USDP: The Cartel's Party

October 22, 2020

The Myanmar military’s proxy party Union Solidarity and Development Party (USDP), contesting 1128 seats in the upcoming election, is part of the military cartel. Like the military itself, the USDP is sustained by secretive and corrupt business networks involving the military officials, cronies and state resources. As the cartel's party, the USDP benefits from the military’s total impunity, which appears to enable the party and key members to act in violation of Myanmar law.

The party was created by the former military regime out of the Union Solidarity Development Association (USDA), a mass organisation formed in 1993 that the military used as a mechanism for political, social and economic control. As has been well-documented, a key function of the USDA was to inflict political violence on assumed enemies of the military dictatorship, illustrated by the USDA’s role in the Depayin massacre on a National League for Democracy convoy in 2003, and its role in attacking non-violent protestors since its inception, including during the 2007 “Saffron Revolution.”

The party itself is a legacy of the corruption and power abuses of the military dictatorship. The current party leader has openly stoked racial and religious divisions in violation of Myanmar law.

Key party officials also receive personal dividends from military conglomerate Myanma Economic Holdings Limited (MEHL), and party members have undisclosed business interests.

The USDA had its own military conglomerate, the Myan Gon Myint group of companies, which operated in key sectors across the economy. According to research published by the Network for Democracy and Development (NDD), Myan Gon Myint controlled gem and wholesale good markets, acquired and rented out agricultural land, controlled bus and train lines, and collected tax and issued visas. The company was established with funds provided by the Ministry of Commerce and was chaired by Prime Minister General Soe Win. Industry Minister General Aung Thaung was the secretary.

According to NDD research, the USDA controlled the awarding of business licences, which they used to favour USDA members and expand the military cartel. They threatened businesses with de-registration and in some cases imprisonment as punishment if they gave jobs to National League for Democracy (NLD) members. They also raised USDA funds from business-owners through extortion. According to the 1996 Burma Human Rights Yearbook, a report submitted to the USDA’s 1995 annual meeting disclosed 362 billion kyat in profits, which included the use of “state properties in their business transactions”. Myan Gon Myint, together with MEHL, controlled the lucrative vehicle import market.

USDA’s Formerly Registered Companies

1. Myan Gon Myint Export Import &  General Trading Co., Ltd.

2. Myan Gon Myint General Services Co. Ltd.

3. Myan Gon Myint Industrial Manufacturing  & Construction Co. Ltd.

4. Myan Gon Myint Travels & Tours Co.  Ltd

Source: Yin Yin Mya, “Establishment of a Capital Market in Myanmar” in Mya Than and Myat Thein (editors) Financial Resources for Development in Myanmar, Singapore: ISEAS, 2000.

The cartel business of the USDP

The USDP was formed in 2010 by Prime Minister General Thein Sein and 26 ministers, all part of the State Peace and Development Council (SPDC), Myanmar’s former military dictatorship.

According to NDD research,“the USDP inherited the USDA’s membership, policies, resources, and moreover, its formidable physical clout and threatening reputation as a violent wing of the SPDC.”

While Myan Gon Myint was later disbanded, state assets misappropriated by the USDA and inherited by the USDP have not been returned. The USDP now operates its own business as part of the military cartel’s state capture and as a legacy of the dominant role the USDA played in the economy under the former dictatorship.

In June 2020, it was reported that the USDP had earned millions of US dollars by leasing cargo scanner machines to the Customs Department for use in ports. The machines were formerly under Myan Gon Myint ownership and transferred to USDP after the company was dissolved. In the 2016-2017 financial year, the customs department paid USDP and several other companies 6 billion kyat (US $4.3 million) in fees for scanners.

The transfer of state assets to the USDP and the party's continued use of assets for revenue may violate Myanmar's Political Parties Registration Law. Under article 12(a)(v) a party must be dissolved if it is "being found that the organization obtained and used directly or indirectly money, land, house, building, vehicle, property owned by the State".

An investigation is urgently needed into USDP's assets, including those inherited from Myan Gon Myint, which may be in breach of Myanmar law.

The USDP's business interests related to ports and customs are also part of a systemic conflict of interest. Brig Gen Kyaw Htin (rtd), head of the Customs Department, was until recently, a Director of MEHL. He remains an MEHL shareholder. While the current NLD-led government ruled that it was an unlawful conflict of interest for the head of Ports and Customs to sit on the MEHL board, they remain in civil service posts after stepping down from the MEHL board.

Key USDP members still hold shares in MEHL. Shareholder data, recently released by Justice For Myanmar, includes evidence that the USDP Chair and prominent candidates were MEHL shareholders in 2011, receiving personal profits from the military’s vast business interests.

As with Myan Gon Myint, MEHL’s business interests were built through the military’s corrupt transfer of public assets to military-owned holding companies and access to state businesses.

During the USDP-led government, in office from 2011-2016, party officials, including key members of the current leadership, personally profited from public business in what was a systemic conflict of interest that raises serious suspicions over the party’s integrity.

Senior former military officials further benefit from military’s total impunity, which continues to allow military conglomerates to operate unchecked. The merging of private interest and public office is particularly concerning in relation to some of the decisions the USDP-led government has made.

For example, in 2013, the USDP-led government privatised Bo Aung Kyaw Terminal to MEHL, a key public asset, which was then leased to K.T. Group which is now managing Bo Aung Kyaw Terminal, since renamed TMT Ports. The decision involved Myanma Port Authority, headed by a director of MEHL and key USDP individuals who profit through MEHL dividends.

In control of mining regulation, the USDP-led government issued licences to Wanbao Mining, a subsidiary of Chinese arms company NORINCO for the Letpadaung and S&K mines, leading to a large windfall for the military and MEHL’s individual shareholders at the expense of local communities, who have lost their lives, land and livelihoods and are grappling with serious environmental impacts.

NORINCO are also a provider of arms for the Myanmar military.

The USDP-led government abused its power to benefit MEHL’s jade business. In the months before the transfer of power to the National League for Democracy-led government, 361 jade licences were issued to MEHL’s jade subsidiary, Myanmar Imperial Jade, which subsequently holds the greatest number of licences.

USDP candidates linked to land grabbing

Thanlyin Township Pyithu Hluttaw candidate Aung Than Oo is a major player in Myanmar’s rice industry. One of the leaders of the Myanmar Rice Federation, he also owns the Nine Seas group of companies with his wife, which has been implicated in land grabs. Nine Seas is one of 16 businesses that stole over 10,000 acres in three townships of Yangon, under a contract farming scheme implemented by the former military dictatorship.

Nine Seas was reportedly one of the most unscrupulous out of the 16 crony and military companies.

Joining in the theft of farmland was Sin Shweli, since re-named Zeyar Premier Agriculture. Zeyar Premier is co-owned by USDP Central Committee member and Pyithu Hluttaw candidate  Lt Gen Myint Hlaing (who is now retired).

MEHL, a major player in Myanmar’s agricultural market, also took part in the land grab.

Aung Than Oo’s businesses include:

1. Nine Seas Trading Co. Ltd.

2. Nine Seas Manufacturing Co. Ltd.

3. Nine Seas Construction Co. Ltd.

4. Nine Seas Travels & Tours Co. Ltd.

5. Myanmar Rice Federation (MRF) Inc.

6. Myanmar Rice and Paddy Association Inc.

7. First Rice & Paddy Trading Co. Ltd

8. Sein Kyun Yadanar Co. Ltd.

Therefore, two USDP candidates were directly involved in land grabs and more have profited from land grabs through receipt of MEHL dividends. After more than a decade, farmers have still not been adequately compensated.

Investigate the USDP

As the military’s proxy party, the USDP appears to operate with total impunity. For instance, in an Oct. 9, 2020 campaign rally, Brig Gen Than Htay (rtd) told voters they can easily check the blood of his family to see whether they have "kalar" or Chinese blood. “Kalar” is a racist and Islamophobic slur used against Muslims and those of Indian descent. This follows other racist appeals in 2018 and 2019.

This attempt to use “race” and “religion” by the USDP’s party chair violates electoral law.

The current Pyithu Hluttaw Election Law and Amyotha Hluttaw Election Law forbids the use of “race” and “religion” in electoral campaigns. Article 12(a)(iv) of the Political Parties Registration Law stipulates cancellation of party registration for failure to follow article 6 of the law, which includes abstention “from writing, delivering speech or organizing and instigating that can cause conflict or that can affect dignity and moral relating to nationality, religion, individual or public”. The Myanmar’s Constitution also forbids the use of religion for political purpose (article 407(d)).

The USDP has well-documented links to extremist Buddhist nationalists, including the passage of four discriminatory "race religion protection laws" laws in 2015 when they were in government.

To date, no legal action has been taken against the USDP's stoking of ethnic and religious divisions and instigation of hate.

The USDP is the party of the Myanmar military cartel. The party itself was created by the military’s mass organisation, USDA, and remains linked to systemic corruption. Key USDP officials continue to have deep ties to military and crony businesses, and the party itself has not disclosed its assets or business dealings.

There has been no accountability for the USDP and USDA's history of political violence, public asset theft and corruption, which has contributed to the profound suffering and loss the people of Myanmar have experienced through decades of military and crony domination of the country.

The USDP's acquisition of state assets, continued revenue from those assets, and use of "race" and "religion" in their current campaign appears to breach Myanmar law. Justice has so far not been served for the people of Myanmar. An urgent investigation is therefore required into the USDP's assets and abuse of electoral law. If the USDP has contravened Myanmar law, the party must be abolished. Stolen assets must be returned to the people.