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BurmaNet News: October 27, 2000
- Subject: BurmaNet News: October 27, 2000
- From: strider@xxxxxxxxxxx
- Date: Fri, 27 Oct 2000 02:24:00
______________ THE BURMANET NEWS ______________
An on-line newspaper covering Burma
_________October 27, 2000 Issue # 1650__________
NOTED IN PASSING: "We fell on the wrong side of the power struggle and
as a result lost our business. Unfortunately in Burma that's what
matters--political connections, not law."
Win Win Nu, co-owner of Mandalay Brewery ousted by regime partner. See
Far Eastern Economic Review: Mandalay Migraine
INSIDE BURMA _______
*Kyodo: ILO mission leaves Myanmar after 6-day visit
*DVB: Rise in number of military, police at Thai border addicted to
*Xinhua: Senior CPC Official Meets Myanmese Delegation
*United Nations: Statement of Burma Rapporteur to Commission on Human
*The Wall Street Journal: Pipeline Project in Burma Puts Cheney in the
*Far Eastern Economic Review: Mandalay Migraine
The BurmaNet News is viewable online at:
__________________ INSIDE BURMA ____________________
Kyodo: ILO mission leaves Myanmar after 6-day visit
Kyodo, Rangoon, 26 October 2000. A five-member International Labor
Organization (ILO) mission led by Francis Maupain, special adviser to
the ILO director general, left Myanmar late Thursday after a six-day
The group met with Lt. Gen. Khin Nyunt, secretary of Myanmar's ruling
junta, before departing Yangon, official sources said.
The mission had series of meetings with the directors general of several
departments, including the labor, home, foreign and judicial
departments, since arriving in Myanmar last Friday.
The group also met Foreign Minister Win Aung earlier Thursday.
The ILO mission was in the country to study Myanmar's compliance with
ILO recommendations on forced labor.
Both junta officials and mission members refused to discuss details of
the talks, with a mission member saying they cannot comment before they
report their findings to the ILO chief.
If the findings are negative, the ILO may adopt measures, including
recommending that ILO-member governments, employers and workers, review
their relations with Myanmar and take measures to ensure their relations
do not perpetuate forced labor in the country.
DVB: Rise in number of military, police at Thai border addicted to drugs
Text of report by Burmese opposition radio on 25th October
Democratic Voice of Burma radio
It has been learned that due to the drugs manufactured, distributed and
sold by the UWSA [United Wa State Army] Wa group, the drugs have not
only affected the Thai people but the number of drug addicts has also
increased in the SPDC [State Peace and Development Council] military.
DVB [Democratic Voice of Burma] correspondent Maung Tu filed this
[Maung Tu] It has been learned that many SPDC soldiers in Htan Lan area
opposite Mae Sot [in Thailand] and along the Myawadi border stretch have
become drug addicts. Lt Soe Naing, who is the team leader of the BSI -
Bureau of Special Investigation - posted in Myawadi, is said to be
addicted to amphetamines. According to one Myawadi resident, the SPDC
Military Intelligence [MI] Unit No 25, the BSI personnel, SPDC soldiers
and DKBA - Democratic Karen Buddhist Army - members became addicted to
amphetamines after trying out the seized drugs.
On 19th September, a combined team of Myanmar Police Force [MPF] members
and MI personnel seized 1,500 stimulant tablets from a teashop in
Myawadi. These amphetamine tablets were divided between the police and
the MI, where some were resold and some were consumed. A week later when
Pa-an based senior MI officials came for an inspection, they received
the news report about the seizure but there were no drugs.
Similarly, it was learned that most officers and soldiers from Myawadi
and Thingannyinaung-based LIB [Light Infantry Battalion] 355, LIB 356,
LIB 357 and LIB 310 have become drug addicts.
Currently, amphetamines can easily be bought at teashops in Myawadi,
Kawkareik and Pa-an. One amphetamine tablet costs around 300 to 500 kyat
but in Mae Sot, Thailand, the tablet is worth around 50 to 60 baht. As
the amphetamines are produced at the Thai-Burma border, there is also
trafficking from Lashio in Shan State via Mandalay and Pa-an. One
amphetamine tablet costs about 200 kyat in Mandalay so those selling
them to Mae Sot receive twice the amount in profit.
Such easy access to stimulant drugs has led to many police, military and
MI personnel posted at the border, and DKBA members becoming drug
addicts. Furthermore, there have been shooting incidents and lapses in
duties committed under the influence of drugs at the border.
Xinhua: Senior CPC Official Meets Myanmese Delegation
Xinhua, Beijing, 26 October 2000. Li Ruihuan, a Standing Committee
member of the Political Bureau of the Chinese Communist Party Central
Committee, met with Win Myint, vice-president of the Union Solidarity
and Development Association of Myanmar, and his delegation here today.
Li, who is also chairman of the National Committee of the Chinese
People's Political Consultative Conference (CPPCC), said China and
Myanmar are friendly neighbors faced with the same task of developing
the economy and improving living standards, and they hold the same or
similar views on many international issues, Li said, stressing that it
is in the fundamental interests of both countries to further advance
their friendly cooperation.
Li said China has undergone dramatic changes since its reform and
opening up. There are broad prospects for economic development of
Myanmar, which enjoys abundant forest,
mineral and tourist resources.
The development of the two countries is mutually beneficial, Li said,
adding that China sincerely hopes that Myanmar will realize economic
development and national prosperity, allowing a happier life for its
Win Myint, who is also the third secretary of the State Peace and
Development Council of Myanmar, agreed with Li that Myanmar and China
are close in their brotherly relations.
Myanmar, as always, will stick to its policy of developing friendship
with China, he affirmed.
He also voiced admiration of China's great achievements in the past over
20 years, expressing the hope that bilateral economic and trade
cooperation would be further reinforced so as to realize a common
United Nations: Statement of Burma Rapporteur to Commission on Human
The following statement by Judge Lallah to the UN General Assembly was
read out on his behalf by Mr Bacre Ndiaye, Director of the New York
Office of the High Commissioner for Human Rights, on 26 October 2000.
SITUATION OF HUMAN RIGHTS IN MYANMAR
STATEMENT BY JUDGE RAJSOOMER LALLAH,
SPECIAL RAPPORTEUR OF THE COMMISSION
ON HUMAN RIGHTS
TO THE GENERAL ASSEMBLY
26 OCTOBER 2000
I must apologise for not being present in person. This is due to some
unfortunate administrative misunderstanding.
Since my appointment as Special Rapporteur in mid 1996, this is the
fifth occasion on which I am presenting to the General Assembly an
interim report on the situation on human rights in Myanmar. The present
report deals with information gathered up to the end of July this year.
Between that date and the present time, there have been some
developments, the most important of which I feel bound to comment upon.
The General Secretary of the National League for Democracy, Daw Aung San
Suu Kyi, was stopped along with some members
of her party while on their way to attend meetings at a party branch
outside Yangon. After some ten days, they were all forcibly taken back
to Yangon where Daw Aung Suu Kyi was held incommunicado in her residence
for some 12 days. Other leaders of her party were either detained or
held incommunicado. The headquarters of the party were ransacked and
This was not the first time on which Daw Aung San Suu Kyi had been
subjected to a stand off or was prevented from attending branch meetings
outside Yangon. She has since this last occasion been prevented from
taking the train to attend meetings of her party outside Yangon. The
policy of the military authorities over the past several years still
continues to privilege the repression of all political activity over the
engagement in a genuine political dialogue, as evidenced in my past
reports. This policy continues to be implemented, first, by the
enforcement of laws, orders and administrative action designed to
criminalise and sanction the exercise of normal political activity;
secondly by the intimidation, harassment, detention or imprisonment of
the NLD leadership and membership, and of other opposition groups;
thirdly, by the severe restrictions that govern their movement outside
their particular locality and, fourthly, by the large scale closure of
branch offices of the party. This is a policy which inherently violates
the fundamental freedoms of association, assembly and movement as well
as freedom of expression, all of which have found their consecration in
the Universal Declaration of Human Rights as further explicated in the
At paragraph 19 of this report I have referred to the arrest, trial and
conviction of Mr James Mawdsley. I have noted the absence of an arrest
warrant, of legal representation and of time to prepare his defence,
including the inordinately heavy sentence of imprisonment imposed upon
him. A few weeks ago the UN Working Group on Arbitrary Detention came to
the conclusion that Mr Mawdsley was being arbitrarily detained and
called upon the Authorities to remedy the situation. This is not
surprising as he was again subjected to a sentence which had already
been commuted. Further, what was held against him was the handing out of
pro-democracy leaflets - an act which is normal in any society and quite
in accordance with international norms governing the exercise of freedom
of xpression. It would appear that Mr. Mawdsley was being held in
solitary confinement and had been beaten up in prison. I am happy to
report that Mr. Mawdsley has now been released and sent back to his
country. I am also happy to report that six elderly prisoners have been
This report and my last report to the Commission on Human Rights cover
the situation of human rights, in so far as it affects not only he
exercise of civil and political rights but also, in a more systematic
way, economic, social and cultural rights. Needless to say, precisely
because of the negation of political rights, the people have no say in
the economic, social and cultural policies that affect all aspects of
their everyday life in the short term and also for their future
survival, well being and development.
I would like to touch upon two aspects of the lives of people in Myanmar
which continue most adversely to affect their civil as much as their
economic and social rights, namely, the food situation and forced
Extreme poverty and the absence of food security have been the result of
a policy characteristic of the militaristic approach adopted by the
Authorities. This policy is implemented by arge-scale forced relocation
in the ethnic areas, accompanied as it has been, by forced labour,
inhuman treatment and other much graver violations of human rights,
depriving the rural population of their lands and consequently, of their
means of subsistence. Forced relocation has now been going on for
many years and would appear to be in furtherance of a scorched earth
policy, or what is generally known as the "four cuts" strategy adopted
by the military, that is to say, depriving insurgents or suspected
insurgents of, firstly, food, secondly, funds and resources, thirdly,
sources of intelligence and information, and, fourthly, possibilities of
recruitment. All this is exacerbated by the army forcibly taking,
without any payment, any rice, poultry and other farm animals to feed
themselves and burning off the rest of the crops.
In those areas where people still do farming, the compulsory sale to the
Authorities of rice is still bedevilled by the very low price and the
quota fixed by the Authorities. The situation of food scarcity has been
the subject of the well documented proceedings of the Tribunal on Food
Security of the non-governmental Asian Commission on Human Rights which
heard many witnesses. I referred to these proceedings and the
conclusions reached in my last report to the Commission on Human Rights
(paragraph 36 and 37 of E/CN4/2000/38).
At paragraph 43 of my present report, I have referred to the resolution
adopted in June this year by the International Labour Conference in view
of Myanmar's persistent failure to comply with ILO Convention No 29, as
found by the Commission of Enquiry. This resolution was scheduled to
have effect from 30 November this year, unless the Governing Body of the
ILO was satisfied that sufficient concrete legislative, executive and
administrative measures had, in the meantime, been taken to give effect
to the recommendations of the Commission of Enquiry and put a stop to
the practice of forced labour. It is my understanding that an ILO
mission has been sent to Myanmar so as to report to the Governing Body,
which is scheduled to meet next month. I greatly hope that the
Authorities in Myanmar have made use of the breathing space afforded to
them to put an end to forced labour in their law and practice.
In conclusion, may I say that it is my unfortunate and regrettable duty
to address this Assembly year after year to report on a human right
situation which shows no improvement and which discards the repeated
resolutions of this Assembly and the Commission on Human Rights. It
remains my firm conviction that the situation will experience a
fundamental change if the Authorities begin to privilege a genuine
political dialogue over military and repressive solutions to a problem
which is essentially political and which is so adversely affecting not
only the people of the country but also neighbouring countries in the
region. Some of these countries experience serious and periodic flows of
displaced persons or refugees when they are themselves facing difficult
It remains my hope that the Authorities in Myanmar, after the lapse of a
decade since the conduct of the last general elections, begin to respond
in a positive way to the resolutions which have been repeatedly adopted
by the General Assembly and the Commission on Human Rights.
_______________ ECONOMY AND BUSINESS _______________
The Wall Street Journal: Pipeline Project in Burma Puts Cheney in the
By PETER WALDMAN (Staff Reporter)
October 27, 2000
Among the many news releases issued by Halliburton Co. under former
Chief Executive Officer Richard Cheney, one stands out for what it
The announcement, in December 1996, trumpeted the "success story" of a
Halliburton joint venture that builds undersea pipelines, unveiling
several large contracts in Asia and Europe for the London-based
operation. Missing from the rundown, however, was any mention of one of
the venture's biggest contracts that year -- in Burma.
Halliburton's Burma connection is a potentially embarrassing episode for
Mr. Cheney, now in the final stretch of his campaign as the Republican
vice presidential candidate. Since 1988, when Burmese's army killed
thousands of pro-democracy protesters to stay in power, the country's
military junta has been widely condemned as one of the world's most
brutal violators of human rights. The U.S., which withdrew its
ambassador and suspended aid to Burma a decade ago, banned new U.S.
investment in the country in 1997 and has led international efforts to
isolate the regime.
The sanctions don't cover service contractors such as Dallas-based
Halliburton and the energy-services giant's subsidiaries, nor do they
affect U.S. investments in Burma prior to 1997. Hence, Halliburton,
which today remains one of the last U.S. companies to keep an office in
Burma, doesn't appear to have violated any laws by working there. Most
U.S. companies, including oil giants Texaco Inc. and Atlantic Richfield
Corp., pulled out of Burma years ago.
Mr. Cheney, according to his press secretary, was kept "generally aware"
of Halliburton's foray into Burma to work on a major pipeline project.
He has long opposed unilateral U.S. business sanctions on the grounds
that they put American businesses at a disadvantage to foreign rivals
and that the U.S. can influence a foreign government best by doing
business with the country, rather than placing embargoes on it. Mr.
Cheney's position dates back at least to his years in Congress, when he
opposed such actions against South Africa's apartheid regime. After
taking the helm of Halliburton, he became one of corporate America's
most vocal opponents of sanctions.
"I personally have spoken many times that unilateral sanctions, I think,
are a mistake. They almost never work," he said in March when asked if
he supported easing sanctions against Iran. In an antisanctions speech
in 1996, he also cited restrictions on business in Libya and Nigeria.
"We seem to be sanction-happy as a government," he said in 1997,
according to an oil-industry newsletter. "The problem is that the good
Lord didn't see fit to always put oil and gas resources where there are
Halliburton itself has been active in opposing attempts to restrict U.S.
business dealings in Burma. In 1995, it opposed shareholder votes on
doing business there. More recently, the National Foreign Trade Council,
a lobbying group backed by Halliburton and other businesses, persuaded
the Supreme Court in June to strike down a Massachusetts law that denied
state contracts to companies that did business in Burma.
In Burma itself, the Western companies that in partnership with the
country's military rulers sponsored the pipeline and hired contractors
like the Halliburton venture already knew the project was benefiting
from forced Burmese labor and "numerous acts of violence" by Burmese
military, according to recent findings by a U.S. federal judge in Los
Angeles. In that case, U.S. District Court Judge Ronald S.W. Lew
dismissed human-rights charges brought by Burmese plaintiffs against Los
Angeles-based Unocal Corp., a principal investor in Burma's Yadana gas
field, on the grounds that the company didn't conspire to commit the
But Judge Lew's 41-page order granting summary judgment in favor of
Unocal quoted extensively from depositions, company records,
consultants' reports and State Department cables to show that the
project's French and U.S. sponsors, as far back as 1993, were well aware
of human-rights abuses in connection with the pipeline. "My conclusion
is that egregious human-rights violations have occurred, and are
occurring, now in southern Burma" along the pipeline route, a Unocal
consultant reported to the company in 1995, a year before Halliburton's
London joint venture agreed to install the offshore portion of the
"The most common" abuses, the consultant reported, as quoted in Judge
Lew's order, "are forced relocation without compensation of families
from land near/along the pipeline route; forced labor to work on
infrastructure projects supporting the pipeline ... and imprisonment
and/or execution by the army of those opposing such actions. Unocal, by
seeming to have accepted [Burma's] version of events, appears at best
naive and at worst a willing partner in the situation." A different
consultant's report for Texaco in 1996 noted the "harsh conditions" of
unpaid laborers on the Burma pipelines, "including young children."
In addition to Judge Lew's findings, several human-rights groups, the
United Nations Special Rapporteur on Burma, the U.S. Department of Labor
and the International Labor Organization have all published detailed
reports on forced labor and other human-rights violations in Burma, with
particular references to the Yadana project. President Clinton, in a
speech last year at the ILO annual conference in Geneva, singled out
Burma for "flagrant" rights abuses and called on other nations to help
the Burmese people. "We must stand by them and keep up the pressure for
change," the president said.
Halliburton hasn't been mentioned specifically in any of these
instances. In his order, Judge Lew made no mention of Halliburton or
other contractors and no finding on whether they were aware of the use
of forced labor on the project.
A Unocal spokesman, while praising Judge Lew's legal reasoning for
dismissing the case, denied the judge's findings that the project's
Western partners knew of and benefited from human-rights violations by
Burmese troops. He says the Yadana field is now ramping up, as planned,
to produce 525 million cubic feet of gas a day by the end of this year,
to be delivered via pipeline to Thailand.
"We acknowledge human-rights abuses have occurred in Burma," the Unocal
spokesman says, "but, as the judge rightly pointed out in his order, we
have no control over the military forces of Burma. We continue to
believe the presence of Unocal and other companies with high standards
of business practices can have a positive impact on Burmese political
and economic climate."
At Halliburton, a spokeswoman says the company used no forced labor on
the pipeline. But she refuses to comment on the company's decision to
work in Burma or whether Halliburton was aware of human-rights or
security concerns in Burma during Mr. Cheney's tenure. "From time to
time, several non-U.S. subsidiaries of Halliburton Company have
performed services for oil-and-gas companies operating in Burma," she
says in a prepared statement. "These business activities have been
conducted in compliance with applicable U.S. law."
Halliburton refers questions concerning Mr. Cheney, its CEO from 1995
until he was chosen as Texas Gov. George W. Bush's running mate in July,
to Bush campaign headquarters in Austin, Texas.
There, Cheney press secretary Juleanna Glover Weiss says the former
Halliburton CEO was kept abreast of the Burma operations, all of which,
she says, were "consistent with U.S. policy and U.S. law." She says the
decision to work in Burma was made by the Italian management of
Halliburton's joint-venture partner, Milan-based Saipem SpA, a unit of
Italian energy company ENI SpA. She adds that Mr. Cheney wasn't involved
in that decision, but was aware of it. Through Ms. Weiss, Mr. Cheney
declined requests for an interview to discuss the level of his
involvement in Halliburton's Burma project.
Like South Africa in the 1980s, Burma has been a poster child of the
corporate-accountability movement in the past decade. The most powerful
calls for an economic embargo of Burma emanate from Aung San Suu Kyi, a
winner of the Nobel Peace Prize, whom the junta has held under house
arrest since her political party won 1990 elections that were deemed
generally fair. She and other democracy campaigners have been
particularly critical of the Yadana gas project, arguing that it has
fostered military brutality, as well as raised money to bolster the
"Our message is clear: This is not the time to do business in Burma,"
says Bo Hla-Tint, minister for the foreign-affairs committee of Burma's
elected government in exile. "The oil companies are propping up the
junta by giving them legitimacy and hard currency that it desperately
needs to buy arms."
Besides Unocal and Halliburton, other U.S. energy companies recently
active in Burma include BJ Services Co., Houston, and J. Ray McDermott
SA, a unit of McDermott International Inc., New Orleans. The McDermott
subsidiary built much of the offshore infrastructure for the Yadana
project, such as various platforms and wellheads in the Andaman Sea.
McDermott's Burma projects are described in detail on the company's Web
site, including the revenue garnered by the company in Burma: a total of
$162 million in 1997 and 1998, making the country J. Ray McDermott's
fifth-largest revenue source in the two-year period, according to the
Halliburton's Web site, which archives company news releases and
regulatory filings going back many years, makes no mention of Burma,
except in a long list of places where prospective job applicants may
work. In a long directory of global offices, it has no entry for
Rangoon. A Halliburton spokeswoman confirms that the Rangoon office is
Other corporate Web sites indicate that Halliburton and various
joint-venture partners operated in Burma as far back as the early 1990s,
helping do precommissioning services on the Yadana project. In March
1996, according to industry reports, Mr. Cheney himself presided over a
signing ceremony in India on an agreement for Halliburton's Brown & Root
International unit to supply gas produced in Burma to India. Later in
1996, according to Offshore Data Services, a Houston research firm, the
Halliburton venture was awarded the big Yadana undersea pipeline
contract, a year or so after Mr. Cheney became Halliburton's CEO.
For the project, the London-based joint venture, called European Marine
Contractors Ltd., was responsible for laying 365 kilometers (about 226
miles) of 36-inch pipe, connecting the Yadana field with the Burma
peninsula near the village of Daminseik. The Halliburton news release of
December 1996 that didn't mention the Burma project was datelined at
corporate headquarters in Dallas and did recount in great detail
European Marine's recent triumphs in France, Holland, Britain, Norway
and China. Joint-venture partner Saipem features the Yadana pipeline on
its Web site as one of its major achievements.
A Halliburton spokeswoman says she was unable to find out why the
company omitted the Yadana contract from its 1996 news release on
European Marine's exploits. She says Halliburton has never tried to
conceal its work in Burma.
The pipeline's financial value to Halliburton is difficult to ascertain.
Halliburton's financial disclosures show that its European Marine joint
venture was highly profitable, and that its revenue and net income
soared in 1997, the year most of the Yadana work was completed. That
year, European Marine earned net income of $48.5 million, up 11% from
1996, on a 77% surge in revenue, to $436.1 million. The Halliburton
spokeswoman declines to explain the gains.
Though the Halliburton spokeswoman didn't respond to human-rights or
security questions, a McDermott spokesman says J. Ray McDermott, like
the Halliburton venture, did most of its work offshore. Thus, he says,
the McDermott unit didn't encounter any problems between civilians and
Still, according to the 1996 report of the U.N. Special Rapporteur on
Burma, Judge Rajsoomer Lallah of Mauritius, Burmese villagers were
forced to work on portions of the project offshore, as well as on the
mainland. For example, in May 1995, the U.N. Rapporteur wrote, the
military ordered about 200 villagers to go to Heinze Island, an
uninhabited shoal in the Andaman Sea where Burmese forces set up a base
camp to guard construction work on the offshore pipeline.
On Heinze Island, Judge Lallah found, the villagers were required to
work for two weeks without pay, clearing land, building bamboo barracks
and constructing a helicopter pad high atop a steep hill -- probably for
later use by the Western companies that built the pipeline, according to
Burmese human-rights monitors. The villagers were forced to pay their
own transportation costs to the island; those who refused to go were
arrested and sent into rebellious areas to serve as porters for the
military, Judge Lallah wrote.
Arguments in defense of Burma's human-rights record are hard to come by.
But Unocal did offer one in the Los Angeles federal court case. Unocal,
noted Judge Lew in his order, took the position that the Burmese
military's use of forced labor is akin to public-service requirements
that existed in some U.S. states in the early 20th century.
Specifically, Unocal compared Burma's actions to those of the state of
Florida, which once required residents to pay a tax of $3 or work on
roads and bridges for six days a year.
"Unocal's public-service argument is not compelling," Judge Lew
concluded, largely because "Unocal knew that forced labor was being
utilized and that the Joint Venturers benefited from the practice."
Far Eastern Economic Review: Mandalay Migraine
Issue cover-dated November 2, 2000
BURMA - Mandalay Migraine
The Rangoon junta's seizure of a joint-venture brewery could test
Asean's resolve and its ability to protect foreign investors
By Shawn W. Crispin/BANGKOK and Bertil Lintner/CHIANG MAI
SINGAPORE BUSINESSWOMAN Win Win Nu has spent the past two years vainly
battling in Burma's courts over the government's seizure of her
investment in a thriving joint-venture enterprise in her former
Her calls for help to the Association of Southeast Asian Nations, or
Asean, have been met with silence. How her case is resolved, if at all,
will speak volumes about Asean's ability to protect foreign investment
in the region through its untested dispute-settlement mechanism.
The case, if taken up by Asean, could also serve as a test of Burma's
commitment to the organization. Burma first saw Asean as a ticket to
participation in the region's economic growth of the mid-1990s. Since
then, however, it has come to regard membership as a liability because
it helps to put the ruling military's repressive policies under the
Win Win Nu's case is a compelling one. When Burma opened its doors to
foreign investment in the early 1990s, she spotted a good business
opportunity. Helped by influential contacts in the ruling State Peace
and Development Council, including intelligence chief Lt.-Gen. Khin
Nyunt, Win Win Nu forged a joint venture between her Singapore-based
company, Yaung Chi Oo Trading, and the government's Ministry of Industry
No. 1 in 1993 to bring the bankrupt Mandalay Brewery bubbling back to
Win Win Nu, who took a 45% stake in the venture, was in charge of
operations and marketing while the ministry handled the books. Profits
would be shared.
The fresh infusion of modern management, technology and capital worked
wonders. In six months, output increased 10-fold, salaries leapt 20-fold
and cash flows soared. Mandalay Beer became a recognized brand name
after the brewery opened more than 40 pubs nationwide. The company also
became one of the country's largest domestic taxpayers.
Burma's experiment in opening to foreign investment was paying off
handsomely, stimulating local economic activity while generating
revenues for the depleted state coffers.
But the joint venture came to an abrupt halt on November 11, 1998, when
armed soldiers and police seized the brewery on the orders of SPDC
Chairman Gen. Than Shwe. Win Win Nu says her local bank accounts were
frozen and claims she was threatened with arrest for misappropriating
funds, which she denies. She fled the country as the junta took over
operation of the brewery just three months after the final payment of
her pledged $6.3 million initial investment.
"Because we were so successful, the brewery became an easy target for
greedy soldiers and bureaucrats," Win Win Nu says. "We fell on the wrong
side of the power struggle and as a result lost our business.
Unfortunately in Burma that's what matters--political connections, not
Burmese law explicitly bars nationalization of foreign investments. But
after fighting her case unsuccessfully through the local courts for 18
months, Win Win Nu was forced to liquidate her share in the company.
Court papers indicate she was facing an uphill battle by going through
Burma's murky legal system. The first team of liquidators was not even
led by a lawyer but by local tycoon Steven Law, whose family runs
Burma's largest privately owned business group. The junta most probably
enlisted the services of the Laws because of their perceived business
acumen, a rare commodity in military circles in Burma.
Win Win Nu is now lobbying to have her case put before Asean's untested
dispute-settlement mechanism on the grounds that Burma's seizure of
Mandalay Brewery directly violates the commitments to protect foreign
investment that it entered into upon joining Asean in 1997.
Asean Secretariat officials in Jakarta say they would be charting new
territory if they took on the case. So far, the regional body, which has
shown consistent impotency in mediating regional disputes on both
political and economic fronts, has failed to respond to appeals for
arbitration sent by Win Win Nu's Singapore lawyers. An Asean official
claims the complaint was not filed through the "proper channels."
Under normal circumstances, the businesswoman should have grounds for
confidence, judging by the results of an independent report into her
case commissioned by the government's Myanmar Investment Commission and
released in June last year. Local PricewaterhouseCoopers representative
U Hla Tun found the takeover was conducted "without legal sanction" and
that the charges of misappropriation of funds against Win Win Nu were
unsubstantiated, according to a copy of the confidential report seen by
the REVIEW. The investigation also warned that the takeover could
"tarnish the 'open market economy' policy declared and prescribed by the
government of the Union of Myanmar."
While Win Win Nu seems to be the first foreign investor to have been
targeted for de facto nationalization, Burma's reputation as an
attractive destination for foreign investment had already started
turning sour. Ever since the mini-boom of the mid-1990s, red tape,
bureaucratic hassle and enduring worries of political instability have
slowed foreign investment to a trickle. Now, the SPDC's apparent
unwillingness to abide by both its own and international laws protecting
foreign investment could further dampen potential investors' spirits.
"Although the policies on the books are unchanged, the SPDC attitude
towards small-scale foreign investment has changed 180 degrees since the
crisis," says a Bangkok-based lawyer who has clients with investments in
The takeover of Mandalay Brewery gives more ammunition to those who
argue that the junta is moving away from its flirtation with economic
openness, a position Khin Nyunt once trumpeted, to the chagrin of army
commander Gen. Maung Aye. When the local currency, the kyat, plunged
during the Asian Crisis, the Maung Aye group seemed to prevail with
their argument that too much openness, too fast, was a threat.
Until now, many looked at SPDC leader Than Shwe as the moderating force
that kept these two power bases from breaking into factions. But Than
Shwe's order to seize Mandalay Brewery may signal that the ailing
chairman will give his blessing to Maung Aye regarding economic
Win Win Nu says Than Shwe ignored numerous warnings from Khin Nyunt's
office about the negative international fallout that nationalizing the
brewery might incur. (Burma's Investment Commission, the Ministry of
Economic Planning and Economic Development and Than Shwe's office didn't
reply to faxes and phone calls from the REVIEW.)
Meanwhile, Asean's reputation and overall viability have continued to
sag. Investment in the region has almost ground to a halt since the
crisis, particularly in Burma. Asean has worked to restore investors'
confidence in the region by sending promotion missions to the United
States, Japan and Europe in recent months, while also pushing to enhance
the transparency of member nations' investment regimes.
So far, though, that has been a hard sell against the political
uncertainties in Indonesia, the Philippines and even Thailand. And
without a firm response to the junta's takeover of Mandalay Brewery,
that sell could become even harder as perceptions grow that investment
protection codes are only so much unenforceable parchment.
But perhaps one clear lesson from the Mandalay Brewery case is the
pervasive influence of nepotistic policies and an arbitrary legal system
on the success or failure of any foreign business in Burma.
"If rules and regulations are not enforced for the layman, that is bad
for Asean, bad for me, bad for everyone," says Win Win Nu.
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