30 July, 2012
Legal News & Analysis – Asia Pacific – Myanmar
Overview
Closed to the outside world for many years as a result of international economic sanctions, Myanmar has recently undergone a significant progression. Most notably, reforms in Myanmar have been highlighted by the release and subsequent election of pro-democracy icon Aung San Suu Kyi. The resource-rich country is ripe for foreign investment with agriculture and extractive industries (including natural gas, mining, logging and fishing) providing the major portion of national incomes. Many potential foreign investors, however, are being deterred by the endemic corruption in the country. According to Transparency International’s Corruption Perceptions Index, Myanmar is currently the third most corrupt country in the world, after Somalia and North Korea.
Myanmar’s anti-corruption efforts are in their infancy. There is currently no independent anti-corruption body and according to many sources, it has been common practice for the ruling generals to misuse anti-corruption laws as a means of ousting political opponents.
In a recent interview, the Burmese Upper House Speaker said that fighting rampant corruption is the most important issue facing Myanmar today. The House Speaker went on to say that although the existing anti-corruption legislation is out-of-date, proposed amendments have already been approved by the Lower House and would be submitted to the Union Parliament during the next session.
Recent international corruption cases
Despite the significant corruption risk, the limited foreign investment in Myanmar means that there have not been many international enforcement actions against companies operating in Myanmar. This may change as sanctions are lifted and foreign investment increases.
A multi-national insurance corporation
In December 2011, it was announced that a multinational insurance corporation had agreed to pay US$16.3 million in order to resolve DOJ and SEC criminal and civil probes relating to alleged improper payments in numerous countries, including Myanmar.
In Myanmar, it was alleged that the company retained an “introducer” to assist with its dealings with two governmentowned entities. According to the allegation, the company’s records indicated that the introducer had used a portion of its commission to improperly influence a government official on the company’s behalf.
Recent domestic corruption cases
Six Burmese ministries accused of corruption
A government audit report released in March 2012 to members of Myanmar’s Lower House of Parliament alleged rampant corruption in six key ministries under the former junta, all of which were led by prominent members of the current administration. The findings alleged that ministries had misused billions of kyat in government funds engaging in a variety of illegal transactions. It remains to be seen what steps parliament or the police will take next in respect of the allegations.
For further information, please contact:
Mark Johnson, Partner, Herbert Smith
