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Singapore's links with Burma under scrutiny -

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(generated from captions) As with the vast majority of the heroin smuggled in our region, the drugs Van Nguyen was caught with are believed to have originated in Burma, also known as Myanmar. That's refocused attention on the links between Burma and Singapore. Some accuse the island of being tough on couriers while protecting those who manufactured the drugs he was carrying. Tom Iggulden reports.

Allegations that Singapore protects Burma's drug barons have been circulating for a decade or more. It was the Australian SBS Television itself that actually did a documentary showing the link between Singapore Government's investments in Burma that are tied in together with Asia World, a company that's owned and run by the notorious Lo Hsing Han.

And tonight there are new claims - that Singaporean banks are helping Burmese drug lords process profits from the heroin trade. Singapore's banks, in conjunction with some other overseas banks, help the Burmese Government evade US sanctions. Economics professor Sean Turnell gained deep knowledge of the Burmese economic system as an analyst for the Reserve Bank of Australia. Now at Macquarie University's economics and finance department, he's a world authority on Burma's secretive economy. Where the Singapore banks are rumoured to come in is to allow the Burmese regime and the drugs traffickers in Burma to earn other than US dollars - to convert US dollar earning into other currencies - and in so, doing avert some of the sanctions imposed by the US. Such currency deals, he says, would undermine the determined efforts by the US to throttle South-East Asia's biggest narcotics producer. The extent to which Singapore's financial sector could do that without the knowledge of the Singapore Government I think is very remote. And money flows from Singapore to Burma in other ways too. After being the first country to invest in Burma's economy in the mid-'90s, Singapore remains Burma's biggest foreign investor despite recent inflows from neighbours such as China and India. Now there's no direct evidence linking Singapore investments to the narcotics trade, but there is substantial Singaporean investment in real estate, in hotels, in tourism - in other areas of Burma's economy, which don't seem to make sense on economic grounds. Today, the Singaporean High Commission in Canberra issued a statement responding to the persistent claims of a close relationship between the Asian economic powerhouse and Burma.

And the Australian Government agrees. A spokesman for Foreign Minister Alexander Downer told Lateline:

But that's not good enough for the Greens. I think there's an element of hypocrisy in the way in which the Singaporean Government is saying we want to be tough on drugs by killing a first-time drug offender, but we're not prepared to take the steps that others in our region need to take with us to ensure that we reduce the opium trade in the region. Rather they're investing in a country

that's one of the significant opium-producing countries in the word. The Singapore Government has reiterated today all its investments in Burma are above board. Tom Iggulden, Lateline.