Report on U.N. Program Assails Whistle-Blower
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By Colum Lynch
Washington Post Staff Writer
Sunday, June 8, 2008

UNITED NATIONS -- A U.N. official showed up at the U.S. mission to the United Nations in 2006 with an alarming story: The U.N. Development Program office he ran in North Korea had stashed thousands of dollars in counterfeit U.S. cash in a safe, diverted tens of millions more into the coffers of North Korean leader Kim Jong Il and possibly supported North Korea's weapons programs.

For the next year and half, Artjon "Tony" Shkurtaj, an Albanian national who served as the UNDP's operations manager in Pyongyang, guided U.S. officials on a tour of U.N. malfeasance in North Korea, furnishing internal U.N. documents and an insiders' analysis of how the global body violated its rules and helped North Korea obtain hard currency and sensitive high-tech equipment.

His claims triggered investigations by U.S. officials, the United Nations and the U.S. Congress, and led to Shkurtaj's designation as a whistle-blower by the United Nations' ethics chief. Mark D. Wallace, the U.S. diplomat briefed by Shkurtaj, accused the UNDP of complicity in a scheme to divert millions of dollars worth of aid for the poor to Kim's personal treasure chest.

Some of Shkurtaj's assertions have since been substantiated. But some of the most serious allegations -- that the UNDP knowingly channeled tens of million of dollars in funds to North Korea or that senior UNDP officials sought to cover up potentially illicit payments -- have been repudiated by congressional and U.N. investigators, who have found no evidence of significant diversion of U.N. funds.

A panel appointed by the UNDP to probe the case issued a report last week attacking Shkurtaj's credibility and saying he provided U.S. officials with documents that were exaggerated, misleading or false.

The report confirms some American concerns, including evidence that the UNDP imported millions of dollars worth of computers, GPS systems and other equipment into North Korea that were on U.S. "dual-use" control lists and anti-terrorism lists. Most of that equipment was left behind after the UNDP ended its program in March 2007.

But the report also asserts that the United States repeatedly made allegations against the UNDP that were either inflated or unsubstantiated, including a claim that North Korea used UNDP funds to buy residences in Britain, Canada and France. The North Koreans told congressional investigators that they had used a U.N.-related account they controlled to conceal their own overseas investments.

U.S. officials say the UNDP's reluctance to detail the size of its programs forced them to look to Shkurtaj and other UNDP informants.

"The report reveals that UNDP made significant and previously undisclosed direct payments to Kim Jong Il's regime and numerous sensitive 'dual use' items that remain in North Korea in violation of U.S. law," said Wallace, who stepped down in April. "Responsible governments should ensure that UNDP returns to helping the world's needy rather than inappropriate payments and unlawful technology transfers."

As the UNDP's operations manager in Pyongyang from March 2005 to May 2006, Shkurtaj raised concerns that the UNDP was violating its rules by paying for most transactions in foreign currency, hiring only government-selected workers and failing to demand access to UNDP bank accounts controlled by North Korea, the report said. "Shkurtaj was shining a spotlight on serious issues," it stated.

Shkurtaj, a U.N. consultant, was rewarded with a full-time job offer. But it was withdrawn on a technicality. He returned to New York, where he was let go after serving a three-month contract.

U.N. ethics chief Robert Benson concluded in August there was a prima facie case that the UNDP had retaliated against Shkurtaj for shedding light on the UNDP's practices in North Korea. But the UNDP refused to let Benson investigate and, instead, appointed an external panel to examine Shkurtaj's charges.

The U.N. panel, headed by former Hungarian prime minister Miklós Németh, rejected Benson's view, concluding that the UNDP made a reasonable effort to address Shkurtaj's concerns. It found that Shkurtaj's criticisms grew after being passed over for the job and that he then began manufacturing evidence that he was a whistle-blower. "Shkurtaj's claims of retaliation are without merit," the panel stated.

Shkurtaj declined to discuss the report's findings, saying he would pursue his case with the U.N. ethics office. But he suggested that the UNDP would never have admitted its failings in North Korea, ended his U.N. career or attacked his reputation if he had not blown the whistle. "If I would not have spoken out, would any of this have ever happened?" he asked in an interview.

Shkurtaj's supporters challenged the panel's credibility, which was selected by the UNDP's executive director, Kemal Dervis, and which included a member of a UNDP advisory board. "If you are the defendant you can't be the judge and jury," said Beatrice Edwards of the Government Accountability Project, which advises Shkurtaj.

The Németh panel contend that Shkurtaj fabricated at least two e-mails he had given the Americans showing he had repeatedly alerted senior UNDP officials about the presence of counterfeit U.S. dollars in a U.N. safe.

The U.N. obtained $3,500 in fake currency in 1996 from an Egyptian consultant who said a North Korean bank gave him the bills when he cashed his U.N. paycheck. Shkurtaj, the panel said, ignored an Aug. 10, 2006, e-mail request from UNDP headquarters in New York to look into the matter.

Shkurtaj purportedly replied by e-mail the next day, asking what "procedures to follow for the money in the safe." The panel said it had "serious reservations" about the authenticity of Shkurtaj's e-mail, which could not be recovered in UNDP's computer hard drives. The panel did recover another e-mail Shkurtaj wrote two days later saying he had not yet responded to the request.

UNDP officials have suggested that other U.S. allegations were based on forged documents. In June 2007, the United States provided UNDP officials with copies of spreadsheets outlining some of the more than $2.7 million alleged payments by UNDP to Zang Lok, a Macau-based trading company linked to a North Korean firm that finances ballistic missile sales. UNDP officials said they could not find a single match for the dates, costs or companies listed on the documents furnished by the United States. Their own records cited about $52,000 in payments to the firm.

The documents were either "doctored" by someone or misunderstood by the Americans, the UNDP told Congress in January. Németh confirmed UNDP's figures, saying "there is no indication that UNDP" knew anything about Zang Lok's relationship to North Korea.