On Third Day of UN's North Korea Audit, Memos Show Warnings But Not the Source of Funds

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

UNITED NATIONS, March 21 -- On the third day of the delayed "urgent audit" of four UN agencies that Ban Ki-moon called for on January 19, Fox News ran a retrospective on the attempts by a group of unnamed individuals whom Fox calls reformers to get the UN agencies to harmonize their policies and, Fox implies, to clear them up. Fox links to a half dozen documents, including minutes of meetings in late 2005 and early 2006. The minutes memorialize for example that UNICEF in particular wanted to continue to pay in hard currency, but to limit staff "R&R" from every two to every three months. WFP on the other hand awarded R&R every six weeks, and had a bus that fit 60 people. There was nowhere to go, however. The international staff were confirmed to what Fox calls the "secrecy-shrouded diplomatic Munsudong district of Pyongyang (known to some North Korean diplomats as 'the greenhouse')."

            The memos have all names redacted, and Fox's story does not mention the name of the Administrator of UNDP, Kemal Dervis. This seems strange, given that sources among the UN Security Council's Permanent Five members opine that Mr. Dervis' tenure at UNDP is drawing to a close, that "only the modalities" remain to be worked out.  Similarly, the Fox story mentions now-gone Secretary-General Kofi Annan before it mention, in its final paragraph and only with reference to the audit, current S-G Ban Ki-moon. Not mentioned at all is where the money being spent by the UN agencies came from: in large part, South Korea, where and while Ban Ki-moon was Foreign Minister.

Mr. Ban with former South Korean Amb. to the UN Lee See-Young, March 21, 2007

   Perhaps Fox' tale is one in a forthcoming series. There are rumblings afoot to that effect. Also, interesting questions have been raised about the UN accepting then holding counterfeit currency from the Kim Jong Il government, click here.

            Because the Fox story does not provide the names, and the memos put on line have all the names redacted, here from Inner City Press is a list of UNDP's Pyongyang international staff: Timo Pakkala, Vineet Bhatia (still in-country); Du Yuexin; Paul Brewah; Mulualem Zeleke; Melvin Padua; Vijay Thapa and Maartin Boon. Here is a link to the December 8, 2005 meeting Fox describes, here is the January 24, 2006 memo to Timo Pakkala, and here are the minutes of the resulting April 13, 2006 meeting, in which we learn among other things that UN international staff had fruits and vegetables imported from China, and that WHO wanted to fly its own flag, and not the UN's, on its vehicles. What does it all add up to? That remains to be seen.

Click here for Inner City Press' coverage today of the UN Office of Drugs and Crime.

    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.

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UNFPA's Dubious Tales On UN's N. Korea Audit's 2nd Day, Red Faces at UNDP

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

UNITED NATIONS, March 20 -- With the delayed "urgent audit" of North Korea programs called for by Ban Ki-moon on January 19 now in its second day, inconsistencies are cropping up.

  The 90-day deadline for the audit is now described as merely being a goal. The government of the Democratic People's Republic of Korea has yet to signal that any auditors will even be allowed to enter the country.

   While the delay in starting the audit is attributed to "unforeseen staff travel arrangements of one of the auditors," UN insiders tell Inner City Press that it was the Pyongyang to New York travel of Resident Coordinator Timo Pakkala that was delayed for one week, so that certain surgical modifications to the records could be made. A point at issue now is not only how much money was expended, but where in fact it went.

            On Tuesday, the audit's second day, officials from the UN Population Fund put in an appearance at the UN Board of Auditors' office on the 26th floor of the UNDP building, where they claimed that UNFPA's programs in Pyongyang did not have the problems which forced UNDP to suspend its operations earlier this month.

            This is belied by a draft internal audit report obtained by Inner City Press, and presumably available to the Board of Auditors. If it is not, since in the face of this audit documents have a way of disappearing or being modified, extensive quotes from the UNFPA internal audit are below.

     But first, after receiving no-comment from the Board of Auditors, Inner City Press' previous questions about the audit have been responded to by UN Controller Warren Sach:

Subj: Question on audit, from today's noon briefing: why was audit pushed back a week, etc, thanks 

From: Warren Sach

To: Inner City Press

CC: goolsarrans [at] un.org

Date: 3/19/2007 2:14:37 PM Eastern Standard Time

   1. Why was the audit pushed back a week? As per a 7 March 2007memorandum from the Board of Auditors, the planned start date of the audit will be delayed by one week due to unforeseen staff travel arrangements of one of the auditors.

   2. What impact might it have on complying with the 90 day time frame?

   Please see below answer on the proposed time frame.

   3. When does the 90 day time frame expire?  The Secretary General has requested through the Advisory Committee on Administrative and Budgetary Questions (ACABQ) that the Board of Auditors conduct the required activities within a time frame of 90 days.  The Board of Auditors has agreed to take up the work as a matter of priority which we hope can be achieved within the timeframe requested by the Secretary General.

   4. Has any request been made for auditors to enter DPRK?  The Secretary General has sent a letter to the Permanent Representative of the Democratic People’s Republic of North Korea informing them of the audit and requesting assistance to facilitate travel arrangements and visas.

   5. Has there been any response? The letter to the DPRK was sent on the 12th of March 2007. We have not received any follow up communication in the past few days.

   6. Has there been any response to Ban Ki-moon's February 28 letter on this issue?  The letter from the Secretary General dated 28 February 2007 was a response to a correspondence received from the Permanent Representative of DPRK.  We have not received any follow up communication from the DPRK.

            While appreciating this reply from Warren Sach, who has also taken back on but has yet to respond about the post of Ban Ki-moon's representative to the UN Pension Fund, it is still unclear when the audit's 90 day "clock," previously referred to by Ban Ki-moon's staff, expires. Additionally, there is among insiders a counter-explanation of the audit's one-week delay in starting, that involves the Pyongyang to New York travel of Resident Coordinator Timo Pakkala being delayed for one week, so that targeted chances to documentation could be made. More on this to follow. Within UNDP, there is growing paranoia. The Administrator's discomfort is, insiders say, incarnated in a skin condition used to deny press access. No questions!  And no answers, either, for example as to why the head of UNDP's Bureau of Management Akiko Yuge has left New York for precisely the two weeks of the audit's first (and some say only) phase.

            For now, the members of the Board of Auditors are making phone calls and holding meetings. On Tuesday, they went to UNFPA, where they were told a number of stories, including that UNFPA's programs in Pyongyang did not have the problems which triggered the audit and forced UNDP to suspend its operations in North Korea.

UNFPA's Thoraya Obaid: UN interview, not (yet) audit

            UNFPA's story is contradicted by a document obtained by Inner City Press, an internal audit report of UNFPA's County Office in DPR Korea, dated May 2006.

            This internal audit was carried out by KPMG in-country from May 23 to May 29 and is 68 pages in length. Even while sidestepping UNFPA's provision of hard currency to the Kim Jong Il government -- perhaps because all of UNFPA's payments were and are through UNDP, as more recently acknowledged by UNDP's spokesman -- the audit paints a disturbing picture of UNFPA.

            At UNFPA in North Korea there is sloppy bookkeeping, at least, for payments of $96,000 and $93,000 and $77,000. KPMG diplomatically notes an "absence of documentation for independent verification." There was a murky "transfer of assets" worth $420,000 to the North Korean government. A consultant was hired to slap together some praise of UNFPA's and the DPRK's "partnership," but was paid before the work was done, and the work was never evaluated. In a project from the European Commission, KPMG notes "unauthorized use of project resources," without saying by whom. But this is what the Board of Auditors should find out and make public.

   Back in January, Inner City Press asked UNFPA for comment on these issues. Spokesman Abubakar Dungus on January 22 said he would respond that day. He did not, and has not. On January 26, Mr. Dungus' boss Safiye Cagar told Inner City Press that Mr. Dungus was on retreat.  Minutes later, UNFPA security chief Janie McCusker attempted to have Inner City Press' correspondent barred from the UNFPA Executive Board meeting. When this failed, Ms. McCusker was seen whispering with Ms. Cagar, Kwabena Osei-Danquah and UNFPA Executive Director Thoraya Obaid. Missing from this scene was UNFPA's Alaadin Morsy, who has been threatened by Ms. Obaid with a document, contested by Mr. Morsy, concerning

"the vehicle that you imported when you were first place on the ATR Project in Egypt... the vehicle was imported for your personal use without paying customs duties to the Government of Egypt.  If you were employed for less than three years on the project, you were obligated to either re-export the vehicle or pay the customs duty that would have been owed when you imported the car in 2002. Your employment with the project was terminated after one year and you should have taken one of these two action. To the best of our knowledge and that of the Ministry of Foreign Trade and Industry and the Egyptian Customs Authority, you have not done so. Mr. Tim S. Buehrer of the Secretary-General's office has stated that he has contacted you on numerous occasions concerning this matter but that you have not responded."

            Some have predicted the ejection from the UN System of either Mr. Morsy or Ms. Obaid. These are other issues, beyond but not unrelated to hard currency and mis-management, into which the Board of Auditors should delve, along with these additional findings from UNFPA's May 2006 internal audit, for example on the key question of accepting personnel from the DPRK government:

"National staff were seconded from the Ministry of Foreign Affairs for National Program Officer, Finance and Administration Associate and Secretary positions and the driver was seconded from the General Bureau for Affairs with Diplomatic Missions... There was no documentation on the health status and evidence of educational background in addition to the Curriculum Vitae for seconded staff maintained in the staff personal file... Competencies of personnel not verified prior to secondment acceptance."

        These are precisely the issues on which Ban Ki-moon called for the audit. UNFPA now tells the Board of Auditors that everything's fine. How? There is also this, in the internal audit of UNFPA:

"World Health Organization (WHO) was the implementing UN agency for DRK3R203. An Annual Work Plan was developed and signed on 1 February 2005. The following issues were note in the execution arrangement with WHO:

The budget allocated for WHO execution was US$193,500 for 2005. However, in the AWP, an amount of US$47,000 was manually recorded as balance carried forward from 2004 in addition to the allocation in 2005. The amount was inconsistent with WHO financial report claiming that the amount carried forward from UNFPA from 2004 was US$62,452; Our review of the financial report submitted by WHO revealed that an amount of US$156,388 out of total budget of US$255,952 was still in 'unliquidated/earmarking' column indicating that the plan activities (mainly fellowships) for the year have not taken place. As at our audit date, the Office was not able to confirm whether WHO has successfully completed the outstanding activities as at 31 December 2005. The information on the utilization of the unliquidated amount was only provided to the Office after being requested the audit team. Ineffective monitoring of resources. Error in financial reporting."

            In response to a direct question from Inner City Press of whether the World Health Organization received $10 million from South Korea while Ban Ki-moon was foreign minister, WHO spokeswoman Christine McNab replied that, "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." This has given rise to a question of how much money the South Korean government transferred to North Korea, through UN agencies, while Ban Ki-moon was South Korean Foreign Minister, click here for that story.

            In the "Management comments" of the audit, UNFPA claims that it "is doing good comparing with other UN agencies resident in DPRK." The auditor KPMG -- also the auditor of UNDP in North Korea -- does not reply. Then again, since UNFPA has refused to show these audits even to the member states on its Executive Board, perhaps there's no reason for KPMG to reply. Reply to whom? Only now, there is an answer -- to the Board of Auditors, unless all of these documents and drafts disappear.

   On UNDP and bank accounts, the UNFPA internal audit says

"The monitoring and oversight of UNFPA funds in UNDP’s bank account in the Korea Foreign Trade Bank was performed by UNDP. The Office had no involvement in the management of banking accounts and facilities in 2005. However, according to the UNFPA Internal Control Framework, which came into effect on 22 March 2006, Country Offices are to receive and check completed bank reconciliations from UNDP on a monthly basis.... Lack of oversight on bank reconciliations."

            After dodging the question from the time it was raised to Kemal Dervis on February 1, UNDP's spokesman recently stated that upwards of $10 from "other UN funds and programs," the "vast majority of it" from UNFPA, was paid through UNDP. UNDP has not disclosed information which its spokesman, in the hallway outside the briefing room, promised to provide, about safeguards in place to track this UNFPA and "other" money. Rather, UNDP has said, "Wait for the audit."

            But if from Day Two of the audit, UNFPA does not tell the truth, and the auditors may never go to North Korea, how will the truth be found? Developing.

With Audit Starting in NY, UNDP Manager Akiko Yuge Leaves Town, Sale-of-Jobs Unanswered

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

UNITED NATIONS, March 19 -- As the delayed "urgent audit" of North Korea programs called for by Ban Ki-moon on January 19 today begins at the UN Development Program, the director of UNDP's Bureau of Management Akiko Yuge has conveniently left town, internal UNDP e-mails obtained by Inner City Press show.

            Sources say that UNDP's legal chief James Provenzano and finance director Darshak Shah may also have left. (Since UNDP no longer answers even basic questions, this cannot be confirmed. As to Ms. Yuge, see the intra-UNDP email below.)

          Mr. Shah and Ms. Yuge were among the eight UNDP officials to whom the Executive Secretary of the UN Board of Auditors, Swatantra Goolsarran, sent his March 1 memo scoping out the audit including requested interviews, their absence from headquarters during the audit has raised questions about staff. So has the fact that the scope of audit memo was not sent to UNDP's Asia chief, Hafiz Pasha, but only to his ostensible deputy, David Lockwood. The credibility of the audit is increasingly doubted by knowledgeable sources inside UNDP.

            UNDP's large but recently lethargic (at least on this issue) communications office has not helped dispel the doubts. A series of questions about the audit and UNDP's North Korea program have done unanswered. Even two non-North Korea questions asked on camera then in writing last week, regarding UNDP's reported support of a gold mine in Romania and the selling of jobs and promotions alleged by UNDP staffers, have been entirely ignored.  UNDP's David Morrison was asked these questions at the March 13 noon briefing filmed by UN TV, click here for video, from minute 40:30 to 42:39.

  Inner City Press followed this up with an email:

Subj: Follow-up to today's UN noon briefing, & some long-outstanding questions, thanks 

Date: 3/13/2007 2:05:40 PM Eastern Standard Time

To: david.morrison [at] undp.org, ad.melkert [at] undp.org, kemal.dervis [at] undp.org

CC: [cc's deleted in this format]

 From: Inner City Press

Hello -- This follows up on questions asked at today's UN noon briefing. On  deadline,  need a yes or no answer on whether the previous head of the Department  of  Management ever imposed conditions appointments or promotion (or in  cases of demotion / re-classification downward). We are told that this was  sometimes explained as being akin to a "headhunter's fee."

  Because we are on deadline, we are also cc-ing some of the  individuals, who we have been told may on this question have knowledge. [Ed.'s note: cc's deleted in this format.]

I am attaching for your comment and explanation three documents  concerning the controversy regarding UNDP's position on, and involvement in, gold mining project in Romania.  Also, a breakdown of the $10.88 million  you cited today, and your response to Ben's question about the $151 million  figure in OCHA's consolidated appeal. I am pasting below yesterday's reminder email, and note that a  long-ago asked question -- how many people work for UNDP? --  message, which  included other still-unanswered questions, pasted below -- has yet to be  answered. Ad Melkert is cc-ed because he indicated such answers would  become faster.

 And again, we believe that Mr. Dervis as Administrator should come  and give a briefing in 226, given the issues that have been raised. 

  Still, no response whatsoever. Therefore, for now, here is an edited version of one of the UNDP staff complaints that has been directed to Inner City Press, despite David Morrison's counter-story that procedures and whistle-blower protections exist in UNDP such that no one should go to the press:

Subject: Re: Attn: Mr. Matthew Russell Lee
Date: 3/2007 [Date and time omitted due to last line of 2d email, below]
From: [Name withheld, entitled to all whistle-blower protections]
To: Inner City Press

 ...on jobs for favors first. I know some people to whom Brian Gleeson offered promotions or appointments in exchange of the cash equivalent of the first salary. He mentioned this option to me as well when my post was re-classified downwards. I pretended it was a joke, but afterwards the relations became very strained. For quite some time I was kind of sidelined...

   Then --

Subject: Re: Attn: Mr. Matthew Russell Lee - many thanks, some [follow-up] questions
Date: 3/2007 [Date and time omitted due to last line of this email]
From: [Name withheld, entitled to all whistle-blower protections]
To: Inner City Press

...Usually $10,000 or first salary. Brian was quoted to say that as UNDP was becoming corporate-like, it would be normal to charge as head hunter agency would charge.

...Our I.T. manager said that the management could track what we do on the Internet at any instant. So much for our rights, which could be another topic for you to explore.

  Yes, that will be another topic. And on the Romania gold mine controversy, we have tried another route, which we hope will soon bear fruit, at least a response of some sort. But why would UNDP made no response at all for six days to questions about these sale of jobs and promotions allegations, questions raised in a formal UN-televised press briefing and then also in writing, with additional names provided?

  This was sent out, Friday after close of business:

From: Bernadette Jones

Sent: Mar 16, 2007 18:10

Subject: O-I-C of BOM

Dear All,

This is to advise that Ms. Akiko Yuge will be away from Headquarters from 18 to 31 March 2007, inclusive.   During her absence Ms. Jocelline Bazile-Finley will be the Officer-in-Charge of the Bureau of Management. Please also note that Ms. Bazile-Finley is the Acting Chief Procurement Officer for this period.

Thank you

Bernadette Jones , Executive Assistant to the Assistant Administrator and Director, Bureau of Management

            We will have more about UNDP's procurement. But why would UNDP send its new director of Management, Brian Gleeson's successor, away from headquarters precisely during the two week New York period of the "urgent audit" of UNDP's management of its North Korea program? Questions, questions...

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

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