By B.K. Sen , Mizzima News (www.mizzima.com)

January 2, 2004

The Burmese military regime's decreeing of new money laundering rules (announced on 5 December 2003) is symbolic of economic mismanagement just as is the political dialogue between the SPDC and the pro-democracy movement is a signpost of political mismanagement.

Burma has been ruled by military dictatorship for nearly 40 years without a national constitution or by 'rule of law.' The ruling Junta are perpetrators of the worst human rights abuses including forced labour, rape, torture, disappearance, dislocation and other forms of mass forced migration of significant portions of the population. Aid victims are being recorded on an unprecedented scale along with poverty, unemployment, erratic opening, closing and general management of the education system and the enforcement
of a subservient judicial system. These factors structure the daily life of people in Burma. Drugs constitute another serious menace not only to people's health directly but also to the economy.

Major investors in the country's economy have considerable cash reserves derived from their ready access to money laundering operations. They are running the two notorious banks, the Asia Wealth Bank and the Mayflower Bank and use them to divert money into the legitimate economy. Money laundering has become such a menace to Burma due to the SPDC's lack of willingness to act against it that the OECD listed Burma as an un-cooperative state. The cease-fire agreements, which Junta made with ethnic leaders were engaged in with evil motives. They resulted in a flood of narco-dollars. All the banks in Burma were forced to have links and dealings with drug lords to keep themselves alive.

Feigned action

On December 5, the Central Control Board of the Ministry of Home Affairs of the Union of Myanmar (Burma) announced the formation of the Investigation Board to carry out investigations into matters concerning laundering money and property obtained by illegal means. They further announced that under Sub-Section (c) of Section 8 of Money Laundering Law by Notification No. 6/2002 dated 4.6.2002, an investigation body was already set-up to investigate nine persons in respect to activities relating to the Asia Wealth Bank and Myanmar Mayflower Bank.

This investigative body is composed of bureaucrats. No retired judge or sitting high court judge has been appointed to this body. Under Burmese domestic law, this money laundering investigative board should comply with Burma's Enquiry Commission Act, which enables the formation of quasi judicial bodies. Prior to military rule, this law was adhered to for all grave matters affecting public interest. But during the rule of the military junta, a new system has been introduced. Thus it has been able to 'legalize' its rules by having a body of their own to meet the purpose. Thus it has been able to manipulate the system to use these 'investigative bodies' as political window-dressing. Thus enabling the junta to give the impression to people of Burma and the international community that there is the rule of law under the military regime.

It is only after the United States Congress passed its Burma Freedom Act 2003 (and particularly the Patriot Act to go after money laundering) that the Junta woke up because all assets suspected to be derived from money laundering in Burma were to be frozen.

It is an open secret that the 2 banks mentioned above have links with the drug lords. A long time ago, Interpol issued a warrant for the arrest of Khun Sa and the junta refused to hand him over. The two banks in question extensively deal with black money and army officers are share holders not only of these banks, but of money enterprises run illegally. The American economic sanctions came as a jolt to these people. The drug lords run domestic airlines, some railways lines, road transport, departmental stores and many other economic activities where army officers are dormant co-partners.

SPDC press conference of 5 December 2003

This conference was supposed to have been held to clarify the control of money laundering rules enacted under Notification No. 1/2003. It was explained that:

1. On 17.6.2002, the control of the money laundering law, Law No.
6/2002 (Law) was enacted

2. For implementation of this law, rules were promulgated.

3. Government was taking systematic measures under the law.

4. A press conference was held so that unscrupulous persons could not continue to exploit the system and people could engage in right kinds of livelihood and financial institution could also feel secure.

5. It spelt out 4 aims in relation to the prevention interference in administrative, economic and social affairs of the state through illegally earn money.

6. It would be in accord with international conventions and deal with international and regional and neighboring countries.The message behind the 2003 press conference, like the previous conference dealing with money laundering held on 17.6.2002 after the enactment of the law, is the same. More than anything, it gave an assurance that there would not be strict enforcement, but it was to keep the business within bounds. Forty recommendations were made by Financial Action Task Force - an inter-government body with the organization for Economic Co-operation and development. They cover issues concerning the criminal justice system and law enforcement and the financial system. The junta did nothing to comply with them except to enact this toothless law in a gingerly way.

How to the Launders Stand

This history of drug eradication can quickly be appreciated from the following facts:

1961: Single Convention on Narcotic Drugs. Burma signed and ratified it, which entered into force on 13 December 1964.

1971: Convention on Psychotropic substances. 21 September. Burma signed and ratified this convention. It came into force on 16.8.76.

1974: Domestic narcotics and drugs law were passed.

1988: The U.N. Convention against the Illicit Transfer in Narcotic Drugs and
Psychotropic Substances entered into force in November 1990.

1983: The Narcotic Drugs and Psychotropic Substances Law was passed in Burma

1998: UN General Assembly passed a resolution to draft the law

2002: Money laundering law (alleged model law)

2003: Money laundering rules were introduced by Junta in Burma.

Looking at the above list, it is evident that the junta had never been in line with international standards. Throughout this period, the junta, which entirely controls the media, never released news of any big drug haul or launched prosecution against drug lords. Thus, not only were its laws below international standard, but they were never enforced. If can be concluded, therefore, that the recent press conference is another of the junta's gimmicks. The criminals can go on with business as usual.

The Flaws of the law

It should be kept in mind that when the US Congress passed Burma Freedom Act 2003, it identified Burma as an epicenter of money laundering. In enacting economic sanctions against Burma, it has seized the assets of this money laundering epicenter, including assets of listed persons. It has stopped issuing visas to a significant group of army officers. It has intensified previous sanctions. This has been done not out of political whim but as a consequence of analysis of hard facts collected and investigated by its competent bodies. In spite of the seriousness of the situation, the junta treats the matter as of little significance for ulterior reasons.

The Money Laundering Rules of the Junta say:

1. The Criminal Control Board will form Investigatory Body

2. If there is supporting evidence, it will be from the Preliminary Scrutiny Body

3. The Central Control Board will decide whether action is to be taken in any case

4. Any appeal are to be made to the government.

The Junta has set up an investigatory body under Section 8(c) of the law and
Ministry of Finance and Revenue will supervise the two listed banks.

What will be the fate of the investigation?

The Investigation Body is not a judicial body. The rules of law, such as the Evidence Act, the Penal Code, the Criminal Procedure Code, will not apply. It has the powers of administrative enquiry only. There is a time limit of three months for the submission of its report.

The junta did not have the trust of its own judiciary. There is not a single legal practitioner in the Investigatory Committee or the higher hierarchy. The body has been formed to produce evidence to meet the allegations of the US and come out with a 'clean sheet' for the two defaulter banks under investigation in which the prosecutors themselves have interests. The investigation is another tool to ward off serious allegations and perpetuate its power.

Conclusion

Money laundering rules passed on 5.12.2003 are nothing but a deception. They are targeted to alleviate pressure exerted by the United States. It is aimed towards the foreign investors whom the junta is wooing. Hence its dire need to show a clean face.

(The author, Mr. B. K Sen, Senior Advocate, contributed this article to Mizzima News.)