Junta Accused of Diverting Millions of Dollars of Cyclone Aid

The Burmese military junta has siphoned off tens of millions of dollars from the aid money intended for Cyclone Nargis victims by forcing all UN funding to be exchanged into local currency at a low rate, says a report.

At least 20 percent of the hundreds of millions of dollars for aid already channeled into Burma has been “lost,” reports Inner City Press, a New York-based rights NGO which investigates issues such as transparency, corporate accountability, community reinvestment, and predatory lending.

The loss is due to the UN “acquiescing to a government-required exchange of dollars for Foreign Exchange Certificates,” the agency alleges in a report.
The exchange loss could be as high as 25 percent.

Inner City Press said it had seen an internal UN memorandum referring to a
“serious loss of twenty percent.”

“Before the cyclone, the loss was 15 percent,” the NGO said. “The extra ten percent loss, applied to the millions of dollars exchanged by the UN system, could have helped the cyclone’s victims.”

Inner City Press has staff working as journalists at the UN headquarters in New York.

A UN report obtained by Inner City Press acknowledges that Burma has a “multiple exchange rate system” and that the UN Development Program, which processes Nargis aid, remitted donor funds into a UNDP US dollar account at the Myanmar Foreign Trade Bank.

“UNDP Myanmar exchanges US dollars for Foreign Exchange Certificates (FECs) at the Bank, and then converts these into local currency, Kyat.” In July, the exchange rate was only 880 Kyats per FEC compared with 1,180 previously, said Inner City Press which alleges that UN officials have kept quiet about the junta’s theft in order to ensure that aid gets into the country.

Inner City Press says UN humanitarian chief John Holmes told it that although FECs are supposed to be one-to-one with the US dollar they are often lower. He would not say how low.

Holmes has been in Burma this week assessing post-cyclone recovery, and the New York NGO urged him to investigate the dollar conversion scam.