Finland has cut all its core funding to United Nations initiatives pending an inspection of their risk management mechanisms, according to a statement from the country’s Ministry for Foreign Affairs.
The move follows accusations of mismanagement of funds at a branch of the U.N. headquartered in the country — Sustainable Investments in Infrastructure and Innovation, known as S3i.
S3i, the investment arm of the U.N. Office for Project Services, is at risk of losing more than $20 million after investing in several unsuccessful projects. The scandal has seen the suspension of Vitaly Vanshelboim, chief executive of S3i, pending the results of an internal investigation, and the resignation of the executive director of UNOPS, Grete Faremo.
Finland provided around €10 million ($10.6 million) of financial support to S3i, and is now considering whether to make attempts to recover the money.
DevExplains: An inside look at the UNOPS scandal
Over the past months, UNOPS, a general contractor which serves other U.N. agencies, has found itself at the center of a scandal. Its executive director has resigned and her deputy is under investigation. But what is UNOPS, what does it do, and how has it got to this point?
S3i is just one of several specialist U.N. initiatives headquartered in the country. Other entities listed on the Finnish government website include the International Organization for Migration; the World Institute for Development Economics Research, part of the UN University; UN Global Pulse, the secretary general’s initiative on big data; and the UNICEF Office of Innovation.
The Finnish Ministry for Foreign Affairs said in a statement that it wants to understand why internal risk management controls failed at UNOPS and whether other agencies are similarly at risk. Agencies receiving “core contributions” will not get more money until this process takes place.
The statement did not say which institutions face suspensions. However, Titta Maja, the Finnish director general for development policy, is reported by the Finnish national broadcaster Yle as saying that the U.N. Population Fund, UN Women, UNDP, and UNICEF were among the organizations affected. Maja is quoted as saying that up to €70 million will be affected.
One insider at UNOPS has speculated that Nordic government officials are wary they are being taken advantage of. Jonas Svensson, the former head of global innovation and technology at UNOPS, told Devex that U.N. agencies had previously relied heavily on Nordic countries to finance new initiatives, and had seen Finland in particular as a “cash cow” for experimental projects.
Vince Chadwick contributed reporting.
About the author
David Ainsworth@daveainsworth4
David Ainsworth is business editor at Devex, where he writes about finance and funding issues for development institutions. He was previously a senior writer and editor for magazines specializing in nonprofits in the U.K. and worked as a policy and communications specialist in the nonprofit sector for a number of years. His team specializes in understanding reports and data and what it teaches us about how development functions.