Identifier
Created
Classification
Origin
07RANGOON328
2007-04-03 05:33:00
CONFIDENTIAL
Embassy Rangoon
Cable title:  

THE BURMESE REGIME'S NUMBER ONE CRONY: TAY ZA

Tags:  ECON PGOV BM 
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C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 000328 

SIPDIS

SIPDIS

STATE FOR EAP/MLS;
PACOM FOR FPA;
TREASURY FOR OASIA:AJEWELL

E.O. 12958: DECL: 09/21/2016
TAGS: ECON PGOV BM
SUBJECT: THE BURMESE REGIME'S NUMBER ONE CRONY: TAY ZA

REF: A. RANGOON 114

B. 05 RANGOON 1421

RANGOON 00000328 001.2 OF 003


Classified By: Econoff TLManlowe for Reason 1.4 (b,d)

C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 000328

SIPDIS

SIPDIS

STATE FOR EAP/MLS;
PACOM FOR FPA;
TREASURY FOR OASIA:AJEWELL

E.O. 12958: DECL: 09/21/2016
TAGS: ECON PGOV BM
SUBJECT: THE BURMESE REGIME'S NUMBER ONE CRONY: TAY ZA

REF: A. RANGOON 114

B. 05 RANGOON 1421

RANGOON 00000328 001.2 OF 003


Classified By: Econoff TLManlowe for Reason 1.4 (b,d)


1. (SBU) Summary: To curry favor and win the most lucrative
deals, 42-year old Tay Za, Burma's number one crony
businessman, entertains regime leaders lavishly and hires
their children in his many business ventures. Now active in
all Burma's profitable sectors, Tay Za first made his name as
an arms dealer, and still maintains ties with Russia's
military supply industry. Valuable concessions in the
timber, cement and liquor sectors have enlarged his empire,
but his intimate ties to the regime entail obligations that
strain his ability to maintain control. End Summary.


2. (SBU) Born in 1964, Tay Za is the son of Lt. Col. (ret.)
Myint Swe and Daw Ohn. He dropped out of his second year at
the Defense Services Academy in 1982 and immediately married
Thida Zaw from the wealthy Htoo family. They have three
children, Pye Phyo Tay Zaw, Htoo Htet Tay Za and Htoo Htwe
Tay Za. Contacts say Tay Za believes his youngest daughter,
who is handicapped, has special powers that help him get
money when he needs it. With financial support from his
sister-in-law, Ma Khaing Zaw, he began his civilian business
life with a small timber company. Capitalizing on the famous
Htoo name, Tay Za established and became Chairman and
Managing Director of Htoo Group of Companies in 1990 at the
age of 25 with an investment of $333,333. His wife is Deputy
Managing Director. The Htoo Group started with the timber
trade and now operates in the trading, logistics, property
development, agro-industries, tourism, oil, and retail
sectors.


3. (SBU) Tay Za began his relationship with the military in
early 1990, when Brig. General Win Hlaing, Director of the
Ministry of Defense Directorate of Procurement, helped Tay Za
and three other young businessmen establish the Myanmar
Billion Group as the country's premier business group. As
the Billion Group's activities declined, Tay Za maintained
his connections with the Defense Procurement Department. Tay

Za leveraged his good relations with the Russian ambassador
into sales representative positions for Russian companies,
including the Military Industrial Group (MAPO),Aviaexport,
and the helicopter company Rostvertol. He formed Myanmar
Avia Export and earned hefty commissions from sales to the
military of arms, ammunition, supplies, MI-17 helicopters,
and MiG-29s.


4. (SBU) Timber also has continued to provide a reliable
revenue stream, and some estimate that in 2005, Tay Za
controlled 80% of the country's logging business. He is one
of the few with permission to harvest logs in "brown," or
militarily contested, areas. In 2006, contacts told us that
the government gave Htoo the logging concession in Kachin
State. Kachin Independence Organization members complained,
saying they lost a significant source of revenue. Travelers
to the region tell of a steady stream of Htoo trucks plying
the road from Kachin State, loaded with teak logs for export.



5. (SBU) Tay Za continues to increase his connections with
the country's rulers by entertaining them in high style. He
curries favor not only with military regime leaders, but also
with those out of power, and with more junior officials. One
official said, "When Tay Za is your host, you know you'll be
treated well." While still married, he reportedly had a
long-term affair with Than Shwe's eldest daughter to please
the Senior General. Pampering those in power has paid off,

RANGOON 00000328 002.2 OF 003


as proven by the many lucrative deals bestowed upon him,
including concessions, construction contracts and
import/export licenses.


6. (SBU) Benefits from regime leaders include a permit to
import palm oil that brought in significant revenues,
although Tay Za lost the permit in 2006 after the Trade
Policy Council decided to give the business to an economic
arm of the military regime. Htoo Trading also earned $63
million in 2005-06 and $55.6 million in 2006-07 from exports
of beans and pulses. Tay Za has one of the country's few
permits to import cement. This is especially valuable as
the government builds its new capital in Nay Pyi Taw.


7. (C) Tay Za also has won favor by hiring the children of
many of Burma's ruling military, despite their lack of
relevant experience. In a key strategic move, Tay Za
appointed Aung Thet Mann as Director of agro-industrial firm
Ayer Shwe Wah (ASW) in the Htoo Group of Companies. Aung
Thet Mann is the son of regime number three, and rumored
successor to Than Shwe, General Thura Shwe Mann. ASW
received lucrative licenses to export rice and fertilizer,
and has developed oil palm plantations in southern Burma.
The GOB granted ASW 50,000 acres in the delta region for
agricultural development. Tay Za also made a place for Hein
Htet Aung, son of the Commander of the Air Force, Lt Gen.
Myat Hein, to help with Htoo's construction projects. Upon
receiving an exclusive concession to import liquor, he gave
the 20-year old Hein Htet Aung $200,000 to operate four
retail liquor outlets.


8. (SBU) Htoo Construction has built a rail terminal, luxury
housing and hotels around the country. In Nay Pyi Taw, the
GOB chose Tay Za's firms to construct the hotel zone, a golf
course, staff apartments, and some buildings in the military
compound. At Than Shwe's request, his firm built a
controversial 13-story observation tower in the Bagan
Architectural Zone, and he has permission to develop the
Myeik Archipelago in southern Burma. Tay Za owns hotels in
Bagan and the beach resort towns of Ngwe Saung and Ngapali.
At another of Than Shwe's requests, he spent $2 million to
build the only luxury mall in the country, which usually is
empty, and entertains benefactors at his serviced apartments
in Rangoon. Other businesses in the Tay Za empire include
heavy land and marine transport, plantations,
telecommunications, oil exploration, rice mills, and vehicle
imports.


9. (C) Tay Za invested $700,000 in 2004 with an additional
$300,000 from Myanmar Airways to start the domestic airline,
Air Bagan, in 2004. The Air Bagan fleet consists of one
Fokker and five ATR aircraft. Htoo recently purchased two
Airbuses from Eastern Airline of China. In 2006, the GOB
gave Air Bagan permission to fly internationally, but the
planned start of international service was delayed,
reportedly because the planes were not ready. Air Bagan
recently announced its flights to Bangkok will start in May
2007, and flights to Kunming and Singapore will be added
later in the year. Singapore Air management experts, in
Rangoon to assist Air Bagan's efforts to upgrade its
Airbuses, told emboff that Air Bagan has serious maintenance
problems, because, "they just don't understand international
standards."


10. (C) Contacts tell us that Tay Za runs his companies by
the "seat of the pants," as he must perform all the
management functions in his far-flung empire. An Australian
consultant hired to advise Tay Za on the airline and hotel
business echoed this sentiment and said it is a wonder that

RANGOON 00000328 003.2 OF 003


Air Bagan's planes still fly and that his hotels operate.
She explained that Tay Za is busy trying to manage all his
businesses with minimal support, because the children of the
elite that he has hired as managers have no experience. He
has no business plans, she said, and he reacts to each crisis
by putting out fires rather than thinking strategically.
"It's amazing anything gets done at all," she said.


11. (C) Tay Za lives large, with 20 houses in Rangoon, a
fleet of flashy imported vehicles, and frequent trips to
Singapore, where he owns a home and does his banking. The
Singaporean Ambassador (PROTECT) recently told us that Tay Za
has purchased two $7 million homes on a gambling resort
island off the coast of Singapore. We have also heard that
he used his connections in Singapore to secretly arrange Than
Shwe's emergency medical treatment there last January.
Family friends say he provides his wife a $50,000 allowance
each month, but also hint at problems in the marriage. Tay Za
has personally designed and built homes for Than Shwe and his
family.


12. (SBU) Despite his web of connections, sources have
reported over the past few years that Tay Za has cash flow
problems. The delay in Air Bagan's plans to fly
internationally is credited partially to a lack of cash for
equipment upgrades. Also, contractors, including Htoo
Construction, received payments partially in kind rather than
in cash for their massive construction work in Nay Pyi Taw
(ref B). The GOB, itself strapped for cash, offered empty
government buildings in Rangoon as one form of compensation,
difficult to turn into cash in Rangoon's moribund real estate
market (ref A). High-ranking military officials, recently
ordered to move their families from military compounds in
Rangoon, have heard that the GOB will give the property to
Tay Za. Turning these decrepit properties into moneymakers
will take more time and investment, not generate cash.


13. (SBU) Comment: While he may hedge his bets by developing
connections to as many powerful people as possible, it is his
relationship with Than Shwe that has given Tay Za most
opportunities. As long as he enjoys the good favor of the
senior general, he will continue to accumulate riches from
Burma's limited profitable sectors. His conspicuous status
and wealth has caused some resentment, however, and his
protected position may be harder to maintain once his number
one benefactor leaves the picture. End comment.
VILLAROSA