By CLARE HAMMOND | FRONTIER

YANGON — Japanese brewer Kirin Holdings has put a moratorium on charitable payments in Myanmar, after Amnesty International challenged a donation made by its subsidiary Myanmar Brewery to the military, at the height of violence in Rakhine State last year.

The company said it donated around $6,000 on September 1, at the request of its local partner, military-controlled Myanma Economic Holdings Limited.

MEHL told Myanmar Brewery the money would be transferred to the Rakhine State government, which would provide aid to victims of the violence, Kirin’s president and CEO Mr Yoshinori Isozaki told Amnesty, in a letter seen by Frontier.

Instead, K17.9 million was presented directly to Senior General Min Aung Hlaing by “partner companies of Myanmar Brewery” at a televised ceremony in Nay Pyi Taw, which was documented in a post to the commander-in-chief’s Facebook page.

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The same post, dated September 2, quotes Min Aung Hlaing defending the military’s brutal clearance operations in Rakhine, which were concurrently causing hundreds of thousands of people — mostly Muslims who identify as Rohingya — to flee to Bangladesh.

The Senior General blamed “extremist Bengali terrorists” for the violence and praised the donors for their “nationalistic fervor”.

Ms Seema Joshi, head of business and human rights at Amnesty said it “beggars belief” that any international investor would make a donation to Myanmar’s military “at a time when those very forces were carrying out ethnic cleansing of the Rohingya population”.

In a second letter to Amnesty, Isozaki admitted the company’s processes for tracing the use of funds had been “inadequate” and said the company had put a moratorium on charitable donations in Myanmar until a comprehensive review is carried out.

Amnesty’s suggestion that the donations might have been seen, or used, as public endorsements of the military’s actions in Rakhine, and that Kirin might therefore be complicit, appeared not to have previously occurred to Isozaki.

This “legitimate and confronting question” had given Kirin “serious pause for thought” he said and in future, it would consider the broader implications of every donation it made.

Amnesty has drawn attention to two subsequent gifts made by Myanmar Brewery on September 23 and October 3, but a Kirin spokesperson told Frontier today that these “were not in fact misused or given to the military”.

The first donation, of rice and cooking oil, worth around $2,000, was given directly to victims of the conflict, the spokesperson said. The second donation, of $22,500 collected from Myanmar Brewery’s business network, to which the company contributed $7,200, was given to local civilian volunteers in the Rakhine State capital, Sittwe, they said.

Reliance on trust

Amnesty today called on Japanese authorities to “urgently launch an investigation” into the payments, which were made during a period when Kirin was negotiating the acquisition of a $4.3 million stake in Mandalay Brewery with MEHL. The deal received Myanmar Investment Commission approval on August 29 and was finalised on December 11.

Kirin and MEHL have been business partners since 2015, when Kirin paid $560 million for a 55 percent stake in Myanmar Brewery, the largest brewer in the country.

MEHL is one of two military-run conglomerates that controlled the economy until the advent of reforms following the 2010 election. Its ownership structure, governance and finances are opaque and it is unclear if its profits — which are also generated in industries including jade and gemstones — provide funding for military operations.

Due diligence conducted prior to 2015 led Kirin to believe that the working relationship was “unlikely to have a negative human rights impact,” Isozaki said.

He said there is a clause in the joint venture agreement that prohibits the use of Myanmar Brewery funds for military purposes and that MEHL has assured Kirin of its compliance.

“Our relationships with business partners are defined by legal agreements but must also necessarily rely on trust,” he wrote to Amnesty.

Myanmar is an important market for Kirin, which is building a high-efficiency production line with a capacity of 100 million liters per year, with “a view to markedly stepping up production capacity by year-end” according to its 2018 report.

Amnesty stressed that it is not calling for an investment boycott on Myanmar and said it hopes that by drawing attention to Kirin’s donations it can encourage the company, and others, to avoid contributing to human rights abuses.

As of February 2018, Kirin has introduced a global human rights policy and is conducting a human rights impact assessment into Myanmar Brewery, which it expects to complete by the end of the year.

“Our aim was — and remains — to promote the sustainable success of Myanmar Brewery as a sound corporate citizen while contributing to the economic and social development of Myanmar as a nation,” Isozaki said.