Dr. Felicity Gerry
The Singapore Exchange (SGX) listed company Emerging Towns & Cities Singapore (ETC) has announced the sale of its stake in the Golden City real estate development in Myanmar for S$4 million, which involved a reported loss of S$80.2 million.
The company’s announcement on 1 July 2023 to sell its controlling stake follows a legal memo which explained the compliance mesh that international law and guidance places on SGX as well as possible liability on the Monetary Authority of Singapore and the Singapore Government for companies doing business with the Myanmar army.
“This is a lesson for all investment and trading platforms and with a warning to ensure consultants are fully cognizant with legal frameworks,” said the eminent international criminal barrister Dr. Felicity Gerry KC, who has been instructed in the case.
“The Golden City debacle serves as a warning to investment schemes to consult international criminal lawyers before doing business with those connected to human rights abuses and atrocity crimes. There is an emerging compliance mesh that creates a connection between criminal law and financial risk. The film the Big Short opens with bankers going ‘from the country club to the strip club’. For multinational investment opportunities the safest location is not a golden city but legal counsel’s chambers,” added Gerry.
“ETC is a longstanding business partner of the Myanmar military that is complicit in the junta’s genocide, war crimes and crimes against humanity,” said Justice For Myanmar spokesperson Yadanar Maung. “ETC’s divestment was necessary but raises further questions that we urge Singapore authorities to address, including whether SGX will remain exposed to the Golden City project, and the fact that a private Singapore company will continue to bankroll the murderous junta.
“We are heartened that Singapore Exchange Regulation has taken swift action against ETC over its business with the Myanmar military, and to issue sanctions guidance that strengthens the impact of Myanmar sanctions for SGX-listed companies,” added Maung.
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Golden City officially opened Golden City Business Centre in 2017. The development with a net leasable area of around 150, 000 sq ft involved land use payments over a 70-year term with amounts of up to US$191.1 million to the Myanmar army. States have imposed sanctions against Myanmar in response to its government’s violent suppression of pro-democracy movements, corruption, and human rights violations. Sanctions include arms and trade embargoes, asset freezing and prohibitions on travel and investment and yet the investment opportunity was offered through SGX.
ETC suspended trading on 23 March 2022 asking SGX for an extension of time to find and offer and seek shareholders’ approval for the proposed divestment specifically citing the memo which found that international law and guidance places due diligence obligations on the Singapore Exchange (SGX), and possible liability on the Monetary Authority of Singapore and the Singapore Government, in relation to companies doing business with the Myanmar military. It also found that Singapore has an international legal obligation “to investigate, prevent and cease transactions that amount to wrongful acts”, which are applicable to business transactions with the Myanmar military and its business interests. Legal remedies would be “easily pursued and enforced” against SGX if the Myanmar military’s financial organs are found to be in breach of international laws and/or compliance regulations including international human rights and humanitarian law.
Despite this ETC’s latest annual report shows a “partial payment” of 2.33 billion kyat (S$1.68 million) to the Myanmar army in 2022.
“We acted pro bono for Justice for Myanmar but this was more than an example of effective pressure on Singapore companies to cut ties with the Myanmar military and its associated businesses to undermine the regime’s political legitimacy,” said Gerry. “It demonstrates the legal minefield that requires expertise on international business and human rights compliance beyond consultancy at the early stages of every investment, including the international criminal law risks. Much of the Big Short was taken up with the right time to sell. The law now requires significant reflection before buying in the first place.”
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