TOKYO (Reuters) – A consortium of Japanese private companies and a Japanese state-owned entity paid the rent for a multimillion-dollar hotel and an office development that went to the Myanmar Ministry of Defense, six companies and government officials told Reuters.
It is the first time that Japan recognizes that the project benefits the Myanmar defense ministry, which is controlled by the military according to the country’s constitution. The payments, as of 2017, are not illegal, but are potentially embarrassing to Japan, as United Nations investigators have alleged human rights abuses by the Myanmar military. Reuters was unable to determine how much rent was actually paid to the defense ministry.
Officially known as Tatmadaw, the Myanmar military is under investigation by the International Court of Genocide for its offensive against Rohingya Muslims in 2017. The military took control of the country in a February 1 coup and have since detained the elected leader. the country and killed more than 261 protesters.
Myanmar’s defense ministry and military junta were not immediately available for comment. Myanmar’s army said its actions against the Rohingya were “cleaning operations” targeting militants and the government dismissed the allegations of human rights abuses and genocide as false. The junta attributed the deaths since the coup to the protesters themselves, accusing them of arson and violence.
Complex Y, built on an army-owned site near the Shwedagon Pagoda in Yangon, is just one of many assets and projects linked to the Myanmar military, who have ruled the country for most of the past 60 years.
The military controls two conglomerates with interests ranging from mining to the bank. Some foreign investors have entered into partnerships with conglomerates in the past decade, while Myanmar’s democratic government was trying to open the country’s economy.
Each part of the Y Complex deal told Reuters that it thought the rent, which was paid by an intermediary, would ultimately go to the government of Myanmar, not the military.
Ryota Nagao, an official in the international policy division of the Japan Ministry of Land, who approved the investment by the state agency, said the ministry judged that the project was not dealing with the military “directly or indirectly” because the defense department was a government ministry. He declined to comment on the fact that Myanmar’s defense department is controlled by the military, according to the country’s 2008 constitution, drafted during the previous military regime.
Japanese construction company Fujita Corp said in a 2017 press release that the Yangon project, which converts an old military museum into a complex of offices, stores and a five-star hotel, would cost $ 330 million.
Fujita, property manager Tokyo Tatemono Co and Japan’s state-owned investment company JOIN, which is overseen by Japan’s Ministry of Land, told Reuters they have formed a consortium that pays the rent on the land on which the complex is built. The State Bank for International Cooperation of Japan (JBIC) said in 2018 that it would participate in financing the project.
Fujita, Tokyo Tatemono and JOIN declined to comment on the rent paid and the amount that ended Myanmar’s defense ministry.
Chief Cabinet Secretary Katsunobu Kato, the longest-serving spokesman for the Japanese government, acknowledged the involvement of JOIN and JBIC in the Y Complex project through a special-purpose company. In response to Reuters questions, he said he understood that none of the entities had a direct commercial relationship with the Myanmar military.
Fujita initially said the project would be completed in 2020. Construction was halted after the coup due to concerns over worker safety, said JOIN, which is 95% controlled by the Japanese government. Representatives from each of these parties told Reuters that the rent was paid through its local partner Yangon Technical and Trading (YTT), a subsidiary of Myanmar’s private conglomerate Ayeyar Hinthar, which has interests in agriculture, banking, health and properties.
Kyi Tha, a YTT official, said the place is being rented by the defense ministry and that the final beneficiary is the government of Myanmar. He said that no special measures were taken to assess the human rights record of the Myanmar military. This is not a requirement of any law or regulation.
GREAT INVESTOR
Chris Sidoti, who researched the economic interests of the Myanmar military for the United Nations, said Complex Y was the only example he found of a military project involving foreign government entities.
Each of Japan’s state-owned entities and companies declined to comment on the terms of the agreement, which was approved by Myanmar in 2017. A treasure trove of alleged official Myanmar records leaked last month and posted online via the Distributed Secrets Denial (DDoSecrets), which describes it as a whistleblower site, indicates that the rent on the complex amounts to about $ 2 million a year for 50 years. Reuters was unable to independently verify the terms of the agreement, or how much the military should actually receive.
Documents on the DDoSecrets website show that a project company controlled by Japanese investors, Y Complex Company, agreed to pay $ 1.8 million out of a total of $ 2.2 million in rent payments to the defense ministry, through an intermediary account, each year starting in 2019. The remainder should be paid by YTT, according to the documents. For 2017 and 2018, called the construction phase, the project company agreed to pay less than $ 500,000 of $ 573,160 in annual rent, the documents show. Reuters was unable to determine how much rent was actually paid to the defense ministry.
JOIN, Fujita and Tokyo Tatemono paid $ 1.8 million in rent in 2019 for the project, according to the audited accounts of a Singapore holding company formed by them for the Y Complex scheme. The request made to the Singapore business regulator does not say to whom the rent was paid. Each of the three companies that formed the organization declined to comment on the number.
Japan is the world’s fifth largest investor in Myanmar, investing $ 1.4 billion in the country over the past five years, according to Myanmar’s Directorate of Investments and Business Administration. Japanese officials said the country’s ties to Myanmar, which also include aid donations, academic exchanges and medical and relief training for its military, help to stem China’s growing influence in the region.
Revelations about economic ties with the Myanmar military may put more pressure on Tokyo and Japanese companies to abandon them, according to human rights groups. Last month, days after the coup, Japanese brewery Kirin cut a beer deal with Myanmar Economic Holdings Ltd, one of two conglomerates belonging to the Myanmar military, saying it was “deeply concerned” about the recent military actions, referring to to the coup, who said they go against their standards and human rights policy.
“This will have serious implications for the reputation not only of JOIN and JBIC, but of Japan as a country,” said Akira Igata, a national security expert at Tama University. “Japan is in danger of being seen as a country that will continue to do business with human rights violators.”
In early March, the U.S. Department of Commerce imposed sanctions on the military-controlled defense and interior ministries in Myanmar, saying they were responsible for the coup. The U.S. Treasury Department has also imposed sanctions on Myanmar’s defense minister, Mya Tun Oo, and his predecessor, Sein Win, among others.
Justice for Myanmar, Human Rights Watch and other pressure groups on February 17 asked a United Nations human rights body to investigate Complex Y’s links with the military. A spokeswoman for the UN human rights working group said she had received the petition, but declined to comment further.
Yoshihiro Kubo, an official who manages business in Myanmar for JOIN, declined to comment on the future of his involvement in the Y Complex. He described the situation as “painful and difficult”, but did not elaborate.
Japan’s finance ministry, which oversees the JBIC, has forwarded questions to the JBIC. JBIC said that its loans for the project are in compliance with Japanese laws and global sanctions, and that it is monitoring the situation in Myanmar.
JBIC said in a 2018 press release that Japanese banks Mizuho Bank and Sumitomo Mitsui Banking Corp would also provide loans for the project. Both declined comments.
Fujita and Tatemono said in statements sent via email that they will “keep an eye on the situation” while considering future measures.
Reporting by Ju-min Park in Tokyo and John Geddie in London Additional reporting by Tetsushi Kajimoto and Antoni Slodkowski in Tokyo and the Reuters team Editing by Bill Rigby