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"Michael Dobbs - Higginson and Miri



Subject: "Michael Dobbs - Higginson and Miriam Marshall Segal" Plus "Inflation in Burma", from BURMA ALERT March 1996

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BURMA ALERT 
Volume 7, No.3

March 1996
Investments:

MICHAEL DOBBS - HIGGINSON
and
MIRIAM MARSHALL SEGAL

In Dec.95, an article entitled ''What is the National League
for Democracy Up To?" by a Michael Dobbs - Higginson
was published in the Indonesian Observer and the Straits
Times of Singapore. It was featured very prominently in
SLORC - controlled newspapers in Burma (in Burmese and
in English) in Jan.96. People in Burma suspected that
Dobbs - Higginson was paid by SLORC to write the very
biased report on the NLD. According to a story by Erik
Guyot in the 24 Jan.96 issue of the Asian Wall Street
Journal and court documents, the facts are a little more
complicated and very interesting:

* Michael Dobbs - Higginson, 54, was until 1990 the
former chairman of Merrill Lynch Asia Pacific in Hong
Kong.

* Dobbs - Higginson wrote the book "Asia Pacific: Its Role
in the New World Disorder."

* Dobbs - Higginson is co - chairman of "Myanmar
Strategic Advisory Services Limited."

* Dobbs - Higginson works as a consultant to the Japanese
trading firm, Mitsui & Co, which started investing in
Burma in 1994. Mitsui & Co is currently engaged in
negotiating various contracts with SLORC.

* Dobbs - Higginson is a good friend of Miriam Marshall
Segal who persuaded him that Burma is ruled by a forward
looking 'collegiate military government.' Until November
1995, Segal was apparently the other co - chairman of
"Myanmar Strategic Advisory Services Limited.

* For the last 20 years, has Segal divided her time between
Burma and New York. She is a close friend of General Ne
Win and Lieut-Gen Khin Nyunt [BA].

* In 1990, Segal founded the Myanmar American Fisheries
Co (MAFCo), a joint venture with SLORC's Ministry of
Livestock and Fisheries, to process prawns and other
seafood.

* Peregrine Investments Holdings Ltd of Hong Kong which
has offices in 16 Asian countries and prides itself on
finding well - connected local partners in emerging
markets, teamed up with Segal in 1992.

* In mid - 1994, Peregrine bought Segal's shares of MMA
Financo Fisheries Co, which owned 50% of MAFCo.
Peregrine then hired Segal as Chairman of the money -
losing business and pumped in more than US$3 million.
* MAFCo continued to lose money and Segal was furious
with Peregrine for limiting her role in running the
company.

In early 1995, Mitsui & Co wanted new sources of seafood
and became interested in taking a stake in the prawn
business in Burma.

* According to memos that Peregrine submitted in court,
Segal allegedly wrote on 31 May to Claude Charles, a
retired Peregrine director and former head of its regional
corporate finance: "I really do hope you and Michael
(Dobbs - Higginson) come up with something creative by
which Mitsui buys all of Peregrine's stake in MAFCo and
then we are able to buy 35% - 40% back.  I think they
should be able to get it quite cheaply. "

* In a memo on 12 June, Segal addressing Brig - Gen
Maung Maung as "My dear general" advised him on a
range of issues including how to handle relations with the
US government or how to spot and deal with potential
dissidents in Burma. "Watch for expats or ex - Burmese
nationals. They are planted to organize local Burmese with
money and strategy while they remain in the background
and act as business people. "

* Segal also advised Maung Maung on Burmese politics,
"Do not give an inch .... It is yours to rule as you see fit ....
If the lady has (sic) let out, who will take responsibility for
her life and lives of others (?) Perhaps they should advise
her to compromise - in other words - attack mildly - show
your security - but your willingness to talk(,) not to be
dictated to. "

* According to documents filed in court by Peregrine,
Segal on 13 June dictated a memo to SLORC's Minister of
Fisheries Brig - Gen Maung Maung, to expel a Peregrine
employee and US citizen named Hector Lwin. "Why can't
his visa revocation be implemented - undesirable citizen,
mistreatment of local staff, suspicion of illegal action, too
many lost passports, etc. My job is difficult enough without
his undermining everything .... make life as difficult as
possible for the group (Peregrine employees) so they learn
that without support from me they will achieve nothing."

* Segal also asks Brig - Gen Maung Maung to intervene
with her landlord, "I left on the understanding that if there
are embargoes, which I am fighting against, his business
will be devastated. Please ask KN what to do about it ....
Make the landlord care; please show your muscle .... Talk
to him"
* Segal also reported to Brig - Gen Maung Maung about
her efforts to lobby for SLORC in the USA. "But bottom
line is we need USA for infrastructure - and work must
continue on changing their minds ... I have to tackle the
White House ... arranged to see Bob Dole, hopefully, our
next president."

* In 1995, Segal set up a rare meeting between a senior
Mitsui official and Lieut - Gen Khin Nyunt, SLORC
Secretary 1 and its intelligence chief. From a 19 June
memo from Segal to Dobbs - Higginson: "I ... arranged
every meeting and the most important one which Mitsui
themselves admitted was impossible to get, and which gave
them much face .... My understanding of the agreement that
exists between you and me is that they (Mitsui) are paying
us a US$150,000 retainer."

* In a 21 June memo to Dobbs - Higginson, Segal claims,
"I am recognized throughout the world as being the
strongest and most influential person with the government
of Myanmar.  That is worth a great deal .... What I have
described above would be the most sensible route for
Peregrine to take. The same applies for Mitsui as I
influence the Burmese government and the Burmese
dependency grows stronger daily."

* In the same memo, Segal writes, "I have managed to
diffuse the fallout from the movie  After Rangoon' (sic) by
pointing out that all this took place before 1988, and it has
changed ..... I have a meeting scheduled with Al Gore, and
I believe I can pull off a big public relations coup by
having the Burmese government represented for very little
money by a lobbying firm, the head of which is doing it for
me and believes in what I am doing. He has overruled his
board, and now it is a matter of convincing the Burmese to
do it, which I believe I can."

* According to Peregrine, Segal wrote Dobbs - Higginson
on 28 June: "In a conversation with Endo (senior Mitsui
official), discuss with him, that (sic) fact that the
government wants for me to become the official advisor for
Mitsui. This would be very beneficial for us and for them.
If that happens, the ministries will act promptly on Mitsui's
requests and I will be able to follow through openly on
everything and no one will dare say no. For these services, I
think we could ask US$500,000 ... and my salary plus
expenses ( ...about US$250,000 / year, roughly what I am
getting now). This would allow us to control and have a
deep knowledge of what Mitsui is doing in Yangon. "

* The same memo said, "Peregrine is about to put another
US$1.5 million into MAFCo... but they will not see the
return anticipated...  At that time, Mitsui can come in and
make a ridiculously low offer for 40% of MAFCo."

* Segal's 28 June memo to Dobbs - Higginson was faxed to
Peregrine by mistake.

* On 31 June, Segal again wrote to Brig - Gen Maung
Maung about Hector Lwin: "Hector is very active - pin
something on him, frame him - anything... I would raid
Hector's house."

* On 11 July 1995, Peregrine dismissed Segal as Chairman
of MAFCo claiming that she was planning to damage
Peregrine's business interest.

* On 14 July, Hector Lwin was interrogated by military
intelligence and immigration officials. On 17 July he was
given 72 hours to leave Burma for violating a minor travel
regulation which would normally merit a warning or fine.

* In early September, Segal entered MAFCo's two prawn
processing plants in Rangoon and told staff that she had
been reinstated as a director. She and a Burmese ally who
she reinstated as MAFCo's Managing Director, told staff
that Peregrine personnel entering the plant would be
prosecuted.

* Segal's lawyer justifies her actions under Burmese law
because the Ministry of Fisheries said that the share
transfer was invalid.

On 12 September, SLORC's Ministry of Fisheries wrote to
Peregrine, stating that the transfer of MMA Financo
Fisheries was subject to Burmese law, even though the
company was incorporated in Hong Kong, and questioned
the validity of Peregrine's acquisition of Segal's shares
because it did not register its ownership of the shares with
SLORC.

*  Peregrine claims that its purchase of Segal's Hong Kong
- registered company doesn't come under Burmese
jurisdiction and that it properly registered the shares.

* Peregrine sued Miriam Segal in New York for US$20
million in September 1995 for violating her employment
contract by pursuing other business deals and plotting to
undermine the prawn business so that Peregrine would be
forced to sell out.

* In Hong Kong, Peregrine also sued Claude Charles and
Michael Dobbs - Higginson, for conspiring to aid Miriam
Segal.

*  In October, Alan Mercer, Peregrine's in - house lawyer
said that it is no longer talking with its joint - venture
partner, the SLORC Ministry of Fisheries.

*  In December 1995, Miriam Segal counter sued Peregrine
in New York for US$20 million for breach of contract and
defamation.

The above account highlights not only the unethical
behaviour of Miriam Segal and her colleagues but is
shocking in exposing how SLORC generals are being
manipulated by unscrupulous businessmen. The lawless
nature of these exchanges should cause investors to pause
and reconsider whether they really wish to do business with
SLORC -- Ed 


Economics
INFLATION IN BURMA

ln recent months prices of basic commodities such as rice
and cooking oil in Burma have skyrocketed ringing
alarmbells. So severe is the inflation that SLORC has
finally admitted that there is a problem. The generals are
getting worried. "The uprising and demonstrations that
took place in 1988 were mainly because of the economic
difficulties," SLORC Minister of Trade Lieut - Gen Tun
Kyi said at a recent symposium. But according to the
generals, growing foreign investment, strong economic
growth and economic reforms have fuelled the inflation.
To explain the increases, SLORC's Minister for National
Planning and Economic Development, Brig-Gen David
Abel, detailed Burma's economic growth rates at a recent
top-level coordination committee meeting. "The issue of
inflation is inevitable since more and more has to be
invested for national reconstruction, but the rate of
inflation must not be out of control," said SLORC
Chairman Senior General Than Shwe. He called for all -
out efforts to bring down production costs by stressing
frugality in spending [Reu/N960301, B960324].
Are the generals' diagnosis of the problem correct? How
severe is inflation in Burma?

The following chart of prices gives an idea of the severity
of the inflation. It shows the Official Price versus
Unofficial Prices of basic commodities in Rangoon - in
Kyat per unit (Source: US Embassy).

          Official  Unofficial     Unofficial

          1990      1990      1995
Emata Rice     6.0       10.6      65.0
Fish      90.0      90.0      300.0
Chicken   120.0          122.0          325.0
Pork      110.0          158.0          300.0
Groundnut Oil 34.0       69.8      225.0
Gasoline  16.0      80.0      220.0

Other cost increases include: Electricity in Rangoon - Kyat
2.50 per unit in 1994 compared to Kyat 0.50 in 1991;
Charcoal - Kyat 45 per viss versus Kyat 13 in 1993; and
Gasoline - the Official Price was hiked to Kyat 25 per
gallon in Aug.94 from Kyat 16. Most Burmese attribute the
jump in inflation to domestic shortages of essentials caused
by excessive exports of some items to earn much - needed
foreign exchange (forest products, rice, sesamum, pulses,
onions, and marine products). Jumbo Shrimps, which are
out of the reach of most Burmese, best illustrate the point. 
In 1990, the Official Price was Kyat 200 per viss versus
Kyat 224 unofficially. In 1995, the unofficial price was
Kyat 1,500 per viss (Note - Most Burmese do not have
access to goods at the Official Price).

According to Professor Mya Maung, the main cause of
inflation in Burma is the inept monetary and fiscal policies
of SLORC. The following tables illustrates his point: 
          Currency in circulation
          (in million Kyats)
1988      14,659
1989      19,926
1990      29,211
1991 March     35,140
1992 March     46,584
1993 March     63,871
1994 March     76,749
1995 March     106,023 plus 13,248

The figure for 1995 shows the additional value of FECs
(Foreign Exchange Certificates) in circulation today (Kyat
13,248 million at the Unofficial rate of exchange). The fact
that the value of FECs are about one eighth of the notes in
circulation notes, makes matters worse.

SLORC's deficit spending on defence is another factor.
Since 1988, the 180,000 - man army has increased to
350,000 men. According to SLORC's own figures, its
defense spending in 1994 - 95 was Kyat 11.421 billion out
of a total budget of Kyat 31.938 billion. These figures do
not include the US$1.8 billion in arms that SLORC
purchased from China. The cumulative SLORC budget
deficit for five years of its rule from 1988 was Kyat 28.931
billion (US$4.82 billion).

The generals' chronic trade deficit is another factor as
illustrated by the following table:

Foreign Trade ( in million Kyats)

Year      Export         Import         Bal
1988-89   2,169          3,443          2,411
1989-90   2,834          3,395          561
1990-91   2,953          5,523          2,571
1991-92   2,926          5,537          2,411
1992-93   3,590          5,356          1,775
1993-94   4,158          7,800          3,642
1994-95   4,893          9,360          4,467

The cumulative trade deficit since 1988 is Kyat 17.837
billion (US$2.86 billion at the official rate).

Given these facts, it does not seem that SLORC is capable
of solving the problems Burma is facing. - Ed.


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