In the latest "dollars-for-dictators" controversy to embroil the UN, officials at its Development Programme (UNDP) acknowledged that since 1998 it had employed North Korean staff, hand-picked by the Stalinist regime of Kim Jong-il, and paid their salaries and other expenses in hard currency into a fund controlled by Pyongyang.

The UNDP, headed by Sir Mark Malloch Brown, a Briton, for much of that period, relied on audits conducted by the North Korean government to track the use of funds to help the desperately poor population of a country where millions have died from famine in recent years.

American officials made clear their alarm in a series of letters to the UN. Mark Wallace, the deputy US ambassador for management, wrote last week that the UNDP's operations had been "systematically perverted for the benefit of the Kim Jong-il regime, rather than the people of North Korea". Estimates of the amount of money that flowed into Kim's coffers range up to $100 million.