On April 21, 2021, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated two state-owned enterprises, Myanma Timber Enterprise (“MTE”) and Myanmar Pearl Enterprise (“MPE”). MTE and MPE were designated pursuant to Executive Order 14014, “Blocking Property With Respect to the Situation in Burma [also known as ‘Myanmar’],” for being a political subdivision, agency, or instrumentality of the Government of Myanmar.
MTE is a state-owned enterprise under the Ministry of Natural Resources and Environmental Conservation (“MONREC”), which is responsible for the production and export of timber on behalf of the Myanmar military regime. MPE is a state-owned enterprise under MONREC, which is responsible for oyster fishing and collecting, artificial breeding of oysters, culturing and harvesting pearl, and selling pearl through the Myanmar Pearl Event. MPE also approves licenses for oyster fishing, collecting and sales of oyster shells, and registration of oyster diving vessels and pearl and oyster technicians.
Andrea Gacki, OFAC Director, stated, “[t]he Burmese military derives significant funding from state-owned enterprises in the natural resources market. Today’s action demonstrates the United States’ commitment to targeting this specific funding channel and promoting accountability for those responsible for the coup and ongoing violence.”
Similarly, Antony J. Blinken, Secretary of State, stated “[o]ur action today reinforces our message to the military that the United States will continue to target specific funding channels and promote accountability for the coup and related violence. We will continue to support the people of Burma in their efforts to reject this coup, and we call on the military regime to cease violence, release all those unjustly detained, and restore Burma’s path to democracy.”
As a result of the designations, all property and interests in property of MTE and MPE that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50% or more by MTE or MPE are also blocked.
Unless authorized by a general or specific license issued by OFAC, or otherwise exempt, all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of MTE or MPE are prohibited. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of MTE or MPE. The prohibitions also include the receipt of any contribution or provision of funds, goods, or services from MTE or MPE.
We will continue to monitor developments in this area, and encourage you to subscribe to be kept informed of latest developments. Please contact the authors or your usual Herbert Smith Freehills contacts for more information.