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UN
Admits $10 M Exchange Loss in Myanmar, Says Will
Disclose Others Countries and Losses
Byline: Matthew Russell Lee of
Inner City Press at the UN: News Analysis
FEC/Burma Shave series - 1st (June 26), 2nd, 3rd, 4th, last
UNITED NATIONS,
July 28 -- At least $10 million in
UN aid money raised by the UN after Cyclone Nargis hit has been lost in
government-dictated
currency exchanges, UN humanitarian chief John Holmes admitted on July
28. He
stated that at the time he launched a second appeal for aid on July 10,
"we here" in New York had not been aware of the seriousness or extent
of the losses. But an internal UN document obtained by Inner City Press
shows
that the UN knew as early at June 26 of a "very serious 20% loss on
foreign exchange... changing US Dollars to Foreign Exchange
Certificates [FEC]
then to local currency, Kyats." This appears in the internal "Notes
for the Record" of an "Emergency Task Force Teleconference" call
involving top officials in Yangon, Bangkok and Rome, available here.
Inner City
Press on June 26, after being read the
minutes by a source, wrote an article and asked questions about it,
including
to the UN Development Program. On July 9, before the appeal was
launched, Inner
City Press asked Holmes about it, on camera in front of the Security
Council,
video here,
at end.
Holmes on
July 28 put the loss at $10 million and called it unacceptable. Inner
City
Press asked what percentage loss through government-dictated currency
exchange
he and the UN would find acceptable. "I think we've had this discussion
before," Holmes said. "It's very difficult to set the bar."
Video here,
from Minute 31:58. "We are arguably a bit
slow to recognize, since the spread widened in June." But prior to
June,
and prior to the cyclone, the UN was losing 15% to currency exchange.
Was that
acceptable?
Myanmar troops in Yangon, funding by UN
through FECs not shown
Given the
UN's losses in Myanmar only came out due to questions being pursued
about these
leaked minutes, Inner City Press asked Holmes if he would commit to now
releasing a list of those countries in which the UN suffers currency
exchange
losses of greater than five percent, and a plan to address the losses
and / or
appropriately disclose them to donors.
"I don't see any reason why not," Holmes said.
"There's
no reason not to be transparent." Video here,
from Minute 55:57. He added, "we had not
been trying to conceal it."
But why
then not have disclosed it in the July 10 appeal for several hundred
million
more dollars for Myanmar? Notably, if a publicly-traded company was
even
negligent in this way, there would be fines and worse. This now becomes
a
test-case not only for Holmes but also for Ban Ki-moon. The problems of
currency exchange rip-offs by governments may have pre-existed their
tenures.
But now that it is belatedly known, if only through questions being
pursued
about leaked minutes, it remains to be seen if they and the UN move to
clean
out this heretofore undisclosed leakage of aid money.
Inner City
Press first raised the issue on June 26 itself, in print and in
questions to
the UN Development Program, which handles UN finances in the field.
UNDP
Spokesman Stephane Dujarric provided a written response that
"UNDP Funds are remitted
into the UNDP US dollar account at Myanmar Foreign Trade Bank. UNDP
Myanmar
exchanges US dollars for Foreign Exchange Certificates at the Bank, and
then
converts these into local currency (Kyat)."
After that,
in response to Inner City Press' request for how much money UNDP and
the UN
have converted into FEC, UNDP has provided no information. Mr. Dujarric
left a
message that he was going on leave but that his colleagues would
provide the
information. This never took place. On July 25, Inner City Press asked
UNDP
Administrator Kemal Dervis after he launched an appeal for more
most-emergency
funds if he would answer questions about UNDP's Myanmar operations,
there in
the UN's conference room 4 or in a press conference. "You know I don't
answer questions like this," he said, adding that any press conference
would have to wait until "after the high summer season." There are
indications that UNDP, even prior to Cyclone Nargis, provided larger
cuts to
Myanmar's Than Shwe government than the 25% now admitted to by the UN's
humanitarian operations.
The
amount of
money the UN system has turned over to the Than Shwe government goes
back far
before the cyclone. At UN Headquarters on July 16, Inner City Press
posed
questions to Eric Laroche, now at the World Health Organization, but
previously
the UN's humanitarian coordinator in Somalia, and further back with
UNICEF in
Myanmar. When Inner City Press asked if
Laroche thought it legitimate to accept a low exchange rate from a
government
in order to have access, he stayed silent for a full eight seconds
before
saying, "It's a very difficult question, and a more difficult answer.
It
has to do with principles." He said that
when he was in the country with UNICEF, auditors were told about the
exchange
rate arrangements with the government. He and his spokesman committed
to
explain how WHO exchanges money in Myanmar, but to date have not done
so. After a telephone call on the
afternoon of
July 28, their response is expected immanently, and will be covered as
this
series progresses.
Watch this site.
And
this --
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