On April 19, 2021, the EU Council added two companies controlled by the Tatmadaw (Myanmar Armed Forces) as well as 10 individuals to its Myanmar sanctions list (see Council Decision (CFSP) 2021/639 and Council Regulation 2021/638). The EU Council designated these entities and individuals by relying on the extended designation criteria established by Council Decision (CFSP) 2021/482 and Council Regulation 2021/479 on March 22, 2021, which provide for the possibility to impose restrictive measures against those involved in activities undermining democracy and the rule of law in Myanmar, as well as against the economic interests of the Tatmadaw. The EU Council had already adopted sanctions against eleven individuals on March 22, 2021 (see our previous client alert).
The new listings include:
- Myanmar Economic Holdings Public Company Limited (MEHL) and Myanmar Economic Corporation Limited (MEC) as they are owned and controlled by the Tatmadaw and generate revenue for the Tatmadaw.
- U Chit Naing, Minister for Information and Chairman of the State Administrative Council. He is deemed responsible for junta propaganda and spreading disinformation through state media, as well as for decisions that led to the crackdown on Myanmar media.
- Nine members of the State Administrative Council, that are considered to undermine democracy and the rule of law, and responsible for serious human rights violations. These include Mahn Nyein Maung; Thein Nyunt; Khin Maung Swe; Jeng Phang Naw Htaung; Maung Ha; Sai Long Hseng; Saw Daniel; Dr Banyar Aung Moe; and Aye Nu Sein (also Vice-chair of the Arakan National Party).
Restrictive measures include travel bans and asset freezes. In addition, EU citizens and companies are forbidden from making funds available to the listed individuals and entities. These latest sanctions come in addition to pre-existing sanctions, which include an embargo on arms and equipment that can be used for internal repression, an export ban on dual-use goods for use by the military and border guard police, and export restrictions on equipment for monitoring communications that might be used for internal repression. Those measures also included the designation of 14 persons for atrocities against the Rohingya population. Combined with the latest designations, this brings the total to 35 individuals and two companies.
The EU sanctions adopted against MEHL and MEC in relation to the military coup is a significant step forward in preventing revenues from reaching the military. The two conglomerates are deemed to provide revenues to the Tatmadaw which in turn contributes to the military’s capabilities to carry out activities undermining democracy, the rule of law and violating human rights in Myanmar. These listings carry further importance as they have vast holdings in many industries, thereby occupying an important part in Myanmar’s economy with subsidiaries and affiliated companies in a range of sectors including banking, insurance, construction, trade, transportation, mining, gem extraction, manufacturing and tourism.
The EU Council’s decision to target MEHL and MEC comes as the United States and the United Kingdom have already imposed sanctions against both entities. The US designated MEHL and MEC on March 25, 2021 (discussed in our prior client alert). Since then the US has remained active with respect to Myanmar sanctions announcing the designation of a state-owned gem company on April 8, 2021 and of timber and pearl companies on April 21, 2021. On March 25, 2021, in coordination with the US, the UK designated MEHL. The UK also designated MEC on April 1, 2021. Both designations were made under The Global Human Rights Sanctions Regulations 2020.
As we previously highlighted, companies operating in Myanmar should pay particular attention since the prohibition on providing funds or economic resources to the listed persons extends to any legal entities that they own or control, directly or indirectly, regardless of whether such entity is listed or not. Moreover, the fact that the EU may designate those providing support or benefiting from the Tatmadaw adds some additional risk to conducting business in Myanmar.