Sunday, 27 July 2008

Weekly Business Roundup - July 26, 2008

  • Junta Accused of Diverting Millions of Dollars of Cyclone Aid
  • Singapore Accused of Failing to Tackle Burma Money Laundering
  • Olympics Disrupt China’s Jade, Timber Trade with Burma

The Irrawaddy News

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.

Singapore Accused of Failing to Tackle Burma Money Laundering

Singapore has been quietly rebuked by a major international financial institution for not enforcing action to curb money laundering from Burma.

The Financial Action Task Force (FATF), an intergovernmental organization set up to combat the funding of criminal and terrorist activities, names Burma, along with Ukraine and the tiny Pacific island country of Nauru, as high-risk countries for money laundering.

In a detailed assessment report on member Singapore’s compliance with its rules and recommendations, FATF says: “In line with the FATF’s decision to impose countermeasures on Nauru, Ukraine and Myanmar, [the Monetary Authority of Singapore] MAS issued circulars to advise the financial institutions under its purview to be aware of money laundering risks in these countries and to give special attention to transactions with persons or entities from the countries. However, these circulars have no enforceability.”

The Singapore banking system is widely known to be used by both the junta leadership and Burmese businesses closely linked to the regime—many of which have been blacklisted by the US in recent times in an attempt to curb their financial dealings.

In its rebuke, the FATF reports says: “Singapore authorities should exercise enforceable powers to require financial institutions to apply additional anti-money laundering counter-measures beyond normal obligations in relation to transactions with, or financial institutions from” Burma and the other countries blackballed by FATF as high risk.

Olympics Disrupt China’s Jade, Timber Trade with Burma

Cross border trade in jade and timber between northern Burma’s Kachin State and China has reportedly slumped because of the forthcoming Olympic Games.

The slump is due to a combination of an official clampdown by China on anything illegal and Chinese jade traders refocusing their business on Beijing in anticipation of a major influx of foreign tourists.

Hundreds of Burmese jade traders usually do business in border towns such as Ruili and in the Yunnan provincial capital of Kunming. But Chinese buyers have decamped to Beijing to prepare for the Olympics, says a report by the Kachin News Group (KNG).

“There are hundreds of jade traders in Kachin State facing a big problem of not having a market for jade,” KNG quotes one local businessman as saying.

Meanwhile, as part of China’s effort to present a clean face to the outside world, authorities in Yunnan are cracking down on illegal timber movements across the border out of Burma.

The crackdown is nationwide in China as the country tries to polish its image for the Olympics and also to seal off all avenues of entry for possible anti-China protesters.

This week the state news agency Xinhua disclosed that Chinese authorities have severely tightened the issuance of business visas for foreigners until after the games finish.

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