U.N. tribunal orders ex-official to repay $58.8 million lost in bad deals while getting perks

The United Nations logo at the United Nations headquarters in New York on Sept. 24.

(Pamela Smith / Associated Press)

By Edith M. Lederer

Oct. 9, 2024 10:26 AM PT

UNITED NATIONS — A U.N. tribunal has ordered a former high-ranking official to repay the United Nations $58.8 million lost in deals he made with a British businessman who showered him with interest-free loans, a Mercedes for his wife and perks for his sons.

The three-judge United Nations Dispute Tribunal ruled that evidence “clearly and convincingly” shows that Vitaly Vanshelboim’s misconduct “caused massive financial losses” by the U.N. Office for Project Services, which says it provides infrastructure, procurement and project management services and is known as UNOPS.

The Geneva-based tribunal said last week that Vanshelboim facilitated multiple financial deals between the U.N. office and British businessman David Kendrick focusing on renewable energy, sustainable housing and the oceans.

At the same time, the tribunal said Vanshelboim entered into a series of private arrangements with Kendrick and his businesses stretching back to 2017 — which he never disclosed to the U.N. as required — and “obtained direct financial and material benefits for himself and his family in the amount of at least $3,133,186.10.”

Secretary-General Antonio Guterres “is pleased by this judgment,” U.N. spokesman Stephane Dujarric said Tuesday.

“The U.N. continues to pursue recovery of the funds through other avenues,” he said. “We are fully committed to ensuring criminal accountability for crimes that may involve U.N. personnel,” he said, adding it would cooperate with national authorities on any investigations. Dujarric did not elaborate.

Vanshelboim’s lawyer, George Irving, said in an email Wednesday that his client is appealing the decision, and declined to comment.

Emails sent to three companies that the tribunal says are connected to Kendrick were not immediately returned, and his previous lawyers in London said he was no longer a client. Other contact information for Kendrick could not be found.

The New York Times first reported the ruling.

Vanshelboim, a Ukrainian, had been an assistant secretary-general, serving either as UNOPS deputy executive director or director of its sustainable infrastructure impact investments program. He was fired in January 2023 following an internal investigation.

The investments by UNOPS, which lost millions of dollars, became public in 2022 with media reports followed by the resignation of Grete Faremo, a former Norwegian minister of justice and public security, as the head of Copenhagen-based UNOPS.

The Dispute Tribunal was ruling on Vanshelboim’s appeal of the fine on his dismissal of 12 months’ salary and an order for him to pay the U.N. over $63.6 million in losses incurred from the deals, with his U.N. pension withheld until the sum was paid.

The judges ruled that Vanshelboim’s failure to disclose any of his financial dealings with Kendrick constituted “blatant misconduct” and said he “committed fraud against the organization by leading it into multiple business partnerships with the Kendrick entities, with which he engaged in undisclosed and unauthorized outside activities.”

The judgment said Vanshelboim was tasked with identifying potential partners and that UNOPS allocated money “with the specific intention to develop projects that would attract private investors.”

The judges said Vanshelboim did not disclose that his wife was being paid by Kendrick for services, including helping the businessman locate, purchase and renovate an apartment in Ukraine’s capital, Kyiv. Vanshelboim did not disclose that in July 2017 he entered into a tennis sponsorship agreement with Kendrick for his youngest son. The U.N. said the amount was $1.2 million, which Vanshelboim called “grossly exaggerated.”

Nonetheless, the judges said when Vanshelboim’s son was told what Kendrick was going to pay him, he wrote: “this is insane, how is this possible. I’m not even a good tennis player yet.” In reply, his father wrote part “of my job is to make insane things happen.”

The judgment also revealed that Kendrick granted Vanshelboim “an interest-free revolving loan facility” for five years, with a limit of $500,000 per year and a total cap of $2 million. It said Vanshelboim used Kendrick’s credit cards for his personal expenses between October 2018 and December 2020.

In addition, Kendrick paid for repairs to Vanshelboim’s property in Mamaroneck, N.Y., and for custom furniture and home accessories — half for his apartment in Kyiv and half for his son’s apartment, the judgment said.

Vanshelboim also purchased a Mercedes Benz luxury vehicle for his wife with funds from Kendrick and his entities, it said.

The tribunal said Vanshelboim “misled the organization by both omitting his blatant conflict of interest with Mr. Kendrick and ‘pushing’ UNOPS to enter into highly risky deals with the Kendrick entities, while minimizing concerns and concealing relevant information.”

It said he can be held responsible for $58.8 million, the amount that UNOPS lost, minus nearly $4.83 million in interest and fees that it said were less clear.

“However, he may seek contribution elsewhere from any others deemed responsible as well,” the tribunal said.

Lederer writes for the Associated Press.