Worldly, charming, and quietly equipping a brutal military

The New York Times
Washington, USWritten By: Hannah Beech © 2021 The New York Times CompanyUpdated: Dec 27, 2021, 01:23 AM IST
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FILE -- Thatbyinnyu Temple in Bagan, Myanmar, March 16, 2017. Photograph:(The New York Times)

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Ultimately, the story of the Kyaw Thaungs parallels that of Myanmar: a country of vast potential foiled by a ruthless military and the families willing to compromise themselves in pursuit of its riches

Three years ago, the Kyaw Thaung family partied at the Pegu Club. The venerable Burmese Irish clan had restored the teak-lined establishment to its 19th-century glory, evoking the days when gin-sipping colonialists ruled. The Pegu Club project befitted the family’s East-meets-West positioning and the optimism of a country newly engaging with the world.

Amid periodic power cuts in the rest of Yangon, Myanmar, the Kyaw Thaungs danced and sipped Champagne among the new elite, including young entrepreneurs returned from exile, bejeweled daughters of generals, and even former political prisoners suddenly responsible for attracting foreign investment to the latest frontier market.

As Myanmar’s military dictators ended decades of isolationism, the Kyaw Thaungs seemed to embody the perfect mix: an august family with a long history of charitable giving that was committed to the kind of business reforms needed to coax a corrupt, closed country into the global economy. But the main source of the family fortune, purported vaguely to be from property and import-export companies, was concealed behind a facade.

For all their efforts to differentiate themselves from the drug lords and business cronies who dominated Myanmar’s economy, the Kyaw Thaungs were quietly equipping one of the world’s most brutal militaries. Their partnership with the Tatmadaw, as the Myanmar military is known, deepened even as its generals committed ethnic cleansing against Rohingya Muslims. And it continued into this year, when the army staged a coup and seized full power of the country, killing more than 1,300 civilians so far, in the estimate of a monitoring group.

Jonathan Kyaw Thaung, the scion, was the public face of the family. As he chased Tatmadaw contracts, he hobnobbed with the family of Senior Gen. Min Aung Hlaing, the military chief who orchestrated the coup. He met with the Myanmar air force commander at the 2015 Paris Air Show, where the military leader checked out Pakistani fighter jets that ended up in the Tatmadaw’s arsenalA Kyaw Thaung family business bid to help supply the military with spare parts for Russian attack helicopters that have been used to strafe civilian populations resistant to the coup.

Even the renovation of the Pegu Club depended on a deal in which the Kyaw Thaungs had to pay at least $510,000 a year to a military conglomerate, the agreement for the club shows.

An investigation of the Kyaw Thaung family by The New York Times — based on interviews with dozens of former company employees, business associates, military insiders and family members, as well as thousands of pages of corporate filings, contracts, tenders and other financial documents — exposes a vast web of military procurement that was strategically hidden from the public. The family, best known for its charitable foundation, was profiting from its close ties to the Tatmadaw and helping the military avoid scrutiny by Western governments.

At cocktail parties and business forums, the family talked up international business standards, like rigorous governance, corporate social responsibility and open tenders. Behind closed doors, the Kyaw Thaungs, charismatic, Western-educated and English-speaking, relied on the kind of insider deal-making with the Tatmadaw that has enriched an entire class of cronies in one of Asia’s poorest and most repressive nations.

Ultimately, the story of the Kyaw Thaungs parallels that of Myanmar: a country of vast potential foiled by a ruthless military and the families willing to compromise themselves in pursuit of its riches.

The Kyaw Thaungs capitalized on their family ties to secure lucrative contracts supplying the military with European aircraft and a French coastal surveillance system. They bid for a deal to provide Italian guns to the navy, according to a former company employee and an email discussing the offer. A relative, a former general who served as both energy minister and the chair of the national investment commission, formally approved deals that Kyaw Thaung companies made with military-linked businesses or with the military itself.

To obscure the real font of their wealth, they set up a tangle of companies in jurisdictions ranging from the British Virgin Islands to Singapore. Some of these opened and closed with a single deal, and they depended on ownership structures that at times masked the involvement of family members.

Some of the family’s military procurement was devised to evade Western export controls meant to prevent the Tatmadaw from strengthening its command, according to international sanctions experts and five former company employees. The coastal radar technology, for example, could have run afoul of such rules; it was operational when Rohingya Muslims tried to escape a military massacre that United Nations investigators say could constitute genocide.

One of the family’s companies donated more than $40,000 to the Tatmadaw for what the United Nations described as a cover-up of the site of ethnic cleansing. A 2019 U.N. report on the military’s persecution of the Rohingya highlighted that contribution.

In interviews, Jonathan Kyaw Thaung denied impropriety, saying his relations with the military were no more than any business operating in Myanmar. He said his relatives, his father included, did not supply military equipment to the Tatmadaw and said other families were the country’s real arms dealers. He noted that his grandfather, who started the family business, stayed away from the fishery or livestock trades because those would contravene Buddhist proscriptions on taking lives.

Jonathan Kyaw Thaung, 39, said in a later interview that he was not close to his father, Moe Kyaw Thaung, and that he was not aware of exactly what kind of businesses his father pursued. He said it was not correct to refer to a family business because of the separate companies he and his father ran. (He was a director of one of his father’s companies and is currently a director at another.)

“Because of my love for my country, I came back,” he said. “I didn’t go and work on Wall Street. I didn’t go to Los Angeles and set up a music business, like a lot of my friends. I came home. I came home not to make money but to continue the family.”

Family Ties

The image that Jonathan Kyaw Thaung presented to the world suited the heir to one of Myanmar’s grand lineages, that of a charming graduate of Millfield, a British boarding school also attended by the Thai king. In 2017, he told a journal produced by the Asian Institute of Management how his grandfather had been invited to Buckingham Palace and dispensed business advice to his grandson. He was the last person to see his grandfather, Kyaw Thaung, before he died, Jonathan Kyaw Thaung said in the article.

Little of the story was true.

He was just a toddler, hardly in need of business advice, when his grandfather died. There was no invitation to Buckingham Palace, according to four Kyaw Thaung family members who spoke with the Times. Although Jonathan Kyaw Thaung’s public biography said he graduated from Babson College, he acknowledged he never completed his studies there.

“I want to set the record straight. I come from Myanmar’s oldest business family,” he said. “My grandfather was extremely successful. My father was extremely successful.

“I’ve always been someone who has achieved and been a champion, and I never took shortcuts,” he added, describing his talents in track, soccer and business.

The Kyaw Thaungs grew up as part of a comfortable, well-connected set that was protected as Myanmar’s generals turned the country inward.

The family’s initial fortune came from jute, a natural fiber that is used to make rope and twine. The jute mill was nationalized during the military’s disastrous venture into socialism after its first coup in 1962.

Burma, once lauded for its fine schools and polyglot cosmopolitanism, sank into penury. The ruling junta renamed the country Myanmar.

Jonathan Kyaw Thaung’s father was sent to Northern Ireland, where he escaped Myanmar’s privations. His siblings scattered to Thailand, Singapore, the United States and Britain. The family’s graceful villa in Yangon moldered, as did the rest of the country.

But even as many of them headed abroad, the family remained connected to Myanmar and traveled there to do business. Their path back was eased by the extended family tree, which included high-ranking Tatmadaw officers, Cabinet ministers and confidants of junta chiefs.

A cousin married Zeyar Aung, an urbane, English-speaking general who led the Northern Command and the 88th Light Infantry Division, both of which the United Nations has tied to decades of war crimes against Myanmar’s own people. He later was the railway minister, then the energy minister, and subsequently led the national investment commission, over the time the Kyaw Thaungs were vying for military contracts.

Myanmar’s patronage networks are a tangle of roots that bind family trees. Generals’ children tend to marry within tight circles, perhaps to other military progeny or the offspring of business cronies.

As the Tatmadaw began loosening control over the economy, engaging in a fire sale of assets that had once been the military’s fief, that elite class of the well-connected swooped in to profit. Jonathan Kyaw Thaung returned to Myanmar, along with siblings and cousins who had also been raised overseas.

It was a path previously traveled by his father, among the earliest businessmen to return to military-ruled Myanmar after time in Northern Ireland and in Singapore. Although he told others that the family business relied on the import-export trade, his father, Moe Kyaw Thaung, was burnishing his Tatmadaw ties by acting as a cross-cultural middleman for the generals, seven business associates, military insiders and family members said. He boasted of arranging the overseas study of the progeny of Senior Gen. Than Shwe, the former junta chief, according to five of those people. Moe Kyaw Thaung did not respond to requests for comment.

Despite the family’s lack of media visibility, a few details emerged. In 2002, a Tatmadaw-run newspaper reported that Jonathan Kyaw Thaung and his father had donated 7 million kyat, a significant amount at that time, during a military “cash-presentation” ceremony for the reconstruction of a Buddhist temple.

The family continued financial and other support of the Tatmadaw even when its soldiers were being accused of genocide in 2017. This deadly campaign against the Rohingya accelerated as the military began sharing power with a civilian government, soiling the feel-good narrative of a rare bloodless political transition.

The KT Group, Jonathan Kyaw Thaung’s conglomerate, donated money for the reconstruction of lands where the Muslim minority had previously lived.

“Officials of these companies should be investigated with a view to criminal prosecution for making substantial and direct contributions to the commission of crimes under international law, including crimes against humanity,” said Chris Sidoti, a U.N. investigator who worked on the 2019 report.

In September 2017, with the violence against the Rohingya provoking international alarm, Ky-Tha, Moe Kyaw Thaung’s business group, arranged a meeting between a representative of Safran, a Paris-based aviation and defense manufacturer, and top officers of the Myanmar air force, according to a leaked document provided by Justice For Myanmar, a watchdog group that investigates Tatmadaw business dealings. The meeting centered on Tatmadaw helicopters, including the Russian-made MI-17, a gunship deployed against the Rohingya and other ethnic minorities.

Safran declined to comment. It is unclear whether the discussions led to a servicing deal. Jonathan Kyaw Thaung said he had never heard of Safran.

Beyond his family connections, Jonathan Kyaw Thaung also cultivated a relationship with one of Myanmar’s most influential cronies, Aung Ko Win, founder of the conglomerate Kanbawza. KBZ, as the company is known, has been involved in most every major business in Myanmar, including banking, aviation, construction and mining. Aung Ko Win was the target of European Union sanctions for his ties to the military regime.

His backing allowed Jonathan Kyaw Thaung to land meetings with military bigwigs, four former employees said. He lent his influence and cash to Jonathan Kyaw Thaung, helping him form an oil and gas company, bid for a telecom license and obscure the purchase of aircraft for the Tatmadaw.

Soon, Jonathan Kyaw Thaung was socializing with Gen. Min Aung Hlaing, the army chief, and his children, according to 11 former employees, relatives, business associates and military insiders. Kyaw Thaung family members accompanied Min Aung Hlaing and other generals to a regional defense summit and air show in Malaysia, two people who participated in the journey said.

Jonathan Kyaw Thaung said that his relationship with members of Min Aung Hlaing’s family has soured. He said he had cultivated ties with the military chief himself. He described Aung Ko Win as a mentor and a business visionary.

Six years ago, Jonathan Kyaw Thaung asked a foreign employee to arrange a customized tour of London for Aung Ko Win, who is a fan of James Bond. Receipts and correspondence reviewed by the Times detailed the stops of the tour, which included a private boat ride on the Thames, with the sound system blasting “Skyfall” by Adele, the KBZ boss’s favorite Bond theme song. At one point, the wind blew Aung Ko Win’s hat off, and the skipper retrieved it, according to the foreign employee who spoke with the Times on the condition of anonymity for fear of retribution.

In Myanmar, Jonathan Kyaw Thaung ordered the design of a glass plinth decorated with a photograph of Aung Ko Win on the Thames. Topping the sculpture was Aung Ko Win’s hat.

Camouflage Inc.

The European-made helicopter appeared destined for the Myanmar oil and gas industry.

But the $2.16 million helicopter on sale in Brazil was not meant for commercial purposes, as a Kyaw Thaung contract indicated. It ended up with the Tatmadaw, the true recipient hidden behind falsified paperwork.

At one point, Myanmar’s Department of Civil Aviation wrote in a letter to Brazilian authorities that the aircraft would be used for “Tourism and Oil and Gas industry.” The letter was based on drafts with handwritten annotations provided by the KT Group, according to the foreign employee and copies reviewed by the Times.

A Tatmadaw officer was listed as a customer on separate internal paperwork for the helicopter, which was reviewed by the Times.

A letter from MWG, a Kyaw Thaung aviation company, requesting visas for six Brazilian crew members to enter Myanmar to deliver the helicopter was addressed not to civil aviation authorities but to the commander in chief of Myanmar’s air force. The letter, which was also reviewed by the Times, specified that MWG would be handing over the Eurocopter to the air force.

When the foreign employee and the Brazilian crew arrived in Myanmar, he said they were met on the tarmac by about 20 men in blue uniforms who swarmed the helicopter, marveling over its features. The employee said he confronted Jonathan Kyaw Thaung when he returned to Myanmar, expressing discomfort at the deception.

Jonathan Kyaw Thaung declined to comment on the deal.

In March of this year on Armed Forces Day, Min Aung Hlaing presided over a grand procession displaying Myanmar’s weaponry. Above the parade flew a Eurocopter, one of several used by the military for maritime reconnaissance, Myanmar’s official news media reported. The same day, more than 100 anti-coup protesters were killed by security forces, according to the monitoring group.

In the years before the coup, as foreign investors were flocking to Myanmar, Jonathan Kyaw Thaung presented his family business as the ideal intermediary, “one of Myanmar’s largest conglomerates,” according to company literature. He boasted of recognition from the World Economic Forum.

“Within 3 years Jonathan had set up offices in Azerbaijan, India, China and Singapore for KT Group and expanded KT Group business from a trading focus to a diversified conglomerate in present day with his entrepreneurship spirit, drive and vision,” said a company bio.

The reality was less grand.

The nerve center of the Kyaw Thaung business empire is a nondescript walk-up office building in Yangon, Myanmar’s largest city. At least 11 of the family’s businesses are registered here, but no grand nameplates mark their existence.

Online, their presence is thin as well. There is a website for the family foundation, but the KT Group’s website has been taken down. The website for Ky-Tha Group is “coming soon.”

The low profile was intentional, clouding the family’s connections to the Tatmadaw, according to the four former employees.

The KT Group handled the import from Europe of at least two turboprops and two transport planes that entered the Tatmadaw fleet. The deals were made to look like commercial transfers to private companies, including its own and the crony aviation firm Air KBZ, rather than military procurement, according to the former employees.

The process could help avoid the possibility that the transactions might trigger European export bans placed on the Tatmadaw. The embargoes target equipment that might be used for internal repression, a wide enough category to possibly include aircraft used to transport soldiers or sanctioned military officers.

Jonathan Kyaw Thaung denied obscuring any aircraft deals. He said some planes had delivered COVID-19 vaccines.

Complicated company registrations also shrouded the Kyaw Thaungs’ connections to influential relatives and cronies. In 2014, Bashneft International, an energy company, partnered with Sun Apex Holdings, a company registered in the British Virgin Islands.

Despite its overseas incorporation, Sun Apex Holdings is a Kyaw Thaung company, a Times analysis of its business records shows. Among the people listed in the registration paperwork are an adviser to the Kyaw Thaungs and the daughter of the founder of KBZ.

Sun Apex had little experience in oil and gas, but it was among select local companies approved by the Myanmar ministry of energy to partner with foreign firms. The formal government approval for the Bashneft-Sun Apex deal was given by Zeyar Aung, the energy minister who is married to a Kyaw Thaung cousin. (He did not occupy that Cabinet position when the bid was made.)

Jonathan Kyaw Thaung said that his relative never gave him preferential treatment.

Flying Under the Radar

In 2015, the Singapore branch of a Kyaw Thaung company signed a deal to supply the Tatmadaw with a coastal radar technology system made by Thales, the weapons maker partly owned by the French government. The sales agreement for the surveillance system, called the Coast Watcher 100, was part of the leaked documents provided by Justice For Myanmar.

The Coast Watcher 100, which spanned a long coastline, required towers 50 meters high affixed with state-of-the-art radar. A British radar expert, who had worked on projects for Thales in Afghanistan and Iraq, was brought in to direct the project. A French former defense attaché was hired as a general manager for international business development and now works at Thales.

As the Rohingya crisis intensified, the Coast Watcher 100 was operational on Myanmar’s western flank, which became the site of the world’s fastest exodus of refugees in a generation.

The Tatmadaw swept through Rohingya villages, killing and raping civilians. To escape, Rohingya piled onto rickety boats. The Tatmadaw caught craft after craft.

In September 2017, during the frenzy of the Rohingya crisis, the Kyaw Thaung company arranged for Thales representatives to meet with senior officers of the Navy, another leaked document provided by Justice For Myanmar shows.

In a statement to the Times, Thales said that it “does not sell defense systems to Myanmar.”

Jonathan Kyaw Thaung denied any knowledge of the Thales system.

It is not clear whether the Coast Watcher 100 was specifically used for tracking the Rohingya. But the system, which can pick up the presence of a small raft, had clear military applications during the exodus of refugees.

Maintenance of the Coast Watcher 100 continues. Leaked defense budgets for 2020-21 show allocations of more than $160,000 for servicing the radar system. The previous year, $120,000 was spent for the same purpose, a record of foreign currency transactions shows, part of the trove from Justice For Myanmar.

Such outlays most likely contravene the European Union trade embargo on the Tatmadaw that targets equipment that might be used for repression, said Siemon Wezeman, a senior researcher at the Stockholm International Peace Research Institute and an expert in Tatmadaw procurement. The trade ban was strengthened in 2018 after the Rohingya massacres, cracking down on so-called dual-use products with either civilian or military purposes.

“The Rohingya are a coastal group, and automatically anything that is checking coastal waters would be for checking for movement of the Rohingya and might be used for repression, end of story,” Wezeman said, referring to the Thales surveillance system.

The Kyaw Thaungs’ procurement of aircraft for the Tatmadaw did raise concerns in Europe, but an inquiry went nowhere.

In 2017, MWG, the Kyaw Thaung aviation company, arranged the purchase of two Fokker planes from an arm of KLM Royal Dutch Airlines.

The planes now transport high-ranking Tatmadaw officials. In September, one flew to Moscow just as the deputy junta leader visited Russia.

The purchase prompted questions in the Dutch Parliament about how the Fokkers had ended up in the Myanmar air force fleet. The Dutch investigation concluded that the planes were purchased for commercial use by a Singaporean firm. That company was the Kyaw Thaung aviation arm, although it was not registered in Singapore at the time.

“It’s civilian planes delivered to civilian companies, but they are used by a military force with a very bad reputation,” said Martin Broek, an arms trade expert who tracked the delivery of Fokkers to the Tatmadaw.

Even before the putsch made foreign investments in Myanmar toxic, concerns about the military had started to haunt the Kyaw Thaungs.

A human rights group put a British port operator on a “dirty list” of international companies doing business with the Tatmadaw; it ran TMT Ports, a container terminal in Yangon that the Kyaw Thaungs leased for up to 70 years from a military conglomerate.

In 2020, the British firm said it would not renew its contract. Maersk, the world’s largest container shipping firm, also announced that it would not use the terminal.

Few of the family’s other aboveboard ventures have worked out. A telecom bid failed. Despite securing rights from the military for a prime tract of land in Yangon, the Kyaw Thaungs were unable to persuade foreign investors to build their “Lego concept” residential and retail space.

The Pegu Club is shuttered. Many of the civilian officials who attended its opening are now in prison.

Jonathan Kyaw Thaung said he took on big loans for the port and does not know how he will pay the $3 million annual lease. Most of Myanmar’s shipping industry has evaporated, he said. The currency has collapsed. The banking system has fractured. The country is broken, not taking into account COVID’s toll.

“If anyone is still standing in 18 months, it will be a miracle,” he said.

Jonathan Kyaw Thaung recently built a home in Naypyitaw, the bunkered city that replaced Yangon as the capital at the military’s behest earlier this century. Most civilians have little affection for the Tatmadaw’s capital, with its empty avenues and soulless ministries.

This summer, as his children played around him in Naypyitaw, a group of villagers carrying machetes confronted him. He said he defused the situation but was spooked by the encounter.

Over the past month or so, the parking garage of his office in Yangon has been bombed four times, he said. Nobody was hurt.

Since the coup, anonymous open letters from former Tatmadaw officers have accused the Kyaw Thaungs of being among Myanmar’s military procurers. With security forces training their guns on unarmed protesters, members of an armed resistance have assassinated those suspected of being government collaborators.

This summer, Jonathan Kyaw Thaung left Myanmar, taking his family with him.

“I don’t know what happens now,” he said. “Everything we’ve all done for the past 10 years is gone.”