As an underdeveloped country, Myanmar has long been vulnerable to corporate crimes. Since the country’s transition to democracy in 2010, it has faced pressure to implement effective reforms and regulations for companies, particularly in relation to foreign investments. One crucial aspect of these reforms has been the protection of human rights (HR) violated by corporations. However, due to the Military Coup in February 2021, legal reform progress has been halted, and the country is now facing even more serious human rights violations. Therefore, this article aims to shed light on the problems with existing laws and enforcement mechanisms concerning human rights violations from an Environmental Human Rights (EHR) perspective. Additionally, it proposes potential solutions under the current circumstances.

Legal Framework

In Myanmar, the concept of corporate crime is relatively new to regulators and law enforcement agencies. This is evident in the recent laws that regulate the Environmental Human Rights (EHR) Protection Agenda. The notion of corporate social responsibility related to EHR was only introduced in 2012 through the Environmental Conservation Law and the Environmental and Social Impact Assessment (EIA) Procedure in 2015. Other regulatory developments include the Myanmar Investment Law and Rules, which establish a licensing procedure for projects with significant environmental and community impacts, the Conservation of Biodiversity and Protected Area Law of 2018, and the Forest Law of 2018. For the purpose of this article, these laws will be collectively referred to as “the Legal Framework.”

Despite the existence of this Legal Framework, exploitation and abuses persist, indicating its ineffectiveness in deterring companies from committing EHR violations. Thus, this article aims to identify the reasons why the Legal Framework falls short in deterring EHR offenses and explore alternative approaches to achieve deterrence.

Issues

According to American legal philosopher Lon L. Fuller, a successful legal system must possess the following characteristics: (1) generality, (2) publicity, (3) prospectivity, (4) clarity, (5) consistency, (6) stability, (7) capacity to be performed, and (8) congruence (Fuller’s eight principles). The failure of the Legal Framework in Myanmar may be attributed to a lack of adherence to some of these principles. A more comprehensive examination is required to determine which of the eight principles are lacking in the Legal Framework. This article primarily highlights issues related to congruence and clarity.

The issues identified in this article are as follows:

1) Inefficiency of Punishments 

The Legal Framework criminalizes all environmental offenses, and the available punishments are divided into three categories: civil penalties, administrative penalties, and criminal actions. Administrative penalties empower relevant government agencies to impose fines, business suspension or closure, and blacklisting, among other measures. Alternatively, civil and criminal actions can be pursued, with prosecutors presenting cases before the court for stronger sanctions such as imprisonment or larger fines, in accordance with the Attorney-General of the Union Law of 2010. Notably, prosecutors in Myanmar do not currently possess the discretion to enter into Deferred Prosecution Agreements (DPAs) or Non-Prosecution Agreements (NPAs) that would incentivize organizational reform. Consequently, it can be concluded that the Legal Framework in Myanmar leans towards retribution and deterrence theories rather than the reformative theory.

To effectively deter corporate crimes, the laws should be designed to increase the costs and reduce the profitability associated with such offenses, given the profit-driven nature of companies. However, the available sanctions under the Legal Framework are insufficient to shift this balance.

Under the existing Framework, the highest fine for environmental offenses is set at USD 10,000.

Although this amount may carry significance for individuals, it represents a low risk for companies engaged in investments that can have a substantial impact on the environment. Additionally, administrative officials have the authority to impose other penalties alongside fines. However, the lack of clear guidelines is a legal concern. As Professor Fuller mentioned in his aforementioned book, “Obscure and incoherent legislation can make legality unattainable by anyone, or at least unattainable without an unauthorized revision, which itself impairs legality.” When officers are granted discretionary power without proper guidelines, the consideration for effective deterrence is often overlooked. For instance, under the Forest Law, the arresting Forest Officer possesses the authority to cancel permits as a form of punishment. However, there are no rules or guidelines regarding the determination of such penalties, such as considering the scale of the offense, the nature of the offender, or the impact of the offense. Consequently, it is less likely that corporate offenders are deterred from committing crimes.

It is worth noting that some of these laws allow for criminal sanctions, where the amount of fines is determined based on the judge’s discretion. Although this represents progress towards achieving deterrence, it can also be ineffective for three reasons:

1. Court procedures are often time-consuming, which may delay addressing urgent environmental issues.
2. There is a lack of guidelines for judges to consider factors such as the size of the company and the scale of the impact.
3. Most judges have limited exposure to large companies and environmental assessments, which can hinder their ability to impose larger fines.

2) Compliance and Enforcement Issues

Congruence between official action and the law is essential for the functioning of a legal system. One factor that can impair congruence is “stupidity.” Strong evidence of this can be observed in the Environmental Impact Assessment (EIA) Procedure and its implementation gap. The World Bank’s 2019 Report identified issues with the implementation of the EIA procedure, highlighting the slow progress in approvals. For example, out of 1,971 Environmental Management Plans (EMPs) submitted, only 112 were approved in 2019. Compared to the data from 2018, the approval rate had only increased by 4. The report also recognized the limited technical capacity and resources of the EIA Division to effectively review EIAs/IEEs/EMPs. These findings demonstrate that the existing EIA procedure cannot function properly given the current capacity of the officers.

Professor Fuller has pointed out additional challenges to congruence, including bribery, prejudice, and the pursuit of personal power, collectively known as “corruption.” In 2022, Myanmar ranked 157 out of 180 countries in Transparency International’s Corruption Perception Index, marking a new low in the ranking after the Military took over the country in February 2021. Prior to the coup, corruption in Myanmar was monitored by the Anti-Corruption Commission. However, following the conviction and accusation of corruption against State Counsellor Daw Aung San Suu Kyi, the commission lost its credibility. This situation has created opportunities for government officials to engage in corruption. Furthermore, the new political situation has caused a 16% rise in the inflation index, leading to socio-economic difficulties in the country. This puts significant strain on government officials whose salaries are already low. Additionally, due to the revolution, many government officials have joined the Civil Disobedience Movement, resulting in a labor shortage within the government system. As a result, those who choose to remain in the system become susceptible to corruption either due to personal strain or the lack of supervision and opportunity. The prevalence of corruption among officials has created a culture of neutrality, further exacerbating the issue.

This corruption incentivizes the growth of corporate crimes in the country due to the administrative discretionary power held by government officials, as mentioned earlier. This situation is particularly problematic in cases of environmental offenses, as most issues and complaints arise from communities in remote areas where large-scale projects are taking place. Consequently, this corruption has undermined the effectiveness of the Legal Framework intended to deter offenders.

Solution

Under normal circumstances, these issues could be addressed through legislative amendments, training programs, or rigorous monitoring. However, given the ongoing unrest in Myanmar, creative solutions are required.

In Myanmar, the People’s Republic of China (China) is the second-largest investor, reportedly holding 23.48% of foreign investments. Specifically, many small-scale Myanmar operations in the mining sector, particularly in border areas, receive informal backing from Chinese capital. These projects are expanding rapidly after the coup and are unlikely to comply with environmental standards. The corrupted local officials and military regime are unwilling to interfere with these projects due to their shared private interests. This article proposes that this situation could be addressed through the implementation of Human Rights Due Diligence (HRDD) measures mandated by the EU Directive on Corporate Sustainability Due Diligence.

According to the Interpretive Guide to the UN Guiding Principles on Business and Human Rights provided by OHCHR, HRDD is “an ongoing management process that a reasonable and prudent enterprise needs to undertake, in light of its circumstances (including sector, operating context, size, and similar factors) to meet its responsibility to respect human rights.” While the concept of HRDD is reflected in many international standards, none of these standards, principles, and guidelines are legally binding or require corporations to actively engage. This lack of binding requirements hampers corporate compliance. However, a new EU Directive aims to change this. Under this Directive, EU companies will be obligated to conduct due diligence throughout their entire value chain, including subsidiaries and cross-border independent third parties, to ensure the protection of human rights and the environment, regardless of the presence or absence of laws in third countries. This obligation expands the corporate liability of EU companies and imposes pecuniary fines, compensations, or other legal remedies for HR and EHR violations committed by their affiliated companies.

Being the major actor in global value chain, Chinese companies work closely with the companies in the EU Market. In fact, China holds $770 million FDI in the EU.  The Directive, therefore, will surely have impact not only on the local Chinese companies but also those in the third-world countries like Myanmar where the productions of raw materials are taking place. This impact will, hopefully, indirectly help reducing the HR and EHR violations in Myanmar.

Conclusion