Economy

Mandalay Beer’s Legal Battle Leaves Former Owner Thirsting for Compensation

By Yan Pai 3 June 2013

The former joint-venture owner of the Mandalay Beer brewery says she will ask Burma’s government to compensate her for damages incurred more than a decade ago after the former military junta confiscated the company, in a long legal battle that has put the country’s beer industry on the map of an international court.

Win Win Nu—who owned Mandalay Beer in a joint venture between Burma’s Ministry of Industry (1) and her Singapore-based company, Yaung Chi Oo Trading—earned rights to produce the beer in a five-year contract starting in 1993.

In 1997, the brewery was confiscated by the military, reportedly after a fallout between Win Win Nu’s company and Aung Thaung, then the minister of information.  Win Win Nu left the country and was forced to withdraw from the investment.

The case was heard not only in Burma’s domestic courts, but also in the International Court of Justice (ICJ) in Brunei, where Win Win Nu accused Burma’s junta of forcibly nationalizing the company. The junta claimed Win Win Nu had misappropriated funds and later sued her in a court in Rangoon for allegedly scaring away other foreign investors.

Win Win Nu lost the ICJ case, but now under Burma’s nominally civilian government she has decided to try her luck again.

“I was unlikely to get compensation if I asked the former military regime,” Win Win Nu told The Irrawaddy recently. “Having presented the case to the International Court of Justice, I have strong evidence: I neither committed embezzlement nor had personal problems with U Aung Thaung.”

Singapore-based Yaung Chi Oo suffered losses of US $7 million when the venture was compensated, she said. “And the factory still hasn’t been transferred to a government department,” she added.

During Win Win Nu’s joint ownership, Mandalay Beer competed for market share with popular international brands including Heineken, Carlsberg, Singha and Foster’s, as well as Chinese beers which entered Burma on the black market.

Many international brands including Heineken later left the Burmese market, facing pressure to stop conducting business in a country ruled by a junta with grave rights violations. Many are now forming joint ventures to reinter the market under the new government.

Win Win Nu was believed to have close ties to members of the former junta, including Khin Nyunt, who was then the head of the military intelligence unit.

Aung Thaung, the former minister, told The Irrawaddy that the Mandalay Beer contract was terminated because Yaung Chi Oo did not fulfill its obligation to invest $6 million within five years. He said the Singapore-based company invested just $1 million and did not cooperate with the factory’s director on business matters.

“She [Win Win Nu] tried to show that she was familiar with authorities of higher rank, half the members of the cabinet and the military intelligence. I don’t know what she intended, but it was intimidating for me,” Aung Thaung, now a parliamentarian, said of their relationship during the joint venture.

“As Win Win Nu prosecuted the ministry at the International Court of Justice, we also did the same to her in domestic court for telling lies,” he added. “But she didn’t come to trial. So we regard her as an outlaw.”

Aung Thaung said that the military’s decision to nationalize Mandalay Beer was legal and that he believed Win Win Nu should provide compensation to the government.

Critics have said the junta’s takeover of the brewery without prior negotiation made a stain on the country’s investment record, raising concern for foreign investors.

The beer factory, built in 1859 and originally used to produce artillery, was turned into a brewery under the British in 1886. Japan operated the factory during World War II. The brewery is currently owned by the military-owned Union of Myanmar Economic Holdings Ltd.

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