UN agency chief resigns amid loan scandal

United Nations Secretary-General António Guterres asked a top official at a UN agency to resign 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, according to a senior UN official.

The United Nations Office for Project Services, a little-known agency for operational projects, ventured into territory no other UN agency had entered: teaming up with the private sector for profit in 2015 by operating like an investment bank. Now it may lose as much as $22 million in bad debt, according to UN auditors.

The scandal has shaken and embarrassed the UN, according to several diplomats and staff members, at a time when it is appealing for millions of dollars in aid from donor countries for the war in Ukraine and other crises. An internal investigation into the transactions was completed Thursday, but its findings have not been released publicly.

The United States, which sits on the executive board of the UN agency, said its leadership needed to address the allegations and be held accountable. In a series of tweets Sunday, Chris Lu, the US ambassador to the UN for management and reform, called for a comprehensive review of the agency’s “business model, governance structure, and personnel”.

“At a minimum, we believe that UNOPS leadership missed clear warning signals, failed to provide necessary oversight, and took unacceptable risks with funds,” Lu tweeted, using the acronym for the Office for Project Services.

An official statement from Guterres on Sunday said he had accepted the resignation of Grete Faremo, a former minister of Norway and the executive director of the agency, who personally approved the loans. 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. Faremo’s agency also gave a $3 million grant to a group run by Kendrick’s 22-year-old daughter, Daisy, to raise awareness about threats to the world’s oceans.

Faremo, in a letter sent to her staff early Sunday morning and obtained by the Times, offered a different account of her resignation. She said she had submitted her resignation Friday because “without knowing the full story, it happened on my watch.”

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