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Somalis Face a Snag in Lifelines From Abroad

August 3, 2013 by

In a country where 40 percent of the population depends on remittances from relatives abroad, however, these transactions are a lifeline. And because Somalia has little in the way of financial infrastructure, the money transfer companies that make them possible play a central role in keeping the financial ties to the diaspora open, a few hundred dollars at a time.

But in an echo of politically charged fights over aid that have vexed Somalia before, the same money transfer services that help keep children in school and elder relatives off the streets also can be used to send money to help finance dangerous groups like the Shabab, the feared Islamist militants who once controlled much of the country.

Humanitarian groups, politicians and Somalis themselves are now sounding the alarm over plans by the British bank Barclays to suspend the accounts of a number of money transfer companies used to send money to developing countries — rather than risk a run-in with regulators over potentially abetting the financing of terrorists or money laundering.

“Millions of people depend on the remittances from outside,” said Shukri Ismail, one of the founders of Candlelight, a nonprofit in the northern region of Somaliland. “If those remittances stop, it will be literally chaos.”

The looming cutoff, expected to occur next Saturday, comes at a time when more and more Somalis have returned from abroad to invest in their home country, build new businesses and jump-start the nation’s economy after years of chaos. In June, the International Monetary Fund established relations with Somalia for the first time in more than two decades.

Last week in Mogadishu, the capital, Somalis lined up at a branch of Dahabshiil, the largest money transfer business in Somalia and one of those facing a shutdown by Barclays. It was busier than usual for the Ramadan holiday.

A cutoff would be “a disaster and result in a new phase of hunger and famine,” said Abdinasir Jamal, who relies on money from his sister abroad to survive.

Activists, academics and politicians in Somalia and abroad have asked the British government to intercede with Barclays. In June, the Somali president, Hassan Sheik Mohamud, appealed directly to the bank in a letter to keep the money transfer businesses’ accounts open.

Mo Farah, the British Olympic gold medalist born in Somalia, has lent his celebrity to the cause, asking for a 12-month extension before the cutoff. “Everyone following the issue understands that Barclays has a bank to run, but this decision could mean life or death to millions of Somalis,” Mr. Farah said in a statement.

The move by Barclays would affect not just Somalia but also countries like Bangladesh, Nigeria and Haiti. But Somalia is uniquely exposed because decades of violence and chaos have left it without a functioning banking system. If the money transfer businesses are shut down, experts say, the transfers will not go through other official channels but will be driven underground instead, making it harder to track money going to militant groups.

“The alternative is bulk cash smuggling, carrying suitcases of cash across the border from other places,” said Jonathan Schanzer, the vice president for research at the Foundation for Defense of Democracies and a former terrorism finance analyst at the United States Treasury.

“If you’re trying to assist people on the ground in Somalia, you have to work with the same remittance houses that are committing violations and assisting groups like Al Shabab,” Mr. Schanzer said.

When the militant group’s clandestine division needed money to pay for a planned wave of assassinations of government officials late last year, the Shabab turned to supporters in the Somali community in Qatar for donations. Shabab operatives used Dahabshiil to send the funds back to Somalia, according to a United Nations report.

Many major American banks have already stopped working with Somali money transfer businesses. In May, a federal court in Minnesota sentenced two women to prison for sending money to the Shabab.

The problem of keeping resources out of the Shabab’s hands has bedeviled Somalia and its donors before. In recent years the United States, concerned that some Somali contractors working for the United Nations were diverting food and money to the Shabab, suspended millions of dollars of food aid, prompting an outcry from United Nations officials who said the decision cut rations to starving people.

“Leakage to Al Shabab is the cost of doing business in Somalia,” said a diplomat involved in Somalia issues.

Anne-Marie Schryer-Roy, a spokeswoman for Adeso, a humanitarian and development organization active in Somalia that has used money transfer businesses, including Dahabshiil, to distribute money in the country, said, “There’s no equivalent to Citibank that could receive those funds and distribute them.”

Western Union has only one office in Somalia — in the relatively stable Somaliland. Elsewhere, Somalis turn to companies like Dahabshiil, which operates in 286 locations around the country.

Abdirashid Duale, Dahabshiil’s chief executive, said his company had worked with Barclays for 15 years without incident. “We’re asking them to be fair and transparent,” he said. “We have never committed any violations or assisted any extremist groups.”

Mohammed Ibrahim contributed reporting from Mogadishu, Somalia.

Article source: http://www.nytimes.com/2013/08/04/world/africa/somalis-face-snag-in-lifeline-from-relatives-working-abroad.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

China and Japan Strengthen Finance Ties

December 26, 2011 by Leave a Comment

BEIJING (AP) — Chinese and Japanese leaders have unveiled initiatives to tighten financial links between East Asia’s economic giants and sometime rivals — measures that could expand use of China’s tightly controlled currency abroad.

During a visit to Beijing by Japanese Prime Minister Yoshihiko Noda, the two governments said in a surprise announcement Sunday they will encourage use of their own currencies in bilateral trade, which now is conducted mostly in U.S. dollars.

They also agreed to support the sale of bonds denominated in China’s yuan by Japanese companies in Tokyo and foreign markets and by the state-owned Japan Bank of International Cooperation in mainland China’s markets, which are closed to most foreign investors.

The pledges were a striking step for China and Japan, which are the world’s second- and third-largest economies and are bound by billions of dollars in trade but whose political relations often are strained over conflicting territorial claims and other disputes.

“To support the growing economic and financial ties between China and Japan, the leaders of China and Japan have agreed to enhance mutual cooperation in financial markets of both countries and encourage financial transactions between the two countries,” the governments said in identically worded statements.

They said Japan’s government also planned to purchase Chinese government bonds, and an application process for official approval of that was under way.

The governments gave no timetable for practical steps to put the pledges into action or the size of possible bond offerings. Commercial banks still have to create yuan-denominated letters of credit and other tools before traders in Japan can use the currency.

The moves might reduce the dominance of the U.S. dollar in East Asia, the world’s fastest-growing region. The Kyodo News agency cited a Japanese official who told reporters some 60 percent of trade between Japan and China is now settled in dollars, which requires companies to convert money between yen, dollars and yuan, adding to their costs.

Beijing controls the yuan‘s exchange rate and the flow of money into and out of China’s booming economy. But the government has begun allowing limited use of yuan for trade. It said this month that some companies that obtain Chinese currency abroad will be allowed to invest it in mainland financial markets.

Most trade in yuan is conducted through Hong Kong, where Beijing also has created a market for yuan-denominated bonds that McDonald’s Corp. and some other foreign companies have used to raise money to invest in their mainland operations.

The easing of controls on bond sales could help to reduce costs for Japanese companies that need to raise money to invest in their China operations.

The communist government keeps China’s bond and other financial markets sealed off from global financial flows. That helped the country avoid the turmoil of the 2008 global financial crisis but has slowed the development of markets that Chinese leaders want to support economic development.

The latest pledges also might help to promote moves to allow the yuan to trade more freely on currency markets.

The United States and other trading partners complain that Beijing’s currency controls keep the yuan undervalued, giving China’s exporters an unfair price advantage and hurting foreign competitors at a time when the global economy is struggling.

Article source: http://feeds.nytimes.com/click.phdo?i=90f3f8449b290ba7d890539265c9e780

Filed Under: Economy News Tagged With: , ,

Spine Experts Repudiate Medtronic Studies

June 29, 2011 by Leave a Comment

The repudiation, appearing in a full issue of The Spine Journal devoted to the topic, represents a watershed in the long-running debate over conflicts of interest for the sponsorship of scientific studies by makers of drugs and medical devices. It is extremely rare for researchers to publicly chastise colleagues, and editors of leading medical journals said they could not recall an instance in which a publication had dedicated an entire issue for such a singular purpose.

Medtronic, the nation’s biggest maker of medical devices, has been facing intensifying scrutiny over its promotion of Infuse, the bone growth product at the center of the controversy. The bioengineered material is used primarily in spinal fusions, a procedure in which spinal vertebrae are joined to reduce back pain.

Infuse is used in about a quarter of the estimated 432,000 spinal fusions performed in this country each year. The articles published on Tuesday charge that researchers with financial ties to Medtronic overstated Infuse’s benefits and vastly understated its risks by claiming there were none.

“It harms patients to have biased and corrupted research published,” five doctors wrote in a joint editorial that accompanied the reports. “It harms patients to have unaccountable special interests permeate medical research.”

“The spine care field is currently at a precarious intersection of professionalism, morality and public safety,” Dr. Christopher M. Bono, editor of the special edition, said in a statement. “As physicians and journal editors, we felt an obligation to present a thorough examination of this controversial issue.”

It is too early to predict how the articles will affect the financial fortunes of Medtronic, which earned an estimated $900 million from Infuse in its most recent fiscal year. But the potential consequences seem significant, and the company’s new chief executive, Omar Ishrak, decided to issue a statement in response.

Mr. Ishrak noted that the articles did not challenge the data Medtronic had submitted to the Food and Drug Administration that led to Infuse’s approval in 2002 for use in one type of spinal fusion. Separately, other company officials said Medtronic planned to retain independent experts to examine the issues raised by the publication.

“Integrity and patient safety are my highest priorities,” Mr. Ishrak said.

Medtronic officials acknowledged in interviews that it was common for them to review studies of its products before publication. However, they sought to distance themselves from the content of the published reports, and said outside researchers, not the company, had determined the significance of data and how it should be presented. At the heart of the issue are potential side effects related to Infuse’s use that emerged during patient studies conducted about a decade ago by outside researchers with significant financial ties to Medtronic.

Medtronic, as required, reported that data to the F.D.A., and the agency considered the rate of those complications significant enough in some cases to require the company to list them on Infuse’s label. But in reporting on such studies in 13 medical journal articles published during the last decade, researchers whose studies were paid for by Medtronic maintained that Infuse’s use was not tied to any complications.

In one article released Tuesday, experts said those reports played down Infuse’s risks and slanted them to favor Infuse’s performance over a bone graft, the material traditionally used in a fusion. Those experts estimated that the incidence of adverse events in connection with Infuse’s use ranged from 10 to 50 percent, depending on how it was used.

Those side effects, they said, include male sterility, infection, bone loss and unwanted bone growth. A stronger version of Infuse, called Amplify, was recently rejected for approval by the F.D.A. because of concerns about possible cancer risks.

In 2008, the agency warned the public that it had received reports of life-threatening injuries associated with the use of Infuse in the cervical portion of the spine, a use that was not approved by the agency.

Dr. Eugene J. Carragee, editor of The Spine Journal, said he believed that Infuse was a valuable product for patients who were not candidates for a bone graft. But he added that the publication had undertaken the review because he and other experts hoped to cleanse the scientific record.

Article source: http://feeds.nytimes.com/click.phdo?i=58c3c7a0187cdebb7fabb4a6221bc620

Filed Under: Business News Tagged With: , ,