Newsroom

Before I start, let me just express my deepest condolences to the families of one of our UNDP colleague who was killed earlier today when a car detonated outside of the Danish Embassy in Islamabad, which is next to UNDP’s project offices. Six other UNDP staff members were also injured, some seriously.

0ur thoughts and prayers also go out to all the other victims of today’s attack in Islamabad, especially the family of the colleague we lost.

We are still trying to gather information as to the exact situation on the ground and are supporting our teams there as best we can.

Now let me turn to today’s topic which is the Nemeth Report. The report on UNDP activities in the Democratic People’s Republic of Korea covering the period from 1999 – 2007.

It’s a long report, for those of you who have seen it, a very comprehensive report, done by a very distinguished independent panel. I don’t expect anybody to have fully absorbed the full report yet. We read it in the evening yesterday and are still studying it very carefully.

I’m going to read, which is not something I usually do, but I just want to be very careful because it’s the Panel’s report, it’s not our report. I think that is very important to stress. So I don’t really want to paraphrase them or interpret them in any way. Once we’ve studied the whole thing maybe we can do that with a lot of care. But I want to stress strongly that this is the Independent Panel’s report and their findings, the way they did their work and the way they wrote it. I don’t want to mix up our own views and our own work on follow up with that of the Panel as such. I’m going to be very careful on this point.

I want to welcome the very thorough and exhaustive independent external review of UNDP’s activities in DPRK. I am pleased that this very important review is now concluded and that we finally have some closure on the allegations made against UNDP.

I would like to thank the chairman of the independent external review Panel, Miklos Németh, the former Prime Minister of Hungary and a current member to the Advisory Council of Transparency International, as well Mr. Chander Mohan Vasudev, former Permanent Secretary of Public Expenditure in the Indian Ministry of Finance, and Ms. Mary Ann Wyrsch, former UN Deputy High Commissioner for Refugees and former acting commissioner of the U.S. Immigration and Naturalization Service. Ms. Wyrsch is also currently the Chair of UNDP’s external Audit Advisory Committee. The Panel members and their staff deserve our heartfelt thanks for their work and dedication to ensure that no stone was left unturned. That is a phrase Mr. Nemeth often used.

I also want to thank you, the members of the media for being here today.

As you know, the distinguished Panel members were chosen in consultation between myself, the Secretary-General and the members of UNDP’s Executive Board. Mr. Nemeth had the full authority to lead the team and to determine how to conduct and conclude its activities.

This report is their report, and I will not interpret or paraphrase it today. It is the Panel’s own writing and everyone seriously interested in the issue needs to read the entire report. I would like to stress and this is also the wish of the Panel that those who really want to absorb the whole findings, it is really important to read the whole thing. It contains findings related to five issues. The report also contains valuable recommendations for UNDP’s operational work in the future.

The findings are summarized in chapters 2 through 6 of the report.

Chapter two, deals with issues of payment modalities and I quote:

• The analysis provided confidence that the amounts detailed in UNDP-DPRK financial systems data are reliable and the scope of the cash inflows is reasonably quantified. It was evident to the Panel that data in the UNDP-DPRK financial systems was consistent with transaction amounts stated in bank statements, and hence the Panel could perform detailed analyses based on this data.
• Apart from performing a straight review of payments and banking procedures associated with the UNDP-DPRK program, the Panel has considered a range of questions raised about the manner in which UNDP-DPRK handled its financial matters. For example, some have questioned the extent to which UNDP paid national staff in cash. The Panel notes that UNDP discouraged the use of cash, and its financial systems in fact are not designed to allow for cash payments. Indeed the UNDP did not make direct cash payments to the national staff, but instead issued cash-checks, which could be exchanged at the Foreign Trade Bank for cash. This practice was designed in part because most DPRK nationals do not possess bank accounts. Payments were made to national staff for items such as daily subsistence allowance, bonuses, overtime, travel, and meal allowances.

Chapter three deals with project implementation and one of the key conclusions is and I quote:

• The volume, quality, and scope of the relevant documentation retrieved from UNDP headquarters and the UNDP-DPRK country office files demonstrated that the majority of the programme, and more importantly the larger, more complex, or higher-risk projects, were managed, monitored and evaluated substantially in accordance with UNDP requirements.

Another key find in that chapter is that, and I quote:

• On the basis of its review, the Panel concludes that allegations suggesting that field visits did not occur are unfounded.
Chapter four focuses on the issue of dual use equipment and, here again, I quote verbatim from the report:
• While familiarity with and sensitivity to export control systems is clearly necessary in connection with UNDP’s operations and its relationships with contractors, the applicable international laws are exceedingly complex. In many instances, questions of applicability remain unresolved. For example, there are questions about whether and to what extent a country’s export control system can have cross-border application. Other questions exist as to which parties in the supply chain are subject to a given export control system and whether persons who facilitate exports face compliance obligations.
• These tensions among laws and the application of privileges and immunities are not issues unique to UNDP, but instead have broad applicability to the UN system as a whole. Resolution of the applicability of international dual use principles will require extensive discussion and agreement on a UN-wide basis with input from and agreement by Member States.

This I was quoting, I’m now adding my own words. As you will see in the chapter, not all countries agree on to the way individual country export controls should be applied and implemented by international organizations. There is nothing in that chapter that finds any kind of wrongdoing on the part of UNDP, but it draws our attention to the need for the international community and Member States to come to a more transparent agreement on how export control systems should be implemented in practice.

Chapter five reports on the issues of the counterfeit US dollars. Here the report says and, again, I quote:

• Regarding action and inaction by UNDP officials, the Panel finds that representatives of the Country Office and UNDP Headquarters knew of concerns about counterfeit currency in the DPRK. At a minimum, warning signs existed that required a more timely and effective response.
End of quote, as you know these counterfeit notes ended up in the safe in 1996. I quote again:
• There is no evidence that anyone acted in bad faith or in a fraudulent or deceptive manner. Instead, the Panel finds that there was a clear lack of attentiveness at the Country Office and Headquarters levels and that communications between the Country Office and UNDP Headquarters were inadequate.
End of quote, so there is a period where the communications s between the Country Office and headquarters were not really careful enough in the late nineties and the early part of the century.
• The Panel notes that prior to 2002, UNDP was using US dollars as the foreign currency for its DPRK operations. The evidence indicates that circulation of counterfeit US dollars was widely prevalent in the DPRK. After 2002, UNDP-DPRK’s use of US dollars ceased, after which UNDP started using Euros as the foreign currency for disbursements. The possibility of UNDP disbursement procedures being misused for circulation of counterfeit dollars was thus minimized.
And finally, chapter 6 deals with the so-called ‘whistle blower” issue. There is a lot of material in that chapter which describes how Mr. Shkurtaj and, I quote, “made assertions during the interview process that are untenable.” The panel also says:
• Considering the totality of the circumstances, including the undisputed evidence, the accounts of numerous witnesses, and extensive documentary evidence, the Panel concludes that UNDP did not retaliate against Shkurtaj for his role in raising concerns about UNDP’s operations in the DPRK.

These were the headings in the Terms of Reference for the Panel. They organized it into these chapters and I just read you some sentences from their findings. There are summaries in the report and of course there is the whole report, and I really encourage you if you are interested in this to read the full report. It makes kind of interesting reading.

We received this comprehensive report yesterday afternoon and we will study it very carefully over the next few days. I will also organize management follow-up meetings on all aspects of the report because it contains very useful proposals on how to improve the effectiveness of UNDP’s work, particularly in the most challenging environments. Of particular importance is the development of the new Accountability System on which Ad Melkert, the Associate Administrator, has taken the lead. The last part of the Terms of Reference for the Panel was to make recommendations for our programmatic development activities, particularly in the most difficult circumstances, and the very experienced panel came up with a whole series of very useful, practical recommendations that will help us.

The Panel will present its report to the UNDP’s Executive Board at the end of the month in Geneva, either on the 24th of June. As you know, sometimes our Board meets in Geneva, and there is a session reserved for the findings of the Panel. As you know the report was commissioned jointly by myself, as the UNDP Administrator, but also by the President of the Executive Board of UNDP. I very much look forward to discussing the report with the members of the Board.

Before I take your questions, let me just say on a personal note as the head of UNDP that this has been a long exhaustive and difficult process. For more than a year we have been the target of various serious allegations. Sometimes these allegations have taken fantastic and irresponsible forms. Be that as it may, we are, and will, always remain open to constructive criticism. It is clear that our complex organization can and should improve further. We have been involved in a constant process of reform, including building greater management controls throughout the organization. It is also clear however, that the men and women of UNDP on the whole are doing an extraordinary job often in very difficult circumstances. And, as we saw again today, sometimes as the risk of their own lives.

I would also like to stress that every UNDP employee has the right to be treated with respect and can at all times safely use the channels that are available to raise issues of concern. I want to stress that, every employee, whatever his or her particular employment contract, has the right to that respect and that protection. At the same time, I intend to also protect the organization and the resources entrusted to us for development purposes from frivolous actions with obvious ill intent. The protection is for people in good faith. They are protected and can use existing channels but frivolous activities which cost a lot of resources and attention, which detract us from our work and which are pursued with individual interest and ill-intent, we will not tolerate.

In conclusion, let me say that I very much hope that this exercise has been useful to all parties involved and that it can guide our actions in the future as we support human development around the world.
Thank you very much.