Burma

Wa Tycoon’s Jade Ties Exposed in New Report

By Seamus Martov 4 December 2015

A new report published by the London-based NGO Global Witness alleges that a group of individuals long associated with Burma’s largest and richest armed group, the United Wa State Army (UWSA), are heavily involved in the jade trade. The report, titled “Lords of Jade” and released on Thursday, alleges that Wei Hsueh Kang, often described as the UWSA’s chief “bankroller,” continues to operate an extensive network of jade mining firms, despite being subject to US sanctions and extradition attempts.

The report is a detailed follow up to Global Witness’ lengthy expose on Burma’s jade trade released in October, which revealed that companies controlled by the families of several key figures from the previous military regime—including Sen-Gen Than Shwe, and former Northern Command chief Ohn Myint—were making millions from the jade trade, an industry that remains mired in secrecy and rampant corruption.

Global Witness’ latest report alleges that Wei Hsueh Kang and his associates “have used a web of opaque company structures to build, and disguise, a jade empire.” The NGO says that its research indicates that Wei Hsueh Kang, who has had a US$2 million dollar bounty on his head stemming from what US authorities allege was his central involvement in the trafficking of drugs to the US, has—in collaboration with his associates from the drug trade—set out to dominate jade mining in Kachin State’s Hpakant Township.

“Wei Hsueh Kang’s grip on parts of the jade trade shows just what a dirty business it is, and the levels of impunity enjoyed by the elites whose operations bring death and misery to the people living near the jade mines,” Global Witness Asia Director Mike Davis said in a statement.

According to Global Witness, both the military, which controls most of Hpakant, and the Kachin Independence Organization (KIO), which has clashed with government forces in and around the area since their ceasefire with the central government collapsed in June 2011, give the Wa-connected firms a wide berth so as not to upset the country’s strongest armed ethnic group. Global Witness alleges that Wei and his clique employ the “UWSA name as political leverage over the government army (Tatmadaw) and the KIA/KIO and as a means of intimidating competitors.”

After US authorities targeted what they alleged was a UWSA front company, Hong Pang, with sanctions in the early 2000s, the firm morphed into a series of interrelated companies whose names often change. Global Witness alleges that a firm called Myanmar Takaung is the most important in the stable of UWSA-affiliated jade firms. The firm works closely with four other firms identified as by Global Witness as part of this group of jade firms, Ayeyar Yadanar, Yar Za Htar Ne, Thaw Tar Win and Apho Tan San Chain Hmi (also known by its English name Value Standard). All five firms are staffed by businessmen known for their prior affiliations with Hong Pang.

Citing interviews with jade industry sources, business partners and drug control experts, the Global Witness report alleges that “Wei Hsueh Kang is a beneficial owner of the jade mining ventures of the five companies and exercises ultimate control over them.”

According to jade businessmen interviewed by Global Witness, the Wa-affiliated firms’ business practices frequently involve heavy-handed tactics. Rival firms are offered protection in “exchange for payment or a share of production.” Global Witness research found that a number of firms including Myanmar Naing Group, an entity Global Witnesses says is controlled by the family of retired military strongman Than Shwe and Yadanar Taung Tann, under crony tycoon Steven Law, have entered into such agreements with the Wa firms. Other companies have been compelled to go along with the Wa firms demands after road access to their mines was deliberately blocked, claims jade businessmen interviewed by Global Witness.

Those in the jade trade have also told Global Witness that Wa-related firms have made less-than-subtle references to the UWSA eliminating people it was unhappy with. “The Wa use money, power and weapons; they even kill people. Local people cannot confront them,” said one businessman interviewed by Global Witness.

Such claims have been denied by representatives of the Wa related firms. Li Myint, a former Hong Pang group managing director who acknowledged being in charge of jade concessions in Hpakant for the firms Ayeyar Yadanar and Yar Za Htar told Global Witnesses that the allegations are false.

“We neither force other businesses into making a partnership nor demand payment from these other businesses. We only work with those who are willing to work as our partners depending on the situation of the business. We built the roads in the vicinity of our mine sites after consulting with our neighbouring miners. Some were difficult to consult with,” Li Myint said in a letter sent to Global Witness, responding to questions about his firm’s business practices. Li also denied any association with Myanmar Takaung.

Another Hong Pang veteran, Zaw Bo Khant, who now serves as Myanmar Takaung’s managing director has been identified by Global Witness a key front man for Wei Hsueh Kang’s jade empire. According to Global Witness “official and industry sources identify Zaw Bo Khant as the person responsible for the jade mining operations in Hpakant” for all five of jade firms identified by Global Witness as being part of the Wa group. Zaw Bo Khant is also the director and shareholder of Myan Shwe Pyi Mining, whose sister firm Myan Shwe Pyi Tractors, bills itself as “Myanmar’s premier Caterpillar dealership.” Combing through Zaw Bo Khant’s Facebook account, Global Witness determined that the alleged Wei Hsueh Kang front man visited Caterpillar facilities in Australia, France, Germany, Spain and the UK.

Global Witness says that Caterpillar, by hosting Zaw Bo Khant and doing business with his firm, the world’s leading manufacturer of earth moving equipment, has suffered from an “apparent failure to do adequate due diligence on the owners of its dealership in Myanmar.” The US-headquartered firm has defended itself by saying that is has employed a “Robust Screening” process to ensure that it is not doing business with anyone or any entity that is subject to sanctions. Despite his previous association with Hong Pang, Zaw Bo Khant has yet to be added to the US sanctions list, though Global Witness says there are plenty of other red flags Caterpillar should have seen.

“Zaw Bo Khant’s previous role as manager for Wei Hsueh Kang’s Hong Pang companies is well known and should be grounds enough for a responsible company to make further enquiries,” the report read.

According to Global Witness’ research, the extent to which the UWSA-connected firms are mining and operating on behalf of the entire UWSA as an organization or just Wei and his network remains unclear. The group’s research suggests that many people in the jade trade see the firm as part of the UWSA.

“Whether or not their companies are a financing vehicle for the UWSA/UWSP, it is clear that they are exploiting the Wa name to intimidate peers and competitors in the business,” the report concludes.

Other senior figures connected to the group—including Aik Haw, the son-in-law of UWSA chief Pao Yu Hsiang (also spelled Bao Youxiang)—have also been identified by Global Witness as playing a role in the jade trade.

“Aik Haw also appears to be the key deal-broker when it comes to arrangements between the Wa-related companies and other jade mining firms,” the report read.

According to a jade businessman interviewed by Global Witness, Aik Haw negotiated the Wa firms buying of mines from both Burmese tycoon Tay Za’s Htoo Group and Kyaing International, another firm identified by Global Witness as being controlled by the family of Than Shwe.

It remains unclear how much Wei and the UWSA have profited from the trade. According to Global Witness, companies affiliated with Wei and the UWSA made pre-tax sales totaling US$100 million at government-run jade emporiums in 2013 and 2014. This is likely only a fraction of the jade revenue earned by these firms, as most of the jade is thought to be smuggled directly across the border to China.

The UWSA was formed in 1989 following the demise of the Communist Party of Burma (CPB). The CPB, which was the largest armed group in Burma at the time, collapsed on itself after a purge of junior officers led by the Wa and other ethnics in the CBP cadre, who were largely left out of the CBP’s senior ranks. The UWSA’s ceasefire deal with the central government, brokered by military intelligence chief Khin Nyunt, gave the group a significant amount of autonomy over territory it controlled along the Chinese border.

In the late 1990s, under the encouragement of the Burmese military, the UWSA waged a campaign to capture territory along the Thai border that had previously been held by Khun Sa’s Mong Tai Army (MTA). It was there that the group established the 171st Brigade and its southern command, which was led by Wei Hsueh Kang. His brother ,Wei Hsueh Ying, later took over as head of the 171st Brigade, a territory populated by survivors of a group of more than 100,000 ethnic Wa who were forcibly relocated by the group to southern Shan State as part of 1999 to 2002 campaign to colonize the newly conquered territory. A third Wei brother, Wei Hsueh Long, has also served in the UWSA hierarchy.

Although he is widely believed to still be living in UWSA territory, Wei Hsueh Kang is rarely seen in public. In 2007, he relinquished his role serving on the UWSA’s politburo as the group’s financial affairs chief. According to Merchants of Madness, a 2009 expose of the UWSA penned by Bertil Lintner and Michael Black, despite his resignation he continued to play a key role in the group’s finances. Unlike many of his peers in the UWSA leadership, the ethnic Chinese Wei Hsueh Kang did not serve in the CPB and was previously affiliated with Khun Sa’s Mong Tai Army. After a falling out with the Shan in 1985, he and his brothers joined forces with a smaller group Wa group, the Wa National Council (WNC) on the Thai border before eventually joining with the UWSA and its similarly named political wing the United Wa State Party (UWSP).

Senior UWSA officials have long disputed reports about the group’s involvement in the drug trade and claim the organization took strong measures to eliminate drug production in its territory more than a decade ago.

“We, the UWSA, are wholeheartedly engaged in the fight against drug-dealing,” the group’s spokesperson, Aung Myint, told The Irrawaddy in 2013. “For seven years since 2005, there have been no poppy fields and no poppy plants in our region. This has finished. That’s why the world should recognize us.”

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