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Conflict Rubies: How luxury jewellers risk funding military abuses in Myanmar

December 15th, 2021  •  Author:   Global Witness  •  6 minute read
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As millions of brave people across Myanmar risk their lives to oppose the military junta which seized power in February 2021, and as Western countries impose economic sanctions aimed at cutting the regime off from key revenue sources, the country’s natural resource wealth is proving to be an economic lifeline for the generals.

Since 2015, we have documented the links between jade mining, armed conflict and continued military control, even during the decade of liberalisation that preceded the 2021 coup. Our previous reports have exposed the rogue actors at the heart of one of Myanmar’s most valuable sectors.

What is less well known is how the military and other armed actors profit from gemstones, including rubies, sapphires and other coloured stones. Our new investigation reveals for the first time in detail how Myanmar’s gemstone industry is just as problematic as the jade sector.

Download the full report : Conflict Rubies

For too long, international jewellers, auction houses and mass-market retailers have hidden behind the myth that the issues plaguing Myanmar’s jade industry do not apply to rubies and other gemstones.

The reality is that just like the jade industry, Myanmar’s gemstone trade is a corrupt military racket, run by the country’s top general Min Aung Hlaing and powerful armed groups. The revenue from this lucrative trade has enabled the Myanmar military to consolidate power and financial resources, and bankroll atrocities including the February 2021 coup.

Our new findings underscore the fact that there is no such thing as an ethically sourced Burmese ruby. These gemstones are sold as symbols of human connection and affection, yet the supply chain is steeped in corruption and horrific human rights abuses.

Key Findings

  • Despite all gemstone mining being officially illegal in Myanmar following the expiration of the last mining license in 2020, gemstone mining has boomed since the February coup.
  • Tens of thousands of informal miners have filled the void left by the end of official mining, and are being exploited by the military as well as non-state armed groups.
  • Based on a conservative estimate, Myanmar’s ruby industry at full production before licences expired was worth an average of $346 million to $415 million a year.
  • Many of these rubies end up in the multi-billion-dollar gemstone markets of Bangkok, Hong Kong, New York and London. Myanmar is one of the world’s two largest suppliers, and the source of the world’s most valuable stones.
  • Companies worldwide are hiding behind the complexity of gemstone supply chains, which obscures the origins of stones sold on the global market. By the time rubies reach Thailand, the global gemstone processing hub, in a murky process which involves payments to armed actors, most dealers have no idea which mine they came from.
  • Rubies sourced from Myanmar are being sold by multinational jewellery companies Graff, Van Cleef & Arpels and Pragnell, high-end auctions houses Sotheby’s and Christie’s, and mass market retailers Walmart and Intercolor. They are then bought by customers who have no way of knowing whether they are funding atrocities.
  • Of more than 30 international jewellers, auction houses and mass-market retailers we contacted, most did not have adequate due diligence measures to determine the sources of the precious stones they buy. Only four declare publicly that they have stopped sourcing gemstones from Myanmar.

A history of exploitation

Since seizing power in a coup on 1 February 2021 and imprisoning the country’s elected leaders, Myanmar’s military and its police have killed more than 1,200 civilians. They have fired indiscriminately into residential neighbourhoods, arrested thousands of people on spurious charges and systematically tortured prisoners in detention.

The coup was the latest in a decades-long series of power grabs by the Myanmar military, which has consolidated control over the country’s gemstone mines. It has granted mining rights to its own conglomerates, Myanmar Economic Corporation (MEC) and Myanmar Economic Holdings Limited (MEHL), which used the revenue from mines to fund military units that have committed atrocities.

Meanwhile, military leaders have used the country’s gemstone wealth to buy off armed opposition, granting lucrative licences to ethnic armed groups. And now, the military’s illegal takeover of state functions has placed regulatory control over the industry back in its own hands.

MEHL and MEC, which have been placed under sanctions by the US, the EU and the UK, are controlled by Senior General Min Aung Hlaing, the architect of the illegal power grab who faces allegations of crimes against humanity including genocide against the people of Myanmar.

In Mogok Township in Mandalay Region, where an estimated 90% of the country’s gemstone extraction takes place, the military is systematically collecting bribes from tens of thousands of local residents who are mining precious stones by hand in the very same sites that were previously licensed to the now-sanctioned MEHL and its subsidiaries.

Recommendations

States and international bodies should:

  • Recognise the pervasive influence of the military over Myanmar’s jade and gemstone industries and place bans on the import of all jade and gemstones from Myanmar.
  • Broaden due diligence regulations on responsible sourcing from conflict-affected areas to include gemstones and jade from Myanmar, and properly enforce them, in line with OECD guidance.
  • Gemstone mining and trading companies in Myanmar should:
  • Halt illegal operations in gemstone mining areas in recognition that they violate Myanmar law and international norms, and follow NUG guidance and policy on the gemstone industry.
  • Not apply for any new gemstone mining licences, or for renewal of lapsed licences, until there is a return to a freely and fairly elected civilian government.
  • Do not participate in military-run jade and gemstone emporiums.

The Responsible Jewellery Council should:

  • Develop detailed reporting requirements for its members and ensure that these are properly enforced, including by sanctioning failures to conduct adequate due diligence in line with OECD guidance.
  • Expand its chain of custody standard to include coloured gemstone supply chains.

Gemstone and jewellery companies outside Myanmar should:

  • Recognise that in the current context, responsible sourcing of jade and other gemstones from Myanmar, including through processors in Thailand and other third countries, is impossible while complying with OECD guidance and international law.
  • Ensure that disengagement from existing business relationships prioritises human rights.
  • Provide for the remedy of any adverse human rights impacts that they have caused, contributed to, or been linked with.
  • Publicly declare that they have stopped sourcing from Myanmar and set out their conditions for reengagement.

All companies mentioned in this investigation were contacted ahead of publication. Where they responded with a comment, these are included in the full report.


Download the Full Report.