European firms paid millions by illegal Myanmar junta for disastrous dam projects
March 14, 2023
Two European engineering firms earned millions advising the brutal Myanmar military junta on the construction of socially and environmentally destructive dam projects after the Myanmar military’s illegal attempted coup two years ago.
Since February 2021’s coup attempt, the military has tried to proceed with disastrous hydropower projects while waging a campaign of terror against the people of Myanmar, committing deliberate killings, arbitrary arrests, indiscriminate airstrikes and shelling, rape and torture. The junta has killed more than 3,100 people, and arbitrarily arrested over 20,000.
Documents, some of which were shared by Distributed Denial of Secrets, show that the Swedish engineering firm AFRY AB and the Austrian-German ILF Group pocketed huge fees at a time when other European and Japanese firms pulled out of Myanmar dam projects following the violent coup attempt.
It is unclear how much profit AFRY and ILF made from their consulting revenues, after paying taxes to the junta, and other costs.
Both companies are paid by a department of Myanmar’s electricity ministry which is illegally under the control of the military junta. They are advising the junta under tenders awarded in 2020 by the democratically-elected government, preceding the military’s brutal coup attempt.
Leaked tax filings suggest:
- AFRY’s Swiss arm earned US$4.68 million in service fees for consulting work on the Upper Yeywa and Middle Paunglaung Hydropower Projects in Myanmar from February 2021 to September 2022.
- Of the total earnings found in leaked filings, US$2.6 million was for work on the Upper Yeywa dam and US$2.07 million was for work on the Middle Paunglaung dam.
- Leaked invoices show that AFRY asked to be paid in US dollars into an account at Nordea Bank in Finland. Payments in kyat were to be made to an account at CB Bank in Myanmar.
Leaked tax filings suggest:
- The Myanmar branch of ILF Group’s Thai subsidiary, ILF Consulting Engineers (Asia), earned US$1.1 million in consulting fees from the junta from February 2021 to April 2022. ILF Group is working on another dam scheme in Myanmar, the Tha Htay Hydropower Project.
- According to a leaked invoice from January 2021, the total cost of ILF’s service on the Tha Htay Hydropower Project is US$6.33 million.
- ILF’s invoices list a local account with the crony-owned United Amara Bank. This bank is linked to the local International Group of Enterpreneurs (IGE) conglomerate which has been sanctioned by the European Union.
AFRY did not respond to specific questions from Justice For Myanmar regarding the current status of their operations in Myanmar, but confirmed they have projects in the country.
ILF Group responded, “the dam required for the power plant is a so-called rockfill dam with a clay liner. With this type of dam, once construction has begun, it cannot be stopped immediately for safety reasons. Our activities were discontinued some time ago, and most recently focused on dam stabilization and slope stabilization for spillway purposes.” ILF Group did not disclose the date their activities were discontinued.
Both companies remain registered on Myanmar’s corporate registry.
The illegitimate military junta is building dams while attempting to crush freedom of expression, assembly, and association.
The Upper Yeywa dam is a 280MW hydropower project on the Namtu River, which is also known as the Myitnge River. It was conceived under the former military dictatorship in Myanmar in 2008, and has been opposed by local communities because of its devastating social and environmental impacts, lack of transparency, threat to ancestral lands and fuelling of conflict.
Villagers have repeatedly protested against the dam (also see banner image from Shan Human Rights Foundation, 2017). Before the attempted military coup, a local legislator from the Shan Nationalities League for Democracy pushed in parliament for the dam to be cancelled.
In 2020, the Shan Human Rights Foundation documented grave human rights violations by the Myanmar military near the Upper Yeywa project, including an extrajudicial killing and torture. The group called on foreign companies to withdraw from the dam project or risk complicity in the Myanmar military’s atrocities.
In December 2022 a local community network, the Namtu River Protectors, warned that more than 40,000 people living in villages near the dam could be impacted by flooding.
Following the military coup attempt, communities have courageously continued to protest the Upper Yeywa Dam, despite grave risks, and a group of workers from the dam project joined the Civil Disobedience Movement against the junta.
On the 2022 International Day of Action for Rivers, communities throughout Shan State protested against the junta’s dam projects, including Upper Yeywa. Members of the network, Action for Shan State Rivers, displayed slogans on banners and rocks opposing dams on the Namtu and other rivers in the state and called for foreign companies to withdraw.
The Tha Htay Chaung dam is a 110MW hydropower project in Thandwe Township, Rakhine State. In 2013, a coalition of Rakhine civil society and political parties demanded a halt to the dam, along with other infrastructure developments in the state, until Myanmar has a federal democracy which would ensure ethnic people have control over the management of their resources.
However, successive governments and now the illegitimate military junta have continued work on the dam.
The Middle Paunglaung dam is a 152MW hydropower project on the Paunglaung River, near Naypyidaw. The dam threatens villagers with forced displacement, according to researchers.
During an October trip to Russia, the junta’s electric power minister signed an agreement with PTG Energy for the development of the dam, with the participation of the Russian company, Inter RAO Export.
Junta pushes dams as foreign companies exit
The Myanmar military junta is speeding up the development of existing dams and initiating new ones.
In January 2022, war criminal and junta leader Min Aung Hlaing visited the Yeywa hydropower project, commenting that hydropower needed to be prioritised and suggested that opponents of dam projects overstate their environmental impacts for political purposes.
In July 2022, the junta’s Department of Hydropower Implementation illegally launched tenders for six new dams. In September 2022, the junta released a tender, addressed to European and Japanese consulting firms, for feasibility studies and the design of hydropower projects.
However, some major European and Japanese companies have stopped work on hydropower projects as a result of the military’s coup attempt and civil society and community opposition:
- The French energy giant EDF suspended work on the Shweli-3 dam;
- Norway’s SN Power suspended work on the Middle Yeywa dam; and
- Andritz Hydro and Kansai Electric Power suspended work on the Deedoke dam.
The Upper Yeywa project has a history of foreign companies pulling out in response to local community and civil society pressure. Lahmeyer, a German subsidiary of the French energy company Engie, withdrew in 2019. In 2020, the Swiss engineering firm Stucky SA also withdrew from the project.
But like AFRY, some unscrupulous companies have ignored their international human rights responsibilities and have apparently continued to work on the Upper Yeywa dam.
These include International Power Group Public Company Razel-Bec (IPGRB), a joint venture between France’s Razel-Bec and the EU-sanctioned crony conglomerate IGE, led by the brother of Myanmar Navy chief Moe Aung. IPGRB is responsible for the design and construction of the dam’s intake galleries. Razel-Bec did not respond to questions from Justice For Myanmar on the current status of their business in Myanmar.
In 2015, China’s Zhejiang Orient Engineering contracted Japan’s Toshiba to provide the dam’s hydro turbine and generator. Myanmar crony conglomerate Shwe Taung has been contracted for road construction, and to supply concrete via its subsidiary, High Tech Concrete Technology Company Limited. The Mandalay-based construction firm Aung Pyitan Company Limited provides machinery and is the local consulting partner of AFRY, according to the company’s website.
AFRY’s shameful history in Myanmar
AFRY and its predecessors have decades of experience in Myanmar, first entering in 2000, supporting and profiting from the Myanmar military’s devastating hydropower ambitions.
AFRY was formed through the 2019 merger of Sweden’s ÅF and Finland’s Pöyry. AFRY Switzerland registered a branch office in Myanmar in July 2020, succeeding ÅF-Consult Switzerland, formerly Colenco Power Engineering, which both previously operated in Myanmar.
According to the AFRY website, the company has provided engineering consultancy services on 13 hydropower projects in Myanmar. These including Shweli-3, Yeywa, Upper Paunglaung, Upper Kengtawng and Tamanthi.
All these projects have contributed to environmental destruction, displacement of local communities, militarisation, conflict and grave human rights violations.
A 2015 report into the Upper Paunglaung dam by Physicians for Human Rights, Kayan New Generation Youth and Land In Our Hands found that international guidelines on evictions were not followed, and that 8,000 people were forcibly displaced by the dam and faced acute humanitarian needs. Many were pushed into poverty, experienced hunger, lacked access to drinking water and the dam project caused depression and suicide.
Questions over ÅF-Consult's role in the human rights abuses caused by the Upper Paunglaung dam were raised in the Swiss parliament in 2013. The Swiss government responded that the dam project was important for the development of Myanmar’s economy.
AFRY and ILF failing their human rights responsibilities
AFRY and ILF appear to have supported the development of hydropower in Myanmar, disregarding community and civil society concerns, and their responsibilities under the UN Guiding Principles on Business and Human Rights, under which corporations have a responsibility to respect internationally recognised human rights. This responsibility is heavier because a dam project can have severe, potentially irremediable, human rights impacts, and because AFRY and ILF are large enterprises. The companies also appear to undermine the OECD Guidelines for Multinational Enterprises through their negative impact on human rights and the environment.
Since the military’s coup attempt, both companies have maintained business with and profited from the illegal junta, as it seeks to speed ahead with socially and environmentally destructive dams, while committing war crimes and crimes against humanity with total impunity.
Justice For Myanmar calls on AFRY and all other companies to responsibly suspend any remaining work on hydropower projects in Myanmar until there is federal democracy. In the meantime, Justice For Myanmar calls for AFRY, ILF and all other involved companies to disclose their human rights due diligence and justify their reasoning and decision-making to advise on hydropower projects in Myanmar, and to remediate damage already incurred in accordance with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises.
ILF Group did not respond to questions regarding their human rights due diligence, but told Justice For Myanmar, “we would like to emphasize that our business activities have always been and still are in full compliance with all relevant embargoes / sanctions.”
A representative of AFRY stated, “AFRY’s Code of Conduct (CoC) cements our commitment to follow the principles set out in internationally recognized Human Rights instruments set out in United Nations conventions on human rights and OECD’s principles for multinational enterprises. Our compliance & ethics framework enables systematic and effective prevention, detection and management of violation risks. The framework is supported by a top level commitment to ensure consistent application and awareness of human rights principles throughout the organisation as well as in our activities and business relationships. We recognise the diversity of laws in the countries where we operate and strive to respect domestic laws. When faced with conflicts between domestic laws and human rights commitments we seek to honour the principles of internationally recognized human rights to the greatest extent possible.”