Broken promise: Inside collapse of UNOPS Habitat Heights project

When former President Uhuru Kenyatta launched the Habitat Heights in 2019. [File, Standard]

In December 2019, a stretch of land in Lukenya was the stage for political fanfare and a flurry of high-stakes promises. Government officials, led by then-President Uhuru Kenyatta, stood alongside United Nations dignitaries and private developers to launch Habitat Heights, an ambitious affordable housing project. The project promised 8,888 modern housing units, envisioned as the first phase of a broader plan to build 100,000 homes across Kenya under the Sustainable Infrastructure Investments and Innovation (S3i) initiative, a global program by the United Nations Office for Project Services (UNOPS). Valued at $647 million, it was presented as a model for public-private development.

However, nearly six years later, not a single home has been completed, and the Lukenya site lies deserted, with its abandoned sales gallery as the sole physical remnant. A visit reveals overgrown flower beds, tall grass, and a crumbling sign with missing letters, with a plaque still commemorating the 2019 launch.  A local herder recalled brief construction activity, then silence. “It has remained the same for years,” he said.

 A gallery, not homes

Satellite imagery confirms that the site never progressed beyond the sales gallery, showing no new development since early 2021. Despite a UNOPS statement on launch day announcing that the “first homes in Kenya were ready,” as part of a “landmark affordable housing initiative. But  in reality, only a sales gallery with two demonstration units was built, never intended for habitation.

When questioned about these initial claims, UNOPS stated the 2018 communication was authorized by S3i’s former CEO Vitaly Vanshelboim, claiming it referred to “show homes, as images from the launch event show.” However, they also added that the UN publicly confirmed that no homes were ever completed for beneficiaries as part of the former S3i initiative.

This stark shift in UNOPS’s narrative, from initial claims of ‘ready homes’ (later re-categorized as ‘show homes’) to a public admission of zero completed residences, highlights a pattern of exaggerated claims and delayed transparency.

Today, even these details have disappeared from the public record. All online references to the S3i initiative, including Kenya-related project pages, have been scrubbed by UNOPS, with original launch materials only accessible through archived snapshots captured by the Wayback Machine, an internet archive that preserves past versions of websites.

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What began as a flagship public-private partnership for Kenya’s affordable housing program now stands as a stark reminder of how grand plans can collapse under the weight of corruption, weak oversight, and institutional failure. An investigation based on internal audits, financial records, and interviews with key stakeholders reveals how a promising development project unraveled into one of the most brazen fraud scandals in U.N. history. It all began with a high-profile partnership signed between UNOPS and the Kenyan government in New York in September 2018.

A deal that delivered nothing

In May 2019, UNOPS, Sustainable Housing Solutions (SHS), and Kenya’s State Department for Housing signed a tripartite agreement to construct 100,000 affordable homes in Kenya, with funding reportedly secured and construction set to begin. President Kenyatta hailed it as an “economic stimulus,” that would reduce poverty and unemployment. UNOPS Executive Director Grete Faremo pledged that the agency would “do everything we can to ensure the project is a success.” SHS Chairman Dr Allan Zimbler called the agreement “a critical step” in addressing Kenya’s housing crisis. Today, SHS Holdings’ website is inactive, and these promises exist only in internet archives.

How a UN agency went rogue

Professor Mukesh Kapila, a former senior United Nations official said UNOPS was never intended to act as an investment vehicle. “UNOPS was created to offer logistical and project management support to other UN agencies,” he said. “But under Executive Director Grete Faremo and her deputy, Vitaly Vanshelboim, it was transformed into something it was never meant to be; a quasi-investment bank.”

According to a KPMG audit, UNOPS leadership between 2016 and 2021 quietly amassed large financial reserves by overcharging for services, then funneled these into risky S3i impact investments. This shift in mandate, beginning in 2014 under the new Executive Director, aimed to raise the agency’s profile by investing reserves in sustainable infrastructure. However, the execution, intended to unlock private capital for public good, proved disastrous

Kapila said UNOPS strayed from its core mission, and “profiteered off the backs of poor people,” he said. “Instead of building refugee camps or providing logistics, which is what they were good at, they tried to turn UNOPS into an investment bank. It failed catastrophically.”

UNOPS’ internal checks, such as the Audit Office, the whistleblower protection office, and the Inspector General mechanisms, were not only bypassed but actively subverted. “All these units reported directly to the same bosses they were meant to keep in check,” Kapila said. “They were completely neutralized.”

Kapila added that the collapse stemmed from more than just poor investment decisions. The S3i initiative was deliberately “set up as a special project” to bypass UNOPS’ established rules and oversight mechanisms. Its classification as a “special vehicle” effectively removed it from the agency’s legal and procedural frameworks, allowing it to operate outside standard checks and balances, a move Kapila called “completely contentious.”

By design, that structure enabled top leadership to evade scrutiny from the Executive Board and internal control units, paving the way for unchecked financial decisions and systemic governance failures.

Kapila added that the UNOPS’ Executive Board, composed of member-state diplomats, also bore responsibility. He stated the board routinely approved reports without demanding financial disclosures, taking “bland reports at face value” and rubber-stamping whatever was presented to them. He argued this was a deliberate breakdown of oversight, calling it a “systematic subversion of the organization right from the very top”

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He described the Habitat Heights saga as part of “the biggest fraud in the UN’s history,” involving a constellation of financial missteps, ignored red flags, and a leadership structure that allowed fraud to flourish unchecked. He said the checks and balances that were supposed to catch misconduct were not just bypassed but were dismantled to enable a few individuals to benefit. “This was not just a poorly designed project that went astray,” he said. “It was a deliberate plot from the very beginning.”

He added that Kenya’s experience was not unique. “Most of these projects were profiteering opportunities for businessmen,” he said, “rather than actually benefiting the poorest in Kenya.” In his view, the Habitat Heights collapse fits a broader pattern of development efforts veering off course when oversight fails and public interest is sidelined.

The scandal also revealed how Kenya’s urgent housing needs were used to legitimize questionable investments. By aligning the S3i initiative with Kenya’s national development agenda, UNOPS leadership secured political goodwill while bypassing due diligence. Professor Kapila said the country’s housing crisis was effectively used as a cover. “They saw Kenya’s need as an opportunity,” he said. “But it was never really about building homes, it was about making deals.”

UNOPS, however, disputes this characterization. In response to inquiries, a spokesperson said the agency had implemented “strategic and administrative reforms” after S3i’s collapse, including leadership changes and accountability measures.

UNOPS financial records show that the agency disbursed $5.4 million to social housing in Kenya in 2019, followed by $5.8 million in 2020, $2.2 million in 2021, and a total of $5 million in investments in 2022, bringing the total to $18.4 million, which is close to 2 billion shillings at 2020 exchange rates. Despite these disbursements, the 2022 audited report reveals significant financial setbacks. By late 2022, UNOPS had fully written off $58.8 million in defaulted loans tied to the S3i initiative. These losses stemmed from seven infrastructure projects, including the Kenya affordable housing project funded through loans to special-purpose vehicles linked to a single private holding group. While the financial statements do not explicitly name Habitat Heights, it was the only S3i initiative-backed social housing project in Kenya during that period.

Yet now, UNOPS says it cannot confirm whether Habitat Heights ever received any S3i funds, claiming that financial details from its own audited reports, which were published over six years ago, were later deemed unreliable. It did not provide documentation to support this assertion.

With UNOPS now disavowing its past disclosures, questions intensify over where the money went. The modest structure in Lukenya bears no resemblance to a billion-shilling project, and the answer may lie in the companies that received S3i funds without competitive bidding or due diligence, as internal reviews revealed.

The money trail and the man behind it

At the center of the scheme was Vitaly Vanshelboim, then UNOPS’ Deputy Executive Director and Chief Executive of the S3i initiative. A United Nations tribunal ruled that Vanshelboim engaged in serious misconduct by channeling nearly $59 million in UN funds to companies tied to businessman David Kendrick, including Sustainable Housing Solutions (SHS Holdings). The tribunal found that Vanshelboim received over $3.1 million in personal benefits from Kendrick, including loans, home renovations, and a Mercedes-Benz for his wife. Concurrently, he facilitated UNOPS’ S3i investments into SHS Holdings and other Kendrick-linked companies, misrepresenting investments as “opportunities” and concealing key information to fast-track approvals.

Detailed questions were also sent to lawyers representing Mr. Vanshelboim and Mr. Kendrick. As of publication, neither had responded to the queries. The tribunal found that the misconduct went beyond undisclosed conflicts of interest. It revealed a complete abandonment of basic financial safeguards. “Vanshelboim and Faremo just rubber-stamped what looked like a sweetheart deal,” Kapila said. UNOPS Director Faremo, who worked with Vanshelboim, resigned in 2022 amid scandal.

Despite Kendrick’s central role, the United Nations has not said whether his case was ever referred to law enforcement. In a 2022 statement, UNOPS noted that investigations into SHS and related entities had been handed to the UN Office of Legal Affairs and that, “Legal actions may include referral to relevant criminal authorities of one or more jurisdictions,” but no such referrals have been confirmed.

Kapila called the handling of the S3i funds a textbook case of negligence by people who should have known better. “These are not stupid people,” Kapila said. “They’re experienced operators.”

The audit review by KPMG further found that UNOPS operated under an “authoritarian” leadership culture that discouraged scrutiny and silenced dissent. SHS was selected without competitive bidding, and despite the company’s limited experience in delivering mass housing, it was entrusted with multimillion-dollar projects across three continents. This raises urgent questions about how institutional failures at UNOPS enabled risky partnerships to take root and drew in governments like Kenya, which entered into agreements based on promises that lacked due diligence. In Kenya, those partnerships included a network of companies linked to Kendrick that played key roles in the Habitat Heights project, even though they were presented as independent entities.

A Web of companies, a single Connection

Another company involved in the Habitat Heights rollout was Bau Lifestyle International Design Limited, which provided interior design for the show homes. Marketed as SHS Holdings’ exclusive design partner, but UK company records show that Bau Lifestyle was also linked to David Kendrick, the businessman at the center of the S3i saga. Kendrick became its second director in November 2015. In March 2023, its directors filed for voluntary strike-off, initiating the process to dissolve the company. The move was suspended a month later after an objection was lodged, just as scrutiny of S3i intensified.

Baupanel Systems, listed as a construction partner on the development’s website, shares similar ties. Its director, Bernard Michael Sumner, also held directorships in Bau Lifestyle and the now-dissolved Worldwide Renewable Energy Limited--another company named in the UN tribunal as a beneficiary of improperly routed S3i funds. Bau Lifestyle’s ownership adds further complexity. It was controlled through a now-defunct holding firm, also linked to Sumner. While not named in the U.N. ruling, Sumner appears in UK records as associated with over 200 companies--many registered to virtual offices and filing dormant accounts. While not unlawful, such structures reduce transparency and complicate accountability, particularly in donor-funded projects. Together, SHS Holdings, Bau Lifestyle, and Baupanel Systems, three companies central to the Kenyan project, form a web of entities with documented ties to Kendrick.

The UNOPS spokesperson acknowledged that S3i “circumvented controls,” and said that the agency now has “more than 100 wide-ranging reforms” to prevent recurrence.

Due diligence that never was

Although these companies were brought into the project through UNOPS, Kenyan authorities still had a duty to vet them, a responsibility they appeared to neglect. Sylvia Kasanga, an architect and former senator, believes the failure extended beyond the UN system. She was particularly critical of how SHS, a company with no verifiable experience in large-scale housing, was entrusted with such an enormous project. Kasanga, who is also an arbitrator and represented Kenya at the International Court of Arbitration, said, “There was clearly a failure on the part of Kenyan authorities to demand proof of capacity.”

While acknowledging the promise of public-private partnerships, Kasanga emphasized that even routine government contracts demand proof of experience. “Even the smallest contracts require bidders to demonstrate their track record.” She added that it was hard to grasp how a company could be entrusted with building 100,000 homes without scrutiny. “That kind of scale,” she said, “requires serious oversight.”

In March this year, Vanshelboim was placed in provisional custody in Spain as authorities considered a U.S. request for his extradition. A grand jury in New York has indicted him on charges of bribery, wire fraud, and money laundering. While legal proceedings are underway abroad, domestic accountability has lagged. Despite the scandal and the project’s collapse, no Kenyan government official has been investigated or held to account.

“It’s hard to believe this kind of corruption could have happened without local complicity,” said Kasanga. “But we’ve normalized it. We know things are wrong, but no one calls them out.”

She described a culture of silence where Kenya’s problem lies not in lacking laws, but in failing to enforce them. She noted that even professionals who should speak up remain quiet, perhaps due to hidden interests. “So we all keep quiet until there is no country left to fight for,” she added.

Still, she emphasized that public-private partnerships (PPPs) remain a vital tool for addressing Kenya’s housing deficit if executed properly. “A government alone cannot meet the demand,” she said. “PPP frameworks exist and, when followed, can provide transparency. You can trace who the partners are, what they bring to the table, and what the contractual terms are.”. Kasanga argued that Kenya should strengthen it through better enforcement, tighter oversight, and genuine commitment to due process.

The UNOPS S3i initiative was founded on a similar idea: to unlock private capital for public development. Its official description said it aimed to “de-risk and structure infrastructure investment projects” to align with national priorities. Each project, it said, would undergo a “rigorous and comprehensive due diligence process” to ensure environmental, social and economic benefits, while also generating returns for investors. In Kenya, that vision collided with execution, exposing the gap between S3i’s promises of rigorous oversight and what actually unfolded.

The grand plan behind Habitat Heights

According to official project documents, the 103-acre parcel of land for Habitat Heights was owned by Habitat Housing Cooperative Society Ltd (HHCSL), a cooperative primarily made up of United Nations staff based in East Africa, along with their families and affiliates.

They formed a joint venture with Singapura Developers Ltd to create Habitat Heights Ltd, the Special Purpose Vehicle (SPV) tasked with implementing the development. The land was subsequently transferred to the SPV. Attempts to reach Habitat Heights, Singapura Developers Ltd, and Habitat Housing Co-Operative Society for comment were unsuccessful.

Marketed as a futuristic mini-city with modern amenities and high returns, the development envisioned various apartment sizes constructed with cost-efficient, earthquake-resistant EPS panel technology and soundproof windows. Despite being branded affordable, Habitat Heights’ pre-construction prices started at nearly 2 million shillings’ cash, with larger apartments reaching 7 million shillings for mortgages. This contrasts sharply with units under the Boma Yangu portal, which start from 640,000 shillings. George Muli, a boda boda operator earning about 1,500 shillings daily and paying 2,000 shillings rent, expressed skepticism, stating he cannot afford a house costing over a million shillings or requiring a 5,000 shillings’ monthly payment. Muli, who is the sole breadwinner for his family, lives in a modest one-room house made of corrugated iron sheets. His monthly earnings often fall short of covering basic expenses, let alone saving toward homeownership. While he would welcome the stability and safety of improved housing, he doesn’t see that happening any time soon. Although the government promotes its online application system as transparent and fair, Muli believes corruption and bribery will ultimately decide who gets the homes. “If you don’t have money to ‘greet’ the right people, you won’t get a house,” he said.

Kenya’s role and the wider housing crisis

Habitat Heights’ collapse reflects systemic failures in Kenya’s Affordable Housing Programme (AHP), launched in 2017 to build 500,000 homes by 2022. By 2023, a Cytonn Investments report, only 13,529 units (less than 3% of target) were completed despite 125 billion shillings allocated between 2018 and 2022. President William Ruto reaffirmed commitment in 2022, targeting 200,000 units annually. As of April 2025, Principal Secretary for Housing and Urban Development Charles Hinga, who signed the 2018 UNOPS MOU and 2019 tripartite agreement for Habitat Heights, reported 1,189 units completed by government since 2022, with 140,000 under construction.

Despite growing concerns over how Kenya’s affordable housing program is being funded and implemented, some experts see the government’s commitment to solving the housing crisis as a step in the right direction. “I like the idea that the government, both the last one and the current one, has embraced the need to provide housing,” Kasanga said. “We must ensure that Kenyans can live with dignity.”

UNOPS confirmed that it will not re-engage in similar investment activities, as reforms issued by its Executive Board prohibited such ventures. Addressing the impact on the Kenyan people, UNOPS acknowledged the “serious and significant management failures” of the former S3i initiative, recognizing that this directly “resulted in challenges to the government of Kenya’s efforts to create affordable housing.”

Monument to broken promises

The UN Dispute Tribunal ordered Vitaly Vanshelboim to repay $58.8 million to UNOPS for funds funneled to Kendrick-linked firms.  Although companies linked to Kendrick repaid $6.1 million to UNOPS in 2021, the tribunal said the amount “did not even cover the interest” on the funds disbursed. The tribunal also rejected Vanshelboim's defense that he was not the sole decision-maker and that benefits were unrelated to his duties, finding he concealed conflicts of interest and misled colleagues. He was dismissed, fined, and had pension benefits frozen. UNOPS now maintains that recovery efforts are underway. A spokesperson said the United Nations Office of Legal Affairs (OLA) is leading the process, supported by legal expertise funded by UNOPS. But the agency declined to provide specifics on repayments from Kendrick-linked firms, and stated that it “does not wish to compromise the outcome.”

While the tribunal’s ruling was disciplinary, Vanshelboim now faces criminal charges in New York. UN staff immunity, believed to have been waived in his case, combined with domestic inaction, has left the project’s collapse unexamined and unpunished in Kenya, with no officials held accountable. When asked whether immunity might be waived for other staff implicated in misconduct, UNOPS stated the Secretary-General has “the right and the duty” to do so if requested by national authorities, though it did not confirm if any such waivers were being considered.