BURMA: INDUSTRY MINISTER'S FAMILY BENEFITS FROM

C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 000741 SIPDIS STATE FOR EAP/MLS, INR/EAP, EEB/TFS PACOM FOR FPA TREASURY FOR OASIA, OFAC E.O. 12958: DECL: 09/19/2018 TAGS: ECON EFIN PREL PGOV BM SUBJECT: BURMA: INDUSTRY MINISTER'S FAMILY BENEFITS FROM CONNECTIONS RANGOON 00000741 001.2 OF 003 Classified By: Economic Officer Samantha A. Carl-Yoder for Reasons 1.4 (b and d). Summary -------------- ¶1. (C) Pyi Aung and Nay Aung are sons of Minister of Industry-1 U Aung Thaung. Pyi Aung is also the son-in-law of Vice Senior General Maung Aye. The two brothers own Aung Yee Phyo Co. Ltd., IGE Co. Ltd., and UNOG Co. Ltd., and continue to use their family connections and close ties to the regime to amass great wealth. Their companies, which are registered in both Burma and Singapore, are involved in various sectors, including general trade, agriculture, oil and gas, timber, and construction. IGE is Burma's second-largest timber company and exports rice on behalf of the regime. In 2007, both IGE Co. Ltd. and UNOG Co. Ltd. signed exploration contracts with Malaysian-owned Rimbunan Petrogas and the Myanmar Oil and Gas Enterprise (MOGE) for two offshore blocks. Embassy Rangoon recommends adding Nay Aung and Pyi Aung and their families to the U.S. targeted sanctions list. End Summary. Close Connections to the Regime -------------- ¶2. (C) Nay Aung and Pyi Aung, the sons of notorious hardliner Minister of Industry-1 U Aung Thaung, are two of Burma's rising cronies. Pyi Aung, a major in the Burmese Army, is married to Vice Senior General Maung Aye's daughter Nandar Aye, further solidifying the family's links to the regime. According to Anwar Hussain (protect),a well-connected businessman working in the agriculture sector, Nay Aung and Pyi Aung are also close to Senior General Than Shwe, who allegedly regards them as family. Like other cronies, Nay Aung and Pyi Aung allegedly garner favor with regime leaders by donating heavily to government projects; they donated more than 100 power tillers to Irrawaddy farmers after Cyclone Nargis. Making Money in All Sectors -------------- ¶3. (C) Nay Aung and Pyi Aung own three companies that have offices in both Burma and Singapore -- IGE Co. Ltd., UNOG Co. Ltd., and Aung Yee Phyo Co. IGE Co. Ltd., established in Burma in 1994 and registered in Singapore in 2001, is the largest of the three, focusing on general trade, construction, timber, and agriculture. Aung Yee Phyo Co. Ltd is much smaller and is involved in agricultural production and timber trading. UNOG Co. Ltd., established in 2000, deals in the import/export of chemicals, electrical and power generating materials, and plastics. ¶4. (C) Both UNOG and IGE are active in Burma's oil and gas sector. In March 2007, IGE and UNOG signed separate 30-year production sharing contracts (PSCs) with Malaysian-owned Rimbunan Petrogas and Myanmar Oil and Gas Enterprise (MOGE) to explore offshore blocks A5 and M1, respectively. The companies have yet to begin offshore exploration; Daewoo Drilling Manager Bruce Leach speculated that since neither company has any drilling experience, they will likely sell their PSCs to other oil and gas companies within the next two years, such as to China National Offshore Oil Corporation (CNOOC) or PetroChina. IGE and UNOG have some experience in the delivery of natural gas, he noted. In the past five years, the companies have constructed and supplied more than 20 compressed natural gas (CNG) stations in Rangoon. RANGOON 00000741 002.2 OF 003 ¶5. (C) Nay Aung and Pyi Aung make most of their money by exporting rice and timber, Hussain confirmed. IGE is one of five companies with GOB permission to export rice. Hussain claims the brothers use their regime connections to secure individual export permits. In 2008, IGE exported 100,000 metric tons of rice to India, Sri Lanka, and Africa, earning a profit of between USD 4-5 million. According to U Win Aung, owner of timber company United International, IGE is the second largest timber company in Burma, earning more than USD 75 million in 2007. Aung Yee Phyo Co. Ltd. also exported approximately USD 25 million in teak logs in 2007, Hussain added. ¶6. (C) IGE recently entered the construction business, and was one of eight companies to construct buildings in Nay Pyi Taw. In addition to building several government housing complexes in the capital, the company built IGE Hotel, a four-star hotel with thirty bungalows. As with other construction companies, the GOB did not pay IGE for its services, instead providing it with 15 vehicle import licenses, worth USD 200,000 each. Hussain confirmed that the brothers have also recently begun importing cars for resale and exporting jade to China, using their connections to Maung Aye to secure the necessary permits. Nay Aung and Pyi Aung can often be seen driving their imported Hummers around Rangoon. Family and Business Information -------------- ¶7. (SBU) Nay Aung and Pyi Aung have three sisters -- Dr. Thu Nanda Aung, Aye Myat Po Aung, and Khin Ngu Ye Phyo -- and one brother, Major Moe Aung. To our knowledge, these relatives are not involved in any of the three businesses. However, they are listed on the EU sanctions list as immediate family members of Minister Aung Thaung. Nay Aung is married Khin Moe Nyunt, Director of Aung Yee Phyo Co. Pyi Aung is married to Nandar Aye. Both Nay Aung and Pyi Aung have residences in Singapore and Rangoon. Nay Aung's best friend, Win Kyaing, is the Managing Director of IGE Co. and UNOG Co. ¶8. (C) According to Hussain, Nay Aung and Pyi Aung conduct the majority of their business in Singapore, banking at United Overseas Bank and Overseas Chinese Banking Corporation. Nay Aung's account at OCBC is number 501-110357-201. The address on the account is No. 6 Dafu Lane 4, Singapore. ¶9. (SBU) Information on Nay Aung and Pyi Aung's companies follows: --Aung Yee Phyo Co., Ltd.; No W-68 Thirimon Housing, Hlaing Township, Rangoon; Phone: 95-1-546-921; Fax: 95-1-544-462. --IGE Co. Ltd.; No 22-A Kaba Aye Pagoda Road, Bahan Township, Rangoon; Phone: 95-1-558-233, 95-1-543-443, 95-1-558-672, 95-1-558-369; Fax: 95-1-542-711; Email: mrtygn@myanmar.com.mm. --IGE Pte Ltd.; 5 Shenton Way #15-09 UIC Building, Singapore, ¶068808. --IGE Pte Ltd; Block 209, New Upper Changi Road, #03-635, Singapore. --IGE Hotel; No 11 Hotel Zone, Nay Pyi Taw; Phone: 95-67-414-114. RANGOON 00000741 003.2 OF 003 --UNOG Co. Ltd.; No 22-A Kaba Aye Pagoda Road, Bahan Township, Rangoon; Phone: 95-1-558-233, 95-1-543-443, 95-1-558-672, 95-1-558-369; Fax: 95-1-542-711; Email: mrtygn@myanmar.com.mm. --UNOG Pte Ltd.; 5 Shenton Way #15-09 UIC Building, Singapore, 068808. --UNOG Pte Ltd.; Block 209, New Upper Changi Road, #03-635, Singapore. DINGER