Coleman investigates another U.N. program: Evidence suggests that North Korea may have used a development program to launder millions of dollars.

By KEVIN DIAZ, Star Tribune

WASHINGTON - A U.S. Senate investigation led by Minnesota Republican Norm Coleman charges that North Korean officials used a U.N. economic aid program to launder several million dollars for unknown purposes abroad.

The allegations have parallels to Coleman's investigation of the U.N.'s oil-for-food program in Iraq, which raised hackles with U.N. officials and brought international attention to Coleman, elevating him as a leading congressional critic of the U.N. bureaucracy.

The charges come as the White House is considering removing Pyongyang from the State Department list of state sponsors of terrorism.

Coleman acknowledged that his staff's findings come at a delicate time in U.S.-North Korean relations, which have been marked by sanctions over the Stalinist regime's nuclear weapons programs.

"I have no doubt that this is an area of sensitivity," Coleman said. "But this is not a burn-down-the-house approach."

The U.N. Development Program's office in Pyongyang, North Korea's capital, was shut down in March when North Korean officials balked at U.N. demands for tighter management controls. The United Nations uses the agency to run anti-poverty programs in 166 countries.

U.N. officials say they have already addressed the concerns raised by Coleman, the ranking Republican on the Senate Permanent Subcommittee on Investigations, and have cooperated with the Senate probe.

In a response to an internal U.N. audit in June, program officials vowed to "improve and strengthen" management practices. They also called North Korea a "less than conducive environment" in which to operate.

The North Koreans reportedly are cooperating, telling Senate investigators that they transferred a total of $2.72 million of their own government funds out of the country through the U.N. program's account in anticipation that the United States might freeze North Korean accounts in the wake of President Bush's 2002 "axis of evil" designation, also shared by Iraq and Iran.

But Coleman, who will hold a hearing today on the investigation, said "They were clearly using the shield of the U.N. to avoid any kind of focus. ... We don't know what the money is being used for."

Investigators on the committee, which is chaired by Sen. Carl Levin, D-Mich., say that Pyongyang used a U.N. Development Program account to disguise the money transfers. While the transfers involved North Korean funds, the investigators also allege that the U.N. Development Program transferred about $50,000 in U.N. funds to Zang Lok, an entity that a State Department official has identified as having ties to North Korean arms sales.

U.N. aid officials told investigators they had no knowledge of such a connection at the time the transfers were made.

For Coleman, the findings represent a new chapter in his efforts to reform a U.N. bureaucracy that he sees as having been readily subverted by corrupt regimes. But where the 2005 oil-for-food inquiry involved about $21 billion in illicit revenue for Saddam Hussein's regime, the amount of money involved in North Korea is much smaller.

The Senate subcommittee's report, which was released Wednesday, paints a picture of a program marred by weak fiscal controls and other failings that made the program "vulnerable to manipulation by the North Korean government."

Coleman noted that U.S. taxpayers have an interest in U.N. management practices because the world body receives about $4 billion a year from the United States. About $100 million of that, he said, goes to the Development Program.

"For folks in Luverne, and for folks in Mankato, that's a lot of money," he said.

Kevin Diaz • 202-408-2753