UNDP recommends new audit of its DPR Korea operations to governing board

The United Nations Development Programme (UNDP), aiming to address concerns over the paying of hard currency and other practices in its operations in the Democratic People’s Republic of Korea (DPRK), today officially proposed to its Executive Board an external audit and modification of future operations in the country.

“Following extensive consultations with members of the Executive Board on the DPRK country programme, we would like to suggest a way forward to address the concerns that have been raised,” said Associate Administrator Ad Melkert at a meeting in New York.

Press reports have suggested that UNDP’s own audits raised concerns about payments being channelled to the Pyongyang Government, which has been subject to Security Council sanctions since October following its proclaimed nuclear test.

Mr. Melkert recommended an external audit to be completed by the Board of Auditors within a three-month time frame, and said this is in line with a proposal made by Secretary-General Ban Ki-moon on 22 January after press reports surfaced on the issue.

On 19 January, the Secretary-General, through his spokesperson, called for “an urgent, system wide and external inquiry into all activities done around the globe by the UN funds and programmes.” Three days later, the spokesperson clarified that the investigation 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 DPRK.

Mr. Melkert also proposed to the Board that the new UNDP programme in DPRK, which runs from 2007 to 2009, be “confined to supporting sustainable human development objectives, while maintaining the total resource envelope at $17.91 million.”

He also repeated a pledge made during a press conference last week to ensure that by 1 March, UNDP will end all payments in hard currency to government, national partners, local staff and local vendors and discontinue sub-contracting of national staff via government recruitment.

As part of this, he said UNDP would work to “ensure oversight of projects, including ensuring that on-site inspections take place without delays during the transition period, and controls on the acquisition and use of project equipment.”

Speaking to reporters following the meeting, Mr. Melkert welcomed “an expression of strong support by the Board for the measures taken by UNDP to end the hiring of national staff via the government and to end direct payments via hard currency, and secondly to ensure that the programme in the future will be based on direct execution, which means we have direct oversight of looking into what is happening in the projects and inspecting on site.”

Asked about UNDP’s Standard Basic Assistance Agreement (SBAA) and whether it provided for payment in local currency, Mr. Melkert said, “All the SBAAs will be part of the audit as they provide the basis for operations in the DPRK and other countries.

“We are really supporting the Secretary-General’s agenda for transparency,” he said, adding that a joint, system-wide approach was needed.

To a question on the fact that UNDP’s internal audits are not provided to States on its Executive Board, he said: “I’m sure that policy will change. We are in favour of changing that policy.”

Summing up on a positive note, he said, “Looking now back on the past week and today’s discussion, I think it is a good day for the UN, it is a good day for the UNDP because the agenda of transparency led by the SG will be brought further and back into the deliberations of the Board, and I think that is really a great step forward for all of us.”