EU Presidency Statement - UN Joint Staff Pension Fund

Mr. Chairman,

I have the honour to speak on behalf of the European Union. The acceding countries Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia, the associated countries, Bulgaria, Romania, Turkey and the EFTA countries, members of the European Economic Area (Iceland, Liechtenstein, and Norway) declare that they align themselves with this statement.

Mr. Chairman,

We thank the U.S.G. for Internal Oversight Services Mr. Nair for the presentation of the report of the O.I.O.S. on the audit of the Investment Management Service of the U.N. Joint Staff Pension Fund.

We attach great importance on how the investments of the Fund's assets are conducted, in view of the fact that the entire staff of the U.N. relies on the Fund for a safe life after their retirement. There is no need to stress that we are dealing with a Fund that at 30 September 2002 had a market value of its investments of almost 19.9 billions U.S. dollars and thus requires the utmost due diligence in its management.

For this reason, we would like to address some of the findings detected by O.I.O.S in the course of its audit.

We apprehend with concern that up to 6.5 billion dollars of the North American equity portfolio - that is, about 30% of the Fund's total investments - are managed without adequate responsibility sharing. This appears to be, in our view, an excessive concentration of investment responsibility.

Another point of concern is the use of non-discretionary investment advisors by the Investment Management Service. This service cost to the Fund 15.2 million U.S. dollars for the biennium 2001-2002 and O.I.O.S. found no evidence that it added significant value in terms of the Fund's individual equity transactions. Moreover, as O.I.O.S. rightly pointed out, there are no comparable examples in investment industry practices of managers who have at their disposal both "full-service" brokers and non-discretionary advisors in executing individual investment transactions. To this regard, we fully share the recommendation by O.I.O.S that this practice be thoroughly reviewed and we note with appreciation that the representative of the SG has agreed to comply with it.

I will conclude, Mr. Chairman, by addressing the issue of developing a code of ethics for staff involved in investment management. While taking note of the reasons given by the representative of the SG on the small number of staff involved, we fully agree with O.I.O.S. on the need to follow the same approach taken on by the investment industry, where ethical codes of conduct are normally adopted for staff performing the same functions.

Thank you, Mr. Chairman.

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• EU Presidency Statement - The UN pension system (11/10/2000)