VZCZCXYZ0008
OO RUEHWEB

DE RUCNDT #0878/01 2902239
ZNR UUUUU ZZH
O 172239Z OCT 07
FM USMISSION USUN NEW YORK
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2807
INFO RHEHNSC/NSC WASHDC IMMEDIATE

UNCLAS USUN NEW YORK 000878 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: AORC KUNR UNDP UNFPA UNGA UNICEF
SUBJECT: BOARD OF AUDITORS (BOA) DECIDES NOT TO COMPLETE 
SPECIAL AUDIT OF UN ACTIVITIES IN THE DPRK:UNDP COMMENCES 
INDEPENDENT REVIEW. 
 
1.(U) In a letter dated September 26, 2007 from BOA Chairman 
Philippe Seguin, to the ACABQ Chairman Rajat Saha, the 
Chairman Seguin explained that the BOA will not complete its 
audit of UN activities in the DPRK as mandated by the UNDP 
Executive Board and requested by the ACABQ in its letter to 
the BOA of June 22, 2007. In his letter to Chairman Saha, 
Chairman Seguin states that the decision of the BOA to not 
complete the audit is based on the inability of the BOA to 
obtain agreement from the DPRK government for visas for the 
audit team. See para 3 for text of letter. The BOA decision 
means there will be no on-site validation of results of the 
BOA's preliminary audit as requested by Member States and the 
Secretary-General. An on-site validation of audit results and 
 
SIPDIS 
an examination of any additional documents located in the 
DPRK is now dependent on the so-called "Independent 
Investigative Review of UNDP Activities in the DPRK," which 
will begin shortly. See paras 3 and 4. 
 
2.(U) Letter from the Chairman of the BOA, Philippe Seguin, 
to Chairman of the ACABQ, Rajat Saha, dated September 26, 
¶2007. Comment: The two attachments listed in Chairman 
Seguin's letter were not provided to the ACABQ. End Comment. 
Begin letter text: 
 
Dear Mr. Saha, 
 
I write to inform you of the status of the ACABQ's request to 
the Board to undertake a special audit of United Nations 
activities in the Democratic People's Republic of Korea 
(DPRK). 
 
In my letter of 29 June 2007, I indicated that the Board 
accepted the assignment but highlighted that such additional 
procedures were not likely to effect conclusions already 
reached. The Board also set out conditions necessary to 
enable it to undertake the additional procedures. The 
Administration confirmed to the Board its agreement to these 
conditions in a letter dated 13 August 2007 (annex 1). 
 
The Administration has, however, been unable to obtain 
agreement from the DPRK government that visas could be 
granted to the audit team. In this regard, the Board has 
received from the Administration a copy of the letter from 
the DPRK government dated 28 August 2007 (annex 2) indicating 
that "...the Government of the Democratic People's Republic 
of Korea (DPRK) is not able to accept your proposed visit to 
the DPRK by the auditors..." 
 
In view of the foregoing, the Board wishes to report back to 
the ACABQ that it is unable to commence the audit requested. 
The Board has decided to redeploy the identified audit staff 
to its regular work. 
 
Please accept, Sir, assurances of my highest consideration. 
End letter text. 
 
3.(U) On September 25, 2007 UNDP published the Terms of 
Reference (ToR) for the independent review of UNDP activities 
that it has established. See para 5. USUN has been informally 
advised that contracts have been issued to the three 
individuals chosen by UNDP to lead the independent review: 
Miklos Nemeth (Hungary), Chander Mohan Vasudev (India) and 
Mary Ann Wyrsch (U.S.). 
 
4.(U) USUN intends to cooperate fully with the investigative 
review. USUN will work closely with the Department and other 
concerned USG agencies in order to provide information to the 
review team that will facilitate its work. USUN will await 
the results of the independent review to assess how 
successful it will be in clarifying concerns regarding the 
effectiveness and credibility of UNDP's programs in the DPRK. 
USUN notes that despite U.S. objections, the ToR still 
provides for a consideration of the issue of Ethics Office 
jurisdiction in the case of a whistleblower who was 
retaliated against by UNDP, while also allowing for a 
subsequent Ethics Office Role in this case once the review is 
completed. 
 
5.(U) The ToR for the Independent Investigative Review of 
UNDP Operations in DPRK as posted on UNDP's website are as 
follows: 
 
The Independent Investigative Review shall consist of a 
comprehensive and detailed investigative review of the UNDP 
Democratic People,s Republic of Korea (DPRK) country office 
operations during the period 1 January 1999 to 1 March 2007, 
and shall result in the submission of a report to the 
Administrator and the UNDP Executive Board. The report shall 
determine what funds were paid arising out of and/or relating 
in any way to the UNDP DPRK country programme.  It shall also 
include payments made by UNDP on behalf of other UN entities, 
 
 
 
other entities and/or other countries.  The report shall make 
every effort to determine whether such funds were used for 
their authorized or intended purposes, or were diverted for 
other purposes. If there is evidence that any such funds may 
have been diverted, the report shall indicate the manner of 
such diversion or possible diversion. 
 
The report shall specifically: 
 
1). Identify all payments made by UNDP for itself and by UNDP 
on behalf of other UN entities, other entities and/or other 
countries to suppliers of goods and services, including 
payments made through  intermediaries, and determine to the 
extent possible whether such payments were received by the 
ultimate beneficiaries. The Report shall identify the bank 
accounts utilized by or for the benefit of the UNDP 
Administered activities, including the persons that had 
signature authority in regard to such accounts. 
 
2). Determine if the projects implemented under the country 
programme were managed and implemented in accordance with 
UNDP regulations, rules, guidelines and practices, and with 
UNDP,s Standard Basic Assistance Agreement with the DPRK 
Government, including whether such projects were effectively 
monitored and evaluated regularly in accordance with such 
regulations, rules, guidelines and practices. The report 
shall identify, enumerate and confirm all project site 
visits, whether more visits should have been made in 
accordance with UNDP policies and procedures and whether UNDP 
international personnel participated in such visits. 
 
3). Identify all equipment that may qualify as having "dual 
use" procured by or for UNDP projects or procured by UNDP for 
other UN entities, other entities and/or other countries, and 
make every effort to determine whether, within the parameters 
of the rules and regulations that existed at the time, 
including legal interpretation of such rules and regulations, 
such equipment was exported by the concerned vendors in 
compliance with applicable international export licensing 
requirements, the nature of the equipment, the names of the 
vendors who supplied such equipment, and the current 
disposition and location of such equipment. 
 
4). Identify the facts relating to any counterfeit or 
suspected counterfeit currency that came into the custody of 
the UNDP Administered country office or of which the country 
office became aware, including any applicable UNDP policies 
regarding the reporting of such counterfeit currency to the 
relevant issuing country and the actions taken by UNDP in 
regard to such currency. 
 
5). A complaint has been lodged that UNDP retaliated against 
an individual for "blowing the whistle" on irregularities in 
its operations in DPRK. In this respect, review the 
complainant's allegations related to these operations and the 
alleged retaliation, make every effort to establish the 
facts, including about the specific events in DPRK and 
regarding application of relevant protection policies.  After 
completing the review, the Independent Review Team shall 
share its findings on this aspect of the Independent 
Investigative Review with the Director, UN Ethics Office. The 
Director, UN Ethics Office, could then provide an opinion and 
formulate recommendations, as may be appropriate, on the 
retaliation allegations in light of these findings. If the UN 
Ethics Office requires further investigation of this specific 
issue, after having reviewed the findings of the 
investigative review, it can arrange for such follow-up 
before providing its recommendations, with the full 
cooperation of UNDP. 
 
6). The Independent Investigative Review may make any 
recommendations as its sees fit based on conclusions drawn 
from this Independent Investigative Review, including 
regarding UNDP,s protection policies and any lessons-learned. 
 
In performing its work, the Independent Review Team shall: 
 
A). Take into account the work already carried out and to be 
carried out by the UN Board of Auditors, and not impair the 
work of the UN Board of Auditors. 
 
B). Have complete and unrestricted access in New York or 
wherever they are available and accessible for review to all 
records in whatever form or media wherever located as is 
necessary to complete its review and report including but not 
limited to: UNDP,s complete manual checkbook, records of all 
electronic funds transfers, all other related bank account 
documents, contracts, receipts, MOUs, all documents related 
to project site visits and monitoring, all documents related 
to "dual use" equipment including applications, grants or 
denials of export licenses, and other relevant documents that 
 
 
 
are made available to the Independent Review Team from 
sources other than UNDP, including private individuals or 
governmental entities.  UNDP shall make all records in its 
custody or subject to its authority available to the 
Independent Review Team. 
 
C). Endeavor to interview in New York or wherever available 
and accessible all parties with knowledge of UNDP operations 
in the DPRK as the Independent Review Team deems necessary. 
The Team shall have complete and unrestricted access to all 
current and former UNDP employees, contractors, and UN 
Volunteers (collectively "UNDP Personnel") that worked in 
UNDP, including the DPRK country office, or in relation to 
the DPRK country program during the relevant time period. 
UNDP shall use best efforts to make such persons available to 
the Independent Review Team. Neither UNDP management nor 
their representatives may be present during any interviews 
conducted by the Independent Review Team of current or former 
UNDP Personnel, unless otherwise requested by the Independent 
Review Team. The statements made in such interviews shall be 
kept confidential by the Independent Review Team except to 
the extent such information is cited in the final report. In 
the case of the final report submitted, the names and 
identities of such individuals shall be appropriately 
protected. All information and documents obtained by the 
Independent Review Team in the course of performing their 
work shall be treated with utmost confidentiality and shall 
be used solely for the purposes of the Investigative Review. 
 
D). The Independent Investigative Review will not seek nor 
accept supervision or guidance from the Administrator, the 
Associate Administrator or any other officials or staff of 
UNDP or of the UN in the conduct of the Independent 
Investigative Review, or from members of the UNDP Executive 
Board or from any other Government, and will at all times 
avoid any conflict of interest or appearance of conflict with 
UNDP or its officials or personnel. Nothing in this paragraph 
shall preclude any person from providing relevant information 
in any form to the Independent Review Team. 
 
E). The Independent Review Team shall be remunerated in 
accordance with standard UNDP remuneration rates, including 
travel.  The Independent Review Team shall determine its own 
support staff/Secretariat (logistical support) arrangements, 
taking into account the need for confidentiality. Where 
support services are contracted, the services shall be on the 
basis of standard UNDP remuneration rates and contract terms, 
in accordance with UNDP procurement rules. Where services of 
experts and outside consultants (firms/individuals) are 
required, the Team shall apply UNDP procurement rules, 
ensuring competency, best value for money, and taking into 
account any real or perceived conflict of interest. 
 
F). The work of the Independent Review Team shall commence as 
soon as feasible and the final report should submitted if at 
all possible before the end of 2007. 
 
G). The working papers of the Independent Review Team will be 
packaged and sealed and provided to the Secretary-General for 
safe-keeping for a period of seven (7) years, consistent with 
UNDP,s document retention policy. Access to the working 
papers shall be limited to such circumstances as may be 
agreed by the Secretary-General. 
KHALILZAD