The Norwegian Ministry of Foreign Affairs lost control over how the International Peace Institute, a New York City think tank formerly financed by Norway, spent the money, an investigation by the country’s Office of the Auditor General found. The news was first reported in the Oslo business daily Dagens Naeringsliv.

The audit also said that the ministry broke rules of procedure and failed to act impartially in allocating money to the International Peace Institute, a prestigious organization located across the street from the United Nations, on Manhattan’s east side.

DN, as it’s called, has been reporting on IPI over the last few years in connection with Terje Rod-Larsen, a Norwegian diplomat who was the organization’s president from 2005 until 2020, and Jeffrey Epstein, the convicted sex offender, child trafficker and financier, who killed himself in a New York City prison in 2019, awaiting trial for additional sex-trafficking charges. Rod-Larsen has not been linked to the accusations against Epstein, but he resigned from IPI in 2020, after acknowledging he took a personal loan from Epstein years earlier.

The audit of past spending patterns by Norway’s foreign affairs ministry further tarnishes the reputation of a country that has been known for its leading role as a peace negotiator internationally, including, recently, the process ending the decades-long war in Colombia. Norway’s standing was significantly hurt when DN reported in 2020 details about the relationship between Rod-Larsen and Epstein, who drew a range of prominent globe-trotters — from Bill Gates of Microsoft to Britain’s Prince Andrew — into his orbit even after being convicted of sex trafficking.

The recent audit also criticized another top Norwegian diplomat, Geir Pedersen, who has been the UN’s envoy for Syria since 2018, in the IPI-related problems. Pedersen was Norway’s ambassador to the UN from 2012-2017, among other roles he has held in his country’s foreign ministry. In his current UN post, he is based in Geneva.

Norway’s political direction could change this year. Prime Minister Erna Solberg, a member of the Conservative Party, is running for re-election in a Sept. 13 vote. She has a strong reputation as a supporter of women’s rights in her own country and globally, but she has lapsed in other areas. She was fined $2,350 in April for breaking her country’s Covid-19 rules by holding a 60th birthday dinner for 13 family members, becoming at the time the highest-profile politician worldwide to be sanctioned for breaching her country’s own rules, FT reported.

IPI was founded in 1970 by the American philanthropist Ruth Forbes Young and Indian Maj. Gen. Indar Jit Rikhye, with the help of UN Secretary-General U Thant of Burma. A nonprofit organization, it is focused on promoting global peace by acting as an independent and more flexible arm of the UN. The fallout from Rod-Larsen’s resignation spurred some members of IPI’s International Advisory Council and Women, Peace and Leadership Council to resign.

Zeid Ra’ad al-Hussein, a former Jordanian diplomat and UN high commissioner for human rights, was named president of IPI in March, after an interim head stepped in when Rod-Larsen resigned. Among other roles, the post requires fund-raising for IPI. It closed its Vienna outpost this year.

Epstein’s personal loan of $130,000 to Rod-Larsen, first reported by DN last year, was made in 2013. Two years later, Rod-Larsen asked the institute to transfer a $100,000 payment to Epstein under murky but different circumstances than the Epstein personal loan, although the payment appears to have not been made. (PassBlue also reported on the developments in 2020.)

IPI’s board, chaired by Kevin Rudd, a former prime minister of Australia, said that when Rod-Larsen resigned it had been unaware of the personal loan from Epstein, and it remains unclear how he used it. He earned nearly $493,000 in 2018 from IPI, besides $71,000 in other compensation.

Rod-Larsen and his wife, Mona Juul, another Norwegian diplomat who is now the country’s envoy to the UN, have had illustrious careers in diplomacy. They were instrumental in brokering the Oslo Accords in 1993 between the Palestine Liberation Organization and Israel, a feat dramatized as “Oslo,” on HBO and as a Broadway play.

Juul is a well-regarded diplomat in the UN, reflected by her country’s win in 2019 for one of two hotly contested Security Council seats in the Western Europe and Others regional group, competing against Ireland and Canada. Norway came in first, followed by Ireland. Juul also regularly promotes gender equality in her role in the Council, a somewhat-lonely torch that Norway and Ireland are carrying in the chamber.

Rod-Larsen was also the UN’s envoy for the Middle East Peace Process and Palestine from 1999 to 2004. (The post, under a slightly different name, is currently held by another Norwegian diplomat, Tor Wennesland, who has also engaged in dubious wheeling-dealing, according to a DN report and followed up by PassBlue.) Other revelations by DN said that Epstein donated $650,000 to IPI between 2011 to 2019.

In his resignation letter to the organization, Rod-Larsen wrote, in part: “DN has reported that I took out a personal loan of $130,000 from Mr. Epstein in 2013. This loan had no connection to the activities or finances of IPI, and it was repaid in full as promised within the allotted time from my own personal accounts. IPI never paid any money or compensation of any kind to Jeffrey Epstein. This was a completely separate and personal matter.”

Rod-Larsen previously worked for Norway’s foreign affairs ministry in various jobs, the recent DN article said. (He did not respond to DN for comments, and one source told PassBlue that he is living in Greece, writing his memoir.)

Norway’s Office of the Auditor General investigated whether the ministry complied with government rules when it allocated money to IPI, from 2007 to 2012. During that time, the country gave more than 50 million Norwegian krone to the think tank, or about $6 million. (Norway is one of the richest countries in the world, with a gross domestic product in 2020 of $366 billion, thanks to its oil-and-gas industry.) Norway’s support for IPI ended in 2018.

The investigation concluded that there were significant weaknesses in the ministry’s case processing, control and follow-up of the grants to IPI and that the ministry did not ensure that the “necessary impartiality assessments were carried out,” DN wrote.

A key part of the criticism by the audit was that IPI used a large part of the ministry’s grants to cover administrative costs rather than following ministry’s internal guidelines. The audit does not provide details on how the money was spent.

“Financial support for international peace work is an important part of Norwegian foreign policy but must be provided in accordance with specific rules,” Per-Kristian Foss, the auditor general, is quoted by DN. “The Ministry of Foreign Affairs should have followed up IPI better, and it is highly reprehensible that part of the money was not used for the purpose, namely peace work.”

“I do not want to comment on people, because we are looking for systems,” Foss said. “The case processing testifies that it may be characterized by too close contacts with Rød-Larsen. It is a very friendly case management towards IPI. This is not how a ministry in Norway should act. There may be too close contacts when the case processing does not control and does not question how the funds from the Ministry of Foreign Affairs to IPI have been used.”

DN’s report also said that Geir Pedersen, a colleague of Rod-Larsen’s, was the boss in Norway’s foreign affairs ministry who O.K.’d the support for IPI for several years. From 1995 to 1998, he had various posts in the ministry in Oslo, including as chief of staff for the foreign minister. Pedersen was head of the ministry’s UN section from 2009-2012, until he became Norway’s UN ambassador, and his wife, Mona Christophersen, got a job at IPI, according to DN. (She is also a researcher for Fafo, an independent research foundation, originally called the Fafo Institute for Applied Sciences, established in Oslo in 1981 by Rod-Larsen. The Oslo Accords originated through back-channel negotiations facilitated by Fafo and Norway’s foreign ministry.)

In 2012, the ministry’s legal department conducted a probity assessment, in which it found “conditions for Pedersen to be incompetent,” DN reported. Among other things, the many years of professional collaboration between Pedersen and Rod-Larsen was noted. The probity case is addressed in the audit report.

“It is the Office of the Auditor General’s opinion that the Ministry of Foreign Affairs’ grant administration in the period 2007–2012 shows that questions of impartiality were not taken sufficiently seriously despite the fact that the ministry’s political leadership has stated that the nature of decisions in grant cases requires special vigilance,” the office wrote in the audit.

Everyone is responsible for assessing one’s own impartiality, but there is no evidence that Pedersen did so, the audit added, according to DN.

Referring to Pedersen, the audit said: “The Ministry has no knowledge of, or documentation of, whether the head of the expedition assessed his competence in 2012 or in previous years. The head of the expedition participated in the processing of grants for IPI throughout the investigation period, and the circumstances that spoke in favor of incapacity in 2012 also applied to the years before.”

Pedersen wrote in an email response to DN: “I take note of the criticism from the Office of the Auditor General. My starting point is that I was competent with Terje Rod-Larsen when I was head of operations, based on the fact that our relationship was primarily job-related and the contact in recent years was significantly less than before. In my opinion, this is in line with Norwegian case law and the Foreign Ministry’s legal assessment.” Pedersen has said that IPI support was reduced during his time as head of operations by 25 percent.

In an email to PassBlue, Pedersen’s office in Geneva said that as he has noted previously, he “dealt with IPI funding consistent with Norwegian law, and in line with Foreign Ministry practice.” It continued: “Mr. Pedersen’s relationship with Mr. Rod-Larsen was mainly related to the work they carried out. Mr. Pedersen was not a ‘close friend’ of Mr. Rod-Larsen as defined under Norwegian law. Norway’s state auditor general conducted an investigation related to the Norwegian Foreign Ministry’s dealing with IPI.” (Pedersen’s office did not elaborate on the legal definition of “close friend” or confirm information about his wife’s role at IPI.)

Foss is quoted in DN as saying: “It is both surprising and reprehensible that the Ministry of Foreign Affairs did not make the necessary impartiality assessments when they considered grants to IPI in the period 2007 to 2012. They knew very well that this was important and should have established systems and routines for it.”

He emphasized the importance of the regulations to “ensure impartial case processing in the state administration,” DN wrote. According to Foss, the competence rules are intended to ensure trust in the state administration and are particularly important when the administration distributes the country’s money.

The Office of the Auditor General also criticized the ministry’s control over the grant, noting that it lacked documentation of its own case processing; did not manage or follow up on how IPI used the money; did not require IPI to report on the grant’s achievements; and did not follow up on deficiencies in project plans, budgets, reports and accounts from IPI.

Foreign Minister Ine Eriksen Soreide responded to the audit, saying, “The Minister takes the findings of the Office of the Auditor General’s report seriously, and states that even though the Office of the Auditor General’s findings cover the period 2007–2012, they are still important to the Ministry.”

Ivana Ramirez contributed research to this article.

This article was updated on July 6, 2021.