The Myanmar military operates like a massive, institutionalised cartel, using a network of dark money to fund violence and crimes against humanity, without any democratic oversight. As the military tightens its grip on the country following their brutal and illegitimate February 1, 2021 coup, they are relying on international business to bankroll their regime and provide it with legitimacy. In order dismantle the military cartel, its global financial network must be exposed.
At Justice For Myanmar we are working to expose the military’s ties to major businesses around the world with the Cartel Finance Map. This revolutionary tool helps visualise the links that extend from the country’s most violent generals towards corporations in major capitals across the world. We'll first expose one of the major financial backers of the Myanmar military's genocide, war crimes and crimes against humanity - South Korean steel conglomerate POSCO. Enter the Cartel Finance Map.
POSCO’s ties to the military
POSCO is one of the Myanmar military’s closest international business partners, gaining an established presence during the military dictatorship that followed the 1988 pro-democracy uprising, which tragically ended in bloodshed. The dictatorship set up two military-controlled conglomerates to build a monopolistic hold on the economy and ensure a steady stream of profits for the top generals as they built a crony capitalist system and pursued a wide scale privatisation initiative. The military opened up offshore gas fields to foreign multinationals, which provided a crucial source of foreign reserves to sustain the dictatorship and finance outsized military spending and civil war.
POSCO’s first business in Myanmar is gas. They operate the Shwe gas field, off the coast of Arakan State, in a profit-sharing agreement with the state-owned Myanma Oil and Gas Enterprise (MOGE). The project is linked to forced relocation, forced labour, militarisation and sexual abuse. The field was discovered by a POSCO subsidiary in 2004 and gas is transported to China by a pipeline that is linked to land confiscation and conflict. POSCO earned US$193.9M in revenue for MOGE in 2017/2018 alone. MOGE is now under control of the military junta and gas is the junta's biggest source of revenue.
In 2011, Myanmar transitioned to a “disciplined” democracy, with some power transferred to a nominally civilian government, while the military maintained ultimate authority. As Aung San Suu Kyi entered the fray and the National League for Democracy swept the 2015 election, relationships were normalised with the West, enabling MEHL and MEC to expand their international partnerships, notably with POSCO.
POSCO established Myanmar POSCO Steel, a steelmaking venture, and a colour and coated steel business, Myanmar POSCO C&C, both in partnership with MEHL registered in 2016. While Myanmar POSCO Steel has been wound down, Myanmar POSCO C&C continues to operate, manufacturing and selling steel in the domestic market.
Myanmar POSCO C&C is based in the Pyinmabin industrial zone on the outskirts of Yangon. The zone is a large tract of land controlled by MEHL and one of the strategic assets the conglomerate uses to channel revenue throughout the military.
According to a newly available Myanmar Myanmar Investment Commission document, leaked by DDoSecrets, POSCO awarded MEHL a 30% stake in Myanmar POSCO C&C in exchange for a land lease in Pyinmabin. According to the investment permit, MEHL’s in-kind contribution of the land lease is valued at US$1.8 million.
The industrial zone used to be home to a community of squatters, who were driven off the land in 2016, their houses demolished. The brutality and greed of MEHL made 2000 homeless.
POSCO has also diversified into tourism, building a five-star hotel on military-owned prime real estate in Yangon, with rent flowing to the Quartermaster General’s office of the Myanmar army, which also carries out weapons purchases for the military.
POSCO aids and abets atrocity crimes
In 2017, the Myanmar military led a campaign of genocide against the Rohingya, and it continues to commit war crimes and crimes against humanity against ethnic and religious minorities. There are well-documented cases of mass killings, gang rape, apartheid, forced displacement, the razing of homes and villages and torture.
As the civil disobedience movement in opposition to the junta spreads, the military has resorted to violence and intimidation of peaceful protesters, including deliberate killings that amount to crimes against humanity. The military junta has attacked peaceful protesters using automatic weapons, air rifles, slingshots and tanks. They have conducted mass arbitrary arrests, torture and are violating freedom of expression and the right to information through internet shutdowns and censorship.
This military regime and the crimes they are committing against the people are enabled by the military’s businesses. Our research has shown that dividends from MEHL are distributed throughout the institutional units of the military, including to regional military commands and battalions, which are directly responsible for committing atrocity crimes.
Profits from the military’s business with POSCO is causing serious harm and breaches POSCO’s human rights obligations under the UN Guiding Principles on Business and Human Rights and the OECD Guidelines on Responsible Business. Despite being publicly named by the UN Fact-Finding Mission on Myanmar and Amnesty International for international human rights law breaches, POSCO continues to do business with the military. POSCO has been put on notice and failed to take action.
POSCO’s global networks link to Myanmar
POSCO has business through the Asia-Pacific region, Europe and North America, channelling investments through subsidiaries and shell companies. POSCO’s business involves worldwide supply chains, through mining, manufacturing, wholesale trade, engineering and construction. Through multiple businesses, the Myanmar military profits from POSCO. Through POSCO, the military is connected to POSCO’s other commercial relationships, such as their shareholders, suppliers and creditors.
Myanmar POSCO C&C is developing a construction supply business, using their international links to gain market share. Any supplier of raw materials to POSCO, such as Australia's Fortescue Metals and Roy Hill Holdings, risk being implicated in a supply chain that profits the Myanmar military.
As a publicly-listed company, POSCO has major institutional shareholders throughout the world who are profiting from POSCO’s business in Myanmar. Pension funds and other institutional shareholders invested in POSCO have a responsibility to hold POSCO to account and ensure POSCO upholds its international human rights obligations.
Unwittingly, residents of Europe, North America and New Zealand are benefiting from the Myanmar military’s brutal repression and systemic corruption.
While Norges Bank Investment Management added POSCO to its exclusion list in 2015 due to “severe environmental damage”, other major funds continue to hold shares, thereby profiting from POSCO’s business with the Myanmar military.
This means that pension funds invested in POSCO in Sweden, the Netherlands, Canada and elsewhere are financially backing POSCO’s human rights violations in Myanmar and receiving a share of the profits.
Första AP-fonden (AP1) of Sweden, is one example of a national pension fund that invests in POSCO, helping to enrich the Myanmar military. AP1 manages assets of 393 billion SEK (over US$46 billion) and claims to invest responsibly.
Institutional investors have an obligation to do human rights due diligence into the businesses they invest in. POSCO’s conduct in Myanmar means that it is untenable for any responsible investor to continue to hold shares in the company. We call for divestment now.
Banks that finance POSCO have an obligation to do human rights due diligence and ensure that their loans do not contribute to human rights violations.
Myanmar POSCO C&C has a US$13.9 million credit guarantee, backed by POSCO Asia. This supports POSCO’s joint venture with MEHL, a business whose beneficial owners include military regiments and battalions, some of which commit war crimes and crimes against humanity.
POSCO Asia is in turn backed by French financial institution Credit Agricole, through a US$50 million guarantee. There’s a high risk that these funds could flow to Myanmar POSCO C&C, through POSCO Asia.
Myanmar POSCO C&C has a loan from Korea’s Shinhan Bank, which has a branch office in Myanmar. This loan is a serious breach of Shinhan Bank’s human rights responsibilities. The guarantee limit is unknown but according to a Myanmar POSCO Steel financial statement leaked by DDoSecrets, in September 2019, Myanmar POSCO C&C had a balance of US$750,000 secured against US$1.1 million in cash from Myanmar POSCO Steel.
The Myanmar military cartel must be dismantled to restore democracy in Myanmar with the military fully under civilian control. To do this, we must trace the military cartel’s global business networks. POSCO is a key part of that. Through the Cartel Finance Map, we invite you to explore how dispersed businesses connect to the brutal crimes of the Myanmar military, which POSCO remains complicit in. By exposing the network, we can apply pressure to the nodes and disconnect the Myanmar military from its sources of finance.
Correction (Mar. 22, 2021)
An earlier version implied possible BlueScope supply links to Myanmar POSCO C&C. This has been removed because the evidence does not support such a link. This feature has been updated with examples of Fortescue Metals and Roy Hill, which are major suppliers of POSCO.