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The UN: Dictators' Piggybank By: Joseph Klein
FrontPageMagazine.com | Monday, April 09, 2007

As the legend goes, Willie Sutton, the famous bank robber, once explained to a reporter why he robbed banks with this oft-quoted remark: "because that's where the money is." Likewise today, the world’s most corrupt dictators know that they can count on the United Nations to provide a rich, easy source of money to plunder.

The UN system as a whole has no meaningful governance policies, rules or regulations that are rigorously enforced. The UN bureaucrats treat their internal audits as a joke. There are no external auditors engaged to independently examine in depth the UN’s world-wide operations or to certify whether the UN’s financial and risk management controls are adequate.


We all remember how Saddam Hussein exploited the United Nations’ ill-fated humanitarian Oil-for-Food program, which had been designed to soften the impact of the oil sanctions on the Iraqi people but which Saddam Hussein turned into a revenue source for his own private slush fund. The United Nations failed to discharge its oversight responsibilities. As a consequence, Saddam Hussein siphoned more than $20 billion dollars to enrich himself and to bribe influential people in governments around the world, including at the UN itself.


Unfortunately, nothing has changed. The UN is still “where the money is” as far as the world’s parasitical, corrupt regimes are concerned. Case in point is the United Nations Development Programme (“UNDP”). The UNDP is at the center of the latest UN corruption scandal. It turns out that for years the UNDP has been funneling our hard-earned tax money to the North Korean government, which has used the cash for illegal purposes rather than the development projects for which the money was intended. Mark Wallace, the deputy US ambassador for management, wrote the UN last January that the UNDP's operations had been "systematically perverted for the benefit of the Kim Jong-il regime, rather than the people of North Korea." Estimates of the amount of money that may have been involved in this scandal go as high as $100 million. Moreover, it was only after the scandal broke in January that the UNDP finally came clean about finding some counterfeit U.S. currency in a UNDP safe in Pyongyang, which apparently had been transferred years before to a UN consultant through North Korea’s banking connections and turned over by the consultant to the UN office in Pyongyang where it remained until now.


UN watchdog Claudia Rosett reported last month that three internal audits of the UN Development Programme’s operations in North Korea since 1999 revealed an appalling pattern of loose financial controls. According to Rosett’s report of the findings, “UNDP local staffing in Pyongyang was dominated by North Korean government employees, who in violation of UNDP rules were handling a lot of the money. This included a North Korean acting as a bank signatory, making travel arrangements, and managing the petty cash and financial records.”

The pattern of financial mismanagement in North Korea went on despite the internal audits, continuing even after the Security Council imposed sanctions on North Korea last October. Indeed, in response to a question as to whether the UNDP could be assured that the currency it paid in North Korea was not converted into North Korea’s weapons program, which was the focus of the sanctions, the UNDP Associate Administrator conceded: “that question cannot be answered because of the general way in which you operate in any country that you are doing business with.”

This North Korean scandal is especially troubling because of the vastness of the UN Development Programme’s operations. It is the UN’s single biggest agency. It describes its broad mandate as encompassing “gender and capacity development, achieving the UN’s Millennium Development Goals and reducing poverty, fostering democratic governance, crisis prevention and recovery, energy and environment and responding to HIV/AIDS.” It plays a major coordinating role for a host of UN agencies in the field engaged in development related projects such as UNICEF and the UN Population Fund. It handles their money as well as its own funds. As reported to its Executive Committee in May 2006, the UNDP had a total expenditure of $3.65 billion in 2005 – an increase of 29% over its level of expenditures in 2004. There has been no corresponding increase in accountability or implementation of financial best practices then or since. The UNDP’s decentralized structure still lends itself to exploitation because its local country offices retain enough authority to define their priorities independently of senior management direction, under the sway of corrupt national governments like North Korea.

A so-called ‘external’ audit of the North Korean situation is supposedly now underway, but it is not really an independent external audit at all. It is being conducted by the United Nations Board of Auditors, which consists of the Auditor General (or officer holding the equivalent title) of three member states chosen by the General Assembly. The current auditors come from the Philippines, France and South Africa, which happen to be the same member states that were responsible for the auditing of the Oil-for-Food debacle. The audit results, whenever they are finally reported, will change nothing. The UNDP by its own admission has been slow in implementing the previous recommendations of the Board of Auditors and will take until at least 2010 to improve the transparency of its accounting and financial reporting by adopting the International Public Sector Accounting Standards.

Yet even as the UNDP’s North Korean scandal was breaking this past January and its financial controls remain unacceptably lax, the UN Development Programme has taken over responsibility for running a trillion dollar global development project. It now administers what used to be known as the Millennium Project (now called MDG Support), the plan to achieve the UN’s Millennium Development Goals that set specific quantitative targets for reducing poverty, hunger, disease, illiteracy, environmental degradation, and discrimination against women by 2015. The UN’s slush fund for corrupt dictatorial regimes is about to get a whole lot larger.


The handbook for financing and implementing the Millennium Development Goals, Investing in Development – a Practical Plan to Achieve the Millennium Development Goals, is a sophisticated version on a global scale of the old-fashioned socialist philosophy – take a trillion dollars or more from the most developed countries, whose taxpayers create wealth with their abilities and hard work, in order to give to those poorer countries whose own corrupt systems of government prevent them from doing better on their own to meet the basic needs of their people. It was prepared under the stewardship of Columbia University economics professor Jeffrey Sachs, George Soros’s pal whom Kofi Annan had hand-picked for the job. Sachs, by the way, was reported to have received an annual salary of $75,000 for his efforts up until this year, on top of his $300,000 salary as an economics professor. Sachs is still pushing his wealth redistribution plan at the United Nations, although reportedly he has at least given up his $75,000 a year special UN stipend.


According to Sachs’ plan, each developed country is supposed to contribute a fixed percent of its Gross National Income toward global funding of the Millennium Development Goals. The plan also calls for global taxes. American taxpayers would have to turn over $140 billion per year to this soak-the-successful boondoggle. So far, President Bush has resisted the pressure from our European allies, the UN bureaucracy and the elite media to accede to this plan. However, the Left will likely embrace it if they extend their power from Congress to the White House in 2008.


The UN Development Programme, which now is in charge of Sachs’ program, shares his redistributionist ideology. In its 2005 annual report, the UNDP presented its simplistic diagnosis of the world’s problems: “Extreme inequality in wealth between countries and within countries is identified as one of the main barriers to human development.” The UNDP also offered its cure-all remedy: the richer countries, especially the United States, must give whatever money it takes to eliminate the disparities. “Aid targets without binding schedules,” said the UNDP, “are not a solid foundation for poverty reduction planning…Aid policies should reflect a commitment to reduce inequalities in human capabilities and income.” The UNDP believes in what it calls universal entitlements, not optional or discretionary allowances.”


Just imagine the opportunity for serious mischief if the mismanaged UNDP, which let itself be used by North Korea’s megalomaniac leader, gets to coordinate the movement of a trillion dollars or more in developmental aid to a whole host of corrupt regimes. It will pursue its socialist agenda and, at best, trickle some money down to the people where it will do some good. But based on its record, most of the money will find its way to all the wrong places. The Oil-for-Food and North Korean scandals will look like child’s play by comparison.


As long as there is a complete disconnect between the interests of the free-rider member states at the UN, who control its budget and audit process by virtue of their majority vote in the General Assembly, and the few democracies that contribute the vast bulk of the UN’s budget, there will never be any real accountability for what happens to the money. Moreover, the UN management still protects its own from any outside interference, as graphically demonstrated by this series of audacious answers given at a UN headquarters press briefing last week.


When asked whether the UN had any regulations on how its employees should handle counterfeit money that may come into the UN’s possession, the UN spokesman responded: “Well, no. We don’t have a policy on counterfeit money, if that’s what your question is.” In response to a question regarding the current immunity procedure as relates to investigations of suspected wrongdoings at the UNDP, the spokesperson gave a non-committal answer: “Well, I think there are rules governing immunity, and the Legal Department can probably give you more on that.” As to the availability of externally imposed remedies for UN wrong-doing generally, the response was that the UN is beyond the reach of any laws other than its own: “you see the problem is, if you want it to be outside the ambit of the UN, then the UN itself would be subject to being sued. And that cannot happen.”


Make no mistake that the UN robbery of the century will happen if the UN Development Programme remains in charge of administering the Millennium Development Goals aid project. The UN and its bureaucrats will be immune from any accountability to us for wrong-doing, even when it is largely our money that is being stolen. The corrupt beneficiaries of the UN-administered largesse will be beyond the reach of the law. And the American taxpayers could be out hundreds of billions of dollars, with little to show for it.


The only effective remedy is a preventive one – immediately take the United Nations Development Programme out of the picture altogether. Instead, scale the Global Development goals aid program way back and turn it over to the professionals at the World Bank, which at least has some decent financial controls. The last thing we need is a vastly expanded United Nations bureaucracy to run a massive world-wide wealth transfer program, which will attract the world’s corrupt dictators because they know that's where the money is.


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