The United States protested that the UNDP had been “systematically perverted for the benefit of the Kim Jong Il regime” since at least 1998, the year before Sir Mark Malloch Brown began his six-year term as its administrator.

The revelation raises fears that UN money may have been used to fund North Korea’s nuclear weapons programme.

America spelt out its objections in a leaked letter to the UNDP’s associate administrator, Ad Melkert. In the letter, Washington’s envoy for UN reform, Mark Wallace, said that all UNDP local expenditures and procurement costs in North Korea, also known as DPRK, “are paid in cash directly to the DPRK Government”.

He called for an independent audit to determine whether North Korea, which recently tested a nuclear bomb, had diverted UN money “for its own illicit purposes”.

The US made its protest after being allowed to read three UN internal audits for 1999, 2001 and 2004 last week. The US letter said that, as of 1999, the UNDP had 29 projects in North Korea with a total budget of $27.86 million.

Mr Melkert announced yesterday that UNDP would suspend cash payments in North Korea by March 1.

He also said that the agency was ready to conduct a full audit, and stressed that internal audits had found no suggestion that Pyongyang was diverting UN funds to its nuclear weapons programme.

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