Wednesday, 30 July 2008

U.S. Calls for End of Myanmar For-Ex Rules After UN Admits Losses, UK Joins, France Silent

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

FEC/Burma Shave series - 1st (June 26), 2nd, 3rd, 4th, last

UNITED NATIONS, July 29 -- The United States is supporting a call that the Myanmar government eliminate currency "exchange rules and regulations" by which of Cyclone Nargis aid "twenty to twenty five percent was diverted," U.S. Ambassador to the UN Zalmay Khalilzad told Inner City Press on Tuesday. "I looked into a little of what you said," Ambassador Khalilad began, referring to Inner City Press' reporting since June 26 and questions to him last week and Monday about UN aid losses to government-required currency exchange in Myanmar.

"It's the result of rules and regulations of the Myanmar government," he said, "that a significant portion, 20 to 25%, was diverted... We are looking further into the Myanmar government's diversion of aid." He did not say if the U.S. is pushing for a return of the lost $10 million, but he said clearly that the U.S. supports the call, in which he included the UN, that Myanmar's currency exchange rules and regulations that led to the loss be "eliminated."

Inner City Press also asked the United Kingdom's Deputy Permanent Representative Karen Pierce about the 20 to 25% loss of aid funds in Myanmar, since as she said the UK has sent $92 million there. "It is obviously very concerning," she said. "We're supporting the UN efforts to get this resolved, rather than working through it bilaterally ourselves. We're in close touch with John Holmes' people about this." Video here, from Minute 4:12.

The third of what some currently call the Security Council's three musketeers, France, despite having loudly threatened to invade Myanmar with food aid after the March cyclone, has not answered questions on the subject of 20 to 25% losses of aid funds. On July 28, while France's Deputy Permanent Representative Jean-Pierre Lacroix was taking questions at the Council stakeout microphone, Inner City Press sought to ask a question, but Amb. Lacroix walked away from the microphone. Video here, from Minute 5:03.

Amb. Lacroix's spokesperson, also the French Mission's deputy, it being August, stood in the way when Inner City Press sought to follow and ask the question. Inner City Press emailed her questions about the issue, stating that they were "on deadline," and sent a text message summary of the questions. By mid-afternoon the next day, there was no response from the French mission to the factual questions sent. When one it received, it will be reported on this site.

Footnote: UN Secretary-General Ban Ki-moon, the day after his Humanitarian Coodinator John Holmes admitted the 20 to 25% losses of aid funds on government-required currency exchanges in Myanmar, is publicizing another contribution to Myanmar. At Tuesday's noon briefing, his spokesperson would have been asked what precautions Ban is taking that his contribution is not diverted in part to the unqualified use of the Myanmar government. But no questions were taken at Tuesday's noon briefing -- there was a farewell press conference by outgoing UN Peacekeeping chief Jean-Marie Guehenno, which will be reported elsewhere on this site. Into Ban Ki-moon's actions on this issue, we will continue to inquire and report.

Watch this site. And this --

UN Admits $10 M Exchange Loss in Myanmar, Says Will Disclose Others Countries and Losses

Byline: Matthew Russell Lee of Inner City Press at the UN: News Analysis
FEC/Burma Shave series - 1st (June 26), 2nd, 3rd, 4th, last

UNITED NATIONS, July 28 -- At least $10 million in UN aid money raised by the UN after Cyclone Nargis hit has been lost in government-dictated currency exchanges, UN humanitarian chief John Holmes admitted on July 28. He stated that at the time he launched a second appeal for aid on July 10, "we here" in New York had not been aware of the seriousness or extent of the losses. But an internal UN document obtained by Inner City Press shows that the UN knew as early at June 26 of a "very serious 20% loss on foreign exchange... changing US Dollars to Foreign Exchange Certificates [FEC] then to local currency, Kyats." This appears in the internal "Notes for the Record" of an "Emergency Task Force Teleconference" call involving top officials in Yangon, Bangkok and Rome, available here.

Inner City Press on June 26, after being read the minutes by a source, wrote an article and asked questions about it, including to the UN Development Program. On July 9, before the appeal was launched, Inner City Press asked Holmes about it, on camera in front of the Security Council, video here, at end.

Holmes on July 28 put the loss at $10 million and called it unacceptable. Inner City Press asked what percentage loss through government-dictated currency exchange he and the UN would find acceptable. "I think we've had this discussion before," Holmes said. "It's very difficult to set the bar." Video here, from Minute 31:58. "We are arguably a bit slow to recognize, since the spread widened in June." But prior to June, and prior to the cyclone, the UN was losing 15% to currency exchange. Was that acceptable?

Given the UN's losses in Myanmar only came out due to questions being pursued about these leaked minutes, Inner City Press asked Holmes if he would commit to now releasing a list of those countries in which the UN suffers currency exchange losses of greater than five percent, and a plan to address the losses and / or appropriately disclose them to donors. "I don't see any reason why not," Holmes said. "There's no reason not to be transparent." Video here, from Minute 55:57. He added, "we had not been trying to conceal it."

But why then not have disclosed it in the July 10 appeal for several hundred million more dollars for Myanmar? Notably, if a publicly-traded company was even negligent in this way, there would be fines and worse. This now becomes a test-case not only for Holmes but also for Ban Ki-moon. The problems of currency exchange rip-offs by governments may have pre-existed their tenures. But now that it is belatedly known, if only through questions being pursued about leaked minutes, it remains to be seen if they and the UN move to clean out this heretofore undisclosed leakage of aid money.

Inner City Press first raised the issue on June 26 itself, in print and in questions to the UN Development Program, which handles UN finances in the field. UNDP Spokesman Stephane Dujarric provided a written response that
"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)."
After that, in response to Inner City Press' request for how much money UNDP and the UN have converted into FEC, UNDP has provided no information. Mr. Dujarric left a message that he was going on leave but that his colleagues would provide the information. This never took place. On July 25, Inner City Press asked UNDP Administrator Kemal Dervis after he launched an appeal for more most-emergency funds if he would answer questions about UNDP's Myanmar operations, there in the UN's conference room 4 or in a press conference. "You know I don't answer questions like this," he said, adding that any press conference would have to wait until "after the high summer season." There are indications that UNDP, even prior to Cyclone Nargis, provided larger cuts to Myanmar's Than Shwe government than the 25% now admitted to by the UN's humanitarian operations.

The amount of money the UN system has turned over to the Than Shwe government goes back far before the cyclone. At UN Headquarters on July 16, Inner City Press posed questions to Eric Laroche, now at the World Health Organization, but previously the UN's humanitarian coordinator in Somalia, and further back with UNICEF in Myanmar. When Inner City Press asked if Laroche thought it legitimate to accept a low exchange rate from a government in order to have access, he stayed silent for a full eight seconds before saying, "It's a very difficult question, and a more difficult answer. It has to do with principles." He said that when he was in the country with UNICEF, auditors were told about the exchange rate arrangements with the government. He and his spokesman committed to explain how WHO exchanges money in Myanmar, but to date have not done so. After a telephone call on the afternoon of July 28, their response is expected immanently, and will be covered as this series progresses.

Watch this site. And this --

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

By Louis Charbonneau and Megan Davies

UNITED NATIONS (Swissinfo-Reuters) 28 Jul'08 - The top U.N. humanitarian affairs official said on Monday the world body had suffered "significant" losses while delivering cyclone aid to Myanmar due to a distorted official exchange rate.

Earlier this month, the United Nations issued an appeal for more than $300 million (150.5 million pounds) in extra aid to cope with the effects of Cyclone Nargis that struck the Irrawaddy Delta region in early May, leaving around 140,000 people dead or missing.

Under-Secretary-General for Humanitarian Affairs John Holmes told reporters the United Nations has lost about $10 million in currency exchanges so far as it pays for a variety of 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 the loss was "significant" and that the spread between the market and official rates widened suddenly in June.

"It's not acceptable," he added.

The loss comes from a complicated system whereby the United Nations uses foreign exchange certificates with a nominal value of $1 each that are then exchanged for the local currency, the kyat, at a rate set by Myanmar's military government.

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

Holmes said the United Nations did not include the issue of the exchange rate losses in the appeal documents because U.N. officials "were not aware of the extent of the loss."

Holmes, who spoke at the United Nations after returning from a trip to the Irrawaddy Delta, said relief efforts were improving, with almost everyone affected by the cyclone now having been reached with items like food or 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 themselves the extent of the problems.

Withdrawing aid would only hurt the people of the Delta who needed help, he said.


U.S. Ambassador Zalmay Khalilzad said he was looking into the issue.

"Of course we are against any waste of resources that taxpayers around the world and member states provide to meet the needs of people around the world," he said on the sidelines of a Security Council meeting on unrelated issues.

Inner City Press reported last week the junta changed the official exchange rate since the cyclone so that the estimated loss of the United Nations had risen to 25 percent from 15 percent on the spread between the official and market rates.

It reported on Monday that an internal memorandum showed the United Nations was aware of the problem in June.

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

"I'm not saying that there isn't some benefit to the government in the spread somewhere -- the likelihood is that there is," Holmes said.

(Editing by John O'Callaghan)

Kanbawza Bank denies impending closure

By Nem Davies

29 July 2008, New Delhi (Mizzima)— Burma's privately owned Kanbawza Bank on Tuesday denied rumours that the bank is closing down in the wake of panic withdrawals.

An official at the Bank's head office in Kamayut Township in Rangoon told Mizzima on Tuesday that the bank is functioning normally and that it has no plans to close down.

"Whatever you heard are rumours. Everything is fine here including the President and the Vice President. There has been no interrogation either and we have no plans to close down," the official said.

An official at the Kanbawza's branch office in Kamayut Township also said while there had been a come down in the amount of deposits to the bank about two weeks ago, the situation has normalised and customers can now deposit as much as they like.

The official's clarification comes at a time when rumours are doing the rounds in Rangoon that the Managing Director Zaw Win Naing, an adopted son of Kanbawza Bank's owner Aung Ko Win, has been arrested by authorities and is currently being interrogated.

"About two weeks ago, we limited the amount of deposit to three million Kyats according to the central bank's order but now things are normal and customers are free to deposit or withdraw as much as they want to. The transactions are normal in the bank," the official at the Kamayut branch office said.

A Rangoon based businesswoman, who regularly has financial transactions with the Kanbawza Bank in Bayintnaung Township told Mizzima that though sometimes there are problems in transferring money to other parts of the country, so far there has been no major problem with the bank.

"For example sometimes when we transfer about five million kyat to Taung Gyi branch and if the branch does not have that much money they refuse to accept it. But if the amount is lesser and if the branch has the money usually there is no problem," Thida, the businesswoman told Mizzima.

Though she denied rumors of the bank's imminent closure, she said banks in Burma have limited capacity and cannot be totally trusted.

"I go to the bank almost every day and it is not closed yet. But in the long run we cannot trust any bank in Burma. There is no bank that can be trusted," she said, saying that there is no proper financial policy that can guarantee the security of banks.

Meanwhile, an editor at a Rangoon-based Weekly Journal said he had heard of the rumors about the arrest of Kanbawza's Managing Director and the interrogation. But he failed to confirm the information.

Junta's attempt to shut down Mizzima and DVB

Mizzima website under attack
29 July 2008

New Delhi (Mizzima News)— The Burmese website of Mizzima News, a Burmese Independent News Agency based in New Delhi, has come under persistent and severe Distributed Denial of Services attack causing the website to become inaccessible since Sunday.

The DDoS attacks flood the communication channel of Mizzima's servers with data up to the extent that the site can no longer handle.

According the Mizzima's webmaster, a DDoS attack is an attempt to disable a website, by overwhelming the site with information requests so that it cannot respond to regular traffic.

Mizzima website received more than five Gigabytes of data in less than 15 minutes, many times more than it usually receive, said the webmaster adding that the enormous amount of information received is more than the site can handle.

While, technically, the origin of the attack is impossible to trace, Mizzima's friend, a technocrat who monitors the site, said the attack is clearly targeted.

He said, while this is not the first attempt, there had been plenty of attempts t intrusion from servers in China, Russia and Hungary. At least 30 servers are involved in the case of the attack on the Mizzima Burmese website, he added.

Mizzima News Agency, run by Burmese journalists, is an independent Burmese multi-media group focusing on Burma and related news and issues, and maintains four different websites –,,,

Besides updated daily news both in English and Burmese, Mizzima also Podcast video stories on its site, which are frequently picked up by other news organizations.

Both Mizzima's Burmese and English site normally attract an average of 10,000 to 15,000 unique visitors per day but the readership suddenly jumped to hundred thousands during the September protests in Burma last year and in the month of May and June 2008, following the killer Cyclone Nargis' hitting the country.

While it is difficult to determine who is behind the recent attack, with intrusion attempts coming from servers in China, Russia, Hungary, the Burmese military junta, which has several of its technocrats and engineers studying in these countries, could be behind the attack.

Burma's military rulers have banned Mizzima's sites in Burma and bypassing the government's internet filtering systems with the use of proxy and browsing the Mizzima's sites, if caught, could lead to users paying a heavy penalty.

Mizzima, however, is not the only Burmese news organization to have recently suffered such attacks. The Oslo based Democratic Voice of Burma's website also came under similar attack since July 20.

In a statement released on Friday, the DVB deputy executive director, Khin Maung Win said the attacker is trying to shut-down the DVB's site from the internet as the attack has been getting more severe and persistent over the last four days.

"And we are still under attack," said Khin Maung Win.

"Technically, it is of course difficult to say who is behind the attack. But we can easily say that Burmese government is behind this attack," Khin Maung Win said.

Soe Soe, Myanmar: "Life is totally bleak"

OUTKWIN, 29 July 2008 (Relief-web-IRIN) - Almost three months since Cyclone Nargis struck southern Myanmar - leaving nearly 140,000 dead or missing - many storm-affected people lack basic necessities of food and shelter.

In the village of Outkwin, Pyapon Township, deep inside Myanmar's badly affected Ayeyarwady Delta, one such survivor, Soe Soe, 28, told IRIN about the hardship she faces, as well as the birth of her son, named after the storm.

"That night I went into labour in a small bamboo, thatched house on the banks of the Pyapon River to deliver my first child. But as the wind roared, my husband and I struggled outside only to see our home destroyed right before our very eyes.

"As the rain poured down and the water began to reach my chest, my husband lifted me on to some floating debris. As I lay there, the labour pains became so painful I began to scream. I needed help.

"Finally, among the broken pieces of wood I gave birth around six in the morning, but almost died in the process. I had lost so much blood. Both my husband and the woman who had helped me deliver thought I was gone. But a single hope kept me hanging on - that my son needed me.

"After the cyclone, I thought the worst was over. But finally I understood that the worst of our hardship - bringing our lives back to where they were - had only just begun.

"We could not rebuild our home. We have neither money to buy materials, nor assistance to build. If my neighbour hadn't had the compassion to share her makeshift hut with us, we would have been left to live in a displaced persons camp. My neighbour collected material from what was left of her own house to build this place. Now, my son Nargis and I have been living here with four other families. My husband, a fisherman, has been away at sea for two months and has yet to return.

"I hope he comes back soon. I have so many debts to pay back and my son needs medical treatment.

"For medical fees, I had to borrow some money from a local money-lender at a high interest rate - 30 percent per month.

"But there are no choices here. You do what you need to do to survive. Not just for my son's medical bills, but also food. Occasionally, the local authorities bring rice to us, but it's never enough. I still need to buy some rice, as well as vegetables and other things for cooking.

"Of course, I know I shouldn't be borrowing money at such high interest rates, but I don't know what else to do. I feel I should thank her for allowing me to borrow the money given I have nothing to offer her in collateral.

"My husband earns just $30 a month and our debts far exceed that now.

"Sometimes, I wonder what the future holds. Right now life is totally bleak."


A selection of IRIN reports are posted on ReliefWeb. Find more IRIN news and analysis at

US clamps down on firms linked to Myanmar


WASHINGTON (AP) - The Bush administration is imposing financial sanctions on companies suspected of being owned or controlled by the military-run government of Myanmar.

The Treasury Department's action Tuesday covers 10 companies including two big conglomerates _ the Union of Myanmar Economic Holdings Limited and the Myanmar Economic Corp. _ that each has extensive holdings in gem mining, banking and construction. Those sectors are keenly important to the government, the department said. All the companies are located in Myanmar.

Any bank accounts or other financial assets found in the United States that belong to those named Tuesday must be frozen. Americans also are prohibited from doing business with them.

It marked the latest administration move to financially punish the repressive junta in Myanmar, also known as Burma, and its backers for a crackdown on pro-democracy protesters.

The United States last week blasted the Myanmar junta's oft-repeated promise to democratize as a "kind of mockery." The U.S. also renewed criticism of Myanmar for initially refusing international help after Cyclone Nargis in May, when several countries including the United States were sitting offshore with ships loaded with aid.

"The regime's refusal to protect and allow relief to reach the Burmese people as Cyclone Nargis devastated their country is but another example of the regime's heartless neglect of its people," said Adam Szubin, director of Treasury's Office of Foreign Assets Control, which enforces the sanctions program.

Three mining companies and an export-import firm also were targeted Tuesday. Myanmar Ruby Enterprise Co. Ltd., Myanmar Imperial Jade Co., Myawaddy Bank, and Myawaddy Trading Ltd. also were covered by the department's order.