(C) BURMA: SILVERWAVE CO. BENEFITS FROM REGIME TIES

C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 000299 SIPDIS STATE FOR EAP/MLS, INR/EAP, EEB/TFS PACOM FOR FPA TREASURY FOR OASIA, OFAC E.O. 12958: DECL: 05/21/2019 TAGS: ECON EFIN ETRD PREL PINR BM SUBJECT: (C) BURMA: SILVERWAVE CO. BENEFITS FROM REGIME TIES REF: A. 08 RANGOON 699 ¶B. RANGOON 235 ¶C. IIR 6 812 0078 09 RANGOON 00000299 001.2 OF 003 Classified By: Economic Officer Samantha A. Carl-Yoder for Reasons 1.4 (b and d). Summary -------------- ¶1. (C) Minn Minn Oung, Chairman of Silverwave Group and a number of affiliated companies involved in the agricultural, timber, mining, and energy sectors, provides significant economic and political support to the Burmese regime. Minn Minn Oung admits his companies received government contracts for onshore and offshore oil and gas development and mining due to his close personal ties to the Ministers of Energy and Mines. Silverwave also has links to Tay Za's Htoo Trading, which allegedly provides financial backing for oil and gas development, and supplies Silverwave with timber for export. Due to a strong relationship with the regime and the significant economic benefits derived from this relationship, Embassy Rangoon recommends the Department of the Treasury add Minn Minn Oung and his companies to the targeted sanctions list. End Summary. Working in Multiple Sectors -------------- ¶2. (C) Minn Minn Oung is one of Burma's youngest up-and-coming cronies. Just 35 years old, he is the Chairperson of one of the fastest growing companies in Burma, Silverwave Group. According to Minn Minn Oung, he launched his company in 1994 with an initial USD 5,000 investment in the agricultural trading sector, exporting beans to India. During the past 15 years, Silverwave Trading has expanded its trade ties to India and now currently exports 11,000 tons of beans to India annually, earning a profit of approximately USD two million, Minn Minn Oung told us. ¶3. (C) In 1998 Minn Minn Oung expanded his business into speedboat production. Working with members of the Japanese Small Craft Association, Minn Minn Oung's staff of 60 build fiberglass speedboats for the Japanese and Burmese markets. He told us that the GOB recently spent USD 500,000 to procure five boats for use in the Irrawaddy Delta. (Note: he refused to elaborate which Ministry purchased the boats, but hinted that they were for personal rather than official use. End note.) One of Minn Minn Oung's brothers, who was educated in Japan and has close contacts with wealthy Japanese living in Rangoon, oversees this operation, Minn Minn Oung explained. ¶4. (C) Silverwave Trading also engages in the international sale of teak and other hardwoods. According to former Forestry Department Director General Dr. Kyaw Tint, Minn Minn Oung has a close relationship with the Myanmar Timber Enterprise, the state-owned company responsible for felling and export of teak and other hardwoods (Ref A). Based on Minn Minn Oung's relationship with MTE, Silverwave in 2003 established a partnership with regime crony Tay Za's Htoo Trading to purchase and export timber. According to Silverwave documents, the company has exported more than 8,500 metric tons of timber annually since 2005, primarily to India, China, and Vietnam. Silverwave earned an estimated USD 50 million from timber exports in 2008. RANGOON 00000299 002.2 OF 003 Exploiting Regime Connections -------------- ¶5. (C) Minn Minn Oung is very open about his close connections to the regime, and explained in detail how he uses those connections to benefit financially. For example, he told us on April 30 that due to his close connections to the Minister of Mines he received the rights to several gold mines in Mandalay and Sagaing Divisions in 2002. Silverwave currently has 45 staff in Sagaing Division dedicated to gold mining operations. While Minn Minn Oung claims this business venture is not profitable, Silverwave is planning to expand its exploration activities. To date, Silverwave has invested more than USD 10 million in gold mining operations, he stated. ¶6. (C) Minn Minn Oung acknowledges he is also close to the Minister of Energy, and has used this connection to obtain oil and gas contracts. In December 2006 Silverwave, with no prior industry experience, entered this sector, partnering with Indian-owned Gail to sign a production sharing contract (PSC) with the Myanmar Oil and Gas Enterprise (MOGE) for offshore block A7 (Ref B). In March 2007, Silverwave, partnering with Russian company Sputnik Petroleum Ltd., signed a PSC with the MOGE for onshore block B2 in northern Burma. Minn Minn Oung admitted that Tay Za helped him secure the investment from Sputnik Petroleum -- though Sputnik has since abrogated its partnership with Silverwave due to alleged theft of more than USD 5 million (Ref C). ¶7. (C) According to Silverwave Business Development Manager Mak Patel, Silverwave has yet to explore A7, due to financial limitations. Terry Howe, General Manager of oil company Myanmar Petroleum Resources Ltd., told us that Gail sold its shares in A7 to Silverwave for USD 15 million because Gail was not confident in the block's resource potential. Per its PSC, Silverwave must explore A7 in the next two years or relinquish its contract. Silverwave has been more active in the B2 block, drilling two wells in 2007. According to Minn Minn Oung, MOGE, not Silverwave geologists, determined where Silverwave would drill based on 30-year old seismic data. He claimed his company was in no position to argue, and complained that his company spent USD 60 million to drill two dry wells (Refs B and C). Minn Minn Oung told us that MOGE requested Silverwave to drill two more wells in 2009. Once again, Silverwave will not select the drill sites, but will defer to MOGE, Minn Minn Oung noted. ¶8. (C) According to Minn Minn Oung, Silverwave Energy plans to expand its oil and gas development operations to Thailand, Vietnam, India, Nigeria, and Sri Lanka. In April 2009 Silverwave was awarded exploration rights for three petroleum blocks in Australia - AC/P49, AC/P50, and AC/P51. Silverwave Energy committed to invest approximately USD 25 million in these blocks during the next three years, Mak Patel told us. Biographic and Company Information -------------- ¶9. (C) Minn Minn Oung was born in Rangoon on February 14, 1974, the youngest of six children. He has four brothers and one sister, all of whom have medical degrees. He is not married and still lives at home with his parents, who are retired civil servants. Although Minn Minn Oung attended RANGOON 00000299 003.2 OF 003 school in Japan from 1992-1994 to study the Japanese language, he has no other formal higher education. During a visit to the Silverwave Rangoon office, we saw Minn Minn Oung's oil and gas library, which consists of more than 100 books, all still in their plastic wrapping. He readily admits that he knows little about the oil and gas sector, and sees his investments as a hobby. Several business contacts confirm Minn Minn Oung knows little about the sectors in which Silverwave is involved, and that his adviser, Mak Patel, is the brains behind the business. ¶10. (SBU) The following is information about Minn Minn Oung's companies: -- Silverwave Group; Traders Hotel Room 714-716, 223 Sule Pagoda Road, GPO Box 888, Yangon, Myanmar; phone: 95-1-242-828, room 714; fax: 95-1-242-800, room 714; email:silwave@myanmar.com.mm -- Silverwave Trading; Traders Hotel Room 714-716, 223 Sule Pagoda Road, GPO Box 888, Yangon, Myanmar; phone: 95-1-242-828, room 714; fax: 95-1-242-800, room 714; email:silwave@myanmar.com.mm -- Silverwave Energy; Traders Hotel Room 714-716, 223 Sule Pagoda Road, GPO Box 888, Yangon, Myanmar; phone: 95-1-242-828, room 714; fax: 95-1-242-800, room 714; email:silwave@myanmar.com.mm -- Silverwave International Services; Traders Hotel Room 714-716, 223 Sule Pagoda Road, GPO Box 888, Yangon, Myanmar; phone: 95-1-242-828, room 714; fax: 95-1-242-800, room 714; email:silwave@myanmar.com.mm -- Silverwave Group; 184/56 Forum Tower, 15th Floor, Rachadaphisek Road, Huaykwang, Bangkok, 10310, Thailand; phone: 66-2-248-1003; fax: 66-2-248-1004; -- Silverwave Group; 7 Claymore Road, 08-02, Singapore 229538; phone: 65-683-68-125; fax: 65-623-58-251; -- Silverwave Group; 566-233 Fujita, Okayama-Shi, Okayama, Japan; phone: 086-296-0851; fax: 086-296-0852. Embassy Recommendation -------------- ¶11. (C) Given that Minn Minn Oung and his company provide significant economic and political support to the regime, and in turn derive substantial wealth from ties to the regime, Embassy Rangoon recommends that the Department of the Treasury Office of Foreign Assets Control add Minn Minn Oung and his enterprises to the targeted financial sanctions list. DINGER