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Profits in a war zone: French banks’ Myanmar investments

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By Adrian Murdoch

· 5 min read

Since President Vladimir Putin’s invasion of Ukraine began on 24 February last year, the departure of the international business community has been rapid.

Large international banks like Goldman Sachs, JP Morgan, Deutsche Bank and Citi all said their do svidaniyas, most major index providers and passive fund managers removed Russia from their products, and the number of international companies with operations in Russia remains small and continues to shrink.

“Increasingly, any association [with Russia] is being interpreted as support of the regime,” Oana Branzei, strategy and sustainability professor at the Ivey Business School in Ontario, told Capital Monitor last year.

The opprobrium heaped on multinational consumer packaged goods company Unilever at the beginning of July was significant when it emerged that it had not only refused to leave Russia, it had seen its profits in the country almost double to Rub9.2bn ($99m) in 2022 and had paid taxes of Rub3.8bn last year.

The company owns eight Russian enterprises, including a margarine factory in Moscow, a sauce factory, a tea-packing factory as well as a perfume and cosmetics factory in St. Petersburg, a food factory and an ice cream factory in Tula, as well as ice cream factories in Novosibirsk and Omsk.

As this emerged, the company was put on the International Sponsor of War watchlist by the Ukrainian government – a list Kyiv keeps of those who refuse to cease doing business with Russia, as opposed to a more global list of corporations that deal with militant states.

“Unilever uses the words ‘least bad option’ to justify staying in Russia. These can be translated into plain English as ‘most profitable option’,” says Mark Dixon, founder of the Moral Rating Agency.

No end in sight to Myanmar’s troubles

But there has been little attention on continued corporate engagement with conflict on the other side of the world: in Myanmar.

Since a military coup d’état in February 2021, which took place only three months after Aung San Suu Kyi’s National League for Democracy (NLD) party won a landslide victory in parliamentary elections, the Burmese military junta has declined to negotiate either with the resistance movement or regional organisations like the Association of Southeast Asian Nations and the United Nations.

commentary from the US think tank The Brookings Institution earlier this year predicted that the civil war inside Myanmar is likely to only escalate this year and that “there is no end to the country’s troubles in sight”.

The international response has been crystal clear. “Accountability is the only way to end the military’s culture of impunity,” said Simon Manley, the British permanent representative to the WTO and UN in Geneva, in a speech at the beginning of April.

Although a large number of banks have pulled out – there were 19 in 2021 – a report in early July from Dutch NGO BankTrack points out that more than two years after the coup in Myanmar, five French banks and a pension fund continue to invest in 22 companies linked to the Myanmar military junta [see chart].

This not only blasts through Sustainable Development Goal 16 – to promote peaceful and inclusive societies for sustainable development – it raises governance questions about violations of human rights and fundamental freedoms under France’s duty of care law from 2017, quite apart from the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises.

Crédit Agricole, La Banque Postale, the BPCE group, BNP Paribas, Société Générale and the pension fund Fonds de Réserve pour les Retraites (FRR) have invested more than $6bn into companies linked to the military. Three-quarters of the funds are in the fossil fuel sector, but there have also been investments in companies that sell arms to the junta as well as telecoms companies that, it is claimed, enable the junta’s surveillance.

“It is unacceptable that French banks and a pension fund continue to invest in companies with known ties to the Myanmar military junta,” says Yadanar Maung, spokesperson for activist group Justice For Myanmar.

An unacceptable risk

With just over $4bn in holdings, the report calls Crédit Agricole “by far the largest investor in companies with ties to Myanmar’s military junta”.

The majority of those holdings (83.2%) are within the fossil fuel sector.

Companies like US energy corporation Chevron, Indian natural gas company GAIL and Thailand’s PTT Exploration as well as oil services companies Halliburton and Weatherford International all have commercial partnerships with Myanma Oil and Gas Enterprise (MOGE).

But the report also confirms that the French bank has invested more than $4m in companies in what are called Category 1 firms – those in the arms and military equipment sectors – like Indian government-owned aerospace and defence electronics company Bharat Electronics and Beijing-based civil aviation group AviChina Industry & Technology.

A Human Rights Council report in mid-May highlighted that the $267m trade from China and $51m trade from India to the Myanmar military comes from both state-owned and private entities.

In January, this year, Norges Bank specifically excluded these two companies from the Government Pension Fund Global, “due to unacceptable risk that the companies are selling weapons to a state that uses these weapons in ways that constitute serious and systematic breaches of the international rules on the conduct of hostilities”.

Credit Agricole has made no comment on the report and opts to remain silent on its connections in Myanmar – as indeed do the other four banks and the pension fund. None responded to Capital Monitor requests for comment on the report or their support of companies with ties to Myanmar’s military junta.

But as the report concludes, although divestment from companies engaged with Myanmar will not “absolve the financial institutions from their previous indirect contribution to human rights harms together with their investees,” after two years “divestment may be the most responsible action left”.

This article is also published on Capital Monitor. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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About the author

Adrian Murdoch is an award-winning financial editor and journalist with more than two decades of experience. He is currently Deputy Editor for Capital Monitor at New Statesman Media.

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