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The Ties That Bind

By Aung Zaw 6 September 2014

YANGON — As a young officer, Col. Myint Swe was known for his courage and his loyalty to his fellow soldiers. Always generous with those serving under him, he was fierce in battle, whether he was fighting foreign forces during World War II or an array of insurgent armies after Myanmar regained its independence in 1948.

Hailing from Pyin Oo Lwin (then known as Maymyo), he joined the army in 1942, when the country was under Japanese occupation. Three years later, he joined the uprising against his military mentors by throwing some Japanese soldiers off a train after getting them drunk while traveling to Upper Myanmar.

When he was in his 30s, he led the 104th Special Force Airborne in attacks on communist and ethnic rebels, earning a reputation for ruthlessness. Rebel leaders who surrendered admitted that their troops fled whenever they intercepted reports that the 104th was on its way.

In 1958, after a stint at the US Army Infantry School in Fort Benning, Georgia, he was assigned to the army research department—a nascent version of a homegrown Central Intelligence Agency created by Gen. Ne Win, the army leader who seized state power in 1962.

As a veteran of Gen. Ne Win’s old regiment, the 4th Burma Rifles, Col. Myint Swe enjoyed the trust of the country’s new dictator, and in 1968 he was tasked with a mopping-up operation after the communist leader Thakin Than Tun, a former colleague of Myanmar’s assassinated independence hero Gen. Aung San, was himself killed by an infiltrator.

Forty years later, after a distinguished military career and a comfortable retirement, Col. Myint Swe died, leaving behind a loving family—and a legacy that continues to ripple through the tangled web of connections that make up Myanmar’s military-business nexus.

A Soldier’s Son

Soon after his death, the highlights of Col. Myint Swe’s career were detailed in a book that included high praise from former army chief Gen. Tin Oo and late Brig.-Gen. Aung Gyi, both of whom went on to co-found the National League for Democracy (NLD) with Daw Aung San Suu Kyi in 1988.

The publisher of that book was U Tay Za, Myanmar’s richest tycoon, and Col. Myint Swe’s youngest son.

Although it’s widely known that U Tay Za owes his fortune to his close ties to Myanmar’s former ruling generals, the depth of his connections to the military has seldom been discussed. However, as the country opens up and the hold of the so-called “cronies” comes under increasing scrutiny, it is becoming clear that some bonds are stronger than others.

This became especially apparent in July, when one of the grandsons of the late Gen. Ne Win revealed that his family’s firm had agreed to buy a majority stake in U Tay Za’s Asian Green Development (AGD) Bank.

In an emailed response to questions from The Irrawaddy, U Aye Ne Win said that the deal—which more recent reports have suggested U Tay Za is reconsidering—was based in part on his family’s special ties to that of the US-sanctioned tycoon.

“Highly reputable and prestigious though some other banking institutions in this nation undoubtedly are, we chose to establish a strategic alliance with U Tay Za and AGD Bank because we have personal connections between our families and the bank in question can provide us with an assurance of a promising future,” wrote the grandson of Myanmar’s former dictator.

If it goes ahead, the plan—which would be backed by the China National Corporation for Overseas Economic Cooperation (CCOEC), a Chinese state-owned company that has offered the Ne Win clan’s company Omni US$4.9 billion to invest as it sees fit in the Myanmar economy—would dramatically underline the hold that old elites continue to have over the country, and the role that personal relationships among them could play in its future development.

Frustrated

At the same time, however, the uncertainty surrounding AGD Bank highlights the continuing pressure on these elites to demonstrate greater transparency.

Preempting criticism of his family’s decision to accept money from CCOEC, U Aye Ne Win was at pains to stress that Omni had done its due diligence. “After careful evaluation, it was brought to our knowledge that the said amount is legitimate and clean,” he said of the Chinese money—emphatically adding that his family’s assets were similarly untainted.

“In this day and age of WikiLeaks, it is highly unlikely that any fortune that is accumulated as a result of some wrongdoing will go unnoticed,” he said.

U Tay Za, however, has had to go to much greater lengths to convince those interested in doing business in Myanmar that he is someone they can safely associate with. The flamboyant tycoon, who was put on the US Treasury Department’s list of sanctioned “Specially Designated Nationals” (SDN) in 2008 for acting as an arms dealer for the former junta and otherwise supporting its rule, is known to have hired PR firms in Washington, DC, to lobby to have his name expunged from the list, to no avail.

The frustrated crony acknowledged the difficulty he’s had with cleaning up his image when he explained why he was looking to unload AGD Bank, which he established in 2010.

“We even have to provide MasterCard services later than the other banks because of US sanctions on me. Everything I do is later than the others,” he told reporters. “The facts I have just mentioned are the reason why I want to sell my shares out.”

From Crony to Donor

In a bid to relax restrictions on his sprawling conglomerate, the Htoo Group of Companies, U Tay Za has also played the philanthropy card, donating to the NLD and, more recently, promising to give $1 million to a journalism foundation to promote better reporting (a move that raised some eyebrows in light of a libel lawsuit he launched against a local publication late last year).

But while his contributions to the country may have been enough to win him an honorary title from President U Thein Sein, U Tay Za is likely to find that the US government is not so easily impressed.

Following his first visit to Myanmar in July, Tom Malinowski, the US assistant secretary of state for democracy, human rights and labor, made it clear in an interview with The Irrawaddy that “donations to charity, while welcome, would not be taken into consideration—for this purpose, what’s important is not how they spend their money but how they make their money.”

He continued: “We will look to see SDNs sever business ties with the military, respect human rights, including by avoiding involvement in land seizures, and respect civilian rule.”

Although some see him as increasingly vulnerable (leaders of the Kachin Independence Organization, for instance, have told me that they have “warned” him about his business plans in Kachin State, and even demolished one of his helipads there), if U Tay Za can rehabilitate himself in the eyes of US policymakers—which is still a distinct possibility—he could yet emerge as one of the big winners as Myanmar’s economy opens up.

In the meantime, his status as a special class of crony—one with ties going back not just to the post-1988 junta, but also to the 1962 coup—will be more than enough to keep him in the game for some time to come.

This article was first published in the September 2014 print issue of The Irrawaddy magazine.

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