United States: US State Department Releases Final Responsible Investment Reporting Requirements For Burma: Some Reports Due July 1, 2013

On May 23, 2013, the US Department of State released the final "Burma Responsible Investment Reporting Requirements", which updates and clarifies the previously proposed reporting requirements for "new investments" in Burma (also known as Myanmar) authorized under General License No. 17 issued by the US Department of the Treasury, Office of Foreign Assets Control (OFAC).

As described in our prior advisory, General License No. 17, issued on July 11, 2012, authorizes US persons to make new investments in Burma subject to certain limitations and requirements.  General License No. 17 requires US persons engaging in new investments in Burma to submit reports to the Department of State if their aggregate investment, over any period, exceeds $500,000.  These reports are intended to provide the US Government with information regarding the impact and effects of new investment permitted under General License No. 17. 

The requirements includes two reports – one report will be made available to the public (Public Report), while the other will be provided to the government and not made public (US Government Report).  Once a US person reaches the $500,000 aggregate investment threshold, the first reports must be filed within 180 days.  For those US persons who exceeded the 180-day window before the final reporting requirements were released, the initial reports are due on July 1, 2013, instead of the previously proposed date of April 1, 2013.  After making an initial report, US persons must file annual reports (on either a fiscal or calendar basis) and identify any changes or updates regarding the investment that occurred during the prior twelve months.  Additionally, US persons making new investments related to an agreement with Myanma Oil and Gas Enterprise (MOGE) must notify the Department of State within 60 days of the new investment.

Annual Reporting Requirements for both the Public Report and the US Government Report

A summary of the types of information that must be contained in the annual report is presented below:

  • Overview of Operations in Burma: The report must include the names of the companies and subsidiaries covered by the report.  It must also state the nature of the businesses, as well as the location of the operations in Burma.  Additionally, the report must provide the maximum number of employees in Burma during the reporting period, broken down by Burmese and non-Burmese employees.
  • Human Rights, Workers Rights, Anti-Corruption, and Environmental Policies and Procedures: The report must include a summary or copy of the due diligence policies and procedures of the company's operations in Burma related to human rights, workers' rights, anti-corruption, and environmental issues.  Additionally, the report should include information on policies and procedures that address anti-corruption in Burma, grievances from employees and local communities, and global corporate social responsibility policies.
    • The final reporting requirements added a requirement to the previously proposed requirements.  Under Reporting Question 5, subsection (f), the report must state how the above described policies and procedures are applied to, required of, or otherwise communicated to subsidiaries, subcontractors, and other business partners.
  • Agreements with Security Service Providers: The report must provide information related to arrangements with security service providers, including names, duties, provider certifications, and summaries of policies or practices for utilizing security service providers.
    • Unlike in the proposed reporting requirements, the final reporting requirements mandate the disclosure of summaries of due diligence policies or practices for engaging and utilizing security service providers.  This includes policies and procedures focused on human rights and anti-corruption (e.g., oversight policies), and whether security service providers are subject to third-party auditing.
    • In addition, the final reporting requirements add the obligation to disclose the security providers' certifications to any national or international standards, in addition to the proposed reporting requirement of whether the security providers are signatories of the International Code of Conduct for Private Security Service Providers.
  • Property Acquisition: The report must provide information for any property or land acquisition – including purchase, use or lease of land or other real property – if the property is worth more than $500,000 or is larger than 30 acres.  For the purposes of this reporting requirement, acquisition of adjacent or related land or other real property will be treated as a single transaction and must be reported if the cumulative value is over $500,000 or is over 30 acres.
    • The report should also include a concise summary of any policies used to determine ownership, dislocation, resettlement and other claims for each transaction. The final report also must include any grievance mechanisms, and an explanation of how these policies were implemented for each transaction.
  • Transparency: US persons must report total payments valued over $10,000 during the reporting year to each distinct Government of Burma entity and/or any subnational.  Reports are to include each separate payment type, including but not limited to royalties, tax obligations, fees, and production-sharing arrangements.
    • Aggregate payments to a particular entity that total less than $10,000 for the reporting year do not trigger the reporting requirement.  
    • This requirement is in addition to any other legal obligation to report payments to government entities.

Additional Requirements for the US Government Report

In addition to the above requirements for the public report, the US persons must include the following additional information in their US Government report:

  • Military Communications: Companies must provide information about whether or not the company, or a representative of the company, has met with or communicated with members of the armed forces of Burma and/or other armed groups.  If so, then the report must indicate the dates of any meetings and/or communications; the name, rank, and group affiliation of the individual(s); and the nature and reason for the meetings and/or communications.
    • "Armed forces" and "armed groups" include the armed forces of the Government of Burma, state-organized militias, and other armed state security forces, as well as non-state armed groups within Burma in conflict with the Government of Burma. It does not include private security companies.
  • Risk Prevention and Mitigation: The report must summarize any risks and/or impacts identified that relate to human rights, worker rights, anti-corruption, and/or environmental issues.  The report should also state any steps taken to minimize those risks, to prevent and mitigate such impacts, and any policies and/or practices on risk prevention and mitigation.

Freedom of Information Act (FOIA) Exemption 4

Exemption 4 of the FOIA protects "trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential." If the submitter determines in good faith that it considers any information provided in the US Government Report to be exempt from public disclosure under FOIA Exemption 4, it shall:

  • Indicate in the US Government Report what information is not included in the Public Report and provide a detailed explanation as to why.  This explanation must specifically identify why the information is either a trade secret or privileged commercial or financial information, and explain why the release of the information would cause substantial harm to the competitive position of the submitter.
  • For each question in the Public Report where the submitter has not included information that was submitted on the US Government Report, there must be an indication that additional information was not disclosed and the basis for not disclosing it.

The recent easing of US sanctions on Burma, through a series of OFAC general licenses, presents new business opportunities for US persons.  Nevertheless, the Burmese Sanctions Regulations remain on the books, and could be reinstated or modified.  Accordingly, those seeking to engage in business activity in Burma should carefully review the relevant laws and regulations to ensure their activities do not violate US sanctions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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