An anti-corruption group has put luxury jewellers on alert about their possible role in funding human rights abuses in Myanmar, saying the country’s lucrative gemstone industry has emerged as an “important source” of revenue for its military rulers.
In a report released last week, Global Witness said Myanmar’s military, which seized power in a coup on February 1, is now in control of the country’s multimillion-dollar gemstone industry.
It said official data indicates the sector, which includes trade in rubies, sapphires and other gemstones, was worth on average from $346m to $415m per year from 2014 and 2017. But when accounting for the illicit trade in these gemstones, the report said the industry could have been worth an average of $1.73bn to $2.07bn annually over the four years.
Given the military’s control of the sector, as well as international sanctions on Myanmar military conglomerates linked to the gemstone trade, Global Witness said “all companies must urgently review their supply chains, to ensure they are not funding conflict, corruption, or state oppression in Myanmar”.
The group’s report, based on more than 150 interviews with public officials, community members and industry representatives, said all gemstone mining in Myanmar is illegal at present, as all the licences issued by the country’s toppled civilian government had expired in 2020, a year before the coup.
The military is yet to issue any licences publicly, but since its power grab, informal mining has “exploded” in the country, Global Witness said, with tens of thousands of workers flocking to the mines in Mogok in the central Mandalay region, paying bribes to the military.
This informal mining is taking place against a backdrop of “extreme instability” in Myanmar, including in Mogok, the report said, with the military accused of committing crimes against humanity, including by killing hundreds of anti-coup protesters as well as launching attacks on civilians in the country’s border areas.
Still, jewellers, auction houses and mass-market retailers are continuing to buy and market rubies and other precious stones from Myanmar, it said.
Processed in Thailand, the gemstones from Myanmar are sold to international jewellers and “and ultimately to customers who have no way of knowing whether they are funding atrocities”, it said.
Only one of 20 dealers Global Witness spoke to in Thailand, Fai Dee, was able to identify a specific mine where one of its rubies originated.
That particular mine, Shwe Pyi Aye, has been controlled since 1995 by Myanmar Economic Holdings Limited (MEHL), one of two main military-controlled conglomerates sanctioned by the United States, United Kingdom, European Union and Canada.
A company representative from Fai Dee told Global Witness that there was “no way” to say exactly when the ruby was mined, according to messages seen by Al Jazeera. The representative told the Global Witness investigator, who was posing as a customer, that it sells its rubies to leading American and British brands like Harry Winston, Graff, Sotheby’s and Christie’s.
When asked for a response, a lawyer for Fai Dee told Al Jazeera that the company did not acquire the Shwe Pyi Aye ruby at a time when MEHL controlled that mine and that much of its collection pre-dates 1995.
The lawyer also said Fai Dee has been operating for 100 years and has acquired a number of gems in that time originating from Myanmar, but that “Fai Dee has not purchased from any mine or government enterprise in Myanmar” since 2008, when the US imposed sanctions on military conglomerates linked to the gemstone trade.
These sanctions were lifted in 2016 following a transition to civilian rule, but were reimposed this year following the military coup.
Fai Dee’s lawyer said the company “has not violated any sanctions relating to Myanmar, nor contributed in any way to human rights abuses in that country”.
Other Thai dealers, while publicly claiming they have stopped sourcing rubies from Myanmar are continuing to do so, according to Global Witness. One company told a Global Witness investigator who was posing as a customer that they could still do so as of July this year.
Global Witness also said it had also contacted 30 international jewellers, auction houses and mass-market retailers that sell gemstones, based in the US, Europe and Asia.
“We found that most of them did not have adequate due diligence measures in place to ensure that their supply chains were not funding abuses. As a result, these companies may have been funding Myanmar’s military, one of the world’s most brutal regimes, helping to sustain its abusive power over the people of Myanmar.”
Peter Kucik, a US sanctions expert with experience working on Myanmar since 2007 and direct experience assessing the gems sector in Mogok, told Al Jazeera that Global Witness’s findings were in line with his own.
Noting Myanmar has been subject to various sanctions regimes, which were imposed in 2008, lifted in 2016 and then imposed again in February after the coup, Kucik said in terms of sanctions liability, companies would only need to be concerned with gemstones sourced since the February coup.
But he said there is no way to determine whether a ruby was mined in 2017 or 2021.
“There’s literally no way to do it. Because of the difficulty or impossibility of identifying licit sources, the default new solution appears to be the same as the old one – cease sourcing any rubies from Myanmar to try and cut off the junta’s revenue stream,” he said.
Kucik said sanctions policies are “strict liability”, meaning that if a US company ended up with a Myanmar ruby that violated sanctions, it would still be a violation, even if the company did not know its origin.
“If I go to Thailand and buy a briefcase full of rubies and the seller says these 100 percent didn’t come from Myanmar, but they did, I still have a problem, but that would be weighed in terms of what enforcement mechanism would be used. That ranges in possibility from a cautionary letter all the way to referral for criminal investigation if there is a willful violation,” he said.
Global Witness said only three companies, Tiffany & Co, Signet Jewellers and Boodles have publicly declared that they have stopped sourcing gemstones from Myanmar since the coup. Cartier and Gubelin told the group the same, while Harry Winston issued a public statement on December 9 saying it will also stop sourcing gemstones from Myanmar.
“In its ongoing commitment to responsible and ethical sourcing, the House of Harry Winston will no longer source gemstones from its suppliers that have Burmese origins, regardless of their importation dates,” it said.
Al Jazeera reached out to Sotheby’s and Christie’s for comment. But there was no response at the time of publication.