UNDEF ADVISORY BOARD MEETING FOCUSES ON

UNCLAS USUN NEW YORK 000296

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SENSITIVE

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E.O. 12958: N/A
TAGS: PREL PHUM
SUBJECT: UNDEF ADVISORY BOARD MEETING FOCUSES ON
ACCOUNTABILITY

REF: SECSTATE 46673


1. (SBU) The UN Democracy Fund (UNDEF) held its Fourth
Advisory Board meeting on April 10. The UNDEF Secretariat
presented an overview of the recent progress of the Fund,
claiming that all projects in the pipeline had been
processed. and project implementation was underway. Of the
125 projects initially approved, 122 were going forward, two
had been canceled, and one suspended indefinitely. In regard
to Fund recruitment and staffing, interviews are set to begin
for the Director position in ten days, to be completed by May
4, with final selection to take place shortly thereafter.
Program Officer positions will be filled with the assistance
of the new Director once he/she is in place. With a view
toward greater transparency, monthly progress reports will
now be given to the Advisory Board members, and UNDEF staff
will be available to answer follow up questions at any time.
The budget will go to ACABQ for review in June.

Board Members Question Results:


2. (SBU) Board members were then given the opportunity to
comment. U.S. Ambassador Terry Miller began, noting his
appreciation for the increased flow of information from the
Secretariat. He added however, that information received

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from U.S. posts had been frequently at odds with updates
provided by the Secretariat. Of fifty-three cables received
by the US Mission to date, fully twenty-three directly
contradicted the Secretariat's status reports in regard to
disbursement of funds. Ambassador Miller read critical
comments from several projects, including Argentina, the
Asia-Pacific region, Bolivia, Chile, and Costa Rica, and
asked the Secretariat for clarification of their definition
of "disbursement completed." He also questioned the
unanticipated addition of UNDP to the process, which added an
additional bureaucratic layer for grant recipients, and
significant costs to the Fund. Finally, after review of the
budget information, Ambassador Miller noted his surprise at
the amount of money expended for travel, and encouraged
frugality on the part of the Secretariat.


3. (SBU) The French delegation intervened briefly, noting
their appreciation for the Secretariat's accounting of the
funds, and praising the detail in the reports. Ambassador
Sen of India followed, voicing his concern and agreement with
the United States. He stated that in addition to the
information provided, it was important that the Board know
the exact status of the projects on the ground, as most are
in developing countries. "We do not want to hear that funds
have been disbursed but nothing is happening." Ambassador
Sen added that the typical fund amount of $300,000 is a
"huge" amount in the Third World. He noted his surprise at
the UNDP five percent surcharge, commenting that we need to
examine their role in this process, as many of their services
seem to be duplicative - especially in countries where UNDP
is already working. Ambassador Sen then questioned the
abandonment of a democracy project in Bangladesh after the
government canceled the elections - especially as this is
where such a project is needed most. In regard to travel,
Sen again voiced support for the US view, and urged caution
with administrative expenditures.


4. (SBU) Ambassador Munoz of Chile then took the floor, also
demanding an explanation of what was meant by "disbursement
completed" and noting that a delay in disbursements could
have a significant negative impact on projects. He
caustically questioned the Secretariat's travel, noting the
frequency of events in places like Madrid, Hungary, and
Vienna, and inquiring "What benefits were derived from trips
like these - why just in Europe?" He commented that other
parts of the world would have been pleased to see UNDEF
participation, and that the Secretariat must be prudent with
their travel costs.


5. (SBU) The representative from Qatar somewhat angrily
pointed out to the Board that UNDEF salaries were different,
significantly higher than elsewhere in the UN, and did not
comply with the salary guidelines. For example, the
Executive Head salary was noted in the UNDEF Budget as
$147,000, while normally it is $126,000. By Qatar,s
calculations, the level of compensation for UNDEF staff
exceeds salaries elsewhere in the UN by thirty percent.


6. (SBU) Board Member Professor Michael Doyle of Columbia
University commented that many of the project summaries
provided by the Secretariat had been inadequate, and would be
more useful if they simply answered "who, what, when, how."
Hungary came to the Secretariat's defense, noting that in
their view, "We need to be generous with administrative
costs," and that five percent UNDP management fee was not too
high. In addition, travel was necessary to publicize the
Fund, and UNDEF should be present at all of these events.

Secretariat's Defense:

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7. (SBU) Acting UNDEF Director Magdy Martinez Soliman
responded to the Board's questions on behalf of the
Secretariat and thanked the Board for "keeping him on his

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toes." He noted that money had been sent out to 110
projects, but the process differed depending on whether the
money was directed straight to an NGO or was sent to a
handling agent, in which case the process would take a week
or two longer. The Secretariat explained that the five
percent fee charged by UNDP was actually a small margin, and
&that some American NGO,s charge 20 percent, particularly
in Washington." In response to questions about travel of
UNDEF personnel, the Acting Director recounted weighing the
need to promote the Fund vs. the need to be frugal, and that
requests for travel had been approved "perhaps only one in
three times" by the Executive Director.

The Secretary General Supports Democracy:


8. (SBU) During a brief recess in the substantive meeting,
Secretary General Ban Ki-moon arrived and spoke to the Board.

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He encouraged the work of the Board Members and Secretariat,
noting that half of the approved UNDEF projects involved
empowering women. In his view, the full and equal
involvement of women in the democratic process was critical
to democracy promotion, which is in turn, vital to the UN's
overall mission. (The Secretary General's remarks are
available on the UN website at www.un.org/democracyfund).
Ambassador Miller thanked the Secretary General for his
strong support, noting that the Fund's work in the areas of
democracy, freedom, and respect for human rights supported
the highest values in the UN system, and the highest
priorities of the U.S. Government. A number of other
delegations also voiced appreciation for the Secretary
General's support. The Japanese Deputy Permanent
Representative attended the meeting as a guest participant,
and commented on the importance of democracy and the work of
UNDEF, noting the importance of democratic values as building
blocks in developing a peaceful and free society. Japan
donated US $10 million dollars to the Fund in March, and is
expected to assume a position on the Board next year.

Lessons Learned:


9. (SBU) As the meeting drew to a close, a "lessons learned"
paper that had been generated by the Secretariat was
considered. After a brief discussion of project funding, the
group agreed with Ambassador Miller's suggestion that the
proposals in the draft could be best approached at a later
date in conjunction with the OIOS report, and with the
guidance of the incoming Permanent Director. Substantive
discussions would be continued at the expert level, and at
the next meeting of the Board. Despite this postponement,
France nevertheless voiced immediate support for an increased
staffing request noted in the paper, and asked for an
assessment of the budgetary impact of doubling the UNDEF
staff. Given staff turnover, it was agreed that new project
applications should be delayed, and accepted in September or
October 2007. India proposed a ceiling of $25 million
dollars in the next round of funding, and again endorsed the
US approach to the issues raised in the lessons learned
paper. The meeting adjourned, with the next Board meeting
now scheduled for June 21.


10. (SBU) Comment: USG efforts to guide the direction of
UNDEF toward enhanced transparency and accountability seem to
have taken root. The recent release of documents on income
and expenditures, staff salaries, and the status of projects
has clearly focused the attention and scrutiny of other Board
members. USUN now finds itself allied with those from other
regions who, without prompting, also pointed out managerial
weakness and a pattern of excess. The U.S., India, Qatar,
Chile, and to a lesser extent Australia were united in
demanding greater accountability, fiscal responsibility, and
results. The majority of Board Members are now questioning
the Fund's leadership. On the other side, EU members,
notably France, Hungary, and Germany, remain loyal to current
management. Replacing the Acting Director and UNDEF staff
with qualified and dedicated personnel remains the highest
priority, and will be critical to the future success of the
Fund. End Comment
WOLFF