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At UNDP, Audit Delayed and Questions Deflected As Other Scandals Brew

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

UNITED NATIONS, March 13 -- The urgent audit of the UN Development Program called for by Ban Ki-moon on January 19 has been postponed for another week. UNDP spokesman David Morrison on Tuesday took questions on camera, and stated that UNDP has expended $47.5 million in North Korea in the past decade, $10.88 million of which was on behalf of other UN agencies, "the vast majority" being for the UN Population Fund. Asked about the $151 million UN Consolidated Appeal for the country issued in 2004, Morrison said he was not aware of the appeal and would get back to reporters with answers about it. Ten hours later, the answers had been provided to this or several other follow-up questions posed by Inner City Press.

            Morrison largely deflected questions by referring to the now-postponed audit, and saying he can't or won't answer until the audit is completed. Video here, from Minute 30:50 to 35:22. Morrison said, "On questions of site access, currency, computers and inventories... we think we should all wait for the results" of the audit that has yet to begin.

            A March 1 memorandum from Mr. Swatantra Goolsarran of the UN Board of Auditors to Kemal Dervis and the heads of UNFPA, UNOPS and UNICEF said that the audit would begin on March 12. Tuesday Inner City Press asked Morrison to explain the new one-week delay. Morrison said to ask the auditors, then added that it is his understanding that they couldn't get all the auditors in place by March 12. The memorandum states that there are only three auditors: team leader Ms. Odette Anthoo of South Africa, Mr. Dioni Abalos of the Philippines and Ms. Martine Latare of France.

   Tellingly, Morrison had less than a week ago been quoted as to his "understanding was that the agency had never had problems with site visits." Tuesday Inner City Press asked about this quote and Morrison claimed he "did not say they never had problem." But any discussion of the lack of access, according to him, must wait until the completion of a still-not-begun audit.

Work-for-food project in N. Korea, UNDP not shown

            Separately, the World Food Program's New York spokeswoman has explained to Inner City Press why WFP was not included in Mr. Goolsarran's March 1 memo, nor in the Board of Auditor's audit:

Subj: Audit 

Date: 3/13/2007 10:10:36 AM Eastern Standard Time

From: Spokeswoman of WFP

 To: Inner City Press

Dear Matthew, here's more on the audit request:

WFP does not fall under the control of the Board of Auditors (historic reasons dating back to our time as part of FAO whose EB requests external audits).  Our external audits can only be requested by our Executive Board. WFP's Executive Board at its first regular session from 19-21 February, took the following decision:

"Noting the Secretary General's proposal, the Executive Board decided to request the WFP external auditor to carry out a special audit of the WFP operations in the Democratic Peoples Republic of Korea as a matter of priority and report its findings to the Board. The WFP external auditor might wish to consult and coordinate with the UN Board of Auditors which may be undertaking a special audit of United Nations organizations in the Democratic Peoples Republic of Korea, including the United Nations Funds and Programs that fall within its mandate."

Given this decision, it is now up to the WFP external auditor to set up its audit schedule. Hope this helps.

            It does, including by contract to UNDP. When UNDP's Morrison on Tuesday was asked to explain still not having provided information that he on Monday committed to produce, he again referred to waiting to the audit. Given that on Monday he said, we'll get back to you with that, what changed in the past 24 hours? Nothing, Morrison said. And in the hours after Tuesday's noon briefing, the status quo of non-response was maintained. Two separate controversies that Inner City Press asked about -- video here, from Minute 40:30 to 42:39 -- and on which Inner City Press submitted follow-up email reminders including to Kemal Dervis, Ad Melkert and others, were left entirely unaddressed by UNDP. Watch this site.

            After telling Inner City Press on Monday that he had no idea what UN Resident Representative Timo Pakkala is bringing from Pyongyang to New York on March 17, Tuesday Morrison acknowledged having said that Pakkala is bringing electronic records, "the highest priority documents."

            Within UNDP, there is speculation one of the two UN official with intimate knowledge of the program" quoted in the Chicago Tribune's article which called UNDP an "ATM" for Kim Jong Il may be Timo Pakkala, and that the May 2006 warning referred to by the Tribune was a communication from Pakkala to Kemal Dervis. Others ask, what could Pakkala gain by blowing the whistle?  Morrison on Tuesday referred repeatedly to staffers' "recourse" in UNDP, and to "whistle-blower" protections. But the stakes are high.

   UN and UNDP staff who have due to their employment G4 visas to be in the United States, would be required to leave the U.S. within thirty days of termination.  A simple reform that the U.S. Congress could enact, advance earlier by this publication and to be reported on from Washington DC later this week, would be to amend immigration rules to extend any whistleblower's right to remain in the U.S.. Developing.

    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]

UN Office: S-453A, UN, NY 10017 USA Tel: 212-963-1439

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At UNDP, Scandal Allegations by Stefan Vassilev, Former Russia Resident Representative

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

UNITED NATIONS, March 12 -- As the UN Development Program denies widespread corruption alleged by the Chicago Tribune, while being subject to an "urgent audit" called for by Secretary General Ban Ki-moon, a previous UNDP Resident Representative in Russia has written to UNDP to complain about his treatment.

   Sources tell Inner City Press that this push-back by a former "Res Rep" who asserts that he was scapegoated is a cautionary tale for UNDP as it seeks to assign blame for those aspects of its operation in North Korea that have lead Mr. Ban to demand an urgent audit.

            Inner City Press previously asked UNDP about the fraud and theft reported, even in the agency's public audit, in its Russia operations. UNDP responded by blaming the fraud on previous Resident Representative Stefan Vassilev:

In a message dated 12/14/2006 7:01:32 PM Eastern Standard Time, cassandra.waldon [at] writes:

Dear Matthew,

Kindly find below responses to a number of your concerns. On UNDP’s Russia office...Stefan Vassilev served as acting Resident Representative from April until June 2003, and then as Resident Representative from September 2003 until August 2005... The discovery of suspected fraudulent activity triggered an internal investigation in June 2005. This investigation concluded that one payment amounting to $190,000 was fraudulent.  Additional payments that could be fraudulent were under investigation. Three former UNDP staff members, all locally employed Russian nationals, were implicated in the fraud. All three resigned from the Country Office before the investigation was launched.  When the extent of the fraud became evident, Mr. Vassilev was summoned to headquarters.  He was removed from his post in August 2005 and subjected to  disciplinary proceedings stemming from shortcomings in management performance and oversight. Mr. Vassilev is no longer employed by UNDP.

In September 2005, drawing on the evidence collected in the investigation, the UNDP Administrator made an official request to Russian law enforcement authorities to open a criminal investigation into the fraud. Such an investigation was opened by the Moscow Prosecutor and is currently under way, with UNDP’s active cooperation.

            Inner City Press reported UNDP's response, and added in a December 22, 2006 article that "now Inner City Press learns that Mr. Vassilev was a fall guy. We will be hearing more -- from, we hope, and about, we guarantee -- about Mr. Vassilev."

UN HQ - UNDP hidden

Subsequently, the very day that Ban Ki-moon wrote to the North Korea ambassador to ask for access to auditors, and the day before Kemal Dervis wrote to announce the suspension of operations in the country -- Mr. Vassilev wrote to Kemal Dervis and its putative Number Two, Ad Melkert:

From: Stefan Vassilev
To: kemal.dervis [at]

Cc: ad.melkert [at]
Sent: Wednesday, February 28, 2007 10:30:23 AM
Subject: Strictly confidential !

Mr Dervis,

My attention was drawn to some publications of Inner City Press where my name is mentioned in various contexts... Being loyal to the Organization I kept silence and low profile for years by now, which turned to be a serious detriment to me at the end. Meanwhile I was subjected to humiliation and harassment by senior managers including and mostly during your “watch” as UNDP Administrator. I wrote to you several times trying to bring your attention to what was going on and how the UNDP machinery was used to target me instead of concentrating on those really responsible. All this was done with facts and supporting documents as you would recall. All was in vein [sic]. I did not even get a receipt confirmation reply from you, though the system showed that you did receive the messages. At the end I was not only denied fair process (whatever it means within UNDP walls) but my contract was “conveniently” not extended while finally after much push on my side some in UNDP started to ask inconvenient questions about how the investigation was done, how I was treated, etc, etc.

I am not surprised that Inner City publishes this kind of materials [from] UNDP staffers into major news story along with the real stuff they report on. But in many cases they are helped by the sloppiness and incompetence of your respective staff, the silence of UNDP or even by deliberate actions. It also applied to my case, where the instruction by MMB was given during a meeting at the very beginning of August 2005 (Kalman and Brian Gleeson were there) to concentrate the blame on me, remove me from the post (contrary to the OAPR advice) so that I could no longer dig-up into the fraud schemes dating even before year 2000. And a sloppy conspiracy was arranged (involving ladies close to Kalman). Facts and documents of all this recently surfaced and I copied some of them to you and other high level UNDP staff. No action however seemed to be taken with regard to those involved. Not to speak of talks and hints by Brian Gleeson of my future appointments within the system "once I help this to be over" and pressure/requests by other officials who wanted to use me in their internal games against each other. I.e. "accept the blame as defined by MMB even before the investigation really began and you will be taken care of one way or another". Such talks were even taking place at the last minutes of Brian's tenure as Director of OHR and days after I was no longer UNDP staff-member. As you are perfectly aware I opted for something else, which was the only moral action possible, i.e. rejected all attempts to be involved... and paid the price, which according to your staff is high enough: losing D-level job at UN. Well, I however preserved my dignity at least. 

All of you also "conveniently" forgot what I was sent for to Russia and what I have done to not only preserve the UN presence in Russia, but to transform the UN resident system into a key actor in crucial and delicate areas, including the conflict region of Chechnya. It was under my watch that UNDP and UN in Russia turned from "non grata" actors to success story for all sides and the RC system started to finally functioned. Not least, it was during my watch that international hostage taking not only stopped, but hostages started to be release and UN presence in North Caucasus not only expanded but survived without any loss the bloody events in Ingushetia an as in the case of Beslan was there the first to offer organized help. If you consider this to be my own over-estimation I could DHL you couple of kilograms of letters from the UN SG, respective USG/Heads of Agencies, foreign donors, top management, etc...

 By now and after all happened I do not have much respect to UNDP, its previous or current management, however, my own system of values dictate me to write this to you and to let you know about what I feel. Though I seriously doubt it, in case you have anything to say to me, I could be reached via this e-mail address. Please make no mistake: I do this only because of the good part of the memories I have about UNDP and my understanding of personal integrity and I do not want or expect anything from you. S. Vassilev   

            The referenced Kalman is Kalman Mizsei; as Mr. Vassilev's message makes clear, no discussion of him is complete without reference to "his ladies," many of whom continue in the posts he doled out until he unceremonious departure in September 2006.  UNDP's negligence, or kowtowing to Mizsei's protector, have played a role in his appointment to represent the European Union in or to Moldova.

            The "MMB" is, of course, Mark Malloch Brown, long-time administrator of UNDP, now at Yale University writing a book that is not predicted to include the material raised and seen by Mr. Vassilev and others.

            While Inner City Press is continuing to inquire into much Vassilev-related material that has come in, on Russia and other matters, UNDP now does not even provide information it publicly commits to sending (click here for that story), about its North Korea scandal which led to Ban's call for an urgent audit. That beyond the way Inner City Press was provided with the email, additional sources also offered it, cannot bode well for UNDP. The Chicago Tribune's story alleging more widespread problems quotes at least two "UN officials with extensive knowledge of the program" in North Korea. Resident Representatives, while UNDP-administered, are "UN officials," with UN (and not UNDP) contracts. It is in this context, UNDP sources tell Inner City Press, that. Mr. Vassilev's recent message and the material annexed and referred to is such a cautionary tale for UNDP. When you throw a Res Rep under the bus, trying to confine the blame to that level, you risk dark secrets coming out. Developing...

On N. Korea, Ban Ki-moon Refers Press to UNDP, Which Refuses to Provide Promised Information

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

UNITED NATIONS, March 12 -- The UN Development Program on Monday flatly denied a Chicago Tribune story that it has paid envelopes of cash in North Korea, and that it has had an difficulty in visiting projects in the country, including those executed by the Kim Jong Il government.

   Speaking to reporters off-camera after the regularly scheduled (and televised) noon briefing, UNDP spokesman David Morrison complained that when he was interviewed by the Chicago Tribune, he was not asked about envelopes of cash nor about the 300 (or 298) phantom computers that ended up in the story. In response to questions from correspondents including Inner City Press, Morrison promised to verify and provide at least five pieces of information. Inner City Press twice verbally asked to be provide with the promised information, and committed the request to an email by 2 p.m. Monday. This request is set forth below. Eight hours later, UNDP had not provided any of the information to Inner City Press.

            During the noon briefing, as transcribed by the UN, Inner City Press asked:

Inner City Press: On the North Korea update you gave and on the audits, I’m definitely glad that we'll speak to Mr. Morrison afterwards.  But this is for you, as the Spokesperson for Ban Ki-moon.  Is the UN-administered staff, Timo Pakkala, the Resident Representative leaving; and, if so, who is going to be Ban Ki-moon's Representative in Pyongyang now that he leaves?  And, also on the audit, we've seen a memo from the Board of Auditors to four agencies -- UNDP, UNOPS, UNFPA and UNICEF... Has there been any response to Ban Ki-moon's 28 February letter?  

Spokesperson:  I think you should direct all those questions to UNDP.  We've already answered as much as we could.

Inner City Press: There are three other agencies.  That’s why I'm directing it to you.  I don't think he can answer for UNFPA or anybody.

Spokesperson:  Well, the process is continuing.  I told you that the other day.  It's starting with UNDP.  And it's going to continue for other agencies.

Inner City Press: But why is WFP not on the list, but UNICEF is?  Who do we ask that?  Obviously it's not UNDP.

Spokesperson:  I can find out for you from the Board of Auditors how they are going to proceed and what is going to be the next audit.

Inner City Press: Is Timo Pakkala leaving?  Who is the Resident Rep or Resident Coordinator?  Who is going to represent the UN?

Spokesperson:  This is a question to be answered by UNDP.

            UNDP's David Morrison did not answer who the next UN Resident Representative in North Korea will be. In fact, Mr. Morrison claimed not to know the name of the Deputy Resident Representative being left behind -- that would be Vineet Bhatia -- and, of the country officer whom Mr. Morrison said has been visiting North Korea four times a year, Morrison claimed not to know his last name, only his first: Napoleon (that would be Napoleon Navarro).

David Morrison: once upon a time

            One correspondent asked Morrison if he is in any position to authoritatively deny the Chicago Tribune's report. Morrison said that he is. Inner City Press asked if UNDP administered and handled the $10 million that the World Health Organization had responded that it received from South Korea for North Korea.

  "I don't know about WHO," Morrison answered. "I do know that there is no earmarked South Korean money that has gone to UNDP going back, I believe, ten years. There is no trust fund for North Korea that UNDP has been involved in." We'll see. Even in UNDP's most recently public audit, there is for example a "UNDP / Republic of Korea Trust Fund."  That is only one example.

            Morrison was asked, repeatedly, to provide a total figure of money UNDP has expended in North Korea, on its own behalf and for other UN agencies. He was asked, "Can we get the figure?" He answered, "Sure." Inner City Press asked Kemal Dervis for this figure on February 1, 2007, and never got it. Ad Melkert was asked for the figure in mid-February, and still not. On March 12, UNDP spokesman David Morrison promised the figure, and nine hours later had not provide it, nor any explanation.

            Morrison did say that the DPRK has not responded to UNDP's March 1 letter announcing the suspension of operations, and that UNDP has told the International Atomic Energy Agency to find another UN agency to make its payments in North Korea for now.  Morrison was asked if UNDP has any system to make sure its payments for other agency actually go for the stated purpose. Morrison said he would check and get back. Nine hours later, no answer had been provided. Morrison said he does not know how long UNDP's lease in North Korea runs for.

            While he is quoted in the Chicago Tribune that Timo Pakkala is bringing documents from Pyongyang to New York in electronic form, when Inner City Press on Monday asked him what documents Mr. Pakkala is bring, Morrison said, "I don't know."

            Unrelated to North Korea -- and Inner City Press has many such questions, but it seems pointless to ask them, when even promised information about North Korea is not provided -- Morrison was asked to describe UNDP's programs in Zimbabwe, and if they will be modified in light of last weekend's crackdown on all opposition by Robert Mugabe, and Ban Ki-moon's condemnation of the crackdown. Morrison answered to the first question, about current programs, "I can look into it." As to the second question, to which Inner City Press added the specific question if UNDP will  continue to push for a Mugage-sponsored human rights commission, Morrison said, "I don't know." But we've heard that before...

            Here are questions Inner City Press reiterated in writing to two UNDP spokespeople at 2 p.m. on Monday:

Subject: Re: DPR Korea - follow-up to "scrum," the various items, thanks in advance

From: Inner City Press
To: david.morrison [at]>, christina.lonigro [at]
Date: Mon, 12 Mar 2007 14:00:13

Hello --

   Following up after the post-noon briefing hallways scrum, I want to be sure to get the various things you said you'd look into and get back with:

--the overall figure / dollar volume that UNDP expended in / for North Korea, including on behalf of other UN agencies;

--whether in payments of other agencies, there has been anything other than purchase and bill accordingly;

--if UNDP has in place any system to check on the use of funds paid for others, any (by analogy) Know Your Customer system such as banks have;

--information on visits by UNDP headquarters staff to North Korea.

Also, would like to know when the Pyongyang lease expires, how much it costs and how and to whom it is paid. And please do keep informed regarding the new Resident Representative.

  There are other, non-North Korea questions, and even North Korea but non-scrum questions, but not in this email.

            There were and are even some "non-scrum" and non-North Korea questions. But none of the above had been answered by 10 p.m. Monday, eight hours after the questions were posed in writing. Developing.

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.

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]

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.

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

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