August 5, 2019 / 5:06 AM / 3 months ago

U.N. urges sanctions on Myanmar army businesses, says foreign partners could be complicit

JAKARTA (Reuters) - United Nations investigators urged world leaders on Monday to impose targeted financial sanctions on companies linked to the military in Myanmar, and said foreign firms doing business with them could be complicit in international crimes.

Marzuki Darusman, chairperson of the Independent International Fact-finding Mission (IFFM) on Myanmar, gestures during a news conference at the United Nation office in Jakarta, Indonesia, August 5, 2019. REUTERS/Sekar Nasly

A panel of human rights experts identified scores of companies tied to the army, which controls vast swathes of Myanmar’s economy through holding firms and their subsidiaries, and is accused by the U.N. of executing a campaign with “genocidal intent” against the Rohingya minority.

More than 730,000 Rohingya, members of a persecuted Muslim minority, fled Myanmar’s Rakhine state into neighbouring Bangladesh amid a military-led crackdown in August 2017 that the U.N. and Western countries have said included mass killings and gang-rapes.

The U.N. investigatory panel condemned the violence in a report last year that called for the economic isolation of the military. Investigators said the purpose of the new report was to help countries cut financial ties with all army-linked companies.

“For the first time, this report comes out with a clear picture of the involvement of specific European and Asian companies, and makes a point that in fact there is this relationship and it’s a violation of U.N. treaties and U.N. norms,” panel chairman Marzuki Darusman said in an interview in the Indonesian capital of Jakarta on Sunday.

A military spokesman did not answer phone calls seeking comment. Zaw Htay, a spokesman for civilian leader Aung San Suu Kyi’s government, could not immediately be reached for comment. The Myanmar government was sent an advance copy of the U.N. report.

The investigators identified at least 59 foreign companies with some form of commercial ties to the Myanmar military, including firms from France, Belgium, Switzerland, Hong Kong and China. Of those, 15 operate joint ventures with the two military conglomerates or their subsidiaries, the report said.

Calling for the imposition of an arms embargo on the country, the investigators also named 14 companies that have sold weapons and related equipment to security forces in the country since 2016, including state-owned entities in Israel, India, North Korea, and China.

Any foreign business activity involving the army and its conglomerates “posts a high risk of contributing to, or being linked to, violations of international human rights law and international humanitarian law”, the report said.

“Corporations and individuals responsible within that corporation can be prosecuted,” Darusman said, adding that the arms they provide allow the military to “continue their oppression to the Myanmar people”. A U.N spokesman later said that Darusman meant to refer to individuals, not corporations.

Myanmar has previously rejected the U.N.’s categorisation of the violence in Rakhine as “one-sided”. It says that military action that followed militant attacks on security forces in August 2017 was a legitimate counter-insurgency operation.

SPRAWLING HOLDING COMPANIES

The United States, the European Union, Australia, and Canada have imposed sanctions on senior military officers including most recently Commander-in-Chief Min Aung Hlaing, hit with a travel ban by the State Department in July.

The U.N. has said top generals should be prosecuted for genocide and the International Criminal Court has begun a preliminary probe.

The EU has also been considering stripping the country of tariff-free access to the world’s largest trading bloc.

The military’s two major conglomerates, Myanmar Economic Holdings Limited (MEHL) and Myanmar Economic Corp (MEC) are sprawling holding companies with investments spanning various sectors including gems, copper, telecoms and clothing. They own two of the country’s largest banks, Myawaddy and Innwa.

The two conglomerates have numerous subsidiaries – the report identified 120 businesses in various sectors, from tourism and banking to construction and gem mining, as owned by MEHL and MEC, as well as another 27 linked to the two companies through corporate structures.

The revenue generated by such businesses strengthens the army’s autonomy from civilian oversight and provides financial support for their operations, investigators said.

They urged investigations into 45 companies that made donations to Myanmar’s military at three funding ceremonies held by Commander-in-Chief Min Aung Hlaing at the height of the violence in Rakhine in 2017.

During these ceremonies he called for funds to support the military in Rakhine and to build a barrier fence on the border with Bangladesh, the U.N said, adding that more than $10 million was donated.

Two local companies, KBZ Group and Max Myanmar, donated $2.5 million and more than $900,000 to Min Aung Hlaing respectively, the report said, in part to fund the border fence “knowing that it would contribute to the suffering and anguish associated with preventing the displaced Rohingya population from returning to their homes and land”.

A spokesman for KBZ Group said the company had not been contacted by the U.N during its investigation and was “not yet in a position to comment further”. Max Myanmar Group said in a statement it “categorically denies” the allegations, saying the funds were “solely and particularly intended for reconstruction and rehabilitation of the society”.

Reporting by Angie Teo and Poppy McPherson; Additional reporting by Thu Thu Aung; Editing by Raju Gopalakrishnan & Simon Cameron-Moore

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