Top executives linked to anti-Muslim extremists fled the lucrative site in fear of arrest after losing a bitter spat with the government
Thousands of gold miners once played soccer, drank at bars and cared for the stray dogs in Moehti Moemi, a smattering of buildings and dirt roads carved into the base of a hill range in central Myanmar’s Mandalay region.
Now the 6,000-acre mining town is almost empty. Hastily abandoned trucks and diggers dot the roadsides, karaoke bars have been shuttered, and the strays have been left to fend for themselves.
“The dogs have started eating each other because there’s no one to feed them,” said a driver who escorted Myanmar Now during a recent visit and requested anonymity.
The executives at the company overseeing operations left the town in a hurry in mid-2018. But not because the gold ran out; the ground beneath is still believed to be brimming with the precious metal.
They fled to avoid arrest following a protracted row with the National League for Democracy (NLD) government, which accused them of failing to hand over about $80 million worth of gold they owed to the state.
For several months last year the National Prosperity Gold Production Group (NPGPG) defied a government order to cease operations, hanging banners at the town’s entrance declaring those trying to shut them down “our enemies”.
They lost the standoff. Top executives at the company have been arrested or gone into hiding. The company’s chairman, Soe Htun Shein, was declared a fugitive in May after being charged in August last year with mining without a permit. Seven others from NPGPG have evaded arrest, though two of those have sent a bundle of evidence to the government that they say proves they are innocent.
Managing director Htun Aung Soe, meanwhile, has been arrested on suspicion of falsely accusing officials of corruption during the row.
And corruption allegations have engulfed a senior official from a government-owned company. Than Daing, managing director of the No. 2 Mining Enterprise, faces 10 years in prison after being accused of abusing his authority and misusing public resources.
The acrimony between NPGPG and the government is about more than just money. Soe Htun Shein is an ultranationalist Buddhist who views Aung San Suu Kyi and her cabinet as ideological enemies.
While refusing to hand over gold to her government, he has used some of the riches his company mined from beneath Moehti Moemi to fund the activities of the anti-Muslim monk Wirathu. That includes a visit in 2017 to Rakhine state, where a vicious military crackdown the same year sent more than 730,000 Rohingya fleeing across the border to Bangladesh.
‘If we can pay, so can they’
Soe Htun Shein and his colleagues enjoyed a good relationship with the previous military-backed government, which repeatedly rewrote their contract on more favourable terms when they said they were unable to hand over the agreed amount of gold.
But after the NLD came to power in 2016, the company found officials unsympathetic when they failed to pay, and eventually had their license revoked in 2018.
Soe Htun Shein has argued that his company was unable to hand over the agreed amount of gold because the deposits at Moehti Moemi weren’t as rich as first thought when operations began in 2011.
But the company’s contract with the government states the agreed sum of gold “must be paid to the country under any circumstances.” And a parliamentary report last year disputed NPGPG’s claim about the quality of the deposits, noting that a group of dozens of smaller subcontractors at the mine had already handed over 607 viss, or just under one metric ton, of gold to NPGPG.
And yet, the report noted, NPGPG had given the government just over half that amount, 338 viss, in the same period since 2011.
“If even we can pay 607 viss, why can’t NPGPG?” said one mine owner who joined Myanmar Now on the trip to the abandoned site.
Thura Zaw, NPGPG’s director, denied the companies’ claim and sued them for defamation, saying that they never handed the gold over to NPGPG. The case is ongoing.
Average monthly production at Moehti Moemi dropped significantly when the NLD government came to power, figures from the company’s 2017 annual report show.
Since May 2015, the site averaged well over 5,000 ticals, or 82kg, of refined gold per month. Then in April 2016, the party’s first full month in office, production dropped to just under 2,200 ticals and averaged less than 3,000 for the next year.
Links to hardliners
Soe Htun Shein is a loyal supporter of Buddhist nationalist causes and the anti-Muslim monks behind them. In 2015 he donated just over 1.6 kilograms of gold, worth about $70,000, to Ma Ba Tha, the now disbanded hardline group of which Wirathu was a key member.
The same year he told the BBC’s Burmese service that only someone who does not believe in Buddhism would accuse the group of being extremists.
NPGPG was also the main financial sponsor for the construction of a private high school in Yangon run by Ma Ba Tha leaders.
And Soe Htun Shein paid for Wirathu to travel to Maungdaw in Rakhine state in May 2017, months before a military-led offensive against the Rohingya that has led to accusations of genocide from UN experts.
Both the NLD-led government and the military vehemently deny the accusation, and say the military was conducting legitimate counter-insurgency operations in response to what they described as terrorist attacks by Rohingya militants.
When Ma Ba Tha was disbanded with an order from the State Sangha in 2017, Soe Htun Shein helped form the Dhamma Vamsanurakkhita Association. The association’s purpose was to support a rebranded version of Ma Ba Tha called the Buddha Dhamma Charity Foundation.
He became the association’s secretary and joined an unsuccessful effort to form a new nationlist political party that was meant to help the Ma Ba Tha movement branch out into electoral politics. The association’s president, Maung Thwe Chun, announced a plan to found the 135 Myochit Unity Party during a meeting in 2017.
The election commission rejected the party’s attempt to register in November the same year, saying that the application did not “meet the requirements stipulated in political party registration law.”
Late last year Maung Thwe Chun was sentenced to two years in prison for defamation after he expressed anger at the fact that Vice President Henry Van Thio was a Christian.
“And that Christian is supported by Muslim kalars,” he said during a speech in 2018 at a monk’s birthday celebration, using a racial slur for people of South Asian descent.
‘They have to pretend to arrest you’
Two of those accused of breaking the law at NPGPG have written to the government to maintain that they are innocent.
In January, Nyi Nyi Lwin, the general manager of the gold production department at NPGPG, received a phone call. On the other end of the line was Naing Lin, a top executive at the company.
“Ko Nyi, please leave the house for two days, today and tomorrow. The police said they have to pretend to come and arrest you,” Naing Lin told him, according to a recording of the call heard by Myanmar Now.
Nyi Nyi Lwin, a 46-year-old former army captain, had been named on a list of NPGPG staff deemed responsible for mining without a permit, meaning he faces 10 years’ imprisonment.
But Nyi Nyi Lwin, who has gone into hiding, maintains he is innocent, and that it is the executives above him who were responsible for going ahead with production after the company’s license was revoked.
He recorded the January phone call as part of an effort to gather evidence to defend himself when he began to suspect illegal activity at the company.
The phone call made him suspicious about the police’s role in the case, he added. “How does a civilian know the exact date, time and place of a police arrest? This is not honest,” he said.
“I don’t know if it’s related to politics, but it’s true that the case is not normal,” he added.
In the end, the police never showed up and he fled, he told Myanmar Now by telephone from an undisclosed location.
He sent the audio of the call with Naing Lin, along with other recordings and documents, to the president’s office and other government departments in March 2019. The package included a letter in which Nyi Nyi Lwin argued his innocence. In it he wrote that he only continued production after the government order to stop because he was directed to by his seniors.
When he got the order to continue from the executive director for mining, Cho Lwin Oo, he assumed it was because the company had resolved the dispute with the government, he said.
The government responded to his letter by saying the matter would have to be resolved in court.
Nyi Nyi Lwin submitted the letter along with another senior employee, Khin Zaw, who was also included on the list of people wanted by police.
Khin Zaw, who was head of one of the company’s gold refinery factories, “could not even tighten or loosen a bolt without permission,” said Nyi Nyi Lwin.
Myanmar Now was unable to reach Khin Zaw and Naing Lin for comment.
“The case was carefully orchestrated, without including our testimony, by the company officers, hired lawyers, Myanmar police force and members of the court to put the blame on the lower level staff,” Khin Zaw and Nyi Nyi Lwin argued in their letter.
Myo Myint Lwin, chief of police in Pyawbwe township, said it was untrue that police tipped anyone off about Nyi Nyi Lwin’s arrest, adding that investigators frequently searched for him.
Lucrative contracts
Soe Htun Shein was already a millionaire before he got into gold mining, said Sithu Aung Myint, a journalist who has written about the tycoon.
Under the military government, he was granted a monopoly on the trade of wholesale eel and crab at the Muse border trade zone.
The export market for eel was worth about $16 million in the 2006-2007 fiscal year, according to government data, and that has later increased to over $40 million.
The military government investigated Soe Htun Shein after he was accused of charging an unfairly high service fee to buyers and suppliers at Muse, an officer from the fisheries federation who was involved in the investigation told Myanmar Now. Authorities ordered him to lower his fee from 5% to 3% after the probe.
To win that tender, Soe Htun Shein had to beat several competitors. But it was his successful bid against 17 others to win the Moehti Moemi contract that raised eyebrows.
A senior executive at one of the losing companies, who spoke on condition of anonymity, said NPGPG’s proposal to pay 5.5 tons of gold to the government over five years had sounded overambitious at the time.
“We estimated we could pay two tons of gold to the government within five years. Everyone was surprised when they proposed that quantity,” the executive said.
The way the tender system worked before the NLD took office allowed those on good terms with the government to win bids by promising to pay large sums in tax, said Sithu Aung Myint.
Then the companies would later amend their contracts so they would never have to fulfill the generous promises they made, he said.
“The NLD does not allow this type of behavior,” he added.
The company signed its first contract with the government-owned No. 2 Mining Enterprise in 2011. The two parties amended the contract in November 2013 to allow NPGPG eight years instead of five to pay the agreed amount.
Ten months later, they amended the contract again, this time to tweak the agreed monthly repayments to allow NPGPG to pay less earlier on and make up the difference later.
The company asked the government to amend the contract a fourth time in July 2016, arguing in a letter to officials that the terms it had agreed to before were “very unfair and one-sided.”
Instead of agreeing to amend, the NLD sent a team to the mines to investigate. The team included the former deputy minister of mines Ko Ko Than and seven other former government officials.
The investigation started in early 2017. After seven months the team concluded: “The company is in a good condition to pay the fixed sum of gold within the period agreed in the contract.”
The government warned the company its mining permit would be revoked if it failed to comply. Company executives met mining ministry officials in 2017 and promised to pay off the debt.
But the government says that after that meeting the company only repaid the debt for July and August 2017 before ceasing payments. Officials referred the case to the president's office, which gave the green light to shut the company down.
‘We will not sit back’
During a shareholder meeting in June 2017, Soe Htun Shein said that the company would be unable to pay dividends to its investors because it had been unable to mine as much gold as first intended. He said the company would need to amend its contract with the NLD, and that if the request was denied shareholders should prepare to protest.
“If the government treats us unfairly, we will not just sit back,” Soe Htun Shein said during the speech, which was captured on video.
He kept his promise, staging a protest in Nay Pyi Taw in June 2018 where demonstrators blamed the government for the shutdown of the mine.
The protest angered NPGPG’s subcontractors, who blamed the company, not the government, for the shutdown. They staged their own protest in Mandalay to make it clear they felt NPGPG was the reason they were losing money.
A crowd of some 300 demonstrators waved placards demanding the company “give the government the 607 viss of gold that we already paid them.”
The subcontractors’ protest led to yet more lawsuits, with NPGPG’s director Thura Zaw suing nine entrepreneurs for defamation. Their cases are still being heard in court.
Infighting
Investors told Myanmar Now they sunk large sums of money into mines at Moehti Moemi and fear they may not get it back.
NPGPG operated the four main mines at the site and partnered with 34 other businesses to operate the rest. The partner businesses worked across 70 mines and invested an estimated 30 billion kyats - or just under $20 million.
“We invested in this as a 20-year project but once we started mining the business was shut down,” said one entrepreneur who invested 10 billion kyats and spoke on condition of anonymity.
He and other partner businesses say responsibility for their losses lies with NPGPG because the company failed in its obligation to provide the government with enough gold.
It was not just the gold miners who descended into infighting. Officials on the government side feuded publicly too.
- Tun Win, the NLD MP for Yemethin township faced accusations of being a shill for NPGPG because he sought to help the company win back its license.
In an interview with Radio Free Asia in January, the general manager of the No. 2 Mining Enterprise, Aye Zaw, labelled Tun Tun Win a “stooge” for the company and said he did not have the interests of the country at heart.
In response, the NLD MP filed a defamation lawsuit against Aye Zaw that could see him jailed for two years.
The MP argues that the country is losing out on tax revenue as a result of the shutdown and that thousands have lost their jobs. He also says that the number of arrests for illegal gold mining have gone up since the shutdown. He added that disciplinary officers from the NLD’s Yangon headquarters took his side when someone complained about him.
“If I said nothing and kept quiet, the people who voted for me would think all I did was collect my paychecks,” Tun Tun Win said.
In April 2019, police arrested Than Daing, managing director of the state-owned No. 2 Mining Enterprise, on corruption charges. The Anti-Corruption Commission accused Than Daing of using company money to pay for family vacations, and of having the company do landscaping work for him on land he owned. He faces 10 years in prison.
The commission has not disclosed who reported Than Daing, but NPGPG’s managing director Htun Aung Soe told The Speaker newspaper in March that he had bribed an officer from No. 2 Mining Enterprise.
Two days after they detained Than Daing, police arrested Htun Aung Soe for making false bribery claims against public officials. The Anti-Corruption Commission said he falsely accused officials and police of taking bribes in exchange for allowing eight smaller companies to continue working at Moehti Moemi after the government ordered them to stop. His trial continues.
Authorities have issued an order to prevent Soe Htun Shein leaving the country, but even from hiding he has continued funding the Buddha Dhamma Charity Foundation.
Like its predecessor Ma Ba Tha, the foundation has now been outlawed by the government, though it has continued operating anyway. In July Soe Htun Shein covered expenses for lunches at the foundation’s annual assembly, which was attended by thousands of monks.
The police’s failure to apprehend him, along with Nyi Nyi Lwin’s account of being warned he was wanted by police, have fuelled suspicions that Soe Htun Shein is using his power and influence to avoid arrest.
At a press conference in July last year, he said he would happily face justice if he had done anything wrong. “If I cheated even a single tical of gold, I will go to the gallows,” he declared.
For now, though, he is nowhere to be seen.
(Editing by Joshua Carroll)
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