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‘Toxic’ Workplace Accusations Trail UN Pension as It Searches for New CIO
A major resignation, investment volatility, and tough internal audit results marred 2020 for the UN pension fund.
The United Nations is looking for a new chief investment officer to head its investment management division, which works on behalf of its Joint Staff Pension Fund — just months after an internal audit revealed accusations of a "toxic" workplace environment in the office.
The job listing comes after a tumultuous year for the complex $80 billion pension, which also faced a major resignation and investment volatility amid the coronavirus pandemic.
A spokesperson for the pension said via email that at the end of November 2020, the UN announced that its current CIO, Herman Bril, will leave at the end of the first quarter of 2021 after nearly five years in that role. Under Bril's tenure, the value of the fund's assets increased by more than 50 percent, the spokesperson added.
The new CIO will oversee the UN pension fund’s five portfolios, lead its sustainable investment team, and work as chair of the internal investments committee, the private markets committee, and the best execution committee, among other duties. The deadline to apply is February 21, according to the listing, which was published on January 8.
On March 29, 2020, the UN announced that the Representative of the Secretary-General for the investment of the pension fund’s assets, Sudhir Rajkumar, stepped down.
By the end of that month, just as the coronavirus pandemic was rocking markets, the pension fund’s assets dropped to $63 billion — a loss of $10 billion in a single month, according to a July report to the pension staff board. Those losses were recouped by the year’s end.
Rajkumar’s resignation also came amid an internal audit of the investment management office, which took place from February through May 2020. According to a July report from the UN, the audit revealed “divisiveness” among staff and a culture many called “toxic.”
“In addition to the perceived micromanagement by certain senior managers, the attitude and approach adopted by them in response to dissenting views and criticism were perceived as intolerant and even retaliatory,” the audit said.
This caused distrust, fear, and infighting among staffers, leading to several complaints and counter-complaints being filed, according to the report. The audit said the UN came across instances in which the performance evaluation process had been used against staff.
“Such conditions pointed to the lack of an appropriate tone at the top with regard to the highest ethical standards of behavior that are expected of officials entrusted with fiduciary responsibilities,” the report said.
“Since arriving in April 2020 as the Secretary-General’s new representative for the investments of the UNJSPF, Pedro Guazo has worked with staff to create a culture of harmony and high-performance where all feel they are empowered and heard,” the UN pension spokesperson said in a statement. “This effort to transform the culture and atmosphere in the office is based on the results of dialogue within the office, involving staff and management. This is a medium-term plan that will be monitored by management and internal auditors.”
A year before the publication of this audit, Rajkumar said in a statement included in the program budget that the UN’s Office of Investment Management was “in some respects malnourished” when he began his role in 2018. He noted that a benchmarking study conducted by a consulting firm showed that the office was understaffed by between 25 to 40 posts. Rajkumar did not respond to a request for comment by the time of publication.
“Specific gaps and staffing priorities were identified and additional investment staff were approved by the UN General Assembly,” a senior official in the UN Joint Pension Fund told Institutional Investor in February 2020. “The newly approved investment staff positions are expected to be filled during 2020, in accordance with UN HR rules and processes.”
According to the job listing, 85 percent of the pension fund, which is fully funded, is managed actively in-house. Its assets under management grew 11 percent in 2020, according to a December message published online by Rosemarie McClean, chief executive officer of pension administration, and Pedro Guazo, the representative of the Secretary-General who replaced Rajkumar.
Their message also revealed that the pension’s investment office will be allowed to use exchange-traded futures, swaps and foreign exchange forwards on a trial basis for two years in a bid to “strengthen risk management and efficiency and help us lower the transaction costs and hedge risks while implementing various investment strategies,” their message said.