Thursday, July 31, 2008

The Montreal Gazette: Myanmar plays the UN and the world for suckers


The Gazette
Published: 7 hours ago

It's hard to say which is more appalling: the way Myanmar's elite skimmed as much as $10 million from international aid money flowing into the country for the survivors of Cyclone Nargis, or the way United Nations officials failed to notice the scam - or worse - for weeks on end.

John Holmes, the UN's top man on humanitarian affairs, says now that the losses are "a significant problem," amounting to as much as 15 per cent of recent cash aid flowing into the country. He admitted that the UN had been "a bit slow" to recognize the swindle.

The country's military government forced the UN to trade hard currency for the local money by the medium of foreign exchange certificates and then set the rate of these instruments in such a way that millions of dollars flowed to bankers and others close to the junta. The usual market rate is 1,100 Myanmar khat per dollar, but the UN has been getting only about 880. The story was broken by a blog (www.innercitypress.com) which covers the UN. We wonder if news of this UN inefficiency would ever have become public without the blog's good work.

That any government could be complicit in such a fraud, at the expense of its own hard-hit people, is staggering.

But it's also alarming that the scam could have gone on since the early days of the humanitarian crisis without being noticed until recently. Nor has it been corrected yet, apparently; Holmes says the UN now hopes the Myanmar government will co-operate in letting UN aid staff get decent value for the organization's hard currency.

The world's people invest their good wishes, their hopes, and their idealism - along with some of their money - in the United Nations. But the high standards those investments require are too often not met by the world body. The UN must keep reforming itself.

Official: U.N. Lost $10M in Burma


By BENNY AVNI, Staff Reporter of the Sun July 29, 2008

UNITED NATIONS — The United Nations lost at least $10 million as it carried out humanitarian relief efforts in Burma because it complied with a plan allowing the country's ruling junta to control foreign currency, according to the top U.N. humanitarian coordinator.

Storm victims stand outside their shacks after they rebuilt them with tarpaulin and leftover pieces from the river after Nargis cyclone at Ohnpinsu village near Labutta town at the Irrawaddy delta on July 10, 2008.

John Holmes's disclosure yesterday raises questions about how funds donated by well-meaning governments and private entities are spent by the United Nations in countries such as Burma, where a dictatorial regime controls every aspect of life, and whether the international effort unwittingly helps such regimes further tighten their grip on power, Burma watchers say.

U.N. officials had downplayed the scope of the losses accrued as a result of the junta's distorted exchange rate. But Mr. Holmes acknowledged yesterday that the amount was "significant," calling it "unacceptable." He promised to raise the issue with Burma's government to ensure that losses could be cut down in the future. But evidence emerged yesterday that the U.N. Office for the Coordination of Humanitarian Affairs, which he heads, was aware of the problem even as it was appealing worldwide for additional funds for Burma.

An economic professor at Macquarie University in Sydney, Australia, Sean Turnell, said yesterday that the figure of $10 million in Burma losses is "not inconsistent" with his own estimate. "But why is the U.N. handing any foreign currency to the Burmese regime anyway?" the economist, who was one of the first to expose the loss, said, adding that such handouts only strengthen the ruling junta.

International organizations were quick to offer assistance and donations to the victims of Cyclone Nargis after it hit the Burmese coast on May 2, killing 140,000 people. OCHA appealed internationally for $200 million, of which $180 million was quickly raised, Mr. Holmes said. A third of those funds was spent inside the country in kyat, the local currency, he told reporters yesterday.

The conversion from dollars to kyat is done through Foreign Exchange Certificates, which are issued by government-licensed local vendors according to what the government claims are market rates. The difference between the official conversion rate and the FEC rate has fluctuated between 10% and 25%, Mr. Holmes said. According to his office's calculation, $10 million of the initial $200 million appeal funds was lost through such conversions.

Although OCHA has said conditions on the ground have improved significantly, on July 10 it appealed for additional international funds — up to $480 million — to aid Burma. OCHA has already received $200 million of this second flash appeal, Mr. Holmes said.

Inner City Press, a Web site focusing on U.N. reporting that has investigated the foreign exchange losses extensively, yesterday published a internal memorandum from June 26 that showed OCHA was aware at that time that the foreign exchange conversions had caused losses of 20%. None of the losses, however, were disclosed to potential donors when OCHA launched its additional appeal in July.

"Presumably the government is benefitting somehow" from the exchange rate, Mr. Holmes said yesterday, though he acknowledged that he could not calculate how much of the $10 million that had already been lost went directly to top generals or their associates. A similar foreign exchange plan led to losses of U.N. funds in North Korea.

A sudden influx of funds to dictatorial countries such as Burma creates the potential for an inflationary effect, Mr. Turnell said. Such an effect "increases the power of anyone who controls the country," he said. Meanwhile, he added, the junta has enough resources to handle the relief efforts, if it cared to do so, without foreign funds.

The Bush administration has spent $47.2 million so far on assistance to Burma, according to government documents. "We're against any waste of resources that taxpayers around the world and member states provide to meet the needs of people around the world," the American ambassador to the United Nations, Zalmay Khalilzad, said. "We also do not want any diversion of it to unintended goals, and that applies to this case."

UN aid disappearing in Burma cash scam


By Thomas Bell, South East Asia Correspondent
Last Updated: 1:48PM BST 29 Jul 2008


The missing money is likely to have lined the pockets of the ruling generals and their business cronies.

The scam, which is still occurring, involves forcing the UN to buy the local currency, the Kyat, at above the market rate by changing money through government backed Foreign Exchange Certificates (FEC).

A dollar currently buys around K1,100 while a "one dollar" FEC only buys K880.

In New York on Monday, Sir John Holmes, the under-secretary-general for humanitarian affairs, said: "We were arguably a bit slow to recognise... how serious a problem this has become for us."

He estimated that 15 per cent, or £5 million, of aid transferred in this way had been lost. "It is not acceptable," he added.

A UN spokesman in Rangoon told The Daily Telegraph that the exact losses are still being calculated. Observers believe the final figure could be higher, because for much of the period since the cyclone the discrepancy in exchange rates has been around 25 per cent.

The scandal was exposed in an investigation by Inter City Press, a New York blog, which began reporting the story on 26 June, after receiving a leak of purported minutes from a teleconference in which officials registered alarm at a "very serious 20 per cent loss on foreign exchange".

Yet top officials denied that such losses were occurring, even as they launched an appeal for another £150 million in cyclone aid on 10 July.

"We buy kyats at the market rate using dollars," Daniel Baker, the humanitarian co-ordinator for Burma said that day. "The government has not benefited."

On Monday Sir John insisted: "We were not aware of the extent of the loss."

A spokesman for the UN Development Programme in Rangoon explained yesterday: "I don't think people expected, given the past, this divergence to be as much as it was or to go on as long as it has."

Urgent steps were being taken to address the problem, he said.

Discrepancies between the official and market exchange rates are well known to visitors to Burma. The International Monetary Fund highlighted the issue in a report last year.

Aung Naing Oo, a Burmese academic at Chiang Mai University in Thailand, said that identifying the beneficiaries of the process would be difficult in Burma's corrupt financial system.

"Who is handling the money, who is doing the trade?" he asked. "Sure the military is profiting, but other shady people may also be profiting who the UN can not clearly pinpoint."

See the leaked minutes: http://www.innercitypress.com/ETFT26June08.pdf

UN’s Lost Aid May Be Tip of the Iceberg


BANGKOK—The loss of United Nations aid money via “unacceptable” exchange rates orchestrated by the Burmese regime was going on long before this week’s disclosures about Cyclone Nargis cash losses, a US nongovernmental organization says.

“There are indications that [the United Nations Development Program], even prior to Cyclone Nargis, provided larger cuts to Myanmar’s Than Shwe government than the [up to] 25 percent now admitted to by the UN’s humanitarian operations,” said Matthew Russell Lee of the New York-based NGO Inner City Press.

The NGO investigates issues such as transparency, corporate accountability and predatory lending. It was instrumental in forcing the UN this week to admit to losses to the junta of at least US$10 million on cyclone cash aid transmitted into Burma.

The “very serious loss” was disclosed by the UN’s humanitarian chief, John Holmes, when he returned to New York this week after a post-cyclone assessment visit to Burma.

“Now that Holmes has admitted the losses, putting the figure at $10 million, it’s important to note that is only for the period from the cyclone until now,” Lee told The Irrawaddy on Wednesday.

“Inner City Press has asked the UN Development Program (UNDP), which has accepted the Myanmar government’s currency exchange rules for 14 years, how much it has converted during that time, and at what rates. For now, UNDP says it doesn’t know, which is also troubling,” Lee said.

The UN usually expects to lose small amounts through exchange of dollars into local currency, but the enforced conversion into Burmese kyat via Foreign Exchange Certificates (FECs) at a government-controlled bank has led to a loss of at least 15 percent, Holmes said.

“The amount of money the UN system has turned over to the Than Shwe government goes back far before the cyclone,” said Lee, who was the first to obtain a secret internal UN memo outlining the losses on cyclone funds.

“Why were these losses never disclosed while [new cyclone] funds were being raised?” Lee asks.

Sizable losses were first disclosed after the UN’s second appeal on July 10 for additional aid of several hundred million dollars to tackle the aftermath of Cyclone Nargis. A secret internal accounting memo outlining the problem was obtained by Inner City Press.

However, it was only after Holmes’ visit to Burma last week that a firm figure was announced. The UN had been “a bit slow to recognize” the size of the losses, Holmes said in New York on Monday this week.

Holmes’ disclosure follows a meeting he had in Naypyidaw with Burma’s ruling generals last week, at which he said, “We must make sure that humanitarian efforts continue to be separate from politics.” Back in New York, Holmes said the extent of the loss through junta-dictated exchange rates was “unacceptable.”

At one point earlier this month, the exchange rate was only 880 kyat for each FEC, compared with 1,180 previously.

It appears that after the UN was jolted into public acknowledgement of the losses, the agency pressured the junta to prevent further skimming of funds by the Myanmar Foreign Trade Bank, where the UNDP holds a US dollar account.

According to Inner City Press, this led to losses dropping to 17 percent, giving the UN 980 kyat per dollar. The UN has already raised $200 million for cyclone relief work in Burma and is seeking an additional $300 million.

About $66 million has so far been used for local purchases within Burma, requiring its conversion into kyat—hence the estimated $10 million loss, based on an average deflated conversion at 15 percent.

Inner City Press, as part of its campaign for financial transparency at the UN, asked a former UNICEF official in Burma, Eric Laroche, who is now with the World Health Organization, whether he thought it was legitimate to accept a low exchange rate from a government in order to have access.

Laroche told Inner City Press: “It’s a very difficult question, and a more difficult answer. It has to do with principles.”

Evidence has emerged that the UN knew in June that it was losing what Holmes now calls “significant” sums of aid money to the junta.

The loss on each cyclone dollar has ranged from 15 percent to as much as 25 percent, peaking in June—before the UN made its second appeal for further donations from member countries.

“We were arguably a bit slow to recognize how serious a problem this has become for us,” Holmes said on Monday. “It’s not acceptable.”

Holmes insisted it was “unclear” who is benefiting from the UN’s losses, although he conceded the “likelihood” that the Burmese government gained.

Tuesday, July 29, 2008

Kemal Dervis: Business with the Poor is great business


For too long, private businesses have not been seen as key drivers of human development. Yet as the world becomes more interdependent, doing business with the poor can not only boost firms’ competitiveness, but also help in the fight against poverty.

A UNDP report released on Monday offers compelling examples of opportunities that create value for all: both achieving the Millennium Development Goals that have galvanised unprecedented efforts to address the needs of the world’s poorest, and attracting business returns.

Take the case of Celtel, a pan-African telecommunications group. Celtel began offering mobile-banking in the Democratic Republic of Congo in 2003, when security in that country was still poor and the banking sector debilitated . Celpay, the service they offer, uses encrypted message technology to allow customers to wire funds across the country.

As a result, Celtel now has over two million subscribers, and has created thousands of jobs and trained local technicians and a sales force throughout the country. The innovative financial service it provides has allowed many formal and informal businesses to grow – businesses that were previously hampered by inadequate banking infrastructure.

While such opportunities for inclusive growth are abundant, so are the challenges. Entering into the markets of the poor is uncharted territory for many companies. It is one where tough obstacles remain, including limited market information, underdeveloped regulatory environments, inadequate physical infrastructure, missing knowledge and skills, and restricted access to financial products and services.

These obstacles often translate into a ‘poverty penalty’ for the poor. People in the slums of Jakarta, Manila and Nairobi can pay up to 5 to 10 times more for water than people in high-income areas of those cities—and more than consumers in London or New York.

This ‘poverty penalty’ is similar in credit, health care and electricity supply. Meeting these challenges in ways that benefit the poor takes creativity, and often requires pooling the skills and experience of private companies, donors, policymakers, philanthropists, public service leaders and nongovernmental organisations. It often involves engaging in a policy dialogue, adapting products and services to the needs of the poor and investing in infrastructure or training.

The report contains 50 specifically commissioned case studies by researchers predominantly from developing countries. These case studies show that by adapting to local conditions, entrepreneurs have successfully identified new opportunities, understood complex contexts, and found innovative solutions.

In Mali, for instance, roughly 64% of the population lives below the national poverty line, and only 10% of the country’s 12 million inhabitants have access to electricity . This number drops to only 2% to 3% in some regions of the country – making economic activity much more challenging. Seeing an opportunity, Électricité de France and its partners set up rural energy services companies .

By the end of 2008, these companies will provide electricity to about 5,000 households in more than 20 villages in the southern cotton region. While they are in partnership with European companies, they are truly independent Malian companies, run by local managers and employees.

Their low-cost electricity, based on solar home systems or small low-voltage village micro-networks supplied by diesel generators, led to new income-generating activities, which have in turn improved the quality of health care and education, increased access to clean water, and reduced CO2 emissions by up to 80% to 90% compared with traditional energy sources.

Work in the area of private sector involvement in less developed markets has so far mainly focused on large multinational firms. Certainly with their influence, global reach and resources, multinationals can effectively scale and replicate successful business models. Yet smaller, local or regional businesses also have much to teach us about strategies that work. They create most of the jobs and wealth required to meet the Millennium Development Goals.

Businesses cannot, however, stand alone. The report suggests that business—accompanied by the skills of governments, donors, civil society and the poor—can build the foundations to grow more inclusive markets.

Governments can unleash the power of business by improving market conditions where poor people live and removing barriers to their economic participation. Notfor-profit organisations, public service providers, microfinance institutions and others already working with the poor can collaborate and pool resources with businesses to help seize opportunities. Donor countries can facilitate dialogues between businesses and governments or other partners.

Socially minded investors and philanthropists can supply the funds to make these time-intensive and uncertain ventures possible. Business models that include the poor require broad support, but they offer gains for all.

With strong and effective political and social institutions , entrepreneurs, firms and households will invest and take risks that promote innovation and create decent jobs. Through the flows of income and creative energy that these jobs generate, people can be lifted out of poverty: their productive capacity can be unleashed, their skills enhanced – providing a solid basis for sustainable development.

The poor are not powerless, nor should they pay a poverty penalty on the products and services that we can so easily take for granted. By recognising them as both potential consumers and drivers of growth, inclusive business models can create greater independence and interdependence – to the benefit of all.

Exchange rate costs U.N. $10 million - Trust shaken after oil-for-food


Betsy Pisik (Contact)
Tuesday, July 29, 2008


UNITED NATIONS Burma is forcing U.N. aid agencies to convert cash to local currency at below-market rates, costing the world body $10 million so far and drawing comparisons to the scandal-plagued U.N. oil-for-food program in Iraq.

Unlike with Iraq, however, U.N. officials disclosed the problem with aid to Burma pre-emptively, just days after top humanitarian official John Holmes returned from a visit to the stricken nation.

Mr. Holmes put U.N. losses at about $10 million on currency exchanges and said he raised the issue with Burmese officials last week.

"They understood this was a problem. But we haven't got a solution yet," he told reporters at U.N. headquarters in New York on Monday.

The U.N. is required to purchase Foreign Exchange Certificates issued by the Burmese government, with a nominal value of $1. The certificates then are exchanged for the local currency, the kyat, at rates set by the government.

Mr. Holmes, the U.N. undersecretary-general for the Coordination of Humanitarian Affairs, said he did not know why the value of the certificates had fallen, nor would he say that the government is profiting by the system.

On the open market, a dollar is worth about 1,100 kyat, but the rate available to the United Nations had recently fallen to about 880 cents, according to Inner City Press, an Internet-based news agency that covers the United Nations and first disclosed the problem.

About 140,000 people were dead or missing after Cyclone Nargis struck Burma's fertile and populated Irrawaddy Delta on May 2.

Suzanne DiMaggio, an official with the Asia Society, said the currency issue would damage efforts to raise additional relief.

"The trust issue is serious, and until it's rectified, I don't see any rush to donate to this cause," Miss DiMaggio said.

"This is also a big test for the United Nations," she said. After the investigations of the oil-for-food program in Iraq, "the international community is questioning whether the U.N. can be a trusted partner in the delivery of humanitarian assistance."

The $10 million in losses - a tiny fraction of the $10 billion unaccounted for from the Iraq oil-for-food program - was not disclosed to potential donors in a revised U.N. appeal for emergency funds issued earlier this month.

The revised request was for $428 million to provide food, health services, agricultural support, logistics, infrastructure repair, water and sanitation and emergency shelter. The appeal is less than half funded, with just $200 million pledged thus far.

The fluctuating value of the currency exchange certificates affects purchases made in kyat, not relief supplies such as food and medicine imported into Burma.

There are number of dollar-kyat exchange rates, including those paid by tourists, relief agencies and the "market rate" of about 1180 to the dollar, U.N. officials said.

Asked why the United Nations does not demand to be exempted from the currency exchange system, Mr. Holmes indicated a reluctance to push the unpredictable junta too hard.

A threat to cut aid would harm the people of the Irrawaddy Delta, he said, not the government.

About 800,000 people were displaced, although Mr. Holmes said that all but a few thousand are thought to have returned to their own land, not all voluntarily.

Mr. Holmes said storm damage was evident throughout Burma's agricultural coastland, as well as in Rangoon, Burma's former capital and largest city.

As many as 4,000 schools as well as 75 percent of the country's health care facilities are thought to have been destroyed.

The delta is Burma's food basket, and aid workers said this week that farmers were scrambling to return to plant rice before the season ends.

"There has been quite a lot of progress," said Mr. Holmes, who toured parts of the afflicted countryside by helicopter.

Relief organizations continue to bring in supplies by air and boat, and houses, schools, clinics are being rebuilt, he said. "There is a degree of normality in some places."

The government of Burma, also known as Myanmar, has continued to issue visas to aid workers from all over the world, not just Asians from neighboring countries, who were allowed into the country during the crucial first weeks after the cyclone.

U.N. humanitarian chief John Holmes (second from left) visits the Irrawaddy Delta in Burma. The organization's aid program has lost $10 million to the Burmese junta's demand that currency be exchanged at below-market rates. (Agence France-Presse/Getty Images)

Mr. Holmes said the process is still more "bureaucratic" than he would like, but praised the government for upholding its promise to let in aid workers.

U.N. reports losses due to Myanmar exchange rate


Currency exchanges have cost the world body about $10 million as it supplies aid to cyclone victims, the humanitarian chief tells reporters.
From Reuters
July 29, 2008

UNITED NATIONS -- The top U.N. humanitarian affairs official said Monday that the world body had suffered significant losses while delivering cyclone aid to Myanmar because of a distorted official exchange rate.

This month, the United Nations issued an appeal for more than $300 million in extra aid to cope with the effects of Cyclone Nargis, which left about 140,000 people dead or missing when it struck the Irrawaddy delta region in early May.


Humanitarian affairs chief John Holmes told reporters that the United Nations has lost about $10 million in currency exchanges so far as it pays for goods and services in Myanmar.

"We were arguably a bit slow to recognize . . . how serious a problem this has become for us," Holmes said, adding that the spread between the market and official rates widened suddenly in June.

"It's not acceptable," he added.

The market rate for the local currency, kyats, is around 1,100 per dollar but the U.N. rate is around 880, according to the Inner City Press, a blog that covers the United Nations and first raised the currency exchange issue.

Holmes, who spoke at the United Nations after returning from a trip to the Irrawaddy River delta, said relief efforts were improving, with almost everyone affected by the cyclone now having been reached with items such as food or materials for shelter.

A revised appeal for aid of $482 million had raised about $200 million so far, he said, adding that initial indications from donors were "quite positive."

He later said he was not aware of any countries refusing to contribute because of the currency loss but that donors were only just realizing the extent of the problems.

Inner City Press reported last week that the military government in Myanmar, also known as Burma, had changed the official exchange rate since the cyclone struck.

Monday, July 28, 2008

REUTERS: U.N. admits "significant" Myanmar exchange rate loss

By Louis Charbonneau and Megan Davies
REUTERS

UNITED NATIONS (Reuters) - The United Nations top humanitarian affairs official said on Monday that the world body had incurred "significant" losses in Myanmar due to a distorted official exchange rate while delivering cyclone aid.

Earlier this month the United Nations issued an appeal for over $300 million in additional aid for Myanmar to cope with the effects of a cyclone in May that left around 140,000 people dead or missing.

U.N. Under-Secretary-General for Humanitarian Affairs John Holmes told reporters that the world body has so far lost around $10 million on aid delivered so far, adding up to an average loss of some 15 percent.

"We were arguably a bit slow to recognize ... how serious a problem this has become for us," Holmes told reporters, adding that the loss was "significant." He said the spread between the market and official rate widened suddenly in June.

"It's not acceptable," he added.

Holmes said the reason the United Nations did not include the issue of the exchange rate losses in the appeal documents was that U.N. officials did not realize the severity of the problem.

"Certainly at the time the appeal was made, we were not aware of the extent of the loss," he said.

The issue was first raised by the news blog Inner City Press (www.innercitypress.com), which follows the United Nations.

It reported last week that the military junta had changed the official exchange rate since the cyclone so that the estimated loss had increased from 15 percent to 25 percent.

Inner City Press reported on Monday that an internal U.N. memorandum showed the United Nations was aware of the problem as early as June.

The loss comes from a complicated system whereby the United Nations uses so-called foreign exchange certificates, which have a nominal value of $1 per certificate and are then exchanged for local currency, kyats, at a rate set by the government.

The market rate for kyats is around 1,100 per dollar but the U.N. rate is now around 880, according to Inner City Press. Holmes confirmed the losses had expanded to as much as 25 percent.

The International Monetary Fund raised the issue of what it described as Myanmar's distorted official exchange rate in a report it published in November 2007.

"The use of the highly overvalued official exchange rate for conversion purposes results in understatement of external trade and the foreign component of consumption, government expenditures, and investment," the IMF said in the report.

Holmes said it was unclear where the exchange rate losses were going and who specifically was benefiting.

"It's not clear that it goes straight into the government's pockets, because they don't do the actual exchange," he said. "That's done by currency vendors. I'm not saying that there isn't some benefit to the government in the spread somewhere -- the likelihood is that there is."

Holmes added that in any financial transaction there is an exchange loss. "The question is -- is this a reasonable kind of fee to accept or is it not, and clearly 20 percent is a real problem for us."

Saturday, July 26, 2008

After appeasing North Korea, United Nations in bed with another dictator. Is it Ban Ki-moon or the UN system itself the problem ?

After Matthew Lee of Inner-City-Press discovered last month that United Nations Agencies, and more precisely UNDP in Myanmar was in cohutz with Junta and was closing an eye on millions of dollars being diverted thru a simple exchange machinery, now UN officials are finally admitting it.

After 4 months of operations in Myanmar, and after 308 Million Dollars spent there, OCHA expressed concerns today that: - "Myanmar’s military leaders are pocketing at least one-fifth of the cash earmarked for victims of Cyclone Nargis by requiring international aid agencies to use an expensive system of changing currency".

Holmes, who first denied to inner-City-Press the loss, expressed “serious concern” over missing money after it emerged that as much as 20 per cent of relief funds were being lost through a costly exchange rate mechanism. He said he raised the issue with top junta officials in the capital, Naypyidaw, during his visit this week to assess the effect of relief efforts after the catastrophe, which killed 140,000 in May.

“At the moment, we don’t have a figure for how much money has been lost,” said Dawn Blalock, an official in Mr Holmes’s Office for the Coordination of Humanitarian Affairs (Ocha).

“All the aid agencies that are working within Myanmar operate within the same system. We have to work within the foreign exchange rules and regulations of a sovereign country,” she said.

All the times when UN is caught in doing "wrong" favors to dictators, the excuse is "everyone does it". (do you remember North Korea??)

Foreign currency brought in to Myanmar by aid agencies must first be changed into government-issued foreign exchange certificates (FECs) before it can then be converted into the local currency, kyat.

Officially, one FEC is worth the same as US$1 (Dh3.67). But, in reality, they trade for only about 80 cents of every dollar they represent, meaning conversion costs for the aid agencies run at about 20 per cent – massively higher than in conventional exchange systems.

Meanwhile amids all this scandal, the United Nations has the guts to demand more CASH to assist the more than two million survivors of Nargis, the most devastating cyclone in Myanmar’s recorded history.

Seems that after lying on North Korea's operations, now Ban Ki-moon is finally acknowledging that an unstated amount of money has been changed into kyats to buy supplies and pay the wages of locally hired staff.

The proportion of cash passing through the currency exchange system is expected to increase as the United Nations Development Programme (UNDP) focuses more heavily on reconstruction efforts and follow an established pattern of acquiring supplies locally to assist economic recovery.

Mr Holmes has estimated that relief work will continue in the affected Irrawaddy Delta region for at least six more months, while recovery and reconstruction efforts will not be completed until April next year.

The missing money also comes at a time when Mr Holmes has been encouraging the UAE and other oil-rich Gulf countries to provide more aid and assistance through Ocha and other such aid systems.

UN aid chiefs have criticised Gulf philanthropists for providing aid on a country-to-country basis, while many Arabian aid-givers express concern over whether agencies like Ocha lose too much relief cash in unnecessary overheads.

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.

BAN KI-MOON SAYS 25% OF CYCLONE AID LOST

BANGKOK, Thailand -- A UN official says as much as 25 per cent of cyclone relief aid in Myanmar is being lost because of the military government's foreign exchange system.

Dan Baker, the UN humanitarian co-ordinator for Myanmar, says he is concerned that the losses could upset donors who have already shown a reluctance to fund the relief effort.

Baker says "This is a big issue. This is a big concern."

The government says the May 2-3 cyclone killed 84,537 people.

Myanmar requires that foreign aid money be converted first into foreign exchange certificates at a set price, and then into the country's national currency, the kyat.

The certificates have been worth as much as 25 per cent less than the market value of an equivalent number of U. S. dollars.

On Friday, a certificate costing $1 was worth 900 kyat while $1 on the open market fetched 1,175 kyat.

The certificates were introduced by the military junta in 1993 to counter a thriving black market and take advantage of a rise in tourism dollars coming into the country.

But the black market has remained popular for most citizens because the official exchange rate remains artificially low.

Baker said the UN has taken up the issue with Myanmar authorities and has argued for the elimination of the certificates.

The UN has raised about $191 million so far following an initial appeal for $201 million in aid. On top of the $10 million shortfall, it says it needs $280 million in additional money for the work of 13 UN agencies and 23 non-governmental organizations.

The money is intended to help the 2.4 million survivors who the UN says have been seriously affected by the cyclone.

Myanmar taking cut of cyclone aid from UNDP and other Development Agencies

After an investigation of Inner-City-Press during the month of June 2008, today U.N. officials admitted that the Myanmar government is using its foreign exchange regulations to take a cut of the humanitarian and development aid being sent for Cyclone Nargis victims.

Burma exiles say the military junta is, in effect, taking a 20 percent cut off the top from cash assistance.

The government requires that all foreign currency brought into Myanmar be converted into what are called foreign exchange certificates, with a value set at parity with the U.S. dollar. But the certificates, when converted to kyat, trade at about 80 cents or less.

While agencies like WFP have nothing to fear, since they bring aid inside country in forms of goods, other UN agencies which deal with longer term development and deals exclusively with the government are directly affected. In effect, sources close to RBAP (Regional Bureau for Asia Pacific of UNDP) say that: - "Junta is taxing any aid that comes into the country as cash - and we have been dealing with this from long ago". "Myanmar is a similar situation as in North Korea" - that source says.

UNDP gives a 25% cut to generals on its CASH micro-finance programme in Myanmar

On July 11th, 2008 - responding to InnerCityPress questions, UNDP Spokesperson said:

"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."

But Ban Ki-moon's Special Humanitarian Envoy, Holmes said yeaterday interview with the German Press Agency in Burma, that: - "the exchange rate gap amounts to losses of millions of dollars and - where that gain goes I'm not sure."

As in the case with North Korea - UNDP lied again about it's operations. From 2004, UNDP has spent the equivalent of 39 Million US Dollars inside Myanmar "working closely" with Junta Dictatorship on micro-finance and small-medium-enterprise development programmes (CASH).

So if the latest revelations that Myanmar generals get's a cut of 25% on exchange rate, is true, than how much did UNDP tacitly gave to these brutal dictators?

2004-2008 PRG (39 Million USD) x 0.25 = US$ 9,750,000

A price to pay, in order to help the poor people of Myanmar.... but did UNDP really helped the poor in Myanmar? Follow this site, we will bring you more about UNDP's affairs with dictatorships.

Friday, July 25, 2008

Dervis and Melkert failed to report to Executive Board 52.8 Million USD awarded in Short Term Consultancies to Individuals world wide

YOUR TAX DOLLARS AT WORK AT UNDP



latest human resource data obtained from ATLAS, UNDP's Financial and HR Software, show increased miss-management and abuse of staffing, nepotism and corrupt practices in hiring consultants and retirees.

While everyone at UNDP is aware that current HR practices consist of actions of nepotism and favoritism which are totally not based on merit. Absent of strict rules and regulation, discourage promotion of UNDP staff worldwide, while encouraging corruptive solutions from managers, who instead of furthering the career of UNDP staffers, try to find short term solutions such as hiring friends (yong or old) as international and/or local consultants.

During 2007 UNDP hired the following:

International Consultants (SSAs): 2,320
Local Consultants (SSAs): 3,600
Retirees International Consultants (SSAs): 580
Retirees Local Consultants (SSAs): 900

From the above 7,400 Short Terms Consultancies, UNDP Human Resources, advertised only 281, or 3.3% of the total SSAs awarded worldwide. This shows that UNDP's Kemal Dervis and Ad Melkert failed to account in latest Executive Board for 96.7% of all Short Term Constracts allocated, or in terms of resources the equivalent of : US$ 52.89 Million Dollars.

But who are these short term consultants who were so lucky to get "selected" from UNDP ? Follow UNDP Watch we will be publishing the list of all of them.

Wednesday, July 23, 2008

VICTORY #81: David Morrison rush to take off-line the Turkey ADD after UNDP-WATCH reporting

Today after 103 days in UNDP's main website, David Morrison the Director of Communications of UNDP called his office early, and started demanding that the Turkey ADD be immediately removed from the main web-page of UNDP Website.

This is yet another victory of UNDP Watchers who are going to continue to Watch and expose the wrong doings inside the UNDP and its cuppola.


Good job David Morrison, just don't forget about NetAid Money, we still want to know what you did with them .




Tuesday, July 22, 2008

Kemal Dervis illegaly uses UNDP immage to support tourism industry in Turkey, while Tsunami hit countries wait in-line for some long needed attention

for the past 102 days, UNDP main Website (http://www.undp.org/) has been sponsoring Turkey's tourism as a UNDP main priority.

As if countries like Maldives, Indonesia, Thailand, Singapore where tourism industry was totally destroyed from the tsunami - does not need to attract tourists, and where people's life has been directly affected - -looks like UNDP chief Kemal Dervis has already started his campaign for returning this fall to Turkey.

How can the member states allow that their money be miss-managed from David Morrison, the Director of UNDP's Department of Information who is directly responsible for the main-website of UNDP ??

Questions from G77 group has been raised these days about this latest gaff of UNDP, many ambassadors have been asking : How much did Turkey paid for this ADD in United Nations main Development Programme's page ? How much is this ADD worth for Turkey ? How much this ADD is worth for Kemal Dervis?

How can Kemal Dervis use a 5 billion dollar enterprise to sponsor Tourism in Turkey, while people are dying in other places ? How can Kemal Dervis sponsor Tourism in turkey while UNDP staff are killed in line of duty and staff and public need to know more about UNDP's actions to protect staffers around the world ? Instead of keeping for 102 days up a publicity for Tourism in turkey, why Kemal Dervis does not publish Internal Audits that show the failure of UNDP's Security Unit to protect staffers from Algiers to Somalia to Darfur ??

Here is the website of UNDP:


Monday, July 21, 2008

Rice shows the door to Dervis

Condoleezza Rice, the US Secreteray of State sends a strong message to Kemal Dervis: Change UNDP Now - or go away !!

In a press release from the US State Department, in contrast with UNDP's Management Statements on same report, Condi Rice says that the DPRK Panel found broad management deficiencies in UNDP’s North Korea program, including in payment modalities, staffing practices, and project oversight.

The Secretary of State expressed deep concerns about the breakdowns in UNDP’s management system, and is urged UNDP Management to address its weaknesses and in so doing better realize its intended purpose – to help the world’s poor.

She also said that the United States will continue to closely follow and monitor UNDP management through the United States - UN Transparency and Accountability Initiative, and will focus particular attention on the Panel’s findings and recommendations.

A clear message to both Ad Melkert and Kemal Dervis, who have yet to read, un derstand and act upon the UN Ethics Office Report on DPRK (Read it here).

Tuesday, July 15, 2008

North Korea’s Stacked Deck


By ART BROWN
Published: July 15, 2008


CHINA’S announcement on Saturday that negotiators have agreed on a blueprint for verifying North Korea’s nuclear disarmament is being seen as the latest in a string of hopeful signs. For a while, the drumbeat in Washington has been that the so-called six-party talks are going well and the North Korean nuclear program is well on its way to being contained. If only that were true.

In fact, the Kim Jong-il regime is getting exactly what it wants and using American hunger for diplomatic success to split us from our most important regional allies in the process. If this were high-stakes poker, the North Koreans would be biting their lips to hide their smiles at the cards in their hands.

As it stands now, we have agreed to ship North Korea a million new tons of fuel oil, released Mr. Kim from the handcuffs of our Trading With the Enemy Act, and — within the legally mandated 45 days — will throw in other goodies that come with removing North Korea from the State Department’s state-sponsor-of-terrorism list. This comes on top of the American decision last year to allow the North Koreans to transfer their tainted money out of a bank in Macao.

But the topper is that Kim Jong-il knows he still gets to keep his stockpile of plutonium and even hang on to his existing rack of nuclear weapons (minus the one he tested in October 2006 to set the tone of the game).

Nor are the North Koreans going to be required to fess up to the uranium-enrichment program they picked up from Pakistan earlier in the decade. Nor must they explain their role at the suspected nuclear reactor in the Syrian desert that Israeli jets were reported to have destroyed in 2007.

And while the North Koreans insist they have changed their ways, The Washington Post reported last month that traces of uranium were found on the very 18,000 pages of documents that North Korea submitted to the Washington in an effort to “come clean” on its programs.

Basically, all the North Koreans had to do for these latest concessions was to blow up the cooling tower at the Yongbyon nuclear plant, a publicity stunt for which they billed the United States $2.5 million. Kim Jong-il’s plus-minus sheet looks decidedly better than ours.

The ugly truth is that North Korea no longer needed the creaking plutonium apparatus at Yongbyon — it was a liability to them, being visible to American bombers. Knocking down the cooling tower for the news cameras simply took away Washington’s ability to do the same in the dark of night. Far better to have a clandestine uranium enrichment program tucked away, safely underground.

Not only will our taking North Korea off the state-sponsored terrorist list strengthen the regime and reward those minimal responses, it is a direct blow to our strongest ally in the region, Japan, which believes it had at least 13 (and possibly dozens more) citizens kidnapped by North Korea in the 1970s and ’80s.

Resolving this abductee issue goes to the fundamental integrity of the Japanese government. If the situation were reversed, and Americans were grabbed off a dark Florida beach by a Cuban patrol boat, we would go to war to bring them home.

But America has pledged to protect Japan in return for the Japanese forgoing offensive arms. Taking the Japanese abductees off the negotiating table while leaving North Korea with its existing weapons may cause Tokyo to question the utility of that pledge. North Korea’s missiles can’t hit us, but Japan is well within the kill zone.

No one should imply that North Korea is an easy nut to crack. Smart folks on both sides of the domestic political aisle have struggled with this challenge. North Korea has shown no intention of giving up its nuclear weapons, and we are unfortunately not in a position to either force or entice it to do so. Despite all the spin out of the talks among the six concerned parties — China, Japan, North Korea, Russia, South Korea and the United States — there is no reason to honestly assume North Korea will ever give up its nuclear capability.

But things are not made any better by pretending that we are making progress, as Washington seems to have decided to do, or by ignoring the real concerns of our allies. Our approach to North Korea calls for a lot more honesty and, in the eyes of those with more at risk, a greater dose of sincerity. There is more at stake here than just North Korean bombs.

Art Brown, a 25-year veteran of the C.I.A., was the head of the Asia division of the agency’s clandestine service from 2003 to 2005.

Sunday, July 13, 2008

U.N. not so clean anymore


July 12, 2008

Bea Edwards and Shelley Walden

The United Nations was scrambling. Reports were surfacing, based on firsthand knowledge, of U.N. peacekeepers grossly exploiting their positions by sexually abusing destitute citizens entrusted to their care.

While a remarkably similar story is currently unfolding, the allegations above emerged four years ago. Former U.N. employee Dr. Andrew Thomson witnessed these atrocities in the early part of this decade and recounted his experiences, together with other staffers, in his 2004 memoir, “Emergency Sex and Other Desperate Measures.” That book not only exposed sexual abuse by U.N. forces, but also described senior U.N. officials’ inactions in the face of dysfunctional U.N. security and rampant financial corruption.

Thomson’s reward for coming forward with the truth? Initially, he was fired. Due to media pressure and legal assistance from our group and others, he was rehired months later and promoted to a position of greater responsibility. In the wake of Thomson’s revelations and the Oil-for-Food scandal, then-U.N. Secretary-General Kofi Annan announced he was working to improve whistleblower protections for all U.N. workers. In late 2005, Annan issued a whistleblower protection policy that was a breakthrough for freedom of expression at intergovernmental organizations. This crucial response had impeccable logic: given the breadth of the organization, U.N. officials could not possibly monitor all staff all the time. The organization had to rely on its own staffers to report on serious misconduct and gross ethical lapses.

Fast forward to a few weeks ago. Eerily similar allegations have emerged that U.N. peacekeeping troops demanded sexual favors from children in return for food in parts of the Sudan, Ivory Coast, and Haiti. U.N. Secretary-General Ban Ki-moon immediately responded, announcing that a thorough investigation will take place, adding that he has a “zero tolerance policy” for these types of actions.

Unfortunately, Ban himself has allowed exactly this type of grotesque misconduct to fester, as he continually hobbles whistleblower protection policies and delays establishing an effective internal justice system that would protect U.N. workers, peacekeeping forces, and contractors from retaliation when they report internal crimes. It is precisely these accountability measures – which fight and deter abuse – which Ban has weakened.

In August 2007, the United Nations Development Program (UNDP), a department rife with allegations of wrongdoing, opted-out of the jurisdiction of the U.N. Ethics Office, which enforces the organization’s whistleblower protection policy. Rather than challenge this secession, the Secretary-General issued a rule disarming Kofi Annan’s comprehensive policy, effectively allowing for all U.N. funds and programs to establish their own codes of ethics. Many have done exactly that, generating ad hoc ethics offices, improvised investigative procedures, and whistleblower policies that lack guidelines or parameters.

Moreover, Ban has proposed that certain categories of U.N. employees — including peacekeepers – be denied access to the new internal justice system for U.N. personnel, which is set to become operational in 2009. This is in direct breach of the recommendations made by a U.N. panel of external experts, who explicitly recommended that the system apply to all U.N. personnel, including peacekeepers.
Ban explains his position by arguing that U.N. peacekeeping forces remain subject to the disciplinary procedures of their home countries. This position is unrealistic — these forces are deployed and paid by the United Nations, and they should be accountable, while on missions, to the United Nations. Countries sending peacekeepers to the United Nations have no reliable, systematic source of information about their soldiers’ conduct.

The United Nations should effectively monitor the conduct of its forces. Ban could strengthen whistleblower protections, extend them uniformly across the U.N. system, strengthen and expand the jurisdiction of the U.N. Ethics Office, and expediently establish a reformed internal justice system that both guarantees the rights of conscientious U.N. workers and holds the renegades accountable. But he has not done so, and he seems to be set against it.

The world will never know if these crimes against children could have been averted had the Secretary-General enforced whistleblower protections for U.N. employees instead of weakening them. Until the United Nations protects its staff members when they report crimes, future scandals like these will be repeated.
Bea Edwards is the international program director and Shelley Walden is the international program officer for the Government Accountability Project, a whistleblower protection and advocacy organization in Washington, D.C. www.whistleblower.org. This column was distributed by MinutemanMedia.org.

Thursday, July 10, 2008

Somalia Remittances: Myth and Reality

By Mohamed Y Abshir Waldo

To create awareness of and about the Somali remittance* sector and to develop a roadmap for the future to address its challenges, it is necessary to first understand the history of the sector. It is equally important to demystify the topic. It is a fact that there are great deal of myths surrounding the ownership, operations and integrity of Somali Remittance Companies (SRCs) that have, in a mere 15 years, grown from small personal arrangements into a significant industry. These myths need to be challenged with the realities.

1. The History of Migration in Somalia

As traditional rural pastoralists, Somalis have long been involved in moving from one place to another, and since the advent of borders, from one country to another. The nomadic traditions have been overtaken in the last 35 years of military dictatorship and civil war, by pressures of political repression, insecurity and the search for peace and economic opportunity.

Somali migration is widely spread among various countries and continents and has not necessarily followed former colonial links and cultural and linguistic affinities. Italy, a major colonial power in Somalia, attracted the least number of migrants among the major European countries. While Somali migration and remittances date back many decades, there have been several distinctive periods of these movements, dating from the 1940s to the present.

The first distinctive period of migration included numerous seafarers from the 19th to the 20 th centuries,many of whom took residence in Arabia; Second World War soldiers and merchant seamen settling in the West; and students who remained abroad after their studies from the 1960s to the late 1980s. The second distinctive period was characterized by the exodus of refugees fleeing the Siad Barre regime persecutions in the 1970s to the late 1980s. Many of the latter migrants settled in the Eastern and Central African countries of Kenya, Ethiopia, Djibouti, Tanzania and Zambia as well as in the Middle East.

The most recent period of migration followed the collapse of the government and the start of the civil war in 1991. This period saw the largest wave of migration to the Gulf States, Eastern Africa, North America and Western Europe with migrants in search of political asylum, employment and a better quality of life.

The period 1991-93 also saw the largest war-related international displacement of nearly a million people from Central and Southern Somalia. As the conflict in the South and Central regions of Somalia continues, there has been increasing recent migration to the Central and Southern African countries of Zambia, Mozambique, Namibia and South Africa where there are now over 35,000 Somali migrants who are mostly engaged in small enterprises and provide employment for the Somali migrants.

2. The Growth of the Somali Remittance Sector

Two reports present an excellent account of the history of the money transfer development in Somalia and Africa. The first is the UNDP report Establishing Systems and Procedures for the Effective Regulation and Monitoring of Somali Remittance Companies (Hawala) by Abdusalam Omer, and the second is the

World Bank report Migrant Labor Remittances in Africa: Reducing Obstacles to Developmental Contributions by Sam Maimbo and Cerstin Sander. These reports thoroughly discuss the historical development of “Hawala,” the vital roles it plays in society and the constraints faced in the respective areas they cover—Somalia and Africa.



The inflow of remittance started with the first migrants who often sent money with traveling friends and relatives. Remittances progressively increased as the number of migrants increased and their earning power improved. Before the collapse of the military regime, another common means of remittance was the ‘Franco Valuate’ system. Under this system, Somali laborers working in the Gulf States purchased high-value consumer goods and shipped them back to their families or simply transferred a portion of their earnings via Somali traders. In the first case the traders then took the proceeds of the sale of the goods and paid the laborers’ relatives in local currency. What started as a way for an émigré to send cash back to their extended families has in many cases blossomed into full-blown financial operations. In the first half of the 1990s, the system of sending remittances was highly informal and personalized. It typically relied on trust relations with a known broker based in Nairobi or elsewhere who would insure that funds were delivered (either by carriers who flew to cities with cash on daily khat flights or via local high frequency [HF] radio operators) to family members inside Somalia or in refugee camps in the Horn of Africa. Initially, poor communications inside Somalia hindered the delivery capacity of this form of remittances. Individuals operating private HF radio communication services, the only type of communication available at that time, locally handled most remittances. In this way, local HF radio operators became the first, small-scale remittance sector. Their lack of capital prevented them from expanding the service beyond very modest levels. Though some operators in small towns and villages continue to play a role in remitting money since 1995 most HF radio operators have been absorbed into larger remittance companies as local agents, operating on commission. This gives the companies the ability to reach virtually every community in the country. Somalia's failed economy and heavy dependence on its diaspora for economic survival in the 1990s coincided with revolutionary advances in the telecommunications sector. These advances made

remittance transfers from great distances much easier. The rise of the remittance companies specializing in global money transfers into and out of Somalia corresponded concurrently with the introduction of the

first private satellite phone companies in 1994-95. Consequently, there are three major factors that have influenced the growth of remittance companies in Somalia: migration, telecommunications, and the emerging trade sector. The financial services and telecommunications industry are currently among the

most innovative and dynamic sectors in Somalia.

3. The Dominance of Somali Remittance Companies in the Horn of Africa

At present, the Somali financial sector is comprised wholly of the SRCs as they are the only financial services providers in the country for the majority of households and for the whole of the private sector.

While in general the Somali private sector suffered considerably from the combination of a protracted civil war, the collapse of the public sector, the absence of a functioning national government for over a decade and the destruction of the economic infrastructure, the remittance business grew exponentially in the vacuum of statelessness. It did so because of the evident need for urgent, personalized and unique financial services to deliver money to communities suffering from the effects of living in conflict zones, and in distant and remote rural areas. Against this backdrop, the remittance industry is the country’s driving socio-economic force. There are about one million Somalis in the diaspora and they remit over $1 billion annually. These remittances provide a lifeline to at least a third of the country’s population, making remittances the backbone of the economy. SRCs provide significant employment at home and in the diaspora. In addition, they encourage investment—remittance companies, while providing limited informal banking services including savings and checking accounts to individuals, businesses and local and international agencies, also serve as a conduit for trade and investment. The diaspora are not only senders of money but also operators and investors; they established the overseas hawalas and manage them.


4. Myths and Suspicions Associated with Somali Remittance Companies

Having successfully grown into ‘branded’ hawalas (for lack of a better word), the Somali remittance sector is surrounded by perceptions and myths. As the title of this chapter may suggest, there also seems to be an assumption that all SRCs are actually owned by Somalis in Somalia and that all transfers occur in one direction—from the West to Somalia. This is a myth and as a result of it, the Somali or associated remittance organizations feel that they are singled out for exceptional scrutiny by regulatory authorities and discriminated against by most Western banks that either close their accounts or refuse to provide them with banking services without credible justifications. Why then is this particular scrutiny and suspicion reserved for SRCs?

Listed below are some of the assumptions that are the cause of the myths and suspicions and the reality associated with each:

• These remittance businesses are owned by Somalis in Somalia: almost all the remittance organizations currently operating outside Somalia are, in fact, owned and operated by citizens of the respective countries in which they operate—the owners/operators are US, Canadian, UK, French, Swedish, Kenyan, and Ethiopian citizens. There are less than 15 effective national Somali hawala owners (i.e., owners/operators of Somali citizenship) while the overseas-owned remittance companies could be in the hundreds. That said, what is important and often overlooked is the close partnership and networking of the overseas hawalas and the local Somali hawalas,which gives the impression that they are one and the same.

• Only the Somali Diaspora transfers money through them: although most SRC diaspora clients are of Somali ethnicity, the client base does include a variety of African nationalities—Kenyans,Ethiopians, Sudanese, etc. SRC clients also include UN Agencies and international NGOs operating in Somalia. Further, while most money transfer destinations are within Somalia, SRCs do transfer money in every other direction—within North America, Western Europe, Arabia and

Africa.

• SRCs, are not legal or registered and do not pay taxes: SRCs are legally registered or in the

process of legalizing their status and they pay taxes in every country in which they operate,including Somalia.

• SRC operations are not transparent and Anti-Money Laundering (AML) compliant because of their association with Somalia: SRC remittance operations are transparent and have been open to the inspection of regulators and banks whenever required, and despite ominous reports from Somalia regarding security and terrorist threats, the SRCs know better than to associate with

undesirables and are traditionally wary of fanaticism. Although Al-Barakaat was closed down soon after September 11 on allegations of terrorist financing, it has not been proven guilty of any crime by a court of law as far as we know and it should be considered innocent until proven guilty. Al-Barakaat was the biggest Somali hawala and its closure bankrupted thousands of Somalis and severely damaged the reputation of the Somali remittance institutions with regulators, banks and governments worldwide. Also, though there may not be formal regulatory mechanisms in Somalia (as there is no functioning Central Bank), each and every SRC practices self-regulation of some kind. This is expected to be further strengthened when the Somali Financial Services Association (SFSA) acquires full operational capacity.

• Clients’ money is not safe and the SRCs are not providing efficient and ethical service for their clients; SRCs are reputed to provide the safest, fastest, most reliable and efficient service for their

clients. Can any traditional financial institution claim or can it offer to make a transfer from Alaska or Japan or New Zealand to a remote village or water well in Somalia in 24 hours? SRCs can and do. It would also be interesting to know if U.S. or European banks and regulators had any complaint from clients of SRC on fraud or shoddy service.



Thus, although there are two distinct ownerships and definite decentralization of what is general termed the Somali remittance organization, the perception has persisted (in international circles) that Somali remittance operations are secretly conducted between Somalis only and that all the transfers are pouring into that murky and anonymous country called Somalia. This is not the case. While it is true that the bulk of the remittances go to Somalia, substantial transfers are also sent from the country for trade purposes.

Transfers to and from other parts of Africa, Arabia, Europe, North America and other countries or continents do take place. Perhaps, a noteworthy example of financial business cooperation should be highlighted—this is the cooperation between SRCs and the international agencies and NGOs working in

Somalia but based in neighboring African countries for security reasons. These international organizations, including UN Agencies, make money transfers for their operations in the country through SRCs.

5. Constraints and Opportunities for Somali Remittance Companies

Principal Constraints in the industry include the following:

• New and weak industry association for the promotion, advocacy and defense of the industry;

• Limited technical and organization capacity to keep up with the pace of rapid and sophisticated

developments taking place in this sector;

• Different and complex US State regulations and bond sizes ranging from $30,000 to over

$500,000;

• Different regulatory regimes ranging from the liberal systems in the UK and Sweden to

complicated requirements in Holland, Norway, Germany, Italy, among others;

• Bond sizes again ranging from a few thousand dollars to millions;

• Hawkish scrutiny and discrimination by banks; and

• Crippling competition with the Somalia hawala on rates of transfer.

6. Conclusions and Recommendations

One of the significant results of the civil war in Somalia was that remittances have clearly played the role of a social safety net, preventing total economic collapse in the face of all the calamities that have befallen Somalia in the last 35 years. It has also been shown that remittances have been far more

important for livelihoods and survival in Somalia than all the international development and humanitarian aid put together.

Particular efforts should, thus, be made to further involve the large, globalized Somali diaspora linked to Somalia as they are in a position to forge global economic networks for investment and development. A professionalized and formalized remittance sector is the key to sustainable stability and governance,

effective reconstruction and improved livelihoods in Somalia. Robust, practical and early international development partners’ support is essential for the realization of these critical objectives. More specifically, the following are recommended:

• Further development of Somali remittance companies into formal financial institutions—banks,

MFIs, insurance, etc.;

• Strengthening of the SFSA to a level where it can properly guide the industry in the right direction and establish effective and fruitful relations with national and international stakeholders;

• Continue the corporate restructuring in line with national and international business and regulatory requirements, especially as the new national government and a central bank begin to take control of the affairs of the country;

• Further develop and strengthen working relations with banks, regulators and donors; and



• Work closely with central and regional Somali authorities with the view to contributing to the promotion of the financial sector and the preparation of investment and regulatory laws.

Finally, as has been argued by Omar Abdulsalam, “regardless of the establishment of a strong central government and/or a central bank in Somalia, the remittance/hawala system will remain an integral part of the Somali economy and monetary system for the foreseeable future.” He correctly gives the reasons for this as follows:

• Remittance companies have the trust and confidence of their customers;

• Remittance companies have an extensive network of agents that service almost all the towns and villages in Somalia; as well as all major cities and towns in other countries populated by Somali Diaspora;

• Remittance operations are far more efficient than other financial services institutions; and

• No other financial system is comparatively so well designed to serve the rural areas where the majority of the people live but are little served by communication and transport infrastructures.



*This essay was published in World Bank World Series Remittances and Economic Development in Somalia


MOHAMED Y. ABSHIR WALDO is the founder and director of the Sandi Consulting Group, a political, business and strategic consulting group whose primary focus is the revival and reconstruction of the Somali nation. Starting out as a radio journalist with the BBC World Service and as Director of the Somali Broadcasting Service in the 1960s, he has been, at various points in his career (and sometimes all at once), a political activist, an entrepreneur and a development consultant. His recent writings on the remittance industry stem from his development work on micro-finance issues as well as his interest in regional rehabilitation through small-business initiatives. Mohamed is a graduate of Columbia University Journalism School (MA in Mass Media, 1968).

Rwandan war crimes suspect arrested

Rwandan war crimes suspect Callixte Mbarushimana, a former UN employee wanted for his alleged role in the 1994 genocide in Rwanda, has been arrested in Frankfurt.

Peter Rueckert, a state prosecutor in charge of extradition cases at the Frankfurt Court of Appeal, said Rwandan authorities have been informed of the arrest, and Mbarushimana, who is wanted in France and Rwanda, would appear before a judge within the next two days. According to a report on the News24 site, Rwandan authorities are demanding Mbarushimana's extradition, accusing him of killing and ordering the killings of many Tutsis, among them some of his colleagues at the UN Development Programme, where he worked in Kigali in the early 1990s. He was arrested in Kosovo in 2001 while he was working for the UN and turned over to the Rwandan war crimes tribunal, but charges against him were dropped in 2002 due to lack of evidence.

Germany: U.N. Employee Accused of Role in Rwanda

A former United Nations employee accused of killing some of his colleagues and others during the genocide in Rwanda in 1994 has been arrested in Frankfurt, and the German authorities are considering his extradition to Rwanda, a prosecutor said Wednesday. The suspect, Callixte Mbarushimana, was arrested Monday at the Frankfurt airport as he tried to board a plane for St. Petersburg, Russia, according to the prosecutor, Volkmar Kallenbach. Mr. Mbarushimana, a 44-year-old Rwandan Hutu, has been accused in Rwanda of genocide and crimes against humanity, Mr. Kallenbach said. He added that Mr. Mbarushimana disputes the charges.

Wednesday, July 9, 2008

LEBANON: Aid agencies grapple with coordination issues

BEIRUT, 24 June 2008 (IRIN) - As the UN’s Palestinian aid agency UNRWA appeals for US$445 million for three years of reconstruction and recovery in and around Lebanon’s Nahr al-Bared refugee camp, a mixed picture of aid agency coordination has emerged from interviews with key players.

Speaking to IRIN ahead of the 23 June donor conference in Vienna, the director of UNRWA affairs in Lebanon, Richard Cook, expressed satisfaction with his agency’s emergency response operation, though admitted the pace of reconstruction was too slow and that coordination with other agencies “could improve”.

A key issue raised by a number of actors interviewed by IRIN was the level of participation of local Palestinian non-governmental organisations (NGOs) in the cluster meetings established to coordinate aid agencies’ response to the Nahr al-Bared crisis.

“Cluster meetings are held in a hotel in Tripoli [northern Lebanon], but all our directors are based in Beirut, so only local staff in Tripoli can attend the meetings,” said Leila al-Ali, director of Najdeh, a local NGO that works in and around the Palestinian refugee camps in Lebanon, targeting primarily women and children.

“Our Tripoli staff do not all speak English, so have limited access to the meetings. The meetings should be organised in a place accessible to all.”

Separate appeal

While expressing satisfaction with the master plan for Nahr al-Bared’s reconstruction, Najdeh said UNRWA’s donor appeal left some gaps unfilled, prompting the local agency to launch its own appeal to donors on 19 June for $2.5m to cover health, education, economic and rights needs.

Some international agencies criticised the absence of key non-UN actors from the UNRWA appeal.

“It is a shame that all the organisations and actors working in Nahr al-Bared were not able to put together a consolidated appeal to give donors an overall picture,” said Ulla Backlund, country director for the Norwegian Refugee Council (NRC) in Lebanon, which has been aiding reconstruction in the camp.

“All the actors should have been given the chance to see where their experience could be best put to use for the good of the beneficiaries.”

Responding to the criticism, Pablo Ruiz, a recovery adviser at the UN Development Programme (UNDP), attending the Vienna conference, said: “The entire process for planning and reconstruction has been very participatory and very inclusive, and we see this document being presented to donors as a consolidated appeal.”

All interviewees expressed concern that the level of complexity in terms of political, security, social and legal issues around the status of Palestinian refugees in Lebanon and rebuilding the currently accessible areas of Nahr al-Bared, in which UNRWA has no legal remit to operate, was hampering coordination.

Richard Cook, director of UNRWA affairs in Lebanon, admitted that coordination with other agencies "could improve"
“Confusion” over status of new camp

“The status of the new camp creates a lot of confusion and has an impact on coordination,” said Bassem Chit of Lebanon Support, an information service aimed at supporting humanitarian efforts, which is directly involved with Nahr al-Bared.

“There is general coordination and information is good, but there are still lots of gaps. The participation of local NGOs in cluster meetings is quite low and decisions are taken outside the meetings; the same problem as in Iraq,” he said.

Chit warned of the dangers of the plethora of agencies operating in and around Nahr al-Bared not coordinating on a comprehensive strategy.

“The issue is not to create more inequality by having one NGO fix only 20 percent of the camp to a high standard, but leave the rest at a low standard,” he said. “It is much better to raise standards across the board as a collective process across the clusters. This is not happening.”

OCHA

Several actors highlighted the absence of the UN’s Office for the Coordination of Humanitarian Affairs (OCHA) from Lebanon since its short deployment to the country during the July War in 2006.

Jamie McGoldrick, head of OCHA’s Humanitarian Reform Support Unit in Geneva, told IRIN he agreed that cooperation between agencies could always be improved. “Basically when faced with a new emergency, it is very difficult to implement clusters, which are a new approach. This has been adapted and brought to Lebanon. It is a new culture, a new way of collaborating and responding and it will take time for those agencies to understand roles and responsibilities,” he said.

McGoldrick also said some of the issues raised by local NGOs were of a longstanding nature. “The issue of language, for example: We have faced this since the first time clusters were used in the Pakistan earthquake. But we are working on them and over time we will overcome them. The most important thing is that we expect those NGOs who feel excluded and have issues to bring this to the attention of cluster leads.”

Challenges

The UN Resident Coordinator’s Office has been supporting UNRWA’s coordination efforts from the onset of the crisis.

“The reconstruction of Nahr al-Bared raises a number of challenges, legally, politically and in terms of mandate… Though coordination has improved, more can be done,” said Fernando Hiraldo, adviser to the UN resident coordinator in Lebanon.

“We hope the Vienna donor conference opens a new phase where the financial resources needed for the reconstruction of the camp and the implementation of the different components submitted to donors are clearly explained.”

hm/ar/cb

Tuesday, July 8, 2008

Acting head of UNDP Somalia killed in Mogadishu

07 July 2008

UNDP strongly condemns the targeted killing of Osman Ali Ahmed, the acting head of UNDP’s office in Mogadishu.

A fourteen year veteran of UNDP, Mr. Ahmed dedicated his life to the betterment of his country while working under very difficult circumstances during some of Somalia’s most turbulent times. Mr. Ahmed was a highly professional and dedicated man and will be sorely missed by all his colleagues at UNDP.

We extend our deepest and most sincere condolences to his wife and family and wish his son, who was wounded in the attack, a full and speedy recovery.

Monday, July 7, 2008

IN RESPONSE TO BRAHIMI REPORT, COMMITTEE ON STAFF SECURITY


Press Release
3 July 2008

Hopes Brahimi Panel recommendations will be implemented more effectively
than those issued after Baghdad bombing


The Independent Panel on Safety and Security of UN Personnel and Premises World-wide, headed by Mr. Lakhdar Brahimi, has released a sobering report which while it indicts the Organization for failing “to develop a culture of accountability in security management,” appears to insulate “the higher echelons of the hierarchy, including the Secretary-General from the System’s passivity observed by the Panel.

The report shows that the UN and particular individuals failed to do their duty, and in ways somewhat similar to the circumstances leading up to the 19 August 2003 attack against the United Nations in Baghdad. While the Under-Secretary-General for Safety and Security took the honorable course of action by resigning, the Staff Union’s Committee on the Security and Independence of the International Civil Service does not believe that fault solely lies with one person.

In the name of accountability, the Committee calls on the Secretary-General to take fully responsibility for the insufficient implementation of the security management system approved by the General Assembly. It further calls upon him to immediately take action to prevent future tragedies from occurring and staff from being endangered; to immediately remove any individuals that failed in their duties; and to swiftly implement the reforms and recommendations of the Brahimi Panel. The Committee urges – for the safety of all staff – that more effective reforms be instituted that will prevent loss of life on the scale experienced in Baghdad or Algiers.

The Committee is not enthused by the appointment of Mr. Ralph Zacklin—an insider who has served as a legal counsel of the United Nations peacekeeping operations—to head an “independent” accountability group that will review the responsibilities of the key individuals and offices connected with the attack on the UN premises in Algiers. The apparent conflict of interest of some members of the group, and their track record at the UN, does not portend a restoration of confidence and morale among the staff. Reliance on senior UN officials to conduct a peer review on accountability issues has proven to be a failure in the past, a situation which the long overdue reform of the internal justice is expected to rectify.

The Committee welcomes the bulk of the recommendations of Mr. Brahimi’s panel, especially with regard to ensuring adequate and sustainable funding for security and safety; establishing the principle of “no programme without security; the urgency of reorganizing the constituent security management structures into a single unified system; the importance of having a reliable, appropriate, and robust information technology (IT) support system to develop information and knowledge, critical to security analysis and threat assessment; and the Panel’s reiteration that safety is half the mandate of DSS and that a dedicated Safety Unit should be established within DSS with competent staff and resources to enhance the safety of UN personnel and to develop a system-wide guidance on air safety.

Friday, July 4, 2008

GAP Commends UN Ethics Director and Secretary-General for Defending UNDP Whistleblower

FOR IMMEDIATE RELEASE

Contact: Bea Edwards, International Program Director
Phone: 202.408.0034 ext 155, 202.841.1391
Email: beae@whistleblower.org

Contact: Shelley Walden, International Program Officer
Phone: 202.408.0034 ext 156
Email: shelleyw@whistleblower.org

GAP Commends UN Ethics Director and Secretary-General for Defending UNDP Whistleblower

(Washington, D.C.) – The Government Accountability Project (GAP) applauds United Nations Ethics Office Director Robert Benson and Secretary-General Ban Ki-moon for defending a whistleblower who was denied due process by the United Nations Development Programme (UNDP).

On June 27, the United Nations Ethics Office found that UNDP whistleblower Artjon Shkurtaj was not permitted to respond to allegations made against him by the External Independent Investigative Review Panel (EIIRP). The decision stated that the ad hoc EIIRP panel – which investigated Shkurtaj’s much-publicized disclosures regarding UNDP wrongdoing in its North Korean office, and the retaliation he faced for exposing this – violated the Investigative Guidelines of the Independent Inquiry Committee into the United Nations Oil-for-Food-Programme. The Ethics Office Director recommended that Shkurtaj be compensated as a result.

This past Tuesday, the spokeswoman for the Secretary-General announced that the UN Secretariat stood behind the decision of the Ethics Office. In taking this position, the Secretary-General has challenged UNDP’s treatment of a whistleblower. UNDP exempted itself from the jurisdiction of the UN Ethics Office and the whistleblower protection policy last August after Benson ruled that there was prima facie evidence of retaliation against Shkurtaj by UNDP.

“Ban Ki-moon’s support for this decision is a reversal of a year-long backslide in whistleblower protections at the UN,” stated Shelley Walden, GAP International Program Officer. “We applaud the Secretary General’s defense of this whistleblower and hope that the Secretariat will strengthen the due process and free speech rights of other whistleblowers by restoring the system-wide jurisdiction of the Ethics Office and whistleblower protection policy.”

UNDP responded to the Benson decision by claiming that the due process errors cited are the fault of the now-disbanded EIIRP and not of UNDP itself. However, the specific error for which Benson faulted the panel was its unilateral attack on Shkurtaj, which it included in its final report and released to UNDP without allowing Shkurtaj to defend himself. UNDP is also at fault for the same reason: UNDP posted the report on its Web site without allowing Shkurtaj to correct serious errors of fact in the report that were defamatory.

“The EIIRP report demonstrates investigative incompetence, ignorance of the standard of proof in whistleblower cases, and the gratuitous defamation of a whistleblower who tried to protect UNDP from misconduct,” said Bea Edwards, International Program Director. “As an independent review, this exercise is such an embarrassment that even UNDP is now trying to disown it. Rather than connect the retaliation dots, the Panel tried to erase them.”

The erosion of whistleblower rights began last November, when the Secretary-General issued a bulletin that allowed UNDP to ignore the rulings of the Ethics Office. Instead of respecting Benson’s decision on the Shkurtaj matter, Kemal Dervis, Administrator of UNDP, established a separate Ethics Office for UNDP, as well as a weaker whistleblower protection policy. Other UN agencies followed suit, and the November bulletin resulted in a proliferation of whistleblower policies and ethics offices in the UN system that do not meet the independent and comprehensive standards set out in the original 2005 UN policy to comply with a mandate of the General Assembly.

GAP, which has advised Shkurtaj throughout his ordeal, believes that there were due process violations in the EIIRP investigation serious enough to invalidate its findings. Most importantly, the panel demonstrated its ignorance of the relevant standard of proof in a whistleblower case. UNDP failed to establish that its action rescinding Shkurtaj’s appointment as Operations Manager of its North Korea office, after he reported wrongdoing, was not retaliatory. Under the UNDP whistleblower protection policy, once Shkurtaj had been designated a whistleblower, UNDP had to prove with “clear and convincing evidence” that it did not retaliate. But UNDP presented no substantive evidence at all, other than the statement of the officer responsible for the withdrawal of Shkurtaj’s appointment that she did not retaliate. In short, at this point in the proceedings, Shkurtaj did not have to prove that the withdrawal of the appointment was retaliatory. UNDP had to prove that it was not.

The Panel itself was not appointed in an independent manner. Its members lacked the impartiality and expertise needed to investigate these disclosures properly, as demonstrated by the fact that members inappropriately devoted a significant portion of their report to attacking Shkurtaj rather than investigating the retaliation described above and easily verified. In fact, the panel’s report was, in itself, retaliatory.


Government Accountability Project

The Government Accountability Project is the nation’s leading whistleblower protection organization. Through litigating whistleblower cases, publicizing concerns and developing legal reforms, GAP’s mission is to protect the public interest by promoting government and corporate accountability. Founded in 1977, GAP is a non-profit, non-partisan advocacy organization based in Washington, D.C.

Thursday, July 3, 2008

ANALYSIS: Does the United Nations Accept the Rule of Law?


Thursday , July 03, 2008

By George Russell

That question has been hanging over the world organization for nearly a year, ever since the U.N.’s first ethics commissioner, Robert Benson, tried to take up the case of a whistleblower who drew attention to the rule-breaking practices of the United Nations Development Program.

Among other things, the whistleblower charged that UNDP had funneled millions in hard-currency to the regime of North Korean dictator Kim Jong Il and allowed North Korean government employees to run key aspects of its development program there. Then, he claimed, UNDP retaliated by firing him.

Now the same issue confronts the U.N. again. This time, the question is whether UNDP would pay restitution for the harm done to the same whistleblower who brought the organization’s misbehavior to light, and whose reputation was blackened by UNDP’s hand-picked investigators when they issued a weighty report earlier this month that confirmed most of the whistleblower accusations, and added a few more.

Judging from events of the past week, the answer to the question is still very far from clear. UNDP’s top managers have told FOX News through a spokesman that “no decision has been made” on the restitution issue.

Restitution for character-blackening is the initiative of chief U.N. ethics officer Benson, the man who is supposed to foster a “culture of ethics, transparency and accountability” across the entire U.N. system, and give the world—and thousands of U.N. employees worldwide—confidence that the organization is following its own rules. Benson had been mandated by UNDP itself to review the investigative report on North Korea for violations of whistleblower protection. Benson’s role was a compromise engineered in part by diplomatic pressure from the Bush Administration.

Click here to read Benson's Review.

A refusal to follow the recommendation would be a direct slap at the U.N.’s top ethics official— and it would again expose the world organization to charges of double standards that were exposed –in part by FOX News— in the multi-billion-dollar Oil for Food scandal and a broad swath of procurement corruption cases.

Moreover, it would be a highly public blow to Benson’s boss, Secretary General Ban Ki-moon, who is standing behind his ethics chief. Ban’s spokesman told reporters yesterday that “the report of Mr. Benson stands as the position of the Secretariat.”

At the same time, the spokesman said the Secretary General was going to wait and see how UNDP reacted to the recommendation and would offer no other opinion on it.

The latest crisis point marks a second lease on life for Benson in the whistleblower case, which involves revelations brought forward by a former UNDP employee in North Korea, Artjon Shkurtaj. It is also a second chance for Ban, whose failure to back Benson strongly in the past sapped the unity of the U.N. system.

The case of the whistleblower, a former UNDP operations manager, was Benson’s initial major test in the ethics job last August—a job created in the wake of the Oil for Food and procurement scandals as a cornerstone of the U.N.’s ability to police itself and protect employees who brought wrong-doing to the attention of their superiors.

But Benson was slapped down by UNDP, which said the matter lay outside his jurisdiction and refused to let him investigate what Benson called a “prima facie case” of retaliation.

Suddenly, to the dismay of the Bush Administration and other governments,the sprawling U.N. system of some two dozen independent funds, programs and agencies around the world seemed to have the legal right to design on their own how they treated the disclosure of improper or illegal activity.

In UNDP’s case, a vivid insight into the potential for abuse was provided by the North Korean investigative report, which was made public in early June. UNDP immediately hailed the 353-page report as vindication—even though the document reiterated at great length that UNDP had systematically violated its own rules in hiring North Korean government employees to fill key UNDP jobs in the country, illegally handed over millions in hard currency to the government of Kim Jong Il, and ignored the laws of the U.S. and other countries in handing on sensitive “dual use” civilian-military technology to the Kim regime, even as North Korea was building and testing a nuclear weapon.

The report, however, took great care to avoid assigning any blame for the lapses to any specific individuals in UNDP, and blamed many of them on vague “lack of communication.”

So far as whistleblower Shkurtaj went, however, the report declared that there had been no retaliation against him, even as it offered evidence that the North Korean regime had pressured UNDP to get rid of him. (Initially offered a full-time position, Shkurtaj, a contract employee, had the offer rescinded a month later on procedural grounds, including a preference that a woman should get the job; another man was later hired instead.)

The panel report also lengthily attacked Shkurtaj’s character and credibility, without offering him the opportunity to respond.

In reviewing those results, Benson still insisted that Shkurtaj had whistleblower status—an important designation, since it offers protection for employees who bring U.N. wrongdoing to light.

But he offered UNDP a victory when he agreed that no retaliation had taken place. As the investigators did, Benson based his reasoning largely on the fact that the UNDP human resources officer who withdrew Shkurtaj’s job offer offered “unequivocal” testimony that she was unaware of any North Korean pressure to get rid of the nettlesome employee. (Neither Benson nor the investigating panel found contradictory the fact that the job was ostensibly earmarked for a woman, but later filled by a man.)

Then Benson threw a curve ball: the neglect of the panelists to let Shkurtaj respond to their concerns about his credibility was, in Benson’s nuanced phrase, a “due process failure,” which violated a U.N. employees right to respond to such findings in an investigation.

The right to such a response is deeply embedded in customary U.N. procedure for internal investigations. Benson, however, cited as the basis for his own conclusion about the lack of due process the example set by the U.N.’s $35 million investigation of the Oil for Food scandal, presumably because it was also carried out by outside investigators.

The “failure,” Benson noted, was on the part of the investigative panel, and not UNDP itself—a fact also underlined by UNDP spokesmen. But since the damage was done, Benson noted “there is no means by which to address this matter other than by means of restitution,” and recommended UNDP pay Shkurtaj 14 months’ salary to salve the damage.

Benson’s effort was clearly a compromise aimed at preserving unified standards of fairness across the U.N. system to employees who dare to testify to their organization’s lapses. And Ban’s current support for his ethics chief –though still equivocal—showed a desire to undo some of the damage done by his earlier flinching at UNDP intransigence. (Ban first signaled his new resolve to unify ethical standards at a confidential meeting of U.N. top managers in May, in Switzerland; copies of his talking points at the session were obtained by FOX News.)

But if UNDP does not accept the ethics officer’s ruling, what then? Neither Ban, nor anyone else, seemed inclined to answer—at least not yet.

George Russell is executive editor of FOX News.