Second Probe of UNDP-North Korea Scandal Set to Begin

Second Probe of UNDP-North Korea Scandal Set to Begin
Saturday , July 07, 2007

By George Russell
FOXNEWS

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The next round in the investigation of the United Nations Development Program’s scandal-tainted operations in North Korea is about to begin.

The question is whether it will be any more successful than the original probe in getting a clear picture of a UNDP program that the U.S. government, among others, charges was hijacked by the communist government of Kim Jong Il and funneled millions in UNDP hard currency into North Korea’s nuclear weapons program.

Another big question is how much, if any, of the UNDP’s documentation will be turned over to the auditors this time for inspection. The bulk of that documentation is still in U.N. safekeeping in Pyongyang — where the previous group of auditors was barred by Kim’s government.

The bell for Round 2 was quietly sounded nearly two weeks ago, in a June 29 letter from the United Nations’ board of external auditors to a U.N. General Assembly committee that examines budget issues. A copy of the letter has been obtained by FOX News.

The letter announces that the auditors, at the urging of U.N. Secretary General Ban Ki-Moon, will make a second attempt to probe the depths of the UNDP’s operations in North Korea, which were suspended in February after the Kim regime refused to accept a variety of new restrictions sparked by the U.S. accusations. When the new auditing effort will begin is not specified.

The North Korean government refused to cooperate in the first U.N. audit, which was published on May 31, and which corroborated many of the U.S. accusations, based in turn on confidential UNDP inspections done in previous years.

According to the Round 1 auditors, UNDP made unauthorized hard currency payments to the North Korean government, not only for its own work in North Korea but for a variety of other U.N. agencies — at least $72 million from 2002 to 2006.

UNDP had hired 22 of its 31 staffers locally, in some cases in oversight roles. The local employees were not only nominated by Kim’s dictatorship, but remained North Korean government employees. The auditors also declared that many inspections of UNDP development projects in North Korea were only carried out under North Korean escort and in some cases by the same local North Korean employees.

Despite all that, UNDP officials declared the initial audit an exoneration, leading to declarations of “dismay” by U.S. diplomats.

Since then, the issue has further morphed into a point of visible tension between the U.S. mission to the U.N. and top UNDP officials, especially the multibillion-dollar agency’s No. 2 man, Associate Administrator Ad Melkert, who allegedly threatened “retaliation” against the U.S. in closed-door meetings over the North Korea affair. Melkert and UNDP have strongly denied the allegation.

For their part, U.S. officials raised the stakes further by documenting additional UNDP fund diversions, in some cases to known North Korean weapons developers, from their own sources. UNDP has in turn rejected the U.S. allegations as based on false evidence and challenged U.S. diplomats to come up with more and better documentation.

All told, the confrontation has marked an extraordinary watershed in relations between the $5 billion U.N. flagship development agency and its largest single financial supporter. The U.S. contributes roughly $100 million to the UNDP budget and is a member of its overseeing 36-nation Executive Board.

The question is whether a further audit will clear the air — or add to the fog.

The auditors themselves do not appear to be entirely sure.

In the letter to the U.N. budget committee, the head of the U.N. auditing board, Philippe Seguin, gingerly declares that a second probe “will provide additional evidence” to back the conclusions of the initial report.

But the auditors backed away from recommendations in the earlier document that urged the U.N. seek “accountability” for the lapses outlined in its first report and attempt to trace where UNDP money might have migrated in North Korea once it left the agency’s hands.

Nor will the new probe attempt to clarify another explosive issue: the discovery of at least $3,500 in counterfeit U.S. money that had apparently been stowed for years in a UNDP safe in Pyongyang. Such efforts would be “investigative,” Seguin says, and thus outside the auditors’ mandate.

Finally, the new probe will depend once again on the whims of North Korea’s rulers on whether the inspectors will get to visit Pyongyang at all. Seguin’s letter makes clear that the auditors require “unrestricted access” to UNDP and other U.N. operations in North Korea, as well as visas, housing, and “agreement on access to all project sites.” All were refused for the first audit.

If that permission is not granted, UNDP officials have promised that they will bring their documents, both paper and electronic, out of North Korea for inspection — something the U.S. has demanded since before the initial audit took place.

But that in turn could raise questions about whether any of the records were erased or suppressed in the months since the controversy surfaced—or even if they all have then made the trip back from Pyongyang.

All such sparring, however, lies far ahead — provided that the U.N.’s promise to keep probing continues to be honored.

George Russell is executive editor of FOX News.

Ex-Worker Seeks Whistleblower Protection

Ex-Worker Seeks Whistleblower Protection

By EDITH M. LEDERER
The Associated Press
Saturday, July 7, 2007; 3:22 AM



UNITED NATIONS -- The former operations officer for the U.N. anti-poverty agency in North Korea is seeking whistleblower protection from the United Nations, saying he lost his job for raising serious allegations about its financial transactions in the reclusive communist nation.

The U.N. Development Fund on Friday, however, disputed Artjon Shkurtaj's allegations that he was subject to retaliation.

In an interview with The Associated Press, Shkurtaj said he went to the former U.N. management chief and the U.S. government after his bosses at the U.N. Development Fund failed to act on his allegations.

When he asked what to do with counterfeit U.S. dollars he found in the office safe on his first day in Pyongyang in November 2004, Shkurtaj said he never got a response. And he said when he complained that paying all North Korean salaries and program expenses in hard currency instead of local currency was against U.N. rules, he said he was told "not to rock the boat."

UNDP spokesman David Morrison said Friday that the agency "has looked into this claim and based on available information found it to be without basis."

"UNDP has invited the individual to submit all relevant information to the UNDP office charged with undertaking internal inquiries, but he has so far declined to do so," Morrison told a news conference.

Two U.S. lawmakers _ Sen. Norm Coleman, a Minnesota Republican, and Rep. Ileana Ros-Lehtinen, a Florida Republican, have sent letters to Secretary-General Ban Ki-moon urging him to intervene and ensure that Shkurtaj is not punished for raising concerns about U.N. operations in North Korea.

U.N. deputy spokeswoman Marie Okabe said the U.N. Ethics Office was considering a request by the former UNDP employee seeking whistleblower protection.

The whistleblower issue comes on the heels of U.S. allegations that UNDP had funneled millions of dollars in hard currency to North Korea with little assurance that Kim Jong Il used the money to help his people instead of diverting it to "illicit purposes," including developing nuclear weapons.

Shkurtaj, who is Albanian, said after he went to the U.S. government in July 2006, U.S. officials asked UNDP two questions: Was there counterfeit money in the safe in Pyongyang and was UNDP operating in hard currency?

In late March, UNDP announced that U.N. and U.S. authorities were investigating how $3,500 in suspected counterfeit $100 bills ended up sitting in a safe in the UNDP office in North Korea for 12 years.

An initial U.N. audit ordered by the secretary-general in response to the U.S. allegations reported in June that U.N. agencies paid North Korean staff and suppliers in hard currency _ euros _ without approval and hired only government-approved staff in violation of U.N. procedures.

After the U.S. raised new allegations, Ban said he would ask U.N. budget officials to approve a further probe by the auditors, who were unable to visit Pyongyang.

Morrison said the former UNDP worker _ whom he did not name _ was interviewed by the external auditors and met with UNDP Administrator Kemal Dervis.

"A lot of what he says, frankly, we're not going to be able to settle on until auditors or independent authorities have access to the documentation which remains in Pyongyang," Morrison said.

He said if the audit doesn't continue, UNDP will bring the records out of Pyongyang "to settle these questions once and for all."

Shkurtaj said the UNDP records from Pyongyang should be brought back and opened to anyone to examine to see where every penny was spent _ and he said they should have been returned months ago.

Morrison said the former UNDP employee was not "a 13-year veteran" as Ros-Lehtinen claimed, but worked on short-term contracts for UNDP dating back to the 1990s, including in North Korea in 2005-2006. He said the whistleblower's latest three-month consultancy expired in March 2007.

Shkurtaj countered that he was ordered to return to New York on Sept. 26, 2006, in the middle of his contract, because "I rocked the boat too much and it was better for my health and future career."

But after continuing to pursue answers to the questions he raised in Pyongyang, he said, UNDP officials told him in March that there were no further jobs for him.

"My case is very important," Shkurtaj said. "If my case fails, everybody else in the U.N. will get the message, don't talk to the U.S. or any other member state if you want to keep your job."