On Currency Exchange Losses, UN Starts Cover-Up in Myanmar and Beyond

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis

UNITED NATIONS, August 14 -- Despite an internal UN memo admitted a "serious 20% loss" of aid money in currency exchanges required by Myanmar's government which led to an admission of $10 million in losses, on Thursday the UN cut its losses to $1.5 million, then refused to explain. The UN Development Program has for weeks refused to disclose how much money it has converted in Myanmar, nor in which other of the 160 countries it does business in its loses money in government-required conversions. The Office for the Coordination of Humanitarian Affairs, whose director John Holmes initially took the lead in admitting the losses, has similarly declined to provide information about any other countries, despite Holmes' July 28 commitment to do so. As is too frequent in the UN, exposure of a problem has been followed not by reform but by cover-up and stonewalling.

In fact, despite a clear written and video record, the UN now claims that the problem wasn't exposed at all, but rather was "first raised" by John Holmes on July 24. But Inner City Press asked Holmes about the losses on July 9, 10 and 11, just as it had asked UNDP about the losses as far back as June 26. In minutes of a conference call that day, which whistleblowers showed to Inner City Press, a "serious loss of 20%" was admitted to. Inner City Press subsequently quoted from and then published the minutes.

On August 14, after reading out a statement that losses were "only" 4.5%, UN Associate Spokesperson Farhan Haq refused to answer Inner City Press' question about how the 20% loss admitted in the internal memorandum had been changed, without explanation, in this new public figure. "Internal conference calls are internal discussions," Haq said. When Inner City Press asked that someone come to a press conference to answer questions about the new numbers, Haq said he's check "if Holmes is interested in talking," but that Holmes is not available now. Video here, from Minute 12:11.

Inner City Press sent written questions to Holmes' office and to Haq, stating that on the record answers were being sought on deadline:

"of how the 20% loss referred to both in the Teleconference minutes and elsewhere was changed to a 4.5% loss, and by whom. I am told, by a participant in the estimate-reduction exercise, that UNDP took the lead; I would like a confirmation or denial of that. I have asked UNDP the following, and hereby ask OCHA (and spending under OCHA's control), on deadline

how much money has OCHA / the UN converted through Foreign Exchange Certificates in Myanmar in the past one, five and ten years? At what rates? With what losses? If any, how were these disclosed? And, please any and all other countries in which OCHA / the UN has faced currency exchange losses of over 5%, and what you have done and, separately, will do about it? And when will Mr Holmes (and separately Mr. Baker, in light of his July 10 statements) hold press conference(s) at UN HQ on these topics?" I trust you remember that Mr. Holmes said he saw no reason not to make public a list of countries in which OCHA / the UN suffers currency exchange losses. So, please do.

Eight hours later, no answer of any kind had been received. UNDP, as noted, has had the questions before it since June 26, multiply reiterates since then. On August 14, rather than providing the numbers about how much money UNDP has converted in Myanmar, UNDP's Spokesman Stephane Dujarric wrote:

On Myanmar, you received extensive answers on the currency exchange question at the noon briefing. With regards to our programme in Myanmar, UNDP does not have a regular country programme in Myanmar. Since 1993, all assistance from UNDP to Myanmar has been governed by a restrictive mandate from UNDP's Executive Board, which stipulates that assistance must be focused at the grass-roots level, particularly in the areas of primary health care, environment, HIV/AIDS, training and education and food security.

Extensive controls are in place to ensure compliance with the UNDP Executive Board mandate in Myanmar and the Executive Board receives regular reports. Independent assessments have all found that the programme is in full compliance with the Executive Board mandate: i.e., that it is effective in addressing the needs of the poor and vulnerable in rural areas of Myanmar, and that all projects operate independently of the government. The full 2005-2006 assessment, including the budget, is available online on the Executive Board website www.undp.org/execbrd/adv2006-second.htm .

But the questions, asked of Mr. Dujarric and in his absence of UNDP's Christina Lonigro and, in great detail, Stanislav Saling, included how much money was been in UNDP's account at the Myanmar Foreign Exchange Bank, how much was converted and at what loss. Also, Dujarric entirely ignores the wider question posed to him and to UNDP Administrator Kemal Dervis, to disclose "any and all other countries in which UNDP has faced currency exchange losses of over 5%, and what you have done and, separately, will do about it?"

This is a question that, as to OCHA, John Holmes said on July 28 there was no reason he would not answer. But despite repeated reminders, the question has not been answered by him and OCHA, nor UNDP, nor the Department of Peacekeeping Operations, to which Ban Ki-moon's Spokesperson passed the buck (DPKO in turn has said it has asked the UN Controllers Office, just as it passes from the UK's Warran Sach to a new Controller from Japan). DPKO has promised an answer, and we'll wait for it and publish it on this site.

Inner City Press has been contacted by other whistleblowers concerned with the UN system's currency losses. But is the only way to get any change to shame UN officials and point out their mis-statements? We'll see.

Watch this site. And this (on South Ossetia), and this --