06 July 2007
Blog Home : July 2007 : Permalink
A preliminary report by U.N. auditors, issued last month, confirms massive violations of U.N. rules regarding hiring practices, the use of foreign currency, and inspections of U.N.-funded projects. In a series of interviews in New York, Mr. Shkurtaj says the auditors (who were barred by North Korea from going there) barely scratched the surface of the misconduct.
We get quickly to the bottom line: Did the U.N. money go to the humanitarian projects it was supposed to fund? "How the hell do I know?" responds Mr. Shkurtaj -- oversight was so poor, the involvement of North Korean workers assigned by the government so extensive and the use of cash so prevalent, that it was impossible to follow the money trail.
Mr. Shkurtaj arrived in North Korea on Nov. 4, 2004. He says one of his first indications that something was amiss was when checks denominated in euros and made out to "cash" arrived on his desk for signature. "Rule No. 1 in every UNDP country in the world is that you have to operate in local currency," he says, "not in hard currency. It's the rule number one of development. . . in order to support the local economy and not devalue or destroy the local currency."
"I didn't sign the checks for about a week," he says, and then "it became a real mess. Headquarters contacted me, and said, 'don't become a problem. You're going to wind up a PNG, a persona non grata, and ending up a PNG means the end of your career with the U.N. . . . We are authorizing you to go ahead and sign the checks . . . So I started signing."
"Every morning from 8 to 10, we would issue checks" in euros for staff and projects, Mr. Shkurtaj says. "Then the checks, instead of going directly to the people or institutions by mail, as they should go [as specified by U.N. rules], the checks were given to the driver of our office." The driver would take them to the Foreign Trade Bank, where he would "exchange them into cash and come back to the office." North Korea did not permit Mr. Shkurtaj to have access to the UNDP's accounts at the Foreign Trade Bank, which refused even to keep his signature on file.
Then, every day at noontime, "North Koreans saying they represented U.N.-funded projects would come to receive cash at the UNDP offices." Mr. Shkurtaj says he was not allowed to require the North Koreans to sign receipts for the money or even to present IDs. "I had to trust them," he says. "But, hey, if headquarters tells me to give the money away, I'll give the money away."
On Aug. 16, 2006, a few weeks before Mr. Shkurtaj left North Korea, the UNDP resident representative, Timo Pakkala, issued a memo to the staff noting "an increased use of cash payments, in some cases to payees that are not authorized to receive payments." Citing "UNDP policy," Mr. Pakkala ordered future payments be made by bank transfer or "non-cash cheque." He also ordered staff to obtain receipts and not give money to unidentified people.
However to go back to the scandal. Mr Melkert is not the only prominent UN official who might find answering probing questions a little embarassing. Britain's Minister for Kleptocrats was running the UNDP while all this N Korean laundering was going on and it would be interesting to know why he apparently failed to notice anything amiss?