Rental payments from a Japan-backed real estate development near downtown Yangon will help fund the Myanmar military’s “genocide, war crimes and crimes against humanity”, a human rights group has said.

The $330m (463.2bn kyat) Y-Complex Project is being built on a nine-acre plot of military-owned land near the Yaw Min Gyi neighbourhood. It will be a mixed-use development that will include a 252-room branch of the five-star Okura hotel, as well as office and commercial space.

“The deal has gone ahead with zero civilian financial oversight and despite a high probability that the project will finance the military’s crimes against humanity and war crimes in Myanmar’s ethnic regions,” the Yangon-based Justice for Myanmar said in a statement.

The Yangon Technical and Trading Company (YTT), a subsidiary of Ayeyar Hinthar, is leasing the land directly from the offices of the Myanmar army’s quartermaster and commander-in-chief, according to a 2013 lease agreement seen by Myanmar Now.

The lessor is named as colonel Aung Min Thein, a Tatmadaw vice quartermaster general.

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According to the lease agreement, rent is to be paid in Myanmar kyat or US dollars directly to an account named “Defence Account”. YTT director Ne Ne Hlwan Moe told Myanmar Now the company is paying $2.18m a year.

But, even though the company pays the annual rent to the quartermaster’s office, he’s certain that money goes to the general government budget and not the military, he told Myanmar Now.

While the lease agreement stipulates rent must be paid directly to a military bank account, Myanmar Now could not find explicit mention of that money in either the defence or general government budgets for the last fiscal year.

Myanmar’s military has a notorious history of grave human rights abuses. An August 2019 report by a UN fact-finding mission urged international businesses to sever financial ties with the military and its vast network of domestic businesses.

Since the popularly-elected National League for Democracy took power, the military’s official budget has been gradually reduced, leading it to increasingly depend on this network to fund its activities without civilian oversight, the report said.

The country is currently being tried for genocide at the International Court of Justice for military “clearance operations” that forced more than 730,000 Rohingya to flee to refugee camps in Bangladesh in August 2017.

The military and the government of Myanmar claim the operations were legitimate counterinsurgency operations.

“International businesses and investors that have economic ties with the Myanmar military are complicit in the military’s crimes,” Justice for Myanmar spokesperson Yadanar Maung said. “Profits from Y-Complex will provide material support for genocide, war crimes and crimes against humanity.”

Japanese partners and investors include the Fujita Corporation, which will oversee construction, Tokyo Tatemono, which will manage the office space, and the state-controlled Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development.

Financing is provided by three Japanese banks: Sumitomo Mitsui, Mizuho Bank and the state-owned international development bank JBIC.

Representatives of YCP’s Japanese partners could not be reached for comment by the time this story was published.

The land is being leased for an initial 50-year term with options to extend, according to the lease agreement.

The Myanmar Investment Commission first approved the project in 2013. YCP had to reapply when foreign investors signed on and was approved again in 2016.

The site was once home to Jubilee Hall, a historic colonial-era structure initially used as a gathering place for high society that later served as a centre of anti-colonial political activity. After WWII, the funeral of independence leader Aung San was held there.

The Burmese Socialist Programme Party government knocked the building down in 1985 to build the military a museum.

The Defence Services Museum opened in 1994 and was demolished in 2017 to make way for the YCP development.

Additional reporting by Tin Htet Paing