The US accused the UN development agency of funneling millions of dollars in hard currency to North Korea with little assurance that leader Kim Jong-il used the money to help his people instead of diverting it to other activities including nuclear weapons, according to US officials and letters obtained on Friday.
US deputy ambassador Mark Wallace charged that the agency's program in North Korea operated "in blatant violation of UN rules" for years. He demanded an immediate external audit of the program going back to at least 1998 which would focus on US concerns that Pyongyang converted UN development funds "to its own illicit purposes."
The UN Development Program, known as UNDP, said the use of hard currency for its operations in North Korea "in difficult circumstances" was approved by its executive board and it would welcome an external audit. Following the UN imposition of sanctions against North Korea in October for conducting a nuclear test, UNDP said it was taking measures to prevent "unintended consequences" of its activities.
UNDP Associate Administrator Ad Melkert disputed US allegations that the agency violated UN rules, insisting it followed UNDP financial rules. Nonetheless, he said that by March 1, all hard currency payments to the government, national partners, local staff and suppliers would be replaced by payments in North Korean won -- but he stressed that the only place to get local currency was from the country's central bank.
Neither the US nor UNDP would give a figure of how much money was involved, but Melkert responded to a question saying it was not hundreds of millions of dollars. In a Jan. 5 letter to Wallace, he said, from 2001 to 2005, UNDP spent an average of US$2.3 million annually on both the program and administration, including approximately US$100,000 annually on local salaries.
Ban Ki-moon, the new UN secretary-general, called on Friday for outside examination of all UN activities.
Ban's sweeping order sought "an urgent, systemwide and external inquiry into all activities done around the globe by the UN funds and programs."
His prompt action, taken after a morning meeting with Melkert, appeared to be an effort to head off the kind of problems that his predecessor, Kofi Annan, faced after muddled UN responses to reports of scandals.
"We are very pleased with the new team's reaction," said Richard Grenell, the spokesman for the US mission. Ban, the former foreign minister of South Korea, began his five-year term on Jan. 1.
Complaints about UN activities in North Korea were raised over the past month by the US mission in a series of letters to directors of the program and were made public on Friday on the op-ed page of the Wall Street Journal.
In the latest letter, Wallace said that the UNDP operation had been "systematically perverted for the benefit of the Kim Jong-il regime rather than the people of North Korea."
Wallace said that the local staff of the development program was dominated by employees of the repressive government, that the UN had failed to conduct proper on-site audits and depended instead on "sham" ones by the North Korean government.
"Simply put," Wallace wrote, "in the absence of real audits and site visits, it is impossible for UNDP to verify whether or not any of the funds paid to the DPRK for supposed use in UNDP programs have actually been used for bona fide development purposes."
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