January 23, 2009 / 8:28 PM / 10 years ago

Censured U.N. agency to return to North Korea: officials

UNITED NATIONS (Reuters) - A U.N. aid agency that left North Korea two years ago amid U.S. charges of financial mismanagement will resume work there later this year under a decision this week by its board, officials said on Friday.

The U.N. Development Program’s executive board “authorizes the resumption of program activities” in the reclusive and impoverished communist state, said a board document dated Thursday and obtained by Reuters.

The decision came after an external review last year cleared the agency of major financial wrongdoing, although it found fault with some practices.

The 36-member executive board gave the green light for UNDP to return to North Korea after considering a report by the agency that proposed tightening up hiring and payment procedures to address critics’ concerns.

The report said programs that UNDP would resume included rural energy development, wind power promotion, seed production and reduction of post-harvest losses in North Korea, which has suffered from flooding and famine in recent years.

The executive board also authorized the head of UNDP to approve other projects on a case-by-case basis. UNDP officials said it would take some months for the agency to resume operations in North Korea and gave no exact date.

UNDP stopped its programs in North Korea in January 2007, and withdrew staff two months later, after Pyongyang refused to accept changes in its relationship with the agency that the board had sought. Several other U.N. agencies stayed put.

The administration of U.S. President George W. Bush had charged that some of the hard currency UNDP spent in North Korea had ended up in the hands of Pyongyang-linked entities abroad that Washington suspected of money laundering and arms dealing.

U.S. officials also said the agency had engaged in sloppy accounting, given cash to North Korean bodies without proper documentation and hired staff handpicked by the government.


A U.N. audit, the external review and a separate U.S. Senate subcommittee inquiry found that UNDP had made mistakes, but did not substantiate the main U.S. charge of funding suspect North Korean bodies, which the agency strongly denied.

The dispute was one of several irritants in relations between the United Nations and the Bush administration.

The UNDP report approved by the board this week said recruitment of local staff in North Korea would in future take place “on a competitive basis” and not depend on appointments by Pyongyang. Such staff would be paid directly and not through the government.

The report made clear, however, that the North Korean government would continue to have a role in finding local recruits, although UNDP would make the final decision. Agency officials said the proportion of international staff would be higher than before.

The report said under an agreement with Pyongyang, UNDP payments to the government and to local staff and vendors would be made in a convertible version of the national currency.

UNDP would bank with the state-run Korea Foreign Trade Bank, but this would have to meet the agency’s global standards for the services it provided.

When the agency’s board considered a possible return to North Korea at a previous meeting last year, diplomats said U.S. and some other representatives had expressed continuing concerns about UNDP management failures.

While the new report appeared aimed at allaying those concerns, the board’s approval, which officials said was unanimous, came just after the inauguration of the Obama administration, widely expected to have warmer ties with the world body. UNDP officials said that was coincidental.

Editing by Eric Walsh

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