Japan’s Kirin is under intense criticism by activists after an investigation failed to uncover whether proceeds from its beer venture in Myanmar went to the country’s military, which has been accused of crimes against humanity.
The brewer is the largest corporate target for activists seeking to bring the south-east Asian country’s powerful military to account for atrocities committed during its crackdown on minority Rohingya Muslims in 2017-18 and other human rights abuses.
Kirin’s investment in two breweries that have shareholders linked to Myanmar’s army has embarrassed the company and highlighted the potential reputational risks for companies operating in one of the world’s riskiest emerging markets. It asked Deloitte Tohmatsu Financial Advisory to conduct a strategic review of its business in the country last year.
In a statement on Thursday, Kirin said Deloitte had concluded its six-month investigation and it had not been able to determine the destination of dividends from its two brewing joint ventures (JVs) with Myanma Economic Holdings Public Company (MEHL).
“Unfortunately, the assessment was inconclusive as a result of Deloitte being unable to assess sufficient information required to make a definitive determination,” the company said.
Kirin said it would continue to suspend dividend payments from the two joint ventures to the Japanese group and MEHL. It said it would provide another update on the matter by the end of April.
The Japanese group is exploring a range of options including changing the ownership of its Myanmar JVs to remove any links with the military.
But the feasibility of such options remains unclear and analysts have said the company may have to sell its stake in the JVs to foreign brewers in the wake of pressure from human rights groups.
Kirin declined to comment on the possibility of a sale, but added it was in discussions with MEHL “to urgently find a solution that is consistent with our approach so far”.
William Nee, a business and human rights adviser for Amnesty International, said Kirin’s statement on Thursday was concerning. “If you are unable to access information sufficient enough to make a positive determination that your business relationship is not contributing to human rights abuses, then you really should consider ending that business relationship.”
“The worry is that they were unable to make that determination and yet are fine with suspending the payment of dividends and leaving it there,” he added.
Myanmar Brewery, the larger of its two beer JVs, accounted for less than 2 per cent of Kirin’s revenue between January and September. However, the brewer enjoys more than 80 per cent market share in the country and it has been reluctant to pull out.
An international UN fact-finding team last year called on businesses to cut ties with MEHL and Myanmar Economic Corporation, a second enterprise with strong ties to the country’s military.
According to Amnesty, MEHL is directed and owned by serving and retired military personnel. Military units, including combat divisions, own about a third of its shares. The human rights group said MEHL shareholders included high-ranking officials implicated in war crimes.
It said its military owners included the Western command, which oversees operations in Myanmar’s western Rakhine state, where security forces killed, injured, or raped thousands of Rohingya civilians during the 2017 “clearance operations” and drove more than 740,000 people into exile in Bangladesh.