May 8, 2021

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Follow the money: Myanmar coup puts pressure on military companies | Military news

7 min read


From SIM cards to beer, skydiving and jade mining, few areas of Myanmar’s economy escape the long arm of its army, the Tatmadaw.

But after Gen. Min Aung Hlaing led a February 1 coup that sabotaged a 10-year experiment with democracy, activists once again set their sights on the military’s sprawling and highly lucrative business interests. .

“Min Aung Hlaing led a genocide against the Rohingya and the international response has been next to nothing,” said Anna Roberts, executive director of Burma Campaign UK. “He probably calculated that there will be a small answer, but that it will be a price to pay.”

Aung San Suu Kyi and other senior officials of the National League for Democracy (NLD), which was re-elected in a landslide in the November elections, have been held for more than three weeks, with the military defending unfounded allegations of fraud to justify his takeover. .

The United States has already announced financial sanctions to prevent the military from exploiting the billions of dollars deposited in the United States, as well as targeted measures against individual generals including Min Aung Hlaing, adding to measures imposed after the 2017 crackdown that caused the exodus of more than 740,000 Muslim Rohingyas to neighboring Bangladesh.

Tuesday, after security forces used force to quell peaceful protesters murder two people, Washington added two other generals to its sanctions list.

The United States added two more generals to its sanctions list after the military used force against protesters over the weekend, killing two people. Activists say international community must tackle military business interests and financial networks [Reuters]

But experts say the international community must go beyond individual generals and tackle the military’s extensive commercial activities. “By going into business, the military was able to gain monopoly control over key sectors of the economy,” Justice for Myanmar, an activist group, said in an email response to questions.

“During the period of the NLD, the military companies empowered them and allowed their campaign of genocide, war crimes and crimes against humanity. The military is able to use corporate funds to support military units, including those committing heinous crimes, and that means they were not dependent on the defense budget allocation from Parliament.

“Massive theft”

The military began to get involved in business when Ne Win decided to nationalize the economy as part of his “Burmese path to socialism in the wake of the 1962 coup.”

When the military abandoned the planned economy, it began to nurture a form of crony capitalism with senior generals and military officers able to guarantee preferential access to many sectors of the economy, including some of the industries. the most lucrative in the country. In some areas, only military companies and their subsidiaries were allowed to operate.

The process accelerated with the asset sales of 2011, when senior generals and their families were able to take advantage of the open economy to secure control over some of Myanmar’s major assets.

“It really is the elite and the cronies of the business world who are benefiting from this massive theft of state resources,” Roberts said. “The rank and file do not profit, and of course ordinary people suffer because the money that should be spent on health and education is instead used to buy military equipment.”

While the military’s business interests remain largely a “black box” according to Clare Hammond, Global Witness’s London-based Myanmar researcher, recent reports and document leaks have revealed more details about two giant conglomerates that are the key to their wealth – Myanmar Economic Holdings Ltd (MEHL) and Myanmar Economic Corporation (MEC).

The military controls Myanmar’s vast natural resources, including timber, gems and jade [file: Aung Shine Oo/AP Photo]

The Ministry of Defense established MEHL in April 1990 to “ensure the economic well-being of soldiers, ex-combatants and the people of Burma, as well as to support the economic development of the state”.

The company “embodies the scope and extent of the military’s dominance over the Burmese economy,” the US embassy said in a 2009 cable that recommended sanctions against MEHL, all of its wholly-owned units, members of the board of directors and general managers. “His influence and holdings are key parts of the elaborate system of patronage the regime uses to maintain power.”

Analysts say the military’s commercial clout remains significant even with the reforms of the past 10 years, and that the coup could be seen as an attempt to protect the military’s wealth and interests from potential reforms. of civil government.

In 2019, the NLD succeeded in ensuring civilian oversight of the General Administrative Service, which oversees major bureaucratic appointments, and also introduced changes to the Gems and Jade Law.

“Many were shocked that the military was forced to relinquish control,” Htwe Htwe Thein, associate professor at Curtin University in Australia, wrote in an article published in The Conversation. “It was a sign of the military’s weakening grip on government administration and patronage – which were central to its ability to accumulate and protect its wealth.”

Shareholder battalions

The United Nations fact-finding mission, set up in the wake of the Rohingya crackdown, detailed the military’s business interests in a 110-page report released in August 2019.

The report details the extent of the armed forces ‘involvement in the economy – exposing 106 companies owned by MEHL and MEC as well as 27 closely affiliated with the military – and the armed forces’ dominance over Myanmar’s natural resources, including including the extraction of jade.

Tatmadaw’s network of business interests allowed him to “isolate himself from responsibility and oversight,” the UN said. “By controlling its own business empire, the Tatmadaw can escape the responsibility and oversight that normally comes with civilian oversight of military budgets.”

“The tentacles of the army have spread in all areas,” said Montse Ferrer, business and human rights adviser at Amnesty International, who released a report last year saying the military appreciated. dividends MEHL alone of some $ 18 billion (based on the official exchange rate of 1 to 6 Myanmar kyat) over the 20 years to 2011.

The military’s sprawling business interests primarily benefit elite officers and their cronies [File: Hein Htet/EPA]

Amnesty, working from unpublished documents obtained by Justice for Myanmar, said the conglomerate was not only controlled by senior military officials – the people who carried out the February 1 coup – but also by the different wings of the armed forces – the army, navy and air force – and even combat battalions.

“It’s quite unique when you have a battalion that is on the front line and is shareholders of MEHL,” Ferrer told Al Jazeera.

The Myanmar Center for Responsible Business, which monitors transparency and corporate governance standards in Myanmar through its annual report Pwint Thit Sa, said it had met 15 members of MEHL’s management in August of the year. last to discuss his 3% score in the 2020 report.

They highlighted gaps in holdings and the fact that top executives were not identified as politically exposed persons. MEHL, with which a number of foreign companies do business, told the MCRB that the company aims to pay a 30% dividend and that institutional shareholders such as Battalions spend their dividends for “welfare and not for military purposes ”.

The report noted that as of last November, MEHL had seven directors and one deputy director, all of them serving or retired military personnel. About a third of the shares were held by battalions, the rest being owners. The company’s constitution, she noted, also showed the existence of a “steering committee” – to oversee the board – headed by Min Aung Hlaing.

Pwint Thit Sa’s report, meanwhile, describes MEC as a “military enterprise controlled by the Tatmadaw”, subject neither to civilian control nor to the oversight of the Auditor General.

MEC got just 2% for transparency, pointing out the challenges faced by anyone trying to understand or keep up with the military’s business relationships.

Hundreds of thousands of people took to the streets in Myanmar to protest against the February 1 coup [Ye Aung Thu/AFP]

Follow the money

Yet activists say efforts to identify military revenue – from legal and illegal sources – and to investigate how military money goes through the global financial system must be stepped up for sanctions to work effectively. .

“What we call alongside targeted sanctions is an effort by countries imposing sanctions to investigate income flows to the military and uncover the identities of unknown shareholders and the banks that have their money,” Hammond said. “This is pretty crucial because we have to understand exactly where the military makes and keeps their money to effectively lobby these funding sources.”

Others also pointed to the military’s banking and financial ties.

In a recent report on how the world should react to the coup, Crisis Group noted that there could also be pressure on the military’s favorite financial centers in the Asian region “notably Singapore”, including including the freezing of assets and the denial of financial services of generals.

Activists have been pressuring Kirin, the Japanese beverage company, to sever ties with MEHL for years. On February 5, he finally did. Lim Kaling, co-founder of Singaporean games company Razer, is also let go of its third-party stake in RMH Singapore, which has a tobacco joint venture with the conglomerate, while on Thursday Facebook said it was banning all advertising from military-related entities.

The Burmese themselves are also boycott goods and services of military companies.

For governments, it might also be time to get tough on Min Aung Hlaing and his generals.

“He feels he will get away with this,” Roberts said. “This is why the international response must be strong; stronger than he calculated.

Activists say world must take stronger action – and show Gen. Min Aung Hlaing he can’t get away with seizing power from Myanmar’s democratically elected government [Sai Aung Main/AFP]





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