UNDP seeks full audit of its DPR Korea work; Ban Ki-moon orders system wide inquiry

Ad Welkert, Associate Administrator of UNDP

19 January 2007 – The United Nations Development Programme (UNDP) today said that it would stop paying hard currency for its operations in the Democratic People’s Republic of Korea (DPRK) amid press reports on the agency’s activities there and announced plans to seek an independent, external audit, while Secretary-General Ban Ki-moon called for an urgent, system wide investigation of UN activities in the field.

Mr. Ban’s announcement followed a meeting he held with UNDP Associate Administrator Ad Melkert on the agency’s multimillion-dollar operations in DPRK.

“The Secretary-General will call for an urgent, system wide and external inquiry into all activities done around the globe by the UN funds and programmes,” his spokesperson, Michele Montas, announced in a statement on Mr. Ban’s behalf.

Mr. Melkert revealed UNDP’s intention to order an independent audit during a press conference held at UN Headquarters in New York.

He urged journalists to see the issue in its historical context, pointing out that 20 years ago, “a large number of countries operated on a different model from today” for example using non-convertible currency and staff selected by governments. UN agencies “had to work within that context,” he said, asserting that “doing so helped many of these countries to open up.”

While over the course of those approximately two decades many countries altered their systems, “the essential way North Korea operates has not changed during that time,” he said, and therefore the terms of reference governing the work of not just UNDP but also the UN Children’s Fund (UNICEF), UN Population Fund (UNFPA) and the UN World Food Programme (WFP) remained the same.

He noted that “North Korea went through a series of horrific humanitarian crises during the 1990s,” and UNDP and other agencies responded with significant humanitarian programmes. After the crisis period subsided, the focus of UNDP’s activities shifted back to achieving longer-term development goals, he said.

The operations of the agency evolved in recent years, and the October, 2006 Security Council resolution placing sanctions on the DPRK Government sparked a “further tightening” of the way UNDP operates in the country.

Mr. Melkert acknowledged that the agency’s own internal auditors had raised “many concerns” about the DPRK programmes with management, and that “tough issues” remain to be addressed. In response, he said the agency would end all payments in hard currency to the Government, national partners, local staff and local vendors as of 1 March. Subcontracting of national staff via Government recruitment will also be discontinued. Monitoring and audit systems will be put in place “addressing the issue of national execution.”

Looking ahead to next week’s meeting of the UNDP Executive Board, Mr. Melkert said the agency would also propose “a full, independent external audit in order to make sure that we really understand what it means to work in a country like North Korea.”

An external, independent audit is “a good point to get to the knowledge that we need for the future,” he added.

Asked about a United States letter saying that UNDP failed to bring violations to the attention of the agency’s Executive Board, Mr. Melkert said all UNDP audits were submitted to the UN Board of Auditors, which in turn was responsible for bringing critical issues to the attention of Member States. “It is our task as management to follow-up on internal auditors’ recommendations,” he said.

To a question on why UNDP, which has recently stated its commitment to transparency, does not make its all of its audits available to Member States – as does the UN Secretariat – Mr. Melkert said the issue was under discussion. “Basically we believe that internal audits should be available to members of the board and UN Member States,” he said. “That will take some time but we will discuss it and we will come back on that.”

In response to a reporter noting that the summary public document released did not mention the DPRK, Mr. Melkert said “as you know, Kemal Dervis (the UNDP Administrator) and me are not that long in this organization but it is our definite view that we can only work on our condition in all countries, and no country should have any exceptional position whatsoever.”

Asked about the level of funding involved, Mr. Melkert said “We’re not talking about hundreds of millions of dollars,” adding, “Over a period of ten years, it is of course tens of millions.”

Responding to questions as to whether UNDP could be assured that currency it paid was not converted into the country’s weapons programme, he said, “that question cannot be answered because of the general way in which you operate in any country that you are doing business with.”

At the same time, he stressed that “from the audits, there has been no indication whatsoever that would say anything in relation to your question.”

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