The Corrupt UN, Part LXXVIII

Claudia Rosett first broke the "oil-for-palaces" story about UN corruption, and lately has turned the microscope on the UN and Burma, reporting this on July 27th:

While Barack Obama has been touring 8 countries in 9 days, refining a foreign policy based on the spontaneous coming-together of the world (or was it the “planet?”), a sordid tale has been oozing out of Burma — with almost no attention from the American mainstream media. In this case, the change-seekers are the members of Burma’s brutally repressive junta, led by Than Shwe. And the change they’ve been seeking — and getting — is hard-cash foreign exchange, skimmed out of the massive United Nations relief operation for victims of the cyclone that hit Burma in May.

How has Burma’s junta been managing this racket? In brief, by requiring the UN to change hard-currency into Burmese currency, the kyat, at lousy, below-market rates — with the Burmese regime pocketing as much as 25% of every dollar exchanged.

This tale only came to light thanks to the intrepid efforts of the small but feisty Inner-City Press, whose UN-based reporter, Matthew Russell Lee, in a series of articles over the past few weeks, has dubbed the scandal “Burma Shave.” Back in June, Lee began asking the unsexy but hugely important question of what exchange rate the UN was getting from Burmese authorities for relief funds spent in local currency inside Burma. Following the usual pattern of UN scandal, the UN’s first response was no answer at all, except that someone would look into it. A fortnight later, having pressed the question again, Lee was assured there were no “dodgy deals.” He kept digging. Last week the UN finally admitted to going along with a Burmese government dodge involving the UN purchase at inflated rates of “Foreign Exchange Certificates” which the Burmese government requires in order to buy Burmese kyat.

So, while the UN has been collecting hundreds of millions in emergency funding for Burma’s cyclone victims, how much of that money has the UN been forking over to the Burmese junta in hard cash?

Rosett added on July 29th:

[W]hile the U.S. Treasury is trying to tighten sanctions on Burma’s thug government, the United Nations has been busy funneling millions of dollars to the Burmese regime — thanks to a classic artificial foreign-exchange rate dodge, which the UN finally acknowledged in public only after weeks of questioning by Inner-City Press.

This latest in the long list of UN gifts to dictators came about as part of the relief mission launched in May to help Burmese victims of Cyclone Nargis. In a press conference yesterday at the UN’s New York headquarters, the UN’s under-secretary-general for humanitarian affairs, John Holmes, appeared not to understand the niceties of how the Burmese exchange-rate fiddle actually works. Nor, as Holmes told it, had other UN officials been paying much attention; they “were not aware of the extent of the loss.” Holmes’s estimate is that “probably less than $10 million so far” has flowed into the wide abyss between the market rate of Burma’s currency (the kyat), and the official rate, set by the Burmese junta, which is what the UN has been buying into.

The actual amount of money thus disappeared in Burma is still desperately unclear (”the losses are significant, but not absolutely gigantic,” was another of Holmes’s locutions yesterday on the subject). This is the UN, where officials have no hesitation in spelling out to the last decimal point their multi-year plans for the GNP of every developing country on the planet, or issuing an appeal for $482 million in emergency relief for Burma, or lamenting shortfalls in their elaborately calculated funding targets. But when it comes to accounting for where exactly the money goes, the UN is suddenly a place of missed messages, ignorance and confusion. They didn’t notice, they hadn’t realized, they never knew, they were not aware … this is the endless refrain, in Oil-for-Food, in Cash-for-Kim, and now in Burma Shave…