Less Cash for Kim

January 26, 2007
The Wall Street Journal
Original Source: http://online.wsj.com/article/SB116978211945688660.html

The case of U.N. hard currency for Kim Jong Il continues to evolve, with the Executive Board of the United Nations Development Fund agreeing yesterday to suspend new operations in North Korea until an audit can be completed and provide better oversight of existing programs.
Most UNDP meetings are snoozefests. But yesterday's got lively, after the U.S., Japan and other countries requested the deferral over concerns that tens of millions of dollars in hard currency have been funneled to Kim's dictatorship. A compromise deal requires that projects in progress adhere to UNDP rules regarding hard currency, staff and on-site visits. Projects managed by Pyongyang will be handed over to the UNDP, which will restrict activities to those that directly improve the lives of North Koreans and get out of the business of helping the government.
Dragged along kicking and screaming were the North Koreans, whose delegate condemned the distorted and fabricated allegations made by the U.S. through its media. This was a tad ungracious, since his business class airfare to New York was paid by the U.N. But no doubt he had orders from Pyongyang, where a Foreign Ministry spokesman asserted that The U.N. operations in North Korea are conducted in a transparent manner and meet U.N. regulations. Yes, so transparent that U.N. officials have been barred from visiting some of the project sites.
Meanwhile, U.N. Secretary-General Ban Ki Moon issued a statement this week elaborating on the urgent, system wide and external inquiry into all activities of U.N. funds and programs that he promised last Friday. The good news is that he is moving swiftly on North Korea, ordering a full investigation within three months.
The disappointing news is that Mr. Ban appears to be stepping back from his larger reform promise. It's understandable that he'd want to limit his audit order in some fashion; investigations of every nook and cranny world-wide would take years. But that's no justification for defining external audits as those done by the U.N.'s own Panel of Auditors and its subset, the Board of External Auditors. These are the same auditors who found nothing suspicious in the Oil for Food program.
There's nothing to prevent the U.N. from hiring outside audit firms to look at specific problems. Oil for Food was investigated by the Volcker Commission, which devoted half its budget to a forensic audit by Deloitte Touche. An independent task force investigating procurement has also hired AON Corp. for forensic auditing.
Also troubling is that Mr. Ban's elaboration appears to limit the audits to hard currency transactions, independence of staff hiring, and access to reviewing local projects. Those are key problem areas, to be sure. But the auditors should be free to follow the trail wherever it takes them. We also hope the audit will include other U.N. programs in North Korea that operate under the same rules as UNDP, including Unicef, the Population Fund and the World Food Program.
It's good to see the cash for Kim programs reined in. But to realize his promise of making the U.N. more transparent, the new Secretary-General has to keep pressing and bring in the outside auditors.