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C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 000162 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EAP/MLS, INR/EAP, EEB/TFS 
PACOM FOR FPA 
TREASURY FOR OASIA, OFAC 
 
E.O. 12958: DECL: 03/03/2018 
TAGS: ECON EFIN PREL PGOV BM
SUBJECT: REGIME CRONIES CONTINUE WHEELING AND DEALING 
 
REF: A. RANGOON 22 
     ¶B. 07 RANGOON 1095 
     ¶C. 07 RANGOON 1093 
     ¶D. 07 RANGOON 1113 
 
RANGOON 00000162  001.2 OF 003 
 
 
Classified By: Economic Officer Samantha A. Carl-Yoder for Reasons 1.4 
(b and d) 
 
¶1.  (C) Summary.  Regime crony Tay Za continues to do 
business in Burma and Singapore, as he looks for ways to 
circumvent U.S. sanctions.  Within Burma, Tay Za's Htoo Group 
of Companies is expanding into new sectors.  Tay Za plans to 
open a new shipping company in 2008, using two bulk 
freighters he recently bought from Korea.  Embassy contacts 
confirm that Tay Za has been courting Russian companies, 
securing contracts in the mining, telecommunications, and oil 
and gas industries.  Although Tay Za's Air Bagan continues to 
have financial and technical difficulties, Air Bagan plans to 
resume flights to Singapore by September 2008.  Chit Khaing, 
a regime crony who is not yet included on the targeted 
sanctions list, continues to expand his tourism empire in 
Burma with the construction of two new hotels.  End Summary. 
 
Taking Burma By Sea and Air 
--------------------------- 
 
¶2.  (C) Tay Za continues his economic dealings in Burma and 
Singapore, diversifying his business portfolio and entering 
into new sectors.  Embassy contact Anwar Hussain (PROTECT) 
confirmed that Tay Za recently traveled to Singapore to 
purchase two ships from an unnamed Korean company.  Although 
the press reported that Tay Za purchased a tanker and a 
freighter, Hussain informed us that Tay Za actually purchased 
two 15,000 ton bulk carrier cargo ships, worth an estimated 
$10 million each. 
 
¶3.  (C) According to Hussain, Tay Za will start his own 
shipping line by mid-2008 to compete with government-owned 
Myanmar Five Star Shipping Lines.  Tay Za received a $10 
million no-interest loan from the regime to purchase one of 
the ships.  (Note:  The Burmese regime has financed other Tay 
Za operations that compete with government-owned entities. 
The best example is Air Bagan, which directly competes with 
flag carrier Myanmar Airways.  End Note.)  Tay Za's ships 
will arrive in Rangoon by the end of April.  The new company, 
yet to be named, will offer cargo shipping services for 
select trading companies. 
 
¶4.  (C)  Although Tay Za's Air Bagan continues to struggle 
with high debt totaling more than $10 million (Ref A), the 
company plans to resume flights to Singapore by September, 
Air Bagan General Manager Soe Win told us.  There is a demand 
for more direct flights to Singapore and Air Bagan seeks to 
meet the aviation needs of the Burmese people, Soe Win 
declared.  According to Soe Win, Air Bagan Chairman Tay Za 
will use his personal resources to finance the flight.  Air 
Bagan plans to use one of its A310s, currently grounded 
because of lack of international flights, to fly to 
Singapore.  The Singapore flight will not be a daily flight, 
Soe Win stated, noting that Air Bagan continues to fly to 
Seoul at least one a week for charter flights. 
 
Courting Russian Businesses 
--------------------------- 
 
¶5.  (C)  Embassy contacts have confirmed that Tay Za has made 
several trips to Nay Pyi Taw in 2008, arranging meetings with 
Russian investors and the senior generals.  Tay Za recently 
signed an agreement with Russian-owned telecommunications 
 
RANGOON 00000162  002.2 OF 003 
 
 
company CBOSS, which will invest in the Burma's cyber city, 
Hussain told us.  Tay Za is also working with several Russian 
mining companies, including Russkaya Mednay Kompaniya, to 
obtain production sharing contracts for nickel and copper 
mines in Burma (Ref C). 
 
¶6.  (C) Chevron representative David Peters told us that Tay 
Za recently entered Burma's oil and gas sector, acting as a 
silent partner with Russian-owned Silver Wave Sputnik 
Petroleum and Silver Wave Energy.  Silver Wave Energy, which 
is registered in Singapore, and Silver Wave Sputnik signed a 
production sharing contract with the Myanmar Oil and Gas 
Enterprise in March 2007 for onshore block B2 in Sagaing 
Division.  According to Peters, Silver Wave began seismic 
data collection and exploratory drilling in May 2007, costing 
the company more than $20 million.  The company has yet to 
find any oil reserves.  Silver Wave also partnered with 
Indian-owned GAIL Petroleum in offshore block A7 in 2007. 
Silver Wave owns a 70 percent share in the block. 
 
Investing in Mining 
------------------- 
 
¶7.  (C) Tay Za continues to expand into the jade mining 
industry, Embassy contact and owner of local construction 
company MSP Limited Khin Maung Win (PROTECT) told us.  Htoo 
Trading has signed several agreements with companies in 
Phakant (Kachin State) including Myanmar Dagaung Co. Ltd and 
Morning Light Company, quietly funding and selling heavy 
machinery to companies in exchange for jade.  In the past six 
months, since Htoo Trading entered into the jade business, 
the cost of a jade mining block lease has increased, forcing 
smaller companies out of the market.  According to Khin Maung 
Win, a one-year lease for a one-acre jade block cost 300,000 
kyat (approximately $250) in 2006.  By mid-2007, the cost of 
jade blocks had skyrocketed to 3 million kyat per acre 
(approximately $2,500) for a one-year lease.  Larger 
companies are able to secure three-year leases for jade 
blocks, although prices range between 10 million to 60 
million kyat ($8,300-50,000), depending on location and jade 
reserves.  Unlike other companies which must sell jade at the 
MEHL's annual gem and jade auctions, Tay Za's company sells 
jade directly to buyers without paying MEHL's commission, 
Khin Maung Win said. 
 
Additional Tay Za Companies 
--------------------------- 
 
¶8.  (SBU)  Ref B included information on several of Tay Za's 
businesses in Burma.  The following companies and properties 
are also owned by Tay Za: 
 
--Aureum Palace Resort, New Bagan, Bagan, Mandalay Division; 
 
--Aureum Palace Resort, Ward 6 Governor's Hill, 
Mandalay-Lashio Highway, Pyin Oo Lwin, Mandalay Division; 
 
--Aureum Palace Resort, Ngapali Beach Rd, Ngapali, Rakhine 
State; 
 
--Aureum Palace Resort, Ngwe Saung Beach Rd, Ngwe Saung, 
Irrawaddy Division; 
 
--Espace Avenir Hotel and Apartments, 523 Pyay Road, Kamayut 
Township, Rangoon.  Telephone: 95-1-505-213; 
 
--Htoo Transportation Services, Pyay Road, Hlaing Township, 
Rangoon.  Telephone:  95-1-500-344; 
 
 
RANGOON 00000162  003.2 OF 003 
 
 
--Le Moliere Restaurant, 49 Pyay Road, Hlaing Township, 
Rangoon.  Telephone: 95-1-501-558; 
 
--Myanmar Shopping Center, 143-149 Sule Pagoda Road, Rangoon. 
 Telephone: 95-1-380-053; 
 
--Myanmar Treasure Resort, Bathein, Irrawaddy Division; 
 
--Myanmar Treasure Resort, Khayay Rd. Anawratha Quarter, 
Bagan, Mandalay Division; 
 
--Myanmar Treasure Resort, Inle Lake, Shan State; 
 
--Myanmar Treasure Resort, Mawlamyaing, Mon State (under 
construction); 
 
--Silver Wave Energy, 5287 Thein Gyi Zei A Building, 
Kyauktada Township, Rangoon.  Telephone: 95-1-242-828. 
 
Chit Khaing's Tourism Expansion 
------------------------------- 
 
¶9.  (C)  Chit Khaing, owner of construction company Eden 
Group and an up and coming crony, continues to expand his 
tourism empire in Burma (Ref D).  According to Embassy 
contacts, Chit Khaing's Eden Group is currently constructing 
two new hotels in Bagan and Ngapali Beach, and plans to build 
additional hotels in Inle Lake and Ngwe Saung Beach by 2010. 
According to Eden Group officials, the Eden Resort in Bagan 
will open in 2008, and the resort in Ngapali Beach will open 
in 2009. 
 
¶10.  (SBU)  The following are additional properties owned by 
Chit Khaing: 
 
--Eden Garden Resort Hotel, Myothit, Taunggyi.  Telephone: 
95-81-242-45; 
 
--Eden Group Office, Zayar Khemar Street, Kyaikwine Pagoda 
Road, Mayongone, Rangoon.  Telephone:  95-1-662-229; 
 
--Eden Resort Bagan, Bagan, Mandalay Division (under 
construction); 
 
--Eden Resort Ngapoli, Ngapali Beach Rd., Ngapali, Rakhine 
State (under construction). 
 
Comment 
------- 
 
¶11.  (C)  U.S. sanctions may have complicated their lives, 
but Tay Za and other regime cronies continue to look for ways 
to circumvent U.S. sanctions and expand their business 
empires.  For the majority of Tay Za's companies, it remains 
business as usual - not only can they maintain and open new 
offices abroad and trade with Asian partners, including 
China, Hong Kong, Korea, Singapore, and Thailand, but they 
continue to have access to financial services, which enable 
them to circumvent U.S. sanctions.  As long as Tay Za and the 
other cronies can manage to circumvent sanctions, they can 
continue to funnel funds to Than Shwe and other top generals. 
 In turn, the generals will continue to direct new business 
opportunities to the cronies, allowing the generals to profit 
personally while the Burmese sink into worse poverty. 
 
VILLAROSA