Rehabilitating Burma’s Cronies

By Aung Zaw 24 April 2015

The United States Treasury announced on Thursday that prominent business leader Win Aung had been removed from its sanctions list, allowing him and some of his companies under the Dagon Group umbrella to conduct business in the US. In this article from January 2013, The Irrawaddy’s founding editor Aung Zaw examines the efforts of other local tycoons to rehabilitate their public profiles after a history of close collaborations with the former military junta.

Burma’s richest tycoons are back in the news again—not for their shady ties to Burma’s former ruling generals, but because of their recent efforts to cozy up to the National League for Democracy (NLD), led by democracy icon Aung San Suu Kyi.

Tay Za, Zaw Zaw and several other notorious figures who came to prominence during the bad old days of military rule have been making headlines recently for donating generously to NLD causes. This, in turn, has led to criticism of the NLD, which has been accused of defending cronies whose names are virtually synonymous with corruption.

On Dec. 27-28, the NLD held a fundraiser in Rangoon to mark the second anniversary of the party’s Education Network. The event netted around 500 million kyat (US $580,000), including a sizable portion from some of Burma’s richest men.

During the event, Skynet, a television operator and a subsidiary of Shwe Than Lwin Company owned by Kyaw Win, donated 135 million kyat ($155,000), while the Htoo Company, owned by Tay Za, donated 70 million kyat ($81,000).

Kyaw Win is known to be close to the office of President Thein Sein, while Tay Za has been accused by the United States of being an “arms dealer and financial henchman” of the former junta—a claim he denies.

Aides to Tay Za have told me that it was the NLD that approached him first; leaders of the party tell that that is not the case.

Aung Zaw is the founding editor-in-chief of The Irrawaddy.
Aung Zaw is the founding editor-in-chief of The Irrawaddy.
Aung Zaw is the founding editor-in-chief of The Irrawaddy.

Tay Za is known to be close to Burma’s senior military leaders, including ex-dictator Snr-Gen Than Shwe. When I met him at his residence in Rangoon last year, however, he told me that he never met the reclusive former strongman until after his helicopter crashed on a snow-capped mountain in the far north of Kachin State in February 2011.

Than Shwe—who three years earlier refused for a full month to allow foreign aid workers into the Irrawaddy Delta after Cyclone Nargis claimed more than 140,000 lives and left millions homeless—immediately ordered hundreds of troops to conduct a search-and-rescue mission for Tay Za and his crew, all of whom survived.

Tay Za told me he later went to the residence of the recently retired junta supremo to express his heartfelt gratitude.

Tay Za also quietly met Suu Kyi soon after her release in November 2010. He had reportedly offered to assist the NLD. Party sources told me Suu Kyi did not reject his offer.

Suu Kyi has also recently been seen visiting a children’s hospital that Burmese tycoon Zaw Zaw of the Max Myanmar Group helped to renovate. Like Tay Za, Zaw Zaw wasted no time finding an opportunity to meet with the Noble Peace Prize laureate. Soon after she was freed from house arrest, Zaw Zaw, who is the chairman of the Myanmar Football Federation, invited her to watch a match together with him. This reportedly earned him a scolding from some senior generals, but that hasn’t stopped him from meeting her again.

When I met him in Rangoon earlier this month, Zaw Zaw—who is still in his mid-forties—said that people should support Suu Kyi. He admitted that sanctions were a big hindrance in making business as the country is opening up to the outside world. He said he cares about his image and his company, but added that if he can’t shed the label of crony, he wants to at least try to be a “a good crony.”

Zaw Zaw is media savvy and friendly. He will proudly tell visitors and the media that he once washed dishes in Japan before coming back to Burma to run his own business selling used cars and later getting involved in the jade mining business in Kachin State.

“I have nothing to hide,” he told me. He was a university student during the 1988 uprising in Rangoon and he witnessed the crackdown and his fellow students being gunned down.

True or not, he doesn’t hide his admiration for Suu Kyi. Indeed, many businessmen who are on the US sanctions list know that Suu Kyi holds the key to their future.

She is the one who can recommend the US government to remove some tycoons from the list. It’s no wonder why some tycoons have been seen making public donations to the NLD and Suu Kyi.

Since his early days, Zaw Zaw’s business empire has expanded considerably. In addition to his mining interests, he now has his own bank (Ayeyarwady Bank, one of the largest in Burma), a cement factory, gas stations and a major construction company. The latter company was awarded numerous lucrative contracts in Naypyidaw, the new capital, including a stadium for the 2013 Southeast Asian Games.

Zaw Zaw may be rich, but he also know that he needs to contribute to society.

In 2010, he set up the Ayeyarwady Foundation, a charitable organization. Since then, he has been building schools across Mon and Karen states and Irrawaddy and Mandalay divisions. Recently, the chairman of the Max Myanmar also attended the wedding of a former student leader and member of the 88 Generation Students group.

But many Burma watchers say that providing cash to the NLD and local community and civil society groups isn’t enough to redeem Zaw Zaw’s reputation. One Rangoon–based observer said that Zaw Zaw and other cronies need to show not only that they support current political reforms, but also that they are willing to make a long-term commitment to the development of civil society. They should also return land that they acquired under the former regime, he said.

“The cronies must show that they are part of the solution, not part of the problem,” the observer added.

From the point of view of the US, which was long the staunchest critic of Burma’s former military rulers, the cronies must make fundamental changes in the way they operate if they want to be removed from the sanctions list.

There has been wild speculation in Rangoon recently that the US is looking into potential waivers of entities, particularly banks, to allow foreign businesses to do business in Burma. This would open up some opportunities for some cronies, but it is unlikely that those involved in drugs or who helped purchase arms for the regime will be removed from the list anytime soon.

Providing cash and building schools and hospitals here and there isn’t enough, one Rangoon-based diplomat said firmly. Some cronies now realize that strong recommendations from Suu Kyi and prominent activists such as Min Ko Naing and Ko Ko Gyi and other actors in the civil society movement are important, as the US is closely monitoring them.

Suu Kyi surprised many by saying that those who became wealthy during military rule should be given another chance to reform themselves. They should be considered innocent until proven guilty, she said, before adding that cronies of the former ruling generals should be investigated for any alleged wrongdoing.

“People may have become rich in different ways. But whether they were involved in any illegal action to make themselves rich must be investigated,” said the opposition leader.

Now, many in Burma are asking whether the tycoons are trying buy off Suu Kyi.

In early January, senior NLD leaders held a press conference to explain the activities of the party’s education network. The press conference was held at the Kandawgyi Palace Hotel—owned by none other than Tay Za.

At the reception, Soe Win, a senior leader of the NLD, told me that he welcomed tycoons’ contribution to education and health. When I asked if the tycoons approached Suu Kyi, he smiled and nodded.

But the question now is: can Suu Kyi rehabilitate some of Burma’s most notorious cronies?

Suu Kyi, who is now the chairwoman of the rule of law and tranquility committee, said that even if they have committed crimes, they should be given a chance to reform themselves.

The right of criminals to rehabilitate themselves should be regarded as part of the rule of law, she said, adding that punishment that is solely intended to inflict suffering is barbaric. “What civilized people should have is a vision that punishment is for reform,” she said.

“Those who are considered cronies have supported the social activities of the NLD and others. What is wrong with that? Instead of spending their money on things that have no purpose, they have supported things that they should support. It’s a good thing,” said Suu Kyi.

Indeed, there are many questions that need to be asked. Can cronies become builders of industry and national economic power? How can they contribute back to society by building philanthropic foundations and provide life-long assistance to society? Many showy tycoons and cronies in Burma are not interested in helping society.

In fact, critics have charged that contributions from cronies are tiny compared to the money they spend on their posh Italian sports cars.

Cronies who have quietly supported Suu Kyi and the opposition movement and donated to the Burmese community in the past were upset to see some cronies who just popped up and threw some cash at the NLD. “They are just opportunists, because they want to be removed from the [US sanctions] list, a young tycoon told me.

“In fact, we have been helping opposition groups for many years,” he said.

He also warned the US not to overlook the fact that several big-time businessmen who were arms smugglers and involved in the opium trade and other shady business are still not on the US sanction list. Moreover, there are several tycoons who have provided profit shares to the generals’ family members.

Sean Turnell, an expert on Burma’s economy at Macquarie University in Sydney, Australia, thinks the cronies are destructive and resistant to reform. “I think the majority are cronies of the destructive sort—but some might turn out for the better.”

“They are rent-seekers pure and simple rather than builders of genuine enterprise,” he added.

“[They are] living off government regulatory largesse, the recipients of monopoly and quasi-monopoly profits and so on. As such, they are political animals as much as economic ones. But certainly there are some too who may emerge as something else. On this front, I guess we have to hope so, since they are amongst the few with sufficient capital to do transformative things, if this is what their desire is.”

A question now is how can cronies be rehabilitated in Burma?