Japanese beer giant Kirin said it may cut ties with its joint-venture partner Myanma Economic Holdings (MEHL) after the military conglomerate repeatedly ignored Kirin’s requests for financial documents during a due diligence review, Kirin said Friday.
Since February, Kirin has been asking MEHL for financial information as part of a “strategic review” of its Myanmar operations. The company said on Friday that MEHL, after first providing “insufficient” documentation, has been unresponsive.
Kirin is the majority owner in joint ventures with MEHL of both the Myanmar Brewery and the Mandalay Brewery, together producing about 80% of the beer consumed in Myanmar. The review came after several human rights campaigns raised concerns about MEHL profits potentially funding a military accused of genocide.
A detailed UN report from 2019 urged companies to stop doing business with MEHL, saying it and its associated businesses continue to help fund human rights abuses against ethnic communities across Myanmar.
MEHL is headed by commander-in-chief Min Aung Hlaing, who the UN has recommended be tried for genocide for leading a campaign of mass murder, rape and arson against the Rohingya in Rakhine state in 2017.
Kirin’s requests having gone unheeded, the company has now hired financial consultants from Deloitte “to determine the destination of proceeds” from its joint ventures with MEHL, it said in a statement Friday.
An MEHL spokesperson could not be reached for comment.
“This is a very big development,” Burma Campaign UK director Mark Farmaner said. “It is highly embarrassing for Kirin that their own business partner is refusing to cooperate with them and disclose information.”
Kirin also said Friday its “exploring alternative structural options for the ownership of the Myanmar joint-ventures.”
The company declined to elaborate on what that might mean. A spokesperson said Kirin will not comment on their review process until it’s completed.
Under Myanmar’s Securities and Exchange Law, as a public company with more than 100 shareholders, MEHL is required to publish regular financial statements and information on its major shareholders on its website, though it has not.
Under the Myanmar Companies Law it must also file financial statements with the Directorate of Investment and Company Administration (DICA), which automatically puts those statements in the public domain, according to Vicky Bowman, director of the Myanmar Centre for Responsible Business (MCRB).
The statements appear to have been filed with DICA though they still remain unavailable to the public.
“We know of a number of entities who have sought information filed by MEHL from DICA,” Bowman said. “We are not aware of anyone who has been able to obtain it, even in hard copy,”
She said the MCRB has for over a year been encouraging DICA to make this information available.
“I therefore welcome Kirin’s decision to deepen their due diligence,” she said. “It is a shame that it has been so hard for them to date to obtain information which should have been easily available.”
Activists continued their calls for Kirin to cut ties completely after the statement was released.
“It’s already clear that Kirin’s partner is the Burmese military, and the specifics on exactly how the military spends the money – on guns, salaries, pensions or propaganda – is irrelevant,” Farmaner said.
“It is imperative that Kirin separates … from MEHL without delay, in a way that prevents further human rights violations,” pressure group Justice for Myanmar said in a Facebook post Friday morning.
The group also called on Kirin to make all findings in the Deloitte investigation public.
“Kirin and its brands worldwide are feeling the growing pressure,” said Simon Billenness, executive director of the International Campaign for the Rohingya. “Genocide is clearly bad for business.”
Donations
Kirin faced harsh criticism after Myanmar Brewery made several donations in 2017 to the military, at the height of its campaign against the Rohingya in Rakhine.
The first, on September 1, was a $6,000 cash gift given at a televised ceremony lead by Min Aung Hlaing, who praised donors for their “nationalistic fervour.”
“The donations were made at a time when global media were awash with reports of the Myanmar security forces committing atrocities against Rohingya women, men and children, who were already fleeing by their tens of thousands into neighbouring Bangladesh,” an Amnesty International statement said at the time. It called on the Japanese government to investigate Kirin for criminal misconduct.
Kirin has said the donations were intended for humanitarian purposes but admitted it had done a poor job of tracking where the money wound up. It revised its giving policy shortly thereafter, but most critics were not appeased.
“The donations are tiny compared to the revenue that flows from their business operations,” Khin Ohmar, a human rights activist who led student protests against the country’s military dictatorship in the late 1980s, told Myanmar Now in December. “Changing their donation policy is not meaningful since the military and senior generals continue to receive substantial funds from their profit split with Kirin.”
MEHL was founded as the Union of Myanmar Economic Holdings in 1990 by the military. While much of its profits used to explicitly fund the national defense budget, it changed its shareholder structure as the civilian government came to power in 2016 so as to channel all profits to individual generals, military units and active and retired service members instead.
It operates companies that dominate Myanmar’s transportation, mining, import and export, alcohol and cigarette industries.
Kirin bought a majority stake in the Myanmar Brewery in 2015 for $560m.
