Friday, 01 August 2008
Burma exchange rate scam
The UN has admitted losing about $10m (£5m) to the Burmese regime while delivering emergency aid to the country in the aftermath of Cyclone Nargis because of a distorted official exchange rate, reports The Indepdent.
The UN's senior humanitarian aid official said it had suffered the "significant" loss because the junta enforced an artificial exchange rate that was at least 15 per cent lower than the genuine rate.
It has been alleged that the UN had been aware of the loss for weeks and had accepted it as the price of "doing business" with the regime.
"We were arguably a bit slow to recognise... how serious a problem this has become for us," John Holmes, the under-secretary general for humanitarian affairs, told reporters in New York. "It's not acceptable."
The losses came about because of the system whereby, when providing aid, the UN uses foreign exchange certificates with a nominal value of $1 each that are then exchanged for the local currency, the kyat, at a rate set by Burma's military government. The market rate for kyats is close to 1,100 per dollar, but the UN exchange rate is now about 880. As a result, the Burmese regime has been making a healthy profit even as the UN provides emergency support.
Mr Holmes said he did not know where the money was going or who was directly benefiting. The Inner City Press blog that first posted the allegations of the losses said some humanitarians believed that allowing the government of General Than Shwe to make a profit was a price worth paying. It also said officials have been aware of the losses since early June.
This month, the UN issued an appeal for more than $300m in extra aid for the country.