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Two South Korea banks ‘indirectly financed’ companies linked to Myanmar military

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Activist Wai Moe Naing (centre) walks with protesters during a rally against the military coup in Monywa, Sagaing region. ANONYMOUS/AFP

Two South Korea banks ‘indirectly financed’ companies linked to Myanmar military

Two of South Korea’s leading banks, Shinhan and Hana, have indirectly provided loans and investments to firms with links to Myanmar’s military, data exclusively obtained by The Korea Herald showed.

In September 2019, Shinhan Bank’s branch in Yangon, Myanmar’s largest city, issued loans worth 847 million won ($750,000) to Myanmar Posco C&C. The coated steel company was jointly established by Posco Group’s steel sheet-making arm Posco C&C and Myanmar Economic Holdings (MEHL), one of two military-owned conglomerates, according to data from activist group Justice for Myanmar. The other is the Myanmar Economic Corp.

Myanmar Posco C&C was established in 2013. The two companies’ first joint venture – Myanmar Posco Steel, a steelmaking company – was founded in 1997. The military-controlled MEHL has a 30 per cent stake in each firm, Justice for Myanmar said.

Justice for Myanmar spokesperson Yadanar Maung said: “Any Korean bank that provided loans to Posco is at risk of supporting Posco’s complicity in serious human rights violations in Myanmar.

“Shinhan Bank’s loan to the Myanmar military joint venture in 2019 was egregious. We call on the bank to cut any other possible ties with the military-related businesses, which finance atrocity crimes in Myanmar.”

Posco Group admitted that its Myanmar Posco C&C received loans from Shinhan Bank that year. Shinhan bank declined to comment on the issue, only confirming that the loan was repaid in May last year.

The civic group also voiced criticism of Hana Bank, which has maintained financial ties with the Bank for Investment and Development of Vietnam (BIDV), the largest state-owned bank in the country in terms of assets. The Vietnamese state bank directly finances a military-affiliated telecom operator in Myanmar called Mytel, the group said.

Mytel is a joint venture between Star High Co, a subsidiary of the junta-owned Myanmar Economic Corp and Viettel, which is owned by Vietnam’s national defence ministry. Star High Company has a 28 per cent stake in the telecoms carrier.

In July 2018, the BIDV provided loans worth $11.5 million to Mytel, which were to be paid in nine instalments starting June this year until 2023, data showed.

To speed up its expansion in Vietnam, Hana Bank acquired 15 per cent of the BIDV’s shares worth 1.01 trillion won in November 2019, becoming the second-largest shareholder.

Maung said: “[Justice for Myanmar] calls on Hana Bank, the biggest foreign shareholder in BIDV, to use its leverage to ensure the BIDV cuts ties with the military-controlled mobile operator Mytel.”

Hana Bank, in response, said the deal shouldn’t be viewed as “direct financing” of Myanmar’s military because it took place before the takeover on February 1.

“The deal between the BIDV and Mytel was a normal financial transaction, which took place before the coup . . . We believe it is inappropriate to see the case as in providing direct financing to the military,” said a Hana Bank official. He added that the BIDV is also closely monitoring corporate risks related to the political unrest in Myanmar.

Regardless of the time gap between the transactions and the coup, however, banks should still have taken the human rights situation in Myanmar into account, as the Southeast Asian country was already the centre of international attention for atrocities committed by its military, according to local experts.

In late 2016, Myanmar’s armed forces started to persecute the Muslim Rohingya people, despite the presence of a democratic government led by Aung San Suu Kyi.

“Local lenders, which made inroads into Myanmar markets should have paid keen attention to the military‘s violations of human rights, even before the coup. The reason why they didn’t take actions against military-related businesses is because they lack internal regulations designed to prevent financing and investments for companies responsible for human rights issues,” said Yoon Jin-soo, head of the ESG business division at the Korea Corporate Governance Service.



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