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Former UN Executive Who Overcharged on UN Projects Now Faces $63.6 Million Repayment

The investigation from 2022 revealed that the U.N. was only able to recover about 10 percent of the invested funds.
Image Source: Photo by Quang Nguyen Vinh | Pexels
Image Source: Photo by Quang Nguyen Vinh | Pexels

According to official court records, the United Nations is asking one of its former executives, Vitaly Vanshelboim to return $63.6 million from his own money, per The New York Times. This request comes after a significant loss of U.N. funds that Vanshelboim entrusted to someone he knew from a party. The situation became public knowledge in 2022, thanks to a report from The New York Times.

Image Source: Photo by Pixabay | Pexels
Cash and coins (representational image) | Photo by Pixabay | Pexels

Vanshelboim, who used to be the deputy head at the U.N.'s logistics agency, along with his boss, earned millions for the organization by charging extra fees on construction projects from governments and other U.N. branches. They did this to gain more recognition within the U.N. Later, they invested around $60 million in companies linked to British businessperson, David Kendrick despite internal warnings. Unfortunately, the investments didn't go well, according to U.N. audit reports. The investigation from 2022 revealed that the U.N. was only able to recover about 10 percent of the invested funds.

Following the revelation, Vanshelboim's boss, Grete Faremo, resigned shortly after The Times exposed the failed investments. Vanshelboim, originally from Ukraine, was dismissed by the U.N. in January 2023 after an internal investigation. In a recent report to the U.N.'s internal court, Vanshelboim shared details of his punishment: he was fined an amount equivalent to his annual salary and ordered to personally pay back $63,626,806. The documents mention that if he doesn't pay, he won't receive a U.N. pension.

Image Source: Photo by SevenStorm JUHASZIMRUS | Pexels
Construction work (representational image) | Photo by SevenStorm JUHASZIMRUS | Pexels

Vanshelboim has appealed to the U.N.'s legal system, which often handles staff disputes, to reverse his dismissal, fine, and repayment order. A remote hearing for his case is scheduled for early 2024. Vanshelboim has chosen not to comment, and he has not faced any criminal charges. Most details of Vanshelboim's case are not publicly available, and the accessible documents do not explain how the U.N. determined the amount he must repay.

According to U.N. guidelines, staff found "willful, reckless, or grossly negligent" can be required to compensate for any financial losses incurred by the U.N. due to their actions. In this case, Vanshelboim's office invested $60 million but only recovered $6.2 million. Additionally, it donated $3 million to a nonprofit run by the businessman's daughter.

The businessman, David Kendrick, denies all allegations of misconduct. His attorney asserts that the projects sponsored by the U.N. are ongoing and successful. U.N. Secretary-General António Guterres, through spokesperson Stéphane Dujarric, refrains from commenting, citing ongoing internal disputes and claimed criminal investigations in Denmark and Finland. KPMG, a global accounting firm retained by the U.N. in 2022, partially attributed the poor investments to an organizational environment discouraging subordinates from questioning Vanshelboim and Faremo.

Image Source: Photo by Pixabay | Pexels
Employees working in an office (representational image) | Photo by Pixabay | Pexels

Former staffer Jonas Svensson, speaking to The Times last year, argued that an unquestioned authority perception among superiors contributed to the failed investments. Faremo, in recent communication with The Times, stated she was neither fined nor instructed to reimburse the U.N. Following the scandal, steps were taken to dissolve Vanshelboim and Faremo's investment program, and their logistics agency branch was asked to return accumulated funds.

The U.S. representative at the U.N., Ambassador Chris Lu, has called for transparency in the internal investigations into Vanshelboim's actions. He criticized the U.N. for not disclosing more details about the case and suggested reforms to the Office for Project Services' operation and management.