Kirin Launches Independent Probes for its Myanmar Military Partnership

By Nan Lwin 5 June 2020

YANGON—Japanese beverage giant Kirin has hired Deloitte Tohmatsu Financial Advisory to conduct an independent review of a Myanmar military-owned company with which it has multiple partnerships. Kirin faces international condemnation for its partnership as the Myanmar military stands accused of genocide against the Rohingya.

On Friday, Kirin said it has appointed Deloitte to review the financial and governance structures of Myanma Economic Holdings Public Company Limited (MEHL), a conglomerate owned by the Myanmar military. The company said the review will determine the destination of proceeds from joint-venture businesses Myanmar Brewery Limited and Mandalay Brewery Limited “as a matter of urgency.”

Kirin’s spokesperson told The Irrawaddy on Friday that apart from reviewing MEHL’s financial structure, Kirin is considering structural options for the joint-ventures as part of a review of their business relationship with MEHL.

“We aim to complete this review as soon as possible and will provide a further update on our position at the earliest opportunity,” said the spokesperson, who asked not to be named.

The United Nations Independent International Fact-finding Mission on Myanmar revealed in a report last August that Kirin holds 51 percent of both Myanmar Brewery and Mandalay Brewery, with MEHL holding the rest. The report said that any foreign business activity involving the Myanmar military and its conglomerates, MEHL and Myanmar Economic Cooperation (MEC), poses a high risk of contributing to or being linked to violations of human rights law and international humanitarian law. The report warned that at a minimum, those foreign companies are supporting the military’s financial capacity.

Kirin announced a strategic review of its operations in Myanmar in February following the allegations of the UN Fact-finding mission report.

The company said that it has made repeated requests to MEHL for proper documentation as the information initially provided was insufficient.

“Unfortunately, we have not received further updates or documentation from MEHL on this matter,” Kirin said in a press release Friday.

“Kirin is exploring alternative structural options for the ownership of the Myanmar joint-ventures as part of a review of the business relationship with MEHL,” the company said in the press release. “While the COVID-19 pandemic continues to pose further significant challenges to advancing this process swiftly, we are making every effort to address the issue as quickly as possible.”

According to Kirin, the company also sought the strategic advice of its International Advisory Board (IAB) regarding the issues. The IAB is a consultative body to the CEO of Kirin Holdings on the group’s growth strategies, risk management and corporate governance.

In 2018, Amnesty international also called for Japanese authorities to launch an investigation into Kirin’s donations to the Myanmar military and authorities. At that time, the military sought to raise money after launching its “clearance operations” against the Rohingya, which drove around 730,000 Rohingya into neighboring Bangladesh.

According to Amnesty, Kirin said that the payments were intended to help the victims of the violence. But Amnesty found that the first donation was made by Myanmar Brewery staff to the commander-in-chief of Myanmar’s armed forces, Senior General Min Aung Hlaing, at a televised ceremony in the Naypyitaw in September 2017. Min Aung Hlaing said the donations would go in part towards, “security personnel and state service personnel” operating in Rakhine State, according to Amnesty.

The UN Fact-finding Mission also recommended that “no business enterprise active in Myanmar or trading with or investing in businesses in Myanmar should enter into or remain in a business relationship of any kind with the Tatmadaw [Myanmar military], or any enterprise owned or controlled by them, including subsidiaries, until and unless the Tatmadaw is restructured and transformed as recommended by the Mission.”

“We appreciate the challenges of operating in frontier markets and are constantly working to deepen our understanding of the many complexities and improve our systems,” Kirin said in its press release.

The company said it would take its responsibilities in Myanmar seriously and would take necessary action to ensure its business activities in the region adhere to the highest standards.

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