Finnish firm operating in Myanmar denies maintaining ties to sanctioned entity

Finnish technology and manufacturing firm Wärtsilä, which remains active in Myanmar, has denied engaging in business with sanctioned entities after leaked evidence suggested a continuing relationship between the company and a firm once headed by a known military arms broker. 

The Helsinki-based enterprise secured tenders in early 2022 to develop solar hybrid power stations in Magway Region and Myingyan, Mandalay Region in partnership with the Chinese firm Dongfang Electric International and the Myanmar-based MCM Group. 

The MCM Group—a conglomerate of companies including the primary entity Myanmar Chemical and Machinery Company Limited (MCM)—was represented in the tender by two of its subsidiaries: MCM Energy Company, Limited (MCME), incorporated in Myanmar, and MCM Pacific Private Limited (MCMPPL), based in Singapore. 

However, Wärtsilä was soon forced to withdraw from the partnership after revelations that MCM had been serving as an arms broker to the Myanmar military, procuring weapons and equipment from Ukraine in the year prior. Without specifying entities or individuals by name, the European Union (EU) had warned private companies in its member states, including Finland, against conducting business with the junta’s arms brokers after the 2021 coup. 

Aung Hlaing Oo, the head of MCM Group, resigned from his directorship of the MCME subsidiary in December 2021, which changed its name to Malikha Energy shortly thereafter in a possible attempt to evade sanctions. He remained the owner of MCMPPL, the Singapore subsidiary representing MCM Group in the tender. 

Aung Hlaing Oo also appeared on a blacklist of junta-linked entities and businesspeople compiled by the publicly mandated National Unity Government (NUG) in 2022. 

The United States (US), United Kingdom (UK), and Canada imposed sanctions directly on MCM and on Aung Hlaing Oo starting in March 2022. The EU imposed sanctions on Aung Hlaing Oo in February 2023, by which time MCM had already changed its name to Asia HMT Company Limited. 

A new company called Myanmar Chemical & Machinery Company Limited was also registered with a different registration number in 2023, with Aung Hlaing Oo listed as sole director. The re-registration may also have been an attempt to circumvent sanctions. 

Wärtsilä claims to have complied with both EU and US sanctions, and to have completed the necessary due diligence to ensure that neither Aung Hlaing Oo nor any MCM Group companies were parties to its ongoing contracts in Myanmar. 

Yet the recent surfacing of a 2022 letter, appearing to be from a Wärtsilä project director based in India, raised questions about whether the company’s ties with the firm had in fact been severed. The document, initially received by activist group Justice for Myanmar and seen by Myanmar Now, described the supply of equipment by Wärtsilä to MCM throughout that year. 

It referred to the shipment of four Wärtsilä power plant engines via an Istanbul port to MCM Power Company (an MCM subsidiary incorporated in 2019) and its Malaysia-based affiliate firm Ilham Timur, intended for use in the 70 MW Gas Fired Power Plant (Shwetaung) project, Phase II, in Pyay Township, Bago Region. It also promised to fulfil Wärtsilä’s contractual obligations for the rest of the year, including future shipments of spare parts. 

When reached for comment, Wärtsilä’s corporate media representatives said that the letter had been faked.

“Based on an internal review by our company’s legal and security team we can conclude that it is a forgery,” the representatives said, referring to the letter. “We have accordingly reported this case to the police in Finland already in February.”

The media representatives added that Wärtsilä had not sold or shipped engines to MCM as outlined in the letter, nor had the company been involved in any transactions with MCM or any of its affiliates during the period in question. 

“We can confirm that Wärtsilä has not signed any agreement to deliver new or used engines from or through Turkey to Myanmar nor conducted any business with MCM in [2022]. There is a possibility that a third party would have bought and delivered our used engines. Wärtsilä has however not been involved in such a transaction.”

The Wärtsilä spokespersons added that the company’s only present activity in Myanmar is the fulfilment of operation and maintenance obligations at the Kyaukse Power Plant, as stipulated in an existing contract with the non-sanctioned Myanmar firm Powergen.

Wärtsilä also stated they had not conducted any business nor supplied engines or equipment to Ilham Timur. Myanmar Now attempted to contact Ilham Timur by phone and email but received no response. 

MCM did not respond to email requests for comment. An MCM representative who Myanmar Now reached by phone refused to offer comment during an initial conversation and could not be reached for further calls.

Despite their denial of continued ties to sanctioned entities, there is still some uncertainty about the reliability of Wärtsilä’s due diligence procedures to ensure compliance with sanctions and the termination of its business connections with MCM. 

Wärtsilä had emphasised that its operation and maintenance contract with Powergen—which operates the Kyaukse power plant with the Myanmar firm National Infrastructure Holdings—was compliant with EU and international sanctions because Powergen is not a sanctioned entity.

However, in February 2023, the Finnish business periodical Kauppalehti noted that MCM had owned 40 percent of Powergen until 2022.

According to corporate registry data from Myanmar, MCM divested from Powergen Kyaukse and a firm called Golden Dream Emperor Company Limited took over its stake on April 28, 2022, either directly or via an intermediary company; Golden Dream Emperor was established just eight days earlier. The Myanmar registry also lists an ownership change in Powergen on March 28, 2022, but Myanmar Now could not obtain further details about the shift. 

Dr Tun Naing, who served as deputy minister for energy and electricity under the now-ousted National League for Democracy government, witnesses the arrival of Wärtsilä engines at Yangon port for the Kyaukse project in September 2018 (Ministry of Electric Power, Myanmar / Facebook)

Myanmar Now was unable to find out if there is any connection between the Golden Dream Emperor Company’s sole individual shareholder—Tin Tin Yu—and Aung Hlaing Oo. The company’s address was identical to one belonging to a restaurant in Yangon’s Insein Township called the Golden Crab. 

A representative from Golden Dream Emperor confirmed to Myanmar Now that the company had bought stakes in Powergen, however, not from MCM but from another firm, which Myanmar Now was unable to verify at the time of reporting.  

The representative said that Powergen was the first power project that the company had invested in and that she had no knowledge about the relationship between MCM’s Aung Hlaing Oo and Golden Dream Emperor’s sole shareholder Tin Tin Yu.

“I’ve only heard of MCM but our company bought the shares from a different company, not from MCM,” she told Myanmar Now. 

However, she acknowledged that the company is aware of MCM and Aung Hlaing Oo being named on international sanctions lists.

“We do have a bit of concern, but doing business means investing in a project that will have profit.”

She explained that the decision was solely due to the company’s interest in the lucrative sector.

“The business of power generation is quite an interest nowadays… The company just wants to invest our money in something in a time when businesses are in a difficult situation. We assume that there will not be a loss in investing in a project that is connected to the government.”

Powergen Kyaukse could not be reached for comment. 

The establishment of intermediary or affiliate shell companies is a known practice for evading international sanctions used by Myanmar businesses. 

The effort to cut off supplies to the junta’s arms brokers has a mixed record. Earlier this year, reports emerged that an Indian firm producing components for Swedish-based rifle manufacturer Carl Gustaf had exported fuzes to Myanmar, enabling the military to continue using the Swedish company’s rifles and undermining the EU’s arms embargo. 

Continued profits from international business ties and circumvention of existing sanctions by the junta and its cronies have prompted doubts about whether foreign governments’ actions so far have been sufficient to hold the regime accountable.

Reporting by Kevin Brondum and Tin Htet Paing.

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