Wednesday, February 25, 2009

At UNDP, Selection Process Stays Secret, from Solomon Islands to Sierra Leone, No Answers

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, February 24 -- As Ban Ki-moon backslides on transparency about the UN Development Program, unanswered questions mount about how UNDP runs itself. At the UN's noon briefing on Tuesday, Inner City Press asked, "it’s been reported that Helen Clark, former Prime Minister of New Zealand, is in New York being interviewed for, they have called it a shortlist for the UNDP top position.  It’s reported that 10 people are being interviewed; a panel will make three and then Mr. Ban will make the decision.  Is that accurate, and who is on the panel?"

   After Deputy Spokesperson Okabe answered, "I have nothing on the selection specifics," Inner City Press followed up, "since the previous Secretary-General did actually make the shortlist for this position public and I know that the Secretary-General has said he is going to be at least as transparent, if not more, what is the rationale for not releasing a shortlist?"

  Ms. Okabe then tried again to move the discussion out of the briefing room, and off the record: "Matthew, we’ve had this discussion; if you want to have it later some more, that’s fine." But later on Tuesday, even a senior UN official who works on the 38th floor said that to fall short of Kofi Annan is not acceptable.

  Inner City Press asked Ms. Okabe, "Do you acknowledge that it's less transparent than it was?"

UN's Ban and Helen Clark, other UNDP candidates not shown

  Okabe replied, "No.  No, I don’t acknowledge that it is less transparent.  As we have told you several times already, the Secretary-General has reached out to Member States, he’s put an ad in the Economist, they’re going about this in a very transparent manner and, as soon as we have something to announce for you, we will.  For the sake of the privacy of the individuals, we are not making that list public." Video here, from Minute 11:33.

  While one UN official, who demanded anonymous treatment, later argued to Inner City Press that there are some candidates who do not want to be listed in case they lose, another scoffed that "at that level, they can't afford to have such thin skin. If they do, they shouldn't get the UNDP job anyway."

   In recent years at UNDP, Kemal Dervis and Ad Melkert, his deputy and now candidate for the top job, fought to make the agency independent from the Secretariat, on ethics and whistleblower protection. The result has been more retaliation cases than elsewhere in the UN system, and UNDP officials moonlighting on the advisory boards of lobbying firms. Clickhere for Inner City Press' exclusive report.

   UNDP's spokesman Stephane Dujarric has declined this year to answer questions about UNDP scandals in the Solomon Islands, and follow-ups on the lobbying moonlighting, reporting on which await the promised answers.  While these pend, UNDP is named as "topping-up" the salary of a scandal-plagued judge in Sierra Leone, clickhere for that.

  Relatedly, while the UN Millennium Campaign called in response to TV questions to claim it does not received funds through the UN system and "does not speak for the UN,"since the Campaign's Eveline Herfkens was admitted to have violated rules prohibiting a UN staff member from taking money from governments, this claimed "no relation" with the UN seems strange. (Ms. Herfkens is still prominentlydisplayed on the Campaign's website, here.

  An Inner City Press correspondent notes that UNDP manages a trust fund called "EC Trust Fund for the European Millennium Campaign Against Poverty," pointed to budget documents showing that $350,000 was contributed to this UNDP trust fund. The correspondent states, "So I don't think it is accurate to say that the Millennium Campaign "receives no money from the UN system"; It is probably more accurate to say that UNDP launders money from UN member states to Eveline Herfkens' Millennium Campaign. Click here for UNDP's partially-retracted spin about Herfkens. In fact,UNDP itself refers to "the Campaign, which is financed by a trust fund administered by UNDP."

   The next head of UNDP will oversee this strange entity, whose recent unaccountable advocacy a senior UN official has called little more than "a gimmick." What is Helen Clark's position on this? Ad Melkert's? Hilde Johnson's?
The Campaign's web site does not meaningfully explain the relations between the UN and the UN Millennium Campaign, much less publish the Campaign's budget. A requested paragraph on UN - UN Millennium Campaign connections, with an emphasis on the financial claim, has not been received. Watch this site.

Try Real 'Change' Toward North Korea

Claudia Rosett

We shouldn't ''engage'' with a government that kills, suppresses and starves its citizens.


Quick quiz on North Korea:

Can you name a single democratic dissident currently active inside North Korea? Just one? Is there any North Korean equivalent to Myanmar's Aung San Suu Kyi? Is there a North Korean Andrei Sakharov, Lech Walesa or Nelson Mandela? Is there any parallel to any of the dissidents who agitated openly for years in South Korea to bring about the 1988 switch from dictatorship to democracy in Seoul?

OK, it's a trick question. In North Korea, there is no one who can be named.

That's not because all North Koreans are happy with a government that brutalizes and starves them by the millions while building missiles and nuclear weapons. It's because anyone who might become known inside the country as a dissenter from the tyrannical Kim Jong Il and his gang would have to immediately flee or face oblivion. The alternatives would not include house arrest or high-profile prison time.

North Korea's government replies to any suspected lapse of total loyalty either with execution or consignment to the prison camps, where Kim Jong Il's enemies and their families disappear from the rest of human ken.

Reporters Without Borders, in its 2008 annual report, reminds us that for the deed of having made phone calls abroad without permission, a North Korean director of a state company was "executed by firing squad in 2007." The same report also mentions a journalist, Song Keum-chul, working for North Korea's wholly state-owned and controlled television network, who "was sent to a concentration camp at the end of 1995 for having set up a small group of critical journalists and nothing has been heard of him since."

What became of Song Keum-chul? What are the names of the hundreds of thousands of North Koreans currently being frozen, starved and worked to death in Kim's gulag? What are the names of those who have died there? Where, in short, are the dissidents who dwell inside North Korea?

As Hillary Clinton makes her maiden swing as Secretary of State through North Asia, these are questions she should be raising--at every press encounter, of every leader and in every speech. This is the issue which--even more than the pressing matter of nuclear weapons--cuts to the core of the problem with North Korea.

In the 15 years since Kim Jong Il succeeded his Stalin-installed father, Kim Il Sung, the country's dynastic regime has proven one of the most monstrous and illegitimate on earth. And yet, America returns again and again to the bargaining table--haggling, bribing and thus dignifying and fortifying the government that is the source of both North Korea's agonies at home and its threats abroad.

Clinton, like her predecessor, Condoleezza Rice, has already laid out a public position implying that the problem is not Kim Jong Il himself--only his nuclear habits. Clinton's goal, as she told the press Sunday while en route to Tokyo, is "the denuclearization of North Korea."

That statement might, of course, include a hidden agenda. There have long been whispers that behind such diplomacy is a backroom calculus that relieving Kim of his nuclear program would lead to his downfall. But we might safely assume by now that Kim and his circle know that, too. Pyongyang's routine is to commit to ending its nuclear habit--It's easy to quit! They've done it before!--rake in aid, cheat on the deal and repeat. America feeds this cycle, looking for ways to "engage," while dismissing the problem that the only real engagement in this routine would be with the regime.

So runs the endless diplomatic loop, as North Korea piles up weapons, shakes down America and her allies and consorts with proliferators, such as Pakistan, and rogue-regime nuclear wannabes, such as Syria and Iran.

Though Hillary Clinton in the role of Secretary of State may appear fresh and new to American voters, the veteran extortionists of Pyongyang have loads of reasons to view her new brief as old home week.

It was Hillary's husband, President Bill Clinton, who helped cement Kim Jong Il's regime during the shaky period in 1994 when the regime of the Soviet Union, along with the communist governments in many of its satellites, had only recently collapsed. Kim Il Sung, Kim's father, had just died. North Korea was in mid-bluster over its nuclear ambitions and going through its first and only transition of power since its Stalin-engendered creation in 1948.

America was at that point the undisputed world superpower--riding high on the results of Ronald Reagan's policy of treating the Soviet Union, first and foremost, as the evil empire it was.

But instead of standing up to North Korea in 1994, with the possibility to bring down its regime, Clinton stepped in and legitimized Kim Jr. by cutting a deal. Jimmy Carter went to Pyongyang and out of his palaver came the Agreed Framework, in which America, in exchange for a North Korean promise of a nuclear freeze, led the offering of two turnkey reactors, plus a torrent of aid.

Kim Jong Il consolidated his grip, at the cost--or, arguably, with the help--of a famine during the mid and late 1990s, in which an estimated one million or so North Koreans starved to death.

One defector I interviewed a few years ago recalled the wasted bodies, covered in vermin, stacked like cordwood at train stations. Courtesy of an American-led consortium of appeasers, free food and fuel flowed to the North Korean government, which selected who would be left to starve and who would be fed--under North Korea's official policy ofsongun, or "military first."

Here we are, 15 years after Bill Clinton's Agreed Framework, and the main "change" under Obama looks like little more than a game of musical chairs. Just last month, I joked to a friend that we were about due for another article from American commentator Selig Harrison, who has been trumpeting engagement for more than 20 years.

Lo, this week, writing in the Washington Post, Harrison popped up on cue, fresh from his latest trip to Pyongyang, suggesting a whole shopping list of ways in which America might next pay off North Korea in the name of "engagement"--from resuming the construction of two nuclear reactors for Kim to more haggling over not only nuclear programs but missiles, too.

And from Tokyo on Tuesday, reprising recent language from Condoleezza Rice and her point man for North Korea, Chris Hill, we heard Hillary Clinton declare that a missile test threatened by North Korea would be "very unhelpful."

(Note to Madame Secretary: North Korea is not trying to be "helpful.")

By now, the monuments to failed U.S. efforts to corral North Korea's regime and contain its nuclear ventures could stock quite a museum. The exhibits could include: The foundations of the two multibillion-dollar nuclear reactors that a U.S.-headquartered consortium began building for Kim Jong Il in the 1990s; the basketball signed by Michael Jordan that Madeleine Albright delivered personally to Kim Jong Il in 2000; bank records for the $25 million in allegedly crime-tainted money that the Bush administration arranged to have transferred to Kim in 2007; satellite photographs of the secret nuclear reactor built with North Korean help in Syria (destroyed by an Israeli air strike in 2007); the program for the concert with which the New York Philharmonic serenaded the Pyongyang elite in 2008; and receipts for America's multimillion-dollar reimbursement to Pyongyang for the 2008 Potemkin-style demolition of a cooling tower in North Korea's Yongbyon nuclear complex.

The exhibits of such a museum should also, in the name of human decency, include a holocaust memorial to the millions of North Koreans killed by this regime that America has appeased, bribed, cosseted, subsidized and serenaded.

To be fair, it is to Hillary Clinton's credit that in Japan this week she met with families of Japanese citizens abducted by North Korea. These families, reasonably enough, asked her to put North Korea back on the U.S. list of state sponsors of terrorism, from which the Bush administration removed it last October in a failed bid to salvage years of nuclear haggling. It remains to be seen whether Clinton will heed their advice or treat the encounter merely as one more chore of a "listening" tour.

What's desperately needed, however, is real change, which would alter the morally grotesque and flawed dynamic of the diplomacy with which America--apart from a brief break during the first term of George W. Bush--has for years been sending envoys to engage with Stalin's heirs in Pyongyang.

What if President Obama were to offer all the usual American largesse, and then some, to North Korea--food, fuel, extended hands, full diplomatic ties--but all to be delivered only when the Kim regime itself is verifiably gone? If, as reported, Kim suffered a bad stroke last August, that's all the better for reaching out to those in North Korea who would welcome the demise of his government..

Hey, President Obama and Secretary Clinton: You wouldn't even have to frame it as official policy. Have a slip with an open microphone! Remember Ronald Reagan's erstwhile gaffe in 1984 about the Soviet Union: "We begin bombing in five minutes."

Mind you, offering an American hand--not to Kim's regime but to a post-Kim-regime North Korea--would not be a threat. It would present North Korea's 23 million people with at least a glimmer of a choice.

Were Obama to do that, he would stand the chance of engaging the minds, and quite possibly the hearts, of a great many people inside North Korea whom, right now, it is not safe even to name.

Claudia Rosett, a journalist-in-residence with the Foundation for Defense of Democracies, writes a weekly column on foreign affairs for

Taboo talk about North Korea

It seems Hillary Clinton broke an informal taboo Thursday by mentioning to reporters the possibility that Kim Jong Il, tyrant-supreme of North Korea, might not last forever. Gasp! Shock! Horror! — apparently, according to theNew York Times, the usual experts agree that this kind of talk might discomfit the Chinese, or cause the North Korean government to lose face — and then who knows what they might do??!!

(Sell missiles to the Middle East? Test a nuclear bomb? Stockpile plutonium? Help the Syrians build a secret nuclear reactor? Test a ballistic missile? Threaten to drown South Korea in a sea of fire? Divert food aid to the military? Counterfeit U.S currency? Send hundreds of thousands of North Koreans to Kim’s gulag? Cheat on their deals, miss their deadlines and demand fresh nuclear payoffs? …Oh, wait, they’ve been doing all that already).

Actually, a lot less focus on satisfying the whims of Kim, and a lot more focus on benefits of life without him, is exactly what’s needed for North Korea — as I’ve argued in my column this week for, Try Real “Change” Toward North Korea.” North Korea’s nuclear rackets are a symptom of the core problem, which is Kim’s regime. Diplomatic engagement over most of the past 15 years has actually helped sustain the regime, with the result that the nuclear rackets have gotten much worse. Kim not only has plutonium, a suspected uranium enrichment program and proliferation networks that almost succeeded in producing an operational copy of North Korea’s Yongbyon reactor in Syria (shut down not through diplomacy, but by an Israeli air strike in 2007). He also has a basketball signed by Michael Jordan and hand-carried to him in 2000 in an act of tribute by America’s then-Secretary of State Madeleine Albright, and an army that has supped for years off American-donated, North Korean-diverted food aid.

The only real answer — brace yourself, I am going to use a taboo phrase — is regime change.

At UN, Merkel's Economic Proposal Absent, Dreams of UN Credibility, Sevan

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, February 13 -- German Chancellor Angela Merkel proposed a UN Economic Security Council while at the recent World Economic Forum in Davos. But at the UN on February 11, when Inner City Press asked the president of the UN's Economic and Social Council, Sylvie Lucas of Luxembourg, about Merkel's proposal, Ms. Lucas said the idea has not been raised to the UN and is "not necessarily a very well defined idea." Video here, from Minute 36:27.

   Inner City Press also asked Ms. Lucas, Luxembourg's Ambassador, how ECOSOC's talk-fest on the global financial crisis lines up and works with the process started by President of the General Assembly Miguel d'Escoto Brockmann, headlined by economist Joseph Stiglitz. Ms. Lucas' lengthy response, replete with high-level meetings, interactive dialogues and other UN buzz words, appeared to mean that the two processes are not fully coordinated. Video here, from Minute 31:02. Then on February 13, d'Escoto's spokesman said the processes are coordinated, in ways he'll explain next week.

   A key d'Escoto staffer this week told Inner City Press that the hook d'Escoto has is the "legitimacy" of the General Assembly, or perhaps of the UN. By way of analogy, he told the story of a respected lawyer jurist, whose client balked at the high price tag of his opinion memo. The lawyer flipped to the last page and tore off the signature. There, he said, now I will give it to you for free. The point, the PGA staffer said, is that it is the name that is important, not the content. The G-20 need us, he said.

UN's Ban and Germany's Merkel, with a not-small gulf between, UN Economic Council not seen

  Believers in the UN name, in the primacy of the so-called GA-192 over groups like the G-20, should then be more concerned about that which inevitably makes the UN look bad. This week, for example, the UN's own Administrative Tribunal said the UN must pay the legal fees of Benon Sevan, formerly head of the UN Oil for Food Program for Iraq, who when charged with bribery fled to Cyprus, which refuses to extradite him. Inner City Press asked Ban Ki-moon's spokesperson if Ban had any comments on the case, any regrets about using UN money to pay the fees of an official formerly charged with corruption.  He has no comment, the spokesperson said. Perhaps because it is not on the Security Council's agenda, the excuse given for Ban not calling for a cease fire in Sri Lanka? Click here for that.

  Ms. Lucas was asked about a sentiment bubbling up from the ECOSOC subsidiary Commission on Social Development meeting in the basement, that the bailouts of banks in the developed world should some how be related to financial for development. Jamaica expressed it strongly in the CSD, more recently a "senior UN official" was quoted as saying a push will be made at the upcoming G-20 meeting. We'll see.

Footnote: when asked about the Merkel proposal, Ms. Lucas encouraged Inner City Press to "see that with my German colleague." That same day, the German Mission to the UN was holding a session on financing the UN, which excluded a number of reporters who actively but critically cover the issue. Two days later, Germany's Ambassador made what is becoming a rare appearance at or outside the Security Council, singing the praises of an Abkhazia resolution which the Georgians, right after Germany spoke, described as a slow slide toward loss of territorial integrity. What where is the Merkel proposal? Watch this site.

UN Security Brass Let Off Hook on Fowler, On Promotions, Investigation Called For

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, February 19 -- The lack of accountability of those in charge of UN Security continues, both in the field and in New York, where the UN Staff Union has passed a resolution calling for an independent investigation of promotion and placement irregularities uncovered two weeks ago by Inner City Press.

    The UN's envoy to Niger, Canadian diplomat Robert Fowler, who was abducted while traveling to Canadian-owned gold mine in the country in December 2008, has now appeared as a hostage in a video, for which Al Qaeda in the Islamic Maghreb claims credit. Still the UN has not answered what Fowler was doing, nor why he was allowed by the UN to travel without security, while in a UN Development Program vehicle, the driver of which has disappeared entirely. 

   At the February 18 UN noon briefing, Inner City Press asked UN Deputy Spokesperson Marie Okabe, "it’s been reported that the Al-Qaida in Islamic Maghreb has said that they are holding Mr. Fowler and Mr. Guay.  Is the UN aware of that?  They have also said that they’re asking for a prisoner exchange.  What’s the UN’s position in response to this?" Ms. Okabe replied, "We’re aware of the reports but we have nothing further to comment on it."

  The UN has had very little to say about Mr. Fowler's activities and disappearance, leading some to conclude they simple want the story to go away. The UN's silence on Fowler stands in contrast to the fast UN press releases on a more recent kidnapping, in Pakistan. Inner City Press asked, "just recently, in Pakistan, when a group said that they had a UNHCR official... the local office put out a press release saying speak with us directly.  Is that decision made by the local office in each case or by Headquarters?"

 Ms. Okabe answered that, "both cases are very different, as in all cases involving a hostage situation.  So, I really could not go into further details on that."

  Two weeks ago, the UN's refusal to answer questions about security, including what accountability steps have been taken about the December 2007 deadly bombing of the UN in Algiers, was a introduction to Inner City Press' reporting on promotion irregularities within the UN Department of Safety & Security, DSS.

UN DSS in 2004, at right now with dog days to CMP?

 Since that report, the official who e-mailed out the inappropriately pre-decided promotions and placements has written a letter saying he was defamed by other DSS personnel at special meetings held on February 11 about Inner City Press' report. It seems that if a person's own document defames them, their only option to sue is to sue themselves.

  On February 18, the Staff Union unanimous adopted a resolution noting the DSS staff's "vote of no confidence in the management of the SSS of DSS." This management, Inner City Press is told, is trying to shift to the UN Capital Master Plan. The resolution notes "that information revealed in recent [P]ress reports appears to cast doubt on the integrity of the staff selection process" and "decides to call on the Secretary-General to establish an independent external investigation to review recent personnel actions within the SSS." The resolution, by its terms, will be conveyed to the Secretary-General, the heads of the Budget Committee and Advisory Committee on Administrative and Budgetary Questions, and the President of the General Assembly. Watch this site.

On Myanmar, UN May Help with 2010 Election Under Flawed Constitution, Rohingya Not Discussed

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, February 20 -- Myanmar's general Than Shwe refused to meet with UN envoy Ibrahim Gambari during his trip two weeks ago to that country. 

  On his way back to New York, Gambari met with Japan's foreign minister, who after the meeting put a positive gloss on the military regimes move to consolidate its power in 2010 with elections in which the main opposition figure, Aung San Suu Kyi of the NLD, is not allowed to run, using a constitution enacted in 2008 just after Cyclone Nargis, in a referendum in which it was illegal to speak against the proposed constitution. 

  Not surprisingly, the NLD has criticized what it called Gambari's and Japan's joint statement.

  Following a closed door Security Council meeting on Friday, Inner City Press asked Gambari about the NLD's criticism. Gambari responded that it was not a joint communique, but acknowledged that he had told those Myanmar official with whom he met that the UN might favorably view a request for electoral assistance if it followed "broad consultations." He said that the NLD is "free to take positions." Video here, from Minute 7:01.

   Japan's Ambassador Yukio Takasu, this month's Council president, went further, telling Inner City Press that "there was no communique," rather an answer by his foreign minister to a question from the media. Takasu said that the NLD wants to "turn back the clock to 1990," the last time credible elections were held. Video here, from Minute 1:48. 

  Inner City Press asked if it is Japan's position that the 2008 constitution, with all its flaws, is credible. Takasu did not answer directly, but rather calls for efforts before 2010. Videohere, from Minute 5:10.

   Inner City Press asked UK Ambassador John Sawers about the situation of the Rohingya, Muslims refugees from Myanmar many of whom were towed back out to see by Thailand and died.  Video here, from Minute 2:53. Sawers said called this a serious situation, but said that Gambari had not raised it, which Gambari confirmed, saying it was not among the points given to him by the Group of Friends on Myanmar, with which Ban Ki-moon is slated to meet on February 23.

UN's Gambari on Feb. 20, use of WFP helicopters duly noted, but Rohingya not mentioned

  A recurring question was whether Ban Ki-moon should go to Myanmar, even if Than Shwe does not release Aung San Suu Kyi.  Inner City Press asked France's Jean-Maurice Ripert if Ban should go. It is not up to us if Ban goes, Ripert answered. Video here, from Minute 5:01.

  John Sawers of the UK went further, saying it would be "well-judged" if Ban went to Myanmar. From this we can conclude that Than Shwe is winning at the UN, or at least that carrots (instead of sticks) are being prepared for him.

   Inner City Press was told that U.S. disagrees with the impression that Hillary Clinton has signaled a move from sticks to carrots, but US Permanent Representative Susan Rice was not at the meeting -- in fairness, it was said she returned to Washington for family time -- and the US Representative who was present, who is quite articulate on other matters, did not speak at the stakeout.  Watch this site.

Footnote: after the Council meeting and stakeouts, the always affable Ibrahim Gambari told Inner City Press that he had, while in Myanmar, been transported by the World Food Program, and not in military helicopters. As Inner City Press asked about at a UN noon briefing this week, that was the UN's ostensible human rights expert Mr. Quintana....

As UN Pitches Wiretaps in Guatemala, Bus Murders Unsolved, Bhutto Panel Not Filled Yet

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, February 24 -- A UN-sponsored prosecutor in Guatemala is advocating legalizing and expanding wiretapping in that country, it emerged on Tuesday. The head of the International Commission Against Impunity in Guatemala, Spanish prosecutor Carlos Castresana, told the Press that he has assembled a team from Chile, Uruguay and Colombia and is going after the drug gangs known as marras 

   Inner City Press asked about a statement by Castresana that he will expose the role of journalists in criminal conspiraciesin Guatemala. It is undeniable that civil society is involved, Castresana answered. Asked to name other countries in which the UN might get so directly involved in judicial and investigative proceedings, Castresana told Inner City Press to "ask the Secretary-General."

   After the briefing, a Department of Political Affairs spokesman declined to comment on the idea of a similar transition from a UN political mission to a judicial follow-up in, for example, Nepal. The countries would have to come and ask for help, he said.  CICIG's funders include a slew of mostly Western European countries, the U.S and the Soros Foundation.

   Inner City Press asked whether Castresana has made any progress on one of the two cases he first accepted from the government, that of a spate of killings of bus drivers. Castresana said that these killings, numbering over 130 in 2008, began as extortion schemes against the bus companies. The threats were delivered by gang leaders by cell phones, but wiretapping was not possible. Video here, from 45:37.

An earlier stage in Guatemala with UN involvement, before wiretapping

  After the briefing, Castresana told Inner City Press that the problem was not any government resistance to wiretapping, but rather getting the phone companies to invest the funds necessary to allow systematic monitoring of communications.

 How closely related to the UN's mission is advocating an expansion of wiretapping?  A senior UN official told Inner City Press, on condition of anonymity, that there are increasing doubts about the wisdom of the UN's involvement in judicial processing. You can lose your focus, he said, citing the UN's role in establishing a tribunal for Hariri's assassins in Lebanon, and Ban Ki-moon's one-third complete naming of a panel on the Benazir Bhutto killing in Pakistan. 

  On the Pakistan panel, one name thrown around has been Peter Galbraith, who while a U.S. diplomat in the Balkans was, sources say, involved in evading arms embargoes in the region. The UN official told Inner City Press that while Galbraith, pushed for the post by Pakistan's government, may not be on the Bhutto panel, look for him to be named soon to another UN post. We'll see.

Tuesday, February 10, 2009

UN, world ignore development in Darfur: UN adviser

Reuters Africa

By Alaa Shahine

CAIRO (Reuters) - The U.N. and world powers are not tackling the root causes of the Darfur crisis such as water scarcity water and lack of development, a U.N. adviser said.

"The diplomats and the military strategists and the political strategists want to approach it from a strategic point of view, from a peacekeeping point of view, from a geopolitical point of view ... whatever it is but not from a water and development point of view," Jeffry Sachs said.

Sachs, an adviser to United Nations Secretary-General Ban Ki-moon said the world body needs to refocus its efforts.

"The right approach is to start from a position that Darfur is one of the most impoverished places on the whole planet. It's one of the most ecologically and economically stressed parts on the whole planet," he told a packed hall at the American University in Cairo on Monday evening.

International experts estimate 200,000 people have died and 2.5 million have been displaced since the conflict flared in 2003 when mostly African rebels revolted against the Arab-dominated government in Khartoum, charging it with neglect.

Darfur is the site of the world's biggest humanitarian operation, with the presence of many aid agencies including the U.N. Most of the work is geared to provide basic aid to millions caught in the conflict rather than long-term development.

Aid agencies came under regular attacks from bandits and combatants as the crisis turned into a free-for-all conflict, with tribes, rebels, bandits and government forces vying for everything from cattle to political power.

Analysts say the eruption of fighting in 2003 was in part the culmination of decades of economic and social neglect by the British occupation and successive Sudanese governments, along with regional conflicts that spilled into the vast, remote area.


"Nomads from the north of Darfur moved south to find water. What they found was sedentary population and they tried to ethnically cleanse them, so that they can grab the water," Sachs said. "This is a one-sentenced, perhaps dramatically over-simplified (explanation) but it is not wrong".

Sachs, who is also the director of the Earth Institute at Columbia University in New York, said he was once summoned to the U.N. for an urgent meeting to discuss the water in Darfur.

He said the meeting turned out to focus only on how to find enough water for 26,000 peacekeepers the world body was preparing to station in the region.

"I said three times during the meeting that's 26,000 people, and there are 7 million people in Darfur, and that probably gives you an idea about the water problem. I could not be heard. The problem was a practical one".

Sachs said cutting wasteful spending on military operations and what he described as excessive corporate bonuses would help the world mobilise enough funds to tackle poverty and ensure comprehensive access to primary healthcare and safe water.

He said the American public still sees power, rather than development and aid, as the best way to settle world problems.

"If we would just look and listen, we'd understand that these are hungry people. And you can send all the armies in the world but you are not going to get one more drop of water that way."

Inside the secret world of auditing - SATYAM

PwC’s unqualified opinions of Satyam’s financial statements were materially false and misleading… as an accounting expert which consented to the use of its unqualified audit opinions, PwC is liable for the material misrepresentations or omissions…

Excerpt from a Class Action Complaint against Satyam, Ramalinga Raju, Rama Raju, Srinivas Vadlamani and PricewaterhouseCoopers filed in a US district court

After investment bankers, it’s the turn of auditors at the big four accounting firms to become the public’s favourite whipping boys, not just in India but all over the world. After PricewaterhouseCoopers’ (PwC) apparent peccadilloes in the Rs 7,000-crore Satyam fraud, the accounting firm whose brand has been present in India for over 100 years has come in for some serious pounding, globally. But even as a huge question mark hovers over the future of PwC in India, the Great Raju Robbery has succeeded inevitably in dragging the other three that make up the Big Four—Ernst & Young (EY), Deloitte and KPMG—into the mire.

Do you know

1. That two of the Big Four auditing firms entered India as management consultants

2.Indian laws don’t allow foreign auditing firms—directly

3.The Big Four’s audit work is done by local partners

4.Audit business for most is smaller than non-audit business

5.The global firms own no stakes in local units

6.Local firms can leave one umbrella and enter a rival one

To be sure, it didn’t need a fraud in India to provide an opportunity to take the accountants to the cleaners. Every accounting fraud—and there are plenty of them globally—is greeted with ridicule being heaped on this fraternity. And it’s not just restricted to the Big Four. The US arm of BDO International, the world’s #5 accounting firm (which in India has an -affiliation with Haribhakti & Co.), has to pony up damages of $521 million awarded against it for a negligent audit. A month ago, three of the Big Four—PwC, KPMG and EY—were dragged into Bernard Madoff’s alleged $50-billion fraud—they were all auditors of the feeder funds that channelled money into the accounts of Madoff’s New York brokerage. And let’s not forget Deloitte, which as the external auditor to GM in the US, was dragged into an accounting fraud allegedly perpetrated by the automobile giant. Deloitte stood accused of falsely certifying GM’s accounts—the Detroit major had apparently accelerated the booking of income between 2002 and 2006.

Along with such headline-grabbing instances of alleged misconduct, the accounting fraternity isn’t exactly adored because these pinstriped suits are perceived to live lives of extravagance—not too different from fat-cat investment bankers. What’s worse, at least from the public’s view point, is that nobody knows exactly how they make that money. Few, in fact, know about what accounting firms do, the precise role of auditors, how the Big Four function globally (they aren’t like any typical multinational operation), how they are regulated, and what else do they do besides auditing company books (plenty more, as it turns out). In the next few pages, Business Today attempts to lift the lid off the mystery that shrouds accounting firms—particularly the Big Four—and find out what makes them tick… and what makes them not tick.

Let’s start at the very beginning: How real is the global network of the Big Four? Do they function seamlessly as one firm?

The big four accounting firms are actually hundreds of firms held together with the glue of knowledge, economics and brand— or so we’re told. They operate under an umbrella brand and a global company that promotes the brand, and researches and coordinates between the member firms (as they are usually known). EY and PwC have their coordinating firm in the UK, while Deloitte and KPMG have their coordinating companies in Switzerland. There are no cross-holdings and ownership is always with the local seniors. These firms or companies—as the structure may be—are owned by partners who become co-owners or shareholders as they go on to become senior members of the organisation. These are largely unlimited liability partnerships and even if some of the firms are limited liability companies, the senior members who become shareholders are still designated as partners.

Globally, the Big Four clock almost $100 billion in revenues and employ close to 5.8 lakh people. In India they are minuscule—less than $1 billion (around Rs 3,500 crore) and employ around 21,000 people.

Other than access to methodologies, training and quality standards, as Jairaj Purandare, Executive Director, PwC, points out, the Indian affiliates get access to the firm’s global clients when they do business in India. However, the One Firm concept becomes a double-edged sword when a local affiliate is pulled up for accounting wrongdoings. For instance, PwC will have to face the heat in the US because of its Indian firm’s involvement in the Satyam fraud (that Satyam is listed on the New York Stock Exchange opens it to a string of Class Action Suits).

How does the Big four work in India?
The Indian rules, revised in the mid-1980S with an eye on the world Trade Organisation (WTO) negotiations on opening up of services, do not permit the Big Four—or any multinational audit or accounting firm—to be registered in India as auditors. So two of them—EY and KPMG—are actually registered in India as management consultants; PwC registered two firms as Price Waterhouse (PW) and Price Waterhouse & Co. back in the pre-Independence era and Deloitte had registered one firm under the name Deloitte Haskins & Sells in 1978 before these rules came into force. That may explain why the audit business of the Big Four is smaller than the rest of their operations—advisory, corporate finance and tax. Audit (assurance in accounting jargon) is conducted by local audit firms who are part of the respective networks of the Big Four (for example, S.R. Batliboi does it for EY, A.F. Ferguson and C.C. Choksi for Deloitte, BSR for KPMG and PW and Lovelock & Lewes for PwC). The chartered accountants and audit firms in India are regulated by the Institute of Chartered Accountants of India (ICAI) and, therefore, the Big Four must have as local members firms registered in the name of local chartered accountants. All the audit work is handled by the local firm, which supposedly follows global standards. The global brand is still not allowed to be used in the audit business. The ICAI, for its part, sees the MNCs’ entry into India as a backdoor one. “To go and seek auditing work as an international firm and then sign the balance sheet as an Indian firm can’t be tolerated,” says Ved Jain, the outgoing President of the ICAI. The PwC-Satyam saga is being used as a pressure point to negotiate in the WTO, a reciprocal access for Indian auditing firms to the US, the UK and to other countries in return for opening up India to the Big Four.

Audit firms in India were recently allowed to advertise their services, but they’re still prohibited from marketing their services. Audit in India is a smaller business for the Big Four. It brings in anywhere between 25 and 40 per cent of their Indian revenues. Also, these firms operate through multiple entities as the the Indian Partnership Act of 1932 doesn’t allow one body to have more than 20 partners. The new law on limited liability partnerships passed in December 2008 will ease this barrier on number of partners and clear the path for less-complicated structures.

So, what’s so special about the Big Four; Are they really superior to the others—local or global?
The big four are not as yet that big in India. However, they love to talk about their sophisticated methodologies, training systems and quality standards. And, they claim to be particularly choosy when picking clients. “Often, many clients themselves withdraw when they hear about our requirements and processes,” quips Sunil Chandiramani, Partner, EY. Adds Rajiv Memani, Country Managing Partner, EY: “There is an effective system of quality control, which includes policies, tools and procedures that are in place to support people in carrying out quality work.” But most importantly, it’s the globally recognised brand of the Big Four that Indian companies— especially those with global linkages—find more useful.

What are these practices that ensure quality in statutory audits?
Evidently, there are many. let’s begin with partner rotation: This entails that the same ‘lead engagement’ partner is not involved with the listed audit client for more than five years. With some clients, partners are rotated every three years. Then, there’s the independent partner review, whereby all audits of listed clients go through a review by a second partner; this could be followed by a ‘Hot Review’; before the audited accounts are submitted to the company’s board, many a time a quick desktop review is done by an independent technical team to check if all presentations and disclosures are appropriate. There’s also an ‘audit quality review’, or AQR, which firms like EY follow; this is a review of a large number of audits by visiting partners and senior managers from member firms worldwide, with local support.

Points out Roopen Roy, Managing Director of Deloitte’s consulting arm: “Deloitte Touche Tohmatsu’s rules, in most cases, are ahead of and exceed the standards set by the regulators.” 

From big eight to big four
A long time ago, they were the Big Eight...

1. Arthur Andersen

2. Arthur Young & Company

3. Coopers & Lybrand

4. Ernst & Whinney (until 1979,Ernst & Ernst in the US and Whinney Murray in the UK)

5. Deloitte Haskins & Sells (until 1978, Haskins & Sells in the US and Deloitte Plender Griffiths in the UK)

6. Peat Marwick Mitchell (later Peat Marwick)

7. Price Waterhouse

8. Touche Ross

… then there were six… In 1989, Ernst & Whinney merged with Arthur Young to form Ernst & Young; and Deloitte, Haskins & Sells merged with Touche Ross to form Deloitte & Touche

… which came down to five… In July 1998, Price Waterhouse merged with Coopers & Lybrand to form PricewaterhouseCoopers

….and now, they're the Big Four (So Far) In 2002, Arthur Andersen, auditors to Enron (which collapsed), was indicted for obstruction of justice (although the verdict was later overturned). This led to its country practices round the world being sold to the Big Four (mostly EY).

... who are #5 and #6? BDO and Grant Thornton are globally #5 and #6—often they switch positions. Grant Thornton is present in India through Walker Chandiok & Co. and BDO through BDO Haribhakti & Co.

So, why aren’t these practices good enough to ensure against fraud?
The favourite maxim of the accounting fraternity is: “We’re watchdogs, not bloodhounds.” ICAI’s Jain quips: “When we were young, we were taught that an auditor is someone who is groping in the dark for a cat that is not there.” Well, in the Satyam case, to paraphrase an excerpt of Raju’s confession, there wasn’t a cat but a marauding tiger at work. How did the auditors fail to catch a glimpse of it? Says Vishesh Chandiok, Managing Partner of Grand Thornton in India: “A collusive management fraud is extremely hard to detect and an audit is not planned or performed with that objective.” Agrees Tridibes Basu, Partner, S.R. Batliboi: “Fraud is particularly difficult to detect in cases where there is management override of set processes.” Jain acknowledges that the biggest challenge for the profession today is the huge gap between society’s expectation of what auditors must do and what auditors actually can do. That gap just got larger after the Satyam scandal.

So, does this mean that auditors are destined to remain toothless watchdogs?
Perhaps not, thanks to some new accounting standards and laws passed in the aftermath of colossal corporate frauds. There’s, for instance, SAS 99, a US accounting standard that came into existence after Enron went bust, and took Arthur Andersen down with it, even though the verdict eventually was that Andersen was not guilty. SAS 99 requires auditors—amongst other things—to gather information necessary to identify risks of material misstatement due to the fraud by a series of measures (like making surprise inventory checks). Along with the provisions of the US Act Sarbanes-Oxley (SOX) of 2002, SAS 99 will become more and more relevant in India, avers Vaibhav Manek, Partner, KNAV Advisors. Auditors at the Big Four reveal that they follow SOX norms when auditing the books of their global clients who’ve set up operations in India. Yet, the main criticism of SAS 99 is that many of the procedures are suggested rather than required—more watchdogish than bloodhoundish. Meantime, the ICAI has prescribed a revised standard on auditing which lists the responsibilities of auditors when it comes to fraud.

How It’s done globally
Global regulation of audits seems more stringent and independent than India’s.

The SEC regulates auditors in the US and appoints members of the Public Company Accounting Oversight Board under the Sarbanes-Oxley Act of 2002.

CEOs and CFOs have to certify financial statements they file with the SEC.
A company cannot have certain consulting contracts with its auditors.

The Auditing Standards Board of the American Institute of Certified Public Accountants, a representative body, issued a standard (SAS 99) in 2002 that has several requirements to help an auditor find frauds, not all of which are mandatory.

The government-appointed Financial Reporting Council regulates auditors. One of its boards, the Accounting Standards Board, issues accounting standards.

The governmentappointed Accounting Standards Board regulates auditors. The Certified Public Accountants and Auditing Oversight Board is appointed by the Prime Minister with the consent of the Diet.

Joint audit is mandatory. So, companies have two auditors.

If an auditor provides any permitted non-audit services to a company it audits, fees for such services cannot exceed audit fees.

Auditors regulate themselves through ICAI and there is no independent regulator.

How prevalent is self-regulation when there’s plenty of room for conflict of interest?
Unsurprisingly, businesses like mergers & acquisitions and valuations are the primary activities of the Big Four. Along with the taxation practice, this share of the pie is easily bigger than audit. Can these disparate businesses, which feed off the same client base, co-exist? Evidently not— not in the US, where three of the Big Four shed their consulting practice to ensure independence of the audit practice. In 2002, EY sold its consulting practice to Capgemini, PwC to IBM and KPMG to BearingPoint. Only Deloitte still holds on to its consulting arm globally. The other three have slowly re-built a consultancy business, which they claim follow strict guidelines to avoid conflict with audit. The lopsidedness of regulation in India notwithstanding, shouldn’t consulting and audit be under two different umbrellas? Such questions are greeted with plenty of clearing-of-thethroats, even as local partners at the Big Four insist that Chinese Walls separate audit from the rest. Audit clients can never be advisory clients, and vice versa. Also, there’s no law that prevents partners from becoming independent directors on boards of companies they are not auditing, although most Big Four firms say that’s a no-no. ICAI says an auditor can’t audit a company and be on its board at the same time. Ultimately, the best assurance of self regulation is the fear of reputional damage. This assurance becomes stronger as these firms expand their businesses beyond audit.

So why do many, including the ICAI, hate the big four?
It’s been a long time since the ICAI has had a big four president. there was Rahul Roy, the youngest-ever president of the Institute but he joined EY after he finished his term as ICAI president. Uttam Agarwal, the man who takes over as president of the ICAI on February 5, points out that the institute has taken action against Big Four representatives in the past. “But how much can we do? We can only impose a fine on the member— we cannot do anything about the firm since licences are given to individuals, not firms. However, now we have started mentioning the name of the firm when we impose a penalty on a member,” says Agarwal.

Agarwal is also head of the committee set up to look into the affairs of Satyam and the audit conducted by PwC. He says that during his tenure, strict action will be taken against errant members—be they from the Big Four or any other firm. PwC had two members sitting in the ICAI council when the Satyam saga broke. They voluntarily stepped out of the meeting of the ICAI Council that discussed the Satyam case. Later, Jain said he can’t bar them from the proceedings since they are elected representatives. Agarwal says: “There are certain measures that we want to introduce and one of those is rotation of auditors.” Perhaps that will go some way in making auditors less-reviled. But remember, even at its best, audits can only be an effective deterrent to fraud—never a guarantor of its absence.

Wednesday, February 4, 2009

CAN YOU TRUST UN? - UN says Hamas stole aid intended for Gazans

International Herald Tribune

Wednesday, February 4, 2009

JERUSALEM: The United Nations Relief and Works Agency, which provides assistance to Palestinian refugees, said Wednesday that the Hamas police force in Gaza had seized aid supplies intended for the desperately needy from a distribution store in a Gaza refugee camp, signaling tensions between the agency and the Islamic rulers of the Palestinian enclave.

The UN agency said it condemned the Hamas action "in the strongest terms."

On Tuesday afternoon, the agency said in a statement, the police confiscated about 3,500 blankets and more than 400 food parcels meant to help hundreds of families in the Gaza City Beach Camp. It was part of the emergency aid being distributed after Israel's 22-day military offensive in Gaza that ended Jan. 18.

According to the statement, the incident took place "after Unrwa staff had earlier refused to hand over the aid supplies to the Hamas-run Ministry of Social Affairs. The police subsequently broke into the warehouse and seized the aid by force."

Christopher Gunness, a spokesman for the refugee agency, said it was the first time its supplies had been seized in such a way. He added: "They were armed and we were not."

Ahmed al-Kurd, the minister of social affairs in the Hamas-run Gaza government, said he was "very surprised and shocked" at the agency's statement to the news media.

The Hamas authorities have "never harmed Unrwa's security," he said.

But Kurd hinted at some displeasure among Hamas officials with the way the agency works. He said his ministry had been asking Unrwa to provide information about the assistance it is providing, and was "investigating" whether the agency is working with any unlicensed nongovernmental organizations in Gaza "that have a political agenda." He was presumably referring to groups at odds with Hamas.

Isaac Herzog, the Israeli minister responsible for coordinating humanitarian assistance to Gaza, said that the "robbing" of the UN warehouses by Hamas was "further proof that Hamas is continuing to make life miserable for the population of Gaza and will use any means to intensify its suffering."

Peter Lerner, an Israeli Defense Ministry spokesman, said Israel was "aware of numerous incidents" in which aid sent into Gaza, particularly from Jordan and Egypt, was seized, "sometimes at gunpoint."

While Israel officially says it appreciates the refugee agency's humanitarian work, there has always been some inherent political friction between the two. Tensions flared between the Israeli military and the agency during the recent offensive after Israeli forces fired at the Unrwa headquarters in Gaza City and killed up to 43 Palestinians in a street outside an agency school.

Israel said it was returning fire after Hamas militants attacked them from inside, or in the vicinity of, the UN facilities. UN officials vehemently denied any Hamas presence in their compounds.

Israel has been allowing up to 200 truckloads of humanitarian aid a day into Gaza since the end of the campaign, but some aid groups have been protesting about continuing restrictions. The Reuters news agency reported Wednesday that the European Union had sent a letter to Israel complaining about the obstacles it has faced.

Also Wednesday, the Israeli military acknowledged that its soldiers fired two tank shells at the house of Izzeldin Abuelaish, a well-known Gaza doctor, killing three of his daughters and a niece, on Jan. 16.

The story of the Gazan doctor, who has worked in Israeli hospitals and is known as a strong advocate of Israeli-Palestinian reconciliation, moved many in Israel and abroad.

The military said it concluded from an investigation that an infantry force had come under sniper and mortar fire from a house adjacent to the doctor's, and identified "suspicious figures" in the upper level of the doctor's house who were "thought to be spotters who directed the Hamas sniper and mortar fire."

The commander of the force gave the order to open fire, and the doctor's family members were killed as a result. The military said that in the days leading up to the incident, officers had contacted the doctor and urged him to evacuate his home because of intense fighting in the area.

The military said it was "saddened by the harm caused" to the doctor's family, but that under the circumstances it considered the decision to fire toward the building "reasonable."

In a message broadcast on Israeli television Wednesday, Abuelaish, speaking in Hebrew, thanked the Israelis for carrying out an honest investigation and said he hoped that such a mistake would never be repeated.

Isabel Kershner reported from Jerusalem and Taghreed El-Khodary reported from Gaza.

UN: Hamas Seized Aid Meant for Gaza Civilians

04 February 2009

The United Nations says the Palestinian militant group Hamas has seized blankets and food meant for hundreds of civilian families in the Gaza Strip.

A Palestinian carries sacks of flour at the UNRWA warehouse in Jebaliya refugee camp in Gaza City, 26 Jan 2009
A Palestinian carries sacks of flour at the UNRWA warehouse in Jebaliya refugee camp in Gaza City, 26 Jan 2009
The U.N. agency for Palestinian refugees, UNRWA, Wednesday said Hamas police raided a warehouse in Gaza City on Tuesday and took 3,500 blankets and more than 400 food parcels.

Hamas Welfare Minister Ahmed Kurd accused the U.N. of giving aid to local groups with a political agenda.

The U.N. has appealed to the international community for about $613 million in aid for Gazans following Israel's three-week military campaign against Hamas.

More than 1,300 Palestinians and 13 Israelis died in the violence.

Palestinian President Mahmoud Abbas told lawmakers at the European Parliament Wednesday that Israel should be held accountable for its actions in the war.

The International Criminal Court says it is exploring whether it can legally investigate allegations that Israel committed war crimes in the Gaza offensive.

The Palestinian Authority recently recognized the jurisdiction of the court. But, it is unclear whether Palestinians can request an ICC investigation because, officially, only states can recognize the court.

A Hamas delegation met Egyptian mediators in Cairo Tuesday, and said the militant group was ready to commit to a truce with Israel for at least a year, in exchange for the full opening of Gaza's borders.

Israel and Hamas stopped major combat two weeks ago, but sporadic attacks continue. Hamas is urging all Palestinian factions to "respect the national consensus" on the cease-fire. 

Some information for this report was provided by AFP and AP.