Kirin stops payments to Tatmadaw beer partner

Asian drinks giant Kirin said it has halted dividend payments from its beer business to its Myanmar military-owned partner Myanmar Economic Holdings Public Company (MEHL) amid an independent probe and concerns from investors.

The suspension stops Kirin and MEHL, and their shareholders, from receiving profits from joint ventures Myanmar Brewery and Mandalay Brewery. Kirin’s Myanmar business posted a profit of US$115 million last year, up around 28 percent from a year earlier.

The decision was attributed to “a significant lack of visibility regarding the future business environment for our Myanmar joint ventures,” Kirin said in a statement this week. It hired Deloitte Tohmatsu Financial Advisory to undertake a probe into the financial and governance structures of the MEHL, a conglomerate owned and run by the Tatmadaw.It was heavily criticised for making donations to Myanmar authorities which ended up supporting the military’s 2017 “clearance operations” in northern Rakhine.Kirin’s statement did not mention the accusations against the Tatmadaw for violence committed on the Muslim minority in northern Rakhine, but the move appears to follow calls from UN
investigators and a campaign by rights groups to pressure the firm to cut ties with the military. Myanmar denies these charges.Last month, Kirin’s institutional investor Lindsell Train, based in the UK, said they would heighten engagement with Kirin citing ethical and reputational concerns.

“We are uncomfortable investing in a company that has any association with a regime committing human rights abuses. This is both from a moral perspective and an investment perspective, given
the potential damage to the company’s reputation and the knock-on effect on the market’s and consumers’ perception of the company’s brands.”Among the solutions, Kirin did not rule out “withdrawing from the investment entirely” or taking more control, the UK equity fund said.

The Japanese brewer is the latest foreign firm, and the first major Asian investor, to potentially reconsider their commercial operations in Myanmar. Last month, shipping giant Maersk of Denmark announced that it would cease using military-owned ports in the country.“Kirin takes its responsibilities in Myanmar seriously and will take necessary action to ensure our business activities in the region adhere to the highest standards,” the statement added.
Kirin was named by Amnesty International and subsequently UN investigators for providing financial support to the military in one of the fundraising ceremonies that were estimated to have yielded, in total, over US$6.15 million for its crackdown against the Rohingya Muslims in 2017.

The MEHL declined to comment when approached by The Myanmar Times, saying a statement would be released.
The suspension of payment was welcomed by rights groups Amnesty International and Justice for Myanmar.Amnesty said it marked an “important step” in taking “human rights responsibilities in Myanmar seriously”, but urged the firm to end ties with the MEHL.“We have repeatedly documented the business links between MEHL and military units directly involved in atrocity crimes against the Rohingya and other minorities in Rakhine, Kachin and northern Shan States,” said Amnesty researcher Montse Ferrer.

Justice for Myanmar urged Kirin and Deloitte to release the probe findings to the public, while reiterating its demand for businesses to disassociate with the Tatmadaw.“Businesses like Myanmar Brewery finance war crimes and crimes against humanity and enrich generals. Wealth acquired through decades of [a] corrupt military rule must be returned to the
public,” it said.

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Source : Myanmar Times

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