Panel partly clears UN group’s North spending

A leading United Nations agency accused by the United States of financial mismanagement in North Korea had no way of knowing how Pyongyang would use the money it spent there, a review panel found on Monday.

The three-person external panel set up to examine the charges also contested the sums U.S. officials have said the United Nations Development Programme paid to North Korean entities, some of which Washington has said are linked to money laundering and arms trading concerns.

Also in its 353-page report, the panel dismissed as “without merit” claims by a former UNDP contract employee in North Korea that he had been victimized by the UN for blowing the whistle on alleged abuses by the agency.

The UN appointed the panel ? former Hungarian Prime Minister Miklos Nemeth, former World Bank official Chander Vasudev of India and former U.S. government and UN official Mary Ann Wyrsch ? last September. It probed U.S. accusations that the UNDP was guilty of sloppy accounting, handing over cash to North Korean bodies without proper documentation and hiring staff handpicked by the communist Pyongyang regime.

A UN audit has already said the UNDP broke its own rules in some of its financial dealings. However, the UNDP, which pulled out of North Korea in March 2007 after Pyongyang refused to agree to changes in procedures, has denied major wrongdoing.

The report, covering 1999 to 2007 and obtained by Reuters, seemed to support that conclusion. It said the U.S. mission to the United Nations had voiced concern that Pyongyang had paid $2.72 million of UNDP money to the account of a Pyongyang-linked company at a Macao-based bank that Washington has identified as a potential money launderer.

But, it said, “there is no evidence... that UNDP officials had any reason to know that these entities could be used by the DPRK [North Korean] government as a means by which to funnel DPRK funds beyond its borders.”

The report conceded that the UNDP had made payments totaling some $52,000 to another Macao-based firm, the Zang Lok Trading Co., which Washington has said is Pyongyang’s main financial agent for sales of arms including ballistic missiles.

But it said there was no indication the UNDP, which worked on agricultural, environmental and other projects in North Korea, could have known at the time of the company’s links with Pyongyang.

The panel, did, however, recommend a tightening of financial procedures should the UNDP return to North Korea. It also found fault with the UNDP for keeping $3,500 in forged bills ? allegedly paid by the North to one of its consultants ? in its office safe for 11 years before handing it over to U.S. authorities.

The panel said it had reviewed the claims by its former Pyongyang operations manager, Artjon Shkurtaj, that he was fired for exposing UNDP wrongdoing, “and, on the basis of incontrovertible and undisputed facts, has concluded that Shkurtaj’s claims of retaliation are without merit.”

Reuters