PRESS CONFERENCE BY United Nations Development Programme

 

While welcoming the Secretary-General’s call for a continuation of the audit of the activities of the United Nations Development Programme (UNDP) in the Democratic People’s Republic of Korea, including the auditors’ visit to Pyongyang, the Programme’s Communications Director, David Morrison, addressed “a new set of allegations” that had surfaced in recent days, at a Headquarters press briefing this afternoon.

He said that, in a meeting with the Programme’s Administrator, Kemal Dervis, on 6 June, United States officials had raised new allegations concerning UNDP’s programme in the Democratic People’s Republic of Korea.  The United States Mission had followed up with new details on Thursday, 7 June.  UNDP took the allegations very seriously and had asked the Mission to provide all available documentation to substantiate the allegations and facilitate UNDP’s own immediate review of them.  No documentation had been provided to UNDP to date, but a meeting was now scheduled to take place in the next couple of days to review all relevant documentation.

“We, of course, have to allow for the possibility that new evidence will come to light, that there is something there that we should be concerned about that we haven’t discovered on our own yet,” he continued.  While it was necessary to allow for the possibility that the data in UNDP’s electronic financial system had been “somehow corrupted”, based upon UNDP’s own records the new allegations did not seem to add up.

UNDP had been very responsive to the concerns about its former programme in the Democratic People’s Republic of Korea that had initially been raised by the United States Mission in a meeting with Mr. Dervis back in December.  Within days after that meeting, UNDP’s Resident Representative in Pyongyang had informed Government authorities that the Programme would be stopping certain hard-currency transactions.  The Programme then informed the country’s authorities that it would be changing its staffing practices, which had also been a subject of scrutiny.  In January, when the Executive Board of UNDP -- led by Japan -- expressed concerns about certain elements of the programme, UNDP readily agreed to narrow that programme.  In March, when the North Korean side informed UNDP that it would not implement the changes, UNDP suspended the programme.  There were no plans to restart the programme in the near future, but of course UNDP would take guidance from its Executive Board on the matter.

During that whole period, UNDP had been a subject of “all manner of pretty wild allegations about wide-scale funding diversion” involving amounts 25 to 50 times larger than what the Programme had in place.  “Envelopes full of cash, white Toyotas pulling up in front of UNDP offices in Pyongyang -- none of these allegations that have been circulating widely have been backed up by any evidence,” he said.  It was ironic that some of the new allegations centred on electronic funding transfers.  “At first, we are charged with throwing buckets of cash around and now it’s all done electronically,” he pointed out.  So there was a certain sense of inconsistency and “moving of goal posts” in the allegations circulated in the press.

The Programme’s response to the allegations had been very clear from the beginning, he said:  “Let’s wait for the audit.”  The Secretary-General had been very clear in January that the way to get to the bottom of the situation was to have an external audit, and the Programme had facilitated and supported that audit.  The preliminary audit report at the end of May had confirmed that UNDP had been running a very modest programme of $2 million to $3 million per year in the Democratic People’s Republic of Korea and that it did have controls in place to determine how the funding was being spent.

Some of the current allegations in a Chicago newspaper centred on the Programme’s spending on behalf of other agencies, he continued, far exceeding the scale of actual operations.  In fact, he had provided the reporter with a spreadsheet detailing all the expenditures on behalf of all United Nations agencies in the Democratic People’s Republic of Korea, going back 10 years, and he was prepared to share that information with other correspondents.  The allegation circulated last week was that, in 2005, UNDP had spent $5 million on behalf of the Food and Agriculture Organization (FAO) in the Democratic People’s Republic of Korea, and the figures that UNDP had been giving out consistently for months were in the low hundreds of thousands.  Those figures had been corroborated by the FAO this morning.

“We cannot prove that something did not happen,” he said.  “All we can do is be completely transparent and say, come and take a look for yourself.”  The programme in North Korea had been audited three times in eight years and, now, the most recent process was focusing on the three areas of concern specified by the Secretary-General.  At no time had those audits or the Programme’s own monitoring, evaluation, and site visits given rise to concerns along the lines of the allegations that had been circulating.  Clearly, there were documents in circulation -- none of which UNDP had seen -- that were telling a very different story about the Programme’s activities in North Korea.  UNDP had scrutinized its records extensively over the past six months, and it was doing so again this week.

Regarding an allegation that, in 2001–2005, UNDP had transferred $7 million to the National Coordinating Committee (NCC) -- UNDP’s counterpart agency within the North Korean Government -- he said that the Programme’s records showed transfers to the order of some $175,000, most of which was used by the North Koreans to host agricultural workshops for participants from Africa and Least developed countries in Asia.  The money was used mainly for consultants and training.  The same related to the allegation that $2.8 million had been transferred by the NCC to North Korean missions in Europe and New York, which used the money to purchase real estate.

There was also an allegation that UNDP had paid nearly $2.7 million to purchase goods and services from companies linked to an entity that the United States Government had designated as the primary North Korean financial agent for sales of conventional arms and ballistic missiles.  UNDP had no record of any dealings with one of those companies.  As for the second one, the Programme’s records showed procurement to the order of $22,000 worth of equipment and supplies on behalf of the United Nations Educational, Scientific and Cultural Organization (UNESCO) in 2004.

Responding to an allegation that the Programme had procured dual-use equipment, including a global positioning system, computers, accessories, and a mass spectrometer, he said that such equipment had been purchased in 2006 for a project that had been initiated by UNDP and the United Kingdom Government to assist countries with land-use classification, natural disaster monitoring and crop yield estimation.  The system was deployed in the provinces that were most susceptible to flooding and drought in North Korea.  UNDP supported similar initiatives in the Maldives and India.

To an additional query about that project, he said that the equipment in question was “by no means state of the art”.  He said:  “We are not naïve in the Democratic People’s Republic of Korea, or anywhere else.  We are aware of the realities and perceptions of dual-use technology, but we are also there trying to do development and, with that in mind, we and the British Government … looked at this programme and decided that it was worth backing.”

As for a new allegation about counterfeiting amounting to tens of thousands of dollars, UNDP took such matters very seriously, but knew of no instances of possible counterfeit currency linked to its operations in North Korea.  UNDP had recently transferred to United States authorities $3,500 in suspect counterfeit funds that did not belong to it, but it had been in its safe in North Korea for some time.

And finally, responding an allegation that UNDP had retaliated against a staff member who expressed concerns over UNDP operations in the Democratic People’s Republic of Korea, and threatened several others, he said that UNDP had not retaliated or threatened any staff members.  A former consultant who had served on a series of short-term contracts for UNDP, including in North Korea, had raised concerns over some aspects of UNDP’s operations there.  Those concerns have been looked into, including by UNDP senior management.  The individual was interviewed by the United Nations Board of Auditors as part of the recent external audit of UNDP’s operations in the Democratic People’s Republic of Korea.  The individual did not currently work for UNDP, having left the organization in March 2007, upon the expiration of his most recent short-term contract.

To additional questions in that regard, he said that he was not aware of a complaint being considered by the Ethics Office.  The individual’s short-term contract had simply not been renewed.  Such contracts -- very common in the United Nations system -- had no expectation of renewal.

Responding to a question, he said that the focus of initial concerns had been on staffing, certain direct payments in hard currency and access to sites, as well as concerns about overall monitoring and control about UNDP’s project expenditures.

To another question, he said that he actually had no idea what the United States Mission to the United Nations had in terms of documentation.  There was, indeed, a meeting scheduled later this week.  UNDP knew exactly what its own financial systems said and it had put all that information on the table, yet allegations were continuing.  They were clearly based on something, but UNDP had not seen any documents.  The Programme was looking forward to sitting down and looking over that information.

To several other questions, he said that UNDP simply did not accept the characterization that the audit had “discovered” something about its staffing practices.  Those practices had been the same in the Democratic People’s Republic of Korea for 27 years.  UNDP had said all along that the Democratic People’s Republic of Korea was a difficult place to do business.  “You don’t simply get in a vehicle and drive around the country to visit your projects unannounced,” he said.  “That is just not the way we are allowed to do business there.”

Despite all the difficulties, it was important to remember that the Executive Board -- which included the United States -- was aware of all the programmes, he added.  The Board found it useful for the international community to have an international presence in the Democratic People’s Republic of Korea for humanitarian and development reasons, and also to expose the country to the standards and norms of the international community.  After Member States raised concerns about the Programme’s operations, UNDP had acted immediately.  After the Government refused to introduce the changes, UNDP had left.  The Programme had also provided the auditors with all the information about all the site visits it had made, as well as all the control systems it had in place.

Responding to a question about staff access to UNDP electronic system, he denied that the driver and the cleaner left behind by the Programme had access, as a correspondent had written.  That was categorically not true.

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For information media • not an official record