US accuses UN of providing millions in hard currency to North Korea

UNITED STATES SaturdaySecretary-General Ban Ki-moon responded quickly to U.S. accusations that the U.N. development agency funneled millions of dollars in cash aid to North Korean leader Kim Jong Il, calling on all U.N. funds and programs to conduct an urgent outside investigation into their operations.

Ban's decision to urge outside audits not only of the U.N. Development Program's activities in North Korea but of all U.N. programs indicated he was determined to avoid a repetition of the scandal over the U.N. oil-for-food program in Iraq which bubbled for months before former Secretary-General Kofi Annan agreed to an independent investigation.

In the North Korean case, U.S. officials questioned whether funds intended to help the country's impoverished people had been used for other activities including nuclear weapons development. The U.N program, known as UNDP, said it has operated in North Korea since 1979 and no concerns have been raised about its funds being used for the North's nuclear arms program.

U.S. deputy ambassador Mark Wallace charged Friday that the UNDP operated ''in blatant violation of U.N. rules'' for years in North Korea. He demanded an immediate outside audit, focusing on concerns that Pyongyang converted development funds ''to its own illicit purposes.''UNDP Associate Administrator Ad Melkert insisted the agency followed UNDP financial rules. The use of hard currency was approved by the agency's executive board, he said, adding that UNDP would welcome an external audit and would ask the board to approve it when it meets here next week.

In response to U.N. sanctions against North Korea in October for conducting a nuclear test, UNDP said it was taking measures to prevent ''unintended consequences'' of the program's activities. Melkert said that by March 1, all hard-currency payments to the government, national partners, local staff and suppliers would be replaced by payments in North Korean won.

The North Korean won is not a hard currency that can be easily used to buy luxury goods or weapons parts, but Melkert stressed that the only place to buy the local currency was from the country's central bank –which means hard currency will continue to reach Kim's regime.

Neither the U.S. nor UNDP would give a figure of how much money was involved. UNDP said late Friday that in the 10 years from 1997 through 2006, the executive board authorized US$59.35 million for North Korea but only US$27.66 million was delivered.Ban called for an urgent ''external inquiry'' into U.N. funds and programs around the globe.