DPRK

Statement by UNDP regarding the preliminary audit report on UN operations in DPRK

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UNDP welcomes the preliminary report of UN Board of Auditors (UNBOA) on the operations of UNDP and other UN agencies in DPRK. UNDP has cooperated fully with the audit process and will continue to do so.

UNDP operated in DPRK at the express wish of its Executive Board. Member states encouraged UNDP to assist the country to engage progressively with the norms and standards of the global community.

The operating environment was very difficult. In recent years UNDP tightened control mechanisms and conducted frequent audits (1999, 2001 and 2004). These audits did not lead to any suggestion that UNDP funding was being diverted to purposes other than those for which it was intended.

UNDP is encouraged that the UNBOA preliminary report confirms:

- That UNDP operated a relatively modest programme in DPRK ($2-3 million per year - far less than "$100s of millions" alleged in press reports)

- That UNDP international staff could - and did - regularly visit project sites to verify how UNDP funding was being used

The preliminary report also highlights specific aspects of the difficult operating environment in DPRK, including staffing and foreign currency arrangements not in line with worldwide practice. UNDP notes that:

- The Executive Board knew of UNDP's staffing practices in DPRK, which date back 27 years

- Similar staffing and foreign currency practices were followed by all UN agencies, international NGOs and foreign diplomatic missions in DPRK, including past and current members of UNDP's Executive Board

- UNDP was not able to follow worldwide practice, but no UNDP regulations or rules were broken

- Following requests by some Board members, UNDP notified DPRK that it was changing its staffing and currency practices. The proposed changes were formally endorsed by the Executive Board in January 2007

- UNDP suspended operations in the country on 2 March 2007 when DPRK failed to meet the operational changes endorsed and mandated by the Board.

- UNDP took the lead in asking the DPRK government to conform to international practice before the Board's decision

The report highlights areas in which UNDP rules or procedures could be strengthened. UNDP is committed to addressing these areas.

UNDP will be transmitting a formal management response to the ACABQ shortly. UNDP would welcome a continuation of the audit process, including a visit by the UNBOA to DPRK. UNDP looks forward to the final audit report.