Archive for the ‘UNDP’ Category

UNDP to return to DPRK

Monday, January 26th, 2009

UPDATE (h/t Mike):
According to this UNDP board meeting in September 2008 (p.13):

84. The President of the Executive Board chaired an informal consultation on the Democratic People’s Republic of Korea. He invited statements by the Associate Administrator and by the Assistant Administrator and Director, Regional Bureau for Asia and the Pacific, UNDP.

85. The Regional Director presented a proposed ‘road map’ for the possible resumption of UNDP activities in the Democratic People’s Republic of Korea. He detailed a proposed five-step process to be completed by early 2009, including: first, dialogue with Member States on the best way forward; second, technical discussions with the Democratic People’s Republic of Korea on human resources, finance and programmatic issues, which would build on preliminary discussions on the recommendations emerging from the independent investigative review (the Nemeth report), as well as the report of the external Board of Auditors and relevant Board decisions; third, the dispatch of a technical team to Pyongyang, following Board endorsement of the road map, to reach agreement on the modalities and content of the UNDP programme; fourth, following the successful completion of detailed discussions, submission to the Board for approval of a package of measures and a country programme to facilitate resumption of UNDP activities; and fifth, subject to approval by the Board, mobilization and recruitment of staff and establishment of physical facilities to initiate programme activities. 

86. Delegations expressed support for the resumption of UNDP activities as proposed. Some suggested that three extensive reviews had failed to confirm the initial allegations of wrongdoing, and one delegation asserted that the cessation of activities without the approval of the Executive Board had been inappropriate. While acknowledging that the reviews had revealed grounds for improvement in accountability and oversight throughout the organization, several delegations urged the Board to weigh the human development needs of the local population against the severity of those shortcomings. Most recognized the proposed road map as a viable means of moving from discussion to action, while others expressed support for further consultations on implementation of the ‘road map’.

87. Delegations encouraged UNDP to heed the findings and recommendations that had emerged from the investigations. Many urged the Board to bring the matter to a prompt resolution.

88. One delegation put forth a list of procedural questions regarding the overall management of the process of suspending, discussing and possibly resuming activities in the Democratic People’s Republic of Korea.

89. The President recommended that UNDP proceed with the agreed ‘road map’. The Board approved the inclusion of the Democratic People’s Republic of Korea under the country programmes agenda item in the tentative work plan for the first regular session 2009. 

I am not sure about the specifics in the above mentioned “road map.”  Here are a couple of strategy documents from the recent past: September 2006, Summer 2008.

ORIGINAL POST:
According to Reuters:

The U.N. Development Program’s executive board “authorizes the resumption of program activities” in the reclusive and impoverished communist state, said a board document dated Thursday and obtained by Reuters.

The decision came after an external review last year cleared the agency of major financial wrongdoing, although it found fault with some practices.

The report said programs that UNDP would resume included rural energy development, wind power promotion, seed production and reduction of post-harvest losses in North Korea, which has suffered from flooding and famine in recent years.

The executive board also authorized the head of UNDP to approve other projects on a case-by-case basis. UNDP officials said it would take some months for the agency to resume operations in North Korea and gave no exact date.

So why did the UNDP leave the DPRK in the first place?  That is a long story…but here are links to three previous posts on the topic:

1. Here is a link to a previous post on the US Senate investigation of the UNDP’s activities in the DPRK.

2. Here is a link to the UNDP’s response to the US Senate report.

3. Here is a link to a post on the UN’s Nemeth Report which exonerated the UNDP.

How did US concerns influence the management strategy of the UNDP’s DPRK portfolio?

The UNDP report approved by the board this week said recruitment of local staff in North Korea would in future take place “on a competitive basis” and not depend on appointments by Pyongyang. Such staff would be paid directly and not through the government.

The report made clear, however, that the North Korean government would continue to have a role in finding local recruits, although UNDP would make the final decision. Agency officials said the proportion of international staff would be higher than before.

The report said under an agreement with Pyongyang, UNDP payments to the government and to local staff and vendors would be made in a convertible version of the national currency.

UNDP would bank with the state-run Korea Foreign Trade Bank, but this would have to meet the agency’s global standards for the services it provided.

When the agency’s board considered a possible return to North Korea at a previous meeting last year, diplomats said U.S. and some other representatives had expressed continuing concerns about UNDP management failures.

While the new report appeared aimed at allaying those concerns, the board’s approval, which officials said was unanimous, came just after the inauguration of the Obama administration, widely expected to have warmer ties with the world body. UNDP officials said that was coincidental.

If a reader out there has a copy of the minutes or a board report from UNDP Executive Board meeting please forward it/them to me. 

Read the more here:
Summary of UNDP activity in the DPRK from the UNDP web page

Censured U.N. agency to return to North Korea: officials
Reuters
Patrick Worsnip
1/23/2009

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Report Shows U.N. Development Program passed resources to DPRK government

Thursday, June 12th, 2008

According to Fox News:

After more than two years of accusations and probes into the operations of the United Nations Development Program in North Korea, a weighty report finally reveals how routinely, and systematically, the agency disregarded U.N. regulations on how it conducted itself in Kim Jong-Il’s brutal dictatorship, passing on millions of dollars to the regime in the process.

The 353-page report, by a three-member “External Independent Investigative Review Panel” appointed by UNDP to investigate itself, was published with much fanfare last week after nine months of political maneuvering and research.

The report depicts an organization that for years apparently considered itself immune from its own rules of procedure as well as the laws and regulations of countries that were trying to keep weapons of mass destruction out of Kim’s hands.

It also shows that UNDP apparently considered itself above the decisions of the United Nations Security Council itself when that organization tried — as it is still trying — to bar Kim from gaining the means to create more weapons of mass destruction.

That is the same Security Council whose decisions, U.N. officials argue, have the weight of international law when applied to the United States and the rest of the world.

Yet despite those rules, and in the midst of a growing international storm of concern over Kim’s behavior, UNDP’s North Korea office, as well as other UNDP offices, continued to hand over millions in hard currency to the Kim regime and to transfer sensitive equipment with potential for terrorist use or for use in creating weapons of mass destruction.

“What this report shows is that UNDP has operated lawlessly for far too long,” said Mark Wallace, the former U.S. ambassador to the United Nations who brought many of the original accusations against the U.N. anti-poverty agency to light in January 2007 after examining confidential UNDP internal audits of its North Korean operation.

“U.N. Secretary-General Ban Ki-moon has indicated that integrity is a high U.N. priority,” Wallace said. “It is now up to UNDP to follow that direction.”

The latest panel report initially was passed on to reporters on June 2 by UNDP boss Kemal Dervis at an unusual press conference where he hailed the report’s conclusions, saying that “we finally have some closure on the allegations made against UNDP.”

The actual authors of the report were not available for questioning or comment, Dervis said, until they presented the document to a meeting of UNDP’s supervisory executive board in Geneva. The meeting begins June 16.

But a close reading of the long and dense document, replete with mind-numbing footnotes, shows that Dervis is wrong.

Among other things, the report confirms that UNDP hired North Korean government employees to fill sensitive core staff posts, in violation of its own regulations, and that the Kim regime picked the staffers.

Previously this had been revealed by a report done by the United Nations Board of Auditors in May 2007 in the wake of Wallace’s concern. The 2007 report noted that the same violations had been reported in internal UNDP audits going back to 2001.

The UNDP office in North Korea paid the salaries of these staff directly to the government in hard currency — another forbidden practice. The report dryly notes, in a footnote on page 96, “It was not clear how much of these amounts were paid to the National Staff, if any.”

In an effort that may have been aimed at keeping at least some staffers from starving, UNDP gave them all hard-currency supplements in cash — another violation of its own rules.

The regime employees filled such critical jobs as UNDP finance officer; program officer slots that helped to design and oversee UNDP projects in the country; technology officer, who maintained all of UNDP’s internal and external communications and servers; and even the assistant to the head of the UNDP office, who presumably was in a position to see much, if not all, of the boss’ paperwork.

Those violations already were known, although only in the barest detail. But the latest report reveals a fact that makes matters much worse: The regime-appointed finance officer — the person who wrote UNDP’s checks for 10 years — also was responsible for reconciling UNDP’s bank statements with the checkbook.

These two functions are supposed to be separated as protection against fraud. The importance of that separation is strongly underlined in UNDP’s basic guidelines called the “Internal Control Framework for UNDP Offices.”

The potential for fraud by a North Korean government employee, however, is discussed in the report only in dry bureaucratic language.

Despite that the review panel brought documents showing millions of UNDP financial transactions out of North Korea, the report shows — in a footnote buried on page 53 — that the panelists never saw any of some roughly $16.6 million worth of cancelled checks that were signed by UNDP. The reason: Kim’s bankers won’t release the originals or copies.

Without the checks, it is impossible to see if the finance officer made them out to cash or if the names on them match UNDP payment records and bank statements.

The North Korean regime also refused to let the panelists interview the finance officer.

The potential fraud risks are huge. The report notes that in 78 percent of a transaction sample of UNDP payment records that they reviewed, the signature on payment receipts could not be verified. For all the rest there was no sign of a receipt at all.

The report declares, with great understatement, that “it is difficult to determine the ultimate beneficiaries of payments made by UNDP-DPRK on behalf of itself.”

The panel sharply hikes — by millions of dollars — the amount of hard currency that previous probes indicated UNDP had passed on to the nuclear-arming Kim regime from 1997 to 2007, as Kim was ramping up his nuclear weapons program and ultimately setting off a nuclear explosion.

Hard currency transfers to Kim of any kind supposedly were forbidden, but the 2007 investigation already had shown that the rule was violated not only by UNDP but other U.N. agencies in the country.

The latest report says that UNDP spent $23.8 million on behalf of itself and other U.N. entities in North Korea, almost all in hard currency that never was supposed to reach Kim. The panel estimates that 38 percent of this, or $9.12 million, went directly to the North Korean government.

But that is not all. The report also notes for the first time that other UNDP offices and agencies outside the country chipped in anywhere from $9.5 million to $27.4 million more in hard currency to the Kim regime over the same period, on behalf of the North Korean office.

Using the 38 percent yardstick that the panel applied to in-country spending, anywhere from $3.6 million to $10.4 million of those totals might have been directly passed on to the government.

In addition, the report makes passing mention of an even bigger flood of cash: $381 million that flowed into North Korea from non-U.N. donors through an arrangement called the Agriculture Recovery and Environmental Protection, or AREP, Cooperation Framework. UNDP projects in North Korea formed part of that framework and, more importantly, helped to support the entire arrangement. But the report goes no further in tracing those funds.

Unauthorized hard currency by no means was the only support UNDP was offering Kim. The report greatly raises the number of sensitive “dual use” items — good for civilian use and for terrorist purposes or helping to create weapons of mass destruction — that UNDP handed over to North Korea. These included computers, software, satellite-receiving equipment, spectrometers and other sensitive measuring devices: 95 items in all.

The policy of unquestioned transfer of dual use items continued even as the Kim regime in 2006 conducted ballistic missile tests and exploded a low-yield nuclear device to the outrage and dismay of the rest of the world; moreover, UNDP acquired at least some of the items in misleading fashion.

The report notes that when some items were purchased, “it was not explicitly stated … that the equipment would be utilized by DPRK nationals working under the auspices of UNDP projects in DPRK.”

In at least one instance, the report says, an employee with a UNDP sister agency even supplied false information to a Dutch manufacturer nervous about end-users in North Korea, telling him that the equipment would be used by the UNDP office in Pyongyang when it really was intended for a faraway rural location.

The report also shows that UNDP itself rarely asked its suppliers about any possible limits on the use of sensitive export goods and, even when it was explicitly informed, made little, if any, effort to keep records of dual use limitations on equipment.

(The report does not say so, but with North Korean government employees operating as program officers, the lack of conscientious record keeping might not come as much of a surprise.)

The report then dismisses any notion of holding anyone at UNDP accountable for these spectacular lapses by invoking a concept of blanket immunity.

UNDP and its officials, the report notes, are immune from the enforcement of U.S. and other national export control laws imposed for anti-terrorist or national security reasons, under an international U.N. Convention on Privileges and Immunities.

The document notes that despite that free pass, a U.N. legal opinion has held that the world organization can be bound by at least some export license limitations when it is retransferring those sensitive goods.

But the people really exposed to penalties for most of the transfers are UNDP vendors who supplied the goods, because they lack U.N. immunity. The panel notes that in many cases, lack of knowledge of the true use of the equipment is not considered a legal defense by many nations, including the U.S.

Having said that, the report tries to sweep under the rug the explosive topic of UNDP’s obligations to the U.N. itself when the U.N.’s chief executive body, the Security Council, calls — as it did twice in 2006 — for bans of sensitive technologies to Kim. Those bans are known as U.N. Resolution 1695, passed on April 15, 2006, after Kim sent test ballistic missiles in the direction of Japan; and Resolution 1718, passed on Oct. 14, 2006, five days after Kim’s low-yield nuclear blast.

Resolution 1695 applied to equipment that might be used in Kim’s ballistic missile program. Resolution 1718, however, was much more sweeping and called for bans on any equipment that might be used in any kind of weapons of mass destruction, as well as travel bans for officials associated with the weapons program.

The panel report tries to take as little note of these sanctions as possible. Resolution 1718, for example, is mentioned in a footnote on page 195 of the report. The footnote calls its applicability to UNDP programs “relatively minimal,” and adds, “a significant majority of the equipment bought in connection with the UNDP-DPRK program was purchased before the passage of this resolution such that [it] was inapplicable.”

Since the report also notes that the records were badly kept or non-existent, this is a hard assertion to contradict. But it is a highly questionable assumption, at best. The report earlier notes that any UNDP-purchased equipment in North Korea belonged to UNDP until it was officially transferred to a host government. That happened to all the items of dual use equipment in North Korea at the same time — in March 2007.

At that time, UNDP shut down its programs after the hue and cry over UNDP practices in North Korea caused the agency to amend some of its practices — changes that the regime refused to accept.

UNDP officials have argued, and the report tacitly echoes their view, that the transfer of equipment when agency projects are closed down is normal practice.

Hardly normal are Security Council calls for the world, presumably including the U.N. itself, to stop transfers of exactly the kinds of equipment UNDP gave to Kim. There is no sign, for example, that the agency gave any thought to finding another method of asserting its property rights until the sanctions were lifted or of asking other U.N. agencies in North Korea to try to keep tabs on the gear.

UNDP “normal practice” apparently trumped world peace and security. The report passes over that complication, involving a rogue regime that had conducted illegal atomic blasts, and that the U.N. itself had declared an outlaw, without comment.

With the same effect of sheltering UNDP from charges that it aided in endangering the peace and security of the world, the panel report declares that any charges that UNDP inadequately supervised the projects in North Korea under its care are untenable.

It based that conclusion on voluminous paperwork provided by UNDP that proved, the panelists said, that site visits to the project took place frequently and were unimpeded.

But the report fails to put those inspections in the context of the fact that four of UNDP’s program and liaison officers, who manage and help to create programs and perform liaison with institutions and vendors involved in the projects — also were North Korean government employees.

(The report is equally silent on the role of the Kim regime employee who served as UNDP technology officer, who was in charge of all of the UNDP offices’ internal and external communications and its computer servers. UNDP communications and computers are supposed to be sacrosanct in terms of host country snooping. Instead, in North Korea, the potential snoops were in charge of the equipment. The potential implications of that fact are completely unexplored.)

Overall, one of the most striking aspects of the report is its lack of curiosity about whether individual members of the UNDP staff should be held accountable for egregious, longstanding and dangerous violations of UNDP rules and international law, not to mention common sense.

This applied notably to the presence in UNDP’s North Korean safe for more than a decade of $3,500 in defaced U.S. counterfeit $100 bills — “Super-Note” fakes that the Kim regime famously passed around the world. Possession of counterfeit U.S. bills is a crime. Even given U.N. legal immunities, it might seem an important matter to bring to the attention of one of the organization’s biggest donors.

Yet no-one informed U.S. authorities and senior UNDP officials claimed no knowledge of the fake funds, even though the bogus money was listed on annual reports of the safe contents for years.

The report’s assessment: “There is no evidence that anyone acted in bad faith or in a fraudulent or deceptive manner. Instead, the Panel finds that there was a clear lack of attentiveness at the [office] and Headquarters levels and that communications between the Country Office and UNDP headquarters were inadequate.

“Inadequate communications” is the explanation often given in the report for failures that allowed rule-breaking to continue, even as Kim openly brandished his nuclear weapon. The report notes that in August 2006 — four months after the passage of U.N. sanctions Resolution 1695 — the UNDP office in North Korea asked headquarters for guidance on dual use equipment transmissions to North Korea. It never got any. The project, which was based in part on receiving satellite imagery, had equipment that the report says already had been purchased.

Then, on Oct. 11, 2006 — two days after the Korean nuclear blast — a UNDP regional supervisor in Thailand answered the guidance request. He ordered UNDP not to purchase any equipment and “to close down the project immediately.” In the same message, according to the panel, the supervisor, Romulo Garcia, said he had received clearance from his bosses to close down the project in late 2005.

As it happens, U.N. Resolution 1718, imposing more drastic sanctions on North Korea, went into effect three days after Garcia’s sudden desire to follow up on a two-month-old guidance request.

The panel report’s conclusion? The 2005 decision to shut down the project “does not seem to have been communicated to the UNDP-DPRK office, as equipment purchases continued throughout 2006, including some dual use items.”

That Garcia apparently did not double-check on whether this highly sensitive order was carried out until a nuclear device exploded and another U.N. sanctions resolution loomed is never discussed in the report.

But the lack of discussion speaks volumes, both about UNDP bureaucratic efficiency and about the apparent level of UNDP concern and internal discussion of Kim’s dangerous nuclear plans.

There is one prominent exception to the report’s attitude of sympathetic understanding toward UNDP lapses: the whistleblower who brought most of them to outside attention and inspired U.S. diplomats to call for multiple investigations, including the panel report.

The report concludes that the whistleblower, a former UNDP-DPRK operations manager named Artjon Shkurtaj did, in fact, perform a service when he brought the situation in the UNDP’s North Korea office to light. But the report emphatically denied there was any retaliation against Shkurtaj when a promotion he already had been given was withdrawn and other short-term contracts he held expired.

Such claims, the panel concluded, were “without merit,” as it also made attacks on Shkurtaj’s personal integrity.

At the same time, the report offers evidence that the North Korean regime may have been pressuring UNDP to keep Shkurtaj out of the job and reveals the alarming fact that the regime apparently had veto power over UNDP’s ability to fund the position.

For his part, Shkurtaj has declared that the authors of the report violated customary U.N. practice when they failed to show their conclusions to him prior to publication. He has appealed to the U.N. chief ethics officer, Robert Benson, to investigate.

So it may well be that the ultimate message of the report is that passing on potentially dangerous equipment to a ruthless dictator who threatened his neighbors and defied the U.N. itself apparently was regrettable but otherwise a lapse in communication. Talking about such things outside UNDP apparently was something else.

Rather than bringing “closure on the allegations against UNDP,” as the organization’s boss, Dervis, hopes, the North Korean investigative report ought to raise bigger and more urgent questions about UNDP operations around the world.

If Kim Jong Il’s despotic government was able to twist UNDP’s rules and its adherence to international law with such ease, what is going on in UNDP offices in dictatorships such as Zimbabwe and Syria?

Most urgently of all, as the U.N. wobbles toward further sanctions on the nuclear-ambitious Islamic regime in Iran, what is going on in UNDP offices in Tehran?

Additional Resources:

1. Here is the UNDP report published in May 2008 (PDF)

2. UNDP Staff 2006 (2006).

Read the full story here:
Report Shows U.N. Development Program Violated U.N. Law, Routinely Passed on Millions to North Korean Regime
Fox News
George Russell
6/12/2008

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(Updated) Committee clears UNDP

Tuesday, June 3rd, 2008

UPDATE 2:

The U.N.’s North Korea Chutzpah
Wall Street Journal, Page A17
Melanie Kirkpatrick
6/12/2008 

UPDATE 1:
Cash for Kim
Wall Street Journal, page A20
6/3/2008

(Excerpt) You have to read to page 347 of yesterday’s report on the United Nations Development Program’s antics in North Korea before reaching the recommendation that is likely to cause a panic in Turtle Bay: Give member states access to the internal audits, now secret, of UNDP programs.

That simple principle – let the funders see how their money is spent – is anathema in the international aid community and was at the heart of the U.S. exposé last year of the UNDP’s slipshod operations in North Korea. If the U.S. hadn’t blown the whistle, it would be business as usual. This latest report – by three experts appointed by the UNDP – is a wake-up call for more accountability throughout the U.N.

In yesterday’s report, the auditors write that they “are unable to confirm the total size” of the UNDP program in North Korea between 1997 and 2007 – an amazing indictment of UNDP financial practices. They calculate total expenditures between $57.1 million and $72.3 million, which roughly accords with what the U.S. had estimated and far exceeds the UNDP’s guess.

Where did all this money go? The auditors conclude that 38% of disbursements were to “government agencies.” Its review of “selected” projects finds that the documentation for 77 projects – or 74% – was so poor that they could not determine “whether the ultimate beneficiary is consistent with the payee name indicated in the financial system.” That is, nobody knows where the money went – except perhaps Kim Jong Il.

Also notable is the report’s findings on dual-use technology. Of the 151 pieces of equipment reviewed by the auditors, 95 were on the U.S. Commerce Department’s control list and required an export license. Many were “controlled by the U.S. for national security and anti-terrorism reasons . . . and were of heightened concern.” The UNDP hadn’t obtained the required licenses. The auditors add that when the UNDP pulled out of North Korea in March 2007, it left this equipment behind. The UNDP failed to obtain the required “retransfer authorization,” the report dryly notes. Translation: Retrieval was impossible because the North already had the stuff.

ORIGINAL POST: A three-member UN investigative committee, led by Miklos Nemeth, a former Hungarian prime minister, issued a report claiming allegations that North Korea diverted aid money from the United Nations Development Program are not supported by the evidence.

From the New York Times:

There was no sign that millions of dollars were mismanaged, diverted elsewhere or unaccounted for, the report said, countering accusations made in early 2007 by the United States Mission to the United Nations. Although the report acknowledged that some information the panel had sought was unavailable, the review’s conclusion was that the money had been “used for the purposes of the projects.”

The controversy surrounding the accusations led the development program to suspend its operations in North Korea in March 2007. They have remained suspended because of differences over whether the government should choose local employees who work for the agency.

The report, which surveyed the disbursement of more than $23 million between 1999 and 2007, recommended that the development program pay closer attention when it adapts its general guidelines to “a challenging environment” like North Korea. The dense 353-page report appeared to concur with what the program had maintained all along, that the American allegations were baseless. But it recognized some sloppy practices, like tossing $3,500 in defaced counterfeit $100 bills into the bottom of its safe in Pyongyang and forgetting about them for more than a decade.

Here is the report (hat tip DPRK Studies)

Here is some background information from the UNDP.

Here is the Washington Post coverage.

Here are the initial findings from a US Senate report (detailing the accusations).  Here is the initial UNDP response (preceding the above report).

Read the full NY Times article here:
North Korea Didn’t Dupe U.N. Office, Report Says
New York Times
Neil MacFarquhar
6/3/2008

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IFES DPRK monthly recap: January 2008

Tuesday, February 5th, 2008

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-2-5-1
2/5/2008

Kim Jong Il’s first visit of the year was reported on January 6 to have been to the Ryesonggnang hydro-electric power plant. Generally, the leader’s visits in the first months of the year, along with the New Year’s Joint Editorial, which focused on economic recovery, set the tone for the coming year’s policies. His second inspection of the year was to a military unit.

Defectors claim that prostitution is on the rise in North Korea, and on January 9, the aid group ‘Good Friends’ reported that the DPRK has begun to close massage parlors as part of a crackdown on prostitution. The agency reported that in the DPRK there was a “steady campaign to weed out decadent foreign culture,” and that in September, DPRK soldiers were ordered to avoid alcohol, sex, and money.

On January 16, it was reported that Kim Jong Il had instructed all DPRK institutions to reduce their bureaucracies, including senior staff, by thirty percent.

Figures released by North Korea’s Korean Central News Agency indicate that the DPRK’s population had increased to 23.6 million in 2004, the latest available figures. According to DPRK figures, the population has grown from 22.1 million in 1996.

North Korea announced the closure of its Australian embassy on January 22. While the DPRK will continue to maintain diplomatic relations with Australia, it apparently can no longer afford to maintain an embassy in Canberra.

According to a report released by the International Red Cross, North Korea has the largest number of people in the world killed by natural disasters over the past decade. The report states that 458 thousand North Koreans have died from natural disaster, 38 percent of the disaster-caused deaths in 220 countries from 1997-2006.

A U.S. Senate investigation reported that the DPRK funneled as much as 2.7 million USD through a bank account set up from UN development projects. The report stated that North Korea used the UN account due to fears that the United States would block its ability to transfer money internationally.

DPRK Nuclear Negotiations

2008 opened with the United States and Japan releasing statements expressing their disappointment at North Korea’s failure to meet its December 31 deadline to fully disclose the extent of its nuclear programs, while North Korea’s New Year’s Joint Editorial called for “stability on the Korean Peninsula and peace in the world” as well as an end to hostile U.S. policies. A U.S. White House spokesman stressed that there was still opportunity to move forward with negotiations, stating, “the important thing is that we get a declaration that…needs to be full and complete,” not whether the declaration is made by the deadline.

On January 4, North Korea claimed it had met its obligations to come clean on its nuclear programs, and that it had provided Washington with a list of its nuclear programs in November. Pyongyang also threatened to bolster its “war deterrent” because Washington had failed to provide promised aid following the declaration. Washington denied that any complete declaration had been made.

A senior Russian diplomat was quoted on January 11 as saying that while Russia regrets the slowed state of progress in talks on DPRK nuclear issues, Russia will fulfill its promise to provide the North with fuel oil. 50,000 tons of fuel oil were delivered on January 20~21.

According to a book of figures recently published by the National Statistical Office, ”Comparison of North and South Korean Socio-economic Circumstances”, the DPRK”s crude imports over the past several years bottomed out at 2,325,000 barrels in 1999, then rose to 4,244,000 barrels by 2001. Since 2001, imports have steadily fallen until only 3,841,000 barrels were imported in 2006, recording the least imports in the last five years.

North Korea opened its first online shopping mall in January. The site offers items from fourteen categories ranging from machinery and building materials to stamps and artworks. The site, www.dprk-economy.com/en/shop/index.php, is based in China.

Orascom Telecom, a Cairo-based phone operator, has been granted the first commercial license for provision of mobile phone services in North Korea. The license was granted to CHEO Technology, a subsidiary that is 25 percent-owned by the state-run Korea Post and Telecommunications Corporation.

DPRK Abduction Issue

The Cambodian Foreign Minister announced on January 16 that his country had been working behind the scenes to find a resolution to the DPRK-Japan abduction issue. The minister stated, “Cambodia is in a position where it can hold high-level meetings with North Korea, and it has the ability to persuade North Korea.”

Inter-Korean Affairs

The incoming Lee Myung-bak administration announced on January 4 a plan to develop an international cooperative fund to support North Korea’s economy. The plan is said to call for World Bank and the Asia Development Bank to help, and for South Korea to provide 40 billion USD.

On January 7, it was reported that Lee Myung-bak’s presidential transition team had asked the ROK Unification Ministry to slow the pace of inter-Korean economic projects and to link them to progress in the six-party talks. The incoming administration has promised not to link humanitarian projects such as rice and fertilizer aid to nuclear negotiations.

The Lee Myung-bak administration announced plans for downsizing the South Korean government, including disbanding of the Ministry of Unification. Opposition to the plan points out the role played by the ministry in improving inter-Korean relations, while proponents to the plan of relegating the ministry’s duties to the Ministry of Foreign Affairs and Trade applaud the move to align North Korea policy with standing foreign policy directives.

On January 14, it was reported that Lee Myung-bak had asked the United States to further engage in talks with DPRK military leaders, while presenting a balanced approach, stating that “our people don’t support the idea of giving lavish aid to the North nor do they want to irritate it too much, I believe.” He went on to add that the United States holds the key to easing DPRK fears of opening up.

The net worth of inter-Korean exchanges totaled 1,797,890,000 USD in 2007, up 33% from the 1.35 billion USD in the previous year. The almost 1.8 billion dollars in trade recorded in 2007 is the highest to date, and is equal to 65 percent of the DPRK”s non-Korean trade volume of 2.996 billion USD in 2006.

The Seoul-based International Vaccine Institute announced on January 14 that it will soon begin inoculating approximately six thousand North Korean children against bacterial meningitis and Japanese encephalitis.

The two Koreas began working-level military talks on January 25, marking the first talks of the year. During talks, the North proposed reducing the frequency of the inter-Korean rail services, citing a lack of cargo. The Southern delegation felt that the frequency was an important indication of inter-Korean cooperation. The two sides agreed to continue daily runs, but to reduce the number of empty carriages in the future.

North Korea is still not as attractive to businesses as other Asian neighbors. A survey released by the (South) Korea Chamber of Commerce and Industry on January 28 indicated that China and Vietnam are more attractive to ROK businesses. According to the survey, 80 percent of businesses have difficulties starting or operating businesses in North Korea.

An ROK special envoy returned on January 23 from Moscow after proposing a joint ROK-DPRK-Russian cooperative project in eastern Siberia. President-elect Lee Myung-bak sent a letter to Russian President Vladimir Putin pushing for cooperation of “North Korea’s workforce, Russia’s resources and capital, and [South] Korean technology.”

U.S.-DPRK Relations

On January 9, amidst reports concerning possible DPRK-Syria nuclear connections, it was reported that in 1991 Israel was posed to strike a ship suspected of delivering missiles from the DPRK to Syria, but was dissuaded by Washington.

A U.S. State Department official stated on January 22 that North Korea had met the legal criteria to be removed from the U.S. list of state sponsors of terrorism. This came just after reports of conflicting opinions within the Bush administration, with Secretary of State Condoleezza Rice sharply rebuking Special Envoy on North Korean Human Rights Lefkowitz, who stated that North Korea is not serious about nuclear disarmament. Rice went so far as to say that Lefkowitz “certainly has no say on what American policy will be in the six-party talks,” dismissing his negative position on the failure of North Korea to meet its obligations. The White House later stated that North Korea must make a full declaration of its nuclear activities before being removed from the list.

Five officials from the DPRK recently visited the United States in order to learn how to treat and prevent tuberculosis, a serious concern for the North that is “practically non-existent in most developed countries.” The officials were invited by The Korea Society, which is based in New York.

DPRK-PRC Relations

According to the PRC General Administration of Customs, China’s oil exports to North Korea were the same in 2007 as they were in 2006. China sent 523,160 tons of oil to North Korea in 2007.

A senior PRC Communist Party official traveled to Pyongyang for a meeting with Kim Jong Il on January 30. Wang Jiarui, director of the International Liaison Department of the Chinese communist party, was to convey a message to Kim, inviting him to the opening ceremony of the Beijing Olympics. While Kim reportedly told Wang that there would be no change in the DPRK stance on nuclear negotiations, he also assured the Chinese envoy that North Korea had no intention of harming DPRK-PRC relations.

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UNDP statement on Senate investigation into UNDP operations in DPRK

Friday, January 25th, 2008

The UNDP issued a response to the US Senate investigation into their operations in North Korea.  This is from their web site (January 23, 2008):

UNDP welcomed the recent investigation by the US Senate Permanent Subcommittee on Investigations (the “Subcommittee”) into its former operations in North Korea.  UNDP voluntarily cooperated with the inquiry, including by making its personnel and documents available for review by the investigators.  UNDP’s extensive cooperation is acknowledged in the report.

The Subcommittee initiated the inquiry in June 2007, in the wake of persistent allegations concerning UNDP’s operations in North Korea.  A 31 May External Audit had found that, because of constraints imposed by the North Korean authorities, UNDP and other UN agencies did not operate in North Korea according to the same standards and practices they used elsewhere worldwide.  The same audit found, however, contrary to allegations that UNDP spending totaled hundreds of millions of dollars, that UNDP ran a modest program of less than $3 million per year, and had in place a full range of monitoring mechanisms to verify its spending.  New allegations surfaced shortly afterward, including detailed charges that UNDP had underreported its funding levels, and engaged in illicit transactions with entities tied to the North Korean armaments program, and that a significant amount of UNDP funding had been diverted by the North Korean government.  The Subcommittee initiated its investigation shortly afterward.

Nearly seven month later, after extensive interviews with UNDP staff, as well as a Subcommittee field to visit UNDP headquarters to verify the financial control systems UNDP had in place in North Korea, UNDP emphasizes that the Subcommittee’s report contains nothing to substantiate persistent allegations that:

• UNDP transferred tens of millions of dollars to the North Korean government, as had been alleged;
• UNDP money was used to fund North Korean purchases of real estate, or were diverted to its nuclear or missile programs;
• UNDP dealt in significant amounts of cash, which could be diverted or embezzled in defiance of financial controls;
• UNDP ignored UN controls on prohibited vendors and dealt directly with entities barred by these processes.

The report does contain a series of findings and recommendations.  UNDP’s responses are outlined below.

On UNDP’s management and operational practices in North Korea:
Finding: UNDP operated in North Korea with inappropriate staffing, questionable use of foreign currency instead of local currency, and insufficient administrative and fiscal controls.  

UNDP Response:

– The report states that UNDP operations in North Korea are a case study of an international agency’s attempts to achieve development goals in a restrictive environment, and that By all accounts, operating development projects in North Korea presented management and administrative challenges of the most extreme nature.  By definition, UNDP operates in challenging environments, and has crafted, for the most part, sound rules and procedures to ensure that UNDP development funds benefit the people of a host nation.
– UNDP has said all along that North Korea was a difficult place in which to do business.  It operated there since 1981 at the explicit direction of its Executive Board, which includes the US, and which regularly approved its programs.  The Executive Board was aware of the operational constraints UNDP faced.  All foreign entities in North Korea – UN agencies, national diplomatic missions and international NGOs – face the same constraints. 
– UNDP is committed to addressing any and all management and operational deficiencies that have been identified in its former operations in North Korea, and to applying lessons learned to other countries in which it faces similarly challenging operational environments.

On access to internal audits

Finding: By preventing access to its audits … UNDP impeded reasonable oversight.
Recommendation: UNDP should provide UN member states with unfettered access to financial and management audit reports about UNDP activities, including providing timely copies of such reports and allowing UN member states to make audit information public.

UNDP Response:

– As noted by Senator Levin, a proposal that would grant routine access to UNDP Executive Board members to UNDP audit reports is currently before the UNDP Executive Board.

On deceptive financial transactions by the DPRK government:
Finding: In 2002, the DPRK government used its relationship with the United Nations to execute deceptive financial transactions by moving $2.72 million of its own funds from Pyongyang to DPRK diplomatic missions abroad through a bank account intended to be used solely for UNDP activities and by referencing UNDP in the wire transfer documents.

Recommendation: UNDP should take steps to ensure that its name and resources are not used as cover for non-UN activities.

UNDP Response:

– UNDP is not happy that its name may have been used inappropriately by the North Korean government in connection with deceptive financial transactions.  It has formally raised this matter with the North Korean government.
– UNDP is pleased to note, however, that there is no suggestion that UNDP either knew of or could have prevented the transactions.  The report states: The Subcommittee does not conclude that the deceptive financial transactions executed by the North Korean government would have been prevented had UNDP’s management been more vigilant.
– UNDP is also pleased to note that contrary to persistent allegations it has faced, the report finds that the $2.72 million in question was not UNDP’s money.
– UNDP records show that the total sum transferred from 2001 to 2005 to the North Korean entity that was misusing UNDP’s name was approximately $175,000.  This figure is far less than the $7 million UNDP was alleged to have transferred to the entity in during this period.

On UNDP payments to Zang Lok

Finding: UNDP transferred UN funds to a company that, according to a letter from the US State Department to UNDP, has ties to an entity involved in DPRK weapons activity.

Recommendation: Prior to making payments to a contractor, UNDP should take steps to ensure that the contractor is not associated with illicit activity.

UNDP Response:

– UNDP paid a Chinese company named Zang Lok $22,000 in 2002 on behalf of WIPO, and $30,000 in 2004, on behalf on UNESCO.  UNDP did so because although both of these UN agencies have run projects involving North Korea, neither of them has a presence in the country.  In both cases the goods in question (computer equipment) were paid for by WIPO and UNESCO and received in good order.
– The State Department first informed UNDP that Zang Lok had ties to a “designated entity” on 6 June 2007, and UNDP immediately agreed to cease doing business with Zang Lok.
– UNDP and other UN agencies routinely consult control lists maintained by the UN Security Council before making procurement decisions.  It is unclear whether Zang Lok, as a company with ties to a “designated” North Korean entity – but not itself a designated entity – was on any list that could have been consulted in 2002, 2004, or afterward.
– The report acknowledges that UNDP’s vetting procedures appear sound and that It does not appear that UNDP, or the UN agencies on whose behalf UNDP was acting, knew of – or had any way of knowing – whether Zang Lok was connected to an entity involved with DPRK weapons activity at the time the payments were made.
– UNDP agrees that it would benefit from increasing its information-sharing with the other UN agencies and is committed to doing so within the ongoing process of harmonizing the UN standards system-wide, in which it is a leading participant.

On alleged retaliation against a whistleblower:

Finding: By…not submitting to the jurisdiction of the UN Ethics Office … UNDP undermined its whistleblower protections. 

Recommendation: UNDP should ensure that whistleblowers do not face retaliation for reporting irregular or improper conduct.

UNDP Response:

– Contrary to criticism directed at UNDP over the past year, UNDP has had policies and procedures in place to protect employees from retaliation for some time.  Some of these predated the policies initiated by the Secretary-General in 2005.  Moreover, all personnel (staff and non staff), regardless of level or legal status, are encouraged to bring concerns and claims under these procedures, and all such claims are treated with appropriate seriousness. 
– More recently, and in accordance with the new policies issued by the Secretary General in late 2007, UNDP has appointed an Ethics Officer.  In addition to overseeing the key components of UNDP’s ethical standards and mechanisms, the Ethics Officer will work together with the Director of the Ethics Office of the Secretariat, the new UN Ethics Committee, and the Ethics Officers of other UN entities, to further harmonize the overall ethics regime of the wiser UN system. 
– From a staff perspective, there is now in place a “two step system”.  Staff from UNDP can now appeal to the Chair of the new UN Ethics Committee to have their individual case reviewed by the UN Ethics Office, if they believe that they have not been appropriately treated within UNDP.
– In the case referenced by the Subcommittee, there is no question that Mr. Artjon Shkurtaj raised operational concerns during his time at UNDP North Korea.  There is equally no question that it was his job to do so, that the concerns he raised were similar to those raised by his predecessors, and that UNDP managers responded as appropriate.
– A key point is fundamental to ethics regimes and whistleblower protection mechanisms almost everywhere, including at the UN and UNDP: the complainant must avail him or herself of the mechanisms and cooperate with any inquiry. Mr. Artjon Shkurtaj neither availed himself of existing UNDP mechanisms nor cooperated with a subsequent inquiry.
– Mr. Shkurtaj’s case has been taken up by the External Independent Investigative Review (EIIR), which is being led by former Hungarian Prime Minister Miklos Nemeth.  According to the terms of reference of the EIIR, if the UN Ethics Office is not fully satisfied on the issue of Mr. Shkurtaj, it will itself look into the matter.  UNDP will not offer further comment while the EIIR is ongoing.

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US senate investigation of UNDP’s DPRK programs

Thursday, January 24th, 2008

The US Senate Permanent Subcommittee on Investigations of the Committee on Homeland Security and Governmental Affairs published a report detailing the failure of the United Nations Development Program (UNDP) to adequately monitor its projects in the DPRK. 

By way of background…In March 2007, the UNDP suspended its operations in North Korea because of the government’s refusal to agree to new measures designed to increase the transparency and accountability of the UNDP programs there. 

The subcommittee staff released the following findings:

1. UNDP operated in North Korea with inappropriate staffing, questionable use of foreign currency instead of local currency, and insufficient administrative and fiscal controls

  • UNDP’s DPRK office was staffed in large part with North Korean nationals who were selected by the DPRK, contrary to UNDP policy; 
  • UNDP paid the salaries of local staff directly to the North Korean government without any way of verifying that the salaries were properly disbursed and despite UNDP’s suspicion that the DPRK was, in the words of one UNDP official, “skimming” money from the payments; 
  • UNDP paid salaries and other expenses in convertible currencies, such as US Dollars or Euros, rather than in the local currency, contrary to UN best practices; 
  • UNDP was required to conduct its financial transactions using a DPRK state bank that accepted paperwork only from DPRK personnel, sometimes routed UNDP funds through an unrelated bank account, and, until recently, refused to provide UNDP with copies of cancelled checks;
  • UNDP was allowed to conduct on-site project visits only with prior notice and in the company of North Korean officials, contrary to UNDP best practices; and
  • The UNDP office in Pyongyang operated without secure communications, and the regime routinely monitored UN activity, going so far as to enter and search private residences of UN personnel.

2. By preventing access to its audits and not submitting to the jurisdiction of the UN Ethics Office, UNDP impeded reasonable oversight and undermined its whistleblower protections.

The UNDP commissioned four audits of its North Korean operations, in 1999, 2001, 2004, and 2007. Problems were identified in all four. The first three audits were nonpublic and, in accordance with UNDP policy, unavailable for review even by nations serving on the UNDP Executive Board. After repeated requests, UNDP made an exception to this policy and, in 2007, showed the audit reports to the US Mission to the United Nations, whose personnel were allowed to read but not copy them.

Beginning in 2005, Artjon Shkurtaj, then Operations Manager of the UNDP office in Pyongyang, raised concerns about management and operational deficiencies in UNDP operations. After raising these concerns, his employment contract was not renewed. He then filed a complaint with the UN Ethics Office claiming that UNDP had retaliated against him.  In August 2007, however, the Ethics Office determined that, although Mr. Shkurtaj had established “a prima facie case of retaliation,” it lacked jurisdiction to decide his claim and could protect only whistleblowers within the UN Secretariat.

3. In 2002, the DPRK government used its relationship with the United Nations to execute deceptive financial transactions by moving $2.72 million of its own funds from Pyongyang to DPRK diplomatic missions abroad through a bank account intended to be used solely for UNDP activities and by referencing UNDP in the wire transfer documents.

4. UNDP transferred UN funds to a company that, according to a letter from the US State Department to UNDP, has ties to an entity involved in DPRK weapons activity.

UNDP regularly made payments to contractors on behalf of other UN agencies operating in North Korea. During the course of its investigation, the Subcommittee learned that payments on behalf of other UN agencies – totaling approximately $50,000 – were made to an entity named Zang Lok Trading Co. in Macau. According to a letter dated June 7, 2007, to UNDP from the US Permanent Mission to the United Nations, Zang Lok “has ties to a North Korean entity that has been designated [by the US government] as the main North Korean financial agent for sales of conventional arms, ballistic missiles and goods related to the assembly and manufacture of such weapons.” UNDP maintains that it does not know, and has no way of knowing, whether Zang Lok is connected to North Korean weapons sales.

How much money are we talking about?
UNDP estimates that, from 1995 to 2005, it spent a total of about $33.5 million in North Korea. Of that figure, approximately $6 million was spent on UNDP office, staff, and operating expenses, including roughly $100,000 per year in payments to local staff and contractors, and $500,000 per year spent on rent, office supplies, transportation, employee compensation, and other expenses. An ongoing external audit is expected to refine these estimates. In addition, the UNDP office in North Korea made payments and provided administrative support on behalf of other UN Funds and Programs operating in North Korea including the United Nations Population Fund and United Nations Office for Project Services, among others. Total expenditures by all UN agencies in North Korea – excluding the World Food Program – during the same ten-year timeframe have been estimated at roughly $200 million.

Here is the full report: undpreport.pdf

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Surfing Net in North Korea

Monday, November 12th, 2007

Korea Times
Andrei Lankov
11/12/2007

Kim Jong-il loves to surf the net. In 2001 he asked the U.S. Secretary of State for her e-mail address, and in 2002 he told a visiting North Korean dignitary that he spent much time going through South Korean sites. He repeated this statement during the recent summit describing himself as ”an internet expert.”

Despite his relatively advanced age, Kim Jong-il takes the IT industry seriously. He obviously believes that the IT industry might become a wunderwaffen (super weapon) which one day will save the ailing North Korean economy (Kim Jong-il has always believed in simple, one-step, technology-based fixes for problems).

Now and then, news agencies report on North Korean efforts to train software specialists, or on a technology firm established by the North Koreans, or even on Kim Jong-il’s plans to create a large industrial complex which would become the North Korean reply to the Silicon Valley.

Efforts to create a computer industry go back to the late 1970s. In those days, the U.N. Development Program helped the North build a small pilot integrated circuit plant. Its history was plagued by one misfortune after another: the plant’s building proved to be badly insulated, the electricity supply was unreliable, and the engineers who were sent overseas for training arrived too late (most of them did not speak English, anyway). However, by late 1985 the plant was operational, producing ICs, an essential component of a computer.

By the early 1990s, the North was producing some 20,000 computers a year. Not much, but enough to provide for the military and even earn some money from export (over 60 percent of them were said to be exported).

In the early 1990s the North Koreans developed their own software, including a word processor. The latter had, among others, a peculiar function: it could automatically insert the names of the Great Leader and Dear Leader through a specially designated hot key.

In the North the PC was never meant to be a personal computer. It is reserved for office or industrial use, not for home – not least because the Internet is unavailable. For a regime which (correctly) assumes that its survival depends on its ability to keep the populace ignorant about outside world, the internet presents a mortal danger. Matters are further exacerbated by the unique success of the South Korean internet. If North Koreans were allowed to surf the numerous Southern sites at will, the carefully constructed picture of the world would instantly fall apart.

Thus, the internet is outlawed – but not completely. In recent years, foreign embassies have been allowed to connect to Chinese internet providers, but they have to pay the exorbitant fee for an overseas call (currently, $2 a minute). The connection is unreliable, but if your bills are paid by your country’s taxpayers, you probably can check your email… Access to email through business centers and even Internet cafes is becoming possible as well _ as long as one is a foreigner and is willing to pay exorbitant prices.

Only the privileged few have unlimited high-speed access to the Internet. But these trusted people are numbered in the hundreds or, perhaps, count a few thousands. Access is provided for the military, intelligence, and few privileged research centers only. Rooms where the internet-connected computers are installed are considered off limits for the North Korean personnel, and only people with proper security clearance can access this source of dangerous knowledge.

Less privileged institutions have access to local networks with limited connections to the World Wide Web. Their task is to let scientists and engineers retrieve the data they need without unduly exposing them to the dangers of overseas decadence.

There have been attempts to make money through IT. None of the grand plans for selling locally developed software on the international market have come to fruition, but there are easier ways to make a buck. In 2002 the North Koreans started an on-line gambling site in cooperation with a South Korean company. It targeted South Koreans, since gambling is illegal here. Its message board attracted much popularity since it was a place where the Southerners could exchange messages with the North Korean staff. The ability to chat with the Northerners was exciting (even though the largely young participants probably did not realize to which extent their interlocutors were controlled). The combination of gambling and propaganda obviously terrified Seoul, and the site was closed down.

Another area where North Koreans are trying their luck (and obviously not without moderate success) are game development and computer animation. Indeed, even major studios are sometimes inclined to outsource their animation work to North Korea.

The Internet remains a hot potato for the North Korean leaders. They understand its importance, but they do not know what to do about its political dangers. While facing such a choice, they have always opted for political security.

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Expert says N.K. becoming more open, better at dealing with national disasters

Monday, September 24th, 2007

Yonhap
9/24/2007

North Korea is becoming more transparent and effective in dealing with disasters, spurred by both internal and external factors, an Asia-Pacific regional specialist said in his latest paper.

Dr. Alexandre Mansourov, a securities studies professor at the Asia-Pacific Center for Security Studies (APCSS) in Hawaii, noted five trends in the North Korean government’s responses over the past decade to nationwide shocks, including floods, typhoons, drought and avian influenza outbreaks.

Increasing transparency is one of the trends, with Pyongyang more quickly admitting to disasters that have struck the nation, he said in a paper (download here) released last week through the Korea Economic Institute in Washington.

It took North Korea several years to admit the impact of natural disasters in the mid-1990s that led to massive starvation and chronic food shortages. But in August 2000, when it was hit by Typhoon Prapiroon, North Korea released the news three weeks after it occurred, and in the two following years, when other typhoons struck, North Korea reported it within three to six days, Mansourov said.

Pyongyang immediately acknowledged flooding in August 2007, he said.

“Observers agree that the timeliness, details, and amount of coverage of flood damage and rehabilitation work in August 2007 is unprecedented.”

North Korea is also showing institutional knowledge and a capacity for disaster management, with new organizations growing out of a decade of learning and experience, such as various provincial centers, the professor said.

The North Korean Red Cross Society has been exceptional, he said, working with the International Federation of Red Cross and Red Crescent Societies, and has made itself the leading agency in disaster preparedness and response.

Inter-agency coordination has also increased, with deputy prime minister-level working groups working closely together in each disaster since the flood of 2001, as there are preventive programs through which basic relief supplies are stored in town and villages.

For example, the 10-year strategy against avian influenza, worked out by the emergency commission in 2005, would have been unthinkable a decade ago, Mansourov wrote.

Another notable trend is the increasing cooperation between the North Korean government and international humanitarian community, gradually allowing joint needs assessments and monitoring, he noted.

Mansourov argued that external factors helped bring about the changes.

“International factors did make a difference in what happened in (North Korea), especially through the introduction of innovative ideas and dissemination of best humanitarian practices,” in addition to foreign aid, he said.

The scholar also argued that while the country’s top leader, Kim Jong-il, does control any institutional changes, there is also adaptation driven by needs.

“There has been some degree of autonomous institutional learning and adaptation; it is incremental in nature and caused by both positive and negative feedback from the environment regarding institutional performance in crisis situations,” he said.

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U.N. agency may have hit back at N.Korea whistleblower

Monday, August 20th, 2007

Reuters
Patrick Worsnip
8/20/2007

The U.N. ethics office found evidence that the United Nations Development Program retaliated against an employee who tried to expose its alleged wrongdoing in North Korea, a letter leaked on Monday said.

The letter sent on Friday by the office to UNDP chief Kemal Dervis is likely to lend fresh ammunition to the United States in a long-running dispute with UNDP over its North Korean operations, centering on claims of financial irregularities.

The agency has denied that it fired Artjon Shkurtaj, a native of Albania with Italian citizenship who was head of UNDP’s operations in North Korea from 2005-2006, because of his criticisms. It says his contract was not renewed.

The case came before the Ethics Office because Shkurtaj applied for U.N. whistleblower status under a two-year-old directive. But the office cannot launch a formal investigation without UNDP’s agreement because, as an agency with its own executive board, UNDP does not come under its jurisdiction.

In his letter, Ethics Office director Robert Benson told Dervis that the evidence it found would have supported a case against the UNDP if jurisdiction had applied.

UNDP has decided against waiving its right not to be investigated by the Ethics Office, but Benson urged the agency to do so, saying: “I believe this would be in the best interests of the United Nations and UNDP.”

His confidential letter first appeared on the Web site of Inner City Press, an independent blog on U.N. affairs.

The United States accuses UNDP of sloppy accounting, handing over cash to North Korean bodies without proper documentation and hiring staff hand-picked by the communist Pyongyang government.

OUTSIDE REVIEW

A U.N. audit published on June 1 said rule breaches had occurred but did not find systematic diversion of U.N. funding. UNDP quit North Korea in March after Pyongyang refused to accept changes ordered by its board of directors.

UNDP and U.S. officials have been unable to agree how much money Pyongyang, whose nuclear program has for years been the subject of international concern, received from UNDP.

Some of Washington’s information came from Shkurtaj, who has said publicly that UNDP violated “multiple rules and regulations” and engaged in “criminal conduct” in North Korea.

UNDP spokesman David Morrison told a news conference last month that Shkurtaj had been invited to submit evidence to back up his allegations but had so far not done so.

He admitted that UNDP barred Shkurtaj from entering the U.N. compound in New York after his contract expired in March, even though his U.N. pass was still valid.

Instead of agreeing to be investigated by the Ethics Office, UNDP has opted for an outside review — yet to be set up — that would look simultaneously at Shkurtaj’s allegations and other aspects of UNDP’s North Korea operations.

“UNDP believes that having multiple processes reviewing related or identical issues would not be the most effective way to achieve closure of this matter,” agency spokeswoman Christina LoNigro said.

U.N. spokeswoman Michele Montas said Secretary-General Ban Ki-moon was “very much concerned about this whole issue,” including the fact that Ethics Office jurisdiction did not cover UNDP, which has no such office of its own.

“There is no doubt that the Secretary-General is going to discuss ways of filling” the gap, she told a news briefing.

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North Korea Tech Transfer

Friday, July 20th, 2007

Wall Street Journal
Melanie Kirkpatrick
7/20/2007

Of all the evidence turned up by the U.S. concerning irregularities in the United Nations Development Program’s operations in North Korea, some of the most disturbing concerns the transfer of dual-use technology.

As reported last month, the U.S. has uncovered documents showing the UNDP procured and delivered to North Korea in May 2006 technology that could be used for military purposes: global positioning system (GPS) equipment, a portable high-end spectrometer and a large quantity of high-specification computer hardware. According to packing lists and confirmation receipts, the items were intended for a “GIS” — geographic information system — project.

The equipment “is the type of technology subject to (U.S.) export controls,” says a spokesman for the Commerce Department’s Bureau of Industry and Security, which is responsible for issuing export licenses. So how did it end up in Pyongyang? It would seem more than passing strange that Commerce would have issued the requisite export licenses. The answer is: It didn’t.

U.S. officials, led by Ambassador Mark Wallace at the U.S. mission to the U.N., have spent a year looking into the UNDP’s operations in North Korea. Now, at the request of the State Department, Commerce searched its archives and found no record of any application for export licenses for the GPS, spectrometer or other equipment for the GIS project in North Korea.

Over the past 10 years, Commerce has received more than 200 license applications to export U.S. technology for U.N. projects in North Korea. Of those applications, the UNDP was named in a grand total of two, including one for software for the same GIS project that was equipped last year. That application was rejected.

Previously undisclosed documents show that the UNDP had been trying to equip the GIS project since at least 1999, when the application for an export license for mapping software was denied. Commerce cited concerns over the lack of safeguards in the project that could result in the software being diverted to the North Korean government and used for military purposes.

Yet seven years later, the UNDP procured and transferred sensitive technology to the same, unsafeguarded project — this time without bothering to apply for a license. And while there’s no evidence the UNDP went ahead and purchased the software for which it had been denied a license, that possibility must be considered, since GPS equipment is useless in such a project without mapping software.

The denial notice for “Case Number: Z177037” is dated Sept. 18, 1999. The “consignee in country of ultimate destination” is listed as the UNDP in Pyongyang. The one-page notice is written in prose that is clear and unambiguous: “The Department of Commerce has concluded that this export would be detrimental to U.S. foreign policy interests.”

The 14 items on the UNDP’s wish list were all classified “EAR99,” which means they are subject to Commerce jurisdiction but didn’t specifically appear on the Commerce Control List of items restricted for export. In discussions over the past several weeks with State Department officials, Commerce officials who examined the archives explained their agency’s decision to deny the export license. During the interagency review of the UNDP request, they say, questions were raised about whether the software would stay in North Korea after the UNDP international staff left and whether North Koreans would have access to the software.

Supporting documents show that the answer to both questions was yes. A letter dated April 5, 1999, from the software manufacturer that was seeking the export license on behalf of the UNDP, explains: “The project is supposed to be completed in three (3) years and the software will be left with the state agencies.”

Emails from the UNDP to Commerce offer further information about the UNDP’s security controls — or lack thereof. An Aug. 3, 1999 email from the UNDP’s Shankar Manandhar, in response to a Commerce query, says, “We would like to inform you that the North Korean nationals will have access to the computer in the project office in [the] presence of UNDP staff.” In another email, Mr. Manandhar notes that the software will be “utilized in the project office.”

The Defense Department recommended to Commerce that the application be denied. In a memo dated July 20, 1999, Defense explains that “These items could pose both national security and proliferation issues for the US and allies if diverted to the North Korean military.” Among the list of potential military applications cited are “planning a nuclear weapons infrastructure or missile launch sites.” And, “it could also be used for targeting.” In the end, as one Commerce official explained, since this type of mapping software can be used for military purposes, it was deemed to be “too great a risk of diversion.”

The Commerce official also says the case notes for the denial specify that several earlier licenses granted to the UNDP in North Korea had been conditioned in such a way that no North Korean nationals were to have access to the licensed items. Oh, really? Based on the UNDP’s replies to Commerce’s questions regarding the 1999 application, the official says that the licensing officer at the time believed it was “highly likely” that the UNDP was violating the terms of its previous licenses by allowing North Koreans access to licensed items. We now know — as confirmed by the U.N.’s preliminary audit of the UNDP’s North Korea operations — that the agency’s local staff were Ministry of Foreign Affairs employees assigned to the UNDP by the government.

It’s also worth noting the year these events took place: 1999. That is, the denial notice originated in Bill Clinton’s Commerce Department, part of an administration that was “conducting a one-sided love affair with North Korea,” in the felicitous phrase of Christopher Cox, then a Republican congressman closely monitoring Asian issues. On Sept. 17, 1999, the day before the issuance of the denial notice, the administration announced it would ease economic sanctions on North Korea. But approving the sale of sophisticated mapping software was a bridge too far even for the Clinton administration.

Since the U.S. went public in January with evidence of the UNDP’s lack of oversight of its programs in North Korea, the agency hasn’t exactly been forthcoming. At first, the UNDP denied that it had purchased dual-use equipment for North Korea, referring instead to “rice husk removers” and “plotters to help the [Korean] authorities more accurately produce maps for environmental monitoring.”

Next it look the line that the GPS equipment, portable spectrometer and computers delivered in May 2006 “do not represent state-of-the-art technology,” as Ad Melkert, the No. 2 UNDP official, put it in a June 28 letter to Zalmay Khalilzad, U.S. ambassador to the U.N. An annex to Mr. Melkert’s letter describes the technology as “not high-end or sophisticated” — an assessment at odds with the representations of the manufacturers. Trimble, for example, maker of the GPS GeoXT Handheld sent to North Korea, describes its product as having “a powerful 416 MHz processor running the most-advanced operating system available.” Mr. Melkert says in the annex that the UNDP is investigating “whether the vendors [in the Netherlands and Singapore] were required to obtain export permits for these items” — which sure sounds like an effort to shift responsibility.

Since January, when the U.S. concerns were made public, the UNDP has pulled out of North Korea and the U.N. audit has confirmed extensive violations of U.N. rules regarding hiring practices, the use of foreign currency and site inspections. The latest U.S. revelations raise far more serious questions about the UNDP’s oversight. Under the most generous interpretation, the agency was negligent of its legal responsibilities to keep dual-use technology out of a country that is on the U.S. list of terror-sponsoring states. At worst, it deliberately transferred the technology, knowing it was breaking U.S. law and helping to strengthen Kim Jong Il’s military dictatorship.

These questions — and many more concerning the UNDP’s record in North Korea — highlight the need for an independent, external inquiry of the UNDP’s programs world-wide. The U.S. first went public with its concerns in January, after months of pressing the UNDP for more transparency. If anything, as the latest U.S. evidence shows, things are worse than anyone thought.

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

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