Joint-venture partner urges court to take action in case against MEHL

A Singapore-based tobacco company filed an application at Yangon’s northern district court last Friday calling on it to move forward with its case against its joint-venture partner, the military-owned Myanmar Economic Holdings Ltd (MEHL).  

Rothmans Myanmar Holdings Singapore (RMHS) announced last month that it was planning to sue MEHL over its lack of transparency. 

Min Sein, the company’s lawyer, told Myanmar Now that the application was filed under section 193 of the Myanmar Companies Law, which allows courts to rule in cases where the conduct of a company is damaging to any of its members.

So far, the court has yet to respond, he added.  

RMHS and MEHL jointly operate Virginia Tobacco Co Ltd (VTCL), the biggest player in Myanmar’s tobacco market. It employs about 1,000 people in the country and produces the popular Red Ruby and Premium Gold cigarette brands.

RMHS released a statement on December 23 saying that MEHL had ignored its calls for an audit of donations made in the name of VTCL and threatened to suspend distribution of the company’s products if it didn’t contribute to a fund for disabled veterans.

It also said that MEHL had rejected a plan to give VTCL employees bonuses for the months of September and December in 2020.

Hla Myo, a general manager at MEHL, told Myanmar Now that the problem was due to a “misunderstanding” between the joint-venture partners. He added that MEHL had no reason to deprive VTCL employees of their rightful compensation, since they were also MEHL employees.

MEHL owns a 51% share in VTCL, which has operated as a joint venture with RMHS since 1993.

MEHL and another military-owned conglomerate, the Myanmar Economic Corporation, were described in a 2019 UN fact-finding report as “two of Myanmar’s most opaque enterprises.”

The report urged foreign companies not to do business with Myanmar’s military, as doing so “substantially enhances its ability to carry out gross violations of human rights with impunity.”

An RMHS spokesperson said the company cited the report to support its calls for an independent audit of VTCL’s finances.

Related Articles

Back to top button