• This is a rush transcript from "The Journal Editorial Report," January 20, 2007.

    PAUL GIGOT, FOX HOST: This week on the "Journal Editorial Report," another black eye for the scandal-plagued U.N. New documents suggest that tens of millions of dollars in U.N. cash have been funneled to Kim Jung Il's communist regime. We'll have the exclusive details.

    Plus, Condoleezza Rice's plan to jumpstart the Middle East peace process. Can it work?

    And media darling Barack Obama tests the presidential waters. But is he any match for Team Clinton?

    Those topics, plus our weekly "Hits and Misses." But first, these headlines.


    GIGOT: Welcome to the "Journal Editorial Report." I'm Paul Gigot.

    Following close on the heels of the oil-for-food scandal comes evidence now of another dictator using a U.N. program to prop up his regime.

    Late this week, our Melanie Kirkpatrick broke the story, citing previously undisclosed documents that suggest that tens of millions of dollars in cash have been funneled to Kim Jung Il's North Korean government through the United Nation's Development Program, or UNDP, with little or no oversight.

    In a January 16 letter to a UNDP administrator, Ambassador Mark Wallace, of the U.S. mission to the U.N., lays out what America digging has found so far.

    According to Wallace, the UNDP's program in North Korea has, quote, "for years operated in blatant violation of U.N. rules, served as a steady and large source of hard currency and other resources for the North Korean government with minimal or no assurance that UNDP funds and resources are utilized for legitimate development activities," end quote.

    Here to discuss these developments, "Wall Street Journal" Columnist and Deputy Editor Dan Henninger, as well as Rob Pollock and Jason Riley, both "Wall Street Journal" editorial board members.

    Dan, our colleague, Melanie broke this story, couldn't be here today. Sounds to me like this is a kind of another oil-and-food — at least it has echoes of that, albeit, on a smaller scale. What are the North Koreans up to here?

    DAN HENNINGER, WSJ COLUMNIST AND DEPUTY EDITOR: Well, what has happened here is that, going back, as far as we know, to about 1998, the United Nations Development Fund, which is the U.N. agency that engages in humanitarian assistance to countries, environmental assistance, developmental funds and such, has had a program up and running with North Korea.

    Now, as far as we know, there are upwards of 30 projects — 30 project sites. For starters, they have only been visiting them once a year. But by and large, North Koreans don't allow foreigners to most parts of the country. So the United Nations has not been visiting these so-called sites at all.

    GIGOT: Yes. U.N. rules say you should visit them once a year. But they aren't — but the North Koreans don't allow the U.N. officials to visit some of them.

    HENNINGER: Yes. So that's for starters. Secondly, we know that tens of millions, perhaps $100 million have been spent on this program. The North Koreans insist that they get paid in hard currency. We are talking about literally cash payments.

    Secondly, the office that the UNDP has in Pyongyang is, by and large, staffed with people picked by the North Korean government. The financial accounting is done by North Koreans. The North Koreans charge the United Nations $2 million a year in rent for the office in Pyongyang.


    GIGOT: And elsewhere, in general, yes.