EXCLUSIVE: U.N. Audit Finds 'Lapses' in Managing Food Program Aid to N. Korea

By George Russell

Published September 28, 2010

| FoxNews.com

In an eerie replay of a scandal that enveloped the United Nations Development Program, an internal audit by the U.N.’s World Food Program shows significant “lapses,” “anomalies,” and unexplained variations last year in the way the relief agency reported its financial and commodity management in North Korea.

The holes in WFP’s humanitarian reporting raise questions of whether a U.N. agency has allowed money and supplies intended for starving North Koreans to end up in the hands of the country’s brutal communist rulers, who are under international sanctions aimed at halting their aggressive atomic weapons program.

According to WFP itself, in response to questions from Fox News, the confidential audit “highlighted a small number of inconsistencies in commodity accounting that have subsequently been addressed.” All the issues involved have since been “closed,” the agency added.

However, Fox News obtained a copy of a summary of projects undertaken by WFP’s internal watchdog Office of Internal Audit between July and September of last year, which lists the North Korean lapses first among its audit highlights. Among other things, it notes:

--“inconsistent data and unreliable information systems used for reporting [WFP] commodity movements, stock balances and food utilization” in North Korea;

--“lapses…in financial and commodity management processes.”

---“numerous anomalies…in information systems used for reporting commodity movements and food utilization in the CO [WFP local country office].”

CLICK HERE TO READ THE SUMMARY DOCUMENT

The full extent of the management lapses and their consequences cannot be determined without the unexpurgated audit report—and the WFP is not willing to make that public. The agency flatly turned down a request by Fox News for the document.

In fact, WFP has not even supplied a copy of the audit report to nations, including the U.S., that supervise its operations through a 36-member executive board. (The U.S. government gave about $1.76 billion to WFP in 2009, and has so far contributed $959 million this year.)

A Fox News query to the U.S. Mission to the U.N. in Geneva got confirmation that the U.S. government did not have the report, and that “WFP does not currently share its internal audit reports with the WFP Executive Board members.”

By now, however, it was supposed to. A policy that allowed the WFP’s executive director, Josette Sheeran, to give such audit reports to executive board members on demand was up for approval by the board at its last meeting in June. However, it was withdrawn from the board’s agenda; it is now up for consideration at the next Board meeting in November.

Even then, however, the wording of a draft version of the decision underlines that the sunlight provisions “will not be applied retroactively.”

The audit references to lapses in relief aid reporting practices are not the first indicator that the regime of ailing dictator Kim Jong Il might have the opportunity to exploit WFP resources in North Korea.

In June 2009, Fox News got an admission from the relief agency that its food supplies were carried from China to North Korea on vessels owned by the Kim regime. The potential transportation costs for those relief supplies appeared to be enormously high to outside shipping experts asked by Fox News to analyze the agency’s relief program documents. No mention of the regime’s role in transporting WFP goods appeared in the documents or on the agency’s website.

Click here to read more on this from Foxnews.com.

WFP has delivered more than $1 billion worth of food aid to North Korea since 2000, but the amount of donated money available for that effort has dwindled sharply as the Kim regime has exploded two nuclear bombs, threatened neighboring Japan and South Korea with war, and even sunk a South Korean warship on the high seas, according to the best forensic evidence available.

Its current plans call for spending about $91 million for food for about 2.2 million North Koreans this year.

The WFP audit reference to lapsed internal controls in North Korea, and the agency’s pooh-poohing of them, also bears a disturbing resemblance to the early stages of a battle over the role of the United Nations Development Program in North Korea, which led to the closure of UNDP's North Korea office for two years, from 2007 to 2009. The WFP was later named as the U.N.’s lead agency in the country.

In 2006, a whistleblower named Artjon Shkurtaj revealed that UNDP procedures in North Korea had funneled millions of dollars in hard currency to the Kim regime, allowed North Korean government nominees to occupy sensitive UNDP positions in the local country office, kept thousands of U.S. dollars counterfeited by North Korea without informing U.S. authorities, and other transgressions.

All were flatly denied by the U.N. agency, though many of the accusations were later revealed to have been mentioned in internal audit reports — which UNDP refused to make public, on the same grounds currently used by WFP, that they were internal management tools. The existence of the audit criticisms were only made known through an external board of auditors’ investigation in 2007.

A further outside investigation revealed that UNDP’s transgressions were even worse than the auditors had suggested. Not only had UNDP routinely continued to hand over millions in hard currency to the Kim regime, use government nominated officials in sensitive positions, and transfer sensitive equipment with potential for terrorist use or for use in creating weapons of mass destruction, it had done so in violation of U.N. Security Council sanctions in force at the time, and also contravened its own basic financial rules and regulations.

Click here to read the Fox News story on the report.

In the midst of the furor over its North Korean activities, UNDP finally agreed to make future internal audit reports public—at least to governments on its executive board, and as long as they applied in writing. Since then, it has also amended its internal procedures and is now relaunching itself in North Korea. (To date, the U.N. has not paid recompense to Shkurtaj that was mandated by its own ethics officer in the wake of the UNDP scandal.)

Is the World Food Program following the unsettling trail blazed by UNDP in North Korea, before it mended its ways?

Without the full internal audits, it is hard to tell—but the stonewalling of those audits looks very familiar.

George Russell is executive editor of Fox News.

Ramos Horta: "...UNDP is only good at doing studies, they don't execute projects"

‘‘You know how many layers of bureaucracy there are when the European Union wants to help East Timor? Well, they don’t provide the funds to us, the funds allocated are managed by world bank. And the world bank has its own layers of bureaucracy. And they charge for that. The project is then managed by UNDP. But UNDP is only good at doing studies, they don’t execute projects.’‘

JOSE RAMOS HORTA

PRESIDENT OF EAST TIMOR

The headache of UN aid distribution

The age-old question of how to distribute aid once rich countries give it, continues to dog the UN millennium goal summit in New York.

Side events held by poorer nations aim to find better ways to meet targets, but many complain about red-tape.

President of East Timor Jose Ramos Horta said:
‘‘You know how many layers of bureaucracy there are when the European Union wants to help East Timor? Well, they don’t provide the funds to us, the funds allocated are managed by world bank. And the world bank has its own layers of bureaucracy. And they charge for that. The project is then managed by UNDP. But UNDP is only good at doing studies, they don’t execute projects.’‘

With so many separate bodies taking a slice, the final sum is often much smaller than originally given. But, some argue it is the only way.

The billionaire financier and philanthropist George Soros said: ‘‘They (the donors) have to account for the money, and if they just give it to the government then it’s liable to disappear. Because many of the countries that are poor are poor because they have bad governments.”

A catch 22 situation, which arguably needs to be addressed by world leaders before the UN targets on cutting global poverty and hunger can be met.

UNDP: Pfizer, Vodafone, Sproxil and WaterHealth International Commit to Fight Poverty

22/09/2010 17:29 (22:36 minutes ago)

The FINANCIAL -- New York. More than 200,000 people in Africa and Asia will have access to improved health care and water, and increased access to jobs, through commitments made by Pfizer, Vodafone, Sproxil and WaterHealth International to the Business Call to Action (BCtA) —a global leadership initiative made up of companies that apply their core business expertise to the achievement of the eight internationally-agreed Millennium Development Goals (MDGs) by promoting sustainable solutions to development.

“With five years left to MDG achievement, it is important that business plays its part in contributing in a meaningful and impactful way to the long-term economic growth and stability of developing countries,” said Programme Manager of the Business Call to Action Natalie Africa. “These innovative projects are providing essential services related to water and healthcare, demonstrating the difference that can be made through putting new technologies including mobile phones to use for development purposes.”

In New York on Tuesday, Ponni Subbiah, MD, MPH, Vice President, Pfizer Global Access, announced a joint commitment on behalf of the pharmaceutical company and Vodafone, in collaboration with the Ministry of Health and Social Welfare in The Gambia and International Health Partners, to support the “SMS for Health” initiative, aimed at improving access and reliability of medicine supply using mobile phone technology. Using real-time information collected via mobile phones, SMS for Health will track medication stock levels and expiry dates and help capture trend information that can be used to predict the seasonal variation in the rate of disease. SMS for Health is currently being piloted in The Gambia.

“We’ve realized that one of the most important ways Pfizer can help improve sustainable healthcare access for underserved populations in emerging markets is through innovative business initiatives that are affordable and commercially viable,” said Jean-Michel Halfon, President and General Manager of Pfizer’s Emerging Markets Business Unit.

“Mobile technology has the potential to dramatically improve the provision of health care across the world but particularly, perhaps, in emerging economies where there is little established health infrastructure. The trick for healthcare providers is to identify the best way to maximize the opportunity. SMS for Health uses technology in an innovative way. It really can save lives and it is straight forward to implement and has low overheads. We hope that we can extend this opportunity to others,” said Vodafone Group’s Head of Mobile Health Joaquim Croca.

For its part, the company Sproxil has pledged to mobilize US$4 million over the next two years to expand efforts to empower patients and consumers with mobile phones in the fight against counterfeit medication in India and Kenya.

It is estimated that over 700,000 people die annually due to imitation malaria and TB medication alone. By using mobile phones, consumers and patients purchasing medication can text in simple numeric codes placed on the drugs to verify if a medicine is genuine. In Nigeria, Sproxil’s codes have already been used on over 1.4 million blister packs with thousands of users signing up every month.

“The increasing popularity of enhancing global health activities with private sector entrepreneurship signifies a shift in thinking among experts and practitioners,” said Sproxil CEO Dr. Ashifi Gogo. “By wrapping our business model around providing purchase decision support to those with little, we believe they will save money and increase their well-being, bringing new, locally-driven momentum to achieving the MDGs.”

In Bangladesh, where many communities lack access to regular supplies of drinking water, WaterHealth International has pledged to build 50 water purification plants that will use a sustainable business model, provide local communities with jobs and opportunities as well as access to clean drinking water at prices up to 20 times lower than traditional water service providers. The purification plants have already been installed in communities in Ghana, India and the Philippines.

“We believe that our products, services and business approach will help alleviate the huge drinking water problem in the country and we look forward to making a significant and sustainable impact to the MDGs in Bangladesh,” said CEO of WaterHealth International Sanjay Bhatnagar. “We also continue to rapidly expand our reach in India and West Africa to provide safe drinking water to people who need it the most.”

The Business Call to Action challenges companies to leverage their core business activities to contribute both to sustainable development and to their own commercial success. The initiative aims to inspire the private sector to reduce poverty while enhancing a company’s own business performance. A new report released today by the United Nations Development Programme (UNDP), titled ‘The MDGs: Everyone’s Business:How inclusive business models contribute to development and who supports them’, provides examples of how some of these and other successful businesses that have contributed to the MDGs, including multinational corporations, large domestic companies, SMEs and cooperatives.

EXCLUSIVE: U.N. Ignores Risks of Terror Attack, New York City Says

By George Russell

Published September 17, 2010 | FoxNews.com

As the United Nations hosts scores of world leaders at its annual General Assembly this month — and a special summit called by Secretary General Ban Ki-Moon for Sept. 20 — behind-the-scene tensions are high between the world organization and New York City, which has repeatedly warned that the U.N. complex on Manhattan’s East side is dangerously exposed to potential terrorist attacks.

Top city officials, including Mayor Michael Bloomberg and Police Commissioner Ray Kelly, feel frustrated that after years of negotiations and a $1.8 billion U.N. facelift that is now under way, the U.N. is ignoring blunt and dire warnings about the risks faced at the 17-acre complex.

“The city is not satisfied with the U.N.’s response to date,” declared mayoral spokesman Jason Post. “The U.N. has not adopted the city’s security recommendations for the headquarters campus.” Post would not elaborate and declined to answer follow-up questions.

The city’s concerns are major. In some places at the periphery of the U.N. complex, little more than a wheel-barrow full of high explosives could have a disastrous effect. In others, a truck-bomber could drive within a few yards of the complex before setting off a blast that could be as devastating as the 1995 Oklahoma City bombing at the Alfred P. Murrah Federal Building.

Those concerns have special resonance in New York City shortly after the ninth anniversary of 9/11, and while memories are still fresh of the unsuccessful May attempt by Muslim extremist Faisel Shahzad to detonate a car bomb in Times Square on behalf of the Pakistani branch of the Taliban.

They also have resonance for the U.N. itself: In 1995, two years after his arrest, a Sudanese immigrant named Siddig Ibrahim Siddig Ali pleaded guilty to conspiring to drive a bomb under the U.N., allegedly with the help of Sudanese diplomats. The plot was broken up two months after the first World Trade Center bombing.

Now, despite years of planning for the U.N. renovation — and a more than trebling of the original $570 million projected cost — the city strongly feels that neither the U.N. nor the State Department, which manages American host country obligations with the world organization, have committed themselves to anywhere near enough protection for the high-profile international target.

In past months, city officials have expressed the same frustrations in increasingly blunt terms to U.S. and U.N. officials, both in written communications and in face to face meetings. Among other things, Bloomberg has written personally to Secretary of State Hillary Clinton about the issues.

For their part, both U.S. State Department and U.N. security officials say that the security “dialogue” is still a work in progress, and there is no end in sight. But they also indicate that the city’s concerns will not ever be completely met, in part because the U.N. is merely renovating the complex, rather than starting over from scratch.

“This is a collective effort of all three parties,” U.S. Under Secretary of State for Management Patrick Kennedy told Fox News in an interview. “I believe we are all working together to develop a process that will integrate security into the renovations of the United Nations complex that will be satisfactory to everyone.”

Kennedy says he has met twice with New York Police Commissioner Ray Kelly on the issue, though he did not describe the outcome.

Kennedy assured Fox News that “the U.S. Government is looking at the full range of improvements and upgrades” for the complex. Yet he also declared that since “there is no desire on the part of anyone to tear down the entire United Nations complex and start over again,” the issue was discovering “exactly what security upgrades are possible”— and “at a reasonable cost.”

“There is always going to be a debate about what constitutes adequate security,” he said.

The same cost-benefit equation was cited by U.N. Under Secretary General Gregory Starr —formerly the State Department’s own security chief — who also takes much the same conciliatory long-term view. “I think ultimately we are all going to come to a good balanced solution and I think everybody will be reasonably satisfied,” he told Fox News in an interview. “I think most of the discussions have been very fruitful and a lot of the ideas that they have put forward are proper ideas.”

Both Kennedy and Starr declined to discuss specific security details, but they underlined that the danger to human life at the U.N. right now is minimal, as most U.N. employees have been removed from the landmark U.N. secretariat building and other buildings while the two-year renovation takes place.

Many of them, however, remain in less-used buildings or temporary quarters built as transitional space during the renovation.

New York City’s intense concerns, however, are focused on the facility that will remain after the renovation is finished in 2012 — an irregular, roughly rectangular shape bounded by the Franklin Delano Roosevelt highway and the East River, 42nd Street, First Avenue, and 48th Street.

All sides, in the city’s view, are dangerously exposed, and the construction standards of the old landmark buildings leave them far more vulnerable to explosions than modern U.S. government buildings, like the new, fortress-like, 26-story U.S. Mission to the U.N., located across the street from the complex, which opened in August. The new mission building has no windows on the first nine floors as an anti-blast measure, and is built, as are all State Department missions, to classified blast-resistance standards.

But one important part of the U.N. complex, the Conference Building that houses the U.N.Security Council, is vulnerable to attack from an unusual direction: underneath. The Conference Building hangs directly over the FDR, on a concrete platform that is directly exposed to a potential terrorist detonation.

The vulnerability is well-known; when President Obama or enough other high-level dignitaries at the U.N., portions of the FDR are shut down to traffic. But the Conference Building remains a potential target even when the top brass have left town.

Another major vulnerability is an exit ramp from the FDR that curls alongside the south end of the U.N. campus onto 42nd Street, a short distance from the U.N. library building.

Once again, the ramp is shut down to all traffic when high-profile events, like the annual opening session of the U.N. General Assembly, take place.

However, “on a day-to-day basis that ramp is open,” says John Cutter, a retired New York City Police chief of criminal intelligence, who inspected the U.N. campus perimeter with Fox News. “If somebody wanted to make a statement, do damage to the U.N., they could go right up there, set off [a] bomb. You could have a devastating effect.”

Much of that effect, he added, would be psychological, given the U.N. complex’s symbolism.

Cutter believes the exit ramp is "a very hard place to defend.” Yet despite a vulnerability visible to any passer-by, there is not even a blast wall in place to deflect any part of a potential explosion on the ramp — a point that city officials have made strongly.

On the north side of the U.N. complex, the exposure is less dramatic, as much of the surface area is devoted to lawns and gardens. (A large, temporary building, however, is now situated on part of the lawn area.). But here, trucks carrying large loads drive up and under the campus to make deliveries. City officials would like to see the trucks unloaded offsite, and their contents screened.

The U.N. has its official entries, and personal screening for visitors, on the west side of the complex, facing First Avenue. There, the slab-sided Secretariat building is set back considerably from the street — but that distance, Cutter says, is nowhere near as safe as it needs to be.

“You need 1,000 feet of distance” to have true security from a bomb blast, he told Fox News, and the Secretariat building is far closer to the street than that. Moreover, a setback of that magnitude is not even possible in an urban setting, which Cutter says is a “tremendous concern.”

A partial solution would be to put up another blast wall — which would mar the serene image of the U.N. from the side that most pedestrians and tourists see. That idea is unlikely to ever be considered.

Another partial solution would be to make it harder for would-be bombers to get quite as close to the complex, by removing a lane of traffic on the U.N. side of First Avenue and installing anti-truck bollards at the perimeter.

“We are looking at the perimeter,” Starr told Fox News. “We are looking at bollards. We are looking at enhancing the survivability of the buildings.”

The frustrating words there, from the city’s point of view, are “looking at,” as in: not deciding yet. The State Department’s Kennedy takes a similar long view as he describes the “process” that is still ongoing.

“We meet, information is exchanged, briefings are provided by security personnel, by architects and engineers. The questions are asked, and then more information is exchanged. And then there are working groups that take place between different elements of the United States government, different elements of the U.N. staff and their architectural engineers, and then different representatives from different departments from the New York City government.”

“We are working each and every issue and there are different timelines, obviously, for what you might do along one of the four sides.”

“I think the city would be happier if we were moving faster,” Starr admitted, while saying that progress had been made on generating some permits for work on First Avenue. (Coincidentally, those permits seem to have been approved around the time Fox News began requesting interviews on this story.)

Both Starr and Kennedy are convinced that their final security solution will have arrived by the time the renovation is finished. Both officials were leery about discussing costs, but one figure tossed out by Starr -- $50 million — seemed very small in terms of the huge spiral in renovation costs that the U.N. has so far accepted.

The big question, however, is whether the eventual solution will satisfy the City of New York —which is not only protecting the U.N., but the lives of New Yorkers at risk in any attack.

The fact is, both Starr and Kennedy emphasized, that when it gets right down to it, the U.N., is an international organization whose campus is outside the jurisdiction of U.S. law. It doesn’t have to please the city, or even the U.S. government, unless it wants to.

“I don't think it's the city's call to determine what the United Nations is going to do to its facilities,” Starr told Fox News. “Ultimately we have to come up with what we think is the right approach.”

And, whenever that approach ultimately gets decided on, the frustrated City of New York and its first responders — praised by both Starr and Kennedy as the best in the world -- will have to defend it.

Or risk their lives picking up the pieces if the U.N. gets the approach wrong.

George Russell is executive editor of Fox News