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EXCLUSIVE: Cash for computers: Is the U.N. busting its own sanctions in North Korea?

Editor's Note: See bottom for update to this story.

An agency of the United Nations has quietly shipped computers and sophisticated computer servers to the government of North Korea, despite ongoing U.N. sanctions against the regime for its efforts to build nuclear weapons, Fox News has learned.

The complicated method chosen by the Geneva-based agency, the U.N.’s World Intellectual Property Organization, or WIPO, to carry out the transaction seems designed to bypass safeguards specifically created by U.N. authorities to prevent a repeat of previous U.N. scandals involving shipments to North Korea.

Among other things, procurement and payment for the WIPO goods appears to have been arranged between WIPO’s Geneva headquarters and China, bypassing the U.N. offices in North Korea. Those North Korean offices operate under a special oversight regime established after the last scandals erupted in 2008 over financial and technology transfers in North Korea, to ensure that money and goods do not end up in the regime’s nuclear programs.

WIPO’s payment of $52,638 to a Chinese supplier and installer for the computer shipment, however, did not go through. It was blocked at the beginning of last month, according to U.N. emails, by Bank of America, which is the host bank for U.N. accounts in China, on the grounds that the money transfer for goods shipped to North Korea was a possible violation of U.S. Treasury rules.

When asked by Fox News about its actions, Bank of America declined to comment. A State Department spokesman, asked a variety of questions by Fox News about the cash-for-computers deal, said only that “we’re looking into it.”

According to documents obtained by Fox News, WIPO is still looking for ways to make the payment.

Concerns about the WIPO computer shipment apparently led to a meeting between the U.N. agency’s top official, Director General Francis Gurry, and a number of foreign ambassadors in Geneva on March 29. Among them, according to one source, were representatives of the U.S., Canada, Japan and South Korea.

The diplomats first learned of the shipment after the head of WIPO’s staff council, Moncef Kateb, voiced concerns in a letter to a special U.N. watchdog in Geneva known as the Joint Inspection Unit.

In that letter, also obtained by Fox News, Kateb declared that so far as WIPO staffers could tell, WIPO’s member states “had not been consulted and have no knowledge of this project. Thus, they were not given an opportunity to review or object to it.” The project, Kateb said, “was allegedly approved directly by the director general.”

Click here to view the staff council letter.

Gurry denied at the meeting with diplomats that WIPO’s technology transfer violated any international sanctions efforts. He subsequently circulated to the attending ambassadors a WIPO legal memorandum -- written by the office of WIPO legal counsel Edward Kwakwa -- which claimed that the computer exports were “part of WIPO’s technical assistance program,” which “does not violate any U.N. Security Council sanctions.”

The memo acknowledged that payment for the computers had been blocked by U.S. sanctions laws “enacted in part to implement” the binding U.N. sanctions. But it also declared that “WIPO, as an international organization, is not bound by the U.S. national law in this matter” and was still looking for ways to pay for the shipment.

In response to questions from Fox News about the technology transfer and the routing of its payments, a WIPO spokesman described the program as routine -- 27 country offices were serviced in similar fashion in 2011 -- and largely ignored questions about payments and where they came and went.

“As part of WIPO’s technical assistance program -- and through a mandate from its member states -- the Organization has been supporting IP [intellectual property] offices in developing countries to facilitate the processing of patent and trademark applications since the 1990s,” the spokesman said. “The assistance in question was part of this program.”

The assistance “is intended to enhance the efficiency of the operation of registration for patents by replacing the current ICT equipment with more efficient ICT [information and communications technology] equipment,” the spokesman continued. “WIPO followed all due processes --procurement and other -- applicable in this context.”

Technology transfers to North Korea -- a truculent communist dictatorship with a thirst for nuclear weapons, whose often-starving citizens are brutally kept in line by a military-dominated elite with widespread international criminal ties -- are hardly routine, however. The country has been under varying degrees of U.N. Security Council sanctions since 2006, when it first set off an illegal nuclear explosion, followed by another in 2009.

The cash-for-computers scheme comes at a new tinderbox time for international relations with the rogue North Korean regime, which shocked the world in mid-March with the announcement that it would launch a satellite-bearing missile next month. That announcement flew in the face of a newly-minted deal with the Obama administration that was intended to send 264,000 tons of food aid to North Korea in exchange for its putting an end to nuclear bomb-related activities.

Many countries, and especially the U.S., see the North Korean satellite program as a cover for further work on missile-ready nuclear weapons. According to North Korea, the satellite launch is a peaceful, scientific effort -- the same argument for satellite launches that is being used, as it happens, by Iran, another country with a clandestine and illegal nuclear weapons program -- and close ties with the North Korean regime.

As a result of the latest North Korean announcement, the Obama administration last week canceled its just-announced food aid program for North Korea until further notice. North Korea, under its new leader, Kim Jung Un, is still fueling up a rocket for its satellite launch, currently scheduled for mid-April.

On the surface anyway, the latest WIPO technology transfer has little to do with nuclear weapons or satellite launches. It involves laptops, printers and servers intended to create a high-speed digital archive for North Korea’s Inventions Office -- the equivalent of the U.S. Patent Office. (In all U.N. correspondence, North Korea is known by its formal name of Democratic People’s Republic of Korea, or DPRK.)

Click here to view the project plan.

The archive plan, which goes by the name of the Patent Databases Upgrade Project, would allow North Korea, among other things, better access to the gigantic trove of international patents held by WIPO, which is the international repository for such legal documents.

According to WIPO’s website, more than 2 million patents are accessible via database technology to 142 signatories of the Patent Cooperation Treaty, one of 24 international agreements administered by WIPO. The PCT offers the access to the patents in its archive in exchange for greater guaranteed protection of intellectual property rights, especially in developing countries. By far the biggest patent producer in the world is the U.S., which also supported WIPO to the tune of $1.3 million last year.

North Korea signed on to the treaty in 1980 -- just months before Kim Jong Un’s erratic father, Kim Jong Il, took over the reins of the family-run communist dictatorship from his own father, Kim Il Sung. How well the country adheres to the treaty is another question, given North Korea’s notoriety as a center for drug smuggling, the production of illegal pharmaceuticals and counterfeiting, notably of U.S. $100 bills.

North Korea signed the Nuclear Non-Proliferation Treaty five years after it joined the patent treaty -- in 1985. It has since been cited repeatedly for ignoring the NPT with its illegal shipments of nuclear materials and equipment, and other prohibited technology, to Syria among other places, as well as its own bomb-making efforts.

“North Korea is trying any way it can to augment its computer power,” observed John Bolton, former U.S. Ambassador to the U.N., and, prior to that, head of a U.S. State Department initiative to police illegal efforts at nuclear proliferation, notably from North Korea.

“Any augmentation of North Korean computer power is something that can be used immediately in their nuclear program,” said Bolton, who is a Fox News contributor. “For the United Nations system itself to violate the sanctions is reprehensible.”

WIPO’s detailed plan for improving North Korea’s patent access was a lengthy process, which really took off after a five-day visit to North Korea in March 2011, by William Meredith, a senior WIPO technician. North Korea signed off Meredith’s proposal for the data upgrade the following July.

Click here to view the sign-off.

As it happens, the WIPO patent data retrieval upgrade was conceived and explored during another period of extensive and pessimistic analysis of the success of U.N.-sponsored sanctions against North Korea.

In the months between WIPO’s exploratory trip and the North Korean agreement to the plan, press reports alleged that China had attempted to suppress a report by a U.N. panel of experts that found U.N. sanctions against North Korea had not been effective, and that alleged prohibited transfers of “ballistic-missile-related items” had taken place between North Korea and Iran.

When the new computers and servers actually arrived in North Korea is not clear from the documents obtained by Fox News. An invoice from the Chinese supplier for the overall cost of the completed project is dated Jan. 20, 2012, but a heavily blacked-out inspection signoff from the Director General of North Korea’s Invention Office does not appear to bear a date.

What is clear, however, is a signed order from WIPO’s Geneva headquarters to the office of UNDP’s Resident Representative in China, dated Nov. 11, 2011, which authorizes payment of the $52,638 total within 30 days of receipt of the invoice and the signoff.

Click here to view the authorization, invoice, and North Korean certification of the shipment. 

The United Nations Resident Representative in China is Renata Lok Dessallien, a Canadian citizen, who is also the country’s Resident Coordinator, and whose agency, the United Nations Development Program, is responsible for paying WIPO’s China-related bills.

Queried specifically by Fox News about the payments in China for technology installed in North Korea, Dessallien offered no reply before this story was published. Nor did UNDP spokesmen at the agency’s New York headquarters, who were asked similar questions.

That Dessallien or her subordinates approved the payment can be inferred from the increasingly perturbed WIPO email chain obtained by Fox News, which also includes messages from at least one UNDP treasury staffer, Mediana Yudianto, who is based in New York.

The initial messages relay Bank of America’s balking at the payment order, and the fact that the bank wants further information about the actual beneficiaries of the shipment.

The same emails show that by March 13, Bank of America’s questioning of the WIPO computer transfer deal had made some members of the U.N. organization uneasy -- especially the man later charged with defending them. The email string includes advice from none other than WIPO’s legal counsel, Edward Kwakwa, suggesting that WIPO abandon the deal “unless you think this arrangement is of crucial importance to WIPO.”

The reason, he said, was that “it does not seem to be of any consequence or benefit to WIPO, and can bring more trouble than benefit ultimately.”

Click here to view the emails.

In the legal formal memorandum presented by WIPO Director General Gurry to ambassadors in Geneva, however, Kwakwa’s office took a very different stance. His argument was not whether WIPO should do it. He argued instead that it could do it.

Kwakwa’s legal memorandum takes on the tone of a defense brief in a seven-page look at the specific U.N. Security Council sanctions resolutions and itemized lists of sanctioned goods, institutions and people in North Korea before declaring that the specific laptop computers, servers and Iinternet connections contained in WIPO’s shipment do not fit on any of them. In particular, the memo notes “there is no provision excluding general computer technology.”

Click here to view the legal memo.

The memo is even more intriguing, for what it does not say. For one thing, it is silent on whether WIPO consulted in advance with U.N. Security Council sanctions committees that monitor the sanctions against North Korea before the agency entered into the tech transfer deal. Nor does the memorandum address any concerns about “dual use” of technology that could be repurposed to aid a nuclear weapons campaign -- and many of the items on the U.N. sanctions list require computerized assistance.

Such concerns about the dual uses of technology have been involved in other U.N. scandals In North Korea -- climaxing in a 353-page report in 2008 that itemized numerous infractions by UNDP itself. 

A bulletin on UNDP’s country website for North Korea now states that “special attention will be given to equipment to ensure that procurement is in compliance with U.N. rules and regulations and export licenses and that no equipment will be used for dual-use purposes.”

Yet WIPO’s equipment transfer got no such special U.N. attention in North Korea -- only an approval by a top North Korean government official.

For his part, a spokesman for U.N. Secretary General Ban Ki-moon explained that the entire affair involving cash and technology transfers was, literally, none of the top U.N. official’s business.

“WIPO is a specialized agency that operates independently of the United Nations and has its own governance structure in which its member states participate,” the spokesman said. “Accordingly, the Secretary-General would not normally be informed of the details of any particular project.”

For the U.S. and most other concerned nations, however, it would be hard to describe anything taking place in a nuclear-ambitious rogue state that frequently threatens its neighbors with annihilation as normal.

Jonathan Wachtel contributed to this report.

UPDATE:  Late on April 4, UNDP responded to a number of questions posed by Fox News to declare through a spokesman that the agency is “often requested to make payment on behalf of other U.N. agencies,” and in doing so, “UNDP is not responsible for procurement or the rules and policies of other agencies.” UNDP involvement in the computer shipment was “limited to the disbursement, authorized by the designated WIPO signatory and accordingly approved by the authorized UNDP official.” After Bank of America stopped the payment for the computer shipment, the money was returned to the UNDP China account and then refunded to WIPO. Subsequently, the UNDP spokesman said, UNDP China has had no further involvement in this matter.”

The UNDP response did not address a number of questions from Fox News about when and how the agency’s North Korean office, which has declared on its website it will give “special attention” to sensitive shipments to that country, among other things to prevent “dual use” of equipment for illicit purposes, was notified of the shipment. Nor did it address the solo role of a North Korean government official in certifying the arrival of the shipment. Nor did UNDP say, in response to a specific question, whether it had informed any U.N. sanctions committee in advance of the shipment. Additionally, questions sent directly to the head of UNDP’s China office about how the supplier for the shipment was selected, and whether the strictures that UNDP applies to goods shipped directly to its North Korean office were also applied when the goods were shipped to North Korea from China, also went unanswered.

George Russell is executive editor of Fox News and can be found on Twitter@GeorgeRussell

Click here for more stories by George Russell.