MAC: Mines and Communities

Myanmar's military elite profit from Jade

Published by MAC on 2015-10-23
Source: Statement, Guardian, BBC (2015-10-23)

Previous article on MAC: Further jade conflict erupts in Burma

The Global Witness report can be downloaded at: https://www.globalwitness.org/reports/myanmarjade/

Myanmar's military elite and drug lords run £20bn jade trade, report says

Politicians’ relatives, the army and a drug baron wanted by the US are making vast profits from gems, Global Witness investigators say

Oliver Holmes in Bangkok

The Guardian 

23 October 2015

A 12-month investigation has revealed Myanmar’s secretive £20bn jade trade, which is controlled by notorious Burmese military leaders and drug lords who maintain an exclusive grip on the lucrative gemstone business.

The report, released on Friday by Global Witness, says that ahead of elections next month the findings show how much powerful elites and former rulers have to lose from open and fair polls. The election has been presented to the world as one of the country’s final steps towards democratic reform.

“Myanmar’s jade business may be the biggest natural resource heist in modern history. Since 2011, a rebranded government has told the world it is turning the page on the ruthless military rule, cronyism and human rights abuses of the past,” said Global Witness analyst Juman Kubba.

“But jade – the country’s most valuable natural resource and a gemstone synonymous with glitz and glamour – reveals a very different reality.

“This massive, dirty business is still controlled by a rogues’ gallery of former generals, drug barons and men with guns. Hidden behind obscure companies and proxy owners, these elites cream off vast profits while local people suffer terrible abuses and see their natural inheritance ripped out from beneath their feet.”

The 128-page report by the London-based group puts the value of Myanmar’s jade production as high as £20bn in 2014 alone. This figure equates to nearly half of the entire country’s GDP and over 46 times national spending on health.

The report says relatives of notorious figures, including former dictator Than Shwe and ruling party members Ohn Myint and Maung Maung Thein, are major players in the jade industry. Than Shwe’s junta was criticised for human rights abuses before he stood down in 2011.

Myanmar’s armed forces, officially known as the Tatmadaw, and drug lord Wei Hsueh Kang, wanted by the US on drugs charges and carrying a $2m reward, are also key beneficiaries, the report says.

“We’re very confident about the roles of the families of Than Shwe, Ohn Myint and Maung Maung Thein,” Mike Davis, Asia director at Global Witness, told the Guardian. “We have quite a depth of evidence on all three cases, based around jade business insider testimony, company records and official documents and maps showing what companies have what jade mines.”

The information on the sums of money that their families’ companies made came from official records of the government-organised Myanmar Gems Emporium events in 2013 and 2014, Davis said.

The dark green rock is mostly sold to Myanmar’s northern neighbour China, to be used in jewellery and ornaments. A necklace made of jade beads was sold for £17.7m at an auction in Hong Kong last year.

The report says the destructive industrial mining of jade is also fuelling a separatist conflict in Myanmar’s northern Kachin state, where the central government is battling the 10,000-strong Kachin Independence Army (KIA). The fighting has displaced 100,000 people.

“The industry generates funds for both sides in a war,” the report says. “This creates incentives for military commanders and hardliners in government to prolong the conflict and protect the ill-gotten assets they stand to lose if the jade business is run more openly and fairly.”


Who controls Myanmar's jade industry?

http://www.bbc.co.uk/news/world-asia-34612320

23 October 2015

Myanmar (also known as Burma) will be going to the polls in just over two weeks, the first elections since a nominally civilian government was introduced four years ago, ending nearly 50 years of military rule.

But a new report from transparency campaigners Global Witness has found that the country's lucrative jade industry - worth a staggering $31bn (£20bn) last year alone - is still largely in the hands of the former military junta.

That is almost half of the country's entire income.

But as Jonah Fisher reports, very little of that money makes it into state coffers.

[Follow link above for video report]


$31 Billion jade trade enriches elite, fuels ethnic conflict: report – Seamus Martov

The Irrawaddy

23 October 2015

A lengthy and detailed 120-page report released on Friday in Rangoon by the London-based NGO Global Witness, reveals that vast revenues generated by Burma’s lucrative multi-billion dollar jade trade continue to flow into the pockets of senior military officials, key figures in the ruling Union Solidarity Development Party (USDP) and well connected crony firms including Asia World and Ever Winner.

Based on 12 months of research, the report titled “Jade: Myanmar’s ‘Big State Secret,’” estimates that Bu rma’s jade production was valued as high as US$31 billion in 2014, a figure that vastly overshadows the country’s other major resource earners, including natural gas exports.

Although a series of reforms have been enacted in Burma since the army officially ceded control of the country in 2011, a group of shadowy firms controlled by individuals closely connected to Burma’s previous military regime, including the families of Sen-Gen Than Shwe, former northern commander Ohn Myint and other key figures from the military era, continue to dominate the jade trade—an industry that is, according to Global Witnesses research, marked by government secrecy and widespread corruption.

“Myanmar’s jade industry may well be the biggest natural resource heist in modern history. The sums of money involved are almost incomprehensibly high and the level of accountability is at rock bottom,” the report concludes.

According to Global Witness, this plundering has been made possible by the central government’s hold on Hpakant in western Kachin State, where the jade is mined. Hpakant came under government control after 1994 when the then-ruling military regime reached a ceasefire with the Kachin Independence Organization (KIO) and its armed wing the Kachin Independence Army (KIA).

Although there has been fighting in Hpakant since the June 2011, when the Kachin ceasefire with the central government collapsed, the army has continued to hold most of Hpakant, including its most lucrative jade deposits. Government authorities in Naypyidaw “have full control of the major jade mines in the Hpakant area. They decide who has access to valuable concessions and on what basis” says Global Witness. A position that means that decision makers can extort huge payments from jade firms, according to jade businessmen interviewed by Global Witness.

The Burmese armed forces, or Tatmadaw, remain the most powerful institution in post-junta Burma. Those forces, the report suggests, bear much of the responsibility for the looting of Burma’s jade.

“The Tatmadaw’s main priority in Hpakant is milking money from the jade business and this imperative frequently trumps its designated function of fighting the KIA.”

Citing government documents and well connected sources in the jade industry, the report also uncovers in unprecedented detail the jade operations of army controlled firms, a finding that calls into question claims by some analysts that the army had begun to withdrawal its dominant position in the economy under a nominally civilian government.

The military controlled Union of Myanmar Economic Holdings Ltd (UMEHL) also known as Myanma Economic Holding Limited, Myanmar Economic Corporation (MEC) and Northern Star Gems sold $283 million dollars of jade at the 2013 and 2014 annual jade fairs in Naypyidaw, according to previously unpublished figures obtained by Gl obal Witness.

But most of the jade is not sold at the annual emporium. The British NGO estimates that 50 to 80 percent of the jade mined annually is smuggled across to China, where the precious stone is highly sought after.

The High Cost of Jade for Kachin State

The report notes that jade mining in Kachin State’s Hpakant Township has created a “dystopian wasteland in which the local population grapples with environmental and social collapse on a daily basis.” Kachin State’s lucrative jade deposits are more of a curse for the local population than anything else. In addition to destroying local rivers with dams and obliterating Hpakant’s local geography, rampant drug use among the poorly paid mine workers has transformed what was once a sparsely populated area with only small-scale mining ventures into a desolate moonscape.

“We feel that we have no security for our lives here… Hpakant will soon disappear without any benefit t o the local people”, says a pastor from Hpakant quoted in the report.

Few—if any—of the huge revenues generated by mining in Kachin State are spent on health care or schools in the remote state, a situation that has only reinforced longstanding distrust of the central government by the local population.

The KIO has, as the report points out, resumed levying their own taxes on jade mining firms once the ceasefire ended, a position supported by many Kachin who see the organization as a more legitimate government structure than the central government.

Civil society groups, such as the Kachin Development Network Group (KDNG), have recommended a full stop to mining in the area until a new system can be put in place that would respect land rights. Such proposals are rapidly rounding up support among local populations throughout the state, but are hardly gaining traction in Naypyidaw, where, according to Global Witness, Burma’s ex-military rul ers have strong incentives to maintain the status quo.

“Every cabinet minister is involved in jade—it’s their best source of income, even though they have never been to Hpakant,” one business insider told Global Witness.

Than Shwe’s Family Earning Millions From Jade

The report identified two firms, Myanmar Naing Group and Kyaing International, as entities controlled by Than Shwe’s sons Kyaing San Shwe and Htun Naing Shwe. Documents obtained by GW indicate that these firms hold licenses for six jade mines in Hpakant.

The latter firm appears to be named after the retired military supremo’s wife, Daw Kyaing Kyaing. A massive flooded mine crater located in Hpakant’s Maw Sizar jade tract, where Kyaing International has its lucrative mining concession, has been named after her, a testament to the low opinion local people still hold of the former first lady, who is reportedly still very much involved in her family’s business activ ities.

A third firm, Kywe Wa Sone—registered in English as “Richest Gems”—is headed by an individual who serves as a director of both Kyaing International and Myanmar Naing Group. According to businessmen in the jade trade interviewed by Global Witness, Kywe Wa Sone is also controlled by Than Shwe’s family.

“The Than Shwe’s family’s [sic] stake in a corrupt and militarised jade business poses a serious challenge to reformers’ efforts to bring real change to Myanmar’s extractive industries, and to peacemakers’ attempts to forge a lasting settlement in Kachin State,” the report states. Moreover, firms controlled by the families of Than Shwe, retired Gen. Maung Maung Thein and current Union Minister Ohn Myint accounted for some $220 million in sales at the 2014 government-run jade emporium in Naypyidaw.

Minsiter Ohn Myint’s Jade Connection

Union Minister for Livestock, Fisheries and Rural Development Ohn Myint, who previously served as the army’s Northern Regional Commander during the final years of the State Peace and Development Council (SDPC), was the highest serving general in Kachin State. According to Global Witness research, this afforded him a great deal of power to decide who mined what in Hpakant.

Global Witness has concluded from their research that Ohn Myint still has connections to the jade trade by way of firm a called Myanmar Win Gate Gems and Jewellery Mining Co. Ltd. Two of the firms directors are Kyaw Thiha, a name shared by Ohn Myint’s son, and Daw Nway Ei Ei Zin, Kyaw Thiha’s wife’s name.

At the 2014 jade emporium the firm posted pre-tax sales of US$80 million of jade half of which came from one piece of jade that weighed 24 KG.


Local observers welcome jade industry exposé, call for reform – Kyaw Hsu Mon

http://www.irrawaddy.org/burma/local-observers-welcome-jade-industry-expose-call-for-reform.html

23 October 2015

Locals involved in the gem trade have called for reform to the sector after an explosive new report into Burma’s jade industry.

Friday’s report, published by Global Witness, estimates the value of the country’s jade trade at US$31 billion in 2014—nearly half of the country’s gross domestic product. It claimed that most of the wealth from jade production flowed directly into the coffers of military conglomerates, well-connected firms and former junta figures, including the family of Snr-Gen Than Shwe.

Myanmar Gems and Jewellery Entrepreneurs Association secretary Tun Hla Aung said that the report was a stark reminder of the massive amounts of wealth that had been stripped from the country as a result of black market trade.

“There has been and there is still jade smuggling, for which t he country has lost a lot in tax revenue,” he said.

Aung Thein, chairman of the Myanmar Yadanar Aung Zabu Gems and Jade Company, said that existing legal restrictions on the jade industry were exacerbating the problem.

“(The cronies and the government) have power and money and they can do anything they please,” he said. “There is no regular jade market in Myanmar and we have to rely on jade and gems exhibitions which are held twice a year. If there is a market for dealing outside these exhibitions, there will no longer be smuggling.”

However, Aung Thein said he was pessimistic that the report’s publication would lead to substantial reform of the industry.

“We don’t bother complaining, because we have complained again and again and nothing has happened,” he said.

Nyo Nyo Thin, a Rangoon Division lawmaker and independent candidate for the Lower House township of Bahan, said that the report was a timely reminder o f the massive amounts of wealth and control wielded by members of the former military regime and its allies.

“Such reports showcase how much the dictatorship has inflicted losses upon the country,” she said. “I welcome such report and would like to ask local people to reveal similar cases so that the government can be kept under check. It is a reminder to the next government, and it makes clear how much the previous government owes to the people.”

Win Myo Thu, the director of Eco-Dev Myanmar, said that environmental campaigners had long sought to increase accountability in the jade industry by advocating Burma’s inclusion in the Extractive Industries Transparency Initiative (EITI) protocol, but he added that the government seemed reluctant to participate.

“We must try to put all benefit sharing, ownership arrangements and contract details into the EITI report to achieve transparency,” he said, adding that he felt great sadness that the environment around Kachin State’s Hpakant Township, home to the vast majority of Burma’s jade deposits, had been destroyed from unchecked mining.


Military monopoly on extractive industries must end, says MATA – Aung kyaw Min

Myanmar Times

14 October 2015

The Myanmar Alliance for Transparency and Accountability (MATA) has demanded an end to the military’s dominance of natural resource extraction.

The country’s natural resources – including jade, precious stones and metals – have for too long been monopolised by military-owned businesses and their favoured private sector partners, said the civil society group in a statement on October 12.

While businesspeople close to top military officials have benefited from the situation for decades, they are among the few, said MATA. The lopsided arrangement is the main root of poverty, injustice and conflict in Myanmar, and has caused harm to the security of human life, the group said.

To highlight the importance of federalism, genuine peace and good resources management, MATA held a three-day meeting in Ahlone township from October 10 to October 12. The outcomes of the meeting will be forwarded to relevant ministries and civil society groups.

“MATA will keep pointing out issues relating to natural resource extraction, whichever government takes office … We will keep working, whether they like it or not,” said leading committee member Daw Moe Moe Tun.

“We will continue to urge the government to enact reforms, until more people are allowed to engage in resource management.”

The meeting covered four main themes – sustainable development of resources, human rights violations, democracy and peace.

President U Thein Sein’s government, which took office in 2011, has been unable to complete a transition to democracy or to build internal peace, according to MATA.

Furthermore, human rights violations are more obvious under the new government, due to a lack of enforceable laws, it said.

Pursuing genuine peace, constitutional amendments and federalism – and strengthening the network of civil society organisations – will create an inclusive approach towards natural resources, said the statement.

A stronger rule of law would also help the government to take effective action against companies that combine resource extraction with human rights violations, it added.

MATA also called for experts and relevant organisations to release accurate information, and to provide research relating to draft policies on Myanmar’s extractive industries – for the benefit of the people.

“We need to carefully deal with resource extraction issues. If we don’t, we could face a repeat of Letpadaung, in which people suffered the consequences of irresponsible resource management …. farmland disputes, environmental damage and health problems,” said Ko Sa w Alex Htoo from the Karen Environmental and Social Action Network.

As a consequence of farmland confiscations, police reacted brutally against peaceful demonstrators, he said, adding that this represents a violation of human rights and a major stumbling block for the transition to democracy.

MATA and the Ministry of Mines hold a meeting each month as Myanmar begins the process of joining the Extractive Industries Transparency Init iative.

The international initiative requires companies in the oil, gas and mineral sectors to declare payments made to the government, and governments must also declare their revenue from extractive industries.

MATA is allowed to ask the ministry about mining projects, said Daw Moe Moe Tun. “But they usually avoid answering about Chinese-owned mining sites,” she said.

MATA was set up in 2013 by a number of civil society groups across Myanmar’s regions and states. Its aim is transparency in resource extraction and inclusive management of natural resources.

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