The arrest of two of Myanmar’s most prominent tycoons since late March has stirred concerns of a deepening crisis in the country’s business community.

Khin Shwe, who heads Zaykabar, a conglomerate with interests in real estate and telecommunications, and Chit Khine, whose Eden Group has even more expansive operations in a number of key sectors, including construction, agriculture, and banking, were taken into regime custody just over a month apart. 

Khin Shwe was detained along with his son on March 21 on charges related to a development project on military-owned land, and Chit Khine was arrested on April 22 to face allegations of corruption in connection with a power-generation project in southern Shan State. The alleged offenses date back to 2018, when the National League for Democracy (NLD) government ousted by last year’s coup was in power.

Both men started their business empires under the dictatorship of former military strongman Than Shwe, and both have extensive ties to leading figures in Myanmar’s armed forces. The fact that even they have run afoul of the current regime has sent a chilling message to others trying to navigate the country’s increasingly stormy economic waters.

The regime claims Chit Khine’s company worked with NLD ministers to pay lower taxes and overcharge the state for coal 

Khin Shwe and his son are taken into junta custody for allegedly failing to pay rent and destroying buildings on land owned by the military

Anti-NLD agenda

A number of businesspeople who spoke to Myanmar Now said they could only speculate about the reasons for the high-profile crackdowns, but added that they felt sure there would be more trouble to come.

“They could go after more cronies. And not just cronies—even medium-sized businesses that had anything to do with the previous government could be targeted,” said one Yangon-based merchant who wished to remain anonymous.

The case against Chit Khine seems especially ominous from this perspective. It also involves allegations of graft against the NLD’s ministers for natural resources and energy, Ohn Win and Win Khaing, as well as its deputy energy minister, Tun Naing. All three face up to 15 years in prison under Myanmar’s Anti-Corruption Law if found guilty.

According to the merchant, the motive for arresting Chit Khine might have something to do with the junta’s ongoing efforts to delegitimise the deposed civilian government by portraying it as irredeemably corrupt.

“They may want the rich business owners to testify as witnesses against former officials, as they did in the case against Dr. Zaw Myint Maung,” he said.

A lawyer for the ousted state counsellor, who is accused of taking massive bribes while in power, called the allegations “absurd” 

Dr. Zaw Myint Maung, the vice chair of the NLD, was the chief minister of Mandalay Region until he was removed from power last year. Maung Weik, a businessman with links to the former junta, testified that he gave the ailing chief minister money to cover his medical costs during a trip to Bangkok.

Maung Weik also gave sworn testimony that he that he handed over multiple bribes, amounting to more than US$550,000, to ousted State Counsellor Aung San Suu Kyi—a claim that was recorded on video and broadcast on state television as part of the regime’s efforts to discredit the NLD.

Forced to choose sides

It’s less clear how Khin Shwe’s case fits in with this anti-NLD agenda, as it has no direct connection to the former ruling party. 

According to one business owner in Mandalay, the targeting of the two tycoons may have more to do with the junta’s suspicion that the resistance movement is receiving much of its financing from within the country—namely, from wealthy donors who are sympathetic to the cause.

“Maybe the military is afraid of the cronies taking the side of the enemy. They could be doing this just to prevent that from happening,” he said. 

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Another businessperson based on Myanmar’s border with China suggested that the recent arrests are really meant to remind the cronies who they owe for their success. 

“They are just trying to let them know that they depend entirely on the military’s favour for their riches. And that means that they have to do the generals’ bidding,” he said.

This situation has put many businesspeople in a bind. Unable to take a more neutral stance, many say they fear displeasing anti-regime forces almost as much as they dread the junta’s ire.

“This is very awkward for us. If we don’t cooperate with the military, they could start terrorising us. But then the public and the revolutionary forces might punish us for taking the military’s side. This is a problem every business owner is facing right now,” said the owner of an export company.

An ex-convict businessman says that he gave the State Counsellor more than $550,000 in cash when ‘there was no one around.’ 

NUG sanctions

The shadow National Unity Government (NUG) has made it clear that companies cannot expect to be spared in a struggle that has already taken an enormous toll on the people of Myanmar.

Taking aim at businesses that have contributed in any way to the maintenance of the junta’s war machine, it has blacklisted six companies for importing jet fuel. These include Yangon Aerodrome, owned by Htun Myint Naing (aka Steven Law); Golden Myanmar Airlines, owned by CB Bank chair Khin Maung Aye; and Brighter Energy, part of Aung Ko Win’s Kanbawza Group of Companies.

Nine other tycoons, including Tayza, Jonathan Myo Kyaw Thaung, and Dr. Aung Moe Myint, have also been sanctioned by the NUG for acting as weapons brokers for the regime.

A few of Myanmar’s super-wealthy have managed to stay in the grey zone, however. One example is Zaw Zaw, the chair of Max Myanmar, who in his capacity as president of the Myanmar Football Federation welcomed coup leader Min Aung Hlaing when he visited Yangon last December.

It remains unclear what relationship he has with the regime, but so far, he has managed not to seriously displease the NUG.

Even with its controversial leader, Kyaw Myint, still behind bars, some in the UDP believe that the party has a future under the current regime

During the National League for Democracy (NLD) government, the UDP was dissolved less than a month before the general election of November 2020 for possession of illegal funds. It would be required to re-register under a new name before contesting future elections. 

Kyaw Myint, chairman of the disbanded Rose Party, was arrested in 2020 for financial crimes (as well as an immigration charge that was later dropped) and is currently serving his sentence in Yangon’s Insein Prison on multiple charges.

The February 7 meeting in Yangon examined questions about the party’s re-registration and other future plans, and the details of the discussion will likely be released after February 15, the party official said.

The UDP’s former secretary Thidar Zin and her husband have been trying to revive the party since the middle of last year, but most of its previous central committee has not rejoined, former party members said. 

Ahead of  the 2020 election, the UDP had established branch offices in nearly every Myanmar township and a national membership of nearly 6 million, the party’s joint secretary Thike Tun said.

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The party registered before the 2010 election, but won no seats in parliament that year or in the 2015 general elections. After an exponential growth in membership, the party nominated parliamentary candidates for 1,130 constituencies in the 2020 election and had the second-highest number of parliamentary candidates nationwide, after the NLD. 

However, these candidates lost the opportunity to compete when the Union Election Commission dissolved the UDP after Kyaw Myint was charged with money laundering and fled prosecution. 

State-level investigations after Kyaw Myint’s arrest in late 2020 found that he had received a transfer of 16bn kyat (worth around $12m at the time) from China, conducted an unlicensed money lending business, and acquired properties by illegal means. 

UDP leader Michael Kyaw Myint was still in jail in July despite the junta’s apparent objections to the handling of his case 

During the NLD government, the President’s Office released a statement saying the Rose Party spent nearly 14bn kyat on its campaigns between October 2018 and September 2020. The statement also noted that the UDP failed to follow legal procedures in purchasing more than 100 acres of real estate in Yangon Region’s Hmawbi Township and in Naypyitaw, where the party had its headquarters.  

Junta officials and pro-junta media have pointed to the dissolution of the UDP as an indication that the 2020 election was not free or fair, which was part of the military’s pretext for seizing power in February 2021. 

“A new party supported by working-class people was completely disbanded for allegedly receiving financial support from a neighbouring country,” the regime mouthpiece Myanma Alinn argued in a September 2021 editorial. 

Coup leader Min Aung Hlaing has also criticised the dissolution of the UDP under the the NLD government.

The junta has not yet clearly stated whether it will allow the UDP to re-register or participate in future elections. 

Maj-Gen Zaw Min Tun, the regime’s spokesperson, said during a press conference in September of last year that a review had found that “some actions were taken rightfully against the party because their actions violated some laws and bylaws.” He did not, however, comment on charges still pending against the UDP.

According to the military council’s Political Parties Registration Law, announced in late January, the party would have to open at least 160 party offices within 180 days and recruit 100,000 party members within three months in order to compete in the election at the Union level. 

The party will still be considered dissolved if its registration is not completed within 60 days after law came into effect on January 26. Party leaders have observed that the number of Union-level political parties will likely decrease due to the strictures of the registration law. 

According to the statement by the junta’s election commission, the military’s proxy Union Solidarity and Development Party and the Federal Democratic Party—led by the daughters of former prime minister U Nu—applied to register within two weeks of the registration law’s enactment. 

The UDP chair, once accused of laundering drug money, has lived freely in Myanmar for years despite being a fugitive