Update 2: Reuters reports that Ban is now backtracking and saying that the new audits will focus only on programs where the financial practices are shady.
Monday’s U.N. statement said Ban would assign auditors only to U.N. funds and programs “in countries where issues of hard currency transactions, independence of staff hiring and access to reviewing local projects are pertinent.” Audits would be “simultaneously carried out in select cases of countries” identified by the funds and programs, it said. Funding for the project must first be approved by the U.N. General Assembly’s budget committee. Some of the audits would be done by a board of accountants from various U.N. nations.
That’s actually good news, because it places a tighter focus on programs that are the most vulnerable to abuse, including those in North Korea. Hopefully, it will also draw attention to questions about who is actually eating all that food.
Update: The invaluable Claudia Rosett raises mismanagement questions about the World Food Program’s “development aid,” to which it acquiesced after North Korea shut down the vast majority of WFP’s food relief operations:
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.
The good news: there aren’t many donations. The bad news: it’s questionable whether those donations will even exceed the overhead by much. I again emphasize that food aid is an urgent need of this regime’s victims, and that we should support it as long as we can have some assurance that it’s feeding those who truly need it.
Original Post: Most of the encouraging signs bloggers have picked up from Ban Ki Moon thus far have been mere words, but this is genuinely promising:
“The Secretary-General will call for an urgent, system wide and external inquiry into all activities done around the globe by the U.N. funds and programs.” So said Mr. Ban’s spokesman after the Secretary-General met with Ad Melkert, associate administrator of the United Nations Development Program. The key word here is “external.” Concerns about corruption in the U.N.’s Oil for Food program bubbled for years before Mr. Annan finally agreed to set up the independent Volcker Commission.
A review of all U.N. programs everywhere may widen the focus so much that it might miss important microscopic detail. Still, it’s a good sign, and it’s having a downstream effect on the UN’s North Korea programs. Ad Melkert, a UNDP big-wig, responds to the Wall Street Journal piece (see my previous post here) that started all of this. Melkert now says he “welcomes” an “independent and external audit” of UNDP’s North Korea operations. He also offers a defense, and it’s lame:
There is no reason to believe that our programs were subverted to fund nuclear activities in North Korea ….
This is a close relative of “don’t ask, don’t tell.” Say you’re the owner of a Saint Bernard, and that you also receive an unexpected windfall in the form of a large vat of chocolate syrup. Sure, some might criticize the prudence of your decision to leave both of them alone together in your living room all weekend. On Sunday, of course, you could explain to your wife that you “no reason to believe” that your house would end up looking like the inside of Hugo Chavez’s large intestine.
Here is the context: Operating a development agency in North Korea is a complex business. To give an example, operating in North Korea entails an unavoidable transfer of foreign currency. Either we pay our local staff and contractors directly in Euros or we exchange euros for North Korean won via the central bank. In light of the current context, we are taking all possible steps to reduce to an absolute minimum of hard-currency transactions and have decided that direct recruitment of staff is pre-requisite for our continued cooperation in the DPRK.
Melkert and his colleagues have added greatly to that complexity by treating the DPRK’s arbitrary policies and unequalled opacity as “unavoidable,” as if these were inviolable laws of physics. Those North Korean conditions have thus called the utility of the whole program into question, and Republican members of Congress may push to cut U.S. funding:
The ultimate sanction is money, and there’s already movement in Congress to withhold the U.S. contribution to the UNDP, which last year constituted 11.4% of the agency’s core budget. Unlike dues to the U.N., contributions to the UNDP and other agencies are voluntary. New Jersey Republican Scott Garrett plans to introduce a bill this week to cut off U.S. funding for the UNDP pending a full accounting and an investigation into its program in North Korea. Ileana Ros-Lehtinen, ranking Republican on the International Relations Committee, said Friday that she “and other members” are determined to apply “pressure.”
Worse, they may be unwittingly aiding the oppression of the population, by allowing the government to selectively deny UN-supplied necessities to North Korea’s untouchable classes. Many (and probably most) scholars suspect that a large percentage of World Food Program food aid is diverted, but no one really knows for certain. Given that, wouldn’t it be better to cut off aid completely until North Korea agrees to comply with the neutral humanitarian code of conduct that every other donee nation on earth has to comply with?