Second Probe of UNDP-North Korea Scandal Set to Begin

Second Probe of UNDP-North Korea Scandal Set to Begin
Saturday , July 07, 2007

By George Russell
FOXNEWS

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The next round in the investigation of the United Nations Development Program’s scandal-tainted operations in North Korea is about to begin.

The question is whether it will be any more successful than the original probe in getting a clear picture of a UNDP program that the U.S. government, among others, charges was hijacked by the communist government of Kim Jong Il and funneled millions in UNDP hard currency into North Korea’s nuclear weapons program.

Another big question is how much, if any, of the UNDP’s documentation will be turned over to the auditors this time for inspection. The bulk of that documentation is still in U.N. safekeeping in Pyongyang — where the previous group of auditors was barred by Kim’s government.

The bell for Round 2 was quietly sounded nearly two weeks ago, in a June 29 letter from the United Nations’ board of external auditors to a U.N. General Assembly committee that examines budget issues. A copy of the letter has been obtained by FOX News.

The letter announces that the auditors, at the urging of U.N. Secretary General Ban Ki-Moon, will make a second attempt to probe the depths of the UNDP’s operations in North Korea, which were suspended in February after the Kim regime refused to accept a variety of new restrictions sparked by the U.S. accusations. When the new auditing effort will begin is not specified.

The North Korean government refused to cooperate in the first U.N. audit, which was published on May 31, and which corroborated many of the U.S. accusations, based in turn on confidential UNDP inspections done in previous years.

According to the Round 1 auditors, UNDP made unauthorized hard currency payments to the North Korean government, not only for its own work in North Korea but for a variety of other U.N. agencies — at least $72 million from 2002 to 2006.

UNDP had hired 22 of its 31 staffers locally, in some cases in oversight roles. The local employees were not only nominated by Kim’s dictatorship, but remained North Korean government employees. The auditors also declared that many inspections of UNDP development projects in North Korea were only carried out under North Korean escort and in some cases by the same local North Korean employees.

Despite all that, UNDP officials declared the initial audit an exoneration, leading to declarations of “dismay” by U.S. diplomats.

Since then, the issue has further morphed into a point of visible tension between the U.S. mission to the U.N. and top UNDP officials, especially the multibillion-dollar agency’s No. 2 man, Associate Administrator Ad Melkert, who allegedly threatened “retaliation” against the U.S. in closed-door meetings over the North Korea affair. Melkert and UNDP have strongly denied the allegation.

For their part, U.S. officials raised the stakes further by documenting additional UNDP fund diversions, in some cases to known North Korean weapons developers, from their own sources. UNDP has in turn rejected the U.S. allegations as based on false evidence and challenged U.S. diplomats to come up with more and better documentation.

All told, the confrontation has marked an extraordinary watershed in relations between the $5 billion U.N. flagship development agency and its largest single financial supporter. The U.S. contributes roughly $100 million to the UNDP budget and is a member of its overseeing 36-nation Executive Board.

The question is whether a further audit will clear the air — or add to the fog.

The auditors themselves do not appear to be entirely sure.

In the letter to the U.N. budget committee, the head of the U.N. auditing board, Philippe Seguin, gingerly declares that a second probe “will provide additional evidence” to back the conclusions of the initial report.

But the auditors backed away from recommendations in the earlier document that urged the U.N. seek “accountability” for the lapses outlined in its first report and attempt to trace where UNDP money might have migrated in North Korea once it left the agency’s hands.

Nor will the new probe attempt to clarify another explosive issue: the discovery of at least $3,500 in counterfeit U.S. money that had apparently been stowed for years in a UNDP safe in Pyongyang. Such efforts would be “investigative,” Seguin says, and thus outside the auditors’ mandate.

Finally, the new probe will depend once again on the whims of North Korea’s rulers on whether the inspectors will get to visit Pyongyang at all. Seguin’s letter makes clear that the auditors require “unrestricted access” to UNDP and other U.N. operations in North Korea, as well as visas, housing, and “agreement on access to all project sites.” All were refused for the first audit.

If that permission is not granted, UNDP officials have promised that they will bring their documents, both paper and electronic, out of North Korea for inspection — something the U.S. has demanded since before the initial audit took place.

But that in turn could raise questions about whether any of the records were erased or suppressed in the months since the controversy surfaced—or even if they all have then made the trip back from Pyongyang.

All such sparring, however, lies far ahead — provided that the U.N.’s promise to keep probing continues to be honored.

George Russell is executive editor of FOX News.