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Viewing cable 09RANGOON134, BURMA: TAY ZA EXPANDS HIS EMPIRE If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs Reference ID 09RANGOON134 Created 2009-03-04 04:28 Released 2011-08-30 01:44 Classification CONFIDENTIAL Origin Embassy Rangoon

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VZCZCXRO8778 OO RUEHCHI RUEHDT RUEHHM RUEHNH DE RUEHGO #0134/01 0630428 ZNY CCCCC ZZH O 040428Z MAR 09 FM AMEMBASSY RANGOON TO RUEHC/SECSTATE WASHDC IMMEDIATE 8737 INFO RUCNASE/ASEAN MEMBER COLLECTIVE RUEHBK/AMEMBASSY BANGKOK 2821 RUEHBJ/AMEMBASSY BEIJING 2206 RUEHBY/AMEMBASSY CANBERRA 1825 RUEHKA/AMEMBASSY DHAKA 5132 RUEHLO/AMEMBASSY LONDON 2068 RUEHNE/AMEMBASSY NEW DELHI 5299 RUEHUL/AMEMBASSY SEOUL 8899 RUEHTC/AMEMBASSY THE HAGUE 0702 RUEHKO/AMEMBASSY TOKYO 6472 RUEHCN/AMCONSUL CHENGDU 1722 RUEHCHI/AMCONSUL CHIANG MAI 2086 RUEHCI/AMCONSUL KOLKATA 0570 RHHMUNA/CDR USPACOM HONOLULU HI RUEKJCS/JOINT STAFF WASHDC RUCNDT/USMISSION USUN NEW YORK 2293 RUEHGV/USMISSION GENEVA 4310 RUEATRS/DEPT OF TREASURY WASHDC RUEKJCS/DIA WASHDC RUEAIIA/CIA WASHDC RHEHNSC/NSC WASHDC RUEKJCS/SECDEF WASHDC C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 000134 SIPDIS STATE FOR EAP/MLS, INR/EAP, EEB/TFS PACOM FOR FPA TREASURY FOR OASIA, OFAC E.O. 12958: DECL: 03/04/2019 TAGS: ECON EFIN EAIR ETRD PREL PINR BM SUBJECT: BURMA: TAY ZA EXPANDS HIS EMPIRE REF: A. RANGOON 54 B. 08 RANGOON 717 RANGOON 00000134 001.2 OF 003

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Classified By: Economic Officer Samantha A. Carl-Yoder for Reasons 1.4 (b and d). Summary ------1. (C) Tay Za, the regime's favored crony, continues to expand his empire in Burma. Over the past three months he has purchased three large hotels, expanded his airline business, and entered the telecommunications industry. Embassy Rangoon recommends OFAC add Tay Za's newest companies and key management personnel (listed in paragraph 8) to the targeted sanctions list. End Summary. Tay Za's Buying --------------2. (C) Over the past three months, Tay Za, through his existing hospitality companies, has acquired three additional hotels in Burma -- the Malikha Lodge in Putao, the Kandawgyi Palace in Pyin Oo Lwin, and the Mt. Popa Lodge near Bagan. All three are luxury properties located in prime tourist destinations.

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3. (C) Tay Za exploited the market share of his airline, Air Bagan, to acquire the Malikha Lodge in Putao (northern Kachin State). The previous owner, Brett Melzer, told us that Tay Za had long coveted the Malikha Lodge and approached him in 2006 with an offer to purchase it. When Melzer refused, Air Bagan, allegedly following Tay Za's orders, reduced flight frequency to the city and often suspended flights for weeks with no explanation. Melzer believes Tay Za was purposefully seeking to run him out of business by denying clients' access to his hotel. Still, the Malikha Lodge managed to break even in 2007. Officials from Htoo Trading and Amata Trading, two of Tay Za's companies, continued to pressure Melzer in 2008, informing him that Air Bagan would resume service to Putao but would reserve the right to refuse service for Malikha Lodge customers. According to Melzer, Tay Za came to Melzer's office in September 2008, reiterating his interest in the lodge and threatening to stop air service again to Putao if Melzer did not sell. Indeed, Air Bagan cancelled all flights to Putao in October, costing the hotel an estimated USD 50,000 in revenue. In November, Melzer agreed to sell the Lodge to Tay Za, and the sale was finalized January 6, 2009. 4. (C) According to anecdotal reports, Tay Za took advantage of a dispute between a hotel operator and the GOB to acquire the other two hotels. According to Sedona Hotel General Manager Saman Sarathchandra, the Woodlands Group, which had contracts with the Ministry of Forestry to operate the Mt. Popa Lodge and Kandawgyi Palace hotel in the protected reserves of both Mt. Popa and Pyin Oo Lwin, faced pressure from the Ministry of Forestry to take on a particular local partner or risk losing its concessions. Woodlands Group Director Frankie Chew refused, arguing that the local partner did not bring any capital to the deal. Melzer commented that Tay Za, taking advantage of the Woodlands Group's precarious situation with the Minister of Forestry (a close Tay Za contact), offered to purchase the concessions from Chew for below-market value (estimated at RANGOON 00000134 002.2 OF 003

USD 3 million). Chew recognized he was unable to fight the Ministry of Forestry and agreed to the sale. According to Melzer, Chew believed that once stories of Tay Za's interest in the hotels were made public, there would be no other prospective buyers. Dominating the Aviation Sector -----------------------------5. (C) Despite low levels of tourism in 2008 (Ref A), Air Bagan has increased the frequency of flights during the past six months. In September 2008, Air Bagan only serviced six domestic destinations (Ref B); by February 2009, it had added an additional four destinations. U Zaw Win, Aviation Specialist at Air Bagan, informed us that Air Bagan has a 70 percent share of the domestic market, up from 60 percent in early 2008. To expand service to additional locations, Air Bagan in October leased an ATR-72 from rival Air Mandalay, which is also facing heavy financial losses. According to U Zaw Win, Air Bagan expects to renew the lease in March for an additional year. 6. (C) Air Bagan is also looking to resume international service, U Aung Gyi of Myanmar Airways International (MAI), Burma's only international carrier, told us. According to George Yin Soon, owner of Regent Air and MAI partner, high-level GOB officials have tried, thus far unsuccessfully, to force MAI to sell shares to Air Bagan at an artificially low price. Soon also told us that Air Bagan, which took over all domestic ground handling services in September 2008 -earning up to USD 6 million annually (Ref B) -- allegedly has requested to take on ground handling for Thai Airways, another lucrative contract. Entering the Telecom Industry ----------------------------7. (C) In December, Tay Za's businesses entered the telecommunications market, selling prepaid GSM SIM cards in select locations in Rangoon and Mandalay. Central Marketing Company, a subsidiary of Tay Za's Htoo Trading, is the sole authorized dealer of these cards, which cost between 10-20 FEC (Foreign Exchange Currency, equivalent to the USD), Central Marketing General Manager U Sai Khin Maung Aye told
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us. To date, Central Marketing Company has sold more than 20,000 SIM cards. Additional Tay Za Companies --------------------------8. (SBU) Below is information on Tay Za's newest companies, including the hotels and telecom company as well as an oil and gas company and several retail businesses: -- Amata Trading Co., Ltd., 54 Shwe Taung Gyar Rd., Bahan Township, Rangoon; -- Central Marketing Company, Myanmar Shopping Mall, Floor 2, 143-149 Sule Pagoda Road, Rangoon; -- Espace Coffee Shop, Domestic Terminal, Rangoon International Airport; -- Kandawgyi Lodge, Lan Thar Yar St., Pyin Oo Lwin; RANGOON 00000134 003.2 OF 003

-- Malikha Lodge, Mulashede Village, Putao; -- Mt. Popa Resort, Mt. Popa, Bagan; -- Myanmar Shopping Mall, 143-146 Sule Pagoda Road, Rangoon; and -- Silverwave Energy, 7th Floor Traders Hotel, Sule Pagoda Road, Rangoon. Embassy Recommendation ---------------------9. (C) Tay Za is one of the regime's foremost cronies, relying on his connections and clout to quash competing companies for personal gain. Several of our business contacts believe Tay Za is bankrupt and speculate he may be acting as a broker to secure assets for senior regime officials before the 2010 elections. We have no way to corroborate this speculation. Either way, Embassy Rangoon recommends the above-mentioned companies and key managing staff be added to OFAC's targeted sanctions list. VAJDA

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Viewing cable 09RANGOON330, BURMA: TAY ZA REPORTEDLY FALLING OUT OF FAVOR, NEW If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs Reference ID 09RANGOON330 Created 2009-06-04 06:01 Released 2011-08-30 01:44 Classification CONFIDENTIAL Origin Embassy Rangoon

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VZCZCXRO2657 OO RUEHCHI RUEHDT RUEHHM RUEHNH DE RUEHGO #0330/01 1550601 ZNY CCCCC ZZH O 040601Z JUN 09 ZDK FM AMEMBASSY RANGOON TO RUEHC/SECSTATE WASHDC IMMEDIATE 9058 INFO RUCNASE/ASEAN MEMBER COLLECTIVE RUEHBK/AMEMBASSY BANGKOK 2921 RUEHBJ/AMEMBASSY BEIJING 2284 RUEHBY/AMEMBASSY CANBERRA 2013 RUEHKA/AMEMBASSY DHAKA 5206 RUEHLO/AMEMBASSY LONDON 2129 RUEHNE/AMEMBASSY NEW DELHI 5488 RUEHUL/AMEMBASSY SEOUL 9084 RUEHTC/AMEMBASSY THE HAGUE 0760 RUEHKO/AMEMBASSY TOKYO 6660 RUEHCN/AMCONSUL CHENGDU 1796 RUEHCHI/AMCONSUL CHIANG MAI 2174 RUEHCI/AMCONSUL KOLKATA 0644 RHHMUNA/CDR USPACOM HONOLULU HI RUEKJCS/JOINT STAFF WASHDC RUCNDT/USMISSION USUN NEW YORK 2464 RUEHGV/USMISSION GENEVA 4471 RUEATRS/DEPT OF TREASURY WASHDC RUEKJCS/DIA WASHDC RUEAIIA/CIA WASHDC RHEHNSC/NSC WASHDC RUEKJCS/SECDEF WASHDC C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 000330 SIPDIS STATE FOR EAP/MLS, INR/EAP, EEB/TFS PACOM FOR FPA TREASURY FOR OASIA, OFAC E.O. 12958: DECL: 06/04/2019 TAGS: ECON EFIN PINR PREL BM SUBJECT: BURMA: TAY ZA REPORTEDLY FALLING OUT OF FAVOR, NEW CRONIES ON THE RISE REF: A. 07 RANGOON 1107 B. 08 RANGOON 741 C. 08 RANGOON 699 RANGOON 00000330 001.6 OF 003

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Classified By: Economic Officer Samantha A. Carl-Yoder for Reasons 1.4 (b and d). Summary ------1. (C) Tay Za, long a favored crony of Than Shwe, allegedly is falling out of favor due to his companies' inability to meet the demands of senior generals. In recent months, his bid to purchase a new A320 plane for his domestic airline fell through, he was unable to fulfill his contract with the GOB to construct the new Parliament and Presidential Palace in Nay Pyi Taw, and he is rumored to be deeply in debt. General Thura Shwe Mann told businessmen that Tay Za's notorious personal behavior draws negative international attention to the regime. Economic contacts speculate that as Tay Za's star is falling, up-and-coming cronies are currying favor with the senior generals. In an effort to secure his position as top crony and ensure access to GOB leaders, Tay Za reportedly plans to run for office in the 2010 elections. End Summary.

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Tay Za on the Outs? ------------------2. (C) Over the past five years, Tay Za has secured his position as the regime's top crony, cultivating relationships with the senior generals, particularly Than Shwe. Regime officials often turned to Tay Za for hotel and airline freebies or capital for the regime's infrastructure projects. He also became the regime's key broker, negotiating with investors from China and Russia on a number of different public and private projects. In return, Tay Za obtained lucrative construction contracts, valuable import permits, and access to the regime. According to local businessman George Soon, owner of Regent Air and investor in Myanmar Airways International (MAI), senior leaders (other than Than Shwe) are becoming disenchanted with Tay Za. Soon noted that General Thura Shwe Mann, number three in the SPDC, recently commented to several high-ranking businessmen that Tay Za is a liability because his notoriously conspicuous consumption has drawn international scrutiny and reflects "poorly" on the regime. Consequently, according to Soon, both Thura Shwe Mann and Vice Senior General Maung Aye are favoring other cronies, including Aung Thet Mann, Nay Aung (son of Ministry of Industry-1), and Zaw Zaw (Refs A and B), for new projects and licenses in return for their "assistance." Failed Business Opportunities ----------------------------3. (C) During the past six months, several of Tay Za's companies have reportedly experienced financial and operational difficulties. According to MAI General Manager Aung Gyi, Tay Za in January failed in his attempt to purchase from a Dubai company a new A320 plane so Air Bagan could resume international flights. The Dubai company canceled the sale because Air Bagan is sanctioned by both the EU and the U.S., Aung Gyi told us. In late May, Tay Za approached Soon, requesting MAI to purchase the plane and "donate" it to Air RANGOON 00000330 002.2 OF 003

Bagan. Tay Za threatened to use his connections to cancel MAI's flight permissions if Soon refused. MAI management denied the request and instead signed its own contract for a new plane. 4. (C) Tay Za's Htoo Construction Company continues to face financial difficulties and is unable to complete many of its contracts, Zamil Steel Country Manager Wael Elmawie reported. Indeed, Htoo Construction, which the regime chose to build the huge new Parliament and Presidential Palace in Nay Pyi Taw, reportedly lost those contracts due to its inability to complete work on time, Elmawie told us. Tay Za still owes Elmawie and several others more than USD 5 million for materials for the Nay Pyi Taw projects, such as steel, concrete, and machine parts. Elmawie added that several construction companies reported Htoo Construction's contract delinquencies to the Minister of Construction, who pledged to look into the matter. New Cronies Gaining Power ------------------------5. (C) Economic contacts confirm that several lower-profile cronies continue to strategize on ways to take Tay Za down. Trader Anwar Hussein (who is friends with Aung Thet Mann) told us that Aung Thet Mann recently became Vice Chairman of Tay Za's Htoo Group of Companies, allegedly on the order of his father General Thura Shwe Mann. Aung Thet Mann already manages Tay Zaw's Aye Yar Shwe Wa company, one of the most successful rice trading firms in Burma, and is looking to step out from Tay Za's shadow, Hussein explained. By the end of 2009, Aung Thet Mann plans to open a new trading company, Golden Link. Hussein noted that Aung Thet Mann plans to use his father's position and influence to ensure that his new company dominates Burma's trade sector. 6. (C) Elmawie told us that regime crony Nay Aung, son of the Minister of Industry-1 and owner of IGE Co. Ltd. with operations in the natural gas, agricultural, and timber sectors, is siphoning off business from Tay Za's Htoo Wood Products (Refs B and C), earning a more dominant position in Burma's timber trade. Zaw Zaw, an up-and-coming crony who is close to Than Shwe's grandson, also continues to curry favor with the regime. As owner of one of Burma's new soccer
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teams, Zaw Zaw gave Than Shwe's grandson a starting position on the team, MAI's Soon told us. In return, Zaw Zaw's company, Max Myanmar, received several new construction contracts, including completing work on the Rangoon-Nay Pyi Taw highway. Max Myanmar is also working with Steven Law's Asia World to finish construction of the new Parliament and Presidential Palace in Nay Pyi Taw, after Tay Za lost those contracts. Running for Office -----------------7. (C) Maung Maung Lay, Secretary of the Myanmar Chamber of Commerce, confirmed rumors that Tay Za will run for office in the 2010 elections. Air Bagan General Manager Aung San told us that, although Tay Za is resident in Rangoon, he will run for office in Bogalay, Irrawaddy Division. After Cyclone Nargis, the regime assigned Tay Za responsibility for rebuilding the Bogalay area, so he is well-known in the region. When asked why Tay Za is running for office, Maung RANGOON 00000330 003.2 OF 003

Maung Lay commented that it was at the Than Shwe's request. Maung Maung Lay surmised that Tay Za also wants to ensure his access to those in power as a Parliamentarian. Comment ------8. (C) The business community is rife with rumors about Tay Za's alleged downfall, and we have seen evidence of lower-profile cronies attempting to curry favor with SPDC leaders to secure lucrative contracts that Tay Za would normally receive. We hear from some sources that Tay Za remains Than Shwe's favorite, and Tay Za will likely do what he can to retain that position. So far, Tay Za is the only regime crony who has plans to run in the 2010 elections, but as the vote nears, we expect other top businessmen to do what they can -- which for some will likely mean running for office -- to protect their influence and position with GOB leaders. DINGER

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