(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

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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

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--------------


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