Junta Crony

Myanmar Junta Crony in New Venture With Regime-Allied Ethnic Armed Group

By The Irrawaddy 26 January 2023

Notorious Myanmar regime crony U Aung Aung Zaw travelled to the Kokang Self-Administered Zone in northeast Shan State in the second week of January, in the latest partnership between junta-linked cronies and regime-allied ethnic armed organizations.

U Aung Aung Zaw in the Kokang Self-Administered Zone in January 11, 2023 /Kokangnews

U Aung Aung Zaw is the chairman of the 24 Hour Group of Companies which operates two airlines, Air KBZ and Myanmar Airways International (MAI).

Kokang sits close to the Myanmar-China border. Its capital Laukkai is a notorious sin city, and the region is controlled by the Myanmar military-affiliated Kokang Border Guard Force (BGF).

During U Aung Aung Zaw’s visit, 24 Hour Group and Kokang BGF signed an agreement on using helicopters for passenger flights, the Facebook page of Kokang BGF’s media mouthpiece, Kokangnews, reported on January 13.

Kokang BGF will purchase the helicopters, while 24 Hour Group will operate and maintain them. The two sides are also planning to build an airport in Kokang, and will jointly carry out preliminary work such as conducting a survey and applying for a license for the new airport.

China-based political analyst Dr. Hla Kyaw Zaw told The Irrawaddy that the partnership between the Kokang BGF and a regime crony is not a surprise.

“I think [U Aung Aung Zaw] was sent by [junta chief] Min Aung Hlaing. Kokang BGF is more than rich enough to buy its own helicopters. It is an incentive to Kokang BGF [by Min Aung Hlaing] to counter the Myanmar National Democratic Alliance Army (MNDAA), which is fighting the regime in Kokang,” she said.

Founded in 1989, the MNDAA is a splinter group from the Communist Party of Burma. The MNDAA lost control of Kokang after the Myanmar military moved into the region at a time when the MNDAA was riven by infighting. The operation was masterminded by Min Aung Hlaing while he was the head of the military’s Bureau of Special Operations 2.

MNDAA leader Peng Jiasheng was deposed, fled to China and was replaced by a Kokang MNDAA officer, Bai Suoqian, handpicked by the Myanmar military. The MNDAA faction loyal to Bai also became a government-recognized BGF. Kokang businessman Liu Jiangxiao is also one of the founders of the Kokang BGF.

Liu was awarded an honorary title by Min Aung Hlaing in December 2021. Backed by generals, Kokang BGF leaders are free to run illegal businesses in the self-administered zone. They are also involved in military-controlled businesses.

U Aung Aung Zaw established 24 Hour Group in 2003. Until 2013, it was a medium-sized firm with interests in real estate, mining, services, as well as a 5,000-hectare palm oil plantation in Tanintharyi Region.

But over the past decade, the company has grown to become a conglomerate encompassing two airlines, fuel and aviation fuel importation and distribution, hotels, electricity generation, real estate and construction, mining, agriculture and cement production. The group’s expansion has been unusually rapid for a Myanmar company, which usually struggle to obtain bank loans and to raise capital.

Members of Min Aung Hlaing’s family and crony U Zaw Win Shein, the owner of Ayeyar Hinthar Holdings Company Limited, were on the board of directors of 24 Hour Group’s general service company, the first of the group’s companies, according to company records.

U Aung Aung Zaw

What is most interesting about U Aung Aung Zaw is that he has acquired businesses from U Aung Ko Win, an arch-crony and owner of the KBZ Group of Companies.

U Aung Ko Win is the creditor of many Myanmar business owners and serves as a middleman between generals and would-be-cronies. He provides capital through his KBZ Bank to implement profitable projects in business deals involving himself, generals and new cronies.

Air KBZ and MAI are the two best-known businesses that U Aung Aung Zaw has acquired from U Aung Ko Win.

MAI was previously the national airline. KBZ Group acquired an 80 per cent stake in MAI under U Thein Sein’s quasi-civilian government.

The two airlines operate domestic routes, as well as flights to 16 foreign destinations. 24 Hour Group bought Air KBZ and MAI in late 2018. Neither company provided details about the deal.

An Air KBZ airplane

In 2019, 24 Hour Group bought around 10 French-made Airbus A319-112 and Brazilian-made Embraer 190 airplanes, which cost US$60-80 million each.

The two airlines now boast a combined fleet of 20 passenger planes: eight Airbuses, eight ART 72’s and four Embraer 190 planes, according to 24 Hour Group.

Only three of Myanmar’s airlines operate internationally. One is state-owned Myanmar National Airlines, the others are Air KBZ and MAI, meaning that 24 Hour Group has a near-monopoly on international flights from Myanmar.

KBZ Group also sold mines in Shan State and vast palm oil plantations in Tanintharyi Region to 24 Hour Group, according to company records and local media.

24 Hour Group is also developing the Kissapanadi seaside housing project in the Rakhine State capital Sittwe, a new international airport at Heho in Shan State, a tourism museum and botanical garden in Shan State’s Kalaw and the Inle Tourism Park in Shan State, as well a US$1.2 billion 660-megawatt coal-fired power plant in Tanintharyi Region.

In July 2022, 24 Hour Group bought Bright Mountain Resources Ltd, the Myanmar subsidiary of the Australian-owned Mallee Resources, which operates a silver mine in Shan State. Mallee Resources, which is listed on the Australian Stock Exchange, sold its Myanmar subsidiary after deciding to exit the country following the 2021 coup.

Ma Yadanar Maung, a spokesperson for Justice for Myanmar (JFM), a group of covert activists campaigning for justice and accountability for the people of Myanmar, said: “MAI is a key business partner of the Myanmar military junta. MAI and the Myanmar Air Force have shared aircraft and the junta leadership use an MAI-branded aircraft for their international travel, including to Russia, where the junta leadership has discussed business and the purchase of arms.”

There is also a risk of money laundering in some of 24 Hour Group’s business dealings, said the JFM report.

Other deals between 24 Hour Group and junta-controlled state-owned enterprises include limestone and coal mines in Tanintharyi and Sagaing regions, as well as the construction of Strand Road in Sittwe on land the Myanmar military grabbed from Rohingya people, according to Ma Yadanar Maung.

“We ask again for imposing targeted sanctions as early as possible against all the businesses, including the 24 Hour Group of Companies, supporting the terrorist military regime,” said Ma Yadanar Maung.