By Bay Fang
Washington Bureau
Published June 9, 2007
WASHINGTON -- A senior State Department official told members of Congress in a recent classified briefing that funds transferred to the North Korean government by the United Nations Development Program were used by the Kim Jong Il regime to pay enterprises involved in weapons sales, as well as to purchase buildings in Europe and technology that could be used in a nuclear weapons program.
A memo obtained by the Tribune details the May 23 briefing, given to about a dozen members of Congress and staff.
According to the memo, the UNDP paid almost $2.7 million for "goods and equipment" to a vendor with ties to a North Korean entity known to be the main financial agent in that country for sales of conventional arms and ballistic missiles. That entity has been singled out under the U.S. Treasury Department-administered Executive Order 13382, which freezes the assets of entities contributing to the proliferation of weapons of mass destruction.
The memo, which the State Department says is based on eyewitness accounts from program officials and internal UNDP business records, also alleges that the program's local employees withdrew from the UNDP's account at Pyongyang's Foreign Trade Bank tens of thousands of dollars worth of what UNDP officials identified as counterfeit U.S. currency.
Earlier this week, U.S. Ambassadors Mark Wallace and Zalmay Khalilzad met with program Administrator Kemal Dervis to present him their evidence. "The information we provided indicated an apparent misuse and diversion of UNDP funds, business dealings with certain suspect entities affiliated with [North Korea], UNDP's procurement of potential dual-use equipment and information related to further use of counterfeit U.S. currency in the [North Korean] country program," said Richard Grenell, a spokesman for the U.S. mission to the United Nations.
According to Grenell, Dervis agreed to investigate and to "cease doing business with the suspect entities."
The State Department memo detailing the May briefing did not provide specific evidence to support the contentions, though other sources indicated that officials had documentation.
The UNDP is supposed to provide money only for humanitarian or development purposes.
UNDP spokesman David Morrison said in a statement: "I am surprised that the U.S. authorities did not come to us first to verify the allegations. At first glance, the allegations do not correspond at all with our own records, which we have scrutinized extremely closely in the past six months. However, we take the allegations seriously and are looking into them. In this connection, we have asked if the U.S. authorities would provide documentation that would substantiate and help us to investigate them."
Other allegations in the briefing included the North Korean government transferring $2.8 million of program money to North Korean missions in Europe and New York to buy buildings in France, England and Canada, and to fund the purchase of equipment that could be used for either civilian or military purposes, such as Global Positioning System equipment, computers and a mass spectrometer, an instrument used to measure the masses and relative concentrations of atoms and molecules.
The memo also mentions electronic transfers made by the program to the North Korean government, specifying that "during 2001 and 2005, UNDP ... transferred over $7 million of its funds" to a North Korean government entity and in 2001-02 transferred more than $8 million of other UN agencies' funds to the North Korean government.
The UNDP has said its Pyongyang office was responsible only for the transfer of $1 million a year on behalf of other agencies.
"It is disturbing but it should not be surprising," said Mike Green, a scholar at the Center for Strategic and International Studies and senior director for Asian affairs at the National Security Council until the end of 2005. "Cash transfers to the North Korean regime are tightly controlled at the top to ensure Kim can procure dual-use materials for his weapons programs, finance his operations abroad and provide luxury goods for the elite. This is all fungible money."
U.S.: N. Korea misused UN cash | Chicago Tribune