What We Learned From The CEIEC Hack

CEC Third Party Congress March 2012

After hacktivist "Hardcore Charlie" announced on Twitter  that he had breached the email of a "Chinese military contractor" firm on April 1, 2012, we downloaded all of the archives for further analysis. While all of the documents appear genuine, it's doubtful that they're all from the CEIEC breach. The Philippines diplomatic documents and the files from the U.S. Army Transportion Corps are completely out of context with the rest of the CEIEC files nor is there any apparent reason for CEIEC to be interested in their content.  However, the balance of the documents are genuine and reveal new facts about CEIEC, it's relationship with NORINCO and their mutual interest in Burma's copper mine which NORINCO secretly bought from Ivanhoe of Canada through its subsidiary Wanbao.

The copper mining operation in Monywa, Burma was acquired from Canadian firm Ivanhoe by NORINCO subsidiary Wanbao. Wanbao has purchased Caterpillar earth-moving equipment for use in that copper mine in Burma. which would put NORINCO in violation of the U.S. Export Administration Act. The copper cathode is not going exclusively to the PLA (the Japanese firm Marubeni has bought some) but having this mine under Chinese control seems like a great way to guarantee copper cathode supplies to Chinese military manufacturing for the next three decades or more, which is how long this mine might last.  It is Burma's only copper mine.  Copper cathode is important in all sorts of military manufacturing including motors and ordnance.

There are over 800 documents with the pathnames NORINCOMYANMAR and MICCL_NORINCO concerning Wanbao Holdings, a Beijing conglomorate, and their apparent 100% interest in a large mine at Monywa, Burma (400 kilometers east of Chittagong and about 700 km NNW of Yangon/Rangoon).  Documents show that Wanbao purchased all of Myanmar Ivanhoe Copper Company Ltd, aka: MICCL, in 2010 or 2011 (see http://www.ivanhoemines.com/s/The_Facts.asp and http://www.ivanhoemines.com/i/pdf/IVN_response_to_Mizzima_and_CFOB.pdf).  Wanbao maintains subsidiary offices in Hong Kong and Yangon, including Myanmar Yangtse Copper Ltd, which has five expatriate Chinese employees in Burma (Chinese Pay January 2012.pdf).  The documents show that the Monywa mine is under development and has extracted some copper ore, though in August 2011 they were plagued by a shortage of industrial explosive peripherals: the Burmese army had supplied enough ammonium nitrate explosive but not the necessary additional peripherals to safely detonate it.  See 008.doc Introduction to Wanbao; 11-10-Oct 11/Financial...).  The project is large and potentially lucrative: it has a capitalization of US$997m and a potential value $3.41b to $9.96b, according to their auditor Deloitte (See 万宝缅甸铜矿...0817-for negotiationpurpose2.pdf, p. 4)

Full extraction operations at Monywa are scheduled for 2013, and some production began this year (11-April.xls and 7 月份产量.pdf shows copper production details).  There may have been six expatriate employees there at one time but now there are three: a Canadian operations manager, Glenn Richard Wallis of Oakville, ONT(profile is available on LinkedIn.com; he was on a six month expat contract beginning 2 June 11) and an engineer named Antonio Di Somma of Naples, Italy (see Antonio Di Somma Curriculum Vitae.doc; no web profile found).  There is also a General Manager, Glenn Ford (no profile found) who may also be based at Monywa or may be in Yangon.  He is the company's contact with the Burmese military.

The huge but unsurprising gap in income between local people and the foreign managers:  US$60-80 a month for a local laborer versus an after tax income of US$8,000 a month for Mssrs. Di Somma and Wallis and $17,500 a month for Mr. Ford (see 17 Income Tax of Contractors...; 18 Income Tax of Laborers for Sep 2011...; Glenn R Wallis Contract.pdf; 07 Executives' Pay...; copper tt Glenn Ford 17500.tif).

Two documents show the purchase by NORINCO in August 2011 of a Catepillar model 834 wheel dozer for $750,000 from Westrac Hong Kong, Ltd, CIF to Tianjin, China, and other equipment worth over US$5m sold from NORINCO to Wanbao.  If NORINCO planned to transfer the equipment to Burma, as might be expected under the circumstances, it would be a violation by NORINCO and possibly by Westrac of the US Export Administration Act, due to the US embargo against Burma effective at the time.  See "copper to china north vehicle 5013400.tif;".

There's been a corruption scandal around this mine, Ivanhoe, and NORINCO which just came to light last month thanks to files from Wikileaks.

CEIEC is the trading arm of CEC, the China Electronics Corporation.  CEC is under the dual leadership of the Chinese Communist Party (CCP) and the State Council, as are so many large companies in the post 1989 restructuring of the Party.  NORINCO is under a separate military subordination (see table).  The two of them do business with each other in a modern profit driven manner, as we see in all those leaked CEIEC documents reflecting huge payments between CEIEC, NORINCO, Wanbao, etc.  In spite of its capitalist aura, today's system retains some parallels to the old system under Mao, where the civilian industrial ministries responded to military production requirements levied through the old State Planning Commission.  Then, it was socialist planning under the Party.  Now, it's profits and national security planning under the Party.

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