Secretary-General’s system-wide probe of UN field activities to start with DPR Korea

Secretary-General Ban Ki-moon moved quickly today on his promise of an external, system-wide probe of United Nations activities in the field, announcing that it would target as a first priority countries where hard currency transactions, independence of staff hiring and access to review local projects are an issue, beginning with the Democratic People’s Republic of Korea (DPRK).

Just three days after he pledged such action amid questions over UN Development Programme (UNDP) operations in the country, his spokesperson said that Mr. Ban had decided to propose to the world body’s Chief Executives Board for Coordination (CEB) that the Board of Auditors be requested to undertake an overall risk assessment and audit in such countries.

Should the CEB, which Mr. Ban chairs, and the Board of Auditors accept the proposal, action would be taken in stages. The first report focusing on operations in the DPRK would be completed within a three-month time-frame and be submitted to the second resumed 61st session of the General Assembly, which ends by mid-September.

“As the issues concern not only the United Nations, its funds and programmes, but also the specialized agencies, the Secretary-General intends, as Chairman of the CEB, to also seek the cooperation of the Panel of External Auditors, to provide their inputs to the CEB on system-wide aspects of the same set of issues,” spokesperson Michele Montas said.

The resulting report would be available for the General Assembly’s 62nd session. The panel of external auditors is chaired by Canada, and includes the relevant supreme audit institution of each of its eight member countries: Canada, South Africa, Germany, France, India, Philippines, Switzerland and the United Kingdom.

The areas of hard currency transactions, independence of staff hiring and access to reviewing local projects will be examined in light of relevant Security Council resolutions, including but not limited to resolution 1718, which imposed sanctions on the DPRK after its nuclear test in October.

To provide the system-wide inquiry around the globe, the same external audits will be simultaneously carried out in select cases of countries with similar conditions to be identified by the relevant funds and programmes in consultation with the Board of Auditors and the Panel of External Auditors.

Mr. Ban has also requested the Administrator of UNDP to provide information in detail concerning corrective actions taken in response to the internal audit findings of 1999, 2001 and 2004 carried out by UNDP internal audit, in particular regarding hard currencies and cash management, absence of independent hiring of local staff and restrictions to audit the ongoing local projects.

UNDP’s operations in North Korea underwent regular internal audits in 1999 and 2001 by KPMG Malaysia and in 2004 by the agency’s Office of Audit and Performance Review. “As is normal, certain deficiencies were identified and management followed up by addressing the deficiencies,” UNDP said in a statement.

On Friday, UNDP’s Associate Administrator Ad Melkert said it would stop paying hard currency for its operations in the DPRK, which have totalled roughly $29.1 million over the past 10 years, and would seek an independent audit. He acknowledged that the agency’s own internal auditors had raised “many concerns” about its programmes and that “tough issues” remain to be addressed.

A 1999 audit raised concerns that North Korean authorities were denying UNDP access to the projects it funds. UNDP says that in response, it instituted a policy of “no access-no assistance” to ensure that its staff have access to project sites for monitoring visits, as well as for physical verification of equipment inventories.

The UNDP Executive Board is scheduled to open a session tomorrow at UN Headquarters in New York at which the question of an external audit is expected to be raised.

Asked by reporters if UNDP could be assured that currency it paid was not converted into the DPRK’s weapons programme, Mr. Melkert said: “That question cannot be answered because of the general way in which you operate in any country that you are doing business with.” At the same time, he stressed that “from the audits, there has been no indication whatsoever that would say anything in relation to your question.”