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"Cash for Kim"
The new UN scandal goes beyond the UN Development Program
A new UN financial and mismanagement scandal began to emerge last week, first in the Wall Street Journal. The UN Development Program apparently has long been paying hard currency directly to North Korean dictator Kim Jong Il's government, contrary to UN rules and with lax or no monitoring of how the money is used. UNDP management seems to have known about these problems from internal audits dating back as far as 1999, but they allegedly did little or nothing to change things and kept the audit information from their member state donors and executive board.
Last week's revelations came as a result of the U.S.'s insistence, over UNDP objections, to examine the internal audit reports. What has that examination shown? In the words of U.S. Ambassador Mark Wallace: "[A]t least since 1998, the UNDP DPRK program has been systematically perverted for the benefit of the Kim Il Jong regime—rather than the people of North Korea. The UNDP DPRK program has for years been operated in blatant violation of UN rules, served as a steady and large source of hard currency and other resources for the DPRK government with minimal or no assurance that UNDP funds and resources are utilized for legitimate development activities. Importantly UPDP apparently has failed to bring the widespread violation of UNDP rules in the DPRK country program to the attention of the UNDP Executive Board."
Much of this would have occurred on the watch of Mark Malloch Brown, UNDP Administrator from 1999 to 2005. From 2005 until the end of 2006, Malloch Brown was Deputy Secretary-General to former S-G Annan—a position he was given when Annan's administration was reeling from the Oil-for-Food scandal, based on his supposedly excellent management of UNDP.
But the problem is bigger than just UNDP. As investigative journalist Claudia Rosett notes, "The UNDP, while serving as coordinator of U.N. programs in Pyongyang, is just one of about a half dozen U.N. agencies that have been operating in North Korea, including UNICEF, the UN Population Fund (UNFPA) and the World Food Program. Combined, these agencies have poured close to $2 billion worth of resources into North Korea over the past decade or so, according to U.N. records." All of them appear to conduct their work in the DPRK in much the same way as UNDP. (Indeed, Associate UNDP Administrator Ad Melkert, responding to last week's allegations, tried to justify UNDP's actions on the ground that other UN agencies operate similarly in North Korea. See UN Press Release and Mr. Melkert's press conference.)
To his credit, new Secretary-General Ban Ki-moon responded quickly, ordering an "urgent, system-wide" external investigation of all UN field programs, beginning with those in North Korea. UNDP has said that it will stop paying in hard currency in the DPRK and that it welcomes the investigation, which is expected to take at least three months.
Ban came into office promising many changes. We join Ms. Rosett in hoping that his investigation "marks the start of a real clean-up, both within the UNDP, and well beyond."