Part 2: New arrangements for seconding officers to the United Nations

Inquiry into New Zealand Defence Force payments to officers seconded to the United Nations.

2.1
In this Part, we discuss the events that took place from March to December 2000 – before Officer 1 started his period of secondment with the UN. We describe:

Changes to the United Nations' arrangements for seconded employees

In February 1999, the UN changed the way it seconded staff. NZDF had seconded staff under the old system, but not under the new system.

2.2
The UN employs some staff directly, but also relies heavily on staff seconded from contributing states such as New Zealand. In February 1999, the UN changed the way it seconded employees from states. Until then, employees seconded from states were paid a salary and any allowances by their home state. This is referred to as the gratis system. NZDF had seconded officers under this system. In practice, it meant that the administrative and financial arrangements for the seconded officers did not need to change, and that they simply worked in a different organisation and command system for operational purposes.

2.3
From February 1999, the UN moved to a system where seconded employees were paid a salary and allowances directly by the UN, and were not to be paid by, or receive any benefits from, their home state. This is referred to as the non-gratis system. The change in payment arrangements was intended to strengthen the independence of the UN. Removing any financial relationship between a seconded person and their home state government made it clear that, while staff were seconded, they were controlled by the UN and not their home state governments. The changes were also designed to create parity between employees seconded to the UN from different states.

2.4
In practice, this change meant that seconding organisations needed to consider how to suspend their usual arrangements for remuneration and other benefits during the secondment. The employee needed to be able to understand any difference in entitlements during the secondment before agreeing to it.

2.5
This is not unusual when an employee is seconded from one organisation to another: it is common for there to be detailed negotiations between the primary employer, the host organisation to which the person is being seconded, and the employee, to agree on the detailed rights and responsibilities of each.

2.6
In early 2000, NZDF began to consider whether to send an officer to work for the UN in New York. This would be the first time that NZDF had seconded an officer under the new non-gratis system.

Documents sent in 2000 by the Military Adviser

NZDF had access to the documents it needed about the UN's requirements that applied to employees receiving accommodation allowances from their home state in 2000.

2.7
In early 2000, NZDF's New York-based Military Adviser to the New Zealand Permanent Mission to the UN (the Military AdviserA) faxed some advice to Operations branch staff on how other states provided for their officers who were seconded to the UN, and in particular on whether they provided their officers with an allowance to cover housing costs.

2.8
The Military AdviserA included a copy of the UN's Administrative Instruction on rental subsidies and deductions (the Administrative Instruction) in the material he sent to NZDF. The Administrative Instruction set out when the UN would pay a rental subsidy to its employees (whether or not they were seconded) and the conditions for the payment of the rental subsidy. It stated that, if a home state paid accommodation assistance to an employee, then that employee needed to declare this to the UN.

2.9
Depending on the amount of the accommodation assistance provided to the employee, the rental subsidy the UN paid could be either reduced or not paid, and deductions could be made from the employee's salary.3 Deductions were made because the salary and post adjustment4 paid to employees by the UN included an allowance for the average rental costs in different parts of the world.5

2.10
The Military AdviserA also faxed a copy of the UN's General Information on Conditions of Service (the General Information) to the Deputy Assistant Chief PersonnelA on 25 April 2000. The General Information also set out the requirements for UN payments of a rental subsidy, including the requirement that employees declare any accommodation assistance provided by their home state. It also referred to the fact that salary deductions may be made if the home state provided accommodation assistance. We were unable to find a copy of that fax or the General Information document within Personnel branch files.

2.11
In this report, we use the term "the UN's requirements" to refer to the UN requirements for the payment of the rental subsidy, which were set out in the Administrative Instruction and in the General Information.

Background to the decision to provide accommodation assistance to seconded officers

The Assistant Chief PersonnelA provided advice to Assistant Chief Operations that an officer seconded to the UN would be worse off financially than an officer posted to the UN.

2.12
On 3 May 2000, the Assistant Chief PersonnelA provided advice to the Assistant Chief Operations on the options for funding the secondment of an officer to the UN. The advice was focused only on the practical question of how to fund the secondment. It did not consider broader questions about the difference between an ordinary NZDF posting to an offshore role and a secondment to another organisation. Nor did it consider in any detail the difference between the previous gratis secondments to the UN and the purpose of the new non-gratis secondment system. Therefore, it did not address the general point that NZDF would need to suspend the officer's overall remuneration and benefits during the secondment, or that this might require specific and detailed analysis and agreement.

2.13
The funding options put forward were that:

  • the UN fully funds the appointment, including salary and accommodation;
  • NZDF funds the seconded officer; or
  • the UN funds the salary costs, and NZDF provides the accommodation.

2.14
The Assistant Chief PersonnelA recommended that the third option be adopted. He stated that this option was acceptable to the UN and fairest to the officer. The Assistant Chief PersonnelA also stated that, if the officer were to be paid fully by the UN, that officer would be disadvantaged financially compared to an officer posted to New York by NZDF.

2.15
The advice included a table that compared the financial position of a seconded officer receiving UN pay and allowances to an officer posted overseas receiving NZDF pay and allowances. It also compared the financial position of a seconded officer receiving UN pay and allowances and NZDF accommodation assistance with an officer posted overseas receiving NZDF pay and allowances. The table showed that a seconded officer on UN pay and allowances would receive much less money than an officer posted overseas receiving NZDF pay and allowances. The table also showed that a seconded officer who received UN pay and NZDF accommodation assistance would be in a financial position comparable to an officer posted overseas.

2.16
The table contained information about UN pay and allowances that could not have been obtained solely from the material sent back by the Military AdviserA. We did not find any other UN material from that period within NZDF's files, so we were unable to determine where the information came from.

Problems with the Personnel branch advice

The Personnel branch table concluded that an officer seconded to the UN would be significantly worse off financially when compared to an officer posted to New York. This conclusion was wrong. Officers seconded to the UN were in a financial position that was generally comparable to that of an officer posted to New York. Therefore, there was no need to pay the seconded officer's NZDF accommodation assistance.

2.17
We reviewed the table attached to the advice provided by Assistant Chief PersonnelA to Assistant Chief Operations. We found numerous errors in the table. The calculations in the table were incorrect, because they did not show that, if NZDF paid accommodation assistance to a seconded officer, the UN might make deductions from the officer's salary or might not pay its rental subsidy. The advice made no reference to the Administrative Instruction or the General Information. It was also flawed because the column for the posted officer did not include a calculation showing that rent was paid but the column for the seconded officer did show rent being paid. Therefore, the total figure paid to the posted officer was inflated when compared to the total figure paid to the seconded officer, because it failed to include the payment of rent. The two columns were not comparing like with like.

2.18
We then reconstructed the analysis, for each of the three seconded officers for whom we had UN payslips. We obtained information from NZDF on what it would have paid the three officers (at the time they were seconded to the UN) had they been posted to New York, and then compared that to what they received from the UN. We agreed with NZDF that this analysis showed that the seconded officers would have been in a generally comparable financial position under the standard UN conditions to an officer posted to New York on NZDF terms and conditions.

2.19
Therefore, the rationale for paying NZDF accommodation assistance to the seconded officers was not valid. They would not have been financially disadvantaged by the secondment. To pay additional accommodation assistance to the seconded officers would (and in fact did) put them in a better position financially than a posted officer.

2.20
As far as we can tell, it was not until we completed this analysis in late May 2010 that anyone in NZDF understood that the seconded officers would in fact have been in a generally comparable financial position to posted officers. As we set out later in the report, for the next 10 years, NZDF proceeded on the assumption that the seconded officers would be worse off and needed additional support.

Decision to provide accommodation assistance to seconded officers

Based on the Personnel branch advice, the Chief of Defence ForceA agreed that NZDF would supplement the payment of housing and utilities for an officer seconded to the UN.

2.21
Based on the advice from the Assistant Chief PersonnelA, on 10 May 2000, the Assistant Chief Operations sent a paper to the Chief of Defence ForceA, recommending that he agree in principle that, if NZDF obtained a secondment position, then the officer would be paid by the UN "with NZDF supplementing housing and utilities". The Chief of Defence ForceA agreed with the recommendation.

2.22
It is clear that Personnel branch staff did not adequately consider the general question of the nature of a secondment under the non-gratis system, and failed to identify the complexities of the UN's rental subsidy scheme. The advice provided to the Assistant Chief Operations in May 2000 was wrong. There was no need to provide additional support to seconded officers. Even if there had been, it would have been possible for NZDF to provide accommodation assistance to a seconded officer and still comply with the UN's requirements.

Documents missing from the files

2.23
When we reviewed the Personnel branch files, we were surprised by the relatively small number of documents about the development of the conditions of service and entitlements for Officer 1 in 2000. Particular documents that we expected to see were not held in those files. For example, the copy of the General Information that the Military AdviserA sent to the Deputy Assistant Chief PersonnelA in April 2000 was not in the files.

2.24
Similarly, documents that we expected to see within the Operations branch files about UN secondments were not there. For example, the copy of the Administrative Instruction, sent to Operations branch staff in April 2000 by the Military AdviserA, was not in the files.

2.25
It is clear from the Assistant Chief Personnel's Minute of May 2000 to the Assistant Chief Operations that Personnel branch staff (who prepared the table attached to the Minute) had access to some UN material. We were unable to identify that UN material because it was not included in the files.

Arrangements made for Officer 1's secondment

NZDF had not finalised its policy about the entitlements of seconded officers before Officer 1 accepted the offer of a secondment to the UN.

2.26
NZDF nominated Officer 1 for a UN vacancy in the Department of Peacekeeping Operations. Officer 1 was offered the position in October 2000. In June 2000, a Personnel branch staff member prepared a paper setting out what would happen to various aspects of Officer 1's NZDF conditions of service (such as superannuation, long leave, and honours) if he were seconded to the UN. The paper did not deal with accommodation assistance.

2.27
The conditions of service and entitlements for NZDF staff are contained in Defence Force Orders. Defence Force Orders are made by the Chief of Defence Force under the Defence Act 1990. The Defence Force Orders set out the conditions of service and entitlements for officers posted overseas by NZDF to NZDF positions, but in 2000 did not provide for conditions of service or entitlements for officers seconded to the UN. As previously noted, the UN system for secondments had changed and new arrangements needed to be negotiated and agreed. Therefore, when Officer 1 received his offer from the UN, he was unable to determine what his conditions of service or entitlements from NZDF would be.

2.28
Before accepting his UN offer, Officer 1 received some advice from Personnel branch staff about what some of his conditions of service and entitlements would be. Personnel branch staff advised him that the Assistant Chief PersonnelA had said that Officer 1 was to get conditions of service that ensured that he was no worse off than he would have been had he remained in New Zealand. At the time, Officer 1 recorded in an email that he had also discussed the secondment with the Military AdviserA, who had advised him to ensure that the conditions of service were adequate for the cost of living in New York. The Military AdviserA had also told Officer 1 that the UN had a number of rules that affected what he would be entitled to from the UN. Officer 1 accepted the UN offer in late October 2000. However, the NZDF conditions of service and allowances he would be entitled to were unresolved.

2.29
Officer 1 appears to have received a copy of the Assistant Chief PersonnelA Minute of May 2000, some time during late 2000, which showed that seconded officers would be significantly disadvantaged financially if NZDF did not pay accommodation assistance. It appears that by this point the advice in the Minute had become a basic assumption that informed all later discussions and action.

2.30
Officer 1 received a copy of the General Information with his UN offer documentation. The General Information explained how the rental subsidy scheme worked, including the requirement for a declaration and that salary deductions may be made if accommodation assistance was provided by the home state. Officer 1 told us that he read the document before he went to the UN, but did not fully appreciate how the rental subsidy provisions applied to him.

2.31
When Officer 1 left New Zealand at the end of 2000 to begin his secondment with the UN, his conditions of service – including what allowances he would be paid – were still unresolved. However, he had been advised that NZDF would be paying him accommodation assistance.

3: See paragraphs 24-26 of the UN Administrative Instruction Rental Subsidies and Deductions for staff at duty stations in Europe and North America (ST/AI/350).

4: The "post adjustment" is part of a UN salary package. The adjustment is designed to compensate UN staff for differences in living costs, providing staff with the same purchasing power regardless of where they might be posted to.

5: See paragraph 4 of the UN Administrative Instruction Rental Subsidies and Deductions for staff at duty stations in Europe and North America (ST/AI/350).

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