January 21, 2007 | Fox News

U.N.’s ‘Cash for Kim’ Scandal: Ban Should Look Next at North Korea, World Food Program

Bravo to the U.S. Mission to the United Nations for digging into the doings of the U.N. Development Program (UNDP) in North Korea and uncovering streams of cash flowing via the UNDP to Kim Jong Il’s regime.

That story, broken last week by FOX News and the Wall Street Journal, presents the U.N.’s new secretary general, Ban Ki-moon, with his first big test. Ban has responded by promising an “urgent” outside investigation of the global U.N. system, in which this latest scandal is just one tip in a flotilla of icebergs.

The challenge now is to ensure that Ban’s proposed investigation does not turn into yet another ritual cover-up, but instead marks the start of a real clean-up, both within the UNDP, and well beyond.

Most immediately under the microscope is some $27.7 million spent by the UNDP in North Korea over the past decades — with stunningly lax oversight.

The U.S. is questioning the extent to which the UNDP has been providing “Cash for Kim,” as the Journal, in deference to the U.N.’s Oil-for-Food debacle, dubbed the scandal.

In a press conference on January 19, defending the UNDP’s actions as perfectly aboveboard, Associate Administrator Ad Melkert, the organization’s No. 2 man, said, “We’re not talking about hundreds of millions of dollars.” Then, he added: “Over a period of 10 years it is of course tens of millions.”

Actually, this scandal points to a great deal more than that, even if Ban focuses for now only on U.N. operations in Pyongyang. The UNDP, while serving as coordinator of U.N. programs in Pyongyang, is just one of about a half dozen U.N. agencies that have been operating in North Korea, including UNICEF, the U.N. Population Fund (UNFPA) and the World Food Program.

Combined, these agencies have poured close to $2 billion worth of resources into North Korea over the past decade or so, according to U.N. records. They have done this on terms giving Kim big opportunities to divert goods and charge fees for the benefit not of hungry North Koreans, but for his military and his gulag-running, missile-vending, nuclear-bomb-testing regime.

Of these billions in U.N.-dispensed largesse, the biggest portion by far has come via the World Food Program.

Since 1995 the WFP, according to its Web site, has shipped into North Korea more than four million tons of “commodities” — including such goods as rice, wheat and corn — valued by the WFP at $1.7 billion. A big part of this came courtesy of U.S. taxpayers, sent via the U.N. before Kim was busted in 2002 by the Bush administration for cheating on a 1994 aid-for-nuclear-freeze deal signed during the Clinton administration. For two years after that, the U.S. kept donations coming; then, since 2005 has refused to chip in. But even today North Korea continues to receive millions worth of resources via the WFP. And, the patterns appear disturbingly similar to the UNDP practices now under fire.

In the case of the WFP, Kim Jong-Il a little over a year ago gambled – successfully – on a ploy that dramatically reduced the WFP’s already limited ability to check where its aid really went. Kim’s regime declared in late 2005 that North Korea had no more need for direct food aid. But instead of closing up shop in Pyongyang, the WFP negotiated a new deal, which caved in to demands of Kim’s regime. The WFP agreed to cut back on the range and frequency of its monitoring trips and also promised to funnel some of its resources through state-run development projects. Under the label of a “Protracted Relief and Recovery Operation,” the WFP launched this arrangement last year, authorized it to run until March 31, 2008, and called for international contributions worth $102 million.

With the U.S. still holding off on aid, the WFP, according to a Jan. 17 bulletin on its Web site, has so far garnered only about 16 percent of what it asked for – resources worth $16.3 million. While a disappointment for the WFP, that amount still represents a handsome gift to Kim’s regime. A WFP spokesman, reached by phone in Bangkok, confirms that a number of the items listed in the Protracted Relief plan under a “project cost breakdown,” represent hard cash paid to the North Korean regime, or to local employees supplied – and vetted by — the Kim government.

Such items include $5 million for transport, storage and handling of the free food shipped in by the WFP; $1.39 million for “staff duty travel” within North Korea, including transportation and state guesthouse lodgings for WFP workers trying to monitor aid; $447,200 for “National consultants”; $106,400 for utilities; and $279,700 for “other office expenses.”

Under the heading of “Staff,” there also is an intriguing provision for $321,100 worth of “incentives.” The WFP spokesman explains this is projected funding to let international staff based in the hardship post of Pyongyang leave the country every six weeks for R&R – a trip that usually involves using hard currency to buy a plane ticket from North Korea's state-run Air Koryo.

Even with the WFP operating on a much lesser scale than originally envisioned in its most recent appeal, there appears to be room here for Kim’s cash-hungry regime to eke out millions for itself from this two-year project. To justify its continuing presence in North Korea, the WFP, in documents posted on its web site, provides such oblique comments as, “The capacity to import on commercial terms is limited so the country falls short of meeting its minimum needs year after year.” This comes at the end of a paragraph also attributing food shortages to “an unfavorable agricultural situation, general economic decline, environmental problems and natural disasters.”

But the WFP fails to mention the root cause of all this misery, which is the despotic Kim regime. It has systematically repressed and isolated North Koreans, starving to death an estimated one- to two-million people in the late 1990s, and stunting their lives today in order to keep its grip on power.

This regime is the overwhelming reason the economy remains rotten, the country remains so desperately vulnerable to floods and droughts, and commercial imports remain “limited.” All while the same North Korean government that is collecting overhead from UN agencies in Pyongyang enjoys seats on the executive boards of the UNDP, its affiliate the U.N. Population Fund (UNFPA), and of UNICEF – not to mention membership in the U.N. Disarmament Conference.

The WFP Web site includes a photo of the agency’s regional director for Asia, Tony Banbury, shaking hands with North Korea's director general for international organizations, Ri Hong-Sik, at the signing last year of the WFP’s new deal for North Korea.

That same director general currently is spending two weeks in New York, having flown business class at U.N. expense, along with two of his official cohorts from Pyongyang, for meetings of the 36-member executive boards of the UNDP/UNFPA and UNICEF.

When the U.S. Mission’s envoy for U.N. reform, Mark Wallace, pressed the UNDP recently for details of this North Korean jaunt to New York City, the UNDP reluctantly produced the information that the U.N. agencies in question were paying more than $35,000 for the roundtrip travel of the North Korean trio.

Interestingly, no other UNDP executive board members are getting this kind of subsidy. The UNDP has argued that this kind of subsidized air travel has happened before, but the case the organization cites is Afghanistan in 2002, after the collapse of the Taliban, when the Afghan government essentially was in U.N. hands. The UNDP has since said it is revising its policy to require member states to foot the bills for sending their officials to board meetings.

That’s a welcome change, but it does not address the deeper questions of why U.N. agencies that advertise themselves as agents of help, hope and good governance would entertain such client states as North Korea on their executive boards in the first place. The UNDP board also includes China, Russia, Kazakhstan, Belarus and Pakistan. UNICEF also boasts China, Russia, Bolivia and Pakistan. And while the 36-member WFP executive board does not include North Korea, it does provide seats to some of Kim’s closest pals, including Syria, Zimbabwe, Russia (which has contributed $5 million cash, according to a WFP spokesman) and Cuba (which has sent $864,225 worth of sugar).

Emblematic of this setup was a statement in a backgrounder issued by the UNDP on January 19. Dismissing the use of U.S. dollars by U.N. agencies in North Korea as a “non-issue,” the anonymous UNDP officials who authored this document added, in what is evidently meant to be a defense of the agency, that the UNDP and other agencies in North Korea “stopped using U.S. dollars in 2001 at the instigation of DPRK government itself, which decreed as an anti-U.S. measure that the only hard currency to be used within the country should be the euro.”

The WFP spokesman confirms that inside North Korea, the euro is his agency’s medium – exchanged when necessary for North Korean won at the Central Bank. In other words, it’s not just that the U.N. lets Kim milk its programs for hard currency; the U.N. agencies also let him choose which hard currency he prefers.

The current show of public resistance by the U.S. Mission dates back to questions sent to the UNDP by Ambassador Wallace last November, during the final weeks of tenure of former U.S. Ambassador to the U.N. John Bolton. There has been speculation at the U.N. that this was a swat by Bolton at one of his nemeses, Mark Malloch Brown, who before serving from 2005-2006 as former U.N. Secretary General Kofi Annan’s chief of staff, and then as deputy secretary general, had spent years running the UNDP. But a more plausible reason is that the U.N. Mission had spotted a serious problem of U.N. aid and development agencies helping to prop up a North Korean regime that had just tested a nuclear bomb, and is now sanctioned by the U.N. itself.

In the wake of exposure of the scandal, new Secretary General Ban’s immediate promise of a system-wide audit of U.N. funds and programs is a big improvement over the stonewalls of his predecessor, Kofi Annan. But the real issue here hardly stops with the book-keeping. If Ban goes down this trail, he will quickly confront a core failing of the UN — the chronic bias, in the name of helping the downtrodden, toward supporting the dictators who tread them down. At that point, he may have to choose whose side he’s on.

Claudia Rosett is a journalist-in-residence with the Washington-based Foundation for Defense of Democracies


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