Chinese and Korean Gas and Oil Projects Linked to Land Confiscations, Violations of Indigenous Rights, Torture, and Corruption in Burma (Myanmar)

By EarthRights International • March 29, 2011

Leading multinational companies from China, South Korea, and India have begun construction of massive oil and gas pipelines across Burma that are connected to widespread land confiscation, violations of indigenous rights, cases of arbitrary arrest, detention and torture, and forced labor, according to a new publication released today by EarthRights International (ERI). ERI is calling on the oil companies involved in the pipelines to immediately postpone their operations, and for the Burmese authorities to enact a moratorium on development in the oil, gas, mining, and hydropower sectors until preconditions for responsible investment are in place and the people of Burma can meaningfully participate in development decisions.

The 24-page “Situation Briefer,” entitled The Burma-China Pipelines: Human Rights Violations, Applicable Law, and Revenue Secrecy, details adverse impacts of the controversial Shwe gas and oil transport pipelines being constructed from Arakan (Rakhine) State in western Burma to the China border in Shan State. The companies involved in the operating consortiums include the China National Petroleum Corporation (CNPC), Daewoo International, Korea Gas Corporation (KOGAS), ONGC Videsh, the Gas Authority of India (GAIL), and the state-owned, Myanmar Oil and Gas Enterprise (MOGE).

The ERI briefer draws primarily on two years of clandestine interviews from inside Burma with affected populations from Arakan State, Magway Division, and Mandalay Division, as well as leaked documents providing new insight into secretive payments between oil companies and the military regime, controversial security arrangements, and inadequate corporate due diligence.

According to ERI, the most common human rights violations connected to the project thus far are widespread land confiscation and inadequate compensation for acquired land, and a systematic violation of the right to free, prior, and informed consent of local people. Other serious abuses include coercion, harassment, and intimidation by state agents of local populations expressing opposition to the project, arbitrary arrest and detention, torture, and forced labor. ERI has found that the companies involved have not obtained a social license to operate, with local populations uniformly opposed to the project at this time.

“Not one villager we spoke to was in favor of these projects,” said Naing Htoo, Burma Project Coordinator for ERI, “and that’s not surprising given that there has been a pervasive and deliberate disregard for the rights of individuals and communities living in the projects’ path. People are losing their land, they’ve been compensated poorly or not at all, and many literally have nowhere to turn,” Naing Htoo continued, “These blatant violations are in the name of development, they are widespread and systematic, and the companies are aware of what’s happening and aren’t acting to prevent the abuses.”

EarthRights International documented how the Burmese state has responded to project-related dissent with arbitrary arrest, torture, and ill treatment. “[Military intelligence] blindfolded me for four days,” said one Arakan man who survived torture and imprisonment for participating in grassroots trainings about the gas and oil pipelines. “For four days I couldn’t see anything. I was beaten nonstop, always being questioned, nonstop for four days,” he told ERI. He was later sentenced to six months in the notorious Insein prison for nothing more than freely expressing his opinion.

As the pipeline construction makes its way into restive Shan State, ERI is concerned the project will escalate ethnic tensions. Armed conflict between the Burmese regime and a armed ethnic group, the Shan State Army South, near the proposed pipeline area in Shan State has recently flared up. A senior representative of the Kachin Independence Army, which has troops in the direct path of the pipeline route in Shan State, told ERI that the Burmese military regime is training villagers to fight in the area of the proposed pipeline route and forcing them to attend abusive militia trainings. This type of “security” strategy has also been documented by ERI in Arakan State in connection with the Burma-China pipelines, and in Tennaserim Division in connection with other foreign-led pipeline projects.

“The contracts between the foreign companies and the Burmese state-owned company MOGE specify that the Burmese Army will provide security for the projects,” said Paul Donowitz, Campaign Director for ERI and a co-author on the new report. “The army is notoriously brutal against local people, especially ethnic nationalities, and there are many such groups in areas this project will traverse”, Donowitz continued. There are at least 28 army battalions already stationed along the pipeline route and ERI is deeply concerned that the project will inevitably lead to more serious human rights abuses against local populations if the projects move forward. “The companies are on notice that if such abuses do occur, they will be complicit. The French oil giant Total and the American oil major Unocal (Chevron) ignored warnings about their projects in Burma. As a result, local people suffered terrible harms and the companies were forced to compensate local victims of human rights abuse while their international reputations suffered greatly. We hope the Chinese, Korean, and Indian companies learn a lesson and postpone their projects.”

EarthRights International has also obtained leaked Production Sharing Contracts between CNPC and MOGE that provide new information regarding the structure of multi-million dollar signing and production bonuses CNPC is required to pay MOGE for its interests in offshore oil and gas development in Burma. “If the documents we obtained are accurate for the Burma-China pipelines, and we believe they are, the companies would have already made several tranche payments to the Burmese authorities, each in the tens of millions of dollars,” said Matthew Smith, Senior Consultant with ERI and co-author of the new report. “CNPC would have already made these payments related to its other offshore interests in Burma, according to the documents we obtained. The whereabouts of that money is unknown, and there’s an obvious risk these payments have contributed to corruption.” Despite a coordinated international effort, energy companies operating in Burma have consistently refused to disclose their payments to the Burmese regime. Burma currently ranks as the world’s second most corrupt country according to Transparency International’s Corruption Transparency Index. Based on leaked and publically available contracts, ERI has established that companies involved in the Burma-China pipelines are not legally restricted from practicing transparency.

For investors and governments providing support and expecting returns on investments related to these projects, they should understand the serious material risks associated with these pipelines. “Companies should be forthright to investors about those risks,” said Matthew Smith. “It’s our understanding the companies have been downplaying the material risks and human costs of these projects to inquiring investors, and that’s a problem.”

EarthRights International makes a number of practical recommendations for governments, banks, monetary authorities, investors, and oil companies with respect to the Burma-China pipelines. At the forefront of these recommendations is for the companies to postpone the pipelines until local people can meaningfully participate in development decisions and adverse impacts can be mitigated.

Chinese and Korean Gas and Oil Projects Linked to Land Confiscations, Violations of Indigenous Rights, Torture, and Corruption in Burma (Myanmar)

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Chinese and Korean Gas and Oil Projects Linked to Land Confiscations, Violations of Indigenous Rights, Torture, and Corruption in Burma (Myanmar)