US$36 million UN Housing Loan Scandal hits Ghana Govt

The West African country of Ghana, has been named in a US$ 36 million dollar housing loan scandal at the United Nations (UN) in a New York Times story which has revealed how some powerful people at the international organization misuse its funds but remain largely unaccountable to anyone.

The housing project under the United Nations Office for Project Services, is said to have gotten a British businessman named David Kendrick, flown into Ghana, to cut sod for the construction of some 200,000 homes in the name of the UN, but since April 2019, not even a single has been constructed.

One P.K. Sarpong, identified as a spokesman for the government of Ghana, who spoke to the New York Times reporters; By David A. Fahrenthold and Farnaz Fassihi, has said that after top Ghanaian officials helped announce the deal in “the pomp and pageantry, they didn’t hear about the project again,” adding “not a single housing project has been built.”

The top officials, the Herald has dug out, included the Vice President of Ghana, Mahamudu Bawumia and Matthew Opoku Prempeh, who at the time was the Minister of Education.

While David Kendrick was captured as having used some multiple companies linked to him in an elaborate scheme which has left many unanswered questions, his daughter, Daisy Kendrick, was also mentioned in the scandal as a recipient of some US$3 million from the UN body to produce a song for the UN agency.

Ghana was mentioned alongside Antigua, India, Kenya and Pakistan as beneficiaries of a US$15 billion dollar project to construct affordable houses.

Ghana was to receive over 5 billion dollars to construct about 100,000 affordable houses to be overseen by one of David Kendrick’s companies.

The story, titled “A Pot of U.N. Money. Risk-Taking Officials. A Sea of Questions” disclosed that a U.N. audit report last year, revealed that one of Mr. Kendrick’s companies admitted it had used the U.N.’s loan to pay off other loans: “A large portion of the $15 million deposit had been used to discharge its pre-existing debts and liabilities,” the auditors’ report said. The U.N. auditors said last year that Mr. Kendrick’s companies had made some small payments, but the auditors expected the U.N. agency to lose $22 million.

Additional information obtained by The Herald had shown that the project was to be executed under the Sustainable Housing Solutions (SHS) Holdings, with the UNOPS and the government of Ghana to build 100,000 affordable homes.

It said that the sustainable and resilient high-quality homes were to be produced by the local factories and constructed with energy efficient solar rooftops.

The project was aimed to provide at least 3,000 new jobs for local people and financial assistance for buyers including mortgage support from Ghana’s Teachers Fund.

It was to add another 100,000 affordable homes to plans previously announced between SHS, UNOPS and the government of Ghana in September 2018 and March 2019, bringing the total to 200,000 homes.

Vice President of Ghana, Mahamudu Bawumia was quoted on the project as “this initiative with UNOPS is a game changer in the Ghanaian housing market”.

Ghana’s Vice President Dr. Mahamudu Bawumia had cut the sod at Afiaman near Amasaman in the Ga West Municipality to commence the construction of One hundred thousand, (100,000), affordable houses under the United Nations Office of Project Services (UNOPS) and Sustainable Housing Solutions initiative hoping when completed will compliment government’s efforts to bridge the huge housing deficit in the country which currently stands in excess of 2 million.

The then Minister of Education of Ghana, Matthew Opoku Prempeh at the time was also quoted as saying; “the Ministry of Education and the government of Ghana are very excited over our inclusion in the UNOPS sustainable housing project and the proposed 100,000 units for teachers and student accommodation. We eagerly look forward to the success of this project as it will go a long way when implemented to help alleviate the accommodation challenges our country faces in the sector”.

UNOPS Executive Director Grete Faremo was also captured as saying “last year, UNOPS and the government of Ghana signed an agreement to help change thousands of lives in the country. Today, our commitment extends further and focuses on one of the most important sectors in any country – the education sector. This landmark project will not only give Ghana’s future generation access to affordable housing, but will also give the people teaching that future generation the opportunity and security to own their own home”.

SHS Chairman Dr Allen Zimbler said: “We salute the Ministry of Education of the government of Ghana for its bold and proactive approach to solving the perennial and growing problem of accommodating increasing numbers of students and faculty. SHS, through its Suite Living subsidiary, is proud to partner with UNOPS once again in providing innovative, sustainable and high quality housing, while at the same time creating opportunities for employment and skills development. This follows the landmark agreement for 100,000 affordable homes signed between UNOPS and the government of Ghana in September 2018 on the sidelines of the UN General Assembly in New York and witnessed by H. E. President of Ghana, bringing the total to 200,000 affordable housing units to be constructed for the people of Ghana”.

Below is the story

A Pot of U.N. Money. Risk-Taking Officials. A Sea of Questions.

A little-known United Nations agency decided to make an impact by doling out loans and grant money — all to a single family. It did not go well.

At the United Nations, two officials had a problem. The little-known agency they ran found itself with an extra $61 million, and they didn’t know what to do with it.

Then they met a man at a party.

Now, they have $25 million less.

In between was a baffling series of financial decisions, in which experienced diplomats entrusted tens of millions of dollars, the agency’s entire investment portfolio at the time, to a British businessman after meeting him at the party. They also gave his daughter $3 million to produce a pop song, a video game and a website promoting awareness of environmental threats to the world’s oceans.

Things did not go well.

Though U.N. auditors said the man’s businesses defaulted on more than $22 million in loans — all money meant to aid the developing world — the agency, the United Nations Office for Project Services, said in a statement last month that “funds are at risk, but to date, no funds have been lost.” The agency added that it would “pursue all available legal remedies to protect its operations and assets, including the recovery of outstanding payments owed to” it.

The story of these misbegotten investments was, at times, surreal. There was a cameo by the Italian-born man about town who had introduced Donald J. Trump to a model named Melania Knauss, the future first lady. There was a concert in the U.N.’s General Assembly hall as it sat nearly empty — where a Norwegian diplomat with a backing band crooned the ocean song (“Just a drop of rain / That’s all I am”).But diplomats and former U.N. officials say the tale also demonstrates what critics say is a serious problem with the U.N.: a culture of impunity among some top leaders, who wield huge budgets with little outside oversight.

“What do you call it when you believe you’re God?” said Jonas Svensson, who recently left the Office for Project Services. Mr. Svensson said his bosses had a rare combination of too little preparation and too much tolerance for risk — plus the power to see bad ideas through.

“Ambition and stupidity,” Mr. Svensson said. “All the way into the wall.”

This past week, a U.N. spokesman, Stéphane Dujarric, said the institution had completed an internal investigation of the transactions in question, but he declined to say what the inquiry had found. He said that António Guterres, the U.N. secretary general, would “take appropriate action on the findings of the investigation report once it has been reviewed and analyzed.”

The top official at the Office for Project Services, Grete Faremo of Norway, announced early Sunday that she was stepping down.Ms. Faremo had previously planned to retire in September, but — in a letter to employees sent hours after this article was posted online — she said an interim replacement would be appointed “imminently.”

“Without knowing the full story, it happened on my watch,” Ms. Faremo wrote in a letter to the office’s staff, which was obtained by The New York Times. She said she had informed Mr. Guterres of her decision on Friday. “I acknowledge my responsibility and have decided to step down.”

The second-highest-ranking official at the agency, Vitaly Vanshelboim of Ukraine, was placed on administrative leave because of the investigation. He declined to comment.

A London law firm representing the British businessman, David Kendrick, and his daughter, Daisy Kendrick, released statements saying the pair had done nothing wrong. The law firm said Mr. Kendrick’s companies had been hampered by the pandemic and decisions by foreign governments.

“Our clients strongly believe in the projects they are running and in their ability to deliver these, and regret the fact that they appear to have become, through no fault of their own, the targets of a campaign seeking to harm their reputations,” wrote the law firm, Carter-Ruck.

The case has become the talk of the U.N. after a series of blog posts by Mukesh Kapila, a former U.N. official who is widely read by diplomats, and an article by the news outlet Devex. The Times reconstructed the story of the lost millions using documents from U.N. auditors, business records and interviews with dozens of people in eight countries.

A Party in Manhattan

The party that began it all was held in 2015 in the antique-filled 5,000-square-foot Upper East Side apartment of Gloria Starr Kins — the 95-year-old editor and publisher of a diplomatic society magazine that covers U.N. parties and events.

It was hosted by Ms. Faremo, a former justice minister and defense minister of Norway. She had taken over the Office for Project Services in 2014 — and later said she had made it faster and less risk-averse: “More than 1,200 pages of rules went into the trash.” Also in attendance was Mr. Vanshelboim, a U.N. veteran and financial whiz who describes himself on LinkedIn as a “SERIAL OVERACHIEVER.”

Their agency was one of the U.N.’s less glamorous: a kind of general contractor to the world. Other U.N. agencies hired it to build schools and roads, deliver medical equipment or perform other logistical tasks.

That job was huge and vital. But at the U.N., prestige came from standing at lecterns — giving grants and giving orders. Their office did neither.

But that was set to change.

“I wanted to move away from being the silent partner,” Ms. Faremo later wrote.

Her agency had stockpiled tens of millions of dollars in excess fees paid to it by other U.N. agencies, and now she and Mr. Vanshelboim wanted to lend out the money, like a bank, to fund profit-making projects in the developing world. Instead of a humdrum contracting hub, they would run a revolutionary in-house investment firm.

But they hadn’t found someone to lend to. That was the point of the party.

Then, through the door came Paolo Zampolli, a man who makes introductions.One of the U.N.’s best-known characters, Mr. Zampolli is an Italian American businessman who also serves as an ambassador for the Caribbean island of Dominica. And he has long nurtured the dream of something bigger: having his own U.N.-approved conservation group called We Are the Oceans, or WATO.

“WATO is the NATO of the oceans,” Mr. Zampolli said. (He means that it would be an alliance of like-minded governments, not that it would be armed.)

When he was a modeling executive, Mr. Zampolli introduced Mr. Trump to the future first lady. At the time of the party, he was making introductions for Mr. Kendrick, the British businessman, who was selling a system for building fast, cheap, sturdy homes in the developing world. And if making the introductions worked?

“Could that bring me money? Yes, of course,” Mr. Zampolli said. “That’s called real estate.”

At that party, it worked. Mr. Kendrick and his daughter met Ms. Faremo and Mr. Vanshelboim there, according to Mr. Zampolli and an employee of Mr. Kendrick’s at the time who was present, Ramy Azoury. Ms. Faremo said she did not recall whom she met at the party, but a photo from the event shows her holding a business card for Mr. Kendrick’s company.

Later, using the acronym for the Office for Project Services, Mr. Zampolli said: “David came to me and said, ‘Paolo, these UNOPS people are very interested. They can invest.’”

In 2017, the U.N. agency gave a $3 million grant to a conservation group run by Ms. Kendrick, who was a recent college graduate.

But Mr. Zampolli said he was never paid a finder’s fee. In fact, Mr. Zampolli said he now regretted making the introduction at all. Ms. Kendrick, it turned out, had named her group We Are the Oceans.

His name.

“I was truly used,” Mr. Zampolli said.

Singing About the Ocean

The U.N. agency declined to say how — out of all the world’s environmental groups — it had chosen Ms. Kendrick’s group for such a large grant. She had set up her New York-based group as a nonprofit a year earlier but never obtained approval from the Internal Revenue Service for a tax exemption as a charity.

Ms. Kendrick signed incorporation papers that seemed to give an inaccurate picture of the group’s leadership. Mr. Azoury and Ms. Starr Kins — two other people who were at the 2015 party — were both listed as directors, but both said in recent interviews that they had no connection to the group, did not know their names had been used and had known Ms. Kendrick only in passing.

“They stole my name,” Ms. Starr Kins said. “She knows I am well-known and she used me.”

Ms. Kendrick’s group produced events, a website, ocean-themed games by the makers of Angry Birds and a pop song about the ocean that was recorded by the British singer Joss Stone. The U.N. agency said its internal investigations group had started a review of the partnership with Ms. Kendrick’s group.

Her father also seemed to play a major role behind the scenes, according to people who dealt with the group. When Ms. Stone signed a recording agreement, the agreement assigned control of the song — and the right to sell it — to a for-profit company that Mr. Kendrick was a director of, according to a copy of the contract provided by Ms. Stone. The company paid for the band that accompanied Ms. Stone.

Ms. Stone said she had agreed to record the song for free, believing it was a fund-raiser for the U.N.

Ms. Kendrick’s lawyers said in a statement that We Are the Oceans delivered on all of its promises to the U.N. and that “the rates paid to all WATO’s participants were at all times legitimate and fair.”

Mr. Svensson, the former employee at the Office for Project Services, said his bosses were focused on arranging a performance of the song by Ms. Faremo. He said she wanted to sing it in the U.N.’s cavernous hall during a 2017 conference about the oceans. They flew in a backing band from Britain, he said.

“Whatever it takes,” he remembered a supervisor saying.

Ms. Faremo sang. But, Mr. Svensson said, an earlier speaker ran so far over time that the hall was largely empty. Mr. Svensson said he planned to include a video of the performance in a documentary he is making about the U.N.

“I agreed to sing this due to my background as a singer,” Ms. Faremo said in her statement. Despite the delayed start, she said, “there was still a crowd in the hall.”

Loans Under Scrutiny

The next year, in 2018, the Office for Project Services announced it was making its first loans. Over the next two years, according to U.N. records, it lent $8.8 million to a company investing in a wind farm in Mexico and $15 million to another company for renewable energy projects. A further $35 million went to build housing in Antigua, Ghana, India, Kenya and Pakistan, projects overseen by a third company.

Business records show that all three companies appear to be connected to Mr. Kendrick. He owns two of them through a family office in the British territory of Gibraltar. The third, based in Spain, does not list an owner in its corporate records — but its directors are longtime associates of Mr. Kendrick, and its email address leads to a company that Mr. Kendrick appears to own half of. U.N. auditors and Mr. Kendrick’s lawyers both referred to the three companies as if they were a single entity.

Mr. Kendrick is a 58-year-old British native who has listed addresses in Spain, according to public records, and he is associated with more than a dozen interlocking companies in multiple countries, mostly in the world of construction. One video, from a project in Antigua in 2014, shows him saying: “I don’t build houses. I’m inspired to build communities.”

It is difficult to get a complete picture of his finances. But at least some of his businesses have struggled at times: U.N. auditors said one of Mr. Kendrick’s companies had lost $20.2 million in 2017 and $14.9 million in 2018.

The U.N. auditors said officials had chosen his companies because they believed his building technology “allowed for quickly built, high-quality and earthquake- and hurricane-resistant homes.” Ms. Faremo approved the loans herself, the auditors found.

Still, the auditors raised alarms that the Office for Project Services had concentrated all of its risk in one place. They wrote in July 2020 that they were “of the view that UNOPS did not follow a sound and transparent method in selecting a partner.”

Just a few months after that, the agency began trying to get its money back, without providing any public reason for doing so. In October 2020, according to U.N. reports, Mr. Kendrick’s companies agreed to return millions lent for the wind farm and the renewable energy projects. But they did not follow through on returning the money.

Months went by.

Finally, according to a U.N. audit report last year, one of Mr. Kendrick’s companies admitted it had used the U.N.’s loan to pay off other loans: “A large portion of the $15 million deposit had been used to discharge its pre-existing debts and liabilities,” the auditors’ report said. The U.N. auditors said last year that Mr. Kendrick’s companies had made some small payments, but the auditors expected the U.N. agency to lose $22 million.

The other loans, which were intended to fund affordable housing projects, are still officially pending. But the U.N. said that, so far, no houses had been completed.

“Not a single housing project has been built,” said P.K. Sarpong, a spokesman for the government of Ghana, where the U.N. loans were supposed to allow work to begin on 200,000 homes. Top officials in Ghana helped announce the deal, but after “the pomp and pageantry, they didn’t hear about the project again,” Mr. Sarpong said.

Mr. Kendrick’s lawyers said that his companies were in the process of restructuring their loans from the U.N. agency and that “no funds have been lost.”

The financial mess threatens to undermine the broader trust of the U.N.’s member countries in the institution at a time when the U.N. is seeking millions of dollars to deal with the war in Ukraine and surging food prices. Finland, for example, had pledged $20 million to support the Office for Project Services’ investments, which were run out of an office in Helsinki, the country’s capital. But Finland has since suspended its funding, according to diplomats and a statement from its foreign ministry.

“They are investing money that the United States and other countries have provided,” Christopher P. Lu, a senior official at the U.S. mission to the U.N., said of the agency. “So they need to be good stewards of our money.”

But the U.N. is a place where accountability often comes slowly and in secret. It was unclear when, if ever, the U.N. would release the results of the investigation that it said this past week had been completed.

If there are to be broader reforms at the Office for Project Services, they would come from its executive board — a group of diplomats from U.N. member states. In the wake of the losses, the board in February demanded an “independent comprehensive evaluation” of what had happened.

It is due in June. June 2024.

Source: The Heraldghana