Burma: Tobacco Giant under Pressure to Pull Out of Joint Venture

CANBERRA -- Ahead of its mid-April annual general meeting, British American Tobacco (BAT) is facing increasing pressure from human rights groups in Asia and elsewhere to withdraw from a joint-venture partnership with the Burmese military regime.

The Australian labour movement aid organisation - Union Aid Abroad/Apheda - is organising protests urging BAT, the world's second biggest tobacco firm, to
withdraw from its joint venture.

"We are calling for a withdrawal of trade investment in Burma following on from International Labour Organisation (ILO) reports and the International Confederation of Free Trade Unions' (ICFTU) own investigation which found that forced labour in Burma is actually increasing," said Marj O'Callaghan, national programme manager with Union Aid Abroad.

In June 2000, the annual ILO Conference backed a resolution urging governments unions and trade unions "cease any relations that might aid its military junta to abet forced labour".

In October last year, the ICFTU released a 350-page report that concluded that "trade union groups are becoming the focus of violent attacks and foreign multinational investment is helping keep the junta afloat as the world's governments look on."

While BAT proclaims it plans on staying in its joint venture partnership with Rangoon, the director of the London-based Burma Campaign UK, John Jackson, predicts that BAT will buckle under the glare of public attention.

"We have no doubt that they will eventually withdraw. We will find every point of pressure that we possibly can, and we will continue to push until we succeed,'' he said.

BAT openly acknowledges that Rothmans of Pall Mall Myanmar is 40 percent owned by the Union of Myanmar Economic Holdings (UMEH), a government-owned company.

While the company commenced operations in 1995, it only became part of the BAT stable of companies when it merged with Rothmans in 1999. Last week, BAT announced that it made 3.3 billion dollars in profits last year.

Zin Linn, spokesman for the National Coalition Government of the Union of Burma, the Burmese government-in-exile, says it welcomes the ''pressure on the tobacco company, or any foreign investments''.

''People know that the income from the tobacco multination helps the generals. That is always the case,'' he said. ''Many people say even if they are suffering from sanctions, they welcome the pressure on the military regime because of the suppression they have to live with.''

Activists hope that by yearend, campaign groups in 20 countries will be publicising BAT's Burma project.

"They could pull out tomorrow without affecting the company's overall financial
position, and they could do this honourably by providing a generous redundancy
package that would more than meet the needs of their workers for at least a
one-year period,'' Jackson told IPS.

To deflect the controversy over its joint venture project, in early January BAT contributed some 50,000 U.S. dollars to a four-day human rights awareness workshop on "capacity building that may help the country to move closer to international conventions on women's human rights".

But this ''allows the regime to present a facade of concern about these issues, when they could simply order their commanders to stop (abuses),'' Jackson said.

According to the Burma Campaign UK, BAT's joint venture factory is in the military-owned Pyinmapin Industrial Zone in the Rangoon division of the Mingaladon township.

"This industrial zone was upgraded in 1996 by construction crews made up of child labourers. UMEH contributed the land and the factory building to the venture",Burma Campaign charged in a November report on BAT's operations.

BAT does not challenge the accuracy of the allegation. "We are disturbed to learn of this allegation, of which we have no knowledge,'' BAT wrote in a background paper on its Burma operations late last year.

Asked if it had subsequently undertaken investigations into the claim, BAT did not respond.

The company defends its operations in Burma by saying that contributing to the economy makes improvements in human rights possible. "We believe that economic prosperity is an important catalyst for other forms of social advance,'' BAT argues.

But Burmese exiles in Thailand disagree. Soe Aung, external affairs director of the Network for Development and Democracy, said: ''Any kind of investment in Burma will in one way or another support the income of the military regime.''

''The military regime is known to launder money it gets through the drug trade to keep its foreign reserves from falling,'' he said. ''Investing in Burma has no guarantees at all.''

Jackson estimates that 16 million dollars in taxes paid by BAT's joint venture have gone directly into the coffers of the regime.

"BAT are pumping millions of dollars into a regime that is impoverishing 41 million people. A few projects by BAT do not compensate for the damage done by a regime that BAT is helping to sustain,'' Jackson said.

The campaign has already embarrassed the deputy chairman of BAT, Kenneth Clarke, who chairs the board's corporate social responsibility committee.

In November 2002, Burma Campaign released a copy of a letter that Clarke - who is also a Conservative member of Parliament - wrote to a constituent, "I must admit that I do sometimes feel uncomfortable about investment in that country.''

"The problem in Burma arises when companies start collaborating with an extremely unpleasant regime which is totally contrary to our notions of civil liberties and democracy," he wrote. Clarke later told the British Broadcasting Corp, ''I don't think companies can have a rule about not doing business with dictatorships."

BAT's sponsorship of the human rights workshops mimics the funding by Britain's Premier Oil of similar workshops. In September 2002, Premier Oil finally from its involvement in the Yetagun gas project after a seven-year campaign by the Burma Campaign UK and other groups.

BAT points to community projects, from support for health projects, food support and orphanages as evidence of the benefits that locals would miss out on if the company withdrew.

But Jackson said: "Fund a brutal military dictatorship, have little regard to the impact of your investment, and then in order to allay public criticism, throw a little bit of money to a few villages to illustrate how positive your presence in the country is. It's a bit like having dinner with the jailers while throwing crumbs to the prisoners.''

• 109 Tobacco
• 116 Human Rights