Myanmar’s Military Cartel: Corruption By Design

June 17, 2020

In late 2019, shocking accounts of brutality inflicted on innocent men, women and children by the Myanmar military in 2016 and 2017 were heard on the world stage, during the first hearings in the case brought against Myanmar under the Genocide Convention at the International Court ofJustice. 2019 was also the year that the International Criminal Court announced it would be launching an investigation into whether the military had committed crimes against humanity and war crimes against civilians in Myanmar since 2016.

Throughout 2019, reports emerged of the military’s soldiers persecuting Myanmar’s ethnic minorities, burning homes to the ground, detaining and torturing people, and killing many more. For many, the main question was why was this happening, when under Aung San Suu Kyi and the National League for Democracy things in Myanmar were supposed to be getting better?

At the very least, the events of 2019 would not be described by most as an example of a military displaying ‘outstanding performance in public service’. And yet, on the 4th of January 2020, the President of Myanmar U Win Mynt awarded eleven senior members of the military with titles for just that.

Among them was Major General Khin Maung Than. Major General Khin Maung Than holds a position of significant responsibility within the Myanmar military; he is director of the directorate for military procurement. He is responsible for deciding what goods and services the military buys, using Myanmar’s public funds and assets.

However, this is not the only position held by Major General Khin Maung Than. He is also managing director of Myanma Economic Holdings Public Company Limited, known as MEHL. MEHL is a vast and secretive conglomerate, with business interests spanning many sectors in Myanmar; from banking, trade, logistics, construction and mining to tourism, tobacco, food and beverage.  

Public procurement is one of the functions of the State most vulnerable to corruption.To say the dual roles held by Major General Khin Maung Than represent a dangerous conflict of interest would be a major understatement. But that is just the tip of the iceberg.

Download Infographic HERE

The Cartel

MEHL, along with another shady conglomerate Myanmar Economic Corporation (MEC), is owned and run by the Myanmar military. The directors of MEHL are the same men who have worked their way to the top of the military. In fact, their role in MEHL is determined by their military position. Lieutenant General Aung Lin Dwe, the military’s JudgeAdvocate General, responsible for upholding military law, is an MEHL director, as is Lieutenant General Aye Win, the Inspector General, responsible for internal military investigations and audits. The Air Force and Navy Chief ofStaffs are also MEHL directors. The list goes on.

As directors ofMEHL, their duty is to maximise profits for the company’s shareholders. Despite being a public company, the shareholders of MEHL are exclusively active military units, current and former Myanmar military personnel and veterans’ organisations. High ranking officers are beneficiaries of MEHL business. For example, Myanmar’s Minister for Home Affairs, a military government appointee in charge of police, domestic intelligence and prisons is an MEHL shareholder, receiving lucrative dividend payments. The military’s Commander-in-Chief,Senior General Min Aung Hlaing, who has international sanctions placed on him for alleged gross human rights abuses committed against Myanmar’s ethnic minorities, is chair of the MEHL patron group and a shareholder.

Download Infographic HERE

Driven by Profit

Corruption and conflict of interest is endemic within and between the Myanmar military and MEHL, and the two feed each other. Military agencies headed by MEHL shareholders and directors award MEHL companies with valuable state assets and lucrative business contracts. The profits of this business then flow to the military leadership, regiments and brigades through MEHL and provide the military with a vast hidden source of revenue. Through expansive state patronage networks, MEHL builds its business. They use force to drive people from their ancestral homes to exploit natural resources and make way for development projects that fund the lavish lifestyles of top generals.

Download Infographic HERE

There is a symbiotic relationship between the military and MEHL. They work in tandem; you cannot understand one without understanding the other. The Myanmar military might be biggest cartel you’ve never heard of and like notorious drug cartels in Mexico and Colombia, the Myanmar military expects total loyalty. The military’s businesses are networks for the distribution of privileges and control. Speak out against the military and you lose your shares. Display loyalty, ruthlessness and business prowess, as Major General Khin Maung Than has, and the benefits are enormous. MEHL goods and services are purchased through the military budget, keeping as much as possible within ‘the family’ while millions of people in Myanmar remain in poverty.

This merging of state armed forces with for-profit enterprise is unprecedented in modern times. The Myanmar military shares some commonalities with the British East India Company, a commercial enterprise that colonised Burma and India, backed up by an army of mercenaries. Like the Myanmar military today, the British East India Company was driven by a motive for profit that came at a horrific cost for millions of people. It is this motivation – profit and power – that drives theMyanmar military and fuels the terrible crimes it commits.  

Cash Injection

The popular story for Myanmar for most of the past decade has been one of democratic reform; of a country emerging from the shadows of military dictatorship into a flourishing democracy, led by a world-renowned peace icon. But the book has been closed prematurely on that version of the story, as the supposed democratic transition can only take place within the confines of Myanmar’s Constitution, which was drafted by the military regime in 2008. The Constitution protects the military’s power and only allows the reforms to go so far. And, while the story of democratic reform is the most well-known story, it is by no means the only one.

After military-orchestrated political and economic reforms were introduced in 2011, foreign investors, international financial institutions and aid agencies began to pour into Myanmar. MEHL and MEC’s business grew as they positioned themselves to exploit new business opportunities. In 2016, in response to the reforms, the US lifted sanctions on MEHL and MEC, further legitimising business with the opaque conglomerates.

Today, there are still more than100,000 people of Kachin and Shan ethnic nationalities living in internal displacement camps as a result of those offensives. In 2016 and 2017 troops were deployed to western Myanmar where mass atrocities on a scale not seen before in the country were then committed. Three quarters of a million Rohingya were driven from their homes into what is now the world’s largest refugee camp in Bangladesh.

Since late 2018 the army, air force and navy have all been engaged in intense conflict in western Myanmar against an ethnic Rakhine army. More than 150,000 people are currently estimated to be displaced from their homes in the region due to the fighting, which has continued despite calls from ethnic armies for a ceasefire in light of the COVID-19 pandemic; calls which the Myanmar military rejected. These military operations cost a lot of money.


Perpetual Conflict and Devastation

The Myanmar military cartel is not interested in peace – the cartel is interested in its own profit and power, and civil war in Myanmar is essential for both. To justify its inflated size, dominance over public life and incursions into ethnic areas, the military propagates an ideology of Bamar ethnic and religious supremacy over Myanmar’s many ethnic and religious minorities and promotes a narrative that it alone can protect the country from disintegration at the hands of "ethnic insurgents" and "terrorists."

But far from disintegration, Myanmar’s ethnic nationalities are calling and fighting for the long-broken promise of a genuine federal democracy in Myanmar to be realised. A federal democracy in which they have rights to govern their own natural resources; where decisions about development are made in transparency by people accountable to the people; and where the entire economy isn’t rigged to profit a military cartel.

This would dismantle the cartel’s business model. Military offensives intoMyanmar’s ethnic border states, through which vital international trade routes run, seek to secure control over strategic locations and the abundance of natural wealth such as teak forest, gemstone, jade, gold, copper, coal, oil, undeveloped land and undammed rivers.

Unspeakable tactics – those now subject to allegations of war crimes, crimes against humanity and genocide – are used to uproot ethnic people from their homes, forcing them into precarious lives in internal displacement or refugee camps, where there is little opportunity and high risk of exploitation.

Resources are torn from the ground by MEHL and MEC companies and heavy industry, such as MEHL’s Moe Gyo sulphuric acid plant and MEC’s Myaing Kalay cement plant, leaves the environment in ruins. There is no accountability and no recourse for the people whose lives are destroyed.

Meanwhile, the military cartel’s power and wealth grows.

Under the façade of a disciplined democratic transition maintained by the National League for Democracy, this grand corruption within the Myanmar military continues unchecked. The main perpetrators are even recognised with state honours. There will be no peace and there will be no justice while this system and these men dictate Myanmar’s future.


What's Next?

This systemic military corruption in Myanmar, where profiteering has infected the military leadership for generations, is unique. It has driven some of the worst atrocities the world has seen this century and impoverished a country that is resource-rich. It must end.

The world needs to stop feeding the Myanmar military cartel for-profit machine. We want to see all companies cut business ties with the Myanmar military, MEHL and MEC. The power of the cartel lies in its vast business network, and this must be undone.

We want to take Myanmar’s future out of the hands of the cartel into the hands of the people of Myanmar. Only when the military is divested from the economy and under democratic control can there be sustainable peace and justice for Myanmar.