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As UN Makes Play for Bailout Funds, Currency Exchange Losses to Dictators Undermine Its Pitch

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, February 15, updated Feb. 23 -- It seemed like a parody headline, "UN lobbies for share of bank rescue funds," like something from the satirical newspaper The Onion. To those who know the UN system better, the ham-handed attempt to latch on to a buzz word or money train was dishearteningly in character. While there is little doubt that people in the developing world will suffer from the global financial crisis, for the UN to cite this fact as a way to raise its own budget, half of which goes to salaries, without yet reforming its procurement and currency exchange and coddling of dictators, is par for the course at the UN.

  The pitch for 0.7 percent of the bailout and stimulus packages, including the $787 billion approved last week by the U.S. Congress, was made by the UN Millennium Campaign. This unit, run by the UN Development Program, was in the news last year when its director, Evelyn Herfkens, was exposed as taking $280,000 from the Dutch government for luxury housing while also being paid by the UN. Herfkens' doubled-dipping was defended by the UN, until finally she left, without repaying a penny of it. This is the unit asking for more money? [See update of Feb. 23, below]

  Likewise not answered are questions raised by the UN's begrudging admission that it was losing at least 20% of the funds it raised from the public for Myanmar in the wake of Cyclone Nargis. First the UN denied the loss, then when Inner City Press obtained and published internal memos admitting it, the UN temporarily changed its tune, its top humanitarian official John Holmes saying that a review would be conducted. But now the UN has reverted to saying there never was a problem, without disclosing in what other countries it accepts government-dictated currency exchanges at a loss. This is how funds would be exchanged in the future?

UN's Ban Ki-moon and World Bank's Zoellick, at right, reforms not shown

    The payments of $700 billion in Troubled Asset Relief Program funds to the likes of Citigroup, which tried to buy another jet, and Bank of America, which signed off on huge Merrill Lynch bonuses and office rehabilitations, are equally troubling, as is U.S. Treasury Secretary Timothy Geithner's failure to timely pay taxes, and attempt to continue to evade based on the statute of limitations.

   Geithner spoke at the G-7 meeting in Rome with a confidence he lacked in Washington, and the World Bank's Bob Zoellick called the 0.7% request a vulnerability fund, which he said would be spent on such programs as "work for food."  In Myanmar, that has reportedly meant using aid to induce villagers to build roads for the military.  In Sri Lanka, the UN is appealing for money to partner with the government which is reportedly preparing detention centers for civilians in the Tamil Tiger-held war zones it is assaulting.  These are how the funds would be used? 

  Until reforms are in place and transparency assured, the UN is not the right mechanism for such transfers, even for those who believe in them.

Update of February 23, 2009 --  A week after the piece above and the TV questions that triggered it, the Global Media Coordinator of the UN Millennium Campaign called and said, among other things, that the UN Millennium Campaign "doesn't receive any funding from the UN" and "we don't speak on behalf of the UN system." Not only in light of the "United Nations" in the Campaign's name, but since the Campaign's Eveline Herfkens was admitted to have violated rules prohibiting a UN staff member from taking money from governments, this claimed "no relation" with the UN seemed strange. (Ms. Herfkens is still prominently displayed on the Campaign's website, here.

  An Inner City Press correspondent notes that UNDP manages a trust fund called "EC Trust Fund for the European Millennium Campaign Against Poverty," pointed to budget documents showing that $350,000 was contributed to this UNDP trust fund. The correspondent states, "So I don't think it is accurate to say that the Millennium Campaign "receives no money from the UN system"; It is probably more accurate to say that UNDP launders money from UN member states to Eveline Herfkens' Millennium Campaign. Click here for UNDP's partially-retracted spin about Herfkens. In fact, UNDP itself refers to "the Campaign, which is financed by a trust fund administered by UNDP."

It's also worth noting that  E/2008/5 states that 'The Millennium Campaign has been working as a United Nations system initiative.') 
 
  The Campaign's web site does not meaningfully explain the relations between the UN and the UN Millennium Campaign, much less publish the Campaign's budget. A requested paragraph on UN - UN Millennium Campaign connections, with an emphasis on the financial claim, has not been received.

    However, from the Campaign's website we wish to note this press release, which while calling for a vulnerability fund -- a term used by the World Bank's Bob Zoellick, who called for 0.7% of stimulus packages -- does not call for 0.7%.

    Inner City Press has asked an array of official from the UN system -- or were they from the UN? -- including the president of ECOSOC, the president of the General Assembly and others, to explain what the UN is calling for with respect to the poor, from developed countries at the G-20 meeting. If the UN Millennium Campaign doesn't speak for the UN, who DO they speak for? We will work toward a second article on this topic but, again, for now note this press release.

Click here for Inner City Press' review-of-2008 UN Top Ten debate

Click here from Inner City Press' December 12 debate on UN double standards

Click here for Inner City Press Nov. 7 debate on the war in Congo

Watch this site, and this Oct. 2 debate, on UN, bailout, MDGs

and this October 17 debate, on Security Council and Obama and the UN.

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These reports are usually also available through Google News and on Lexis-Nexis.

Click here for a Reuters AlertNet piece by this correspondent about Uganda's Lord's Resistance Army. Click here for an earlier Reuters AlertNet piece about the Somali National Reconciliation Congress, and the UN's $200,000 contribution from an undefined trust fund.  Video Analysis here

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