BANGKOK // Myanmar's military leaders have siphoned billions of dollars into offshore accounts in Singapore over the past nine years, according to a report just published by the US-based environmental group Earth Rights International (ERI).
The money comes from the Yadana gas project in Myanmar, once known as Burma, and involves energy giants Chevron of the United States, France's Total and Thailand's PTTEP. More than 60 per cent of the gas is pumped through a pipeline into Thailand.
"Since 2000, some $5 billion [Dh18.3bn] from the Yadana gas pipeline has been stolen from the Burmese people," Mathew Smith, the main author of the report said in an interview. "Rather than contribute to Burma's economic development, the billion-dollar revenues from the project have gone into the pockets of the top generals."
The money has been put in two Singapore banks, the Overseas Chinese Banking Corp and the DBS Group, according to ERI. The monitor has sent the report's findings to the banks involved and the Singaporean government. Both banks have issued statements dismissing the accusations and disclaim any involvement in the Yadana project. The Singapore government is looking into the case, a senior government official said.
"The revenue from this pipeline is the regime's lifeline," Mr Smith said. "As long as the regime has easy access to these funds there will be little incentive to change. But it also provides a critical leverage point for the international community to use to support the people of Burma."
Myanmar earns $150 million (Dh551m) a month from gas exports, and that is set to rise substantially in the future, according to Sean Turnell, an Australian academic at Macquarie University in Sydney and an expert on Myanmar's banks and economy.
"Foreign reserves have now just passed $5 billion. Meanwhile, the international community is being berated over its failure to stump up for the government's post-Nargis reconstruction funding proposals," he said.
While the gas revenues are the most substantial part of the regime's schemes, according to diplomats in Yangon who monitor the economy, they are only the tip of the iceberg. "Every deal done with foreign companies involves a cash-back component," a European diplomat familiar with the government's business practices.
"The industry minister, Aung Thaung, always asks foreign businesses which approach him for government approval for 25 per cent of the projects value as a kickback," according to a German entrepreneur who has been dealing with the regime for more than a decade.
Most European businesses baulk at this request, but Asian firms are much more compliant, seeing it as an acceptable cost of doing business with the generals. The former minister for post and telecommunications, Brig Gen Thein Zaw, benefited substantially from a deal with the major Chinese mobile phone company ZTE, according to a Myanmar businessman familiar with the deal done four years ago. Under the contract, the Chinese provided a $150m loan for the infrastructure to provide 300,000 telephone lines, more than 10 times the real cost of the project, according to industry experts. In a ZTE contract for a million phone lines in another south-east Asian country the cost was $30m.
China's largest oil and gas producer, the China National Petroleum Corp, is scheduled to start constructing nearly 4,000km of pipeline from Myanmar's western Arakan state to China's Yunnan province next month. The deal is expected to provide the military government, which has ruled the country since a 1962 coup, with at least $29bn over 30 years.
"Corruption in Burma is endemic," Mr Turnell said. "Every aspect of the economic food chain involves bribery and payoffs. From the clerk who gets a tip for processing application forms for passports, telephones, business registration and so on to the big deals involving senior government officials and ministers, who demand much more."
Transparency International rates Myanmar as the second most corrupt country in the world based on its corruption perceptions index. Only Somalia rates worse.
ERI estimated that the military government had received 75 per cent of the revenue generated by the Yadana pipeline, which runs from the Andaman Sea to western Thailand. The junta managed to keep the $4.83bn off its national budget accounts by using a 30-year-old exchange rate from dollars to the local kyat currency, which produced a sum in kyat that was a mere fraction of the real amount generated, according to ERI.
"Singapore has very tight laws regarding corruption and misappropriation of public funds," Mr Smith said. "These accounts should be red-flagged until the banks have the opportunity to co-operate with the authorities."
The group called on the international community to take steps to end high-level corruption in an effort to divert money into government programmes, especially health and education.
"If there isn't a local response, then countries like the US could act and call for secondary-boycott financial sanctions," Mr Turnell, from Macquarie University in Australia, said. "These ban not just Burma's banks from access to the US financial system [which is what current US financial sanctions do], but any bank that allows Burmese banks, leaders or connected parties to maintain accounts with them - or conduct other services on their behalf."
foreign.desk@thenational.ae
DUBAI WORLD CUP RACE CARD
6.30pm Meydan Classic Trial US$100,000 (Turf) 1,400m
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7.40pm UAE 2000 Guineas Group Three $250,000 (Dirt) 1,600m
8.15pm Dubai Sprint Listed Handicap $175,000 (T) 1,200m
8.50pm Al Maktoum Challenge Round-2 Group Two $450,000 (D) 1,900m
9.25pm Handicap $135,000 (T) 1,800m
10pm Handicap $135,000 (T) 1,400m
The National selections
6.30pm Well Of Wisdom
7.05pm Summrghand
7.40pm Laser Show
8.15pm Angel Alexander
8.50pm Benbatl
9.25pm Art Du Val
10pm: Beyond Reason
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
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If you go...
Etihad Airways flies from Abu Dhabi to Kuala Lumpur, from about Dh3,600. Air Asia currently flies from Kuala Lumpur to Terengganu, with Berjaya Hotels & Resorts planning to launch direct chartered flights to Redang Island in the near future. Rooms at The Taaras Beach and Spa Resort start from 680RM (Dh597).
Panipat
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Produced Ashutosh Gowariker, Rohit Shelatkar, Reliance Entertainment
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Company Profile
Name: JustClean
Based: Kuwait with offices in other GCC countries
Launch year: 2016
Number of employees: 130
Sector: online laundry service
Funding: $12.9m from Kuwait-based Faith Capital Holding
The White Lotus: Season three
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Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
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AT4 Ultimate, as tested
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Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Jordan cabinet changes
In
- Raed Mozafar Abu Al Saoud, Minister of Water and Irrigation
- Dr Bassam Samir Al Talhouni, Minister of Justice
- Majd Mohamed Shoueikeh, State Minister of Development of Foundation Performance
- Azmi Mahmud Mohafaza, Minister of Education and Minister of Higher Education and Scientific Research
- Falah Abdalla Al Ammoush, Minister of Public Works and Housing
- Basma Moussa Ishakat, Minister of Social Development
- Dr Ghazi Monawar Al Zein, Minister of Health
- Ibrahim Sobhi Alshahahede, Minister of Agriculture and Minister of Environment
- Dr Mohamed Suleiman Aburamman, Minister of Culture and Minister of Youth
Out
- Dr Adel Issa Al Tawissi, Minister of High Education and Scientific Research
- Hala Noaman “Basiso Lattouf”, Minister of Social Development
- Dr Mahmud Yassin Al Sheyab, Minister of Health
- Yahya Moussa Kasbi, Minister of Public Works and Housing
- Nayef Hamidi Al Fayez, Minister of Environment
- Majd Mohamed Shoueika, Minister of Public Sector Development
- Khalid Moussa Al Huneifat, Minister of Agriculture
- Dr Awad Abu Jarad Al Mushakiba, Minister of Justice
- Mounir Moussa Ouwais, Minister of Water and Agriculture
- Dr Azmi Mahmud Mohafaza, Minister of Education
- Mokarram Mustafa Al Kaysi, Minister of Youth
- Basma Mohamed Al Nousour, Minister of Culture
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
More from Neighbourhood Watch:
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Company profile
Company name: Suraasa
Started: 2018
Founders: Rishabh Khanna, Ankit Khanna and Sahil Makker
Based: India, UAE and the UK
Industry: EdTech
Initial investment: More than $200,000 in seed funding
Analysis
Members of Syria's Alawite minority community face threat in their heartland after one of the deadliest days in country’s recent history. Read more
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
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The Melbourne Mercer Global Pension Index
The Melbourne Mercer Global Pension Index
Mazen Abukhater, principal and actuary at global consultancy Mercer, Middle East, says the company’s Melbourne Mercer Global Pension Index - which benchmarks 34 pension schemes across the globe to assess their adequacy, sustainability and integrity - included Saudi Arabia for the first time this year to offer a glimpse into the region.
The index highlighted fundamental issues for all 34 countries, such as a rapid ageing population and a low growth / low interest environment putting pressure on expected returns. It also highlighted the increasing popularity around the world of defined contribution schemes.
“Average life expectancy has been increasing by about three years every 10 years. Someone born in 1947 is expected to live until 85 whereas someone born in 2007 is expected to live to 103,” Mr Abukhater told the Mena Pensions Conference.
“Are our systems equipped to handle these kind of life expectancies in the future? If so many people retire at 60, they are going to be in retirement for 43 years – so we need to adapt our retirement age to our changing life expectancy.”
Saudi Arabia came in the middle of Mercer’s ranking with a score of 58.9. The report said the country's index could be raised by improving the minimum level of support for the poorest aged individuals and increasing the labour force participation rate at older ages as life expectancies rise.
Mr Abukhater said the challenges of an ageing population, increased life expectancy and some individuals relying solely on their government for financial support in their retirement years will put the system under strain.
“To relieve that pressure, governments need to consider whether it is time to switch to a defined contribution scheme so that individuals can supplement their own future with the help of government support,” he said.