A high-ranking United Nations official secretly took $3 million in gifts from a British businessman while he steered more than $58 million of the organization’s money to the man’s companies, according to a ruling from an internal U.N. court.
The decision provided a potential answer to a question that has baffled the organization since news broke in 2022 of Vitaly Vanshelboim’s disastrous investments: Why did a 20-year veteran of the United Nations defy auditors and common sense by entrusting his agency’s entire investment portfolio to a man he purportedly met at a party?
The court found last week that Mr. Vanshelboim, a Ukrainian, had committed fraud and “blatant misconduct” by failing to disclose the gifts from the businessman, David Kendrick. It said Mr. Vanshelboim had received interest-free loans, home repairs, a new Mercedes and a $1.2 million sponsorship for his teenage son, who was a tennis player.
“This is insane, how is this possible,” the son wrote back to his father at the time, according to an email cited in the court ruling. “I’m not even a good tennis player yet.”
“Part of my job is to make insane things happen,” Mr. Vanshelboim replied, the court said.
The United Nations now says that all $58 million that Mr. Vanshelboim’s agency entrusted to Mr. Kendrick has been lost. Mr. Vanshelboim was fired last year, fined a year’s pay and ordered to repay all the money lost through the United Nations’ dealing with Mr. Kendrick.
He appealed those penalties, but the court largely rejected his arguments, saying he had to pay $58 million or lose his U.N. pension. Mr. Vanshelboim declined to comment. Mr. Kendrick did not respond to a request for comment on Tuesday.
By filing his appeal over his pension, Mr. Vanshelboim brought previously unknown details of his payments from Mr. Kendrick into the public domain.
In its ruling, the three-judge U.N. court said it did not find proof that Mr. Vanshelboim had explicitly promised to provide U.N. money in exchange for personal gifts. But it said that the payments from Mr. Kendrick began in 2017, a year before Mr. Vanshelboim’s agency made its first huge investments with him. And it said that while he was taking money from Mr. Kendrick, Mr. Vanshelboim “intentionally misrepresented” facts to make his benefactor’s companies look better.
“The secretary-general is pleased by this judgment,” said Stéphane Dujarric, the spokesman for Secretary-General António Guterres. “The U.N. continues to pursue recovery of the funds through other avenues.”
Mr. Dujarric said the organization remained committed to ensuring accountability for crimes that involved U.N. personnel. But he would not comment on which countries had opened criminal investigations into Mr. Vanshelboim’s conduct. Mr. Dujarric declined to provide further details in order to avoid influencing any action or decision by the national authorities involved in the case.
Mr. Vanshelboim “committed fraud against the organization by leading it into multiple business partnerships” with Mr. Kendrick, the ruling said.
The saga of bad investments began when officials at the U.N. Office for Project Services — an obscure agency that acts as a kind of general contractor for other arms of the organization — found themselves with tens of millions in surplus money. Mr. Vanshelboim was second in command at the agency and had such respect there that others called him Mr. UNOPS.
Mr. Vanshelboim and his boss decided to lend out the surplus, like a bank, to projects building homes and renewable energy in the developing world. But instead of spreading out their investments with multiple partners, they entrusted all of them to Mr. Kendrick’s companies.
They also gave $3.3 million to a charity run by Mr. Kendrick’s daughter, Daisy Kendrick. Among its tasks: produce a song about the ocean. Mr. Vanshelboim’s boss, Grete Faremo, later sang it to a largely empty U.N. General Assembly chamber.
Ms. Faremo resigned in 2022 after a New York Times story about the bad investments. The recent court ruling blamed her for “extraordinary deferral” to Mr. Vanshelboim on the investments. In an email, Ms. Faremo rejected the idea that she had done anything wrong.
The agency’s deals with Mr. Kendrick quickly soured. Not a single house was built as part of the deals, according to the court ruling. Although Mr. Kendrick’s companies eventually repaid $6 million, the United Nations says that was not enough to even cover the interest on the loans.
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