THE BURMESE REGIME AIRS ITS DIRTY LAUNDRY: FORMER

C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 001462

SIPDIS

STATE FOR EAP/BCLTV; PACOM FOR FPA

E.O. 12958: DECL: 11/11/2014
TAGS: PGOV PINR ECON BM
SUBJECT: THE BURMESE REGIME AIRS ITS DIRTY LAUNDRY: FORMER
PM "CORRUPT AND INSUBORDINATE"

REF: A. RANGOON 1437


B. RANGOON 1402

C. RANGOON 1382 AND PREVIOUS

D. RANGOON 1345

E. RANGOON 1237

Classified By: CDA, a.i. Ronald McMullen for Reasons 1.4 (b,d)


1. (C) Summary: In an apparent campaign to smear former
Prime Minister General Khin Nyunt and in the process diminish
the authority of the military intelligence (MI) apparatus
that he created and controlled, the SPDC on November 7
published a stunning "explanation" of his recent ouster.
Gone is an initial regime veneer that subscribed "health
reasons" behind Khin Nyunt's departure, replaced by a
vitriolic attack describing the junta's former third-ranking
member as "culpable," "corrupt," and "insubordinate."


2. (C) Rather than corruption, however, we suspect that a
more probable explanation for the SPDC's anti-Khin Nyunt
campaign is a long-standing hatred, and fear, associated with
an MI apparatus that knew no limits and focused attention not
only on overt threats to the status quo, but also on the
regime itself. Nonetheless, although MI was clearly an
irritant to many senior officials, the intelligence network
more often than not delivered the goods and served as the
regime's backbone for command and control of Burma's diverse
population. We suspect that MI will survive, in some shape
or form, to continue playing a key role for the SPDC. End
Summary.

Sunday - Laundry Day for the Regime
--------------


3. (U) In a stunning 18-page expose, the SPDC on Sunday
November 7 issued a self-described "complete explanation" of
events related to the October 19 ouster of former Prime
Minister Khin Nyunt. The "explanation," issued as a special
insert to the regime's official newspaper (the New Light of
Myanmar),was a compilation of internal briefings offered to
government and military officials in late October and early
November. According to the regime, the briefings were given
by SPDC member General Thura Shwe Mann, Prime Minister Lt Gen
Soe Win, and Secretary-1 Lt Gen Thein Sein and issued
publicly "with a view to hav(ing) the complete story
regarding the developments in the country."


4. (C) On several occasions since SPDC Chairman Than Shwe's
declaration that he had permitted Khin Nyunt "to retire on
health grounds," GOB and SPDC officials have alluded to
allegations of corruption as a possible reason for the former
Prime Minister's demise. Most notably, on October 21 during
a briefing for the diplomatic corps, Foreign Minister U Nyan
Win linked Khin Nyunt to a $30 million corruption scheme (ref
C). During a private meeting with the COM on October 25, the
Minister of Labor (ref B) said that Khin Nyunt was "covered
with rust" and should have been dismissed earlier (Note: The
Labor Minister, who had close ties to Khin Nyunt, was himself
sacked less than two weeks later - ref A. End Note).


5. (U) The SPDC's November 7 official explanation of events
dropped all pretext of medical reasons for Khin Nyunt's
departure, saying that such a description was initially
offered "out of regard for his dignity and that of his
family." Instead, the briefers, led by General Shwe Mann,
unleashed a volley of accusations describing General Khin
Nyunt as "culpable," "insubordinate," and deeply involved in
bribery and corruption. Among the highlights of Shwe Mann's
briefings:

--While Khin Nyunt was undergoing medical treatment in
Singapore in mid-September, a "huge and alarming bribery and
corruption case" was uncovered at a border checkpoint near
Muse, close to the China border in northern Shan State (ref
D),involving over $30 million in cash, 42 tons of jade, and
1,300 pearls. According to Shwe Mann, a "dutiful citizen"
had issued a report on the corruption to Khin Nyunt, but the
latter neglected to inform SPDC authorities.

--Thus far, the regime has arrested and convicted 186
personnel from the military and three civil departments for
their involvement in the Muse case and disbanded the National
Intelligence Board (which, under Khin Nyunt's authority, had
oversight of military intelligence).
--The Muse case, which exacerbated existing tensions between
military intelligence units and immigration units, also
revealed that MI (under Khin Nyunt's command) had been
"high-handed" in its dealings with ordinary citizens and
civil servants.

--On October 1, Army Chief Vice Senior General issued a
directive to all government and military departments to cease
economic ventures disguised as "welfare" activities raising
funds for civil servants. General Khin Nyunt was "deeply
aggrieved" by the directive, which resulted in SPDC Chairman
Than Shwe warning him on October 4 that he, the Chairman,
planned to relieve the Prime Minister of his MI portfolio.

--On October 14, Khin Nyunt told his OCMI lieutenants that
the situation had devolved due to a "lack of unity" among
military units, and he issued instructions for intelligence
gathering on regional and brigade military commanders.

--Citing Khin Nyunt's October 14 instructions as "not only
leading to the disintegration of the Tatmadaw (Armed Forces)
but also posing a serious threat to the nation," Shwe Mann's
briefings concluded that the former Prime Minister was
permitted to retire on October 19.

Extortion? We're Shocked, Just Shocked
--------------


6. (U) The SPDC's explanations also revealed that Shwe Mann
and Prime Minister Soe Win had met with business leaders
subsequent to Khin Nyunt's dismissal to "give necessary
instructions." Soe Winn, explaining that the regime's
economic development successes were not achieved solely under
the direction of one individual (e.g., Khin Nyunt),
admonished the entrepreneurs to avoid creating a "new class
that benefits... a minority of the people" and to steer clear
of corruption and bribery. (Note: S-1 Lt Gen Thein Sein, in
his capacity as Chairman of the National Convention Convening
Commission, also explained that the regime's road map was not
the product of "a single individual," but rather the entire
SPDC. End Note.)


7. (U) General Shwe Mann told the business leaders,
apparently with a straight face, that "we come to know only
now" that military intelligence officers had employed
strong-arm tactics with the commercial sector, noting that
"if they (MI commanders) need money, all they need to do is
to summon the entrepreneurs and interrogate them." Shwe Mann
assured the business leaders that the SPDC had placed MI "in
its bounds" in order to prevent further corrupt practices.


8. (U) However, Shwe Mann also gave a clear warning to
operators who may have had business deals with Khin Nyunt,
his family, and/or his cronies, urging entrepreneurs to write
as soon as possible to the new chief of military
intelligence, Maj Gen Myint Swe, and confess their past
"donations" to MI officers and avoid "unnecessary
interrogations." He added, "if, on the other hand (your
deals are) revealed upon interrogation, you will be held
responsible." He observed that interrogations had already
exposed information on joint ventures between OCMI (Khin
Nyunt's Office of the Chief of Military Intelligence) and the
"Tun Lin Yaung Company," but offered no further details.

Comment: MI Down, but Not Out for the Count
--------------


9. (C) A mere two days elapsed before the SPDC began to
remove its thin veneer of a dignified departure for Khin
Nyunt and to blame the former Prime Minister for many of the
country's ills. The November 7 "explanations," a public
airing of internal conflict and decision-making without
precedence under the current regime, are a stunning admission
that Khin Nyunt almost single-handedly split the armed forces
and threatened to undermine the regime. True or not, the
SPDC has felt compelled to undertake a massive effort,
apparently launched just prior to Khin Nyunt's actual ouster
(ref E),to purge the military and government of his
influence. Authorities have cast a very wide net and in
recent weeks hundreds upon hundreds of Khin Nyunt's family
members, cronies, associates, and subordinates have
disappeared--subject to dismissal, arrest, interrogation,
detention, and/or imprisonment.


10. (C) So what is behind the vitriol suddenly directed at
Khin Nyunt, by all accounts a teetotaler workaholic who was
faithful to the regime cause and, by the low standards of
dictatorial rule, relatively limited in his excesses? There
is no question that "resource allocation" and competition
among various military units for economic gains were sources
of serious friction within the Tatmadaw, and perhaps even the
SPDC itself. However, the regime's feigned shock at Khin
Nyunt's corrupt practices are laughable, given the vast
amounts of "tea money" that regularly exchange hands at all
levels of Burmese society and the regime's own use of
corruption to extend and maintain its authority.


11. (C) A more probable explanation for the SPDC's feast upon
the carcass of what was once a Khin Nyunt empire is the
long-standing hatred, and fear, associated with his military
intelligence apparatus. MI knew no limits and, with its
Stasi-like oversight and powers, focused attention not only
dissenters, insurgents, and other overt threats to the status
quo, but also on the regime itself. Khin Nyunt's purported
October 14 instructions for his MI officers to probe the
SPDC's powerful regional commanders may have been the straw
that broke the camel's back, leading to his ouster and
providing cover for a vengeful blow directed at military
intelligence.


12. (C) The ongoing purge may be short-lived, however. MI
was clearly an irritant to many, but the intelligence network
more often than not delivered the goods and served as the
regime's backbone for command and control of Burma's diverse
population. The SPDC will likely, for the sake of its
continued survival, establish some new or modified
organization to carry out the nefarious activities of Khin
Nyunt's MI. End Comment.
MCMULLEN