US embassy cable - 04RANGOON250

C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 000250 
 
SIPDIS 
 
STATE ALSO FOR EAP/BCLTV; CINPAC FOR FPA; COMMERCE FOR ITA 
JEAN KELLY 
 
E.O. 12958: DECL: 02/23/2014 
TAGS: PGOV, ECON, BM 
SUBJECT: RANGOON'S OUSTED MAYOR: DOWNFALL OF A FAVORITE SON 
 
REF: RANGOON 247 
 
Classified By: COM Carmen Martinez for Reasons 1.5 (b,d) 
 
1. (C) Summary:  U Ko Lay, who served as Rangoon's powerful 
mayor for fifteen years following the military regime's rise 
to power in 1988, has endured five months of disgrace 
stemming from an investigation into his corrupt practices and 
culminating in his forced retirement.  The murky demise of a 
former soldier-hero and powerful money maker for the regime, 
who once enjoyed a regular Sunday golf game with SPDC 
Chairman Than Shwe, is further evidence that no individual in 
Burma is untouchable when the generals wake up on the wrong 
side of the bed.  End Summary. 
 
Kingfish Ko Lay 
 
2. (C) Regime authorities have ousted U Ko Lay, Rangoon's 
powerful former mayor and a favorite "son" of the SPDC's 
senior generals, and placed him under investigation for 
corruption.  SPDC Senior General Than Shwe had removed U Ko 
Lay from the mayoral job in August 2003 and "bumped him up" 
to the Office of Prime Minister during preliminary 
investigations.  For five months, U Ko Lay served as a 
Minister without Portfolio under PM General Khin Nyunt until 
the ousted mayor's forced retirement in early February. 
 
3. (C) U Ko Lay was appointed Mayor of Rangoon in 1988, when 
the current regime came to power, and held the office for 
fifteen years.  He also served as Chairman of the Yangon City 
Development Committee (YCDC), the capital city's omnipotent 
municipal authority that has broad economic interests and 
controls expansive real estate holdings.  As Mayor, 
considered by many to be on par with the regime's regional 
military commanders, he reported directly to SPDC Chairman 
Senior General Than Shwe and by all accounts tapped YCDC 
assets to supply the SPDC generals with a regular source of 
supplemental income and services. 
 
All in the Family 
 
4. (C) According to many observers, U Ko Lay's tenure and 
power as Rangoon mayor was secured through close ties to the 
SPDC and, in particular, to Senior General Than Shwe, a 
regular Sunday golfing partner.  U Ko Lay earned his military 
credentials in the Burmese Army, rising to Colonel during 
several years of combat experience in the 1980s fighting the 
Communist Party of Burma in the Wa and Kokang regions on the 
border with China.  U Ko Lay also enjoyed close family 
connections to the junta, a helpful ingredient in the 
retention of power, through his daughter's marriage to the 
son of the late Lt. General Tin Oo, the SPDC's fourth ranking 
member until his death in a 2001 helicopter crash. 
 
One For You, Two For Me 
 
5. (C) According to GOB sources, as Mayor of Rangoon U Ko Lay 
amassed a personal real estate empire that included over 400 
apartments and numerous houses.  By all accounts, U Ko Lay 
gained considerable wealth from kickbacks and from YCDC 
income-generating projects in farming, livestock, and 
recreation facilities.  He reportedly demanded a cut of any 
action on his turf--including, for example, skimming 
membership fees at YCDC's public golf course--which angered 
the business community who found his petty corruption above 
and beyond the reasonable "rent seeking" norm. 
 
6. (C) The SPDC officially sacked U Ko Lay on February 4. 
According to the Rangoon rumor mill, he was then placed under 
arrest.  However, GOB sources claim that punitive actions 
were limited to a freeze of his assets, a physical search of 
his main Rangoon residence, and quiet retirement.  In 
addition, the GOB fired several dozen of U Ko Lay's long-time 
cronies at City Hall and elsewhere in the municipal 
government, placing several in detention and others under 
investigation. 
 
Comment: Here Today, Gone Tomorrow 
 
7. (C) It is unclear why U Ko Lay fell from the good graces 
of the SPDC generals.  Family connections to the SPDC may 
have been soured by his son-in-law's extramarital affair with 
one of Senior General Than Shwe's daughters.  A more likely 
explanation, however, is that greed got the best of U Ko Lay 
and he exceeded even the generous bounds of a regime built on 
corruption.  Sources say he also failed to adhere to the 
unspoken rules of the military leadership's informal 
patronage system and properly award his hierarchy (reftel). 
His demise is a further example that no individual in Burma 
is untouchable:  cross the generals, or fail to "pay" proper 
respect, and you will be punished.  End Comment. 
Martinez