Second Probe of UNDP-North Korea Scandal Set to Begin

Second Probe of UNDP-North Korea Scandal Set to Begin
Saturday , July 07, 2007

By George Russell

The next round in the investigation of the United Nations Development Program’s scandal-tainted operations in North Korea is about to begin.

The question is whether it will be any more successful than the original probe in getting a clear picture of a UNDP program that the U.S. government, among others, charges was hijacked by the communist government of Kim Jong Il and funneled millions in UNDP hard currency into North Korea’s nuclear weapons program.

Another big question is how much, if any, of the UNDP’s documentation will be turned over to the auditors this time for inspection. The bulk of that documentation is still in U.N. safekeeping in Pyongyang — where the previous group of auditors was barred by Kim’s government.

The bell for Round 2 was quietly sounded nearly two weeks ago, in a June 29 letter from the United Nations’ board of external auditors to a U.N. General Assembly committee that examines budget issues. A copy of the letter has been obtained by FOX News.

The letter announces that the auditors, at the urging of U.N. Secretary General Ban Ki-Moon, will make a second attempt to probe the depths of the UNDP’s operations in North Korea, which were suspended in February after the Kim regime refused to accept a variety of new restrictions sparked by the U.S. accusations. When the new auditing effort will begin is not specified.

The North Korean government refused to cooperate in the first U.N. audit, which was published on May 31, and which corroborated many of the U.S. accusations, based in turn on confidential UNDP inspections done in previous years.

According to the Round 1 auditors, UNDP made unauthorized hard currency payments to the North Korean government, not only for its own work in North Korea but for a variety of other U.N. agencies — at least $72 million from 2002 to 2006.

UNDP had hired 22 of its 31 staffers locally, in some cases in oversight roles. The local employees were not only nominated by Kim’s dictatorship, but remained North Korean government employees. The auditors also declared that many inspections of UNDP development projects in North Korea were only carried out under North Korean escort and in some cases by the same local North Korean employees.

Despite all that, UNDP officials declared the initial audit an exoneration, leading to declarations of “dismay” by U.S. diplomats.

Since then, the issue has further morphed into a point of visible tension between the U.S. mission to the U.N. and top UNDP officials, especially the multibillion-dollar agency’s No. 2 man, Associate Administrator Ad Melkert, who allegedly threatened “retaliation” against the U.S. in closed-door meetings over the North Korea affair. Melkert and UNDP have strongly denied the allegation.

For their part, U.S. officials raised the stakes further by documenting additional UNDP fund diversions, in some cases to known North Korean weapons developers, from their own sources. UNDP has in turn rejected the U.S. allegations as based on false evidence and challenged U.S. diplomats to come up with more and better documentation.

All told, the confrontation has marked an extraordinary watershed in relations between the $5 billion U.N. flagship development agency and its largest single financial supporter. The U.S. contributes roughly $100 million to the UNDP budget and is a member of its overseeing 36-nation Executive Board.

The question is whether a further audit will clear the air — or add to the fog.

The auditors themselves do not appear to be entirely sure.

In the letter to the U.N. budget committee, the head of the U.N. auditing board, Philippe Seguin, gingerly declares that a second probe “will provide additional evidence” to back the conclusions of the initial report.

But the auditors backed away from recommendations in the earlier document that urged the U.N. seek “accountability” for the lapses outlined in its first report and attempt to trace where UNDP money might have migrated in North Korea once it left the agency’s hands.

Nor will the new probe attempt to clarify another explosive issue: the discovery of at least $3,500 in counterfeit U.S. money that had apparently been stowed for years in a UNDP safe in Pyongyang. Such efforts would be “investigative,” Seguin says, and thus outside the auditors’ mandate.

Finally, the new probe will depend once again on the whims of North Korea’s rulers on whether the inspectors will get to visit Pyongyang at all. Seguin’s letter makes clear that the auditors require “unrestricted access” to UNDP and other U.N. operations in North Korea, as well as visas, housing, and “agreement on access to all project sites.” All were refused for the first audit.

If that permission is not granted, UNDP officials have promised that they will bring their documents, both paper and electronic, out of North Korea for inspection — something the U.S. has demanded since before the initial audit took place.

But that in turn could raise questions about whether any of the records were erased or suppressed in the months since the controversy surfaced—or even if they all have then made the trip back from Pyongyang.

All such sparring, however, lies far ahead — provided that the U.N.’s promise to keep probing continues to be honored.

George Russell is executive editor of FOX News.




COMMENTARY


A Whistleblower's Tale
By MELANIE KIRKPATRICK
July 6, 2007; Page A9

It's been more than six months since the U.S. first shone a light on the corruption in the United Nations Development Program in North Korea -- a scandal potentially involving tens of millions of dollars used to help prop up the nuclear-armed regime of one of the world's most dangerous dictators. But never mind. It's all a Bush administration plot.

Such, apparently, is the considered view of the UNDP, which has spent the past half-year variously disputing the U.S. disclosures, justifying UNDP actions on "humanitarian" grounds, or offering an "everyone-does-it" defense. Ad Melkert, the former Dutch politician who is the No. 2 official at the UNDP and the point person for oversight of the program, even threatened to "retaliate" against the U.S., according to Zalmay Khalilzad, U.S. ambassador to the U.N.


In any case, Mr. Melkert seems to be more worried about his own job than the integrity of the organization he leads. In a June 23 article titled, "Smear Campaign, U.S. Against Melkert," the Dutch daily De Telegraaf, citing "insiders at the UNDP," reported that "conservative forces in the American government want the scalp of Ad Melkert."

So it's perhaps the right moment for a reality check courtesy of the man who blew the whistle on it all -- Artjon Shkurtaj, an Albanian-born accountant who served as chief of operations for all U.N. operations in North Korea from November 2004 to September 2006. Mr. Shkurtaj -- a veteran of UNDP programs in Bangladesh, East Timor, Kosovo, Mexico, India and elsewhere -- was outraged at the violations he encountered in North Korea. After two years of trying to persuade his superiors at UNDP headquarters in New York to take corrective action, he took his information to the U.S. mission to the U.N. in May 2006. The UNDP responded by firing him this March.

A preliminary report by U.N. auditors, issued last month, confirms massive violations of U.N. rules regarding hiring practices, the use of foreign currency, and inspections of U.N.-funded projects. In a series of interviews in New York, Mr. Shkurtaj says the auditors (who were barred by North Korea from going there) barely scratched the surface of the misconduct.

We get quickly to the bottom line: Did the U.N. money go to the humanitarian projects it was supposed to fund? "How the hell do I know?" responds Mr. Shkurtaj -- oversight was so poor, the involvement of North Korean workers assigned by the government so extensive and the use of cash so prevalent, that it was impossible to follow the money trail.

Mr. Shkurtaj arrived in North Korea on Nov. 4, 2004. He says one of his first indications that something was amiss was when checks denominated in euros and made out to "cash" arrived on his desk for signature. "Rule No. 1 in every UNDP country in the world is that you have to operate in local currency," he says, "not in hard currency. It's the rule number one of development. . . in order to support the local economy and not devalue or destroy the local currency."

"I didn't sign the checks for about a week," he says, and then "it became a real mess. Headquarters contacted me, and said, 'don't become a problem. You're going to wind up a PNG, a persona non grata, and ending up a PNG means the end of your career with the U.N. . . . We are authorizing you to go ahead and sign the checks . . . So I started signing."

"Every morning from 8 to 10, we would issue checks" in euros for staff and projects, Mr. Shkurtaj says. "Then the checks, instead of going directly to the people or institutions by mail, as they should go [as specified by U.N. rules], the checks were given to the driver of our office." The driver would take them to the Foreign Trade Bank, where he would "exchange them into cash and come back to the office." North Korea did not permit Mr. Shkurtaj to have access to the UNDP's accounts at the Foreign Trade Bank, which refused even to keep his signature on file.

Then, every day at noontime, "North Koreans saying they represented U.N.-funded projects would come to receive cash at the UNDP offices." Mr. Shkurtaj says he was not allowed to require the North Koreans to sign receipts for the money or even to present IDs. "I had to trust them," he says. "But, hey, if headquarters tells me to give the money away, I'll give the money away."

On Aug. 16, 2006, a few weeks before Mr. Shkurtaj left North Korea, the UNDP resident representative, Timo Pakkala, issued a memo to the staff noting "an increased use of cash payments, in some cases to payees that are not authorized to receive payments." Citing "UNDP policy," Mr. Pakkala ordered future payments be made by bank transfer or "non-cash cheque." He also ordered staff to obtain receipts and not give money to unidentified people.

Mr. Shkurtaj says nothing happened. "The same routine continued." On Jan. 31, in a memo to Kemal Dervis, head of the UNDP, he urged that "the cashing of checks from the UNDP driver must be stopped and UNDP must demand access to the Foreign Trade Bank in all transactions with our accounts."

As the recent U.N. audit confirmed, the North Koreans who worked at UNDP were selected by the Ministry of Foreign Affairs, which also collected their salaries; both practices were violations of U.N. rules. Mr. Shkurtaj notes, too, that North Koreans selected by the government performed "core" functions such as dispensing cash -- another violation of the rules. All communications tools -- fax and telex equipment, computer servers, the local area network -- "were in the hands of the North Koreans." "All the backup data [for the office's computers] were in a storage place completely isolated with a North Korean the chief of it." When Mr. Shkurtaj wanted to file a secure report, "I would go use the telex and communications satellite at the German embassy or other embassies in the compound."

A North Korean -- Li Kum Sun -- controlled the office safe in her job as "finance officer." "Damn it," says Mr. Shkurtaj, "you had security-evacuation plans in the hands of a North Korean. It's unbelievable." One of his few on-the-job successes was to get control of the safe and petty cash taken away from Ms. Li and handed over to him in March 2006.

The U.N. audit also found numerous irregularities regarding on-site inspections of UNDP projects. Most projects are located outside Pyongyang, and Mr. Shkurtaj says one way to determine whether the required annual field visits actually took place is whether the inspectors filed expense accounts. "Everybody -- meaning one driver, one translator . . . and one or two international staff would have received per diems," he says, or submitted vouchers for gas or overtime. "That is the proof that people checked the project." Yet, "in nearly two years in North Korea . . . I signed for a maximum of two or three" such trips.

Mr. Shkurtaj recounts two inspections he attempted to carry out himself. In one case, UNDP paid for 300 computers intended for Kim Il Sung University. "Instead of the computers coming to UNDP, they went to a warehouse outside town and we were allowed to inspect them only after a month and a half of fighting [with the government]. Then we were allowed to inspect only one computer in one box. The other boxes were not allowed to be opened."

Another inspection charade involved GPS equipment supposedly going to an agricultural project on flood control. "They didn't allow us for three and a half months to see the GPSs that we gave them," Mr. Shkurtaj says.

Finally, he says, "they took us to the outskirts of Pyongyang, to an empty building, completely empty -- no desk, no chairs, no nothing. We come in and go to the first floor. Empty. We go to the second floor. Empty. On the last door of the second floor, we enter. There is only one desk in the middle of the room, and on the desk are the GPS devices that we provided. Now, you're telling me we are providing GPS devices for an empty building, without people working inside?"

During the years he worked for UNDP in Pyongyang, Mr. Shkurtaj says he filed numerous reports to his superiors but got nowhere. Finally, with several months to go in his tour of duty in North Korea, he was recalled to New York.

He says that David Lockwood, deputy assistant administrator of the UNDP, told him, "Look, it would be good for your future if you come to New York and from here we'll send you somewhere else in the world. But you have rocked the boat too much right now and you should leave for your own good."

Mr. Shkurtaj's last day in North Korea was Sept. 26, 2006. When his contract came up for renewal in March -- the vast majority of U.N. employees operate under work contracts -- he was told that after 13 years of employment at UNDP his services would no longer be needed.

A few months before his dismissal, he received an "outstanding" rating in his annual review, dated Dec. 14, 2006 and signed by Romulo Garcia, chief of the Northeast Asia and Mekong Division. Mr. Garcia described Mr. Shkurtaj as "quick, professional, highly competent, creative, hard working and dedicated."

Mr. Shkurtaj has filed a complaint with the U.N. Ethics Office, asking for reinstatement under the U.N. whistleblower protection policy. Yesterday Rep. Ilena Ros-Lehtinen, ranking Republican on the House Foreign Affairs Committee, wrote U.N. Secretary-General Ban Ki Moon asking him to look into Mr. Shkurtaj's dismissal. His case "appears to be a fundamental test of the UN's whistleblower protection policy, one of the touted hallmarks of internal U.N. reform in recent years," she writes. "It is also highly relevant to whether UNDP has adequately internalized the need for increased transparency and accountability." Her request followed a similar letter to Mr. Ban last week from Sen. Norman Coleman, asking that Mr. Shkurtaj be accorded whistleblower protection.

Meanwhile, Mr. Shkurtaj has sent his wife and two children home to Italy -- he is an Italian citizen -- and is fast depleting his savings. He says he is "living like a bum" in New York.

Ms. Kirkpatrick is a deputy editor of the Journal's editorial page.






REVIEW & OUTLOOK


Kim's U.N. Banker
June 11, 2007; Page A12
The case of the United Nations and North Korea gets curiouser and curiouser. Only a week ago, the U.N. was claiming that a preliminary audit of its programs in North Korea showed "irregularities" that were no big deal. But now the U.S. has new evidence that U.N. funds intended to help the people of one of the world's poorest countries were diverted to prop up Kim Jong Il's regime.

The latest chapter in the Cash for Kim saga shows how the United Nations Development Program operated as the North Korean dictator's private banker. The U.N. agency facilitated Pyongyang's purchases of high-tech equipment that could be used for military purposes, as well as property in France, Britain and Canada. The outlines of the scam were reported over the weekend in the Chicago Tribune and Washington Post.

The details are worth studying, however, both for what they show about the sophistication of Kim Jong Il's financial manipulation and the lack of oversight by the UNDP. Unlike the $100 billion Oil for Food scandal, there's no proof that UNDP officials were in on the game, but there's plenty of evidence of willful blindness.

Many of the transactions were carried out through North Korea's National Coordinating Committee for UNDP, established at the Ministry of Foreign Affairs for the ostensible purpose of financing UNDP's "NEX" projects and other activities. In U.N. lingo, NEX stands for "nationally executed" and refers to programs funded by the UNDP but staffed and operated by the country in which they are located. In North Korea -- where many projects were subject neither to site visits nor careful audits -- "NEX" apparently stands for "non-existent."

The U.S. says it has documents showing that more than $7 million in UNDP money between 2001 and 2005 often ended up elsewhere. The North Koreans transferred $2.7 million for "goods and equipment" to Zang Lok Trading Co., based in Macau. Zang Lok has ties to Tanchon Commercial Bank, which was designated in 2005 under President Bush's Executive Order 13382 as the main North Korean financial agent for sales of WMD. Doing business with Tanchon violates U.S. law.

Another $2.8 million was transferred to North Korean missions in Europe and New York to "cover buildings and houses," according to the payment details. A familiar name turns up in this transaction -- Banco Delta Asia, the Macau bank sanctioned for money-laundering by the U.S. Treasury. The payments went through accounts at Banco Delta Asia at the direction of International Finance and Trade Joint Co., another Macau-based entity.

Then there's the dual-use equipment. In May of last year, the UNDP procured and delivered to North Korea global positioning system equipment, a portable high-end mass spectrometer and a large quantity of high-specification computer hardware. The purpose? The equipment was designated for what the UNDP called an "agricultural assistance project for landscaping," supposedly to help with flood control. The U.S. says the UNDP country program for 2005-2008 mentions no such project.

The U.S. has also raised concerns that North Korea used the UNDP to cover up its counterfeiting. The UNDP often paid for foreign travel for North Korean officials. In a number of cases, North Korean employees of the UNDP appear to have abetted a money-laundering scheme involving real dollars and fake dollars and the UNDP's euro account at the Foreign Trade Bank in Pyongyang. The real dollars were pocketed by the government, while the fake ones were distributed by North Korean officials on their foreign travels.

We're told that U.N. Secretary-General Ban Ki-moon claims to be "shocked" by these latest U.N. findings. We hope that means he's finally motivated to buck the U.N. bureaucracy and insist on the independent, external audit of U.N. operations in North Korea that he promised in January. As these revelations show, there's a long way to go before we get to the bottom of the Cash for Kim scandal.





REVIEW & OUTLOOK

U.N. Cash for Kim
Echoes of Oil for Food in hard currency for Pyongyang.

Friday, January 19, 2007 12:01 a.m. EST

The U.N.'s Oil for Food disgrace rolls on, with this week's indictment by a federal prosecutor in New York of the program's former administrator Benon Sevan. But now a new dollars-for-dictators scandal is breaking into the open, this one involving the U.N. Development Program (UNDP) and North Korea's Kim Jong Il.

Our Melanie Kirkpatrick lays out many of the gory details here, based on documents reluctantly produced by the U.N. after prodding by American officials. The tale is similar to Oil for Food in that money for programs designed to benefit North Korea's poor appears to have been used instead to sustain the government. While the total amount of cash spent by the UNDP in North Korea isn't clear thanks to the opacity of U.N. record-keeping, any hard currency is manna from Turtle Bay for the isolated Kim regime. If dollar amounts into the tens of millions over nine years are accurate, that's money that would have helped Kim stay in power and continue his nuclear weapons program.

The documents we've seen follow the program back to 1998 and the era of detente between Kim and the Clinton Administration. But what's especially alarming is that the UNDP's programs have persisted in North Korea even as Kim has banished U.N. weapons inspectors, raised the volume on his threats, tested long-range missiles and even tested a nuclear weapon--all in defiance of the U.N.'s own stated positions and Security Council sanctions.





A defense that the UNDP merely does humanitarian work--for the people of North Korea and not the government--isn't credible given the details exposed by Ms. Kirkpatrick. U.N. officials can't even say with confidence that all of the "development" projects exist because they haven't been allowed to visit their sites. Pyongyang officials insist on payments in cash that become fungible hard currency for the regime. Every U.N. dollar is one more that Kim doesn't have to raise from other (and often illegal) sources to pay off his generals or to buy a nuclear centrifuge.
The desire in some circles, including parts of the U.S. State Department, will be to dismiss all of this as no big deal because the bigger game is getting Kim to end his nuclear program. So why let a little more U.N. corruption, or incompetence, interfere with serious diplomacy?

Well, one reason is because we still don't know how wide or deep this scandal is, especially if it extends to other U.N. programs operating in North Korea. Another is that any cash to Kim contradicts U.N. and U.S. policy and helps ease pressure on the dictator to give up his nukes. And then there is the matter of the U.N.'s own credibility and failure to reform. In the wake of Oil for Food especially, why would U.N. officials allow this program to continue?

The generous explanation is incompetence, or perhaps the kind of feckless idealism that really believes such a program helps poor Koreans apart from Kim's regime. But given the U.N.'s recent track record of indictments for corruption, more venal motives need to be investigated. And it is also worth asking whether outright hostility to the U.S. policy of trying to isolate Kim has also played a role.

Whatever the motive, the Cash for Kim scandal is one more blot on the record of former Secretary General Kofi Annan. It also raises questions about the role played in North Korea by Maurice Strong, the Canadian who was Mr. Annan's envoy to Pyongyang.

We'd feel a lot better if the U.N. had quickly responded to U.S. queries and tried to get to the bottom of the mess at UNDP. But the exchange of letters between U.S. Ambassador Mark Wallace and UNDP officials described by Ms. Kirkpatrick is certainly reminiscent of the early U.N. stonewalling on Oil for Food.





Mr. Wallace and his colleagues from other nations on the UNDP executive board are right to demand a stop to the program and an independent investigation. The U.N.'s new Secretary General, Ban Ki-Moon, could make his own early mark by calling for a probe as part of a new era of U.N. transparency. Democrats in Congress could also be constructive by insisting on accountability, especially given how much stock they put in a competent U.N. to promote American security.
One lesson of Oil for Food, and its failure to lead to any serious reform, is that to some foreign policy elites there can be no such thing as a U.N. "scandal." That's because for them the U.N. is all about good intentions, and the hopes and dreams for peace, rather than about actual results. But it is precisely that forbearance that has allowed too many dictators to exploit the U.N. for their own purposes, and has brought Turtle Bay to its current low ebb. Getting to the bottom of Cash for Kim is one more chance to make the U.N. shape up, and to stop financing a global menace in the bargain.

U.N.'s 'Cash for Kim' Scandal: Ban Should Look Next at North Korea, World Food Program

By Claudia Rosett
Fox News
January 22, 2007

Bravo to the U.S. Mission to the United Nations for digging into the doings of the U.N. Development Program (UNDP) in North Korea and uncovering streams of cash flowing via the UNDP to Kim Jong Il’s regime.

That story, broken last week by FOX News and the Wall Street Journal, presents the U.N.’s new secretary general, Ban Ki-moon, with his first big test. Ban has responded by promising an “urgent” outside investigation of the global U.N. system, in which this latest scandal is just one tip in a flotilla of icebergs.

The challenge now is to ensure that Ban’s proposed investigation does not turn into yet another ritual cover-up, but instead marks the start of a real clean-up, both within the UNDP, and well beyond.

Most immediately under the microscope is some $27.7 million spent by the UNDP in North Korea over the past decades — with stunningly lax oversight.

The U.S. is questioning the extent to which the UNDP has been providing “Cash for Kim,” as the Journal, in deference to the U.N.’s Oil-for-Food debacle, dubbed the scandal.

In a press conference on January 19, defending the UNDP’s actions as perfectly aboveboard, Associate Administrator Ad Melkert, the organization’s No. 2 man, said, “We’re not talking about hundreds of millions of dollars.” Then, he added: “Over a period of 10 years it is of course tens of millions.”

Actually, this scandal points to a great deal more than that, even if Ban focuses for now only on U.N. operations in Pyongyang. 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 U.N. 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. They have done this on terms giving Kim big opportunities to divert goods and charge fees for the benefit not of hungry North Koreans, but for his military and his gulag-running, missile-vending, nuclear-bomb-testing regime.

Of these billions in U.N.-dispensed largesse, the biggest portion by far has come via the World Food Program.

Since 1995 the WFP, according to its Web site, has shipped into North Korea more than four million tons of “commodities” — including such goods as rice, wheat and corn — valued by the WFP at $1.7 billion. A big part of this came courtesy of U.S. taxpayers, sent via the U.N. before Kim was busted in 2002 by the Bush administration for cheating on a 1994 aid-for-nuclear-freeze deal signed during the Clinton administration. For two years after that, the U.S. kept donations coming; then, since 2005 has refused to chip in. But even today North Korea continues to receive millions worth of resources via the WFP. And, the patterns appear disturbingly similar to the UNDP practices now under fire.

In the case of the WFP, Kim Jong-Il a little over a year ago gambled – successfully – on a ploy that dramatically reduced the WFP’s already limited ability to check where its aid really went. Kim’s regime declared in late 2005 that North Korea had no more need for direct food aid. But instead of closing up shop in Pyongyang, the WFP negotiated a new deal, which caved in to demands of Kim’s regime. The WFP agreed to cut back on the range and frequency of its monitoring trips and also promised to funnel some of its resources through state-run development projects. Under the label of a “Protracted Relief and Recovery Operation,” the WFP launched this arrangement last year, authorized it to run until March 31, 2008, and called for international contributions worth $102 million.

With the U.S. still holding off on aid, the WFP, according to a Jan. 17 bulletin on its Web site, has so far garnered only about 16 percent of what it asked for – resources worth $16.3 million. While a disappointment for the WFP, that amount still represents a handsome gift to Kim’s regime. A WFP spokesman, reached by phone in Bangkok, confirms that a number of the items listed in the Protracted Relief plan under a “project cost breakdown,” represent hard cash paid to the North Korean regime, or to local employees supplied – and vetted by — the Kim government.

Such items include $5 million for transport, storage and handling of the free food shipped in by the WFP; $1.39 million for “staff duty travel” within North Korea, including transportation and state guesthouse lodgings for WFP workers trying to monitor aid; $447,200 for “National consultants”; $106,400 for utilities; and $279,700 for “other office expenses.”

Under the heading of “Staff,” there also is an intriguing provision for $321,100 worth of “incentives.” The WFP spokesman explains this is projected funding to let international staff based in the hardship post of Pyongyang leave the country every six weeks for R&R – a trip that usually involves using hard currency to buy a plane ticket from North Korea's state-run Air Koryo.

Even with the WFP operating on a much lesser scale than originally envisioned in its most recent appeal, there appears to be room here for Kim’s cash-hungry regime to eke out millions for itself from this two-year project. To justify its continuing presence in North Korea, the WFP, in documents posted on its web site, provides such oblique comments as, “The capacity to import on commercial terms is limited so the country falls short of meeting its minimum needs year after year.” This comes at the end of a paragraph also attributing food shortages to “an unfavorable agricultural situation, general economic decline, environmental problems and natural disasters.”

But the WFP fails to mention the root cause of all this misery, which is the despotic Kim regime. It has systematically repressed and isolated North Koreans, starving to death an estimated one- to two-million people in the late 1990s, and stunting their lives today in order to keep its grip on power.

This regime is the overwhelming reason the economy remains rotten, the country remains so desperately vulnerable to floods and droughts, and commercial imports remain “limited.” All while the same North Korean government that is collecting overhead from UN agencies in Pyongyang enjoys seats on the executive boards of the UNDP, its affiliate the U.N. Population Fund (UNFPA), and of UNICEF – not to mention membership in the U.N. Disarmament Conference.

The WFP Web site includes a photo of the agency’s regional director for Asia, Tony Banbury, shaking hands with North Korea's director general for international organizations, Ri Hong-Sik, at the signing last year of the WFP’s new deal for North Korea.

That same director general currently is spending two weeks in New York, having flown business class at U.N. expense, along with two of his official cohorts from Pyongyang, for meetings of the 36-member executive boards of the UNDP/UNFPA and UNICEF.

When the U.S. Mission’s envoy for U.N. reform, Mark Wallace, pressed the UNDP recently for details of this North Korean jaunt to New York City, the UNDP reluctantly produced the information that the U.N. agencies in question were paying more than $35,000 for the roundtrip travel of the North Korean trio.

Interestingly, no other UNDP executive board members are getting this kind of subsidy. The UNDP has argued that this kind of subsidized air travel has happened before, but the case the organization cites is Afghanistan in 2002, after the collapse of the Taliban, when the Afghan government essentially was in U.N. hands. The UNDP has since said it is revising its policy to require member states to foot the bills for sending their officials to board meetings.

That’s a welcome change, but it does not address the deeper questions of why U.N. agencies that advertise themselves as agents of help, hope and good governance would entertain such client states as North Korea on their executive boards in the first place. The UNDP board also includes China, Russia, Kazakhstan, Belarus and Pakistan. UNICEF also boasts China, Russia, Bolivia and Pakistan. And while the 36-member WFP executive board does not include North Korea, it does provide seats to some of Kim’s closest pals, including Syria, Zimbabwe, Russia (which has contributed $5 million cash, according to a WFP spokesman) and Cuba (which has sent $864,225 worth of sugar).

Emblematic of this setup was a statement in a backgrounder issued by the UNDP on January 19. Dismissing the use of U.S. dollars by U.N. agencies in North Korea as a “non-issue,” the anonymous UNDP officials who authored this document added, in what is evidently meant to be a defense of the agency, that the UNDP and other agencies in North Korea “stopped using U.S. dollars in 2001 at the instigation of DPRK government itself, which decreed as an anti-U.S. measure that the only hard currency to be used within the country should be the euro.”

The WFP spokesman confirms that inside North Korea, the euro is his agency’s medium – exchanged when necessary for North Korean won at the Central Bank. In other words, it’s not just that the U.N. lets Kim milk its programs for hard currency; the U.N. agencies also let him choose which hard currency he prefers.

The current show of public resistance by the U.S. Mission dates back to questions sent to the UNDP by Ambassador Wallace last November, during the final weeks of tenure of former U.S. Ambassador to the U.N. John Bolton. There has been speculation at the U.N. that this was a swat by Bolton at one of his nemeses, Mark Malloch Brown, who before serving from 2005-2006 as former U.N. Secretary General Kofi Annan’s chief of staff, and then as deputy secretary general, had spent years running the UNDP. But a more plausible reason is that the U.N. Mission had spotted a serious problem of U.N. aid and development agencies helping to prop up a North Korean regime that had just tested a nuclear bomb, and is now sanctioned by the U.N. itself.

In the wake of exposure of the scandal, new Secretary General Ban’s immediate promise of a system-wide audit of U.N. funds and programs is a big improvement over the stonewalls of his predecessor, Kofi Annan. But the real issue here hardly stops with the book-keeping. If Ban goes down this trail, he will quickly confront a core failing of the UN — the chronic bias, in the name of helping the downtrodden, toward supporting the dictators who tread them down. At that point, he may have to choose whose side he’s on.

Claudia Rosett is a journalist-in-residence with the Washington-based Foundation for Defense of Democracies