Wednesday, May 14, 2008

Whistleblower allegations against UNDP

(Reuters) - The United Nations Development Program (UNDP) says it is investigating allegations by a former employee of corruption and mismanagement in its Somalia country office, including support for Dalsan, a money transfer company with suspected militant links.

The ex-employee, Ismail Ahmed, says the UNDP helped Dalsan -- which collapsed in May 2006, leaving depositors with losses of around $30 million -- in ways including the following:

-- By intervening with Swiss authorities in 2003 to obtain the release of funds frozen by the public prosecutor for suspected money laundering and terrorist finance offences. Swiss authorities dropped the case when UNDP provided a list of what it said were the ultimate beneficiaries in Somalia of the frozen funds.

-- By intervening on behalf of Dalsan agents and others in Norway to persuade authorities to lift a ban on Somali remittance companies.

-- By sending missions in the United States to assure state regulators and banks it was in the process of establishing an oversight mechanism to certify compliance with U.S. regulations in order to allay concerns about Dalsan and some other Somali money transfer companies. Dalsan was able to obtain licenses in 10 states without meeting minimum net worth requirements.

-- By supporting Dalsan's operation in Britain so that it could stay in business without complying with British regulations. Dalsan only ever submitted one set of accounts, representing a fraction of its activity.

-- By helping Dalsan in Dubai obtain a simple license from the central bank to act as a hawala business -- an informal transfer system -- although it should have had a formal money transfer and exchange license with minimum paid-up capital of about $1 million. Ahmed said this helped Dalsan avoid proper scrutiny and costly regulations.

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