Kirin hires firm to investigate Myanmar-military partner

08, Jun. 2020

Photo by from Pexels
Photo by from Pexels

By Yadana Htun

YANGON, NNA – Japanese beverage maker Kirin Holdings Co. has appointed Deloitte Tohmatsu Financial Advisory LLC to probe its local partner in Myanmar after it failed to respond to allegations of the military using money from its businesses to fund deadly operations against ethnic groups.

Kirin announced on June 5 that it has been reviewing its equity stakes in joint-ventures with army-owned Myanma Economic Holdings Ltd. (MEHL) since February after the U.N. Independent International Fact-Finding Mission on Myanmar called on the international community to impose targeted sanctions and arms embargoes on Myanmar military which has been accused of persecuting the Muslim minority in western Rakhine State.

The independent United Nations group, which scrutinized military-business ties, had appealed to businesses to terminate their dealings with military companies including Kirin’s joint ventures Myanmar Brewery Ltd. and Mandalay Brewery Ltd., which come under the MEHL group.

The Japanese beverage giant had repeatedly asked MEHL to cooperate in an internal governance check but to no avail. Kirin finally decided to order an independent investigation after MEHL failed to provide any meaningful information.

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, it said in a press statement.

Kirin said, "We consider this to be a matter of utmost urgency. Respect for human rights is the foundation of all business activities in the Kirin Group."

It added, “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.”

A Kirin spokesman in Tokyo told NNA that the company will announce the result of the investigation when progress has been made.

Previously, Kirin had said it would take necessary action to ensure that its business dealings with the military are in line with global practices and corporate governance standards.

Currently, Kirin has a 51 percent stake in Myanmar Brewery, which is the country’s largest beer maker. It had the lion's share of 80 percent of the local beer market.

To expand its beverage business to Upper Myanmar region, Kirin bougt a 51 percent stake in Mandalay Brewery in 2017.

In a press statement in August 2019, the United Nations said the UN mission members had declared " for the first time, the degree to which the country’s military uses its own businesses, foreign companies and arms deals to support “brutal operations” against ethnic groups that constitute “serious crimes under international law”, bypassing civilian oversight and evading accountability."

According to the mission, the military, known as the Tatmadaw, had carried out “extensive and systematic” human rights violations” against civilians since 2016, including forcibly deporting more than 700,000 ethnic Rohingya to Bangladesh.

"During this period, they say, at least 14 foreign firms, from seven nations, supplied them with fighter jets, armored combat vehicles, warships, missiles and missile launchers," said U.N. in its statement.

The mission urged investors to engage with businesses that are not affiliated with the military in order to "make it harder for them to block reforms, violate human rights and carry out operations without oversight."

The mission also named two companies, Myanma Economic Holdings and Myanmar Economic Corporation (MEC) that, it said, are owned and “influenced by” senior military leaders, including Commander-in-Chief Senior General Min Aung Hlaing and Deputy Commander-in-Chief Vice Senior General Soe Win.