British banks under pressure over £45m loans to firm with links to Myanmar military

Human rights groups are demanding that two of Britain’s biggest banks explain why they have lent tens of millions of pounds to a technology company building a telecoms network that is part-owned and used by the Myanmar military.

HSBC and Standard Chartered have loaned $60m (£44.5m) to Vietnamese telecom giant Viettel in the last four years, a period when the Myanmar military has been accused of committing war crimes, genocide and crimes against humanity. Viettel is a major investor in Mytel, a Myanmar mobile network that, since its launch in June 2018, has grown to become the second-biggest operator in the country with over 10 million users.

A Myanmar state-owned enterprise, Star High Co Ltd, a subsidiary of the military-operated Myanmar Economic Corporation, has a 28% stake in the network; Viettel’s international telecommunications investment subsidiary, Viettel Global JSC, controls 49%; and Myanmar National Telecom Holdings, representing a group of Myanmar companies, owns 23%. The shareholding structure, which confirms Mytel is a major revenue generator for the Myanmar military, is revealed in a report by the campaign group Justice For Myanmar (JFM).

The report, based on open-source material and a trove of documents that emerged when a Viettel subsidiary accidentally published online internal files relating to the company’s operations in Myanmar, reveals how Mytel has been upgrading the Myanmar military’s infrastructure, including the army’s network of fibre-optic cables.

The links between Mytel and the military are well established. Major General Thaw Lwin, director of the military’s Directorate of Signals, who has responsibility for its infrastructure, is a director of Mytel. A Viettel subsidiary is leading the construction of at least 38 Mytel network towers located in Myanmar military bases.

The report also claims that Viettel units, under the Vietnamese Ministry of National Defence, are mining user-data for analysis in Vietnam. It alleges that the Myanmar military has access to the data, opening up the possibility it could be used for military purposes.

JFM has established that HSBC loaned $40m (£29.7m) to Viettel Global JSC between 2016 and 2020, while Standard Chartered’s UK arm loaned just over $20m (£14.8m) over the same period.

Viettel Global’s accounts show that more than half of its capital expenditure this year and almost half last year went into Mytel. “The report sets out very well the position of Mytel in relation to the Myanmar military and the position of Viettel in relation to Mytel,” said Christopher Sidoti, a former member of the UN Human Rights Council’s Independent International Fact-Finding Mission on Myanmar.

“The facts establish that Mytel plays a vital role for the military and that Viettel makes Mytel possible.”

JFM says businesses with interests in Myanmar – formerly Burma – have responsibilities under UN human-rights principles and Organisation for Economic Co-operation and Development guidelines to uphold international standards on human rights. It also questions whether HSBC and Standard Chartered may be in breach of EU restrictive measures on Myanmar.

“The report reflects where the money trail leads,” Sidoti said. “Among other places, it leads to HSBC and Standard Chartered. The report does this very cautiously, conservatively, not asserting that HSBC and Standard Chartered are liable for prosecution for crimes under international law or that they are directly aiding and abetting the commission of such crimes. Rather, the report puts these companies into a third category of entities that have human-rights due-diligence responsibilities that they have breached. That is a conclusion with which I agree.”

Yadanar Maung, a spokesman for JFM, said: “HSBC and Standard Chartered should be transparent and show exactly how they monitor and prevent their loans from financing human rights abuses.”

HSBC said: “HSBC complies with sanctions, laws and regulations in all the jurisdictions in which we operate and strongly supports observance of international human rights principles as they apply to business. We do not comment on client relationships, even to confirm or deny that a relationship exists.” Standard Chartered declined to comment.

The Observer put detailed allegations to a spokesman for Viettel about its relationship with Mytel, the Myanmar government, its military, HSBC and Standard Chartered. The company did not respond to requests for comment.