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UN Admits Losses to Myanmar Junta Through Currency
Exchange, NGOs Skirt with Hawala
Byline: Matthew Russell Lee of
Inner City Press at the UN: News Analysis
UNITED NATIONS,
July 11 -- The question is not
"if" but "how
much" money Myanmar's military government has taken from
the UN aid that has come into the country since Cyclone Nargis hit,
it emerged
Friday at the UN. John Holmes, the UN Humanitarian Coordinator, told
Inner City
Press that some level of loss would be acceptable in exchanging dollars
for government-issued
Foreign Exchange Certificates, which are in turn converted into the
local
currency, Kyat. "One percent would probably be okay," he said. Video
here,
from Minute 37:50.
But Inner
City Press is informed by multiple sources, both UN personnel and from
non-governmental organizations which try to avoid siphoning or
"seigniorage"
by the military junta, that at least 20% of aid money is lost in
converting into
Foreign Exchange Certificates. Holmes acknowledged that while the FECs
are
supposed to be one-to-one with the U.S. dollar, they are often lower.
He
declined to say how much lower, but sources on the ground but it at 20%
or
more, with further losses in the FEC to kyat conversion process.
Humanitarian Holmes and UNFPA-Myanmar's Dan Baker,
currency exchange seigniorage not
shown
To work
around this, some NGOs have taken to using the informal money transfer
system
known as hawala. While this traditional system, in which money is
deposited in
one country and paid out in local currency in another with no paper
trail, was
attacked by the U.S. government after its supposed use to fund the
September
11, 2001 plane bombings of the World Trade Towers in New York, in this
case it
is being used to deny "seigniorage"
by a military government the United States
condemns.
Inner City
Press first reported on June 26 that its "sources say UNDP
paid
dollars to Myanmar's government, and got local currency back at an
artificially
low official exchange rate." The spokesman for UNDP said he would look
into it, but then provided no information for two weeks. Finally, after
Inner
City Press published its next article on the topic, UNDP
acknowledged it
converts dollars into FEC:
"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). The exchange rate is based
on the
prevailing [most competitive] rate in the market, which can fluctuate."
NGOs active in
Myanmar to whom Inner City
Press showed this statement called it ludicrous, the implication that
the
exchanges are made at "competitive" rates. "The
government is the one which creates
and determines the value of the FECs," one said. "The UN and UNDP are
gettin ripped off by the government, they've known about it but just
stayed
quiet."
Inner City
Press is informed that the UN is now belatedly pushing for some changes
to how business has
been being done in Myanmar. But future,
present and past
practices by the UN and UNDP should all now be disclosed. John
Holmes said one
percent would be OK. His July 10 Revised Appeal for Myanmar states that
"$313,704,035 in total has been committed for Myanmar relief operations
as
of 9 July." One percent of that is over three million dollars, pure
profit
to the Myanmar military government. A
twenty
percent loss would amount to over $62 million.
The UN should be required now to disclose what
exchange rates it has
been accepting, and how much has been lost. Future,
present and past currency exchange practices by the UN and UNDP should
all now be disclosed, and not only in Myanmar. Watch this site.
And this --
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