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Viewing cable 07USUNNEWYORK125, AMBASSADOR WALLACE MEETS WITH UNFPA EXECUTIVE

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Reference ID Created Released Classification Origin
07USUNNEWYORK125 2007-02-12 22:55 2011-08-30 01:44 CONFIDENTIAL USUN New York
VZCZCXYZ0005
OO RUEHWEB

DE RUCNDT #0125/01 0432255
ZNY CCCCC ZZH
O 122255Z FEB 07
FM USMISSION USUN NEW YORK
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1330
INFO RUEHUL/AMEMBASSY SEOUL IMMEDIATE 0789
RHEHNSC/NSC WASHDC IMMEDIATE
C O N F I D E N T I A L USUN NEW YORK 000125 
 
SIPDIS 
 
SIPDIS 
 
FOR IO, T, EAP 
 
E.O. 12958: DECL: 02/05/2017 
TAGS: EAID KFPC KN KNNP KUNR PINR PREL UNDP UNFPA
SUBJECT: AMBASSADOR WALLACE MEETS WITH UNFPA EXECUTIVE 
DIRECTOR THORAYA OBAID IN WAKE OF EXECUTIVE BOARD'S 
DECISION ON THE DPRK. 
 
Classified By: USUN Acting Permanent Representative Alejandro D. Wolff 
per 1.4 (b) and (d) 
 
1.(C) On January 25, Ambassador Wallace met with UNFPA 
Executive Director Thoraya Obaid and a team of senior UNFPA 
officials to discuss UNFPA's program activities in the DPRK. 
UNFPA provided USUN with preliminary information on program 
budgets, in-country expenditures paid directly to the DPRK 
government, and UNFPA's audit policies. Ambassador Wallace 
stated his intention to make a formal request for copies of 
UNFPA's internal audits and also stated his hope that USUN 
and UNFPA could work cooperatively in the future to address 
U.S. concerns. ExDir Obaid, while noting U.S. concerns, 
stated that as Chair of the High Level Committee on 
Management (HLCM) she could not provide UNFPA internal audits 
to Member States, citing the recommendation of the HLCM to 
the UN System's Chief Executive Board for Coordination (CEB). 
Obaid did however, state her willingness to provide 
Ambassador Wallace with summaries of UNFPA's internal audits. 
Ambassador Wallace was accompanied by PRM/PIM Director Nan 
Kennelly and a USUN/MR officer. End Summary. 
 
2.(C) Ambassador Wallace opened the meeting by providing an 
overview of U.S. concerns with UN operations in the DPRK and 
a summary of USUN/UNDP interactions leading up to the 
deferral of the DPRK country program at the UNDP Executive 
Board meeting. Ambassador Wallace focused on U.S. concerns 
with transparency and accountability in all UN funds and 
programs, particularly with Member States lack of access to 
internal audits. He reiterated the U.S. position that 
internal audits must be provided to Executive Board Members 
in order to enable Members to make informed decisions on 
program activities and also to ensure that their citizens' 
tax money is not being diverted by the DPRK government for 
other purposes. 
 
3.(SBU) ExDir Obaid and her team acknowledged that as a 
member of the same country-team as UNDP in the DPRK, UNFPA 
engaged in many of the same practices as UNDP, i.e. employing 
seconded staff from the DPRK government and making payments 
in hard currency. Obaid distinguished UNFPA from UNDP 
however, in the nature of services provided, the manner in 
which services are delivered and the size of the UNFPA's 
program in the DPRK vis-a-vis UNDP. Specifically, she stated 
that the size of the UNFPA program in the DPRK was small in 
comparison to that of UNDP and that all projects were 
implemented via Direct Execution (DEX), as opposed to 
National Execution (NEX), which allows UNFPA more project 
oversight and to rely less on the host country government for 
project implementation and procurement of services from 
national vendors. 
 
4.(SBU) Regarding U.S. concerns with lack of field/site 
visits by UNDP officials to NEX projects in the DPRK, UNFPA 
stated that it was their policy to require international 
UNFPA staff to visit all UNFPA facilities and assistance 
operations on the ground in the host country. UNFPA's DPRK 
program is supervised by the Beijing office, and the UNFPA 
China mission director Dr. Bernard Coquelin stated that 
during his most recent visit to the DPRK, he personally 
checked some of the 23 facilities, the equipment used on-site 
(e.g. stethoscopes, scanners, medication and low-capacity 
computers) and had private meetings with clients and doctors. 
Obaid stated that UNFPA has a "no access, no assistance" 
policy, meaning that UNFPA aid is contingent on host country 
assurances of unlimited access for UNFPA officials to 
projects and staff. She added that all equipment is provided 
by UNFPA in accordance with the UN sanctions list, so the 
risk of "dual-use" equipment is minimal. 
 
5.(U) UNFPA officials provided the following information on 
UNFPA program costs in the DPRK: 
-1985-1989: $2.2 million 
-1990-1997: $3.6 million 
-1998-2003: $3.6 million 
-2004-2006: $2.7 million 
-2007-2009: $8.25 million 
 
6.(SBU) UNFPA stated that approximately 13% of the program 
budget is spent on expenditures paid directly to the DPRK 
Government. This 13% amounts to approximately $150,000 in 
currency transfers to the DPRK per annum. The office in the 
DPRK consists of five local and one international staff 
member. Regarding staff travel, UNFPA stated that checks from 
UNFPA to staff for DSA's are made out directly to staff and 
not to the DPRK government. Regarding procurement, since DEX 
is UNFPA's preferred modality of execution, the majority of 
procurements are made offshore (in large part through the 
Beijing office) and not through national vendors as is the 
case with UNDP. ExDir Obaid claims that local staff do not 
have access to financial controls, e.g. checkbooks, as was 
found to be the case with UNDP, and that while local staff 
can access the ATLAS system (the internal system for 
facilitating financial transactions), they do not possess the 
signature authority needed to authorize payments for UNFPA; 
that is handled from Beijing. 
 
7.(C) UNFPA stated that the last internal audit of the 
program in the DPRK was conducted in 2004 and was executed in 
conjunction with a Big 4 independent audit firm. This audit 
had a rating of "partially satisfactory", due to the auditors 
concerns with inadequacies in staffing and IT security. 
According to UNFPA, the auditors expressed no concerns with 
financial controls, program monitoring or personnel. UNFPA 
stated that while they could not provide USUN with the 
internal audits, they could provide summaries upon request. 
 
8.(C) At the conclusion of the meeting, Ambassador Wallace 
reiterated the U.S. position that Executive Board Members 
cannot fulfill their fiduciary responsibilities without 
access to internal audits. In response, Ms. Obaid revealed 
that she has been meeting with Kemal Dervis, Administrator of 
UNDP and Ann Veneman, Executive Director of UNICEF, to 
consider changes in the Executive Committee's policy on 
sharing internal audits with Member States. 
 
9.(SBU) USUN intends to send the following letter ExDir Obaid 
in which Ambassador Wallace will reiterate U.S. concerns and 
make a formal request for copies of UNFPA's internal audits 
of the program in the DPRK. Begin letter text: 
 
-Thank you for the meeting January 25th to discuss the United 
States' concern with the UNFPA program in North Korea. As you 
know, this is a matter of the utmost importance to my 
Government. 
 
-In order for the United States to exercise our 
responsibilities as a Member of the Executive Board, it is 
critical that we better understand the state of UNFPA's audit 
activities. We thank you for the preliminary information 
provided during our meeting as well as your offer to provide 
us with summaries of UNFPA's internal audits. However, in 
order to more effectively understand the audit and oversight 
capacity of UNFPA, we request the following information: 
 
Full internal and external UNFPA audits of the country office 
in North Korea going back to the year 1998; 
The date and scope of all general or special purpose, 
internal and external, audits during the last five years of 
each UNFPA headquarters, regional, country and local offices; 
The priorities for future internal and external audits during 
the next 12 months. 
 
-We maintain that it is counter to sound fiduciary principles 
that a Member of the UNDP/UNFPA Executive Board would be 
precluded from access to important internal audit 
reports-particularly when they review the workings of 
programs in a country such as the DPRK. 
 
-Thank you for your attention to this matter. End letter text. 
 
 
WOLFF