International Fight at U.N.'s $5 Billion Anti-Poverty Agency Over Secrecy

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Nearly 18 months after the United Nations Development Program promised to shed daylight on its internal operations to the countries that pay its bills, is the U.N.'s flagship anti-poverty agency going to live up to the deal?

That is one of the main issues in a tussle currently taking place within UNDP's 37-member executive board, which supervises the organization, and which winds up its semi-annual meeting today in New York.

The battle is led by the U.S. and a number of other Western nations that pay most of the UNDP's bills (the U.S. alone donates roughly $500 million annually to UNDP). Some of the Western states are concerned that UNDP is still trying to keep its $5 billion operations — and any problems it has with them — under as many wraps as possible. For its part, UNDP says it is happy to cooperate if only all the countries that make up its board can agree. The outcome of the battle is still uncertain.

The issue revolves in part around UNDP's disclosure of its internal audits to U.N. members that request them — a policy that became a hot button a year ago, when the U.S. demanded to look at UNDP audits for North Korea. The audits, conducted periodically of all UNDP programs, examine how the organization is spending its money and whether it is following its own rules while doing so. Traditionally, UNDP's top managers have considered them to be "management tools," and insisted they be kept confidential, even from the governing executive board.

But all that began to change in 2007, when U.S. diplomats got to examine a series of UNDP audits of its programs in North Korea. After reading them the U.S. accused UNDP of funneling millions of dollars in hard currency to the Kim regime, hiring North Korean government employees to fill sensitive UNDP jobs in the country, and passing on sensitive "dual use" technology that could be used in North Korea's nuclear program, all in violation of U.N. rules. Moreover, UNDP auditors had passed on many of those concerns to top management; nothing was done.

The essence of the U.S. charges was vindicated, and then some, in a special investigation of UNDP's operations in North Korea, which reported in June of this year. The lengthy document not only buttressed most of the U.S. charges, but also reported that a North Korean government employee who served as UNDP's finance officer also verified the receipt of the checks she wrote, in violation of one of UNDP's most fundamental anti-fraud rules.

In the midst of the North Korea battle, the U.S. issued a new demand: that future UNDP audits be made public to member governments on request. The UNDP punted the response to its current executive board meeting, as part of a discussion on a UNDP "accountability framework," which included not only the audit issue, but protection for whistleblowers who drew attention to wrongdoing within the organization, and the authority of ethics officers who are supposed to do the protecting.

In its only official comment on the situation, the chief U.S. diplomat on the executive board, T. Vance McMahan, stated only that "we believe the Board should have access to all UNDP internal audits ... and we believe all information, except that which could affect the due-process rights of individuals, should be made available to the Board."

The major roadblock to that idea, according to sources familiar with the in-house tug-of-war, is China, the country with the closest ties to North Korea, and which has been energetically extending its influence in the rest of the developing world, notably in countries like Sudan and Zimbabwe, with enormous human rights concerns.

According to sources, a coalition of Western nations had managed to forge a consensus that the audits would be handed out under two major conditions — that they not be leaked to the public, and also that the countries where UNDP spending was being audited would be "informed" of a request to view the documents and be offered the chance to respond to whatever was discovered.

At the last minute, China demanded that the key term be changed to "consulted" — which apparently means that the target country could keep the audit confidential.

Whether the logjam would be broken today remains highly unclear.

But for watchdog organizations monitoring the tussle, even the compromise so far seems unacceptable. The Government Accountability Project (GAP), a Washington-based group that helped the United Nations frame its overall ethics policies back in 2005, charges that the "accountability framework" presented by UNDP to the board still gives UNDP management too much authority to cover up its actions.

If a government wishes to see an audit report, a reason must be provided to UNDP," GAP declared in a statement to FOX News. In contrast, when UNDP withholds a report, neither the UNDP top administrator nor the auditing organization needs to give a reason.

"How can UNDP preach 'good governance' to its member states and at the same time concoct an accountability system like this?" GAP asked.

GAP was equally skeptical about UNDP claims to provide adequate protection for whistleblowers who call attention to wrongdoing. Their claims of retaliation are referred to a UNDP ethics committee, which can only recommend subsequent relief actions to UNDP top management — which may have allowed any retaliation in the first place.

The stakes on the outcome of Friday's meeting — if it is not once again kicked down the road — are high. For UNDP, a judgment by the U.S. State Department that it had failed to achieve sufficient "transparency" could trigger a congressionally mandated cutback on U.S. financial support, one of the main reasons why the new policy is under discussion at UNDP at all.

On the other hand, lack of a policy for examining audits leave UNDP operations in such countries as Iran, Venezuela and Sudan — or any other rogue country where UDNP programs might be abused — dangerously out of sight.

George Russell is executive editor of FOX News.

UPDATE (9/23/08): At the end of last week, UNDP's executive board approved a version of the audit-sharing proposal that included the need for a written demand by a member state for any audit, coupled with a written confirmation that the material would remain confidential. Countries whose programs were audited would be informed of the request and given "adequate time" to comment on the audit report, but no right of veto over its sharing.