TOP CRONIES FEELING THE PINCH OF U.S. SANCTIONS

C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 000222

SIPDIS

SIPDIS

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

E.O. 12958: DECL: 09/21/2016
TAGS: ECON EFIN PREL PGOV BM
SUBJECT: TOP CRONIES FEELING THE PINCH OF U.S. SANCTIONS

REF: RANGOON 162 AND PREVIOUS

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


1. (C) Summary. Despite public statements that U.S.
sanctions have little effect on regime cronies' ability to do
business, Embassy contacts tell us that the top cronies --
Tay Za, Steven Law, and Aung Thet Mann -- are running scared.
Tay Za's purchase of two bulk cargo ships from Korea
recently fell through because the Singaporean banks refused
to handle the financial transaction. Steven Law, owner of
Asia World and several Singaporean-based businesses, is
allegedly looking to change the name of his company to
circumvent sanctions, although the Asia World sign continues
to hang over the office doors. Aung Thet Mann, son of Number
3 General Thura Shwe Mann, has shifted some business to his
other trading company, Shwe Yin Mon Ltd., and is exploring
the option of opening new businesses in Singapore despite
recent banking difficulties. Because of difficulties banking
in Singapore, some cronies are looking for new places to
conduct their financial transactions, like Dubai, Hong Kong,
and Korea. End
Summary.

Singapore Banks Tighten the Screws
--------------


2. (C) According to several business contacts,
Singapore-based United Overseas Bank (UOB) and DBS, two
Singapore banks that allow Burmese citizens to open accounts,
have placed increased restrictions on the financial
transactions of Burma's top cronies, including Tay Za, Steven
Law, and Aung Thet Mann. These increased restrictions, which
include limiting the number of bank accounts one can open, a
ban on check payments, and refusal to issue letters of
credit, have affected the cronies' ability to do business,
SGS Limited Managing Director U Kyaw Tin told us.
Singaporean banks are closely scrutinizing all financial
transactions with Burma that total more than 30,000 Singapore
dollars; companies or individuals that want to send money
have to declare the source of their income, U Kyaw Tin
explained.


3. (C) Embassy contact Anwar Hussain noted that the
Singapore banking regulations disrupted Tay Za's plans to
start his own shipping line. Tay Za, who recently signed a
contract with a Korean company for the purchase of two cargo
ships (Reftel),had to cancel his contract because UOB would
not transfer the funds to Korea. Singaporean banks have a
reputation to maintain, Hussain stated, noting that the banks
are under increased criticism for acting as a safe haven for
the regime's money. Captain Aung Khin Myint, Chairman of
Global Multimodal Transport and Services Co., confirmed the
story, stating that Tay Za, who remains committed to
establishing his shipping line, met with several foreign
shipping companies, looking for available ships. So far, no
deal has been made.


4. (C) Aung Thet Mann, son of Number 3 Senior General Thura
Shwe Mann and business partner of Tay Za, has also
experienced difficulties with UOB and DBS. Aung Thet Mann,
whose company Aye Ya Shwe Wa was recently included on the
U.S. targeted sanctions list, has told several of our
business contacts that he is only on the sanctions list
because of his relationship with Tay Za. He mistakenly
believes that if he severs ties with Tay Za, the U.S. will
delist him and his company. U Kyaw Tin told us that Aung
Thet Mann continues to explore options for opening new

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companies in Singapore. In the meantime, he has shifted some
of his business to his Burma-based seafood export company,
Shwe Yin Mon.


5. (C) Hussain told us that Aung Thet Mann allegedly opened
three new trading companies in Singapore in the past month -
Asia Might Company, Ayer Hinda Company, and Terrestrial Pte.
Ltd. - but could not open bank accounts for the companies.
While we cannot confirm the existence of the companies, U Soe
Win, Managing Director of Myanmar Vigour Consulting confirmed
that several of the listed cronies were having problems
opening new bank accounts in Singapore. Many of the cronies
are now looking for alternate financial centers, like Dubai,
Korea, or Hong Kong, according to U Soe Win.


6. (C) While Steven Law's inclusion on the targeted
sanctions list in late February did not get much coverage in
the local papers, Steven Law is concerned about the effect on
his business, Hussain told us. Two weeks ago, Law met with
Aung Thet Mann and Tay Za to discuss ways to circumvent U.S.
sanctions, Hussain revealed. According to U Kyaw Win and U
Soe Win, since the February 26 OFAC designation, Law has had
problems with Singapore banks, which only allow him to make
cash withdrawals and refuse to issue him lines of credit.
Our contacts report that Law is trying to change the name of
his largest company, Burmese-registered Asia World, although
we observed that the Asia World sign continues to hang over
the door of the company. Hussain was unsure whether Law's
Singaporean-based companies were affected by the sanctions
designation, but explained that the Burma-based company has
lost some international business since February.

Making Nice with the Regime
--------------


7. (C) Although sanctions may have affected the cronies'
ability to trade internationally, they continue to curry
favor with the senior generals. According to Hussain, Steven
Law's Asia World has ongoing construction projects in Nay Pyi
Taw, including several new shopping complexes, road
construction, and the new national zoo, which will open on
March 27. The GOB will not pay Law for Asia World's work,
but will provide him with 20 car import licenses worth
$200,000 each and will help him secure contracts with the
Chinese to construct the proposed natural gas pipeline from
Kunming to the Bay of Bengal. U Kyaw Win, whose office is
next door to Asia World, heard from the Chinese Commercial
Counselor in Rangoon that Asia World will receive all
construction deals for the Shwe Gas pipeline project.


8. (C) Several companies, including Zaw Zaw's Max Myanmar,
Htoo Group of Companies, Asia World, and Eden Group, plan to
open offices in Nay Pyi Taw in 2008. The offices will be
relatively small, and staff will work in Nay Pyi Taw to help
facilitate quick issuance of import and export licenses. The
staff will also be there to cater to the senior generals'
needs, Hussain informed us.


9. (C) Tay Za continues to do lucrative business with the
regime. Several business contacts confirmed that Tay Za is
slated to take over the now-defunct Myangone Myint Company's
operations. Up until last week, Myangone Myint Company, run
by the Central Executive Committee of the USDA, was one of
two companies in Burma with the rights to import new and used
cars (with profits allegedly used to support USDA
activities). Although business contacts could not explain
why the USDA suddenly stopped its car import operations, they
agreed that when Tay Za takes over in the next month, he will
earn substantial profit (between $50,000-$100,000) per car.

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Comment
--------------


10. (C) While it is difficult to measure the full effect of
U.S. sanctions, the fact that cronies are complaining to
other businessmen about the increased difficulties they face
shows that targeted sanctions have affected the regime's
favorite businessmen. Within the business community, those
who do business with the regime are scared that they too will
be added to the U.S. targeted sanctions list. It comes as no
surprise that the senior generals and their favorite cronies
would look to other financial havens for banking services.
We need to keep ahead of the cronies to warn other nations
against taking their business.

VILLAROSA