The United Nations Office for Project Services (UNOPS)
Statement to the Second Regular Session of the Executive Board 2022
Statement by Jens Wandel, Acting Executive Director of UNOPS, to UNDP/UNFPA/UNOPS Executive Board, Second annual Session – 29 August 2022
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Up-to-date information on UNOPS action plan to address issues related to S3i can be found here.
Madam President, honourable Executive Board Members, friends, it is a pleasure to be here with you all.
I want to start by expressing my sincere appreciation to Member States for the time and effort you are taking to help us navigate the current situation, and for consulting with UNOPS on key topics.
When we met in June, I presented a six-point plan of action to address concerns around the failure of the Sustainable Investments in Infrastructure and Innovation (S3i) initiative. With your guidance, this morphed into a 10-point action plan, centered around the immediate and long-term actions to address S3i concerns, restore trust and ensure that those mistakes never happen again.
Since then, we have made some progress on the 10-point action plan and other measures. Allow me to take you through some of these updates.
We have now completed three of the actions on the 10-point action plan.
We have suspended all S3i investments, and consolidated and frozen our operational reserves. UNOPS has also rebalanced its underlying investment portfolio to reflect the consolidation of assets into the operational reserve.
We have completed an internal assessment on the independence of our audit and investigations functions, the conclusions of which will be reported at the second regular session of the Executive Board.
And we have developed a timeline to implement all outstanding recommendations of the United Nations Board of Auditors (UNBOA), the Advisory Committee on Administrative and Budgetary Questions (ACABQ) and the Joint Inspection Unit (JIU). We continue to focus efforts on addressing all oversight recommendations in a timely manner. I plan to engage in detailed conversations with the owners of the open recommendations to ensure we provide additional resources where needed to instill lasting improvement.
We also issued requests for proposals for two third-party reviews, in response to the Executive Board request that UNOPS provide reviews on oversight for S3i and its internal control systems. I am happy to confirm that we have selected KPMG to carry out the review, following an extremely competitive process, which included several high quality applications from other big international bidders too. The work on the reviews will commence today.
I want to particularly thank the working group for the support in finalizing the terms of references for these two reviews. We expect to get the preliminary results of the reports in October, with the final reports due by the end of November.
Of these two reviews, the one focused on S3i is backwards-looking, because it is absolutely essential for us all to know what happened, enforce accountabilities and make all necessary changes to personnel, structures and policies so an S3i or S3i-like situation will never happen again.
But the other review is more forward-looking, to cover UNOPS governance, internal control systems, and risk management, including an assessment of the integrity of the wider UNOPS portfolio and a review of UNOPS cost structures.
Together, these two reviews will be vital not just for the Board and our partners, but also in our own journey to understand shortcomings and build on lessons learnt as we carve out a path forward.
While these external reviews are underway - we are taking action internally to change our governance and control environment. These efforts mainly focus on accountability mechanisms, internal audit and investigation, ethics function, reserves, pricing policy, communication with our partners and Sustainable Development Goals (SDG) impact.
Allow me to provide some updates on each of these areas:
It was clear in June 2022 that the 2021 Annual Report of the Executive Director did not reflect reality. At the request of the Board, I have changed the outline for future Annual Reports of the Executive Director, to ensure our reporting captures a clear picture of the status of the business including risk and shortcomings. The new draft format, available here, is designed to ensure that the 2022 report will present an accurate update of the business, including risks, client feedback data, data on sexual exploitation and abuse, along with oversight findings and recommendations. I would welcome guidance from the Board on whether you feel this reporting format allows for a meaningful conversation on the state of business.
I have already overhauled our management team. The new Management Team brings back the voice of the field operations, through the inclusion of regional directors. Furthermore, both Audit and Ethics Directors are ex officio members.
This new structure replaces the much more centralized Senior Leadership Team. In addition, a number of sub-groups have also been convened in order to act as expert advisory bodies to the Management Team on subjects including people, investment, revising policy and processes and delivering on the digitalization of UNOPS.
The Management Team together with the reintroduced position of Deputy Executive Director, creates a more inclusive approach to decision-making and reestablishes segregation between internal operations and client-focused programmatic activities.
Internal audit and investigation
We have also taken a number of steps to strengthen the capacity and operational independence of our Internal Audit and Investigations Group (IAIG).
Until June 2022, the group’s work had been impacted by a number of challenges: constraints on its independent operating environment, inadequate budget allocation which impacted its capacity to perform effectively, in addition to facing the highest caseload of the three UN Agencies under management by the Executive Board.
To address these issues, and increase capacity and operational independence, we have made significant changes to both budget and operating arrangements, including:
An 87 per cent budget increase for 2023;
Regular contacts - since June 2022 - with the UNOPS Executive Board, the UNOPS Executive Board Bureau and the UNOPS Executive Board President, have been conducted independently of the Acting UNOPS Executive Director;
A revised charter for IAIG strengthening its operations and independence, has been promulgated on August 23rd.
Similar to the reviews of the independence of the UNOPS ethics, and of internal audit and investigations functions requested by the Board, the Chair of the UNOPS Audit Advisory Committee (AAC) has, in consultation with me and the Committee members, decided to undertake a self-assessment of the Committee's role and mandate. This will among other things consider the Committee's ability to independently perform its advisory function in relation to audit and oversight, including through independent access to information and as necessary unhindered access to the President of the Executive Board. I look forward to updating you on the conclusions and the Committee's recommendations.
On our ethics function, extensive changes have been made to bring these more in line with the UN standards.
The overall function as well as the job description for the new Ethics Director has been aligned to the UN Ethics Network's standards. Shortlisting of the new Director is underway in collaboration with the Ethics Directors of UNFPA and UNDP. A final decision is estimated to be taken before 30 September.
Moreover, we were asked to update our whistleblower policy and present it to you at the second regular session. UNOPS previous policy of protection against retaliation was abolished. The updated version has been aligned with the wider Ethics Panel of the United Nations and includes inputs particularly from the UN Secretariat, UNDP and UNFPA to further align our practices and open the door for wider collaboration and exchange of good practices.
The policy was published on 19 August 2022, prior to the second regular session as requested by the Board. The policy is a crucial step in our efforts to create a culture where people are encouraged to speak up. The UNOPS Ethics Office will now focus on raising awareness around the policy and on UNOPS wider system of justice in dealing with wrongdoings.
The Executive Board had also requested an independent review of the independence and impartiality of our ethics function. I can announce that the terms of reference for this review have been finalized. It will be conducted by a team of Ethics Offices from within the wider Ethics Network of Multilateral Organizations (ENMO) which comprises over 40 multilateral organizations. UNOPS is currently in the process of identifying the reviewing parties and agreeing on availability and timelines for the review. We will update the Board at its next session on the progress and, if available at the time, on the outcomes of the review.
Another item requested by the Board was to update and make public our ethics website and to provide all information in an easy-to-access format for all UNOPS employees. I can confirm that the Ethics Office’s website has been updated in August 2022 following a review and consultations with internal stakeholders.
We have also made efforts to improve administration of justice for our personnel while balancing the caseload of our Ethics function. As of 1 September 2022, this will give all our personnel - regardless of their contract type - access to a formal and transparent rebuttal mechanism to contest performance ratings, in line with normal UN contract standards.
As these efforts to adjust our governance and oversight environment continue, our hope is that the forward-looking third-party review of our internal control systems, risk management and overall governance structures will validate our efforts, while providing an opportunity for us to improve on what we have embarked upon.
Let me now turn to the issue of reserves. UNOPS has proposed to base the management of reserves on HLCM-approved principles. Supported by Deloitte, my colleagues have been working hard to support the work of the working group in presenting options for use of reserves, transparency, and limiting accumulation of UNOPS reserves.
Earlier in August, UNOPS shared with the working group an overview which both proposed options for consideration on the use of reserves, and provided context on the structure and composition of the current UNOPS reserves.
I have revised the UNOPS pricing policy. UNOPS will no longer charge its partners more to factor in additional levels of risk - except in exceptional cases that I can approve. The underlying financial basis of the pricing model has been fully updated and what we move forward with is a simpler model that has put a downward pressure on the income. This decision has been taken and is in effect today, and will now be regularly reviewed. I have established a formal means to review this policy at least every 2 years. The first review will be for the 2024-2025 biennium budget which will be presented to ACABQ and the Board next summer.
UNOPS is a fee for development service entity, so the views of our clients on performance and outlook is central for the successful development of the organization. Therefore, UNOPS plans to hold a special extraordinary session of the Client Board in order to brief partners on the S3i situation next month. The goal is to discuss our progress and where things stand from our perspective while seeking both feedback as part of our commitment to continuous improvements and cost-effectiveness.
As you know, partnerships form the cornerstone of all UNOPS does. And we aspire to be a true 17 SDGs organization. Our Client Board is one vehicle through which we take the pulse of our relationships with key partners, get constructive feedback and ensure better transparency.
The Client Board meetings usually take place in February. We hold two sessions, one for UN partners and one for others. We held the last meetings in February 2022 virtually and the next ones are planned for next spring.
The Multilateral Organization Performance Assessment Network (MOPAN) assessment of UNOPS, published in 2021, highlighted UNOPS “agility, flexibility, and responsiveness”, but it also pointed out a need to better demonstrate the contributions of our service delivery to the objectives of partners and the achievement of broader development goals. This was also reflected in the EB decision 2021/20.
We are progressing well in our efforts to respond to these recommendations. For UNOPS as a services provider, our partners’ results frameworks are the natural reference point for measuring our contributions. We are therefore aligning projects, both in design and implementation, to national development agendas, donor development assistance frameworks, UN Cooperation Frameworks and the Secretary General’s Our Common Agenda.
The SDGs will be our compass in project design and implementation. We expect to have every ongoing project aligned to the SDGs by the end of 2022, and this will be a standard in our project results reporting in 2023 and as a standard feature of our corporate annual reporting for 2023 and onwards.
Dear Members, UNOPS continues to take the failures associated with S3i extremely seriously. And I hope this session provides some evidence of the extent of our efforts to ensure that those mistakes never happen again.
But as we take these steps, we also continue with our everyday work to help people build better lives and countries achieve peace and sustainable development. Over the past few months, I have been witness to the hard work of colleagues across the globe, to make tangible changes to people’s lives where needs are greatest. And I have increasing confidence in the integrity of ongoing regular project activities across the UNOPS portfolio.
Just two weeks ago, I conducted a virtual visit to Sierra Leone, where UNOPS helps get reliable and clean energy to rural communities, working together with the government, local communities and the private sector, and funded by the UK government. In a context where only about one in five people have access to electricity, you can imagine the immense power of this work to improve lives. This impact goes far beyond cutting emissions: from creating jobs to enabling more COVID-19 vaccinations. From helping students do better at school, to helping women deliver their babies in a safer environment. And this is just one example of the genuine, passionate and innovative ways my colleagues work to deliver on the SDGs.
And while we work hard to restore the trust that has been broken, I want us to remember that throughout this crisis, the work of my colleagues on the ground has continued, delivering on the principle of leaving no one behind, with ingenuity, a can-do attitude, and a willingness to go the last mile.
We are reflecting, working to understand what went wrong, and working toward a clear plan going forward to ensure UNOPS integrity and effectiveness. While we do so, I am convinced there is a role for UNOPS in implementing the SDGs and delivering on our Common Agenda. I believe the time has come to restate the UNOPS value proposition. To that effect, the Board may want to consider whether UNOPS should proceed to do an early midterm evaluation of its strategic plan.
Thank you for your attention.