Correction: An earlier version of this story referred to ‘KBZ Group’ as one of several entities named by United Nations experts and Amnesty as ‘do[ing] business’ with MEHL, based in part on investigations by Justice for Myanmar. The conclusions from these organisations’ research have not been fully borne out since they were reported, and the available evidence does not indicate any business relationship between MEHL and KBZ Group or any connected entities. The references to this entity have accordingly been removed.
Former President Thein Sein and his ministers from the previous government hold shares in a massive conglomerate that funds “the military’s international crimes” with “secret slush funds,” activists have confirmed.
Justice for Myanmar published the names after obtaining a 2011 company report, which also revealed that regional commands, battalions and platoons were institutional shareholders in Myanmar Economic Holdings Limited (MEHL).
Many of these military units were guilty of “war crimes and crimes against humanity,” the group said.
“Shares are distributed across the armed forces, creating secret slush funds that support military operations,” the group said in a report on Thursday.
Amnesty International, which received a copy of the MEHL report from Justice for Myanmar, said dividend payments were used to fund military operations.
“There is no way for outsiders to know how these military units spend the dividends, but considering their size and regularity, it is reasonable to assume that they help finance them by contributing to operational costs,” the group said in a report also released Thursday.
While it has long been known that MEHL is military-owned, the company has always been highly secretive about the individual identities of its shareholders.
Between 1990 and 2011 MEHL’s shareholders received 108bn kyat in dividends, the company report showed.
Because the official exchange rate under the former regime artificially inflated the value of the kyat, it is difficult to assign a US dollar value to the figure. But it represents a vast sum paid out by a company with a stranglehold on key sectors of Myanmar’s economy.
Amnesty named several companies that do business with MEHL, including the Japanese brewer Kirin, and said they were funding military abuses and could be criminally liable.
“By doing business with the conglomerate, they too can be linked to these crimes and violations,” Amnesty said.
KIrin said in a statement that it was “deeply concerned by the contents of the report published by Amnesty.”
“We emphasise that it is wholly unacceptable to Kirin that any proceeds from our Myanmar joint-ventures could be used for any military purposes,” it added.
It said it would take Amnesty’s report into account when conducting an assessment that began in February and is due to be finished by the end of the year.
Kirin has for more than a year resisted growing calls from activists who have accused it of “funding genocide” against the Rohingya and urged it to immediately cut ties with Myanmar’s military.
Myanmar Brewery, which is jointly owned by Kirin and MEHL, made $155.9m in revenues in the second quarter of this financial year.
Last year, a panel of United Nations experts named Kirin among dozens of firms it said should be criminally investigated for aiding and abetting crimes against humanity with donations to the military during its 2017 attacks against the Rohingya.
Kirin made three donations via its joint venture. The first was a cash gift of $6,000 at a ceremony presided over by commander-in-chief Min Aung Hlaing in September 2017.
At the televised ceremony, held a week after soldiers began storming villages in Rakhine, Min Aung Hlaing praised the donors for their “nationalistic fervour”.
Amnesty, prompted by the UN report, called on the Japanese government to investigate Kirin for criminal misconduct.
Both the military and the government have strongly denied committing international crimes against the Rohingya.
Justice for Myanmar said Thursday that firms “must cut ties” with the military. “It is untenable for domestic and international companies to continue to do business with the Myanmar military.”
The fact that the cabinet under the Union Solidarity and Development Party (USDP) government were MEHL shareholders was “evidence of the military’s state capture,” Justice for Myanmar said.
“The merging of the military government and the ‘civilian’ USDP in this cartel-like structure created a shocking conflict of interest that calls into question key USDP decisions. This conflict of interest continues today. MEHL shareholders hold key ministries and are distributed throughout the public service,” it added.
Shares in MEHL are also used to reward loyalty and punish dissent in the military, the group said.
“MEHL withholds payments to shareholders who step out of line in the military. The 2010-11 shareholder report lists dividends withheld to Major Aung Lin Htut, a high-profile defector, as well as deserters and those who are dismissed. MEHL is therefore part of the military’s control structure, punishing dissent and disloyalty,” it said.
Soldiers who are “loyal and rise through the ranks can buy a higher number of shares and enjoy more profits,” it added. “Shares are sold at the artificially low-price of 1,000 kyat per share.”
A military spokesperson did not answer calls from Myanmar Now seeking comment on Thursday. Amnesty said it contacted MEHL outlining its findings but the company did not answer any of the questions it raised.
Justice for Myanmar said: “Business deals and investments are financing the military’s international crimes and feeding systemic corruption. This must stop. All military businesses must be dismantled and those responsible for crimes must be held accountable.”
