Greenpeace International’s 3.8 million-euro ($5.1 million) loss on a sour foreign-exchange deal last year was not the first time the environmental group has been caught on the wrong side of fluctuations in the currency.
As far back as 2008 the Amsterdam-based nonprofit organization said it was reviewing treasury procedures to reduce “exposure against such foreign-exchange fluctuations.” The latest loss has prompted another review, with new rules approved on authorizing transactions and ensuring similar financial instruments cannot be used without the board agreeing, according to Mike Townsley, communications director at Greenpeace International.
“We’ve completely rewritten our authorization policy to make it absolutely explicit who can authorize which transaction and who can sign off invoices,” Townsley said in a telephone interview from Mexico City today. “There have been two failures. One, an individual acting outside their authority, and the second is that the existing systems were not adequate.”
Like companies that sell goods overseas and report income in euros such as Puma SE, Europe’s second-largest sporting-goods maker, which said last month currency volatility would harm profit margins, Greenpeace was hurt by the euro’s 8.2 percent gain last year versus nine major peers. It said an employee in its finance unit bet the euro wouldn’t strengthen and that the person had since been relieved of their position. An independent audit would be conducted, the organization said.
The euro was the best performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes last year. The dollar rose 3.4 percent, while the yen lost 17 percent. The euro has dropped 1.1 percent since June 5, when the European Central Bank cut interest rates, the indexes show.
Townsley declined to name the employee involved or the institution that arranged the transaction, which he described as a futures contract linked to the euro. The fault was at Greenpeace rather than with the company that arranged the transaction, he said.
After Greenpeace recorded a loss on currency transactions in 2008, it announced a review of its procedures. That year, the euro advanced against the majority of its major counterparts, reducing the value of a Greenpeace euro-denominated loan to another company while cutting the value of cash deposits held in other currencies.
Greenpeace hasn’t always been on the wrong side of bets in the $5.3 trillion-a-day global foreign-exchange market. It made profits on currency transactions in each of the three years through 2011, according to published annual reports.
Last year’s loss contributed to a 2013 deficit of 6.8 million euros, Greenpeace said in a statement posted on its website on June 15. The organization, which operates in more than 40 countries, said it had income of 72.9 million euros in 2013 out of a global budget of about 300 million euros.
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