by Brian McCartan, Asia Sentinel, 29 Feb 2008

In an action that Burma watchers view as long overdue, the United States earlier this week slapped financial sanctions on wealthy Burmese businessman Lo Hsing Han, his US-educated son, Steven Law and Law’s wife, Cecilia Ng, a Singaporean businesswoman.

At least 10 Singaporean companies owned by Law’s wife have been targeted by the sanctions. Among other things, the sanctions point up the often-unhealthy way the Singaporean government chooses to ignore relationships between its financial community and unsavory Burmese businessmen. Because of the ties to Lo’s main corporate vehicle, Asia World Co. Ltd, the story also illustrates graphically the narco-state that Burma’s rulers have visited upon the world stage.

Asia World is targeted by sanctions also. And, included among the Singaporean companies owned by Ng is Golden Aaron Pte Ltd, which has been linked to the Chinese state-controlled oil and gas giant, China National Offshore Oil Corporation (CNOOC). Under the sanctions, any bank accounts and financial assets the individuals or their companies hold in the United States are frozen and Americans are forbidden from doing business with them.

Asia World is considered to be Burma’s biggest and most diversified conglomerate. Lo is chairman and Steven Law is the company’s managing director. In a 1997 article, The Nation, a US magazine, described a web of connections between Asia World and the Singapore government, which “is directly connected to key business ventures of drug kingpin Lo” through a series of investments in the Myanmar Fund, including some by the Government of Singapore Investment Corporation (GIC).

In a letter to the magazine the Singapore embassy in the US said that GIC was a passive investor in the Myanmar Fund and was not involved in investment decisions and that the Myanmar Fund had been wound up.

Asia World is involved in industrial investment, development, construction and transportation. It imports and distributes goods into Burma and owns a supermarket chain. It was recently involved in road construction from Pyin Oo Lwin in Shan State to the Chinese border, the renovation of Rangoon’s international airport and the construction of a deep water seaport at Ahlone near Rangoon. It was also one of two main contractors for the construction of the new capitol at Naypyidaw. In 2001 the company’s authorized capital was given at about US$40 million.

Rangoon’s port, which handles 40 percent of Burma’s container traffic, is also run by Asia World which also operates a cargo and shipping business from the port. This and Lo’s ownership of Burma’s largest bus company has led some to speculate about whether he is using the facilities for continued drug trafficking.

Lo and Steven Law were refused visas to travel to the US as long ago as 1996 for suspected drug trafficking activities. The property interests of Golden Aaron are now reportedly blocked.

These moves follow sanctions earlier this month against the business empire of Burmese tycoon Tay Za and 33 other Burmese generals and business people and 11 companies which have had their assets frozen and were denied travel to the US. This is the latest in an ongoing series of financial sanctions aimed at hurting Burma’s ruling State Peace and Development Council through its business contacts.

“Unless the ruling junta in Burma halts the violent suppression of its peoples, we will continue to target those like Steven Law who sustain and who profit corruptly because of that support,” said Stuart Levy, Treasury Department Under-Secretary for Terrorism and Financial Intelligence.

According to the Treasury Department, “In addition to their support for the Burmese regime, Steven Law and Lo Hsing Han have a history of involvement in illicit activities. Lo, known as the ‘Godfather of Heroin,’ has been one of the world’s key heroin traffickers dating back to the early 1970s. Law joined his father’s drug empire in the 1990s and has since become one of the wealthiest individuals in Burma.”

The saga of how Lo and his son acquired their fortune and the outward trappings of respectability has many twists and turns including several brushes with death. Lo, 70 or 73 years old depending on the source, began in the drug trade in 1960 when he organized a local militia in the Kokang area of Shan State. The government turned a blind eye to Lo’s drug trafficking in exchange for his assistance in fighting Shan insurgents. He was dubbed the “King of Opium” by US authorities in the 1970s.

His fortunes then changed. Thai police arrested Lo in 1973 and deported him back to Burma, where he was found guilty of rebellion and sentenced to death. However, he was given amnesty in 1980, and he moved back to Shan State where he built his headquarters at Salween Village near Nampawng southwest of Lashio. He immediately reestablished himself with a new militia and resumed his role in the drug trade.

The wisdom behind granting Lo amnesty was borne out when Lt General Khin Nyunt used him as a go-between in 1989 in arranging ceasefires with Kokang and Wa insurgents who had recently mutinied against their Burmese Communist Party leaders. In exchange, according to a memo from the Thai Office of Narcotics Control Board in 1993, Khin Nyunt gave Lo the right “to smuggle heroin from the Kokang Group to Tachilek [on the border with Thailand] without interception.” By 1994 he controlled what was regarded as the most heavily armed drug trafficking organization in Southeast Asia.

Lo also gained unfettered access to the Burmese economy for his part in the ceasefire deals. This was further enhanced when in the early 1990s, with the Burmese economy on the brink of collapse, the generals turned to traffickers to invest their money in legal and semi-legal businesses. A “whitening” tax of 40 percent, later reduced to 25 percent, was levied on funds repatriated from bank accounts in Bangkok and Singapore. It was also at this time, on June 5, 1992, that Lo set up Asia World.

Law enforcement officials say indications are that since the mid-1990s Lo has stepped back from direct involvement in the drug trade, although he does reportedly maintain contacts, and that has not stopped western law enforcement agencies from trying to find evidence of his continued role, so far without success.

Lo’s business empire, international observers believe, is built on the profits from his drug trafficking activities. These businesses and his money have proved invaluable to the junta.

Lo has maintained strong relations with Burma’s ruling generals. At Steven Law and Cecilia Ng’s 1996 wedding, among the guests was then-Hotels and Tourism Minister Lt General Kyaw Ba as well as three other generals and four cabinet ministers. Lo also organized the catering for the extravagant wedding party thrown for the daughter of Burma’s Senior General Than Shwe in 2006. Despite Lo’s relations with Khin Nyunt, he was notably unaffected when the general was placed under house arrest in 2004.

Lo also has been described by government figures as the most prominent partner for foreigners wishing to invest in Burma, with a massive amount of the joint venture investment done through Asia World. For example, an agreement to import cooking oil from companies controlled by Malaysian billionaire Robert Kuok reportedly has grown into very lucrative real estate and construction deals, including the construction of the Trader’s Hotel in Rangoon, in which Asia World holds shares.

Another joint venture was with Sinmardev International Pte Ltd of Singapore. Headed by Albert Hong, Sinmardev was a consortium of Singaporean and other companies that built a US$207 million industrial park and port on the outskirts of Rangoon. Asia World contracted for part of the construction and holds shares in the project along with the members of the junta and several international investors.

Steven Law, who also goes by Tun Myint Naing, is the managing director of Golden Aaron, which has now been linked to CNOOC. The link was spotted by David Webb, a business commentator and non-executive director of the Hong Kong Stock Exchange. The relationship goes back to an October 2004 production-sharing contract between Myanmar Oil and Gas Enterprise and a business group formed by CNOOC Myanmar, Golden Aaron and China Huanqui Contracting and Engineering Corp to explore for oil and gas in Kyaukphyu township of Rakhine State.

According to the official New Light of Myanmar newspaper, the signing ceremony was attended by CNOOC chairman Fu Chengyu and Golden Aaron director Chua Chay Jin.

CNOOC’s 2004 annual report listed itself as the operator of a joint venture with Golden Aaron and China Global Engineering Corp. through which it owns five exploration licenses covering 73,152 square kilometers. The licenses will run out on March 12, 2008 unless they are renewed. The gas deposits are part of the controversial Shwe gas project which is to include a gas pipeline through Burma to China. Human rights organizations have frequently cited abuses related to the project and have called for its cancellation.

The US sanctions may also have an effect on Singapore. The island republic has long been accused of being a shopping and financial center for Burmese generals and narcotics traffickers. Former US Assistant Secretary of State for the Bureau of International Narcotics and Law Enforcement Affairs, Robert Gelbard, said in 1997, “since 1998 over half of [the investments from] Singapore have been tied to the family of narco-trafficker Lo Hsing Han.”

Singaporean banks have been repeatedly accused of being used for money laundering by Burmese narcotics traffickers. Although Singapore does have what are considered by the Asia/Pacific Group on Money Laundering effective anti-money laundering mechanisms, the fact that figures such as Lo and Law are able to continue to do business there and keep banks accounts has prompted much speculation. In a recent step to detect money laundering, the Singaporean police announced that after 1 November 2007, anyone carrying or transferring more than $20,650 would be required to submit a report to the immigration authorities.

Whether or not the money is from drug profits, it is being used to finance investment in Burma that the US and international observers claim prop up the regime. While US financial sanctions are not aimed directly at Singapore or its banks, the hint is there that by dealing with individuals and firms on the sanctions list, the banks risk bad publicity.

Although the Monetary Authority of Singapore is unlikely to advise banks to cut ties with Burmese firms as a result of the US sanctions, some analysts believe Singaporean banks are taking steps to restrict their links to Burmese companies. The refusal of Singaporean banks to deal with Burmese tycoon Tay Za’s Air Bagan airline is seen as a possible example of this. In addition, in late October 2007 the Irrawaddy magazine reported that bank transfers between United Overseas Bank of Singapore and Burma had been suspended temporarily. The risks to their banking relationships with the US may be forcing Singaporean banks to re-evaluate doing business with Burmese firms.