Ban Ki-moon and UNDP Claim Exoneration by Auditors
Barred from N. Korea, Retaliation Concealed
Byline: Matthew Russell Lee of Inner City Press at
the UN: News Analysis
UNITED NATIONS, June 1 -- After less than a month as
Secretary-General, Ban Ki-moon on January 19 called for an "urgent audit" of the
UN Development Program, beginning in North Korea where charges of lax oversight
had surfaced. On Monday, January 22, after lengthy weekend meetings, Mr. Ban
significantly limited the audit, to only North Korea, and by UN auditors, not an
outside private firm.
Inner City Press reported on May 31,
Mr. Ban commissioned a memo from his own Department of Political Affairs which
advised that "concerns over
UNDP financial transactions, and other alleged irregularities in the DPRK,
should be met through the coming external audit." Otherwise, Mr. Ban's DPA
wrote, "the UNDP program risks being terminated. Rather than being able to
support the six-party talks process and international engagement with North
Korea at this critical juncture, the UN will lose its unique comparative
advantage in that area altogether."
From this memo, and even more so from
numerous interviews with diplomats and UN insiders, it emerges that Ban Ki-moon
thought the better of conducting a legitimate, on-site audit of how aid funds
were used under the Kim Jong Il government. Such inquiry might not only work
counter to the foreign policy of South Korea, which for years until he this year
became Secretary-General was Mr. Ban's
focus, but now might also undermine the UN's ” unique comparative
advantage," one of which is presented as being Mr. Ban himself.
A superficial report of audit,
which may or may not be final, was released on June 1 at 11:55 a.m. by Ban's
Spokesperson's office. Minutes later, the Spokesperson read out a statement that
the report, which reporters had not had time to read, cleared UNDP of any "large
scale diversion of funds." The UN's own News Center ran a headline, "DPR
Korea: Ban Ki-moon says audit finds no large-scale diversion of funds."
Ban and Kim and ROK peacekeepers
Only after UNDP's hit-and-run press
conference, held before reporters could read the audit report, did it emerge
just how limited to auditors work in fact was. They acknowledge that they "did
not test the validity of payments to ultimate recipients as it does not have
access to financial records outside the UN system." Para. 13(f).
But the trigger for the audit was the
claim that funds funneled by UNDP ended up in illicit uses, potentially in
violation of UN Security Council resolution 1718. Why conduct and announce an
audit that does not even " test the validity of payments to ultimate"?
While various UN official have repeatedly
evaded questions about whether the UN auditors were barred from North Korea, the
report finally discloses, quietly in its Paragraph 75, that Ban's chief of staff
Vijay Nambiar on March 12 diplomatically asked North Korea for "assistance with
travel arrangements" for the auditors to North Korea. On March 20, as never
disclosed until this report, the Kim Jong Il government advised Ban's chief of
staff that North Korea "was not going to extend any cooperation to UNDP's
So the auditors were not allowed into the
country at issue, and yet purport to exonerate UNDP. This despite the disclaimer
that "no complete set of financial statements of the UN-related DPRK activities
were submitted for audit" and "the audit was limited to personnel and documents
made available in New York."
UNDP spokesman David Morrison previously
claimed that UNDP's resident coordinator Timo Pakkala brought to New York all of
the documents that the auditors would need. But the report's Paragraph 66
alludes to money
to a local staff member who would cash the check and distribute the cash to
local personnel. As the supporting documents for these payments were not kept in
the headquarters in New York, the Board [of Auditors] was not able to verify any
controls exercised over these payments."
So which is it? Did Timo Pakkala bring
from Pyongyang all relevant documents? Apparently not, see Paragraph 27 as well,
in which the auditors note that "annex 1, which was to describe the scope of
services, was not provided to the Board."
UNDP paid in Euros in North Korea, and
the report at Paragraph 55 (c) says that UNDP's "Euro account was funded from
UNDP Headquarters." But then in Paragraph 68 the report says that "all payments
made from the Euro, convertible Won, and non-convertible Won accounts for the
period 2002-2006 have been recorded as manual check payments. No checks were
held in New York, therefore, in this phase, the Board did not have access to the
First, if the Euro account was "funded
from UNDP Headquarters" in New York, why were none of the checks in New York?
Second, even assuming that were true, why didn't Timo Pakkala bring the checks
with him to New York, to meet with the auditors?
Timo Pakkala was, among other things, in
charge of the safe at UNDP Pyongyang in which counterfeit U.S. currency was
secreted. The report explicitly says that counterfeit is beyond what it
considered. Inner City Press has asked, aren't inventories including safe
contents filed within UNDP? Mr. Morrison has said "no," but UN sources with
direct knowledge of the issue have told Inner City Press that such reports were
filed every June and December, with UNDP finance director Darshak Shah.
The report is signed by Philippe Seguin
of France, Terence Nombembe of South Africa and Guillermo Carague of the
Philippines, the bosses of actual auditors Martine Latare, Odette Anthoo and
Dioni Abalos, respectively. Mr. Morrison declined to confirm that head auditor
P. Brodeur has left his post. Since Brodeur was the person slated to present the
report to the ACABQ, and to the press, it is not clear what now will happen.
The report says that "during this
preliminary phase, the Board did not perform alternative procedures to confirm
whether all payments were released in fall by the Government of DPRK to the
staff members." Paragraph 37. This was a key question to be investigated:
whether the money UNDP paid the government, supposedly for staff, was every paid
to them. Since these was not checked, the report cannot legitimately make any
finding about how the money was used. And yet exoneration is claimed, in part so
that Ban's UN can get back to their "competitive advantage."
This despite the finding, buried in
Paragraph 60 of the report, that "contrary to Article 6 of the Standard Basic
Agreement, UNDP made local payments in foreign currencies."
The report states, in Paragraph 65, that
"the information supplied was not verified, and no source documents were
examined during this phase of the audit." How can it even be called an audit
City Press posed this and other questions to UNDP spokesman David Morrison
Friday at a hastily scheduled
Despite several written requests in recent days, Mr. Morrison still could not or
would not describe what UNDP has called its "biodiversity" program in North
City Press asked Mr. Morrison to confirm or deny that UNDP, through chief legal
officer James Provenzano -- who was still to rule on a filing Inner City Press
long ago made under UNDP information disclosure policy -- and UNDP legal staffer
Peri Johnson, threatened a UNDP North Korea staffer with termination and
expulsion from the U.S. for having blown the whistle. Video
from Minute 15:10. "I am not aware of it," Mr. Morrison said. "I have seen your
question." Then why had he never answered or acknowledged the question? Inner
City Press advised him to "ask Peri Johnson." We'll see.
here for Inner City
Press' June 1 story on other UNDP questions.
Again, because a number of Inner City Press'
sources go out of their way to express commitment to serving the poor, and while
it should be unnecessary, Inner City Press is compelled to conclude this
installment in a necessarily-ongoing series by saluting the stated goals of the
UN agencies and many of their staff. Keep those cards, letters and emails coming, and phone
calls too, we apologize for any phone tag, but please continue trying, and keep
the information flowing.
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