By NEIL MacFARQUHAR
Published: June 3, 2008
UNITED NATIONS — American allegations that North Korea duped the United Nations Development Program by diverting aid money for its own needs are not supported by any evidence, according to a lengthy external review released Monday.
There was no sign that millions of dollars were mismanaged, diverted elsewhere or unaccounted for, the report said, countering accusations made in early 2007 by the United States Mission to the United Nations. Although the report acknowledged that some information the panel had sought was unavailable, the review’s conclusion was that the money had been “used for the purposes of the projects.”
The controversy surrounding the accusations led the development program to suspend its operations in North Korea in March 2007. They have remained suspended because of differences over whether the government should choose local employees who work for the agency.
The review was conducted by a three-member panel, led by Miklos Nemeth, a former Hungarian prime minister, and was presented Monday by Kemal Dervis, a former Turkish finance minister who leads the development program. Mr. Dervis said the panel members preferred not to comment publicly.
At the news conference, when asked whether he thought the accusations emerged out of the political dispute over the Bush administration’s negotiations with North Korea, Mr. Dervis said he would not comment on internal government ideological battles.
“All these allegations, clearly — when you compare it to what is in the report — are either vastly exaggerated or stem from misunderstandings or some of them may be from ill intent,” he said.
The accusations were raised by Mark D. Wallace, who leads the department at the United States Mission that evaluates United Nations management practices. In early 2007, he said millions of dollars in program money had been used to buy real estate abroad and to pay a North Korean financial agent responsible for sales of missiles and arms.
He compared the program to the multibillion-dollar oil-for-food scandal in Iraq before the invasion and suggested that the United Nations money might have helped finance North Korea’s nuclear program.
Zalmay Khalilzad, the American ambassador, said his staff was studying the report, but noted that it was the American Mission’s responsibility to pursue any allegations about the abuse of money, especially since United States taxpayers helped underwrite the United Nations budget. The United States supports all recommendations in the report that would increase transparency and accountability, he said.
The report, which surveyed the disbursement of more than $23 million between 1999 and 2007, recommended that the development program pay closer attention when it adapts its general guidelines to “a challenging environment” like North Korea. The dense 353-page report appeared to concur with what the program had maintained all along, that the American allegations were baseless. But it recognized some sloppy practices, like tossing $3,500 in defaced counterfeit $100 bills into the bottom of its safe in Pyongyang and forgetting about them for more than a decade.
Some confusion stemmed from the fact that the North Koreans used the development program’s name on international money transfers — hoping the funds would come under less scrutiny that way. Such tactics were beyond the program’s control, the study concluded.
Among other key findings, the report said that the former development program operations manager in North Korea who was a source for many of the allegations, Artjon Shkurtaj, lacked credibility and “proved to be an evasive witness.”
Mr. Shkurtaj issued a statement via e-mail objecting to not having been shown the report before it was released. He said he still hoped for a ruling from the United Nations Ethics Office on whether he had been fired in retaliation for being a whistle-blower. The report dismissed accusations that the development program had retaliated against him.
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