Burma's forced labour

The brutal Burmese government has for years forced citizens to work for free. Twenty per cent of tho

The Burmese military government has come under huge international pressure and criticism since cyclone Nargis destroyed large parts of Burma, killing at least 78,000 and leaving 56,000 more missing.

A month on, the UN estimates that 2.4 million people are in need of food, shelter or medical care, and more than a million have yet to receive foreign aid. Huge numbers of people are surviving in appalling conditions, with little or no help.

In the month since the disaster, only a small number of international aid workers have been granted access into the affected regions, and there is growing concern that the reconstruction effort will depend on forced labour - be it from children or migrant adult workers.

The International Labour Organisation's (ILO) liason officer in Rangoon, Steve Marshall, said there had not been any verified reports of forced labour linked to the disaster. But he added: "We're not saying it isn't happening."

Burma is well known for its use of forced labour. The Tatmadaw (Burmese military) routinely forces civilians to work on state infrastructure projects, such as the building of roads, bridges, military bases or even towns.

The military will typically demand labour from local villages, with the threat of fines if households are unable to supply the required amount of people. The ruling State Peace and Development Council's (SPDC) search for labourers is made easier by the existence of registration documents with details of the exact number of inhabitants, property and livestock within any given village.

Inhabitants have no choice but to apply for national identity cards and register their details or risk fines or arrest.

The military is increasingly relying on SPDC-appointed village chairpersons as intermediaries through whom to disseminate their demands.

One particularly brutal example of forced labour is SPDC’s use of villagers as human minesweepers to clear the way for the safe passage of soldiers.

Projects vary in length and intensity, but they always mean that people are taken away from their land and livelihoods without any remuneration in return.

Military personnel operate under blanket impunity, and know that they will not be held accountable for any mistreatment of civilians. Furthermore, low level officers and soldiers in charge of forced labour projects are under pressure to meet demands, quotas and timetables ordered by their superiors.

Threats, harassment, beatings and even killings are not uncommon, and women risk rape and other sexual abuses. Forced labour often means that villagers are unable to work on their own agricultural work for days or even weeks on end. Regular forced labour in Mon State (South-eastern Burma), for example, has been a primary factor leading to increasing food insecurity.

Prison Labourers

Human rights organisations have reported the continuous use of forced prison labour in Burma, and it is estimated that as many as 20 percent of prisoners sentenced to ‘prison with hard labour’ die as a consequence of the conditions of their detention. It has been reported that at least 91 labour camps operate in areas across the country and the thousands of prisoners in these camps are used to build highways, dams, irrigation canals, and to work on special agricultural projects. Prisoners are reportedly being forced to work 12 hours a day without rest, and the sick and weak are not exempted from work. Inmates who cannot afford bribes are condemned to the harshest labour.

The living conditions and the general treatment of forced prison labourers are widely reported to be far worse than for civilian forced labourers. The work is more dangerous, they have to work even longer hours and health provisions are non-existent. The prisoners are viewed as expendable labour and there are countless reports of their torture, beatings and killings. A constant supply of prison labour is ensured by the continuing arbitrary arrests, as well as the imposition of lengthy sentences for minor misdemeanours. Those arrested often do not receive due legal process and are told that they will be released on payment of a bribe. Those who are unable to bribe the police or the judiciary are automatically sent to prison, whether there is evidence against them or not.

Forced conscription and child soldiers

Human rights groups, meanwhile, believe boys as young as 12 are recruited to fight against ethnic minority rebels. Human Rights Watch (HRW) estimated that there may be more than 70,000 child soldiers in the SPDC Army.

The children are often kidnapped without their parents' knowledge while on their way home from school. They are then brutalised and physically abused during their induction and basic training before being shipped off to fight in the country’s ethnic states. “Child soldiers are sometimes forced to participate in human rights abuses, such as burning villages and using civilians for forced labour," said HRW. "Those who attempt to escape or desert are beaten, forcibly re-recruited or imprisoned."

Following the suppression in 1988 of the nationwide pro democracy demonstrations, the ruling military council initiated a dramatic effort to modernize and expand the armed forces. To tighten its control over its population, the SPDC Army instituted a dramatic expansion of military personnel throughout the country.

Service in the armed forces is for many a dangerous and gruelling experience, and soldiers are often subjected to mistreatment by senior officers. According to the junta’s military meeting minutes, there were about 9,000 desertions during 2006, whereas the army was only able to recruit 6,000. This trend continued in 2007, and the army is facing an acute shortage of trained personnel as a result.

Burma continues to have one of the highest numbers of child soldiers in the world - despite an official age of enlistment of 18.

According to Thein Sein, it is under-18s that are to blame for the problem because they lie about their true age or did not inform their parents that they had enlisted in the army.

Though, in a tacit admission that there remained underage soldiers in the armed forces, he further stated that soldiers with stunted growth were not sent to forward areas but were instead given light work duties at military bases, and that illiterate youth were sent to army schools to be educated.

With forced labour being such a common occurrence in the country, it is expected Burma will make use of it for the reconstruction process. Burma has a long history of ignoring the advice of International Organisations and actively hampering their freedom of movement and investment in the country, and is not about to change its stance.

Once again, the military junta will throw a spanner in the works and prevent ILO from monitoring the reconstruction process properly, adding further suffering to the devastated area and a population that has been through so much already.

Carole Reckinger specialises in south east Asian politics. She drafted the 2007 Forced Labor Chapter for the Burma Human Rights Yearbook. Click here for more of her articles
Photo: Getty
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Enough to educate 17 million children: the true cost of Brazil’s Car Wash scandal

As a new Netflix series dramatises one of the world’s largest corruption cases, Global Witness puts a figure on the cost of the scandal.

In the 1980s, Alberto Youssef was, alongside an older sister, smuggling whisky and electronic products from Paraguay to Brazil. Once, while being chased at a high-speed by police, VCRs kept falling out of the pick-up truck he was driving. Few would have guessed that this almost comical character would, one day, become a key player in what has been called the biggest corruption scandal in history. But then, the Car Wash, or as it’s known in Portuguese, Lava Jato, stretched far and wide across Brazil at a huge cost.

New research by Global Witness shows the damage caused by the Car Wash scandal far exceeds the sums stolen. The cost to the Brazilian treasury may be nearly eight times higher than the £1.4bn actually taken, enough to cover the salaries of more than a million nurses or provide a year’s education for over 17 million children.

Police only began to uncover the extent of the Car Wash scandal in 2013, when they became suspicious about the sheer quantity of cash churning through a bureau de change in a humble petrol station in the country's capital Brasilia. That led to the arrest of Youssef, which in turn led to further arrests. It soon became clear that this was no ordinary money laundering operation. Police had stumbled upon a racket that would involve at least 28 major corporations and 20 political parties, resulting in over 100 convictions. The list of those implicated reads like a Who’s Who of the Brazilian political elite, including two of the country's presidents.

Former Brazilian president Luiz Inacio Lula da Silva has been sentenced to more than 12 years, after it emerged he took bribes for helping a construction company win contracts with Petrobras. Lula says the case is politically motivated and remains free while appealing it. A ruling in a federal court on Monday, however, could send him behind bars, even as he takes the case to the Supreme Court.

Current president Michel Temer has also been at the centre of corruption investigations, most recently over allegations of bribery concerning a deal for operating services at the Port of Santos, Latin America’s largest container port. Congress has twice blocked Temer from standing trial on corruption charges while in office, and he denies the allegations.

The scandal has also inspired The Mechanism, a new Netflix drama from the director behind the biopic of Pablo Escobar, Narcos. The sums of money involved in Car Wash were almost at Escobar levels, but the billions lost to Brazil’s hard-pressed public services mean the scam might also have caused harm on a scale comparable to the druglord’s activities.

The fraud revolved around Petrobras, Brazil’s state-owned oil company. Instead of awarding huge contracts for construction projects, oil rigs, shipping and so on in the normal manner, the work was rotated around a cartel of companies in orderly fashion. Petrobras would over-pay the companies by at least 3 per cent, with the extra money forming a kickback to the directors responsible for awarding them the contracts. These directors would pocket some of the money, and hand the rest to the politicians who had appointed them to their lucrative posts. The money then went to the campaigns of Brazil’s political parties and provided backdoor funds that kept otherwise unstable governing coalitions together.

The result was a Byzantine racket of astonishing intricacy and scale in which everyone took a cut. Bribes came in the form of bricks of cash, expensive art works, aircraft and yachts; anonymously-owned companies in tax havens and foreign bank accounts helped launder the loot. One Petrobras director alone channelled €20m to banks in Monaco from accounts in the Bahamas, Panama and elsewhere.

“Once the mechanism is established, only the corrupt can take part,” says José Padilha, the Brazilian writer and director of The Mechanism. “If you’re an honest politician you’re doomed. The honest businessman will not get any contracts. There are only crooks.”

This “mechanism” had been running uninterrupted for at least 12 years.

Was this really the biggest corruption scandal of all time? Virtually every Car Wash explainer in the UK press poses the question – but none provides an answer. That’s probably because it’s notoriously hard to quantify value throughout history. In 193 AD, the Roman Praetorian Guard assassinated their emperor and held a fraudulent auction to appoint his successor, striking a deal worth 250 pieces of gold for each soldier in the army. (The empire was not theirs to sell). If not the earliest documented fraud, it was surely the most audacious – but trying to convert the ransom into modern currency is a fool’s errand.

But Padhila has no doubt. “It’s the biggest corruption scandal in the history of mankind,” he says. “It involves a mechanism which has been operating in Brazil in one form or another since at least the Eighties. Too many Brazilians fall into the trap of ideology, but the mechanism has no ideology. It is left wing and right wing. The whole political system is corrupted. Democracy has failed.”

Regardless of whether Car Wash is the biggest bribery case of all time, it certainly features in the ranks of the world’s corruption mega-scandals, sitting alongside mammoth state-thieving operations such as Malaysia’s recent “1MDB scandal” – US lawsuits claim an estimated $4.5bn has gone missing from a state development fund – and France’s Elf scandal, which shook the body politic and in which at least $400m was creamed off international oil contracts. All these scandals were linked to illicit political funding.

Taking a look at the cost of Car Wash to Brazil, first off there is the amount filched from the state oil company in improper payments. A Federal Police report seen by Global Witness conservatively estimates this at £1.4bn – all of which had to be laundered, sometimes moved physically. To put this logistical feat in context, if withdrawn in £10 notes the sum would make a stack eight miles high equivalent to almost 16 Burj Khalifas, the tallest building in the world (or, if you like, 343 Christ the Redeemers). The 119 tonnes of cash would take a fleet of 97 Ford Transit vans to deliver.

Then there is the £2.1bn fine Petrobras has agreed to settle a US investors’ class action, already bigger than the amount actually stolen. But both the theft and the losses are dwarfed by (and reflected in) the collapse in Petrobras’s share price. Before the scandal broke in September 2014, shares were at $19.33 but as of March 2018 they had dropped to $14.07. The government suffered a paper loss of £14.1bn for its 29 per cent stake in the company.

September 2014 was also the moment that global oil prices began a long decline, but the damage was too great for Petrobras to hide. “I would say 90 per cent of the fall in share price is due to Car Wash,” says Tiago Cavalcanti, a Brazilian economist at the University of Cambridge.

Petrobras’s 3.7 billion shares are supposed to furnish Brazil with a healthy income, and in the three years before Car Wash exploded, they provided Brazil with an average annual dividend of £360m. No dividend was paid in 2015, 2016 or 2017, costing the country £1.1bn.

Then comes the kicker. So vast was the upheaval  with billions slashed in investment   that some believe it helped bring about the worst recession in Brazil since records began. In March 2014, when the first Car Wash arrests were made, the Brazilian unemployment rate was 7.1 per cent. By last summer it was at 13 per cent. São Paulo consultancy GO Associados, headed by economist Gesner Oliveira, calculated that the fallout from Car Wash hit GDP by 2.5 per cent in each year the investigation was going on, from 2015 to 2017. The consultancy has now told Global Witness it has revised those figures up to an extraordinary 3.6 per cent — which would mean almost the entire drop in output during 2015 and 2016 was accounted for by Car Wash.

GO Associados said that would imply an annual $4.6bn (£3.3bn) in lost tax for each of the three years the fallout from Car Wash was at its most extreme £9.9bn. This figure would appear to be on the conservative side: it is based on the hit to the economy from Petrobras’s reduction in spending plans  but does not take into account the wider impact on Brazil’s giant construction companies, many of which lost contracts elsewhere in Latin America as a result of the scandal. Such firms were also banned from any public contracts in Brazil. The figure also fails to include the reduction in foreign investment in Brazil as a result of the political turmoil.

So even setting aside Brazil’s paper loss – Petrobras shares may well continue to rise  Lava Jato could have cost the government at least £11bn in revenue in lost tax and lost dividends from its stake in the company. That’s almost eight times the amount stolen from Petrobras in the first place.

“That number sounds very plausible and the calculation is logical,” says Cavalcanti, who has himself calculated that without Car Wash and other governmental policies Brazilian GDP would have grown by 1.2 per cent in 2015 and 2016 (as opposed to an actual fall of 3.8 per cent and 3.6 per cent). “Another reason for the recession was the falling price of commodities, but Peru and Chile did not have the fall Brazil had. Certainly Car Wash was a very big factor in the recession.”

Who knows the real difference that £11bn could have made in a country where universal healthcare is still some way off and about 7 per cent remain illiterate. The real price of Car Wash is incalculable.

“I feel disgust and exasperation,” says Padilha.

You might think that at such terrible cost, the Brazilian public would rather the fraud had never been exposed. But a recent poll suggests 94 per cent of Brazilians think the investigations should continue despite the current turmoil. For many, this is a golden opportunity to tackle the corruption that has afflicted the Brazilian body politic for decades before the mechanism started turning.

Because according to the filmmaker, Petrobras is the tip of the iceberg.

“There is no public contract in any village, town, city or state that is not affected, from the tiniest new road to the biggest government project,” he says. “All are corrupted - and none of this is exposed yet. In my country you can turn any stone and there will be cockroaches underneath.”

Ed Davey is an investigative journalist for Global Witness.