to the world's seas.

Ms. Faremo provided a different explanation for her departure in a letter emailed to her colleagues early Sunday morning and acquired by the NYT. She stated that she resigned on Friday because "without knowing the full story, it happened on my watch."

“I acknowledge my responsibility and have decided to step down,” she stated.

Faremo appeared to point the finger at her deputy, Vitaly Vanshelboim, who was placed on administrative leave in December while the UN examined the transactions. Faremo stated, after addressing the probe and Vanshelboim, that a "shocking breach of trust hurts, and it has shaken the organization profoundly.”

However, a senior UN official, who spoke on condition of anonymity, said Faremo was instructed to resign, and Guterres decided to move quickly after the Times report aired in an attempt to restore donor nations' faith in the organization.

Guterres appointed both Faremo and Vanshelboim, who were the highest-ranking officials.

Jens Wandel, an interim director, has replaced her until Guterres finds an appropriate person to replace Faremo.

Farhan Haq, the deputy spokesman for the UN said Wandel "has had a clear record of working on UN reform."

According to a senior United Nations official, any reform or restructure of the agency would be at the discretion of its executive board, which is made up of member nations including the US.

On Sunday, Lu stated that the executive board had requested a complete briefing with the agency, which would take place soon.