B-173927.OM, MAY 7, 1981

B-173927.OM, MAY 7, 1981

SUBJECT: CARLOS E. RIVERA - REIMBURSEMENT FOR LOSS DUE TO DEVALUATION IN FOREIGN CURRENCY. B-198772-O.M.

ASSOCIATE DIRECTOR, AFMD - CLAIMS GROUP (RM. 5858):

THE SUBJECT FILE Z-2799607 IS RETURNED HEREWITH. THE CLAIM FOR REIMBURSEMENT OF LOSSES DUE TO DEVALUATION OF FOREIGN CURRENCY IS FOR ALLOWANCE ON THE BASIS THAT SUCH LOSS MAY BE CONSIDERED AS PART OF THE EXPENSE NECESSARILY INCURRED IN CONNECTION WITH THE TRANSACTION OF OFFICIAL BUSINESS.

THE RECORD DISCLOSES THAT ON AUGUST 30, 1976, MR. RIVERA, AN EMPLOYEE OF THE UNITED STATES DEPARTMENT OF JUSTICE, DRUG ENFORCEMENT ADMINISTRATION, WAS GIVEN A TRAVEL ADVANCE OF 37,470 PESOS, THE EQUIVALENT OF U. S. $3,000 AT THE THEN CURRENT EXCHANGE RATE (12.49 PESOS PER U. S. $1), BY THE AMERICAN EMBASSY IN MEXICO. MR. RIVERA HAD TRAVELED FROM PUERTO RICO TO MEXICO FOR 90 DAYS TEMPORARY DUTY. ON SEPTEMBER 1, 1976, THE GOVERNMENT OF MEXICO DEVALUED ITS CURRENCY, RESULTING IN A SUBSTANTIALLY APPRECIATED EXCHANGE RATE OF 20.40 PESOS PER U. S. $1. THE DEVALUATION CAUSED MR. RIVERA TO SUFFER AN EXCHANGE LOSS OF $1,088.69, FOR THE PERIOD FROM AUGUST 31, 1976, TO OCTOBER 26, 1976.

AS A GENERAL RULE, THE RISK OF INCURRING AN EXCHANGE LOSS WHILE ON TEMPORARY DUTY IN A FOREIGN COUNTRY LIES WITH THE EMPLOYEE. 23 COMP.GEN. 212, 216 (1943). THE FEDERAL TRAVEL REGULATIONS (FTR) (FPMR 101-7, MAY 1973), AT PARA. 1-11.5E(2), REQUIRE THAT, FOR REPORTING OF TRAVEL EXPENSES, EXPENDITURES IN FOREIGN CURRENCY MUST BE CONVERTED INTO UNITED STATES DOLLARS AT THE RATE WHICH THE FOREIGN CURRENCY WAS OBTAINED. HOWEVER, THIS OFFICE HAS ALLOWED EMPLOYEE EXCHANGE LOSSES ON FOREIGN CURRENCY WHEN NECESSARILY INCURRED FOR OFFICIAL PURPOSES. B-173927-O.M., DECEMBER 8, 1971, AN EXCHANGE LOSS ON FOREIGN CURRENCY PAID AS A SECURITY DEPOSIT TO AN AUTO RENTAL AGENCY WAS PERMITTED ON THE BASIS THAT SUCH LOSS WAS A NECESSARY EXPENSE OF THE RENTAL AGREEMENT. IN JULIAN B. HAMMOND, B-185286, AUGUST 26, 1976, AN EXCHANGE LOSS WAS INCURRED AS A RESULT OF A REQUIREMENT OF THE SOVIET GOVERNMENT TO PAY FOR HOTEL ROOMS IN ADVANCE IN HARD CURRENCY. THE LOSS WAS ALLOWED AS A MISCELLANEOUS EXPENSE NECESSARILY INCURRED FOR OFFICIAL PURPOSES UNDER THE PROVISIONS OF PARA. 1-9.1D OF THE FTR.

IN THE INSTANT CASE, MR. RIVERA HAD NO ALTERNATIVE TO ACCEPTANCE OF THE ENTIRE ADVANCE IN LOCAL CURRENCY. THE AMERICAN EMBASSY IN MEXICO WAS REQUIRED TO DISTRIBUTE THE TRAVEL ADVANCE TO MR. RIVERA IN PESOS BY REGULATIONS CONTAINED IN THE FOREIGN AFFAIRS MANUAL, 4 FAM SEC. 333.2 3C (JUNE 30, 1976), WHICH PROVIDES THAT A TRAVEL ADVANCE FOR HOST COUNTRY TRAVEL IS PAID IN LOCAL CURRENCY ONLY. THUS, FTR PARA. 1 11.5E(2), WHICH REQUIRES THAT FOREIGN EXPENDITURES BE CONVERTED TO U. S. DOLLARS AT THE RATE THE FOREIGN MONEY "WAS OBTAINED", ASSUMES THAT THE TRAVELER RECEIVED, OR HAD THE OPTION TO RECEIVE, THE ADVANCE IN U. S. CURRENCY. WHERE, AS HERE, THE EMPLOYEE IS REQUIRED TO ACCEPT A TRAVEL ADVANCE IN FOREIGN CURRENCY AND THAT CURRENCY IS IMMEDIATELY DEVALUED, THE RESULTING LOSS SHOULD BE BORNE BY THE GOVERNMENT AS A MISCELLANEOUS EXPENDITURE INCURRED IN CONNECTION WITH THE TRANSACTION OF OFFICIAL BUSINESS UNDER THE PROVISIONS OF FTR PARA. 1-9.1D.

MR. RIVERA MAY BE REIMBURSED IN ACCORDANCE WITH THE ABOVE IF OTHERWISE CORRECT.