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Swiss cement company backtracks on plans to sell to military cronies

The world’s largest cement producer is liquidating its Myanmar assets and reversing its previously stated intention to sell to its military-linked partners, after reporting in the Swiss press shed light on the possible impact on human rights of the sale.

LafargeHolcim – the result of a 2015 merger between the French company Lafarge and the Swiss company Holcim – was already cited for its military ties in a 2019 UN fact-finding mission on the military’s economic interests.

In 2014, before the merger, Lafarge invested about $12m in a cement project in the Thiliwa Special Economic Zone, just south of Yangon.

In June, LafargeHolcim said it was selling its shares to companies owned by two of the project’s investors, Hla Myo and Ye Myint, according to reporting by journalist Konrad Staehelin in the German-language SonntagZeitung newspaper.

Both men are close allies and business partners of the military.

The Aung Myin Thu group, co-founded and owned by Hla Myo, transferred about $43,000 to the military in September 2017, at the height of its “clearance operations” against the Rohingya. The military is currently on trial for genocide at the International Court of Justice for that operation.

The M.Y. Holding company, owned by Ye Myint, already has a stake in the LafargeHolcim operation.

Ye Myint also runs a joint-venture cement factory with the military-owned Sinminn Cement company, of which he is a former director.

Sinminn is a subsidiary of Myanma Economic Holding Limited, the largest military-owned conglomerate in the country.

Profits from military-linked companies like these – and from the foreign companies that partner with them – directly contribute to the military’s crimes against humanity, including some of the “gravest crimes under international law,” the UN has said.

Staehelin, who has previously reported for Frontier Myanmar, wrote that the company likely knew about the potential problems with their partners but only pulled an “emergency brake” on the sale once the issue became public.

“Compared to the company’s intentions expressed in June for the sale, this is a 180-degree turn,” he wrote. “There is no other plausible explanation for this but that LafargeHolcim, confronted with SonntagZeitung’s reporting, switched course.”

LafargeHolcim told Myanmar Now it takes the allegations seriously and that it made its decision to sever ties with its partners in Myanmar long before any reporting was published.

“We already decided back in 2017 to exit our operations in Myanmar,” Eva Mairinger, head of media relations for LafargeHolcim, said. “It’s important to note that this happened more than one year before the UN report was published in August 2019.”

She said the company had already ceased operations in Myanmar in 2018 and has been dormant since, with “no employees on the ground and no sale of any products.”

“We are now in the process of liquidating the dormant company and do not intend to sell anything,” she added.

The rights group Justice for Myanmar welcomed LafargeHolcim’s decision in a statement released Monday morning but called for “full transparency” throughout the liquidation process.

“By halting a planned sale to their business partners, who are members of the military cartel, LafargeHolcim is denying a future revenue stream to the Myanmar military, who are war criminals,” the group said.

“Construction is a major business for the Myanmar military,” spokesperson Yadanar Maung added. “Profits … enable them to commit grave human rights violations with impunity and support generals and their cronies.”

It is not the first time the cement giant has been accused of funding grave human rights violations. In 2013 and 2014, around the time Lafarge was investing in Thiliwa, it was also funnelling more than $5m to terrorists in Syria – including Al Qaeda affiliates and the Islamic State (IS) – to help it move employees and supplies and to secure raw materials as the war in that country intensified.

The company later admitted to “unacceptable errors committed in Syria.”

LafargeHolcim’s global annual sales amount to about $27bn.

“For LafargeHolcim, the liquidation of the Burma business means a write-down of a few million,” Staehelin wrote. “More serious is the fact that internal controls have failed again after the Syrian IS scandal.”

LafargeHolcim insists its human rights compliance procedures in fact led it to close shop in Myanmar three years ago.

The company “takes all necessary measures to ensure we operate according to the highest standards of governance and human rights around the world,” Mairinger said.

This article has been updated to reflect comments received from LafargeHolcim after publication.

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