Burmese junta pockets millions in foreign aid currency scam

Burma’s generals are reportedly pocketing tens of millions of dollars of foreign aid intended for cyclone victims by manipulating the rate at which the money is exchanged into local currency, writes Edward Loxton for The First Post.

The Burmese junta insists that US dollars and other hard currency entering the country must be converted first of all into so-called Foreign Exchange Certificates (FECs) and then into the Burmese currency, kyat.

This month the exchange rate for FECs dropped to 880 kyat to the dollar, while one dollar fetches 1,180 kyat at unofficial exchanges in Rangoon and other Burmese cities. The discrepancy results in a surplus of almost 30 per cent in the regime’s favour in its cyclone relief budget. "Where does that money go?" asked a Burmese exile researcher. "I’ll give you three guesses."

More than $200 million has been contributed since May by individual governments, organisations, corporations and individuals towards relief aid for the hundreds of thousands of survivors of the deadly Cyclone Nargis. Among individual donors was Britain’s Queen Elizabeth, who was reported to have made a "significant" contribution. Britain’s Disaster Emergency Committee alone raised more than $20 million.

At a donors’ conference in Rangoon in late May, the Burmese regime asked for $11 billion to rebuild the devastated Irrawaddy delta region and its shattered economy. Representatives of several Western governments and Burma’s partners within the Association of Southeast Asian Nations baulked at the idea of committing themselves to pledging large amounts of money without guarantees that it would be used responsibly.

Nevertheless, a UN fund is now nearing the $100 million mark, and contributions pledged at the Rangoon conference are flowing spasmodically into Burma.

The UN conceded in an internal memorandum that the Burmese regime appeared to be profiting by at least 20 per cent from its currency exchange regulations, according to the New York-based watchdog organization Inner City Press. "The UN knows it’s a scam but can’t, or won’t, do anything about it," said a Burmese researcher.

FIRST POSTED JULY 25, 2008