Myanmar Democracy Icon Suu Kyi Taps 'Crony' Capitalists For Charity Funds

Simon Montlake, Forbes Staff

Give cronies a chance (Image credit: AFP/Getty Images via @daylife)

Political transitions in unsteady countries make for unlikely bedfellows. Myanmar (Burma) is no exception, nearly two years after a despised military clique voluntarily made way for a civilian government that has pivoted towards the West. Myanmar has opened up to multinationals that  were kept away by Western sanctions and shoddy standards. The government has just invited bidding for two wireless network licenses. Multilateral lenders are also back in Myanmar, and aid is flowing from Japan and others. This thaw in external relations was made possible by the participation of Aung San Suu Kyi, the Nobel laureate and former political prisoner. Last year she was elected to parliament and her National League for Democracy (NLD) is seen as the frontrunner in an election due in 2015. Suu Kyi’s principled opposition to military rule won her a Nobel Peace Prize. Western leaders fall over themselves to be photographed with her and to pledge support for Myanmar’s transition to democracy.

Yet Suu Kyi is no longer an opposition icon. She’s a politician. As such she needs money to organise her party and to show that it’s capable of running the country. Philanthropy is a way to close that gap and burnish the party’s image. Which is where Myanmar’s tycoons come into in the picture, blurring the political lines that seemed so sharp during decades of conflict and repression. Last month the NLD held a controversial charity event for education and healthcare projects. The biggest donors were companies owned by businessmen that profited from ties to the former regime and were dubbed ‘crony capitalists’ and subject to U.S. sanctions. The most notorious among them is Tay Za, who owns Htoo Trading, with interests in logging, aviation and tourism. Tay Za donated $82,000 to the NLD’s charity drive for education. He also has his own charitable foundation, which he mentioned repeatedly when I interviewed him in 2010 for this cover story in FORBES ASIA. Intriguingly, he has old ties to Suu Kyi: his father served under her father, Gen. Aung San, and Tay Za claims to have helped her campaign around the country in 1989 before her first period under house arrest.

However, Tay Za’s generosity went down poorly with some NLD supporters. They claim that he supplies lethal equipment to the military, which recently conducted air strikes against rebel-held towns in the north (Tay Za told me he only traded helicopters, not guns or ammunitions). The U.S. Treasury calls him an arms dealer and “financial henchman” of the former regime. Even the idea of accepting money from tycoons associated with the junta is anathema to opposition activists. For her part, Suu Kyi has spoken critically about corruption and nepotism in Myanmar’s economy, calling it crony capitalism. Now she finds herself in the unusual position of defending tycoons like Tay Za. “Those who are considered cronies have supported the social activities of the NLD and others. What is wrong with that? Instead of spending their money on things that have no purpose, they have supported things that they should support. It’s a good thing,” Suu Kyi told reporters last week.

Tay Za isn’t the only tycoon building bridges to the opposition. Zaw Zaw, the owner of Max Myanmar, a consumer-products firm, and chairman of a football league, has also courted Suu Kyi. Another prominent donor at the NLD fund-raiser was SkyNet, a cable-TV operator owned by Kyaw Win. All built up their business during decades of military rule and are well aware of how easily wealth can evaporate when political winds change direction. So far, Myanmar’s transition has been based on a tacit agreement to bury the past and look forward. Suu Kyi is entitled to take the same pragmatic approach with the business community as she has with the abusive military. The cronies’ wealth may be dubious, but Myanmar needs capital and expertise to develop, and an over-reliance on foreign companies, either Asian or Western, could be dangerous. Expect to see more charitable engagement with tycoons by Suu Kyi, who is learning how to play politics in a transitional democracy.

Ref:forbes