UN to deny aid to NK until audit.

UNITED NATIONS (AP) -- The U.N. Development Program agreed Thursday not to approve new projects in North Korea until an external audit addresses U.S. allegations that the agency has funneled millions of dollars to the communist regime in violation of United Nations rules.

UNDP assistant administrator Ad Melkert said the agency also agreed to end cash payments to the North Korean government and local suppliers and to stop hiring staff recruited by Pyongyang. The United States had complained about both practices.

The UNDP also agreed it will be responsible for implementing all North Korean projects, addressing U.S. complaints that authorities in the North were overseeing several initiatives.

The UNDP's decision came a week after U.S. deputy ambassador Mark Wallace alleged the agency's North Korea operation had been run "in blatant violation of U.N. rules" for years. He demanded an outside audit focusing on concerns that development funds had been used by Pyongyang for "its own illicit purposes."

Secretary-General Ban Ki-moon announced the audit on Monday, a swift response that indicated he was determined to avoid a repetition of the scandal over the U.N. oil-for-food program in Iraq. Former Secretary-General Kofi Annan did not agree to an independent investigation into that scandal until months after it erupted.

The U.S. welcomed the new steps.

"We're pleased with the approach that the UNDP administrator has laid out," acting U.S. Permanent Representative Alejandro Wolff told reporters.

The decisions were made by consensus during a regular meeting of the UNDP executive board to approve country programs. North Korea, which sits on the board, said it would accept the steps, though it condemned them as an attempt to "politicize the system" of the UNDP -- a stance echoed by the representatives of Russia and Cuba.

Possible irregularities.

U.S. officials said they first received indications there might be irregularities in UNDP's North Korea program last year. They raised concerns the cash might be misused, possibly for Pyongyang's nuclear program.

The U.N. Security Council imposed sanctions on North Korea on October 14 for conducting a nuclear test.

At the board meeting, North Korean delegate Jang Chunsik called the U.S. allegations "nonsense," insisting the UNDP's activities in his country had been "conducted in a transparent way."

The Russian delegate, Dimitry Maksimychev, said that while his country "did not stand in the way of the consensus ... it is an undesirable example of politicization of the work of the executive board."

Japan, however, applauded the agreement and went a step further. It said U.N. should stop providing aid to North Korea except for humanitarian assistance "directly delivered to the people" because Pyongyang had defied Security Council demands that it end its nuclear program.

Asked about that proposal, Wolff said "the Japanese argument is quite compelling. We're going to consider it."

U.S. officials said the United States already withholds its contributions to the UNDP and other U.N. agencies that provide funds to North Korea.

The audit, to be completed in three months, will initially focus on UNDP spending in North Korea and then be expanded to other U.N. agencies. It will be conducted by the U.N.'s Board of Auditors, which is comprised of accountants from eight U.N. members.

Wallace has made several allegations in letters to senior UNDP officials, which were first reported by The Wall Street Journal. He has said UNDP's local staff is dominated by North Korean government employees who managed the agency's programs and finances in violation of UNDP rules.

The UNDP has spent about $3 million annually in the last 10 years on programs in impoverished North Korea, in addition to about $600,000 in office costs, which include local salaries and supplies. The programs focus on food production, rural and environmental sector management, economic management and social sector management.

The UNDP executive board agreed to delay approval of its 2007-2009 North Korea program until the audit is completed. It also agreed to review the proposed program to ensure it addresses the concerns raised by the United States, Melkert said.

Current projects will continue but must stop cash payments and the hiring of North Korean government recruits by March 1, Melkert said. He also said all projects will be directly implemented by the UNDP.

The agreement came despite the UNDP's ardent denials this week that its North Korea program violated U.N. financial rules.

The agency noted that it already directly manages the vast majority of its projects, with about $337,000 worth of program costs overseen by North Korean authorities. UNDP officials also stressed that it has conducted three internal audit of its North Korean operations in the last eight years, the last in 2004.

Source: CNN.

Labels: Asia, News

- posted by Rosemary Welch@11:22 PM