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First U.S. Companies Release Reports on Investments in Myanmar

By EarthRights International  •  July 11, 2013

A handful of U.S. companies released public reports on their investments in Myanmar last week, as required by the State Department and other agencies administering the U.S. sanctions regime.  The reporting companies are involved in offshore oil and gas activities, as well as passive investments in a Singapore-based company doing significant business in Myanmar. More reports from U.S. companies, including from Coca-Cola, are expected towards the end of the year.

“The first reports demonstrate both the usefulness of these reports, as well as some of the weaknesses in the U.S. requirements,” said Jonathan Kaufman, Legal Advocacy Coordinator with EarthRights International (ERI).  “We see, for example, that Hercules Offshore has disclosed details about the due diligence procedures it has in place for its employees, partners and contractors around anti-corruption and human rights issues in Myanmar.  This is a positive outcome, and it is likely the company would not have taken such robust measures without the U.S. requirements.”

However, serious gaps remain in the rules. Even Hercules Offshore – which provided the most detailed report – is not disclosing the names of its Myanmar suppliers and subcontractors. This makes it difficult for civil society groups to monitor its investments for the serious human rights, environmental, or other abuses the rules are designed to prevent.

Moreover, Capital Bank and Trust Company and Capital International Inc. (related investment funds) submitted reports disclosing that they had undertaken no due diligence whatsoever in their “passive investment” in Yoma Strategic Holdings Ltd. – a Singapore registered company owned by a Myanmar national with significant operations in plantation agriculture and real estate. International standards on corporate human rights responsibilities do not differentiate between “passive” and more hands-on investments.  For example, under the OECD Guidelines for Multinational Enterprises (which have been endorsed by the U.S.), minority investors are expected to use their leverage with business partners to prevent and mitigate international human rights abuses.  This requirement is especially weighty where human rights risk are high, such as the plantation agriculture sector in which Yoma operates, and in which land grabs, environmental destruction, and labor abuses have been widely documented.

To support civil society monitoring of U.S. investments, ERI has released a Myanmar language version of the U.S Government’s Responsible Investment Reporting Requirements (Reporting Requirements). The Reporting Requirements, released on 31 May 2013, cover U.S. companies that do business with the Myanmar state-owned oil company, Myanma Oil and Gas Enterprise (MOGE), or have invested over $500,000 in Myanmar.  They require companies to disclose critical information to the public and U.S. Government on their policies and procedures regarding human rights, the environment, corruption, land acquisition and labor rights. Investors are also required to report on their security arrangements and on the payments they make to the Myanmar government, any of its sub-divisions, and any armed groups that control territory. The State Department intends to use these reports to help manage the impacts of U.S. investment, while Myanmar civil society groups and local communities hope to use them to closely scrutinize the practices of U.S.  companies investing in the country.

“The Reporting Requirements were adopted because Myanmar remains a high-risk country for foreign investment, notwithstanding recent reforms”, said Paul Donowitz, ERI’s Campaign Director. “Investors and their home states need to make strenuous efforts to mitigate the risk that their actions will contribute to internal conflict, human rights and environmental harms, corruption, and land tenure insecurity.  This includes heightened due diligence policies and practices related to their activities and those of their partners and suppliers, especially related to land acquisition.”

Many governments are promoting economic engagement in Myanmar without measures to safeguard human rights; the U.S. now stands alone in requiring its companies to disclose human rights-related information. While the requirements leave much room for improvement, ERI welcomes the new standards and hopes they bring much-needed transparency to the dealings of U.S. investors in Myanmar.

Contact:

Jonathan Kaufman, 202.466.5188, ex. 113; 617.645.4069, jonathan@earthrights.org [U.S.]
Paul Donowitz, 080 673 1179, paul@earthrights.org [Thailand]

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This post is in: Business and Human Rights, Press Release

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