Weekly Business Roundup (January 16, 2009)

By WILLIAM BOOT

UK Insurance Firm Fined for ‘Suspicious Payments’

A London-based insurance firm has been fined millions of dollars by the British government for “suspicious payments” to procure business in Burma and other Asian countries.

The fine of US $7.75 million was made against the British subsidiary of Aon Corporation of the U.S.

Aon admitted to the UK’s Financial Services Authority that it had made “inappropriate payments” to third parties overseas in what were described in The Times of London as “high risk jurisdictions.”

The payments were made to potential business procurers in a number of countries, including Bangladesh, Burma, Indonesia and Vietnam.

In ordering the fine under British anti-corruption laws, the FSA said it was “completely unacceptable for firms to conduct business overseas without having in place appropriate anti-bribery and corruption systems and controls.”

The Burma Campaign UK which lobbies to stop companies doing business with the Burmese junta this week urged the London government to investigate all British insurance companies.

The human rights group has been waging a campaign to stop major insurance broker Lloyd’s of London members from providing insurance coverage to Burmese junta-owned or linked businesses.

“Corruption is endemic in Burma, the Financial Services Authority must now investigate all companies that have insured business in Burma, focusing on Lloyd’s of London,” said group spokesman Johnny Chatterton. “We know a number of Lloyd’s of London companies, including Catlin, Atrium and Kiln, have insured business in Burma, but the million dollar question is have they bribed the junta?”


Third Offshore Gas Probe Comes Up Empty

Another probe for gas in Burma’s offshore waters has drawn a blank— the third in less than two months.

Drilling in a well on a license held by Thailand’s PTTEP in the Gulf of Martaban is being abandoned, the company announced on Thursday, at a loss of US $27 million.

It’s the second exploratory probe to be abandoned as barren by PTTEP in a month.

In December, the Thai state-controlled firm said it would plug and abandon a deep sea drilling operation in its M-7 block, also in the Gulf of Martaban, at a similar financial loss.

PTTEP’s latest dry drilling loss is in the M-3 block, in which China National Overseas oil Corp. has a 20 percent stake.

Earlier in December, South Korea’s Daewoo International said it was abandoning an undersea probe in the AD-7 block it licensed to explore in the Bay of Bengal.

That drilling was at the center of a territorial waters controversy between Burma and Bangladesh which saw a confrontation between naval vessels between both countries.

The Bangladeshis claim the AD-7 waters as being inside their offshore border.

The counterclaims have been unresolved for years.


Vietnam Army Telecom Plans Burma Business

The Vietnamese state telecommunications company Viettel is expanding into Burma as it spreads across Southeast Asia in a bid to become a major regional player.

Vietnam’s state media reports that the company intends to open an office in Rangoon as a first step to offering telecoms services in Burma.

Viettel’s full name is Vietnam Military Telecom Company, and it’s owned by the Vietnamese army.

The firm has already established business in Laos and Cambodia, as well as operating one of the biggest mobile phone networks in Vietnam.

It announced recently that it had acquired 100,000 mobile subscribers in recent months in Cambodia and aimed to become that country’s second-biggest mobile services provides by the end of this year.

It’s not yet clear what business Viettel is planning in Burma, or how close its contacts are with the Burmese army.


India Rejects Burma Pulses in Favor of Vietnam

Burma’s pulse crops growers and wholesalers have lost up to 1 million tons of exports to India after buyers abandoned negotiations because of inflated prices and bought from Vietnam instead, reports say.

Indian buyers had been seeking extra purchases because of higher than usual demand at home, but negotiations collapsed at the end of last year when Burmese sellers attempted to inflated prices by US $200 per ton, according to the Myanmar Times and India’s Financial Express.

India announced last year it would seek up to 1 million tons of lentils, beans, peas and chickpeas from Burma.

India has an annual shortfall of about 3 million tons and traditionally imports from Burma, Australia and Canada.

The cause of the deal collapse is being investigated by Burma’s Ministry of Commerce, said the Times this week.

Earlier last year during high-level bilateral talks, Burma offered 40,000 hectares of land for contract farming for Indian to raise pulse crops. But the outcome of that proposal—at the time of India’s negotiations to develop the west coast Arakan port of Sittwe—remains unknown.