DEMARCHE DELIVERED: PREVENTING DPRK ABUSE OF THE

UNCLAS USUN NEW YORK 001572

SIPDIS

SIPDIS

DEPT. FOR ISN, IO, T, EAP

E.O. 12958: N/A
TAGS: AORC EAID KN KNNP MNUC PARM
SUBJECT: DEMARCHE DELIVERED: PREVENTING DPRK ABUSE OF THE
UN FINANCIAL SYSTEM VIA SPECIALIZED AGENCIES, FUNDS AND
PROGRAMS

REF: A.STATE 108151 B.USUN 01527


1. As a follow up to the demarche Mission delivered on August
8th to acting UN Controller Jay Karia concerning currency
transactions between United Nations agencies and the
government of North Korea (DPRK) (ref B),Mission asked the
following UN entities whether they have ongoing activities in
DPRK and followed up with each entity that indicated there
were such activities: UN Population Fund (UNFPA),World Food
Program (WFP),UN Children's Fund (UNICEF),UN Development
Program (UNDP) and UN-Habitat. Of these, WFP, UNICEF and UNDP
responded that they have ongoing activities in DPRK. Per ref
A, Mission conveyed U.S. concerns regarding hard currency
transactions in the DPRK utilizing talking points contained
in ref A. UNFPA and UN-Habitat indicated that there are no
ongoing activities in DPRK.


2. UNICEF: Mission conveyed U.S. concerns to Terry Brown,
Comptroller. Mr. Brown stated that UNICEF operations in DPRK
total roughly 7-8 million dollars per annum and employ ten
International Professional staff members (IP's) and 7 local
staff. Most of the 7-8 million is used for off-shore
procurement purposes, for example prescription drug
purchases. Mr. Brown noted that UNICEF transactions conducted
in hard currency are always outgoing and hard currency
conversions are conducted bank to bank; UNICEF does not
receive hard currency from the DPRK. However, Mr. Brown noted
that approximately three hundred thousand dollars in hard
currency is used to pay local staff and IP salaries and to
purchase minor procurements such as printing services. So far
this year, 1.03 million euros in hard currency has been taken
from a Chase account in London and changed into local
currency (DPRK) for local staff and housing. Mr. Brown will
look further into the matter and get back to USUN shortly
with additional information and indications how it would
propose to proceed as may be appropriate.


3. UNDP: Mission conveyed U.S. concerns to Darshak Shah,
Director and Comptroller of UNDP who was accompanied by Julie
Anne Mejia, Treasurer. Mr. Shah stated that UNDP is operating
a "medium-sized" office and program in DPRK staffed by 4
IP's, with a budget of 12-13 million dollars per annum.
Mission requested further information on UNDP's office and
programs. The initial report from Mr. Shah indicated that
while hard currency transactions do occur, such transactions
are solely in euros. Noting that country offices (COs) are
aware of the issue of counterfeiting U.S. dollars, Mr. Shah
stated his intention to send out letters to CO's alerting
them of this risk and reiterating that U.S. dollars should
not be used in hard currency transactions. Mr. Shah indicated
that he would get back to USUN shortly with additional
information and indications of how he proposes to proceed, as
appropriate.


4. WFP: Mission conveyed concerns to Deborah Saidy, Director
of the New York Liason Office of WFP who was accompanied by
Ussama Osman, Liason Officer for the Asia Office. Mrs. Saidy
will instruct her office to look into the matter and get back
to USUN shortly with initial findings and indications how it
would propose to proceed, as appropriate.


5. Comment: Department may want to request missions in other
locations to demarche UN agencies not covered by USUN in New
York.
BOLTON