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UN may have funded Kim Jong-il's cronies

London Telegraph | January 21, 2007 
Philip Sherwell

The new head of the United Nations, Ban Ki Moon, has ordered an emergency external review of all UN expenditure after claims that up to $100 million meant for development aid was channelled into the hands of North Korean officials.

The allegation, made by US officials, prompted fears that the money from the agency may have helped fund Pyongyang's secret nuclear bomb programme. Mr Ban's rapid response to the US claim is a sign that he wants to avoid being dragged down by the sort of UN scandals that dogged his predecessor as secretary general, Kofi Annan. The organisation's former chief was widely criticised for his handling of the Iraqi oil-for-food affair, under which Saddam Hussein skimmed off an estimated $10 billion from the UN programme.

In the latest "dollars-for-dictators" controversy to embroil the UN, officials at its Development Programme (UNDP) acknowledged that since 1998 it had employed North Korean staff, hand-picked by the Stalinist regime of Kim Jong-il, and paid their salaries and other expenses in hard currency into a fund controlled by Pyongyang.

The UNDP, headed by Sir Mark Malloch Brown, a Briton, for much of that period, relied on audits conducted by the North Korean government to track the use of funds to help the desperately poor population of a country where millions have died from famine in recent years.

American officials made clear their alarm in a series of letters to the UN. Mark Wallace, the deputy US ambassador for management, wrote last week that the UNDP's operations had been "systematically perverted for the benefit of the Kim Jong-il regime, rather than the people of North Korea". Estimates of the amount of money that flowed into Kim's coffers range up to $100 million.

The UNDP has said that from March 1, it will instigate new financial controls in North Korea, choose local staff and pay them in North Korean won rather than dollars.

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