, the North Korean government (DPRK) convinced
the United Nations Development Program (UNDP) to provide hard
currency payments to the cash-strapped nation without even minimal
safeguards or supervision. Those funds ended up in the hands of Kim
In addition, the DPRK dictated hiring for UNDP personnel in the
country and denied the agency the ability to supervise projects
freely. When the U.S. mission to the U.N. questioned these
activities, the program denied the U.S. access to internal audits
and other relevant information despite America's generous financial
support and presence on the Executive Board of the UNDP.
The United States must demand an immediate, fully independent
inquiry into this latest scandal. This inquiry must not be led by
someone handpicked by the U.N. Secretary General or by an
individual with significant ties to the United Nations. Such an
investigation must be extensive, in-depth, and far-reaching, with
the power to interview both current and former U.N. officials.
While smaller in scale, the UNDP North Korea scandal echoes
features of the earlier Oil-for-Food scandal: a brutal dictator's
siphoning of funds earmarked for humanitarian purposes; the U.N.
leadership's willingness to appease the whims of an egotistical
tyrant; the cloak of secrecy shrouding the day-to-day running of a
major U.N. operation; an extraordinary lack of external oversight
and auditing; seeming incompetence and mismanagement on the part of
U.N. officials; and hostility toward U.S. requests for documents
It is a depressingly familiar story of U.N. inefficiency and
incompetence played out against the backdrop of one the biggest
man-made humanitarian tragedies of our time: the repression and
forced starvation of millions of innocent people by a tyrannical
despot. The U.S. response, both from the Bush Administration and
from Capitol Hill, should be swift and comprehensive.
Given the U.N. Security Council's resolutions and expressed concern about
North Korea's nuclear ambitions and recent detonation of a nuclear
weapon, the United States should request that the Council authorize
a thorough inquiry into the possible support that the wide range of
U.N. funds, programs, and activities may be providing to North
Korea's pursuit of weapons of mass destruction.
The Latest Scandal
The Wall Street Journal revealed, in a searing
exposé, a catalogue of serious management failures in the
United Nations Development Program (UNDP) operation in North Korea,
which has allowed millions of dollars to flow to the coffers of Kim
Journal cites a January 16 letter from Ambassador Mark
Wallace of the U.S. mission to the U.N. to the UNDP's leadership
that provides a damning indictment of the United Nations operation
[B]ecause of the actions of the DPRK government and the
complicity of UNDP, at least since 1998 the UNDP DPRK program has
been systematically perverted for the benefit of the Kim Jong Il
regime-rather than the people of North Korea. The UNDP DPRK program
has for years operated in blatant violation of UN rules, served as
a steady and large source of hard currency and other resources for
the DPRK government with minimal or no assurance that UNDP funds
and resources are utilized for legitimate development activities.
Ambassador Wallace's letter states that "as of 1999 there were
twenty-nine ongoing UNDP projects in the DPRK with a total budget
of $27.86 million." The Wall Street Journal reports that
"while the precise amount of hard currency supplied through UNDP
isn't known, the documents suggest it has run at least to the tens
of millions of dollars since 1998 and one source says it could be
upwards of $100 million."
As Ambassador Wallace notes, a number of UNDP practices in North
Korea violated UNDP rules and procedures, and there were many
opportunities for abuse and manipulation by Pyongyang. The U.N.'s
local staff "was dominated by DPRK government employees," and UNDP
officials were "not permitted to perform site visits to many UNDP
DPRK projects in violation of UNDP rules."  North Korean government
employees "performed financial and program managerial core
functions in violation of UNDP rules," giving them a significant
degree of control over operations. In addition, Pyongyang insisted
upon cash payments to local DPRK government suppliers, creating a
lucrative source of foreign currency for the isolated North Korean
regime, money that may have helped fund its nuclear weapons
While the UNDP activities were the focus of The Wall Street
Journal article, U.N. support for North Korea does not stop
there. Until the Journal story led to a change in policy,
the UNDP reimbursed the DPRK for the travel expenses of its
government representatives who attended its meetings. Moreover,
assuming that the DPRK treats other U.N. programs and funds
operating in North Korea (such as UNICEF) in a similar way to the
UNDP, unwitting U.N. financial support to the DPRK could actually
be far more than that provided through the UNDP. 
U.S. Financing for the UNDP
U.S. funding for the U.N. Development Program is substantial.
According to the UNDP, gross regular resource income through
contributions by member states totaled $921 million in 2005, of
which the U.S. provided $105 million. However, the bulk of UNDP
financing comes through donor co-financing and resources provided
by recipient country governments that are used to support projects
and development programs in the recipient countries. Nearly all
developed donor countries co-finance UNDP programs, and donor
co-financing totaled more than $2.5 billion in 2005, of which the
U.S. provided $140.8 million. Local resources totaled over $1
billion in 2005. All told, UNDP programs, activities, and other
expenses spent amounted to well over $4 billion in 2005.
According to the U.S. Department of State, the U.S. provided an
estimated $108.9 million to the United Nations Development Program
in fiscal year 2006, and the administration requested $94.5 million
for fiscal year 2007. This does not include additional, larger
amounts regularly provided by the U.S. in co-financing support of
Transparency and Accountability
The Wall Street Journal's reporting demonstrates that the
UNDP lacks the characteristics of an open and transparent
organization, noting that the U.S., despite sitting on the UNDP
executive board and contributing over $200 million in 2005, is
given short shrift:
American officials have had to fight for even the most basic
information on the UNDP's activities in North Korea. When the U.S.
Mission asked for copies of the internal audits of the North Korean
operations, it was rebuffed. "Internal audit reports are important
management tools for Executive Heads and, therefore, confidential,"
wrote Kemal Dervis, UNDP's head, on Jan. 5. After protests,
American officials were finally permitted to review three internal
audits-1999, 2001, 2004-but were not allowed to retain copies.
Indeed, despite being praised as a model for reform of an
international organization, the UNDP lags behind the oft-criticized
U.N. Secretariat in a key area of transparency: Unlike the Office
of Internal Oversight Services (OIOS), whose audits must now be
shared with member states upon request, the internal audit reports
of the Office of Audit and Performance Review of the UNDP are not
available to the public or to member states.
Recommendations for the
The Bush Administration should act immediately to ensure that
resources provided to, or in coordination with, international
organizations do not support repressive regimes. Washington
- Immediately freeze U.S. contributions to the UNDP and
other U.N. funds, programs, and activities operating in North Korea
until those organizations comply with appropriate standards of
transparency in their activities and documents. This must include
granting all member states full access to UNDP audits and
associated documents upon request. Most immediately, the United
States should call for all internal U.N. documents relating to UNDP
operations in North Korea to be made publicly available.
- Suspend U.S. co-financing or voluntary funding of U.N.
activities in North Korea and other repressive regimes until
there is a reasonable certainty that the funds and activities do
not directly or indirectly support the government.
- Urge an independent Security Council-backed inquiry into
U.N. activities in the DPRK, including UNICEF, World Food Program,
and other U.N.-related operations. The inquiry leader should
not be hand-picked by the U.N. Secretary General and should be
protected from all forms of interference and manipulation by the
U.N. Secretariat, UNDP leadership, and other U.N. agencies. It
should be headed by an experienced investigator without any ties to
the United Nations or affiliated bodies.
- Demand that the UNDP suspend all funding to projects in
North Korea until the independent investigation is complete.
The United Nations as a whole has reportedly pumped $2 billion in
total resources into North Korea since the mid-1990s. The U.S.
hasproposed a motion to defer UNDP programs in North Korea pending
an investigation that will be considered at the UNDP executive
board meeting this week. The U.S. should insist that this
investigation be conducted by an independent authority and that the
investigation have full access to all UNDP projects in North
- Call upon South Korea to allow the independent commission of
inquiry to review Seoul's extensive unilateral provision of
assistance to the DPRK. South Korea has provided approximately
$5 billion in aid to Pyongyang during the past decade, including a
secret $500 million payment to secure the 2000 inter-Korean summit.
An independent inquiry could resolve lingering concerns over the
extent and nature of South Korean largesse.
Recommendations to Congress
The role of Congress in pushing for reform of the United Nations
and greater openness and transparency in the world organization is
critical. An independent inquiry, backed by the U.N. Security
Council, would shine a powerful spotlight on the failure of the
UNDP's operation in North Korea. But as the Oil-for-Food inquiry
demonstrated, congressional hearings, oversight, and investigation
are also necessary to paint a complete picture of this latest
The House and Senate investigations into Oil for Food played a
pivotal role in unearthing what happened behind the scenes of the
world's largest-ever humanitarian program. The sustained pressure
from Capitol Hill, as well as the threat to withhold funds,
significantly helped to focus minds and open doors and dusty files
at the U.N. Moreover, this effort dramatically raised the profile
of U.N. reform issues. It should be a key demand of the U.S.
government that any major U.N. inquiry must work with, and not
against, congressional investigations into the misuse of U.S.
- Conduct Hearings and Oversight. As part of its oversight
of U.S. policy towards the DPRK, the Senate Committee on Foreign
Relations and the House Committee on Foreign Affairs should examine
whether U.N. programs operating within the DPRK-including the
UNDP-are harming U.S. interests.
Specifically, the Committees should determine whether certain
U.N. programs are effectively providing hard currency to the Kim
Jong-Il regime, rather than for legitimate development projects and
other humanitarian assistance.
The Committees should hold hearings into this matter to raise
public awareness of the issues involved with funding U.N.
activities in the DPRK. UNDP Administrator Kemal Dervis and former
UNDP chief Mark Malloch Brown should be asked to testify.
- Withhold Funding. As part of their appropriations
processes, the House Committee on Appropriations and the Senate
Committee on Appropriations should not approve any additional
funding of UNDP operations until: (1) a full independent and
outside forensic audit of the UNDP's activities and the activities
of other U.N. funds and programs in the DPRK are completed; and (2)
Congress is satisfied that the DPRK is not converting UNDP and
other U.N. humanitarian programs' funds for its own purposes.
- Investigate. The House Subcommittee on Oversight and
Investigations of the Committee on Foreign Affairs and the Senate
Permanent Subcommittee on Investigations should strongly consider
following their successful Oil-for-Food inquiries with in-depth
investigations of and hearings into the UNDP's operations in North
Former Secretary-General Kofi Annan has bequeathed yet another
scandal as his legacy at the United Nations. To his credit, new
Secretary-General Ban Ki-moon announced in the wake of The Wall
Street Journal report that he would "call for an urgent, system
wide and external inquiry into all activities done around the globe
by the U.N. funds and programmes." The UNDP has subsequently declared that
it will make payments for operations in North Korea only in local
currency by March 1 and that it will "welcome an independent and
external audit of our operations in North Korea [and] strongly
support the secretary-general's call to have an inquiry into the
operations of the U.N.'s funds and programs world-wide..."
However, these declarations must be followed by action. Indeed,
Ban faces an enormous challenge in cleaning up an institution that
has proven vulnerable to corruption, mismanagement, and political
manipulation by repressive regimes. Never again should a brutal
dictatorship be allowed to manipulate a U.N. operation that is
aimed at helping some of the world's most impoverished and
To help ensure this outcome, the U.S. should press for a
completely independent investigation into the North Korea scandal
and demand that the "system-wide" inquiry into U.N. activities
around the world apply particular scrutiny to U.N. activities in
countries under U.N. sanction and in states like Sudan and Zimbabwe
where there is extensive government interference in the activities
of private sector charities, non-governmental organizations, and
bilateral and multilateral assistance efforts.
At the same time, Congress should launch its own inquiries into
the UNDP scandal, ensuring that the U.N.'s bureaucracy is held
accountable to member states. Congressional oversight has proven
critical in the fight to reform the United Nations, and Congress
has a key role to play in getting to the heart of one of the
biggest scandals in the history of the U.N.
Gardiner, Ph.D., is Director of, Brett
D. Schaefer is Jay Kingham Fellow in International
Regulatory Affairs in, and Steven
Groves is the Bernard and Barbara Lomas Fellow in, the Margaret
Thatcher Center for Freedom, a division of the Kathryn and Shelby
Cullom Davis Institute for International Studies, at The Heritage
Foundation. The authors would like to thank Bruce Klingner, Senior
Research Fellow in Asian Studies, for his advice and
In what seems to be an annual tradition, the United Nations is
again embroiled in scandal-this time as willing dupe of the
despotic tyranny in North Korea. As reported in