Burmese generals pocket $5bn from Total oil deal

An impoverished nation is deprived as pipeline cash is deposited in foreign bank accounts, report claims

The Burmese military junta has earned almost $5bn from a controversial gas pipeline operated by the French oil giant Total and deprived the country of vital income by depositing almost all the money in bank accounts in Singapore, a new report claims.

Campaigners say Total has also profited handsomely from the arrangement, with an estimated income of $483m from the project since 2000. Campaigners say that the windfall from the Yadana pipeline, operated by Total and two other partners, has been so huge that it has done much to insulate the country's military rulers from the impact of international sanctions imposed over its human rights abuses. The report from EarthRights International (ERI), published today, argues that this makes Total and their partners a major factor in reinforcing the regime's intransigence. And it claims that while their people suffer some of the worst standards of living in Asia, with miserable state investment in health, education, infrastructure and everything else that affects the lives of ordinary people, the self-perpetuating military elite has grown obscenely wealthy.

The pipeline in eastern Burma, which carries gas from rich fields in the Andaman Sea through Burma and into Thailand, has long been controversial. Campaigners have regularly claimed that the authorities have used forced labour in the project, security for which is provided by the Burmese armed forces. Last month, Total rejected claims that forced labour was still being used.

Yet the information contained in the report from ERI, a respected Thailand-based group, provides the most detailed insight yet into the vast sums earned by the regime from the pipeline and what happens to that wealth.

In the report, Total Impact, which has taken two years to research, the group says the junta, headed by General Than Shwe, manages to avoid including almost all its dollar gas revenues in the national budget by using an artificially low exchange rate. This way it calculates its revenue as just 6 kyat to the dollar when the real rate is closer to 1,000. According to a confidential IMF report obtained by ERI, the natural gas revenue "contributed less than 1 per cent of total budget revenue in 2007/08, but would have contributed about 57 per cent if valued at the market exchange rate". The report says that at these rates, the regime has listed just $29m of its earnings while around $4.8bn is unaccounted for.

The report says that "reliable sources" have indicated that the Burmese military regime's portion of the Yadana earnings are located in two leading offshore banks in Singapore - the Overseas Chinese Banking Corporation (OCBC), which holds the majority of the revenue, and DBS Group. ERI says that OCBC is Singapore's longest established local bank.

"The military elite are hiding billions of dollars of the people's revenue in Singapore while the country needlessly suffers under the lowest social spending in Asia," said ERI's Matthew Smith, the report's main author. "The revenue from this pipeline is the regime's lifeline and a critical leverage point that the international community could use to support the people of Burma."

The apparent disregard for its people is a charge that has long been levelled at the Burmese junta, which calls itself the State Peace and Development Council. The group Burma Campaign UK has estimated the regime's spending on health services is the lowest in the world – just 50 pence per person a year – while it spends up to half its budget on the military.

Criticism of the regime increased last year in the aftermath of Cyclone Nargis when the authorities were accused of a fatally slow and inadequate response to the storm that left 140,000 people dead. Suspicious of the motives of outside organisations, the authorities resisted granting entry visas to scores of aid workers. US and other foreign vessels carrying badly needed emergency supplies were refused permission to dock.

Yet while the regime appears happy to let its people suffer – Burma today is the poorest country in the region – senior members of the junta enjoy lives of luxury and excess. In November 2006, a rare insight into the extravagance of the regime was provided by a video of the wedding party of Than Shwe's daughter to an army officer. In the video, posted on the internet, copious amounts of champagne was poured while gifts totalling an estimated $50m were handed to the couple. The wedding presents included cars jewellery and houses.

For a regime facing a series of sanctions and widespread pressure to release political prisoners, including the detained opposition leader, Aung San Suu Kyi, energy deals have become a key bargaining chip in its relations with regional powers such as China and India.

The junior international partners in the Yadana pipeline are Chevron, which is said too have earned $437m from the project, and PTTEP of Thailand, which has earned around $394m. Burma's state-controlled Myanmar Oil and Gas Enterprise is also involved in the operation. Last month The Independent revealed allegations that the Yadana pipeline was still being serviced by forced labour, claims that were denied by Total.

Last night the Burmese Embassy in London failed to respond to questions about the report's allegations. A spokeswoman for Total said it was unable to respond comprehensively to the claims made by ERI as it had not seen the document. Asked about its earning in Burma, the spokeswoman said: "We do not usually comment on our earnings per country. Nevertheless our amount in Myanmar represents 0.7 per cent of the group's results."

She said that in 2008, the group's income was €13.9bn (around $20bn), suggesting Total annually earns $140m from Burma and its controversial pipeline.

A brutal regime: Military rulers who profit

Burma has been under the thumb of the military since 1962, and the current junta has ruled since the late 1980s when it brutally crushed a democracy movement, killing up to 6,000 people.

At the head of the State Peace and Development Council (SPDC) sits senior leader Than Shwe, a former postal clerk now aged 76. Initially considered something of a moderate, the general has shown himself to be increasingly authoritarian and hostile to negotiations. Located in the remote jungle capital of Naypidaw since late 2005, the SPDC's other senior members include vice chairman Maung Aye, who has a reputation for ruthlessness and xenophobia. Some reports suggest that he and Than Shwe are involved in a power struggle.

Third-in-command in the military structure is Shwe Mann, Joint Chief of Staff and co-ordinator of the special forces. A father of three sons, Shwe Mann became a powerful figure in the regime when he was appointed head of all three services.

Then Sein holds the position of prime minister and is considered to be a strong supporter of Than Shwe. In May 2008, as head of the junta's disaster preparedness committee, he became the point man for relief efforts related to Cyclone Nargis. He was notoriously pictured on the front page of a state-run newspaper handing out television sets when people were desperate for food, water and electricity.

The oil giant: Total's global reach

Total's adventures with the Burmese generals have disturbing parallels with the involvement of another French oil giant, Elf – a company Total swallowed in 2000 – with corrupt military dictators in Africa. It's an inglorious story that ended with one of Europe's biggest corruption trials in 2003 and the conviction of three senior executives at Elf. Soon afterwards the company was absorbed into Total and Elf's African operations were rebranded.

A Paris courtroom heard how the oil riches of West and central Africa from Gabon to Cameroon and Congo to Angola had flowed back and forth between Elf and its client leaders – three of whom are still in power while the third, Omar Bongo, died earlier this year.

In that case, although not in this, the company's senior management were accused of personally profiting from the deals. Elf's former chairman, Loïk Le Floch-Prigent, received a five-year jail sentence in 2003, as did the former director Alfred Sirven, while the company's "Mr Africa", Andre Tarallo, was jailed for four years and fined €2m (£1.75m).

The court heard how huge sums were paid – more than €16m annually to President Bongo – to ensure these leaders stayed loyal to Elf. The defendants maintained that French leaders and parties received similar sums to ensure no one interfered with the arrangement.

In Gabon, that meant Elf could act as a "state within a state", while the sweeteners ensured that France's military and espionage operations operated with impunity.

Today, Total is investing nearly $5bn (£3bn) in its Africa operations and is doing business with the same stalwarts from the Elf years: Paul Biya in Cameroon, Denis Sassou Nguesso in Congo-Brazzaville, and José Eduardo dos Santos in Angola. What these countries have in common are sham elections, broken constitutions, rampant corruption and mass poverty.

Suggested Topics
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

Sport
Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
Sport
Yaya Touré has defended his posturing over his future at Manchester City
Voices
Spectators photograph the Tour de France riders as they make their way through the Yorkshire countryside
voicesHoward Jacobson: Line the streets for a cycling race? You might just as well watch a swarm of wasps
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
lifeHere's one answer to an inquisitive Reddit user's question
News
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
News
Detail of the dress made entirely of loom bands
news
Life and Style
beauty
Sport
There were mass celebrations across Argentina as the country's national team reached their first World Cup final for 24 years
transfersOne of the men to suffer cardiac arrest was 16 years old
Arts and Entertainment
Armando Iannucci, the creator of 'The Thick of It' says he has
tvArmando Iannucci to concentrate on US show Veep
Sport
German supporters (left) and Argentina fans
world cup 2014Final gives England fans a choice between to old enemies
News
A mugshot of Ian Watkins released by South Wales Police following his guilty pleas
peopleBandmates open up about abuse
Sport
Basketball superstar LeBron James gets into his stride for the Cleveland Cavaliers
sportNBA superstar announces decision to return to Cleveland Cavaliers
Sport
Javier Mascherano of Argentina tackles Arjen Robben of the Netherlands as he attempts a shot
world cup 2014
Sport
Four ski officials in Slovenia have been suspended following allegations of results rigging
sportFour Slovenian officials suspended after allegations they helped violinist get slalom place
News
14 March 2011: George Clooney testifies before the Senate Foreign Relations Committee during a hearing titled 'Sudan and South Sudan: Independence and Insecurity.' Clooney is co-founder of the Satellite Sentinel Project which uses private satellites to collect evidence of crimes against civilian populations in Sudan
people
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

C# Developer (HTML5, JavaScript, ASP.NET, Mathematics, Entity)

£30000 - £45000 per annum + Benefits + Bonus: Harrington Starr: C# Developer (...

C# Integration Developer (.NET, Tibco EMS, SQL 2008/2012, XML)

£60000 - £80000 per annum + Benefits + Bonus: Harrington Starr: C# Integration...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice