Controversial U.N. Development Program Faces Cutoff Threat Over Audits

After years of secrecy and resistance from the United Nations’ flagship anti-poverty agency, the United States has called forcefully upon the United Nations Development Program to provide full details of its spending and financial oversight, or face the possibility of a cut-off of its funding.

The cutoff threat came in the form of a remarkably blunt statement on Sept. 6 from Joseph M. Torsella, the U.S. Ambassador to the U.N. charged with issues of management and reform, at the fall meeting of UNDP’s 36-member supervisory Executive Board, where the U.S. is a member.

“We have reached a juncture where we have to ask the hard question: Will UNDP adopt full public disclosure as its policy, and when?” Torsella declared. “The answer will have a profound impact on the perception of UNDP’s integrity and on the support it receives from donor and program countries in the years ahead.”

With that, the struggle to induce the secretive UNDP to lift some of the veils swathing its operations or face financial penalties has reached a new pitch, as Torsella told the often controversial U.N. agency that it must make all of its “audit, oversight, and financial information public as soon as possible.”

The clear implication was that if UNDP, a $5.3 billion organization which manages and coordinates most of the U.N.’s development and social programs world-wide, did not do so, its continued funding would be under threat.

Click here to read Torsella's full statement. 

A public warning of that kind for any U.N. organization is highly unusual for the Obama Administration, which is deeply committed to U.N.-centered “multilateralism” in its foreign policy.

But it is not coincidental that the warning is aimed at UNDP, which has been engaged in battles to limit access to its sensitive internal audits, among other things, for nearly half a decade, since the days of the Bush Administration.

UNDP’s current position is that such audits of its operations around the world are internal “management tools,” and that they should only be shown upon request to governments that foot UNDP’s bills, that signed confidentiality agreements must be provided first, and even then, audits can be withheld if a country where the audit takes place objects. A similar position was adopted by another major U.N. Agency, the World Food Program, last November.

In both cases, battles over transparency had erupted over the U.N. agencies’ operations in highly sensitive areas of the world, such as North Korea. But other questions have also arisen, including the extent to which earmarked contributions of money to UNDP and other U.N. organizations have increasingly piled up as growing unspent balances at the end of each year.

Click here to read more on that story from

Torsella did not say it, but one of the major sources of the pressure for increased UNDP openness is the U.S. Congress, where Republicans in particular seem determined to cut funding for various parts of the world body for, among other things, lack of transparency in showing how U.S. taxpayer dollars are spent.

(According to UNDP, the U.S. contributed $421.5 million to UNDP in 2010, slightly less than Japan. But that understates U.S. contributions significantly, as the “U.N. system” itself gave UNDP about the same amount. The U.S. contributes 22 percent of the regular U.N. budget, meaning that another $80 million or so of UNDP income might originate with the U.S.)

Last week, Ileana Ros-Lehtinen, head of the House Foreign Affairs Committee, introduced a new bill in Congress that would, among other things, require a “certificate of transparency” from the U.S. Comptroller General governing the “adequacy of accounting, oversight, and internal control mechanisms at United Nations entities that receive United States contributions.” Failure to win the certificate would result in loss of any affected funds, which would be returned to the U.S. Treasury.

Click here to read the bill.

Ros Lehtinen’s proposed measure is not assured of passage, and various U.N.-supporting interest groups are lobbying furiously against it. Torsella’s statement was a clear signal, however, that the Obama Administration thinks such efforts need to be taken seriously, and even, perhaps, that the Administration feels vulnerable over the issue.

As Torsella noted, “at a time when all of us are demanding transparency and good governance in both developed and developing states, we should ask no less of UNDP.”

Agreed Brett Schaefer, an expert on U.N. financing at the conservative Heritage Foundation:

“UNDP regularly provides recommendations to developing countries on how to improve governance, transparency and accountability. Why should UNDP be exempt from those same standards?

But then Torsella offered the U.N. agency an escape hatch of sorts. He declared that the U.S. “looked forward” to Clark’s response at the next UNDP Executive Board meeting—slated for January 2012. And even then, he said, what Washington expected by then was to review “the detailed steps and the timetable that Administrator Clark will pursue to achieve universal and full disclosure.”

In other words, after four months, Clark could still drag things out considerably further.

Torsella also offered UNDP a carrot for cooperation: the possibility of “additional resources to support UNDP management initiatives to promote transparency, accountability, and other management improvements.” Possible translation: even more money.

For her part, UNDP Administrator Clark was fairly tight-lipped about financial transparency in her own remarks to the Executive Board, saying that “we welcome continued dialogue” on the issue, and “I hope that by the end of next year we could reach a consensus on this.” Further implementation, of course, could take longer.

Clark’s glacial approach contrasted—unfavorably—with an announcement from one of the other major sources of audit reporting in the U.N. system, the Secretariat’s Office of Internal Oversight Services, regarding publication of its own internal audits, which have documented a wide variety of waste, inefficiency and wrongdoing.

In a report to be presented to the U.N. General Assembly during the upcoming session that begins Sept. 16, OIOS chief Carman LaPointe revealed that the oversight agency would begin publishing its audit reports on its website, starting next January. Previous OIOS policy was that reports would be provided to U.N. member states only on request. The U.S. has published large numbers of such reports it had requested on its own U.N. website, but selectively, and at sporadic intervals.

In response to questions from Fox News about the new policy of openness, LaPointe declared that “Publication of audit reports will help increase both the pace and the level of change” at the U.N., which she evidently welcomed. “Knowing OIOS reports will go public will encourage more timely responses to address significant issues--hopefully before the ink is dry.”

U.N. Secretary General Ban Ki-moon, she said, “fully supports this approach. “

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