Myanmar’s auditor general is unable to probe a $2m-a-year military real estate deal because a law drafted by the former junta shields the defence ministry from scrutiny, a senior official has said. 

The military is leasing a plot of land to a company for a luxury hotel project, Myanmar Now reported last month, but the money does not appear in the defence budget. 

Naing Thet Oo, permanent secretary of the auditor general’s office, said at a press conference in Nay Pyi Taw on Monday that her office had no power to audit the deal. 

“It’s not in our jurisdiction,” she said, responding to a question from Myanmar Now. “We don’t have the right to do it.”  

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The Union Auditor General Law was drafted in 2010 by the State Peace and Development Council. It gives the auditor general the powers to investigate the finances of every other government ministry.

Section 39, at the very end, reads: “the provisions contained in this Law shall not apply to the Ministry of  Defence.”

With its overwhelming majority in parliament, the NLD-led government could easily scrap the law. 

“There is no good reason, in principle or in practice, for the military to be exempt from any state oversight mechanism,” said Chris Sidoti, a lawyer who worked on a UN fact-finding mission that investigated the military’s business ties last year. 

“Why should it be? The military is as much a part of the state structure as any other state agency and should be subject to exactly the same kind of oversight and regulation,” he told Myanmar Now.

“It is not acceptable,” he said.

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‘Possible corruption’

The Yangon Technical and Trading Company (YTT) is building a $330m mixed-use development, the Y-Complex Project (YCP), on nine acres that once housed a military museum in Yangon. 

YTT is leasing the land directly from the offices of the quartermaster general and the army's commander-in-chief. The lessor on the 2013 contract is colonel Aung Min Thein, a Tatmadaw vice quartermaster general. 

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. 

Sidoti said it was odd but not unheard of in Myanmar to have military officers lease land in their official capacity this way.

“It raises all sorts of questions about possible corruption,” he said. 

Tatmadaw spokesperson major general Tun Tun Nyi said he could not immediately comment.

Zaw Htay, spokesperson for the President’s Office, declined to comment.

Human rights groups told Myanmar Now last month that profits from the lease “will provide material support for genocide, war crimes and crimes against humanity.” 

The UN fact-finding mission that Sidoti served said the military funds its operations with a vast network businesses that dominate major industries like pharmaceuticals, cigarettes and precious gems.

Its report last year urged all companies to sever ties with these businesses and their subsidiaries.

Myanmar last month submitted a report to the International Court of Justice detailing what measures it has taken to protect minority Rohingya from genocide. 

The court ordered the report as a preliminary measure after The Gambia accused the military of committing genocide during “clearance operations” in 2017 that forced some 730,000 Rohingya to flee to refugee camps in Bangladesh. 

The military and government say the operations were legitimate counterinsurgency operations.

YTT is a subsidiary of Ayeyar Hantha. The lease has an initial 50-year term with two optional 10-year extensions. 

The project will include offices, stores, and a 252-room branch of the Japanese five-star Okura hotel. It is being built at the corner of Shwedagon Pagoda Road and Pan Tra Street. 

Partners and investors include the Japan-based Fujita and Tokyo Tatemono corporations and the state-controlled Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development. 

The Myanmar Investment Commission approved the project in 2013. The project 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 and early centre of anti-colonial political activity. The bodies of independence leader Aung San and other leaders assassinated in 1947 lay in state at the hall for several months. 

The building was demolished in 1985 to make way for the Defence Services Museum. The museum opened in 1994 and was knocked down in 2017 to make way for the YCP project.

Additional reporting by Danny Fenster