After Arrest in Govt Crackdown, Retailer Points to Alcohol Imports by Tycoons

By Kyaw Hsu Mon 17 December 2013

RANGOON — Premium Food Service Products, a supply company owned by Burma’s biggest retailer City Mart Holdings, has defended its business operations following the arrest of one its directors on Friday during a government crackdown on unlicensed imported wine and liquor.

Premium said the alcohol was imported and supplied by firms belonging to Htoo Group of Companies and ACE Group of Companies, two large conglomerates owned, respectively, by well-known tycoon Tay Za and Phyo Ko Ko Tint San, who is the son of Minister of Sport Tint San.

Premium argued that the importers share blame for the situation and should also be targeted by the Ministry of Commerce, which so far has prosecuted only retailers. The firm also called for a revision of what it deems unclear government policy on alcohol imports.

Since October, two mobile taskforces—comprising officials from the Commerce Ministry, customs department and the special investigation bureau of the police—have been raiding retail warehouses in Rangoon and Mandalay to investigate the legal status of imported alcohol, tobacco and preserved frozen foods.

Most retailers have now stopped sales of foreign booze out of fear for being raided, leading to a shortfall of liquor supplies and complaints from consumers and restaurants.

A Rangoon warehouse belonging to Premium was raided early this month and last Friday Premium director Phyo Hein Kyaw was arrested on accusations that he was involved in sales of illegally imported alcohol.

He became the second retail executive to be arrested. The managing director of Quarto Products was detained and charged in October following a raid on the Rangoon warehouse of Quarto, a large beverages distributor. The retail executives could face three years imprisonment.

Soe Aung, an assistant director of the Rangoon mobile taskforce, said it found 87,000 bottles of wine and 1,200 bottles of liquor, worth about US$560,000, at a Premium warehouse in Tharketa Township.

“We asked Premium to show the original [import license] documents for these bottles, but they couldn’t show them and now we sued them,” he said.

In an interview on Tuesday, Nge Nge, marketing executive of the Premium Food Service Products marketing department, confirmed that it had been unable to hand over the original import license documents for most of the alcohol, but it said that its suppliers share responsibility for this situation.

“Though we have called both our suppliers asking them to show their original import documents for our products [to the taskforce], they actually failed to do that,” she said.

ACE Trading Co. Ltd and Myanmar Shopping Mall supplied Premium with its imported alcohol and only ever provided copies of the import licenses, Nge Nge said. “But, the mobile task force neglected the copies and asked for the originals. We could not and then they sued us,” she added.

ACE Trading is part of ACE Group, a conglomerate with interests in hotels, restaurants, construction, media and travel. ACE is run by Phyo Ko Ko Tint San, who is the son of Sport Minister Tint San.

Myanmar Shopping Mall is a duty-free shop in downtown Rangoon that is owned by Htoo Group, one of Burma’s largest conglomerates, which has interests in banking, mining, construction and hotels. It is owned by Tay Za, a powerful businessman who the US government has sanctioned for his involvement in arms deals for the Burma Army.

Like all retailers in Burma, Premium was forced to seek supplies of imported alcohol from hotels and duty-free shops due to long-standing government import restrictions.

Since the mid-1990s, the government has implemented a ban on the import of alcohol, tobacco and other luxury goods, only allowing certain hotels and duty-free shops to carry out such imports. The ban was part of the former military government’s policies under which military- or crony-owned companies controlled large parts of the economy.

The hotels and duty-free shops are formally banned from commercial sale of alcohol they are allowed to import. Until recently, however, the government made little effort to prosecute retailers, hotels and duty-free shops for involvement in this supply and import chain.

Premium feels it is unfair that it is only being targeted in the current government crackdown, since ACE Trading and Myanmar Shopping Mall imported and supplied the alcohol.

Premium showed The Irrawaddy letters addressed to the firms, requesting them to send import license documents for the alcohol they sold the retailer. Both companies failed to do so.

A reply by ACE Trading Company, dated Dec. 13, denied that it had conducted any transaction with Premium. It claimed that a director on its board by the name of Thura Soe had acted alone in supplying thousands of bottles of alcohol to Premium.

“Thura Soe has used the company’s name for his own initiative to sell imported alcohol that the mobile taskforce has checked. Those products did not come from ACE Company, these came only from Board of Director member Thura Soe,” the letter stated.

Nge Nge, of Premium Products, said the company found this claim hard to believe, adding that the both ACE Trading and Myanmar Shopping Mall should be included in the Commerce Ministry’s investigation.

So far, this has not happened. Raids by the mobile teams, led by senior official Nyunt Aung, have only targeted retailers, leading to concerns that authorities are afraid, or unwilling, to tackle the well-connected firms involved in importing and sales of alcohol.

Asked about this, Soe Aung, of the Rangoon mobile taskforce, denied that hotels and duty-free shops should also be targeted in the crackdown. “It is not our responsibility to check importers directly; buyers have to deal with importers,” he claimed.

The Irrawaddy was unable to reach ACE Trading and Myanmar Shopping Mall for comment on Tuesday.

Clarification: A change was made in this story on 18 December. Premium Food Service Products is under police investigation. City Mart Holdings is a separate company from Premium.