Burmese Military Conglomerates Sanctioned by U.S, U.K. Amid Crackdowns on Protesters

A protest in Burma against the military coup, held Feb. 14. (Source: MgHla, via Wikimedia Commons)

By Samuel Rubenfeld and Helen Koo

Friday, March 26, 2021

The U.S. and U.K. announced sanctions on Burmese military conglomerates as lethal crackdowns continue against civilians who oppose the February coup.

The Burmese military controls vast swaths of the country’s economy through two holding companies, Myanma Economic Holdings Public Company Limited (MEHL) and Myanmar Economic Corporation Limited (MEC), the U.S. Treasury Department said Thursday. The U.K. designated MEHL, while the U.S. sanctioned both military conglomerates. 

“By designating these entities, the United States and the U.K. have shown that we will follow through on our pledges to promote accountability for the coup and the abhorrent violence and other abuses we have seen in recent weeks,” U.S. Secretary of State Antony Blinken said.

The designations of MEHL and MEC come weeks after the two companies were added to an export controls list by the U.S. Commerce Department, and days after the Treasury sanctioned two Burmese military divisions, a police chief and a military special operations commander. Alongside the sanctions, the Treasury also issued a series of licenses that allow official Burma business with the U.S. government, certain international organizations and nonprofits, as well as a brief period to wind down dealings with MEHL, MEC and their majority owned subsidiaries. 

MEHL has business interests across the Burmese economy, ranging from banking, trade and logistics to tourism, agriculture, tobacco, and food and beverage, the U.S. Treasury said. In its sanctions notice, the U.K. identified 41 MEHL subsidiaries by name. The U.K. confers sanctions on entities majority owned or controlled by a designated party; a similar U.S. rule only covers majority ownership, not control, according to guidance documents from each country.

Profits from MEHL businesses are systematically distributed to the military, and shares are spread across the armed forces with no accountability, creating secret slush funds the military uses to augment its budget, according to the Treasury. MEHL has nearly 1,800 institutional shareholders, including military units, the Treasury said. MEC, meanwhile, has businesses in the mining, manufacturing and telecoms sectors, as well as companies that supply natural resources and produce goods for the military’s use, the Treasury said.

The EU on Monday announced its first designations since the coup, including high-ranking officers of the Tatmadaw, the Burmese military forces. It did not impose sanctions on the military conglomerates, however, as had been considered, according to media reports. The EU will continue to review all of its policy options, including additional measures on entities controlled by the Burmese military, the bloc said in a statement. Both MEHL and MEC have been sanctioned by Canada since 2007, along with several subsidiaries of each firm.

Moe Myint Tun and Aung Lin Dwe, senior Burmese military officials sanctioned Monday by the EU, are directors of MEHL, records show. Aung Lin Dwe has also been sanctioned by the U.S., U.K. and Canada, while Moe Myint Tun was designated by the U.S. and U.K. 

Myawaddy Bank Ltd., an MEHL subsidiary, has remained mostly shut since the coup despite pressure from the military for it and other financial institutions to reopen, according to a media report. When it did open for a day in mid-February, a large crowd tried to withdraw cash, but a bank official who spoke to The Irrawaddy said it would only allow 200 customers a day, with withdrawals limited to about USD 3,500 per person. Myawaddy Bank has a mobile app available on the Google Play store; a large Western payment processor severed ties in January.

Myawaddy Trading Ltd., another MEHL subsidiary, imports palm olein, a byproduct of palm oil production, from multinational agricultural companies in Southeast Asia, trade records show. The firm also runs supermarkets and wholesale centers in Myanmar that sell electronic and consumer goods, including those made by U.S. and European companies, according to their websites and Facebook accounts.

MEHL also operates at least three industrial zones in Myanmar, one of which rents space to companies that have shipped goods that arrived in the U.S. this month, according to records reviewed by Kharon. 

From the Ngwe Pin Lae Industrial Zone, located on the outskirts of Yangon, companies also made recent shipments of frozen fish and apparel to the U.S. market, trade records show. At least one of the shipments, hundreds of backpacks from Golden Tri-Light Myanmar Company Limited, departed the country five days after the coup, according to shipping records. MEHL is responsible for the zone’s maintenance, waste management and security, and tenants pay an annual fee for the services, according to a letter dated Feb. 13 from one of its tenants.

Several companies located at the Pyinmabin Industrial Zone in Yangon, another MEHL-operated industrial park, are, or have been, joint ventures between the military conglomerate and its international partners, Kharon found.

However, the foreign partners of Virginia Tobacco Company Limited and Myanmar Brewery Limited, which is sanctioned by Canada, have each said they intend to sever ties with MEHL, according to media reports and press releases.

Coup leader Min Aung Hlaing, who the U.S. said leads MEC and the U.K. named as chair of  MEHL’s “patron group,” was among those sanctioned Monday by the EU. He was designated last month by the U.S., U.K. and Canada. Two of Min Aung Hlaing’s adult children were sanctioned earlier in March, along with several of their companies. The U.S. also designated him in 2019 over human rights abuses against the Rohingya, a Burmese minority group.

In 2017, MEHL directly contributed to a series of fundraising events that provided financial support for the Tatmadaw personnel engaged in “clearance operations” against the Rohingya, the U.K. sanctions notice said. One of the military divisions sanctioned Monday by the U.S., the 33rd Light Infantry Division of the Burmese Army (33rd LID), was also designated in 2018 for its role in the Rohingya operations. A U.S. senator said he proposed legislation that would require the government to determine within 90 days whether the Burmese military’s operations against the Rohinya constituted a genocide, after it had previously declined to do so.

Conditions on the ground in Myanmar, the other name for Burma, are deteriorating and the United Nations should hold an emergency meeting to address the crisis, Tom Andrews, the U.N. special human rights envoy, said Thursday in a statement. Limited sanctions imposed thus far don’t cut the military’s access to revenue that help sustain its illegal activities, he added. Earlier this week, the U.N. extended Andrews’ mandate for another year.

Literature at a market in Yangon. (Source: Alexander Schimmeck, via Unsplash)

Since the Feb. 1 coup, security forces have killed 328 people, according to figures released Friday by the Assistance Association for Political Prisoners (Burma), a human rights group. More than 3,000 people have been arrested, charged or sentenced, the group said.

A military spokesman on Tuesday had accused protesters of arson and violence, and said nine members of the security forces were killed. Police shot and killed a seven-year-old girl as she ran toward her father in the family’s home, her older sister told the BBC on Wednesday. The family has since gone into hiding for fear of being targeted by the military, CNN reported.

“These abhorrent and brutal acts against children...further demonstrate the horrific nature of the Burmese military regime’s assault on its own people and its complete disregard for the lives of the people of Burma,” a U.S. State Department spokesman said Thursday.

Foreign businesses in the country are struggling to operate amid the volatile environment, The Wall Street Journal reported this week. Human rights groups urged an American energy company to freeze payments to Myanmar Oil and Gas Enterprise, a state owned company whose cash flow is now under the military’s control, the Financial Times reported.

Lt. Gen. Aung Soe, sanctioned Monday by the U.S., is a Bureau of Special Operations commander whose units have participated in attacks on peaceful protests while armed with weapons meant for the battlefield, the Treasury said. Under the leadership of Than Hlaing, who was also designated Monday, security forces have gone from attacking protesters with water cannons, rubber bullets and tear gas, to using live ammunition, according to the Treasury. Than Hlaing was appointed chief of the Burmese police and deputy home affairs minister after the coup, the Treasury said.

The Treasury also sanctioned a second military division, the 77th Light Infantry Division of the Burmese Army (77th LID), because their deployments into Burmese cities have resulted in instances of excessive force, including killings, by security forces, the Treasury said. Video footage shows security forces riding pick-up trucks while apparently indiscriminately firing live ammunition in multiple directions, including into people’s homes, according to the Treasury.