State: N. Korea Spent UN Funds to Buy Property in France, Britain, Canada

The UN has released the results of a preliminary audit report on the UN Development Program’s operations in North Korea.  Those operations were shut down  following revelations that the UN gave the  regime  cash with few conditions and little accountability, and essentially became its “ATM machine.”  Among the juicy revelations is that the UN  was keeping a large sum of counterfeit “supernotes” in a UN safe.  The UN now concedes that the UNDP violated UN rules:

A statement by UN Secretary General Ban Ki Moon, who called for the audit in January under pressure from the U.S., said the preliminary report “identifies practices not in keeping with how the United Nations operates elsewhere in the world.” But he insisted that the audit does not back up U.S. charges that UN funding on a large scale was systematically diverted to North Korea’s regime.

The audit, conducted by the internal Board of Auditors at the UN, based its preliminary findings on interviews with UN staff and on reviews of documents in New York. But the auditors did not have access to documents or staff in North Korea, leaving many of their conclusions murky.

Ban said a follow-up visit to North Korea is required in order to get more detailed information. But the regime of North Korean leader Kim Jong Il has already rejected such a visit, and critics of the UN said they doubted it would happen.  [Chicago Tribune]

The State Department  must have  had  higher hopes for accountability and full disclosure, because it told the Washington Post just where it thinks the money went:

About $3 million in United Nations money intended to help impoverished North Koreans was diverted by the Pyongyang government toward the purchase of property in France, the United Kingdom and Canada, according to a confidential State Department account of witness reports and internal business records. Millions more, the department reported, went to a North Korean institution linked to a bank alleged to handle arms deals.

….

During 2001 and 2002, the UNDP also transferred more than $8 million of other agencies’ funds to the North Korean government, the State Department said. Pyongyang then transferred at least $2.8 million of the UNDP funds to North Korean diplomatic missions in Europe and New York to “cover buildings and houses,” including purchasing buildings in France, the United Kingdom and Canada, the probe found.

The UNDP said the national government received $2.2 million. The agency has no means to determine how North Korea financed its purchase of expensive houses, Morrison said, but he said the UNDP has verified that its money was used to fund its programs.

Worse, some of the gear the North Koreans bought with the aid money had potential military applications:   GPS equipment, computer equipment, and a mass spectrometer. 

The State Department also alleged that the UNDP paid nearly $2.7 million for “goods and equipment” to a North Korean financial institution that is linked to Tanchon Commercial Bank (also known as Changgwang Credit Bank). President Bush designated that institution in 2005 as the main North Korean financial agent for sales of ballistic missiles and parts used in the assembly of weapons and missiles.

A UNDP official said the State Department has cited to the agency two financial institutions linked to Tanchon — Zang Lok and the International Financial and Trade Company. The UNDP found one payment, for $22,000, sent via Zang Lok in 2004 and none for International Finance.

According to this subsequent AFP report, the U.S. Mission to the UN  has essentially confirmed the Post report.  The UN claims that the U.S. accusations do not comport with its records, an inconsistency that isn’t that hard to explain.

Some Anju Links:

*   We’ve seen a lot of bad reporting come of journalistic tours of North Korea.  It takes an exceptional reporter to find humor, compassion, and truth  in a carefully  guided itinerary designed to suppress those things, but the L.A. Times’s  Mark Magnier did it:

Our senior tour guide, whom we nickname “Good Cop,” is in his mid-30s, speaks English well and appears relatively comfortable around foreigners.

Our second tour guide — we nickname him “Mini-Me” after the diminutive character in the Austin Powers films — is a decade younger, betrays no sense of humor and shows a pretty deep distrust of foreigners.

Mini-Me also appears to hold sway over his older colleague, which on the face of it is unusual in Korea’s strong Confucian culture, hinting at superior political credentials and the underlying fear that binds society. “This is the last time I say this to you, no pictures,” he barks in a typical warning. “Or there will be uncomfortable events.”

The two are assisted by a young female guide in training, whose main function seems to be sitting strategically near the back of the bus to keep a close eye on us, and a driver, for a group of seven visitors.

*   The Daily NK reports that a tidal wave  has killed 100 people along North Korea’s northwest coast:

Receiving information from a people’s unit chairperson, a source in Yongcheon said that “people in Dosan-ri and Bosan-ri in Yongcheon make living by collecting sea shells, and around 70 households were affected. Another source said that the dead included fishermen fishing in the coastal sea of Cholsan, women, and students collecting seashells.

Collecting seashells in North Korea is done by boarding a boat on a coastal sea as the tide rises. When it ebbs, people get off the boat and collect seashells on the foreshore. As the tide rises again, they need to get back on the boat. This practice caused the death toll to rise. The dead included young students who began school in March, who were helping their parents in other cities make a living. 

The disaster happened in March.  Although  as many as  2,000 others were injured, the regime ordered everyone to cover it up; consequently, the injured received no outside assistance, but a few of the bereaved got new color televisions.

*   British American Tobacco is pulling out of North Korea, in another setback to those who believe North Korea is ready for, or can be changed by, major  corporate investment.  Further proof:  North Korea’s largest source of foreign exchange  may be  counterfeit cigarettes, and you have to wonder how much BAT’s technical assistance may have contributed to that.  You will recall that I had a dry-run radio debate with former Ambassador Donald Gregg on the subject.  Unlike Gregg, I could  see no good in North Korea devoting its agricultural resources to growing anything but food, given what we know about how Kim Jong Il will spend his share of the profits.