UNITED NATIONS (AP) — The head of the U.N. agency for Palestinian refugees resigned on Wednesday following a preliminary internal investigation that raised "management issues," reflecting concerns over allegations of possible sexual misconduct, nepotism and other abuses of authority at the agency.

The allegations in a confidential U.N. ethics office report came amid a financial crisis for the agency, sparked by the unprecedented loss of all funding from the United States, its largest donor.

U.N. spokesman Stephane Dujarric said Pierre Krahenbuhl, commissioner-general of the U.N. agency for Palestinian refugees, submitted his resignation, effective immediately, hours after Secretary-General Antonio Guterres had placed him on "administrative leave."

The U.N. chief thanked him "for his commitment and dedication" to the U.N. Relief and Works Agency, known as UNRWA, and to Palestinian refugees, Dujarric said.

The spokesman said the initial findings of the investigation by the U.N. Office of Internal Oversight Services, known as OIOS, "exclude fraud or misappropriation of operational funds by the commissioner-general."

Dujarric said Krahenbuhl was placed on leave to further clarify the managerial issues "so that a final determination can be made, and any appropriate action taken." He said later that the OIOS investigation was continuing.

Guterres had already appointed Christian Saunders to act as officer-in-charge of UNRWA, during Krahenbuhl's leave with orders to implement a plan to strengthen the agency's management, oversight and accountability.

Saunders, a Briton, had been appointed as UNRWA's acting deputy commissioner-general as the revelations first emerged. He began his U.N. career in 1989 with UNRWA in Gaza and was most recently U.N. assistant secretary-general for supply chain management.

UNRWA earlier Wednesday announced that Krahenbuhl had temporarily stepped aside, saying the OIOS investigation turned up "a number of areas that required strengthening."

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UNRWA was established to aid the 700,000 Palestinians who fled or were forced from their homes during the war surrounding Israel's establishment in 1948. It now provides education, health care, food and other services to 5.5 million refugees, their children and grandchildren in the West Bank and Gaza Strip as well as Jordan, Syria and Lebanon.

The ethics office report obtained by The Associated Press in July claimed UNRWA managers including Krahenbuhl had "engaged in sexual misconduct, nepotism, retaliation, discrimination and other abuses of authority."

Citing information from some 25 current and past UNRWA directors and staff, the ethics report said an "inner circle" comprising Krahenbuhl, his deputy Sandra Mitchell, Chief of Staff Hakam Shahwan and senior adviser Maria Mohammedi had bypassed normal decision-making processes and sidelined field and program directors and other senior staff.

The report alleges that Krahenbuhl, a Swiss national who was appointed to lead UNRWA on March 30, 2014, started a relationship with Mohammedi late that year that "went beyond the professional," created "a toxic environment," and caused "frequent embarrassment."

The ethics office said Krahenbuhl established the post of senior adviser and followed "an extreme fast-track" to give the job to Mohammedi. She traveled with him on the vast majority of his business travels, using waivers so she could travel business class with him, the report alleged.

The report said some former executive office staff reported that Krahenbuhl was away from UNRWA headquarters in Jerusalem for 28-29 days per month, claiming a daily allowance. It said he told a senior staff member in mid-November 2018 that he had made 52 trips during that year up until that time.

The ethics report alleged the concentration of power began in 2015 and escalated after the United States cut funding from $360 million to just $60 million in 2018. This year, the agency received nothing from the Trump administration.

Last year, 42 countries and institutions increased their contributions so the agency could finance its $1.2 billion budget. UNRWA has kept the same $1.2 billion budget this year in hopes donors will be equally generous, but its financial support remains precarious.

Israel expressed "great concern" over the U.N. internal watchdog's findings, saying they confirmed the need for "deep and comprehensive change" at UNRWA.

"The stepping aside of Krahenbuhl is but the first step in a long process that is needed to eliminate corruption, increase transparency, and prevent politicization of the agency," the Israeli Foreign Ministry said in a statement.

The Swiss government said it's "taken note" of Krahenbuhl's resignation and "is demanding a comprehensive investigation" into what allegedly happened. Until then, Switzerland said it will be withholding its payments for UNRWA projects.

UNRWA's three-year mandate expires on June 30, 2020. It is expected to be renewed by the General Assembly in December.

Secretary-General Guterres called on the international community Wednesday "to remain committed to UNRWA" and support its "crucial work ... which is a source of stability in a volatile region," Dujarric said.

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Associated Press writer Jamey Keaten contributed to this report from Geneva.