Military’s proxy party enriched itself with customs x-ray machine that ‘should be owned by the state’

The military-backed Union Solidarity and Development Party made billions of kyat in fees from an x-ray cargo scanner it leased to the government, with much of the money coming from importers and exporters who did not even use the machine.

The unusual contract terms the customs department gave to the party and several companies meant the country lost out on 6bn kyat (about $4.3m) in the financial year ending 2017 alone, Yangon’s auditor general said in a report.

And the department paid the USDP the equivalent of 90m kyat, roughly $65,000, in x-ray fees even after the scanner broke down in 2017, the report said.

The machine was set up at the Asia World port in Yangon in 2006, when the customs department brought in a system to scan cargo at nine ports and two border gates.

The party, which was still officially an association at the time, owned the machine via a company named Myan Gon Myint. The company has since been dissolved and its shares transferred to the USDP.

Between 2006 and 2018, the party made 16bn kyat in fees at the port, Myanmar Now calculated using figures from the auditor general’s report.

It is unclear how much of that came from traders who did not use the cargo scanner. But in the 2016-2017 financial year the party made 700m kyat in such fees on top of what they took for use of the scanner.

Under rules set by the customs department, certain commodities such as raw materials for the garment industry can be exempt from being x-rayed when they arrive at Myanmar’s ports.

Companies pay 20,000 kyat per shipping container to have their cargo scanned. But they have to pay the fee even if the containers aren’t scanned, and the x-ray machine owners get the majority of the fee either way.

‘The state should own them’

Net profits from the cargo scanner fees are distributed evenly among the owners after deducting electricity costs, a 5% tax and a 5% fee to cover machine operators’ health care costs, according to the auditor general.

Sandar Min, a Yangon region MP for the NLD and chair of the local Finance, Planning and Economic Committee, said the scanners should belong to the public because they are profitable.

“The state should buy them,” she told Myanmar Now, adding that the customs department “should include this in its budget.”

In the year to April 2017, the USDP and other owners of the machines made 8bn kyat between them, but only 2bn kyat of that from containers that passed through the scanners.

Thet Naing Oo, a senior customs official, disputed the auditor general’s claim that the USDP received money for its machine after it stopped working in 2017.

“It’s not possible they would be paying fees if the machine isn’t functioning,” he told Myanmar Now. “Payments would have been made to compensate for the use only if it was used.

He added that he did not oversee the payments and they were handled by a separate unit. He said he did not know which unit.

Wunna Kyaw Myint, an assistant manager at the Asia World port, said the scanner was collecting dust. “The USDP-owned machine hasn’t left the port. We sent a letter to customs to say we won’t be using this anymore but they haven’t claimed it,” he said.

USDP representatives Thein Htun Oo and Nang Myamya Mimi Zaw said they were not aware of the details about payments after the scanner broke. Party chair Than Htay did not respond to a request for comment.

Strong finances

Myan Gon Myint was founded by the USDP’s predecessor, the Union Solidarity and Development Association. With support from the military, the group established interests in gem mining, construction, agriculture, livestock, imports and exports to fund its operations.

While the company was officially dissolved in late 2015, its shares were transferred to the party, although the details of this process and how the party’s business interests are now managed are unclear.

While its dealings are opaque, the USDP appears to have the strongest finances out of any political party.

In 2015, the last general election year, the party’s monthly expenditure was over 1.4bn kyat, leaders said at the time. During the election, party candidates were given 3m kyat each. The party stood 1,134 candidates, meaning it spent over 3.4bn kyat on candidates alone.

The party’s nearly 5m members pay a 1,000-kyat annual fee, spokesperson Thein Htun Oo told Myanmar Now. That means the party brings in around 5bn kyat, or $3.5m, a year, before taking any profits from its business interests.


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