US claims N Korea syphoned millions from UN project
By Mark Turner at the United Nations
Financial Times
Updated: 1:12 p.m. ET Jan 19, 2007

Lax controls in the United Nations Development Programme may have led to millions of dollars of currency being funnelled to North Korea, according to US officials.

In a letter sent to the UN agency this week Washington said that "at least since 1998 the UNDP [North Korea] programme has been systematically perverted for the benefit of the Kim Jong Il regime – rather than the people of North Korea".

"The programme has for years operated in blatant violation of UN rules...Importantly, UNDP apparently has failed to bring the widespread violation of UNDP rules...to the attention of the UNDP executive board," the letter said.

As of 1999, it said, there were 29 UNDP projects in North Korea with a total budget of $28m.
While US officials say they are not clear on the full extent or nature of the problem, the findings echo the UN's oil-for-food programme scandal, in which the Iraqi regime raised $1.8bn dollars in defiance of international sanctions.

The complaint comes amid allegations by UNDP insiders that procedures are not fully followed in the multi-billion dollar programme. UNDP executive board members are expected to call at a meeting next week for more transparency.

US officials say they have confidence that Ban Ki-moon, the new secretary-general who comes from South Korea, is intent on rooting out UN mismanagement. Mr Ban recently called on the US not to withhold funding from the world body.

But Ileana Ros-Lehtinen, the ranking Republican member of the US House Foreign Affairs Committee, called the findings "yet another example of the abuses made possible by the lack of accountability within the UN system".

"It is clear that the measures that have been taken to date are woefully inadequate. Only through outside pressure can meaningful change be ensured. I and other members are determined to apply that pressure in this Congress."

In a statement issued on Friday, the UNDP said its operations in North Korea (DPRK) were "in full compliance with the decisions of the member states on UNDP Executive Board and with resolutions passed recently by the UN Security Council".

"The Executive Board directly approved financial regulations on the basis of which authority was delegated to the Resident Co-ordinator in DPRK." But it said it would seek guidance at next week's meeting "on conducting a full independent and external audit of the current programme".

According to the US's January 16 letter, sent to Ad Melkert, associate administrator, UNDP's North Korean staff is dominated by government officials, who had "performed financial and programme managerial core functions in violation of UNDP rules".

The UNDP has been led since mid-2005 by Kemal Dervis, but much of the period in question was under the leadership of Mark Malloch Brown, who went on to become the UN's chief-of-staff and, later, its deputy secretary-general.

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