(C) BURMA: JADELAND CO. SUPPORTING THE REGIME

C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 000229 SENSITIVE SIPDIS STATE FOR EAP/MLS, INR/EAP, EEB/TFS PACOM FOR FPA TREASURY FOR OASIA, OFAC E.O. 12958: DECL: 04/22/2019 TAGS: ECON EFIN ETRD PREL PINR BM SUBJECT: (C) BURMA: JADELAND CO. SUPPORTING THE REGIME REF: A. 08 RANGOON 59 ¶B. 08 RANGOON 699 ¶C. RANGOON 221 RANGOON 00000229 001.2 OF 003 Classified By: Economic Officer Samantha A. Carl-Yoder for Reasons 1.4 (b and d). Summary -------------- ¶1. (C) Yup Zaw Hkwang of Kachin State owns the largest jade mining company in Burma, Jadeland Co., and his family provides significant economic and political support to the regime. Yup Zaw Hkwang helped to broker the cease fire agreement between the GOB and the Kachin Independence Organization in 1994; in exchange, his company gained concession rights for approximately ten jade mines in Phakant. Additionally, Jadeland Co. also trades timber and agricultural products -- Yup Zaw Hkwang's trucks, accompanied by military escorts, illegally ship timber to China; and Jadeland Co. in 2006 received a contract for biofuels production in Kachin State. Yup Zaw Hkwang is known by local Kachins as the "Deputy Regional Commander" due to his close friendship with former Bureau of Special Operations (BSO) 1 Commander Major General Ohn Myint and current Northern Commander Brigadier General Soe Win. Due to his strong relationship with the regime and the significant economic benefits derived from this relationship, Embassy Rangoon recommends the Department of the Treasury add Yup Zaw Hkwang, his family, and his companies to the targeted sanctions list. End Summary. Paid in Jade -------------- ¶2. (C) Yup Zaw Hkwang (a.k.a. Yup Zau Khawng) is the richest man in Kachin State, due in large part to his strong connections to both the regime and the Kachin Independence Organization (KIO). According to David Tegenfeldt, Director of Hope International and close contact of Yup Zaw Hkwang, Yup Zaw Hkwang was instrumental in brokering the cease fire agreement between the KIO and the Burmese Government in 1994. In exchange for his assistance, Yup Zaw Hkwang received concessions to operate approximately ten jade mines in Phakant Kachin State, Burma's largest jade mining area, Tegenfeldt stated. Although Tegenfeldt argues that Yup Zaw Hkwang is no longer close to the regime, during a visit to Myitkyina in February 2008, we heard local Kachin refer to Yup Zaw Hkwang as the "Deputy Regional Commander" due to his close relationship with the former BSO 1 Commander Major General Ohn Myint (Ref A). According to local Kachins, Yup Zaw Hkwang often travels with Major General Ohn Myint and the current Northern Commander Brigadier General Soe Win when they are in Kachin State, but he also maintains close relations with the KIO; for example he hosted Kachin Independence Day events in both 2008 and 2009. ¶3. (C) Nay Min Han, General Manager of MK Gems, confirmed that Yup Zaw Hkwang's Jadeland Company is the largest Burmese producer of jade, exporting much of it to China directly rather than via government auctions. (Note: GOB regulations require that jade companies sell their products in the annual jade and gems auctions, and provide a percentage of the sale to the regime. The ability to sell jade directly without GOB RANGOON 00000229 002.2 OF 003 involvement is rare and noteworthy. End note.) Indeed, our trade data on gems and jade sales do not list Jadeland Company as a major exporter of jade, even though jade merchants throughout Rangoon (even in the local markets) are familiar with the company's operations. The company employs an estimated 800 people in Kachin State and is one of the largest private employers in Northern Burma, Tegenfeldt told us. Branching Out the Business -------------- ¶4. (C) Jadeland Co. is not just a mining company. It is also heavily invested in the timber business. According to Win Aung, owner of private timber trading company United International, Yup Zaw Hkwang's company in 2007 finished constructing 76 miles of road between Myitkyina and Bhamo, and in exchange received from the Regional Commander a thirty-year concession for timber logging. Jadeland does not work through the Myanmar Timber Enterprise (MTE) to cut down trees (which is a significant deviation from GOB policy - see Ref B),and in 2008 exported more than 50,000 cubic meters of timber illegally across the border to China, Win Aung stated. Due to Yup Zaw Hkwang's good relations with both the Regional Commander and the KIO/KIA, Jadeland trucks piled high with timber traverse easily throughout Kachin State, often with military escorts, former MTE Deputy General Manager U Khin Zaw told us. He alleged that Jadeland often moves timber on behalf of the Regional Commander, currying additional favor with the regime. ¶5. (C) Yup Zaw Hkwang in recent years has also expanded into the agricultural sector, and in 2008 exported products including fish, cassava, sugar, and rubber to China. U.S. NGO Wildlife Conservation Society Country Director Than Myint informed us that Jadeland in July 2006 received a concession for 50,000 acres of land in the Hukong Valley, Kachin State, for biofuel production, despite WCS requests to maintain the area as a tiger reserve (Ref C). Than Myint also confirmed reports that Jadeland is the only company allowed to fish in the Danai River, catching more than 4,500 pounds of fish daily. U Kyaw Tint of SGS Consulting (a large agricultural consultant) told us that Jadeland in 2008 received permits to import American-made John Deere tractors and rice milling equipment from China, and has plans to open a rice mill in Kachin State and to apply for a rice export permit in 2009. Support for the Regime -------------- ¶6. (C) In addition to his close relationship with the Northern Command Regional Commander and former BSO 1 Commander, Yup Zaw Hkwang cultivates his ties to the regime by engaging in government projects and donations. In May 2008, Yup Zaw Hkwang donated more than USD 150,000 to the GOB for Cyclone Nargis relief, according to the GOB paper, The New Light of Myanmar. Additionally, Jadeland Company has participated in several GOB infrastructure projects, including the Myitkyina-Bhamo Road and several bridges in Kachin State. U Khin Zaw confided that the regime did not pay Jadeland for the construction projects, but rather provided it with timber permits and concessions. Company Information RANGOON 00000229 003.2 OF 003 -------------- ¶7. (C) Yup Zaw Hkwang and his family -- wife Sha Daung Khon Taung, daughters Yup Seng Ing and Yup Seng Pau Lu, and sons Yup Zau Ja, Yup Sin Wa Li, and Yup Sing Gawn Naw Htoi -- own Jadeland Company and several large plots of land in Rangoon and Kachin State. Company details follow: --Jadeland Company, 263 Thein Phyu Stree, Botahtaung Township, Rangoon, telephone: 95-1-296-466, 95-1-296-467, fax: 95-1-299-450, email: Jadeland@myanmar.com.mm. --Jadeland Company, MGR (48) Shatapru, Myitkyina, Kachin State, telephone: 95-74-237-09, 95-74-237-08, 95-74-235-98, fax: 95-74-232-44. --Jadeland Company, Phakant, Kachin State, telephone: 95-74-70380, cell: 95-992-1367. --Jadeland Company, Hukong Valley, Kachin State. Embassy Recommendation -------------- ¶8. (C) Given that Yup Zaw Hkwang and his family provide significant economic and political support to the regime, and in turn derive substantial wealth from these relationships, Embassy Rangoon recommends that the Department of the Treasury Office of Foreign Assets Control add him, his family, and his enterprises to the targeted financial sanctions list. Biographic information on Yup Zaw Hkwang and his family may well exist in past U.S. visa applications. The Department of the Treasury may wish to consult with State/L and CA about the feasibility of gaining access to that information. DINGER