Will the U.N. Development Program Probe Be Ban Ki-Moon's First Cover-Up?

By Claudia Rosett and George Russell

Less than one month into his job, the new United Nations Secretary-General, Ban Ki-moon, has already had his first scandal. Now he may be engineering his first cover-up.

For just one day last week, it looked like Ban, in the first real test of his self-proclaimed mission to “restore trust” at the U.N., had risen above the bureaucratic evasions of his scandal-plagued predecessor, Kofi Annan. That day was Jan. 19, shortly after FOX News and The Wall Street Journal broke the story of U.S. State Department accusations that the United Nations Development Program (UNDP), violating its own rules, had allowed hard currency to flow to the now-sanctioned rogue regime of North Korean dictator Kim Jong Il. The State Department told of UNDP offices in North Korea dominated by officials of the regime, “sham” audits of programs to hide the cash flow, and an extended cover-up of the situation by the UNDP itself.

Ban came out that same day for a public housecleaning, with guns blazing. In a break with the stonewalls of the U.N. when faced with Oil-for-Food and other scandals, he promised to call for what his spokeswoman described as “an urgent, system-wide and external inquiry into all activities done around the globe by the U.N. funds and programmes.”

For this, Ban earned immediate praise, even from some of the U.N.’s most diehard critics. And he seemed intent on sticking to his guns. When a reporter dropped by the office of Ban’s spokeswoman, Michele Montas, late that same Friday evening, she took time to offer assurances that yes, indeed, the audit would be rigorous, complete and independent. Asked, specifically, if outside, private auditors would be employed to ensure integrity, she said, “Yes.”

But by Monday, Ban was backtracking faster than you can say “ACABQ” — which is the acronym for the U.N. General Assembly’s own budget oversight body, the Advisory Committee on Administrative and Budgetary Questions — which Ban was suddenly proposing to use as the overseer of his promised housecleaning.

To call that a huge step backward would be understatement. Among other things, the former chairman of the ACABQ, Vladimir Kuznetsov, was one of two U.N. officials indicted in 2005 on charges of bribery and money-laundering in connection with a highly publicized U.N. procurement scandal. (One, Alexander Yakovlev, pleaded guilty. Kuznetsov has pleaded not guilty, and goes on trial next month in New York federal court).

It was during the time that Kuznetsov held his U.N. budget oversight job that illicit funds were allegedly passing through his secret Caribbean bank account. Somehow, his alleged crimes escaped the ACABQ’s attention.

It is this same ACABQ that Ban now proposes to use as a conduit for handling the inspection of the UNDP’s North Korean unit, which will be carried out not by a truly independent outside auditing firm, but by using the U.N.’s own “external auditors.”

This U.N. group of auditors may be called external in U.N. parlance — meaning it is not composed of career U.N. bureaucrats — but it is hardly independent of the U.N. itself. The board is made up of the government audit arms of a rotating trio of U.N. member states, currently consisting of the Philippines, South Africa and France. This was precisely the same trio of government auditors, serving on precisely the same U.N. oversight board, that provided so-called external audits during the final graft-crammed years of Oil-for-Food.

Over a period from 1996 to 2003, the so-called external auditors blew the whistle on precisely nothing, even as Saddam Hussein stole billions from Oil-For-Food in bribery and kickbacks.

It was thanks in part to this board’s feeble oversight that BenonSevan, the recently indicted former head of Oil-for-Food, was able to file a report in 2002 that claimed that the Oil-for-Food program was “one of the most audited in the United Nations system.”

Not only did these government external auditors fail to sound a general alarm about the record-setting scale of corruption under Oil-for-Food; in the cases of South Africa and France, countries that were prime players in Saddam Hussein’s scams, the overseers didn’t even try to stop the corruption when it showed up at home.

In the case of North Korea, their track record may be as bad, since the board has already been involved in oversight of the UNDP’s operations there. According to the UNDP’s No. 2 official, Ad Melkert, copies of lower-level audits that outlined many of the problems had been passed on to the oversight board — which, in his view, had the responsibility to pass them on to member states. (Melkert’s viewpoint eerily echoes the Oil-For-Food defenses of Annan, who also argued that his office was not responsible for policing that program; only a committee of the Security Council was.)

But even if one buys Melkert’s argument, which it is impossible to do without a truly impartial investigation, he is also pointing to a grievous conflict of interest on the part of Ban’s board in overseeing any subsequent audit.

Ban is now proposing that this apparently feckless board confine itself, for the time being, to examining over the next three months the operations of U.N. agencies in North Korea and other places, where “issues of hard currency transactions, independence of staff hiring and access to reviewing local projects are pertinent.” It appears that the urgent worldwide audit proclaimed last week for the U.N.’s entire $20 billion system will have to wait until at least September.

Without clarifying any further details, Ban left U.N. headquarters Wednesday on an extended trip to Africa via Paris. Meanwhile, without waiting for fresh audit reports of any kind, the UNDP’s chief administrator, Kemal Dervis, told his executive board — whose 36 members include North Korea — that “there is really no justification for the extreme allegations and interpretations we have seen over the last few days.”

This is the second time in about three weeks that Ban, put to a test, has first signaled a sound instinct, only to retreat after a dose of in-house consultation. The first occasion came during his first week on the job, after the execution of Saddam Hussein.

In a break with the orthodoxy of his predecessor, who had led the U.N. on an anti-capital punishment crusade, Ban first noted that Saddam had committed heinous crimes, and that hanging such a monster was a matter for individual U.N. member states to decide. By the end of the week, however, he had joined the eternal U.N. chorus that condemns all capital punishment, even of mass murderers like Saddam.

This retreat is much worse for the U.N., and even for Ban himself. In backing away from a genuinely independent audit of U.N operations in North Korea, Ban may well be throwing a blanket over significant aspects of his own history. Prior to his U.N. appointment, Ban was South Korea’s foreign minister. His country has been shipping huge amounts of aid, including hard currency, to the North Korean regime for years, some of it during his own term in Seoul as foreign minister. Some of those funds may well have passed through the UNDP. If there is anything unsavory to uncover in that regard, Ban would be wise to get it over with now, via truly independent investigators. Otherwise, the UNDP scandal, which currently looks like a holdover from his predecessor, might turn out to be Ban’s own Achilles’ heel.

Claudia Rosett is a journalist-in-residence with the Foundation for Defense of Democracies. George Russell is executive editor of Fox News.