Julian Assange

terça-feira, 7 de dezembro de 2010

Viewing cable 09RANGOON378, BURMA: UPDATE ON CRONY ZAW ZAW’S ACTIVITIES
Reference IDCreatedReleasedClassificationOrigin
09RANGOON378 2009-06-19 05:05 2010-12-06 15:03 CONFIDENTIAL Embassy Rangoon

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DE RUEHGO #0378/01 1700706
ZNY CCCCC ZZH
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FM AMEMBASSY RANGOON
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9139
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHBK/AMEMBASSY BANGKOK 2975
RUEHBJ/AMEMBASSY BEIJING 2332
RUEHBY/AMEMBASSY CANBERRA 2076
RUEHKA/AMEMBASSY DHAKA 5253
RUEHLO/AMEMBASSY LONDON 2177
RUEHNE/AMEMBASSY NEW DELHI 5550
RUEHUL/AMEMBASSY SEOUL 9146
RUEHTC/AMEMBASSY THE HAGUE 0807
RUEHKO/AMEMBASSY TOKYO 6724
RUEHCN/AMCONSUL CHENGDU 1843
RUEHCHI/AMCONSUL CHIANG MAI 2221
RUEHCI/AMCONSUL KOLKATA 0691
RHHMUNA/CDR USPACOM HONOLULU HI
RUEKJCS/JOINT STAFF WASHDC
RUCNDT/USMISSION USUN NEW YORK 2527
RUEHGV/USMISSION GENEVA 4533
RUEATRS/DEPT OF TREASURY WASHDC
RUEKJCS/DIA WASHDC
RUEAIIA/CIA WASHDC
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC

C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 000378 

SIPDIS 

STATE FOR EAP/MLS, INR/EAP, EEB/TFS 
PACOM FOR FPA 
TREASURY FOR OASIA, OFAC 

EO 12958 DECL: 06/19/2019 
TAGS ECON, EFIN, ETRD, PREL, PINR, BM 

SUBJECT: BURMA: UPDATE ON CRONY ZAW ZAW’S ACTIVITIES 
REF: A. 07 RANGOON 1107  B. RANGOON 298  C. RANGOON 355  D. RANGOON 330
RANGOON 00000378 001.4 OF 004

Classified By: Economic Officer Samantha A. Carl-Yoder for Reasons
1.4 (b and d).

Summary
------- 

1. (C) Regime crony Zaw Zaw continues to expand his businesses in
Burma. In addition to Max Myanmar Group of Companies, Zaw Zaw 
owns a beverage bottling company, a cement plant, a trading company,
a jade mine in Phakhant, a rubber plantation in Mon State, and a 
professional soccer team. Embassy Rangoon recommends OFAC add Zaw 
Zaw’s additional companies and key management personnel (listed 
in paragraph 5) to the targeted sanctions list. End Summary.

Additional Business Ventures
---------------------------- 

2. (C) Zaw Zaw, one of Burma’s up-and-coming cronies, continues
to expand his businesses. His Max Myanmar Group of Companies, 
which overseas his construction and tourism operations, is already 
designated on the Department of the Treasury’s sanctions list (Ref A).
We have confirmed Zaw Zaw also owns Pinya Manufacturing Co. Ltd.,
which produces beverages including Max Cola for the local market.
Pinya Manufacturing began operating in 1998 with an initial 
investment of 12.5 million kyat (approximately USD 41,000 in 1998)
and currently employs more than 70 workers. Pinya Manufacturing Co. Ltd.
has 13 distribution branches throughout Burma.

3. (C) Embassy business contact XXXXXXXXXXXX confirmed that Zaw
Zaw is expanding his business ventures under the Max Myanmar 
umbrella, including construction of a cement factory in Nay Pyi
Taw, which allegedly will provide cement to Steven Law for Asia
World’s airport project (Ref B), a concrete block factory in
Nay Pyi Taw, a jade mine in Phakhant, and a rubber plantation
in Mon State. According to XXXXXXXXXXXX , Zaw Zaw operates the
Lone Khin jade mine in conjunction with the Ministry of Mines 
and recently received an additional 50 acres of land in Phakhant 
for jade mine development. Zaw Zaw allegedly sold several lots 
of jade at the March 2009 government jade and gem auction, 
[name removed] noted.

4. (C) Zaw Zaw is currently Chairman of the Myanmar Football
Federation, and he owns Delta United, one of the professional
soccer teams in the new Myanmar Football National League (Ref C).
Contacts confirm that Zaw Zaw hired Senior General Than Shwe’s 
grandson to play on the team (Ref D). Zaw Zaw has also begun to 
develop plans for the construction of a new soccer stadium in 
Pathein, Irrawaddy Division, the future home of the Delta United
team,XXXXXXXXXXXX . XXXXXXXXXXXX  estimated the stadium 
construction cost will be more than USD 1 million, and should
be completed by 2011.

5. (SBU) Below is information on additional companies owned
by Zaw Zaw.
RANGOON 00000378 002.8 OF 004
-- Delta United Football Club; Pathein, Irrawaddy Division. Listed
owner and partner: U Zaw Win Shaine, owner of Ayeyar Hinta Co., Ltd.
-- Lone Khin Jade Mine; Phakhant, Kachin State.
-- Max Myanmar Cement Factory; near Taung Phila Limestone Deposit,
Leiway Township, Nay Pyi Taw.
-- Max Myanmar Concrete Block Factory; Nay Pyi Taw.
-- Max Myanmar Rubber Plantation, Belin, Mon State.
-- Pinya Manufacturing Co. Ltd.; 37/38 Baw Maw An Twin
Wun Street, Industrial Zone 3, Hlainthaya, Rangoon; phone:
95-1-681-745, 95-1-685-75, 95-1-685-15; fax: 95-1-680-669.
Managing Director: U Kyi Lwin, a.k.a. U Kyan Khinn.

Embassy Recommendation
---------------------- 

6. (C) Zaw Zaw is one of several mid-level cronies actively
attempting to curry favor with the regime and to use his 
government ties to expand his commercial enterprises. He, 
his family, and many of his companies are already listed on
OFAC’s targeted sanctions list. Embassy Rangoon recommends 
OFAC also designate the above-mentioned companies and senior 
management under the JADE Act.
DINGER
RANGOON 00000378 003.2 OF 004

6. (SBU) The Burmese government usually releases a 
supplementary budget later in the fiscal year reflecting 
higher expenditures; its total annual deficits are thus
greater than in the initial official budgets. For example,
the FY08-09 supplementary appropriation added an additional 
743.9 billion kyat (approximately USD 743 billion at current 
rates) to that year’s budget, raising expenditures by more 
than 15 percent over projected totals.

7. (SBU) As in previous years, “Government” received the 
largest allocation of additional funding (USD 282 million),
approximately half of FY08-09’s supplemental appropriation.
Businessmen explained that money likely funded ongoing 
construction costs in Nay Pyi Taw, as well as other government
infrastructure projects. SOEs received the second largest
amount - 185 billion kyat (USD 185 million), a 65 percent 
budget increase. The Ministry of Defense received an additional
9 billion kyat (USD 9 million) and the Ministry of Finance 
received 53 billion kyat (US 53 million). In response to
Cyclone Nargis, the GOB allocated an additional 77 billion 
kyat (USD 77 million) to the Ministry of Agriculture while 
the Ministry of Social Welfare received 44 billion kyat
(USD 44 million).

Weak Revenue Generation
----------------------- 

8. (SBU) During last year’s IMF Article IV consultations,
IMF representatives highlighted the need for the Burmese 
Government to improve its tax administration and modify its 
widespread discretionary tax exemptions. According to IMF 
officials, the GOB replied that one of its goals is to 
reduce the budget deficit by addressing the main causes:
weak revenue collection, losses from inefficient SOEs and 
SEEs, unrestrained government spending, and budget expenditures
for non-productive uses, such as defense and construction.
However, business contacts reported that the GOB did little to 
modify its tax structure in 2008, leading them to question the 
government’s prediction of a 27 percent increase in tax 
revenues in FY09-10.

9. (SBU) Over the past few years, authorities have attempted
to increase revenues through stricter enforcement of income
taxation and through an informal 2007 Customs valuation rate 
hike from 450 kyat/$1 to between 800 and 1200 kyat/$1, depending
on the product and its origin. While GOB officials privately
argue that this rate hike indicates an effort to reconcile the
various exchange rates, it instead complicates Burma’s already
complex informal exchange rate system.

10. (SBU) According to the FY09-10 budget data, most SOEs will
operate at a loss. Even with extractive industries presumably
posting sizable profits, the net SOE loss is predicted to be 
roughly 484 billion kyat (USD 484 million) -- though this 
estimate could be too low. State-Owned Enterprises registered
a loss of 601 million kyat in FY08-09, substantially more 
than GOB initial estimates of 450 billion kyat. According to 
budget publications, SOEs lost 800 billion kyat in FY07-08, 
436 billion kyat in FY06-07, and 549 billion kyat in FY05-06.

11. (SBU) Corruption at all levels remains a problem in Burma,
which 
affects the GOB’s ability to collect revenue.
RANGOON 00000378 004.2 OF 004
While the government cracked down on crooked Customs officials
in 2006, the payment of bribes on the borders continues,
according to business contacts. Corruption is also rife in 
other GOB agencies, including the Internal Revenue Department,
Immigration, and the Yangon Central Development Committee.

Comment
------- 

12. (SBU) While the published budget provides a general 
guideline of how the GOB will allocate its funds, the lack 
of details in the document -- and the general unreliability of
GOB statistics -- make it impossible to obtain an accurate 
picture of Burma’s fiscal situation. This problem is compounded
by the lack of spending discipline by senior leaders, who will 
likely continue allocating money for pet projects with little 
oversight or regard for planned appropriations. Despite the GOB’s
stated intention to reduce the budget deficit, another increase 
is far more likely due to uncontrolled spending, SOE losses,
and the lack of tax reform. Burma’s economic future remains troubled.
DINGER

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