UNDP lied while under-oath at US Congressional Hearings...

PART 1 (Part 2 - will follow tomorrow)

LEVIN:
We appreciate it and appreciate your good work generally at the GAO. Thank all your colleagues there for all the good they do, will you?
All right, we'll now move to our third panel.
We now welcome a final panel of witnesses from the United Nations who will brief the subcommittee on UNDP issues.
As mentioned earlier, we thank the United Nations for the extent of its voluntary cooperation with this inquiry.
We're very pleased this morning to have with us Frederick Tipson, who's the director of the U.N. Development Program's Liaison Office; David Lockwood, who is the deputy director of the Regional Bureau for Asia and the Pacific for the United Nations Development Program; David Morrison, director of communications for the U.N. Development Program; and Robert Benson, the director of the U.N. Ethics Office.
The subcommittee recognizes the privileges and immunities of the United Nations, and therefore this panel will not be sworn.
Again, gentlemen, we appreciate very much your being with us this morning, for the cooperation that you have shown with our staff and with us, and we welcome you to the subcommittee.
I think you were here when you heard our announcement about the timing system and about when the lights flash on and off.
We understand, Mr. Tipson, that you'll be presenting a brief statement for the United Nations Development Program, and so we will have you go first, followed by Mr. Benson, who will be presenting the briefing statement of the U.N. Ethics Office.
And then after these two statements, I gather it's your understanding that we would then proceed to questions. Is that acceptable?
Mr. Tipson, please proceed.

TIPSON:
Thank you very much. As representatives of the U.N. Development Program, we appreciate the opportunity to address the issues raised by this subcommittee.
As employees of an international organization, we must appear informally and on a voluntary basis within the limits of the immunities recognized by the U.S. government, and we appreciate the subcommittee's willingness to accommodate these considerations.
Yet we also appear here willingly, with the objective of satisfying this committee that the funds provided to UNDP by the United States government are applied effectively to the purposes intended.
I am Fred Tipson, director of the Washington office. You've already introduced me and my colleagues. I'm going to limit my remarks to three main points.
First, we appreciate very much the professional manner in which your staff has reviewed UNDP operations in North Korea. We take the findings in this staff report very seriously and will consider as an organization how best to address each of the recommendations it contains.
At the same time, in light of the serious allegations about UNDP's operations that have appeared over the past year, it's really essential that we take note that this report does not substantiate any of the following claims.
UNDP did not transfer hundreds of millions of dollars to the North Korean government over the last 10 years.
UNDP's funds did not go for North Korean purchases of real estate, nuclear technology or missile programs.
And UNDP did not use cash in North Korea which could otherwise have been diverted or embezzled in circumvention of financial controls.
It's important as we address the other issues of concern to this subcommittee that we emphasize this point at the outset, given the visibility of those allegations in the media.
Second, our objective as an organization must be to satisfy the standards of our major government supporters, including the United States Congress in particular, that UNDP is sufficiently transparent and accountable to provide you with confidence in our operations wherever in the world they are.
If you are not satisfied with our performance in that regard, then we cannot be satisfied, and we must engage in a continuing process of review and improvement. And I appreciate the recognition that that's an objective on both sides.
I hope that our efforts to cooperate with this investigation have demonstrated our high level of commitment in that regard.
In fact, as the attachment to our statement makes clear, UNDP is often cited as a model among global organizations for its openness and reporting, and we pride ourselves on the substantial progress we have made in becoming a flexible, performance-driven, financially sound organization.
Nevertheless, we recognize that on two of the most important issues you have raised -- access to internal audits and whistleblower protections -- there are basic concerns, and we can address both of those here today.
On access to internal audits, I want to assure you that the head of UNDP, Kemal Dervis, has actually taken a leading role within the U.N. system to advocate a policy of greater access, and he is currently pursuing such a policy with our executive board. We can respond to further questions on that issue shortly.
I know you're also concerned about whether UNDP offers adequate protections to whistleblowers. I want to assure you that UNDP strongly encourages the reporting of wrongdoing and does offer protections on those who step forward to report it.
But I also want to assure you that in this area as well, Mr. Dervis has worked to support a more collaborative framework on ethics standards and procedures across the U.N. system, and we particularly look forward to working with Mr. Benson's office to assure a strengthened outcome.
Third, UNDP does operate in the most difficult locations in the world, as both of you senators have acknowledged. We have attached a short overview of the major programs we conduct in a set of the most challenging countries of particular interest to the U.S., including Afghanistan and Iraq.
To do so, we must apply considerable resourcefulness and discipline to assure that our funds and resources go to serve the needs of the people and not the narrower interests of particular leaders or elites.
North Korea is certainly a case in point. The subcommittee's report has it right. By all accounts, operating development projects in North Korea presented management and administrative challenges of the most extreme nature -- I'm quoting the report here.
"By definition, UNDP operates in challenging environments and has crafted, for the most part, sound rules and procedures to ensure that UNDP development funds benefit the people of the host nation."
But the report and Ambassador Khalilzad's testimony focus on three areas where our practices in North Korea diverge from our general policies in other countries. These involve practices required by the North Korean government as a condition of operating there.
These include the use of convertible currency rather than local currency, the hiring of local staff indirectly through the government, and the requirements regarding government oversight of visits to project sites.
Two points should be emphasized. First, there's nothing hidden about these practices. All three have been well known and permitted by all governments, including the United States, for nearly 30 years.
They continue to be the conditions under which all other international organizations, all foreign embassies and all NGOs operate in North Korea. They were not unique to UNDP and, in fact, are based on operational practices that were widespread in countries such as China and Vietnam until relatively recently.
UNDP is alone amongst organizations in North Korea to have moved to change the practices, and North Korean resistance to these changes was a factor in our decision to suspend our program there last spring.
While we know you have further questions about these issues, we were not comfortable having to operate in that situation, and we will do our best to address the considerations involved in those issues.
In closing, let me just offer a personal perspective on these matters. I worked for five years as counsel to the Senate Foreign Relations Committee. I know firsthand the responsibilities you feel to assure that the international organizations supported by U.S. contributions can be relied on to do the important work they're committed to doing.
It is my full-time job to facilitate the transparency and accountability of UNDP to the U.S. government and to the Congress, and to you senators in particular.
And I hope you agree that our responsiveness to your investigation makes clear how seriously we take this responsibility. I thank you.

LEVIN:
Thank you, Mr. Tipson.
Mr. Benson?

BENSON:
Thank you. Senators, this is the first opportunity I've had to appear before a U.S. Senate subcommittee. I welcome the opportunity.
I've been required to appear in order to brief this committee on the jurisdiction of the ethics office and the adequacy of whistleblower protection within the U.N. system.
We've also been requested to provide a written briefing statement, which we have done.
In accordance with the U.N. policy regarding U.N. officials required to appear before legislative bodies of member states, the secretary general has approved my attendance in order to provide information to this subcommittee, provided, as is indicated, it's achieved by means of a briefing session conducted on an informal basis.
The ethics office of the United Nations Secretariat was established and became operational on January 1, 2006, discharging its mandate as set out in the applicable secretary general bulletin.
On the 1st of May 2007, as you have indicated, I was appointed as the United Nations' first director of ethics. However, prior to that time -- I come to the United Nations with 17 years of public sector experience working at the federal level in Canada, and the last three years working for an independent office of the ethics commissioner, which was an entity of the parliament of Canada.
Myself personally, I'm a lawyer by training. And through my career, I've worked in the judge advocate general's branch of the Canadian armed forces. I worked in the federal department of justice where my client group at that time, my clients, were the Royal Canadian Mounted Police and the security service.
And then at some point in time, I changed career paths and went into being a senior manager within the Canadian government, and finally I ended up my career working in the ethics commissioner's office in the parliament of Canada.
That ends my opening statement.

LEVIN:
Thank you so much, Mr. Benson.
The U.S. has made requests for audit access relative to the North Korea issue, and they were not given what they asked for. Our U.N. representatives were denied the kind of access that they requested, and I'm just wondering why.

TIPSON:
Mr. Chairman, just to clarify, I want to make clear that we understand -- we're here in part to understand, not simply to respond and defend.

LEVIN:
OK.

TIPSON:
We understand the importance of the objective of facilitating access to member states of the audits. As I just indicated, we're leading the charge in trying to get that policy adopted, not only in UNDP but in other parts of the United Nations.
It's a policy that has to be approved by our executive board. We have a board of 36 countries. And so it's not a matter of simply taking a pen and changing the policy overnight.
And I can tell you that this very week our leader is in the process of trying to propose that that policy be adopted.

LEVIN:
Are you privy to the reasons for the policy?

TIPSON:
Well, I'm going to defer to one of my colleagues here who has much more experience dealing with audits.
But let me just say on the basis of experience in the private sector for the last 23 years that audits are a key way in which boards keep track of the honesty of what they're getting from all the parts of the organization.
But one of the things that audits need to accomplish is to verify the validity of the systems that the organization uses to report the numbers, the funds, what happens to the money in those organizations.
And the concern with the way Ambassador Wallace characterized the situation is that if the U.S. government cannot rely on the representation of UNDP with respect to key financial issues -- they simply will not take what we say as being reliable information, unless there is somehow an independent audit of that information, then it's a very difficult way to have a relationship, and it's really very rare that governments take that position or that that becomes the style with which we have to exchange information.
As your staff will tell you, we have taken them through, in sometimes exhaustive detail, what our systems do and how they are structured to accomplish them. And the audits that have occurred would have shown up if those systems were not reliable, if that were, indeed, the case.
So I know that doesn't fully respond to the question you asked, and I'll ask my colleague to try to get into the question of why there's a tendency to want to limit access to audits.

LEVIN:
OK, which...

TIPSON:
Mr. Morrison.

LEVIN:
Mr. Morrison?