As recently as last March, the top legal officer of the flagship United Nations Development Program warned the organization not to punish a whistleblower who exposed UNDP’s controversial dealings in North Korea “because he is a resource person for an independent review of a potential explosive matter for UNDP.”

The advice was ignored, even as UNDP claimed to be cooperating with a preliminary audit of its North Korean operations that had been ordered by U.N. Secretary General Ban Ki-moon.

The audit came in the wake of allegations raised by U.S. diplomats that UNDP had been improperly funneling millions in hard currency to the regime of Kim Jong-Il, allowing North Korean government employees to hold sensitive UNDP functions, and other irregularities. The diplomats also charged that UNDP for years kept some $3,500 in counterfeit U.S. currency in its North Korean safe without notifying U.S. authorities.

In June, the independent audit confirmed most of the U.S. accusations, even while the auditors complained that they had been unable to examine considerable amounts of UNDP financial information that remained in North Korea, where the Kim regime refused to allow them entry.

In the meantime, the development organization announced that it was refusing to renew the contract of the whistleblower, Artjon Shkurtaj, who served for two years as UNDP’s chief operations manager in North Korea.

Since then, UNDP has continued its hardline stance, by refusing to accede to an appeal by the U.N.’s ethics office to continue to investigate the whistleblower’s case after that office declared there was “prima facie” evidence of retaliation against the whistleblower.

UNDP has declared that the ethics office, which was created under former Secretary-General Kofi Annan as a high water mark of U.N. reform, lacks jurisdiction in the case.

Instead, the U.N.’s flagship development organization declared that another ostensibly independent investigation will take place under its own auspices to examine whether the whistleblower was fairly treated. But that will only be one of the duties of the investigation, whose mandate was still being negotiated at a meeting of UNDP’s 36-member executive board.

At an impromptu press conference, the head of UNDP, Kemal Dervis, announced that a three-person panel headed by Miklos Nemeth, a onetime prime minister of Hungary, would look into the whistleblower allegations and other aspects of UNDP’s behavior in North Korea. Dervis said he hoped the panel would report by December.

The other panel members members are Mary Ann Wyrsch, former U.N. Deputy High Commissioner for Refugees and a chairperson of UNDP’s audit advisory committee; and Chander Mohan Vasudev, a former Indian civil servant who is currently an executive director of the World Bank. As it happens, Dervis himself worked at the World Bank from 1977 to 2001; his deputy, Ad Melkert, also served as an executive director of the World Bank from 2002 until 2006.

At the same press conference, Dervis repeated his assertions that the UNDP was unlikely to rehire Shkurtaj, even while the investigation proceeded. The reason he cited was unspecified “facts the external review will bring to light.”

Last March, however, the top officers of UNDP were considering a different course, at least so far as Shkurtaj’s status was concerned.

The legal memo discussing that course was contained in an e-mail dated March 13, 2007, and was addressed to Akiko Yuge, the No. 3 official at UNDP who is in charge of human resources and management functions. Copies of the e-mail also went to Dervis and Melkert.

It offered guidance on how the organization should treat Shkurtaj during the independent audit announced by Ban in January, which would begin work on March 19. It was written by James Provenzano, at that time head of UNDP’s Office of Legal and Procurement Services, the equivalent of UNDP’s general counsel.

Among other things, the legal opinion noted that Shkurtaj’s current contract would expire on March 26, and noted that UNDP’s top officials were already considering a one-month extension. Offering up a detailed analysis of Shkurtaj’s terms of employment, the memo suggested a solution “premised on the notion that Mr. Shkurtaj is to be treated in a manner that is fair and consistent with the UNDP policies and procedures.”

But it also underlined that “the Organization would not take any actions that could be misconstrued as ‘retaliatory.’”

The proposed solution: a new short-term contract that would be explicitly tied to Shkurtaj’s helping with the Secretary-General-sanctioned audit. At the same time, the memo warned that “the various steps UNDP takes will need to be in a manner that does not fuel any perception of retaliation, investigation tampering, etc.”

Instead, Shkurtaj’s contract was allowed to expire, and various attempts were made to ban him from U.N. headquarters.

Earlier this summer, the legal officer who issued the warning was shuffled out of the job of chief legal counsel of UNDP, to be replaced by a junior legal official.

Provenzano is currently head of the UNDP procurement service, which was set up as a separate office in line with the management change. When contacted by FOX News, he declined to make any comment about the legal opinion.

George Russell is Executive Editor of FOX News.