Ethical Performance
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BAT says Burma pull-out was ‘not the best way’

December 2003

British American Tobacco has said it still does not agree that businesses should pull out of Burma (also known as Myanmar) over the country’s human rights record, even though it is the latest company to decide to leave.

The UK-based multinational is selling outright its majority stake in a Burma cigarette business, the largest UK investment in the country, to the minority shareholder Singapore-based Distinction Investment Holdings. The rest of the business (40 per cent) is owned by the Union of Myanmar Economic Holdings, part of the Burmese military regime.

BAT says its decision is a direct result of being asked this summer to quit by the UK government.

The company still believes ‘it is not the best way forward for businesses to withdraw unilaterally from countries whose governments’ human rights records have been criticized’, but says it must consider ‘the importance of the UK government’s position to the investment decisions of a UK-based multinational business’.

BAT’s decision brings to 15 the number of companies withdrawing this year. Campaigners say they will now push for a ban on imports of Burmese gems and timber into the UK and the European Union. They claim these products are an increasingly important source of income for the regime.

The Burma Campaign UK claimed that although profits from the factory would still go to the government, ‘it is unlikely to be nearly as much as under BAT, as the new company does not appear to be a tobacco firm and will not be as experienced and efficient as BAT’.

The pressure group said it will try to persuade the Singapore company to withdraw, but claimed BAT’s decision was significant because ‘if a company like BAT can be forced out of Burma, any company can be’.

Michael Prideaux, BAT’s director of corporate and regulatory affairs, said the sale, to be completed next year, was‘ a balanced outcome to a difficult dilemma’. He said: ‘We will sell our share in the … joint venture, while ensuring its continuing stability as a going concern. We have been assured that the new owners of our share aim to maintain the company’s high operating standards and the best possible employment prospects for its 500 employees.’

Distinction Investment Holdings has other business interests in south-east Asia and has owned 15 per cent of the Burma operation since 1993. UK Foreign Office minister Mike O’Brien, who called in BAT chairman Martin Broughton to discuss the issue in July, said he ‘warmly welcomed’ the decision.

O’Brien added: ‘I appreciate this was a difficult process, but I am in no doubt the decision was the right one. It was inappropriate for a British company that cares about its reputation for CSR to be participating in a joint venture with the business arm of Burma’s military dictatorship.’

The UK government claims the Burmese operation’s main beneficiaries are generals who are shareholders in the military’s trading arm – which distributes the cigarettes and takes profits.

BAT said the impact on its profits was not ‘material’ and so was not releasing the figures.


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