UK-based Global Witness reported Myanmar exported at least 12 billion USD worth of jades to China in 2014

Most of the profits are monopolized by Se. Gen. U Than Shwe family, Union Minister U Ohn Myint, military-backed Myanmar Economic Holdings Ltd., crony companies and drug lords.

According to the import figures from China, Myanmar had exported 12 billion worth of jades to China in 2014 alone, stated Global Witness’s report released on October 23.

The report titled “Jade: Myanmar’s Big State Secret” documented the finding and further details were also included in the report.

According to the finding, most of the profit from jade export is monopolized by the family of former dictator andSenior General U Than Shwe, Union Minister U Ohn Myint, military backed Myanmar Economic Holdings Limited and Myanmar Economic Corporation, Htoo Group, Asia World, KBZ Group, Ever Winner conglomerate and Sky Net company, and companies backed by Wei Hsueh Kangwho had provided financial aid to the United Wa State Army for a long time.

The amount in 2014 alone

According to the China’s import figures, Myanmar had exported 12 billion USD worth of jades to China in 2014 alone, Global Witness reported.

“Until now the jade sector’sworth has been almost impossible to determine.However, based on new research and analysis,Global Witness estimates that the value of officialjade production in 2014 alone was well over theUS$12 billion indicated by Chinese import data,and appears likely to have been as much asUS$31 billion. To put it in perspective, this figureequates to 48% of Myanmar’s official GDP and 46times government expenditure on health,” states the report.

The report said that jade, one of the most precious gems in the world, is being monopolized by military elites, US-sanctioned drug lords, and crony companies. As a result, the benefit from the Hpakant jade mines is very low for both Kachin locals and the citizens.

“Our investigationsshow that the elites who between them have mostto lose from an open and fair future also haveready access to a vast slush fund in the shapeof the jade sector. This raises urgent questionsfor reformers and their international partners.What is happening to all this jade money? Is it onlybeing spent on real estate, fast cars and lavishparties, or is it being used for political purposesas well?” said the report.

Who are involved?

Global Witness named individuals and businesses manipulating the jade trade.

Global Witness’s Asia regional director Mike Davis said, “The first group is made up of companies owned by the military elites. For example, two of the companies are owned by former Senior General U Than Shwe’s family. We think there are subsidiaries under the two companies.”

“The other is the company owned by former Commander of Kachin State and current Union Minister for the Ministry of Livestock, Fisheries and Rural Development U Ohn Myint sold about 80 million USD worth of jades before paying taxes. Likewise, former USDP General Secretary and former General U Maung Maung Thein’s company sold 100 million USD worth of jade after tax eviction,” he added.

Moreover, he said that the findings were only the tip of the iceberg and investigations showed jade businesses are conducted by people close to the military.

“The next is Myanmar Economic Holdings Limited. It is working on many mines and also influential over other companies. Myanmar Economic Holdings Limited has the largest share of the jade business,” said Mike Davis

The third group is made up of crony companies including Htoo Group, Asia Workd and KBZ Group.

“It is not clear if KBZ group is directly involved in the jade business. They said they do not involve in the business directly. Still, we have evidences proving that they have close ties with Ever Winner, the biggest jade company in the business. They claim to have only provided capital while Ever Winner is being founded. The two owners are also very close,” explained the regional director.

The last group is United Wa State Army, drug lords and companies working with them.

“The biggest financial supporter for UWSA is Wei Hsueh Kang who was named as drug lord and the US had even announced 2 million USD award for his arrest. The companies are notorious for their aggressiveness and involvements. Moreover, they are the ones abusing the conflicts in Kachin State for their own profits. They are working under official licenses. The question here is why the licenses were given to them?” Mike Davis added.

U Ohn Myint and people from the ruling party

In Global Witness’s report, not only U Than Shwe family but also four high-ranking officials from the ruling USDP party are named.

They are the current Union Minister for Livestock, Fisheries and Rural Development and former Kachin State Commander U Ohn Myint, former USDP General Secretary U Maung Maung Thein, Deputy Minister for Social Welfare, Relief and Resettlement U Phone Swe, and Deputy Minister for Communications and Information Technology U Win Than.

“Global Witness research indicates that thesefigures are making vast amounts from jade. TheThan Shwe, Maung Maung Thein and Ohn Myintfamilies hold multiple concessions which betweenthem generated pre-tax sales of US$220 millionat the 2014 jade emporium (the official governmentjade sale), and US$67 million at the 2013 emporium.Another company which Global Witness believesto be part of the Than Shwe family group postedsales of another US$150 million across the 2014 and 2013 emporiums combined,” the report reads.

Mike Davis, Global Witness’s Asia regional Director, said, “Who get the licenses? Who get the biggest share of the jade business? To answer these questions, we investigated into the owners of the companies they government had given the licenses, and we tried to find out who are behind the companies. However, we do not know everything. Some of the facts remain as ‘Big State Secret’. Still, we are able to name four people mainly involved in the business.”

Among the four people, U Maung Maung Thein was recently ousted from the position of General Secretary of the ruling USDP.

U Ohn Myint is now running for Pyithu Hlluttaw (lower house) from Kyauktan Township in the upcoming election. He is also one of the main trustees of the president and closely follows the president on his trips.

Global Witness said that it is important to know where the profits from the jade business are being used as the election approaches.

“As the countryheads towards election, when many fear hardlinersmay finance sectarian violence and dirty tricks,

Myanmar’s citizens urgently need to know where the jade money is going,” said the report.

Involvement of the military

Global Witness’s report stated that the military officially involve in the jade business through its Myanmar Economic Holdings Limited and Myanmar Economic Corporation.

“GlobalWitness’ analysis of 2014 emporium data suggeststhese companies sold the highest quality jade,commanding an average price of over US$13,000per kilogram. Between them, official emporiumsales of army companies amount to US$180million in 2014 and US$100 million in 2013. Thesefirms are regarded as an off-budget fund for theCommander-in-Chief,” Global Witness said in the report.

Crony Companies

The report widely covered the involvement of crony companies in the jade business.

The summary of the report said, “Firms that emerged andprospered under the Than Shwe military juntaare key players in the jade business. Most notableare the Asia World group established by Kokangdrug lord Lo Hsing-Han and the Htoo Group runby ‘number one crony’ Tay Za, both of whom are subject to US sanctions.Much more significantbut virtually unknown is the powerful Ever Winnergroup of companies, which appears to encompass12 jade mining firms. The Ever Winner firmsbetween them made around US$190 million inofficial emporium sales in 2014 and just overUS$120 million in 2013. Global Witness researchindicates that its owners are connected to politicallyinfluential tycoons including Aung Ko Win, thehead of KBZ Group and Myanmar’s biggest bank,and media mogul Kyaw Win, the operator ofSkynet satellite TV.”

In Global Witness’s full report, U Aik Htwe, chairman of Every Winner Company, is named as the main player in the business and highlighted his connections with Shwe Than Lwin Company.

Drug Lords

While describing about the involvement of drug lords in abusing jade business for personal gains, US-sanctioned Wei Hsueh-Kang is named as the key player.

While describing him, Global Witness stated that he have been the biggest financial supporter of the UWSA and controlled a group of companies monopolizing the jade business of the country.

“Wei Hsueh Kang is a narcoticskingpin and long-time financier of the United WaState Army / United Wa State Party (USWA/UWSP)ethnic armed group who has a US$2 million USgovernment bounty on his head. There is strongevidence that he controls a group of companiesthat are now arguably the dominant players inMyanmar’s jade industry. Companies run by WeiHsueh Kang and other UWSA/UWSP-relatedfigures have been heavyweights in the jadebusiness since the 1990s. The introduction of USsanctions forced a shuffling of the pack in themid-2000s, but Global Witness investigations haveidentified five firms we believe are now the frontfor Wei Hsueh Kang’s jade ventures. Thesecompanies recorded pre-tax sales of US$100million across the 2013 and 2014 government gems emporiums,” the report said.

Moreover, the example was referred to the connection of Coca-Cola Company and Caterpillar Institute.

“For example, the Coca-Cola Company andCaterpillar Inc. have both recently been caughtout as new information on their in-country partnersand associates has come to light. Despite a sevenfigure due diligence process, Coca-Cola failed toidentify their local partner’s interests in the jadeindustry, including a long-running associationwith army company Myanma Economic HoldingsLimited. The drinks giant stated in a letter that“The Coca-Cola Company has been transparentabout our joint venture and operations in Myanmarand we continue to go above and beyond theDepartment of State’s Reporting Requirements onResponsible Investment in Burma.” the reported quoted.

It continues, “Caterpillar,meanwhile, has hosted in at least five countriesthe front man for a group of jade companies

Global Witness believes to be controlled by druglord Wei Hsueh Kang. In a response to questionsthe company said that its due diligence had notdemonstrated that the companies named byGlobal Witness are owned or controlled by ‘a sanctioned part’.”

Even though it is not complete,

Even though Global Witness’s reported released on October 23 is not complete, analysts said it reflects the current on-ground situations.

While the amount of jade being sold is compared to the tax gained from the trade, it can be seen tax evictions are involved in the business.

In Myanmar, about 100 companies are working together with the government in the jade business.

However, most of the jade companies did not appear in the top 500 taxpayers list released for 2011-12 fiscal year and 2012-13 fiscal year.

Moreover, it is obvious if the companies pay the correct amount of revenue by looking at the fact that most of the companies still remain out of the top 1,000 taxpayers list for 2013-14 fiscal year.

In 51th state emporium alone, the government and 90 partner companies or individuals sold 1 billion Euro worth of jade.

It is a prove that the companies avoid paying tax since they are not in the top taxpayers list while they are selling billions of euro worth of jades.