Cash for Kim

Another day, another UN scandal. This one is in its early stages. Well, no, the scandal has been going on for some time but its uncovery is in its early stages that are, as the Wall Street Journal points out, very reminiscent of the beginnings of what we have learnt to call the oil-for-food scam.

One lesson of Oil for Food, and its failure to lead to any serious reform, is that to some foreign policy elites there can be no such thing as a U.N. "scandal." That's because for them the U.N. is all about good intentions, and the hopes and dreams for peace, rather than about actual results. But it is precisely that forbearance that has allowed too many dictators to exploit the U.N. for their own purposes, and has brought Turtle Bay to its current low ebb. Getting to the bottom of Cash for Kim is one more chance to make the U.N. shape up, and to stop financing a global menace in the bargain.

Melanie Kirkpatrick gives some of the gruesome details in an article that is worth reading right through.

American officials have been pushing for some time for greater transparency in the activity, particularly the financial activity of the United Nations Development Programme (UNDP) in North Korea. I am sure none of our readers will be too surprised at being told that the UNDP has been stonewalling.

In a Jan. 16 letter to UNDP Associate Administrator Ad Melkert, Ambassador Mark Wallace of the U.S. Mission to the U.N. lays out what American digging has found so far: The UNDP's program in the Democratic People's Republic "has for years operated in blatant violation of U.N. rules, served as a steady and large source of hard currency and other resources for the DPRK government with minimal or no assurance that UNDP funds and resources are utilized for legitimate development activities."

So what sort of sums are we talking about? Hard to tell, according to Ms Kirkpatrick:

While the precise amount of hard currency supplied through UNDP isn't known, the documents suggest it has run at least to the tens of millions of dollars since 1998 and one source says it could be upward of $100 million. An internal 1999 audit notes a budget of $27.9 million for 29 projects. David Morrison, a UNDP spokesman, says "the overall size of the program" in North Korea has been reduced in recent years. While $22.2 million was budgeted for 2005-2006, the agency spent only $3.2 million last year and $2.1 million in 2005, he says. Programs fall into four areas: humanitarian assistance, public health, environment and agriculture, and the economy.

Do we know at least what the money has gone on? Well, not really, as UN inspectors are not exactly welcome in North Korea.

A defense that the UNDP merely does humanitarian work--for the people of North Korea and not the government--isn't credible given the details exposed by Ms. Kirkpatrick. U.N. officials can't even say with confidence that all of the "development" projects exist because they haven't been allowed to visit their sites. Pyongyang officials insist on payments in cash that become fungible hard currency for the regime. Every U.N. dollar is one more that Kim doesn't have to raise from other (and often illegal) sources to pay off his generals or to buy a nuclear centrifuge.

In other words, the usual messy situation has developed under cover of which hard cash is handed over to a very nasty dictator to be used as he sees fit.

There is, Ms Kirpatrick emphasises, to date no evidence that any UN official has been taking bribes or behaving in an openly corrupt fashion. Of course, one cannot rule that possibility out but neither is it essential for our understanding of how Kim Jong-Il benefits from western “generosity” and the UN’s inability to live up to its own supposed principles.

It seems that the UNDP staff in Pyongyang consists almost entirely of North Koreans, all appointed by the government, whose salaries are not paid to them directly but through that very government. How much of it reaches the actual officials is unknown just as it is unknown what proportion of the funding reaches the people in need of help, that is most of North Korea’s population.

But who needs a checkbook? According to the same audit, cash is the only means of payment that the government accepts. The UNDP does not use purchase orders in North Korea and local purchases--including those over $1,000--are made in cash. That includes local office costs, which are typically provided in kind by the host country. North Korea even charges rent, to the tune of $2 million a year, according to one source who has looked at the program.

Meanwhile, there is little if any oversight of the UNDP's projects in North Korea, which, according to a U.N. document, numbered 30 last year. UNDP regulations require one official, on-site visit a year but since Pyongyang prohibits foreigners from visiting some of the project sites, that's another rule that's out the window. Audits of individual projects are spotty at best and in the case of "nationally executed" or "NEX" projects--that is, those run by the North Korean government with funds provided by the UNDP--they are often done by the government itself, giving new meaning to the adage about the fox running the henhouse.

Does the new SecGen Ban Ki-moon watch Laurel and Hardy films, I wonder. If he does he could quote Ollie Hardy's line to his predecessor Kofi Annan: "That's another fine mess you got me into."

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