U.S. Alleges North Korea Is Misusing Aid for Poor

U.S. Alleges North Korea Is Misusing Aid for Poor
Probe Says U.N. Money Was Spent on Property Overseas


By Glenn Kessler and Colum Lynch
Washington Post


June 9, 2007

About $3 million in United Nations money intended to help impoverished North Koreans was diverted by the Pyongyang government toward the purchase of property in France, the United Kingdom and Canada, according to a confidential State Department account of witness reports and internal business records. Millions more, the department reported, went to a North Korean institution linked to a bank alleged to handle arms deals.

The U.N. Development Program (UNDP) in North Korea spent about $3 million a year over the past decade to promote the country's economic growth, foreign trade and investment. It halted operations in March after the United States alleged that the agency engaged in improper hiring and financial practices. A preliminary U.N. audit, released last week, confirmed that it violated its own guidelines by hiring local workers who were selected by the North Korean government and paying them in foreign currency.

A separate State Department investigation suggests that some of the agency's money enriched the North Korean government. The U.S. ambassador to the United Nations, Zalmay Khalilzad, presented UNDP Administrator Kemal Dervis with new allegations regarding the North Korea programs Wednesday, a UNDP spokesman confirmed.

"At first glance, the allegations do not correspond with our own records, which we have scrutinized extremely closely in the past six months," spokesman David Morrison said.

The U.S. probe, headed by Mark Wallace, a deputy ambassador, also found that the UNDP procured for North Korea equipment that could be used in a weapons program. Such "dual use" equipment included global-positioning system equipment, computers and computer accessories, and a device known as a mass spectrometer, used to determine the isotopic composition of elements.

Morrison said the UNDP purchased the computers, GPS equipment and spectrometer to enable the forecasting of weather patterns in flood- and drought-prone areas of the country. He noted that the 10 GPS devices cost $65,000 and the mass spectrometer cost $6,000.

"UNDP takes these allegations very seriously and has asked the U.S. Mission to provide all available documentation to substantiate the allegations and to facilitate UNDP's own immediate review of them," Morrison said.

Ric Grenell, a spokesman for the U.S. Mission to the United Nations, said the information presented to Dervis "indicates an apparent misuse and diversion of UNDP funds, business dealings with certain suspect entities affiliated with [North Korea], UNDP's procurement of potential dual-use equipment and information related to the further use of counterfeit U.S. currency in" North Korea. He said Dervis indicated that he is "committed to investigating the matter" and providing answers.

The State Department has not made public any documents to back up its interpretation, and Khalilzad has declined to release details of the department's investigation. Some congressional staff members have received confidential briefings on the findings.

The revelations come at a sensitive moment, as the Bush administration has been working closely with other countries, particularly Russia, to arrange a transfer of $24 million in tainted North Korean money to facilitate an agreement to shut down North Korea's nuclear reactor.

The U.S. probe discovered that the UNDP purchased for the North Korean government 29 books for an arms control and disarmament project, including one titled "The Psychology of Nuclear Proliferation." Morrison said the books were purchased in December and delivered last month. "In hindsight, better judgment could have been used in the selection and delivery of these books," he said.