BURMA: SANCTIONING TAY ZA'S RIGHT-HAND MAN

C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 000386 SIPDIS STATE FOR EAP/MLS, INR/EAP, EEB/TFS PACOM FOR FPA TREASURY FOR OASIA, OFAC E.O. 12958: DECL: 06/24/2019 TAGS: ECON EFIN ETRD PREL PINR BM SUBJECT: BURMA: SANCTIONING TAY ZA'S RIGHT-HAND MAN REF: A. 07 RANGOON 328 ¶B. RANGOON 134 ¶C. RANGOON 20 RANGOON 00000386 001.2 OF 003 Classified By: Economic Officer Samantha A. Carl-Yoder for Reasons 1.4 (b and d). Summary -------------- ¶1. (C) Lu Lu, a.k.a. Kwan Lu Chan, Chan Kwan Lu, and Zaw Min, is Vice Chairman of Air Bagan and regime crony Tay Za's top assistant and advisor. Known in business circles to be cunning and ruthless, Lu Lu boasts to businessmen that he taught Tay Za "all he knows." Tay Za often designates Lu Lu to entertain high-ranking GOB officials and coordinate their travel abroad. Of Burmese-Chinese origin, Lu Lu is Tay Za's liaison to Chinese partners and potential investors, and allegedly set up different firms in China on Tay Za's behalf. Lu Lu also owns several companies on his own. He is married to an American citizen and allegedly holds a green card. Based on his important position with Tay Za's organization, providing political and economic support to the regime, Embassy Rangoon recommends that the Department of the Treasury add Lu Lu, his family, and his companies to the targeted sanctions list. End Summary. Tay Za's Key Advisor -------------- ¶2. (C) Tay ZQhas been the regime's top crony since 2005, after the fall of former Prime Minister Khin Nyunt. Tay Za used his connections to the regime to secure his favored position (Ref A),and he relies on key personnel within the Htoo Group of Companies to ensure that his businesses remain viable while providing support to the senior generals when necessary. According to several economic contacts, Lu Lu is Tay Za's right-hand man. George Soon, owner of Singapore Company Regent Air, told us that Lu Lu, who has been friendly with Tay Za for more than 20 years, often boasts that he taught Tay Za "all he knows," including how to curry favor with the senior generals. ¶3. (C) Lu Lu is currently the Vice Chairman of Air Bagan, and until October 2007 held the position of Vice Chairman of Htoo Group of Companies, Tay Za's umbrella organization that manages more than 20 firms, Soon told us. Lu Lu is also a minority shareholder in Pavo Trading, one of Tay Za's companies based in Singapore that exports timber, marine products, cement and other construction materials. According to Embassy contact Anwar Hussein, Lu Lu relinquished his Htoo Company title in October 2007 because he was afraid of being sanctioned by the USG. ¶4. (C) Lu Lu retained his position at Air Bagan because he has a genuine interest in aviation and the position affords him power and influence with the regime, Soon explained. Lu Lu has brokered several aviation deals on behalf of Air Bagan, including arranging charter flights for key regime officials to Singapore, Korea, China, and other destinations, Myanmar Airways International General Manager U Aung Gyi informed us. Lu Lu also recently attempted to purchase a new A320 from a Dubai company on behalf of Air Bagan, although the deal appears to have fallen through (septel). Soon confirmed that, as Vice Chair of Air Bagan, Lu Lu coordinates RANGOON 00000386 002.8 OF 003 travel arrangements for the senior generals and their families and often accompanies them on trips to Singapore. According to Soon, Lu Lu is unwilling to give up this access to the regime elite. Business Acumen -------------- ¶5. (C) Although Lu Lu obtained his position in the Htoo Group of Companies based on his friendship with Tay Za, Soon says Lu Lu has a strong business sense despite the lack of formal business training. Using his connections and his ability to achieve profitability, Lu Lu assists Tay Za by ensuring that the Htoo Companies are the first ones the regime looks to when it has new projects or needs a "favor," Embassy contact Brett Melzer confirmed. (Note: Lu Lu was Melzer's first point of contact during the sale of the Malikha Lodge in January 2009 - Ref B. End Note.) Additionally, Lu Lu uses his fluent Chinese language skills when acting as a broker to secure Chinese investment in Burma. Glen Ford, Acting General Manager of Myanmar Ivanhoe Copper Co. Ltd., told us that Lu Lu, working on Tay Za's behalf, acts as liaison with several Chinese companies interested in acquiring MICCL's shares in the Monywa copper mines (Ref C). ¶6. (C) Lu Lu also has business interests separate from the Htoo Group of Companies, Soon told us. He owns several jade and gem mines in Phakhant and Mogok, selling high-quality gems to the senior generals' wives. According to Brett Melzer, Lu Lu is a minority partner with Tay Za in two Chinese companies, Cheung Hing Corporation Ltd. and Cheung Hing Timber Corporation, and maintains bank accounts with HSBC Bank in Hong Kong. Weapons Smuggling? -------------- ¶7. (C) Rumors abound that Tay Za has long smuggled Chinese weapons into Burma via his aviation and trading businesses. Soon alleges that Lu Lu, who has close ties to the senior management of Chinese firm Norinco (an alleged arms dealer that has business dealings in Burma),is the mastermind behind Tay Za's involvement in the arms trade. According to Soon, Lu Lu introduced Tay Za to Norinco officials and has secured several business agreements between Htoo Trading and Norinco, including a partnership for a gold mine in Mandalay Division and a broker contract for Norinco's planned purchase of MICCL (Ref B). Biographical and Business Information -------------- ¶8. (C) Born in Burma in 1962, Lu Lu holds a Burmese passport. However, he allegedly holds a U.S. Legal Permanent Resident card in the name Zaw Min, deriving his status from his American Citizen wife Khin Khin Aye. Lu Lu allegedly also uses the names Kwan Lu Chan and Chan Kwan Lu, Embassy contacts confirm. Although Lu Lu previously lived in Singapore, he recently moved his residence to Burma and resides at one of Tay Za's homes in Rangoon. ¶9. (C) The following is contact information for Lu Lu's businesses in Hong Kong. Pavo Trading, in which he is an investor, is already listed on the Department of the RANGOON 00000386 003.2 OF 003 Treasury's targeted sanctions list. -- Cheung Hing Corporation Ltd., 4/F Wai Hing Building, 146 Prince Edward Road, Prince Edward, Kowloon, Hong Kong; Phone: 85-2-2381-2547; Fax: 85-2-2391-1790. -- Cheung Hing Timber Corporation; 4/F Wai Hing Building, 146 Prince Edward Road, Prince Edward, Kowloon, Hong Kong; Phone: 85-2-2381-2547; Fax: 85-2-2391-1790. Comment -------------- ¶10. (C) As a trusted advisor of regime crony Tay Za and Vice Chairman of Air Bagan, Lu Lu provides significant economic and political support to the regime. Embassy Rangoon recommends that the Department of the Treasury Office of Foreign Assets Control add Lu Lu, his family, and his companies to the targeted financial sanctions list. DINGER