Board members of a military conglomerate with sweeping export and import operations have served as top customs and port authority officials for decades, a former company director has told Myanmar Now.

The President’s Office last week said it would investigate the appointment of two directors from Myanma Economic Holdings Limited (MEHL) to lead the government’s customs department and the Myanma Port Authority.

But the practice, which appears to be a clear conflict of interest, has been going on since the military junta founded MEHL in 1990, retired lieutenant colonel Kyaw Zay Ya told Myanmar Now.

“The director-general of customs and the managing director of the port authority have always been on MEHL’s board of directors,” said the former director, who ran the conglomerate’s shares department for 10 years.

“But times are different now that this is an elected government … it’s not right,” he added.

A panel of United Nations experts has alleged that the military uses MEHL and other companies to enrich itself without civilian oversight and to fund operations that amount to war crimes and crimes against humanity.

Having MEHL board members in charge of customs and the country’s shipping ports allows the conglomerate to operate with less government interference.

“Things go much more smoothly for the company’s import and export businesses,” said Kyaw Zay Ya, who has also served as a regional MP representing the NLD and is now vice chair of the newly formed People’s Pioneer Party.

Attorney General to investigate

The customs department is led by Kyaw Htin, a former brigadier general, while Ni Aung, a former army major, runs the port authority. Both are also on the MEHL board of directors.

In response to a question from Myanmar Now last week, President’s Office spokesperson Zaw Htay said he was unaware of the potential conflict of interest and would ask the attorney general’s office to investigate.

Both Zaw Htay and the attorney general, Htun Htun Oo, are former military officers. It is unclear if either of them hold shares in MEHL or how the investigation will be conducted.

Under the military regime, it was common practice for retiring military officers to take on senior civil service roles, but that was gradually phased out after the transition to civilian rule, with Kyaw Htin and Ni Aung being two notable exceptions.

According to the Myanmar Gazette, former President Thein Sein appointed Brig-Gen Kyaw Htin as customs director general in March 2016, just before the NLD came to power.

The customs department website shows that four of the five director generals prior to Kyaw Htin were former lieutenant-colonels in the army.

The website does not mention that former director general Htun Thein is also a retired officer, but Kyaw Zay Ya said he served in the army and his rank was not lower than colonel.

Htun Thein was fired from the department in 2016 for corruption and replaced by Kyaw Htin.

Win Khant, permanent secretary of the Ministry of Transport and Communications, which oversees the Myanma Port Authority, said that although it was common for officials to also be board members at MEHL, these officials did not attend meetings and weren’t invited.

Asked if he thought there was a conflict of interest, he said: “Legally, this doesn’t infringe on anything. He can take on the job if he’s capable or turn it down. That’s just how it is.”

“A government official is immediately going to be in trouble if they try to bypass the law,” he added.

Ni Aung became the port authority boss in 2017. His predecessor Kyaw Myint was also a retired military officer and an MEHL director.

Protecting corporate interests

MEHL’s website says the main responsibility of the board of directors is to protect the interests of shareholders with strategic decision making.

Kyaw Zay Ya said MEHL’s directors received generous dividends, rather than salaries.

“A director’s dividends aren't small. I’m not going to tell how much exactly but I’ll just say that the amount is very attractive,” he said.

There has been little action to stop MEHL’s directors leading government departments since the Thein Sein-led government took over from the military junta, he added.

Hla Moe, an NLD MP and secretary of the lower house parliamentary rights committee, said the practice should be banned and MEHL’s shareholders should be made public.

“Parliament can file a motion… and legislate if needed,” he said, without elaborating.

Mass privatisation

The former military government established the Union of Myanma Economic Holdings Limited in 1990 to dominate a large swath of Myanmar’s economy.

The company’s exports include jade, rubies and precious metals and its imports include petroleum to supply its Myawaddy petrol stations. Its subsidiaries also have interests in transport, mining, alcohol, cigarettes and more. Shares are held by retired and active military personnel.

In the past, shareholders were divided into two groups. Type A Shares were for the defence ministry and type B for individual military units and organisations run by retired officers and servicemen and active and former military personnel. 

After the NLD came to power in April 2016, UMEHL privatised itself and dropped the “Union” from its name.

Before the change, the type A shares were converted to type B ones, meaning the company’s profits would no longer go into the national budget, except via taxes.

From 2009 to 2012, many state-owned buildings and businesses were privatised. These included the Bo Aung Kyaw port terminal and the Myanma Five Star Line, which was bought by MEHL.

Last week the Ever Flow River Group, a company with ties to MEHL, listed on the Yangon Stock Exchange.

Ever Flow River’s projects include a joint venture with Lann Pyi, an MEHL subsidiary, to build a $43m inland port.

The rights group Justice for Myanmar, said there was a high risk of corruption from the venture and a potential conflict of interest from the two government leaders being board members of MEHL.

mmnowelectionads.jpg