The United Nations agency for Palestinian refugees was in “crisis mode” on Wednesday after director Pierre Krahenbuhl resigned amid a misconduct probe over whether he fast-tracked his girlfriend into a top aid job, analysts said.

The decision to quit by Krahenbuhl, commissioner-general for the U.N. Relief and Works Agency (UNRWA), came as the agency battled an ongoing cash crisis after top donor the United States cut all funding earlier this year.

“This is the biggest crisis UNRWA has ever had,” David Bedein, director of the Jerusalem-based Center for Near East Policy Research, a research group that has lobbied against the agency for decades, told IPS.

“It’s not a schoolteacher or social worker who has been caught with their hand in the cookie jar. We’re talking about the top guy, who’s meant to be an unimpeachable example of purity for the organisation.”

Senior aides for U.N. secretary-general Antonio Guterres have spoken with Bedein and other prominent pro-Israel campaigners about overhauling UNRWA to make it more transparent and less political, he told IPS.

“They want a school and administration system that would be characterised by transparency and accountability. While this has been prompted by a sex scandal, it’s going to lead to good things,” said Bedein.

“This is more than a case of simply removing a few people at the top. You have to take a messed up system and redo it.”

Answering a question from IPS, U.N. spokesman Stephane Dujarric said UNRWA was undergoing a “process of strengthening its work in the face of financial difficulties” focussed on “areas of oversight and accountability”.

But Dujarric declined to comment on closed-door meets between Guterres’ aides and Bedein and Rabbi Abraham Cooper of the Simon Wiesenthal Center, a Jewish human rights group, about overhauling UNRWA.

Krahenbuhl, a Swiss national, had resigned “effective immediately”, Dujarric told reporters on Wednesday. Guterres appointed Christian Saunders, a Briton, as the temporary officer in charge of UNRWA the same day.

Krahenbuhl had been battling allegations that he led an “inner circle” of UNRWA officials who had engaged “in sexual misconduct, nepotism, retaliation, discrimination and other” wrongdoing, according to a confidential report by a U.N. watchdog that was leaked earlier this year.

According to the document, Krahenbuhl struck up a relationship with senior adviser Maria Mohammedi in 2014 that was “beyond the professional” and arranged for her to fly alongside him on costly business class flights.

On Wednesday, the U.N. said in a statement that investigators had not found evidence of “fraud or misappropriation of operational funds” against Krahenbuhl, but that there were “managerial issues that need to be addressed”.

Danny Danon, Israel’s ambassador to the U.N., said the Krahenbul scandal was just the latest in a “growing list of charges” against the agency and that “there is no other solution to UNRWA except to close it”.

Officials from the administration of U.S. President Donald Trump have repeatedly bashed UNRWA, saying that its schools and health clinics should be run instead by neighboring countries.

The agency has struggled with a financial crisis since Washington, which was historically UNRWA’s biggest donor, slashed its contributions from $360 million to $60 million in 2018 and down again to zero for 2019.

UNRWA was established following the 1948 Arab-Israeli War surrounding Israel’s creation to help some 700,000 Palestinians who were forced from their homes by fighting. Absent of a political solution, the U.N. General Assembly has repeatedly renewed UNRWA’s mandate.

The agency provides education to 500,000 Palestinian students, health care at 144 centres that handle 8.5 million patient visits each year, and social services to 5 million Palestinians. UNRWA is also a big employer in Palestinian areas.

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