Japanese beer giant Kirin has signalled it will make good on a promise to disentangle its business from the Myanmar junta after a military coup last year.
Key points:
- Kirin was in a joint venture with MEHL, a secretive military conglomerate
- It is the parent company of Lion, which counts Tooheys, XXXX, Furphy and Little Creatures among its brands
- Economists and rights groups say companies in joint ventures with MEHL face a sticky exit
But critics say the way the company plans to withdraw from the conflict-riddled country — a share buyback scheme — is an “irresponsible exit”.
Kirin is the parent company of Lion, which boasts Australian brews including Tooheys, Furphy, XXXX, Little Creatures, James Squire, James Boag, Hahn and White Rabbit, among others.
The Myanmar military overthrew the elected government of Aung San Suu Kyi on February 1 last year, imprisoning senior members of the government, as well as Australian economist Sean Turnell.
Kirin was in joint ventures with Myanma Economic Holdings Limited (MEHL), a secretive military conglomerate, owning 51 per cent of both Myanmar Brewery and Mandalay Brewery, to MEHL’s 49 per cent.
According to activist group Justice For Myanmar, MEHL provides slush funds that have funded military operations and helped to finance atrocities.
Kirin said it will transfer all of its shares to Myanmar Brewery in a share buyback scheme estimated to cost 22.4 billion yen ($243 million).
The company said it considered other options, such as transferring shares to a third party, but said MEHL would need to approve it and the lengthy process of finding an appropriate transferee would be at odds with the goal of a swift departure.
Kirin also considered liquidation, but determined that route should be “avoided because the loss of the [Myanmar Brewery] business due to liquidation would have a tremendous impact on local employees, business partners, and others in the local Myanmar communities”.
Justice For Myanmar spokesperson Yadanar Maung said Kirin was “prioritising their bottom line” and the decision was “a windfall for the Myanmar military and will ensure a continued stream of revenue to finance atrocity crimes”.
“Kirin appears to be excusing this irresponsible exit by claiming it is in the best interests of workers,” she said.
A spokesperson for the beer company told the ABC: “Kirin will not make a profit on the sale of its shareholding.
“The sale price is significantly lower than the original investment made by Kirin in the joint ventures in 2015 and lower again than the valuation of the shareholding in 2019.”
Kirin’s original investment was worth $US506 million (about $674 million at the time) in August 2015, a few months before Aung San Suu Kyi’s party won a landslide election over the military-aligned political party.
Companies with junta ties face ‘messy’ exit
Since the coup, more than 2,000 people have been killed and more than 14,000 have been arrested, including journalists and pro-democracy protesters.
Among the journalists still detained is Han Thar, who has worked for the ABC. Advocates campaigning for his release say he has been tortured while imprisoned.
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But how companies extricate themselves from junta-linked businesses has become a vexed issue.
Kirin was one of the first companies to say it would exit the country in the wake of the coup — in January Australia’s Woodside Petroleum said it would exit the country, and Norwegian telecommunications company Telenor has also pulled out.
Ms Maung said OECD guidelines require companies exiting a business to undertake human rights due diligence and mitigate negative impacts, as well as maintaining meaningful stakeholder engagement and transparency.
She added they needed to disclose all possibilities and how they made their decision, as well as consult with shadow civilian National Unity Government and stakeholders.
The Kirin spokesperson said there was a comprehensive review of several options, and the share buyback was found to be “the most appropriate option” in the circumstances.
They added that the company was exploring additional measures to support employees, which will be determined before they exit.
Economist Tim Harcourt, a friend of Professor Turnell, said companies have been criticised both for investing in joint ventures in Myanmar in the first place and also for withdrawing.
“I don’t think there’s a perfect solution,” he said.
“But I would have thought at least if you divest, you are allowing some retention of employment.
“Ultimately, the end of poverty in Myanmar will rely on foreign investment … so saying to all international companies ‘don’t touch Myanmar’ probably would just allow the military to maintain their rule.”
He said companies who had made an “unfortunate decision” to enter into joint ventures linked to the military now had to find a way out.
He added there was no point to the military continuing to detain Professor Turnell, who he described as a “world-class economist” who had been denied translators during his ordeal.
“Sean hasn’t done anything wrong, except provide good economic advice on how to improve the lives of Burmese people. There’s no crime,” he said.
Teppei Kasai, from Human Rights Watch, said human rights groups had repeatedly urged Kirin to cut ties with the military even before the coup.
Kirin had suspended dividends to MEHL in November 2020, a few months before the military takeover.
Mr Kasai said despite the “hard lesson learned” for Kirin, he thought the company “did what needed to be done”.
“Theoretically, companies should cut ties with the military without compounding human rights abuses, meaning minimising or eliminating risk of enriching the junta, while considering the wellbeing of local workers and so on. Obviously this is easier said than done,” he said.
“They showed the international community what happens when you do business with the junta — things get messy.”
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