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U.N. Secretary-General Ban Ki-Moon Faces Major Test in Ethics Case

Faced with crises in the Middle East, Korea and Sudan, U.N. Secretary-General Ban Ki-moon now has another urgent fire to put out — in his own organization.

How he faces that challenge could well determine the tone of his five-year term of office — and whether the head of the United Nations truly controls the sprawling, decentralized and rapidly expanding multibillion-dollar bureaucracy that he is supposed to lead.

“This is a time of choosing” for Ban, declared a Western diplomat familiar with the internal crisis.

The choice: Whether Ban will support Robert Benson, newly appointed chief of the United Nations Ethics Office — itself only a year old — in the first major test case of the office’s mission of “fostering a culture of ethics, transparency and accountability” at the world organization.

Or, if not, whether the ethics office, deemed the high-water mark of U.N. reform, will become no more than a curiosity demonstrating the hollow nature of the secretary-general’s authority, after he included the setting of “the highest standards of ethics, professionalism and accountability” among his core tasks.

The test was set by Benson himself, who declared in a confidential letter dated last Friday that he had established a “prima facie case” of retaliation against an employee by the $5 billion United Nations Development Program, the flagship of UNDP aid schemes.

Click here to view Benson's confidential letter (pdf).

Protecting U.N. employees against bureaucratic retaliation for reporting wrongdoing was one of the main reasons for creating the ethics office, after the U.N. was buffeted by the multibillion-dollar Oil-for-Food scandal and the discovery of millions of dollars' worth of fraud in the U.N.’s procurement department and elsewhere.

The UNDP employee whom Benson referred to — but did not name — is Artjon Shkurtaj, a 13-year U.N. veteran who was head of UNDP’s North Korean operations in 2005-2006, and who blew the whistle on UNDP’s unauthorized funneling of perhaps tens of millions of dollars in hard currency to the North Korean dictatorship of Kim Jong-Il — quickly dubbed the Cash for Kim scandal.

Shkurtaj also disclosed that, in violation of UNDP rules, well over half of the organization’s staff in North Korea was selected and employed by the North Korean regime, and that there was no guarantee that UNDP’s aid projects in North Korea were even taking place as planned.

News of the unauthorized funding was first reported by FOX News and the Wall Street Journal last January, and confirmed in a preliminary investigation at Secretary-General Ban’s request by the U.N.’s own Board of Auditors, released in early June. A further probe by the Board of Auditors was confirmed in late June, but has not gotten off the ground.

Once the scandal erupted, with the disclosure of a series of confidential letters on the topic between U.S. Ambassador to the U.N. Mark Wallace and the UNDP’s No. 2 man, Ad Melkert, Shkurtaj lost his U.N. job and was briefly — and illegally — banned from entering U.N. headquarters grounds.

Since then, UNDP has been at pains to cast doubt on Shkurtaj’s credentials and his credibility.

A spokesman for the agency declared that Shkurtaj was not a staff member, but merely a short-term “consultant” — even though he ordered the disbursement of UNDP funds (a purely staff function under the organization's rules and regulations) and chaired multi-agency U.N. committee meetings in Pyongyang. In a letter to Shkurtaj in June, the UNDP’s own staff association declared that he was “performing the same functions as a regular UNDP staff member, and you should be entitled to the same rights, privileges and expectations of continuous employment.”

An anonymous leaker subsequently charged in the New York Times that documents provided to the U.S. by the whistleblower had been judged by UNDP to be tampered with — though the Times provided no evidence to support that charge.

“I alerted my chain of command to violations of U.N. rules, but they did nothing,” Shkurtaj told FOX News in an e-mail interview from Europe. “UNDP retaliated against me for being a whistleblower; the U.N. Ethics Office has confirmed this. UNDP must be held accountable for retaliation against me, because in accordance with the U.N. whistleblower policy, retaliation is itself misconduct.”

The challenge for Ban begins with the fact that UNDP also declared quickly that the secretary-general’s ethics office has no authority to investigate the alleged retaliation at the agency, which has its own governing executive board and is funded by international donations that are separate from general U.N. dues. (The U.S. has donated roughly $1 billion to UNDP over the past decade, one of the largest single contributions.)

In the same letter, in which he said he found evidence of illicit UNDP retaliation against Shkurtaj, Benson in effect agreed. In a remarkable plea, he urged Kemal Dervis, the head of UNDP, to allow him to continue the ethics investigation on a one-time basis, saying it would be “in the best interest of the United Nations and UNDP to do so.”

So far, UNDP has refused, saying that it will carry on an independent external review of the circumstances surrounding North Korea. But that deliberately sidesteps the retaliation issue.

Moreover, UNDP has no ethics office of its own, nor any policy similar to that creating the protections afforded to whistleblowers under that office. UNDP has pointedly refused to discuss Shkurtaj’s future status with the organization.

(Efforts by FOX News to gain interviews with Benson and Dervis so far have received no reply.)

That is where Ban’s decision comes in. He was pointedly copied by Benson on his letter to Dervis — and at a regular press briefing Monday, Ban’s spokeswoman, Michele Montas, confirmed that Ban had received the copy “and was studying it.” Ban, she added, “is concerned by the issue.”

As well he might be.

The question of whether Ban’s authority extends to ordering UNDP to allow the ethics office to continue its work was apparently not an issue last January, when the secretary-general quickly, and preemptively, announced that the U.N.’s Board of Auditors would examine the allegations of UNDP misbehavior in North Korea.

Ban’s energetic intervention was quickly watered down, however, when North Korea refused to cooperate with the auditors’ probe — and when documents that UNDP first claimed were speeding on their way to New York for audit inspection remained stuck in Asia, where the auditors complained they could not look at them. Those documents, which include check stubs for payments to North Korean staffers, have still not been inspected.

At Monday’s press briefing, Montas took a much more cautious line about Ban’s next move. She declared that the impasse between the U.N. Ethics Office and UNDP involved “intricate legal issues,” then added that Ban’s style was to “use quiet diplomacy to deal with disputes, and [he] has shown that he can obtain results that way.”

However effective Ban’s quiet diplomacy might be elsewhere, the ethics office crisis is the most important, but not the first, time that UNDP has rejected ethics-related investigations outright by Ban’s Secretariat.

In late June, investigators from the United Nations’ watchdog Office of Internal Oversight Services, or OIOS, began probing the central financial management unit of UNDP for evidence of hiring irregularities and violations of UNDP financial rules.

FOX News subsequently reported that a number of personnel in the section were actually employees of a temporary financial employment service, and several had access to functions that are only supposed to be handled by full-time UNDP staffers. There was no evidence of a competitive bid for the contract for those services.

UNDP explained that the employees had been hired under rules that allowed for no-compete contracts, but FOX News also discovered that those rules were promulgated long after UNDP began hiring such temporary help.

The OIOS investigation was abruptly ended, however, when UNDP argued that the watchdog organization had no jurisdiction and that its own investigators would do the job. There has been no subsequent announcement of whether any UNDP investigation is taking place.

Though Dervis and his deputy, Melkert, claim to support the principle of transparency, UNDP has also resisted efforts by members of its own executive board — led by the U.S. — even to obtain copies of internal UNDP audits and financial statements. Top UNDP officials declare these to be “management tools” and therefore immune to scrutiny, even by the nations that provide UNDP with its funding. The United Nations Secretariat began making its own internal audits available to member states more than a year ago.

When Ambassador Wallace obtained limited access to such UNDP internal audits — he was allowed to look at them but not take them away — he discovered that UNDP’s own auditors had long warned of the same practices that Shkurtaj finally brought to broader attention.

This apparently arcane debate over jurisdiction has many long-term effects on the U.N.’s future. At the same time that it has resisted inspection of its practices by the U.N. Secretariat and even by its governing member states, UNDP has been working energetically to expand its sway within the widely diverse array of U.N. agencies and programs that actually deliver services — and money — in the rest of the world.

It has taken the lead in an initiative to increase coordination — in many if not most cases under UNDP’s auspices — of the delivery of all U.N. funds and services in the world’s developing countries. The move, which was first endorsed in a U.N. report issued last November, called for consolidation of such agencies as UNICEF and the World Food Program at the country level, and the elimination of “unnecessary duplication and competition.”

UNDP chief Dervis, heading what is called the United Nations Development Group, speedily announced creation of an eight-country pilot project to test the idea. If the pilot project succeeds, an increasing amount of the U.N.'s discretionary spending on development, famine relief and humanitarian spending — which vastly outstrips the core U.N. budget of some $2 billion — may be further shielded from oversight of the “reformed” portions of the U.N.

Ironically enough, the initiative is known in organizational parlance as “One U.N.” — exactly the concept that Dervis and UNDP oppose when it comes to Ban’s Secretariat investigating wrong-doing on their own turf.

It now remains to be seen whether Ban will be able to invoke “One U.N.” when it comes to the high ideals of ethics and accountability that he swore to bring back to the badly tarnished organization.

George Russell is executive editor of FOX News.