The Burma-Singapore Axis:

Globalizing the Heroin Trade

by Leslie Kean and Dennis Bernstein

Covert Action Quarterly, Spring 1998

Singapore's economic linkage with Burma is one of the most vital factors for the survival of Burma's military regime," says Professor Mya Maung, a Burmese economist based in Boston. This link, he continues, is also central to "the expansion of the heroin trade.") Singapore has achieved the distinction of being the Burmese junta's number one business partner -both largest trading partner and largest foreign investor. More than half these investments, totaling upwards of $1.3 billion, are in partnership with Burma's infamous heroin kingpin Lo Hsing Han, who now controls a substantial portion of the world's opium trade. The close political, economic, and military relationship between the two countries facilitates the weaving of millions of narco-dollars into the legitimate world economy

Singapore has also become a major player in Asian commerce. According to Steven Green, llS Ambassador to Singapore, that city-states free market policies have "allowed this small country to develop one of the world's most successful trading and investment economies." Singapore also has a strong role in the powerful 132-member country World Trade Organization. Indeed, the tiny China Sea island of three and a half million people is known far and wide as the blue chip of the region-a financial trading base and a route for the vast sums of money that flow in and out of Asia.

If the brutal Burmese dictatorship's international pariah status is of any concern to its more powerful partner, Singapore shows no sign of it. Following the March 24 visit of Singapore's Prime Minister Goh Chok Tong to Rangoon, a Singapore spokesperson proclaimed, "Singapore and Myanmar should continue to explore areas where they can complement each other." As both countries continue to celebrate their "complementary" relationship, the international community must take note of the powerful support this relationship provides both to Burma's illegitimate regime and to its booming billion dollar drug trade.

Drugs 'R' Us

The Burmese military dictatorship- known by the acronym SLORC for State Law and Order Restoration Council until it changed its name to the State Peace and Development Council (SPDC) last November-depends on the resources of Burma's drug barons for its financial survival. Since it seized power in 1988, opium production has doubled, equaling all legal exports and making the country the world's biggest heroin supplier. Burma now supplies the US with 60 percent of its heroin imports and has recently become a major regional producer of methamphetamines. With 50 percent of the economy unaccounted for, drug traffickers, businessmen and government officials are able to integrate spectacular profits throughout Burma's permanent economy.

Both the Burmese generals and drug lords have been able to take advantage of Singapore's liberal banking laws and money laundering opportunities. In 1991, for example, the SLORC laundered $400 million through a Singapore bank which it used as a down payment for Chinese arms. Despite the large sum, Burma's foreign exchange reserves registered no change either before or after the sale. With no laws to prevent money laundering, Singapore is widely reported to be a financial haven for Burma's elite, including its two most notorious traffickers, Lo Hsing Han and Khun Sa (also known by his Chinese name Chang Qifu).

SLORC cut a deal with Khun Sa for his "surrender" in early 1996, allowing him protection and business opportunities in exchange for retirement from the drug trade. Khun Sa now bills himself as "a commercial real estate agent who also has a foot in the Burmese construction industry. Already in control of a bus route into the northern poppy growing region where the military is actively involved in the drug business, he is now investing $250 million in a new highway between Rangoon and Mandalay, an SPDC cabinet member confirmed. "The Burmese government says one thing but does another," according to Banphot Piamdi, director of Thailand's Northern Region's Narcotics Suppression Center. "It claims to have subdued Khun Sa's group. ... However the fact is that the group under the supervision of...Khun Sa's son has received permission from Rangoon to produce narcotics in the areas along the Thai-Burmese border.

Khun Sa's son is not the only trafficker reaping benefits in the Shan State area which borders Thailand and China and serves as Burma's primary poppy growing area. Field intelligence and ethnic militia sources consistently report a pattern of Singapore's investments in Burma are opening doors for the drug traffickers, giving them access to banks and financial systems."

Burmese military involvement with drug production in these remote areas. Government troops offer protection to the heroin and amphetamine refineries in the area in exchange for payoffs and gifts, such as Toyota sedans, pistols and army uniforms. The only access to the refineries is through permits issued by Burmese military intelligence - without this, the heavily guarded areas surrounding the refineries are too dangerous to approach. The military is also involved in protecting the transport of narcotics throughout the region, which the authorities have sealed off from the outside world.

"There are persistent and reliable reports that officials, particularly army personnel posted in outlying areas, are involved in the drug business," confirms the March 1998 US government narcotics report. "Army personnel wield considerable political clout locally, and their involvement in trafficking is a significant problem." Intelligence sources, working for ethnic leaders combating both the drug trade and the military dictatorship, report that the pattern of government involvement extends all the way to the top. The central government in Rangoon demands funds on a regular basis from regional commanders who, in turn, expect payoffs from the rank and file. The soldiers get the money any way they can-through smuggling, gambling or selling jade-with drugs being the most accessible source of revenue in Shan State. The officers in the field also "tax" refineries, drug transporters, and opium farmers.

At great risk, the intelligence sources- who go undercover to infiltrate troops in the field-collect painstakingly detailed data including names, dates and places, such as these delivered in March 1998 from Shan State: "On 10th Jan. 98, SPDC army no. 65 stationed at Mong Ton sent 40 troops to Nam Hkek village. Pon Pa Khem village tract, collected 0.16 kilo of opium per household or [collected payment of] Baht 600. Then the troops sold the collected opium to the drug business men at the rate of Baht 6000 for 1.6 kilos." Another report states: "Troops from SPDC Battalion nos. 277 & 65 stationed at Mong Ton are still protecting heroin refineries situated at Hkai ion, Pay lon & Ho Ya areas, Mong Ton township. Those who can pay B.200,00 per month are allowed to run the heroin refineries." And: "On 3rd of Jan. 98, Burma Army no.99 collected opium tax in Lashio township. They charged 0.32 kilo per household. They arrested and beat seriously those who failed to give.

These sources also report that Ko Tat, Pnvate 90900 from SPDC battalion no.525 stationed in Lin Kay, recently defected from the Burmese army and said that his company had been giving protection to the opium fields around Ho Mong. While the lower ranked officers struggle to meet their quotas in the field, the highest levels of the government in the capital city strike deals with Burma's two top traffickers, one of whom is the prosperous partner of Singapore.

Lo Hsing Han: At Home in Singapore

With massive financial ties to Singapore, Lo Hsing Han is now one of Burma's top investors. He, along with Khun Sa, the former "king of opium," is a major player in the Burmese economy.

In the early l990s, Lo Hsing Han controlled the most heavily armed drug trafficking organization in Southeast Asia. He was arrested in 1973 and sentenced to death, but was freed under a general amnesty in 1980. Now, like Khun Sa, he wears the public persona of a successful businessman in Rangoon-where no one does business without close government cooperation. Although he still oversees rural drug operations with the status of a godfather, according to US narcotics officials, the notorious Lo currently serves as an adviser on ethnic affairs to Lt. Gen. Khin Nyunt, the military intelligence chief and the junta's powerful "Secretary 1.

Lo Hsing Han is the chair of Burma's biggest conglomerate, Asia World, founded in 1992. His son, Steven Law, is managing director and also runs three companies in Singapore which are "overseas branches" of Asia World. Although Singapore is proud of its mandatory death penalty for smalltime narcotics smugglers and heroin addicts, both father and son travel freely in and out of the friendly island-nation. "The family money is offshore," said a high-level US narcotics official. "The old man is a convicted drug trafficker, so his kid is handling the financial activities."

In 1996, when Law married his Singaporean business partner in a lavish, well-publicized Rangoon wedding, guests from Singapore were flown in on two chartered planes. According to a high-level US government official familiar with the situation, Law's wife Cecilia Ng operates an underground banking system, and "is a contact for people in Burma to get their drug money into Singapore, because she has a connection to the government." According to the official, Ng spends half her time in Rangoon, half in Singapore; when in Rangoon, she is headquartered at Asia Lite, a subsidiary of Asia World. The husband-wife team are also the sole officers and shareholders of Asia World subsidiary, Kokang Singapore Pte Ltd. Founded in Singapore in 1993 with $4.6 million, the company "engages in general trading activities in goods/products of all kinds/descriptions. "

Singapore's ventures with Asia World include both government and private investments. Kuok Singapore Ltd., a partner with Asia World in many ventures, was Burma's largest single real estate investor as of late 1996, with over $650 million invested 20 Other Singaporean companies are mentioned in Asia Worlds company reports. Sinmardev, another major Singaporean project linked to Lo's company, is a $207 million industrial park and port on the outskirts of Rangoon, which broke ground in 1997. Singaporean entrepreneur Albert Hong, head of Sinmardev, described the project as the largest foreign investment in Burma outside the energy field. The Singaporean consortium leads the joint venture along with the Burmese junta, Lo's Asia World, and a slew of international shareholders

Kuok Singapore Ltd., Lo Hsing Han's Asia World, and the Burmese junta are also partners in the luxury Traders Hotel. The hotel's November 1996 opening ceremony was attended by the Singapore ambassador, the president of Kuok Singapore, and briefly by Lo Hsing Han himself. The presiding Burmese minister publicly thanked Steven Law and the government of Singapore "without whose support and encouragement there would be very few Singaporean businessmen in our country."

While government and business connections in Burma and Singapore have boosted Asia World's prospects, other factors have contributed to the company's extraordinary growth. In the last six years, Asia World has expanded from a modest trading company to become Burma's largest and fastest-growing private sector enterprise with interests in trading, manufacturing, property, industrial investment, development, construction, transportation, import and distribution, and infrastructure. "How is it that a company that has a humble beginning trading beans and pulses is suddenly involved in $200 million projects?" said a US government official, requesting anonymity "Where did all that start-up capital come from?"

The US government ventured a guess in 1996: It denied Asia World's CEO Steven Law a visa to the US "on suspicion of drug trafficking." Asia Worlds operations now include a deep-water port in Rangoon, the Leo Express bus line into Northern Burma, and a $33 million toll highway from the heart of Burma's poppy-growing region to the China border 24 On December 20, the conglomerate opened a wharf with freight handling, storage, and a customs yard for ships carrying up to 15,000 tons 25 "If you're in the dope business, these are the types of things that you've got to have to be able to move your product," said a high-level US narcotics official. "They have set up institutions to facilitate the movement of drugs. And in all probability, they are using laundered drug proceeds, or funds generated from investments of drug trafficking proceeds, to build this infrastructure," he added.

The activities of Lo's company Asia World have triggered an international narcotics investigation led by Washington. US investigators allege that Asia World's relationship to Singapore paves the way for the narcotics trade to be woven into all legitimate investments between the two countries. "Singapore's investments in Burma are opening doors for the drug traffickers, giving them access to banks and financial systems," said one government official familiar with the situation.

One Stop Shopping: Intelligence to Repression

The Burmese junta's control of its impoverished population through crude methods such as torture, forced labor, and mass killings leaves it open to international condemnation. In contrast, Singapore takes a more sophisticated approach to repression, both at home and abroad. While the island-nations citizens have material benefits and the appearance of rule of law, they live in fear of an Orwellian government that closely monitors every aspect of their lives. The ruling party often sues those who dare to oppose it on trumped up defamation charges, forcing many into bankruptcy or exile.

The FBI is investigating complaints by US citizens of harassment by Singapore's Internal Security Department (ISD). One California academic, a widely respected specialist on Southeast Asian affairs who asked not to be identified, said ISD agents broke into his home because he was working to bring leading Singaporean opposition figure Tang Liang Hong to an American university The operatives tore out his door handle to get in, then searched his computer and desk. A week later, an Asian man, waiting in a tree, photographed and videotaped the academic while he walked in the park. After temporarily blinding the academic with his bright flash, the man jumped from the tree and made a getaway in his car. Tang -who is facing a $4.5 million defamation lawsuit by Singaporean senior ministers-was not surprised by the burglary. "I've been followed everywhere, whether I was in Hong Kong, Malaysia, Australia or in London," he said in a phone interview from Australia.

Singapore has been more than willing to share its expertise in intelligence with its Burmese counterparts. The Singapore-Myanmar Ministerial-Level Work Committee was set up in 1993 in Rangoon to "forge mutual benefits in investment, trade and economic sectors." The committee includes intelligence chief Lt. Gen. Khin Nyunt, other top Burmese ministers, and high level Singapore an officials. At the December 23 meeting, Khin Nyunt urged his ministers to give priority to projects arranged by the Singaporean government. "Pilot projects are being implemented to transfer know-how to Myanmar," said Khin Nyunt in his address.

One such project is a state-of-the-art cyber-war center in Rangoon. Burma's military leaders can now intercept a range of incoming communications-including telephone calls, faxes, e-mails and computer data transmissions-from 20 other countries.

The high-tech cyber-war center was built by Singapore Technologies, the city-state's largest industrial and technology conglomerate, comprising more than 100 companies. This government-owned company also provides on-site training at Burma's Defense Ministry complex, and reportedly passes on its "sophisticated capability" to hundreds of Burmese "secret police" at an institution inside Singapore.

Burma has no external enemies, but the ruling junta goes to extremes to terrorize the population through its elaborate intelligence network. Intelligence officials have already used their newly-acquired talents from the cyber-war center to arrest pro-democracy activists, and it is well known that Burma's feared military intelligence often tortures its victims during lengthy interrogations.

Singaporean companies have also helped suppress dissent in Burma by supplying the military with arms to use against its own I people. The first shipment of guns | and ammunition was delivered on October 6, 1988.35 Throughout that month, hundreds of boxes of mortars, ammunition, and other supplies marked "Allied Ordnance, Singapore" were unloaded from vessels in Rangoon. Allied I Ordnance is a subsidiary of Chartered Industries of Singapore, the arms branch of Singapore Technologies-the same govemment-owned company which built the cyber-war center. The shipments also included rockets made by Chartered Industries of Singapore under license from a Swedish company and sold in violation of an agreement with Sweden require authorization for re-exports.

These shipments from Singapore arrived only weeks after the September 1988 military takeover in Rangoon, in which the new leaders of the SLORC massacred hundreds of peaceful, pro-democracy demonstrators in the streets. These killings followed another wave of government massacres earlier that summer, when longtime dictator Ne Win struggled to keep power in the face of nationwide strikes and demonstrations for democracy He eventually stepped down but, operating behind the scenes, installed the puppet SLORC. As the killings continued, thousands of civilians fled the country fearing for their lives. When numerous countries responded by suspending aid and Burma's traditional suppliers cut shipments, the SLORC became desperate. Singapore was the first country to come to its rescue.

Singapore companies have continued to supply Burma's military, sometimes acting as middlemen for arms from other countries. In 1989, Israel and Belgium delivered grenade launchers and anti-tank guns via Singapore. In 1992, Singapore violated the European Commission arms embargo against the Burmese regime by acting as a broker and arranging for a $1.5 million shipment of mortars from Portugal.

"It is highly unlikely that any of these shipments to Burma could have been made without the knowledge and support of the Singapore Government," wrote William Ashton in Jane's Intelligence Review. "By assisting with weapons sales, defense technology transfers, military training and intelligence cooperation, Singapore has been able to win a sympathetic hearing at the very heart of Burma's official councils."

Singapore's Stakes

Last November, Singapore deployed its diplomatic arsenal to defend Rangoon at the UN. Singaporean UN representatives made an effort to water down the General Assembly resolution which castigated the Burmese government for its harsh treatment of pro-democracy activists, widespread human rights violations, and nullification of free and fair elections that had voted it out of power. In an "urgent" letter to the Swedish mission, which was drafting the resolution, Singapore representative Bilahan Kausikan cited "progress" in Burma and said that "the majority of your co-sponsors have little or no substantive interests in Myanmar.... Our position is different. We have concrete and immediate stakes."

Objecting to parts of the resolution and attempting to soften the language, Singapore's representative circulated the letter to key members of the UN's Third Committee on Human Rights. "The driving force was definitely business connections," according to Dr. Thaung Htun, Representative for UN Affairs of Burma's government-in-exile. "Singapore is defending its investments at the diplomatic level, using its efforts at the UN level to promote its business interests."

The protection of Singapore's "concrete and immediate stakes" is essential to the ruling party s success in maintaining power and the basis of its support for Burma, said Case Western Reserve University economist Christopher Lingle. "Singapore depends heavily upon its symbiotic relationship with crony capitalists and upon accommodating a high enough rate of return to keep the citizenry in line. Therefore its very survival is tied up with business and government investments.,

William Ashton, writing in Jane's Intelligence Review, suggested an additional incentive for Singapore's alliance with Burma. As Rangoon's major regional backer and strategic ally, China has provided much of the weaponry, training, and financial assistance for the junta. China's expanding commercial and strategic interests in the Asia-Pacific region, coupled with its alliance with neighboring Burma, is a source of great concern in Singapore. The desire to keep Burma from becoming Beijing's stalking horse in the region may provide another motivation for Singapore's wooing of Rangoon.

Turning a Blind Eye

The Singapore government has consistently disregarded the gross human rights violations perpetrated by its allies in Burma. The UN Special Rapporteur, appointed to report to the United Nations on the situation in Burma, has been barred entry into Burma since 1995.44 The new US State Department Country Report on Burma for 1997 states that its "longstanding severe repression of human rights continued during the year. Citizens continued to live subject at any time and without appeal to the arbitrary and sometimes brutal dictates of the military dictatorship." Amnesty International reports that there are well over 1,200 political prisoners languishing in Burmese dungeons, where torture is commonplace.

Singapore has issued no urgent letters about a recent report by Danish Doctors for Human Rights which noted that "sixty-six percent of the over 120,000] refugees from Burma now living in Thailand have been tortured" and subjected to "forced labor, deportation, pillaging, destruction of villages, and various forms of torture and rape." The doctors reported that refugees witnessed the junta's military forces murder members of their families.

Singaporean leaders also seem unconcerned about the fact that the Burmese government shut down almost all of Burma's colleges and universities following student protests in December 1996 and imprisoned hundreds of students. At a February ceremony of the Singapore Association in Myanmar, the Ambassador to Singapore presented a large check to Gen. Khin Nyunt-who is also Chairman of the government Education Committee-for the "Myanmar education development fund." While depriving young Burmese of higher education, the junta's "Secretary 1" Khin Nyunt responded that "Uplifting the educational standards of our people is one of the social objectives of our Government." He then went on at length to extol the "firm foundation of growing economic and trade ties" between Singapore and Burma.

The Burmese government has also kept computers and communication technology away from students and others in opposition to the regime. All computers, software, e-mail services and other telecommunication devices-which hardly anyone can afford anyway-must be licensed, but licenses are almost impossible to obtain. Yet Singapore has made the best computer technology available to the ruling elite and their business partners. Singapore Telecom, the largest company in Asia outside of Japan, was the first to provide Burmese businesses and government offices with the ability to set up inter- and intra-corporate communications in more than 90 countries.

Complementary Relations Singapore's concerns are dramatically different from those of countries sharing a border with Burma. Thailand has to deal with the deadly narcotics trade and an overwhelming number of refugees arriving on a daily basis. Banphot Piamdi, the Thai counter-narcotics official, believes Thailand made a big mistake when it voted for Burma's entry into the Association of Southeast Asian Nations (ASEAN), given Burma's lack of cooperation in fighting drugs. Not surprisingly, the Singapore government lobbied hard for Burma's 1997 acceptance into the powerful regional trade alliance.

Ironically, Burma's inclusion in ASEAN may force member nations, including Singapore, to address the havoc that their newest ally is imposing on the region- especially since Burma provides approximately 90 percent of the total production of Southeast Asian opium. China and India, Burma's other neighbors, now face severe AIDS epidemics related to increased heroin use in their bordering provinces. Most of the heroin exported from Burma to the West passes through China's Yunnan province, which now has more than half a million addicts. And even Singapore-whose heroin supply comes mostly from Burma-had a 41 percent rise in HIV cases in 1997.

As we head into the "Asian century," Singapore has become Washington's forward partner in the unfolding era of East-West trade. Ambassador Green called the country "a major entry port and a natural gateway to Asia for American firms." US companies exported $16 billion worth of goods to Singapore in 1996 and more than 1,300 US firms now operate in the country Singapore's strategic and economic importance to the US cannot be overstated. The two nations just reached an agreement allowing the US Navy to use a Singapore base even though the deal violates ASEAN's 1997 nuclear weapons-free zone agreement.

The US has condemned the Burmese junta's record of human rights abuses and support for the drug trade, but has turned a blind eye when it comes to Singapore's dealings with the regime. Although President Clinton imposed economic sanctions on Burma partly for its role in providing pure and cheap heroin to America's youth, he has not commented on Singapore's willingness to play ball with the world's biggest heroin traffickers. Ambassador Green told Congress last year that the US "has an important role in working with the Singapore government to deal with illegal drug and weapons proliferation issues," but most US officials have remained silent about Singapore's investments with Lo Hsing Han and Burma's narco-dictatorship. It's unlikely Clinton made any mention of this issue last fall while golfing with Singapore an Prime Minister Goh Chok Tong during the APEC summit in Vancouver.

Unless the financial crisis in Asia limits profits, Singapore will probably continue to expand its investments in Burma. "Our two economies are complementary and although we can derive satisfaction from the progress made, I believe that there still remains a great potential that is yet to be exploited," said the junta's Gen. Khin Nyunt last February, Aided by Singapore's support, Burma's thriving heroin trade has plagued the majority of countries around the globe. While these countries blithely pour money into drug-connected companies based in Burma and thereby help them to expand into foreign markets, an abundance of the world's finest heroin continues to plague their citizens. At the same time, the line between legitimate and illegitimate investments grows dimmer in the global economy.

Leslie Kean is co-author of Burma's Revolution of the Spirit The Straggle for Democratic Freedom and Dignity and director of the Burma Project USA.

Dennis Bernstein, associate editor at Pacific News Service, is producer of KPFA radio's "Flashpoints."

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