UN Audit of Four of Its Agencies in N. Korea Starts, Memo Shows, Only in NY

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, March 12, updated 2:48 pm -- A memorandum from the UN's Board of Auditors to the UN Development Program and three other agencies, obtained by Inner City Press, reveals that a two-week audit to be conducted in New York begins today.

            The inter-office memo to UNDP Administrator Kemal Dervis and the heads of the other three New York-based agencies, the UN Children's Fund, the UN Population Fund and the UN Office of Program Services -- notably omitting the World Food Program, as well as the FAO and World Health Organization -- came from the Executive Secretary of the UN's Board of Auditors, Swatantra A. Goolsarran. It asked the officials to make available by March 12 "an inventory of financial, human resources and project records available both in New York and the Democratic People's Republic of North Korea [sic]... and access to correspondence files between UN personnel in DPRK and your New York headquarters."

            UNDP's documentation will only arrive in New York in a week's time, brought by the UN's outgoing Resident Representative in the North Korea, Timo Pakkala. An internal UNDP memo obtained by Inner City Press indicates that most of UNDP-North Korea's national staff will leave by March 15, while four will remain with the Deputy Resident Representative and Operations Manager to implement the suspension. UNDP will continue to lease its facilities during the suspension. One wonders: to whom will UNDP pay rent, and in what currency?

            UNDP insiders question whether Timo Pakkala, who they say has a UN and not UNDP contract, as the UN's Resident Representative in North Korea, is being fired. His contract, they say, runs out in July 2007, and this may be used to influence what he tells the auditors.  Mr. Pakkala flies to New York with the documents on March 17, to meet with the auditors on March 19. By then, only one week will remain in the two-week scoping audit, and several senior officials, including Kemal Dervis, will have been interviewed before the auditors have the relevant documents.

     Mr. Goolsarran's memo states that that focus for two weeks will be on the "identification of systems, expenditures and documentation, the quantification of amounts, the mapping of the relationships between UNDP, UNOPS, UNFPA and UNICEF at the Democratic People's Republic of Korea country level, and interviews with personnel."

            The memo names the auditors who will conduct the two-week review: team leader Ms. Odette Anthoo of South Africa, Mr. Dioni Abalos of the Philippines and Ms. Martine Latare of France. While the memo refers to "a possible site visit to DPRK," Mr. Pakkala's return to New York with all documents seems to indicate, at least to well-placed UNDP sources, that the Kim Jong Il government has not responded positively to UN Secretary-General Ban Ki-moon's February 28 letter requesting access for UN auditors.

            A New York-only audit, even with the documents being brought by Mr. Pakkala, would be far less than what Ban Ki-moon publicly called for, even as Mr. Ban amended and narrowed it. The goal of the called-for audit was to see where the money paid out actually went. This would require on site visits to North Korea, and cooperation by North Korean government officials, which does not appear to be forthcoming. One source questions, even if the auditor were allowed to enter North Korea during the 90 day period set by Ban Ki-moon, would they be required to hire North Korean helpers or minders? The same is asked of the UN International Atomic Energy Agency team arriving this week in Pyongyang.

UN auditors line up -- and then proceed without documents

            With Mr. Pakkala leaving the country, a question exists as to who then will be representing the UN system in North Korea. Sources question whether it will be someone from UNICEF, which is a part of this two week audit, or of WFP, FAO or WHO, which are not addressed by the Board of Auditor's memo. [It is not clear if a separate memos for audits in Rome and Geneva have gone out.] All four agencies have acknowledged, in responding to written questions from Inner City Press, that they paid hard currency to the North Korean government for staff selected by that government. The UN Population Fund, UNFPA, refused to answer Inner City Press' questions, but an internal audit subsequently obtained shows that UNFPA in North Korea has been paying in hard currency, through UNDP, click here for that story.

            At UNFPA, those addressed along with Executive Director Thoraya Obaid are Subash Gupta, Rahul Bhalla and head of audit Olivier Brasseur (who, as Inner City Press has reported, received a negative audit for his time with the UNFPA's Pakistan office).

            At UNOPS, where controversy about harassment and leadership change at the Dubai office continue, those addressed include only Executive Director Jan Mattsson and his deputy Vitaly Vanshelboim, as well as a joint UNOPS - UNDP auditor, Santiago Fua.

            At UNICEF, along with Ann Veneman (who told Inner City Press last week that her agency's operations will continue unchanged in North Korea), those addressed include outgoing deputy Rima Salah, Claus Andreasen and Comptroller Terry Brown.

            Within UNDP, the memo is also addressed to Associate Administrator Ad Melkert, Darshak Shah, Timo Pakkala (all of whom have declined to respond to previous questions from Inner City Press), as well as chief of staff Tegegenwork Gettu, Akiko Yuge, Antoine Khoury, David Lockwood and Jonathan Ng, "Implementation Advisor," along with the putative head of UNDP, Kemal Dervis.

            Mr. Dervis, slated to be interviewed this week, may continued be distracted. Reports in the Turkish press again indicate his political ambition to run for office, as well as reporting on a scandal involving his father, Riza Dervis, reputed to have offered Mercedes automobiles in exchange for contracts as a supplier of medical equipment to universities in the past. The apple, one source says, hasn't in this instance fallen far from the tree. To Inner City Press the relevance is that this familial scandal would make Mr. Dervis less likely to prevail.

[Update of March 12, 2:48 pm -- UNDP spokesman David Morrison, in another strange "scrum" with reporters in the hallways outside, rather than at the rostrum in, the UN's press briefing room, chided Inner City Press for calling this a "two week audit," despite the inclusion of Mr. Goolsarran's memo's reference to a subsequent, but not certain, site visit to the DPRK. So, for the record, the memo does call the two weeks starting today "the first phase of the audit." Will the Kim Jong Il government subsequently allow the auditors into the country? How long does UNDP's lease in Pyongyang run? Who will be the Resident Representative replacing Timo Pakkala? On these and other questions, Mr. Morrison said he did not know, and would get back with answers, which Inner City Press has requested orally and by email to receive, today, including the long-ago requested volume of money that UNDP expended in DPRK including for other UN agencies. Mr. Morrison said, we can get that number, the overall figure. We're waiting for it.]

            The memo is also copied to Alicia Barcena of the Department of Management, and Controller Warren Sach. Four weeks ago, Mr. Sach referred Inner City Press' questions to Mr. Goolsarran, who in turn declined to answer:

Subject: Re: Press questions on UNJSPF and audits / UNDP / North Korea

From: Warren Sach

To: Inner City Press

Sent: Mon, 12 Feb 2007 10:01 AM

  Dear Mr Lee, Thank you for your e-mail of earlier this morning which is hereby acknowledged. I did meet with UNDP's Resident Coordinator for North Korea, Timo Pakkala on Friday 9 Feb. I advised him to contact the Executive Secretary of the Board of Auditors, Mr Anand Goolsarran to coordinate on logistical arrangement for the forthcoming audit. Mr Goolsarran would also be the best person for you to contact re Board of Auditors matters. The ACABQ Chairman, Mr Rajat Saha has written on Friday 9th Feb requesting that a special audit be conducted by the BoA in N Korea. This followed my own formal request to ACABQ that the BoA be requested to undertake an audit; in connection with that request the ACABQ held separate hearings on Wed 7th Feb with both myself and the representatives of the BoA on the request for an audit. I do know if the BoA has yet begun the audit; I suspect they have a number of logistical steps to take before field work begins; Mr Goolsarran can best advise you.

            Inner City Press then posed the following still-outstanding questions to Mr. Goolsarran of the UN Board of Auditors:

Dear Mr. Goolsarran --

Hello... When will the audit(s) actually begin? We have heard a date of February 16. Is that correct? Who will perform the audit? ... Have you spoken with Mr. Pakkala? We are also informed that you met with the ACABQ on February 7. In the two meetings, what logistical arrangement were arrived at?

   Can you comment on the fact that the DPRK issues were not mentioned in the most recent publicly available audit of UNDP, which also refers, on Russia, to a document being "released" when it is nowhere available? Will the audit include other agencies such as WFP, UNFPA, WHO, FAO and others?  If limited to UNDP, will it include the money that UNDP pays on behalf of other agencies? Will any agencies be audited in geographies beyond the DPRK? If so, when?

There has been difficulty for the press in getting even basic information. UNDP, for example, has most recently told us regarding all North Korea-related questions, including a simple total figure of money UNDP handled for FAO, UNFPA and other UN agencies, that "Until the audit is completed, it would not be appropriate to comment on our work there..." In your position with the Board of Auditors, do you think it is  appropriate for a UN fund or program to cite the existence of one of your audits to, in the American  vernacular, expansively invoke the Fifth Amendment for at least 90 days on a wide range of issues of public concern?

            Mr. Goolsarran has yet to respond, although his memo, obtained by Inner City Press, answers some few of the questions. As previously reported, Controller Warren Sach left UN Headquarters on February 28, but is slated to be back today on March 12, the day the two-week audit process begins. Developing...

* * *

From  transcript of Feb. 20, 2007, UN noon briefing:

Inner City Press: Does the 90 days -- because he said it should be done in 90 days -- does the 90 days run from when he announced that the audits would begin or from when they actually began?

Spokesperson: Actually…

Question: Have they begun?

Spokesperson: Actually, I know that -- yes, they have started it.

Question: Which ones have started?

Spokesperson: The external auditors have started on the process.

Question: But could you specify? I mean, there’s a lot of agencies to be audited.

Spokesperson: As you know, they’re starting with the UNDP and the specific case of --

Question: You say they have started. You mean the one in North Korea?

Spokesperson: Yes.

Question: The clock is running?

Spokesperson: Yes.

    Again, because a number of Inner City Press' UN 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.

Feedback: Editorial [at] innercitypress.com

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UNDP Stonewalls on Trust Funds for N. Korea, Including S. Korean Money: Unanswered Questions

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, March 6 -- In light of the UN Development Program's suspension of its operations in North Korea earlier this month, following the January 2007 calls for an urgent audit by UN Secretary General Ban Ki-moon, several simple questions have been asked by Inner City Press.

   How much money did UNDP expend in North Korea, and how much of this came from South Korea, particularly during Mr. Ban's tenure as that country's Minister of Foreign Affairs and Trade?

            Sources tell Inner City Press that there are funds beyond those disclosed by UNDP's Ad Melkert in January, which he put the size of UNDP's North Korea program in 2006 at $3.3 million, and by spokesman David Morrison on March 5, $4.4 million. These undisclosed funds are alleged to be found in Trust Funds co-sponsored by South Korea's Ministry of Foreign Affairs and Trade (including under Ban Ki-moon) and the South Korean reunification ministry, flowing to the North Korean government via a pass-through mechanism, with UNDP reported taking a four percent fee.

Kemal Dervis and UNDP logo: how much passing through?

            Inner City Press began asking these questions after receiving confirmation from the UN World Health Organization that it too accepts staff seconded from the North Korean government, one of the grounds for Mr. Ban's "urgent audit," and that WHO is receiving $10 million a year from the South Korean government (now, it is believed, through a Trust Fund). WHO's spokeswoman wrote:

Subject: RE: Ms. NcNab- Checking in for response to our previous questions, thanks

To: Inner City Press

From: Christine McNab [at] who.int

Hi Matthew, Here are the answers below.  

Q. Please comment on: whether the World Health Organization, herein below "you", in North Korea  uses personnel seconded by the government...

A. WHO has 17 staff in its office in the Democratic Peoples Republic of Korea (DPRK). There are four internationally recruited staff, including the WHO Representative, and 13  national staff. As with all agencies working in DPRK, the national staff are seconded from the government...

Q. Please confirm or deny that in mid-2005 a South Korean contribution  of some $10 million was received by WHO, and is so state the involvement of  the South Korean Ministry of Foreign Affairs and its then-head and provide  any and all documentation.

A. Yes, last year South Korea committed to providing the equivalent of US 10 million per year as support to DPRK through WHO for health-related humanitarian assistance, for three years, primarily in the field of maternal and child health. 

             While there have been competing claims, including from UN Secretariat officials, about whether UN funds and programs in North Korea beyond UNDP are being audited, and will continue operation, on the evening of March 6 Inner City Press asked UNICEF's Ann Veneman if her agency will continue in North Korea.

   "Yes," Ann Veneman said, noting that UNICEF is in a different building that UNDP in Pyongyang and is engaged, in her words, in more "humanitarian" activities then UNDP.  It is not clear that this was Ban Ki-moon's distinction in calling for audits. Rather, Mr. Ban referred to paying in hard currency and allowing a host-government role in staffing, both of which UNICEF below acknowledges. (Inner City Press thanked Ms. Veneman for UNICEF's having made available for interview its Senior Advisor for Children in Armed Conflict, Manuel Fontaine; Ms. Veneman countered by recommending a recent book on children and armed conflict, which we will soon review.)

            On January 19, Ban Ki-moon called for an urgent audit of all UN funds, programs and agencies. On January 22, this was scaled back to a focus on North Korea and, at least in the first instance, on UNDP. It has been said that the World Food Program and the UN Children's Fund, for example, will also be audited.

            On February 1, while attending a press briefing by UNDP Administrator Kemal Dervis, Inner City Press asked Mr. Dervis how much money UNDP has spent in North Korea in recent years, on its own before and for other agencies (or as a pass-through). Mr. Dervis did not answer, and subsequently his communications staff declared that "it would be inappropriate to comment" on its programs or spending in North Korea until the audit is completed.

            On March 2, Kemal Dervis wrote to North Korea's UN Ambassador that UNDP is suspending its programs in the country. Inner City Press is informed that an impact, and even intent, of this announcement is to make the audit more difficult. Inner City Press asked this question at Ban Ki-moon spokesperson's noon briefing on March 5.

            On March 6, the spokesperson announced that Ban Ki-moon has written to North Korea asking for access for the auditors. Meanwhile, Inner City Press has been informed that the Board of Auditors, meeting until late on March 5, acquiesced to an audit only in New York.

            But on the question of how much UNDP spent, and for and under whom, in North Korea, UNDP, the Secretariat and even the South Korea mission have been asked. On March 4, Inner City Press emailed questions to Kemal Dervis, Ad Melkert and other senior UNDP officials. For example:

            Bruce Jenks, the head of UNDP's Bureau for Resources and Strategic Partnerships was asked "The closing, will it impact South Korean funds dedicated to the DPRK? What will happen with those funds?" Mr. Jenks did not answer, and nor after two reminders did UNDP's Communications Office.

            Darshak Shaw, Director of UNDP's Office of Finance, was asked:

"can all the numbers for the audit be looked at in New York? Also, we still have a number of questions pending that have not been  answered, including the simple question about who many people UNDP employs / pays.  Perhaps you can answer that?"

            Mr. Shaw has not answered, nor after two reminders has UNDP's Communications Office. In fact, the Communications Office has ignored a request on the afternoon of March 5:

"Most pressingly, please specify which of the funds spending through UNDP in the past four years were from South Korea, and within these, which if any had the involvement of the South Korea Foreign Ministry and when?"

            Despite emailing to Inner City Press terse answering to unrelated questions, the above "most pressing" question has been ignored by UNDP. Therefore Inner City Press asked the UN's Office of the Spokesperson for the Secretary General, particularly for volume of South Korean funds passed-through UNDP while Ban Ki-moon headed South Korea's Ministry of Foreign Affairs and Trade. Inner City Press asked this question orally, not in the noon briefing, on the morning of March 5. Inner City Press was referred to Soung-ah Choi, a 2007 addition to the Spokesperson's office, and was told to put the question in writing, which was done:

"This is a question that I came into the OSSG earlier this morning to ask, was advised to direct it to you by email:

--what role if any did Ban Ki-moon play while with the Republic of Korea government in South Korean aid to the Democratic People's Republic of Korea?  If any, did any of this aid involve UN funds, programs or agencies? If any, could any of this aid be within the scope of the urgent audits Mr. Ban called for on Jan. 19, as modified Jan. 22?

Context: following UNDP's (quiet, online only) announcement that it suspended its operations in North Korea on March 1, Inner City Press has heard from sources information that gives rise to the above question, as well as to other questions posed directly to UNDP and to the Board of Auditors. (Including what impact the suspension of operations will have on the audit, on which we understand the 90 clock is already ticking). I'd wanted to just orally ask the above questions in your office, now do so by email."

            In response, the UN's Soung-ah Choi told Inner City Press this is not really a UN or Secretary General question, and that it can only be asked to the South Korea mission, specifically to Ambassador Oh Joon who, she said, was involved in North-South Korean relations and aid during the time frame.

[Update of March 16 -- it has been emphasized to Inner City Press that Amb. Oh's post was for international organizations; point taken.]

            On the morning of March 6, Inner City Press three times called Ambassador Oh. First, his secretary said he would call back in 15 minutes. Inner City Press explained what it wanted to know. Then, she said that Amb. Oh had been called away on urgent business, and to leave the question in his phone-mail. Inner City Press did so, along with an additional question, and waited. The day ended with no response by the South Korean mission to a question referred to them by the Office of the Spokesperson for Ban Ki-moon.

   While Inner City Press did later on March 6 get a response from UNICEF's Ann Veneman, that UNICEF's operations will continue, we would be remiss to not note that UNICEF has acknowledged both hard currency payments and acceptance of seconded staff.  Here were UNICEF's first responses to Inner City Press:

Q.  Whether you pay salary, DSA, utilities, rent and other expense in hard currency (Euros, dollars or otherwise) in North Korea

A: DPRK -- Of the 30 UNICEF staff in the Pyongyang office, 10 are international professionals recruited through New York headquarters and stationed in Pyongyang for up to five years.  They have the bulk of their salaries paid to personal overseas bank accounts. Twenty are local staff.  For local staff, UNICEF transfers their salaries to the host government, which in turn is responsible for paying each of the 20 national staff members... they are selected by the Ministry of Foreign Affairs which then seconds them to UNICEF. 

            Inner City Press has asked numerous UNDP officials, and spokespeople, to specify which of the three listed conditions, including stopping payment in hard currency and acceptance seconded staff, could not be met by March 1. In light of UNDP's refusal to answer this simple question, it is difficult to understand Ms. Veneman's statement that that UNICEF, with the same practices, can and will continue operating.

  At the March 6 noon briefing, Inner City Press again asked that UNDP's Administrator Kemal Dervis, who signed the letter suspending operations in North Korea and who is reportedly the stealth manner of the suspension's delayed announcement, come and answer questions. From the transcript:

Inner City Press: Yesterday, I’m told the UNDP was here. I wasn’t able to hear what they said in the hall because we had a briefing on human trafficking. But I’m told that they said they now put the value of UNDP’s program in 2006 in North Korea at 4.4 million rather than 3.2 as was previously said. So, I’m wondering, the numbers are changing. Is it possible rather than have a briefing out in the hall to actually have UNDP come and answer questions?  Probably Mr. Dervis, since he signed the letter to suspend operations in North Korea...

Spokesperson:  I’ll transmit your request to them... Only UNDP can answer.

            Again, why are these questions, which purportedly only UNDP can answer, being asked? Well, sources tell Inner City Press that there are funds beyond those disclosed by UNDP's Ad Melkert in January, which he put the size of UNDP's North Korea program in 2006 at $3.2 million, and by spokesman David Morrison on March 5, $4.4 million. These undisclosed funds are alleged to be found in Trust Funds co-sponsored by South Korea's Ministry of Foreign Affairs and Trade (including under Ban Ki-moon) and the South Korea ministry for reconciliation, flowing to the North Korean government via a pass-through mechanism, with UNDP reported taking a four percent fee. Recently, Inner City Press has heard of UNDP taken even higher "overhead" fees for administering pass-through funds. We will have more on this. Developing.

In Wake of UNDP's Stealth North Korea Shut Down, Spin Machine Re-Starts

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, March 5, updated March 6, 10 am -- As questions grew about the UN Development Program's decision to suspend operations in North Korea, the UN's humanitarian coordinator on Monday said UNDP's program have had little humanitarian impact, and that other UN programs should be able to "operate reasonably normally" in North Korea. Video here, from Minute 35:46. But since other UN funds and programs pay -- in hard currency -- through UNDP, and since UNDP's Timo Pakkala is the Resident Representative of the UN in North Korea and will be pulled out of the country, the story is clearly far from over. Ironically, on March 13 Mohamed ElBaradei of the UN-affiliated International Atomic Energy Agency will travel to Pyongyang, from which UNDP is departing.

            Monday at Ban Ki-moon's spokesperson's noon briefing, numerous reporters asked questions about UNDP's stealth suspension of operations on March 2, while not announcing it to the press or public beyond an update, dated March 1, slipped on its website. Inner City Press asked if the suspension has the effect of slowing the "urgent audit" which UNDP called for. It remains Inner City Press' understanding that this is the effect and, sources say, intent. This analysis is missed or disagreed with the Wall Street Journal and by a Congressperson who congratulates the UNDP Executive Board for suspending operations. Currently it appears that Mr. Kemal Dervis probably made the decision to suspend, and made the decision to not announce it to the press.

Dervis should speak, w/ or w/o ice water

            In the back of the briefing room stood UNDP's head of Communications, David Morrison. The spokesperson at one point said that he -- "Jim," as in the band The Doors, one wag joked -- would answer questions. From the transcript:

Question:  I just wanted to follow up.  As I understand it, the UNDP’s statement was posted on their website but I don’t think that we got any announcement.  I would like to put in a request that on announcements, such as this, those announcements should be made to us, not just posted.  We don’t go and read the UNDP website all the time.

Spokesperson:  Well, I think we have someone from the UNDP here.  I’m not sure.  Yes, we do have Jim back there and he will be glad to answer your questions right after the briefing.

            But Mr. Morrison never came to the rostrum. Rather, between the noon briefing and a previously scheduled briefing by new Under Secretary General of Management Alicia Barcena, Mr. Morrison conducted what he called a scrum in the hallway outside the briefing room. Later he stated to Inner City Press, in response to still-unanswered written inquiries, that "all questions" had been answered in the scrum, which Inner City Press could not attend due to the Alicia Barcena briefing, click here for video, starting at Minute 33:08, and here for Inner City Press' story.

[Update of March 6, 10 am -- Mr. Morrison writes that

"This is just to note that you have your facts wrong:  I began the briefing outside of 226 AFTER the noon briefing was complete, i.e. after the segment with Ms. Barcena.  I did this so that everyone could attend."

  We stand corrected. UNDP's David Morrison's hallways briefing did not conflict with the press conference of USG for Management Alicia Barcena, but rather with a long-scheduled press conference about the trafficking of women, which Inner City Press also covered, click here for that story. A direct request has been made to Kemal Dervis and his spokeswoman for a briefing in the UN's Room 226, rather than outside while another press conference takes place inside. And a simple question has been asked. We'll see.]

            Out in the hall, Mr. Morrison apparently told Reuters that unnamed North Korean "officials want to discuss again a further narrowing of the program." Mr. Morrison is also quoted with a number -- $4.4 million -- that is different than Ad Melkert's previous provided figure of $3.2 million as UNDP's 2006 expenditure in North Korea. Which is it?

           Mr. Morrison wrote, "I’m responding to the questions you’ve sent to Timo, Hafiz, etc. on DPR Korea.  It’s a shame you didn't come to the scrum I did outside of 226 following the noon briefing, as I answered all questions at that time."

   Inner City Press immediately replied with specific written questions, not one which have been answered. Some of the questions were also posed directly to spokespeople for the Secretary-General, although one these incongruously referred the questions to the South Korean mission to the UN. Whatever it takes, wherever we have to go, we'll get to the bottom of this. For now, click here for UNDP's Kemal Dervis' March 2 letter to the North Korean mission. As with the U.S. mission inquiry, it was Ad Melkert rather than Mr. Dervis who attended and spoke at the meetings. Where is Mr. Dervis? The time has come, as Inner City Press has requested, for a Kemal Dervis press conference.

Other, earlier Inner City Press are listed here, and some are available in the ProQuest service.

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