BANGKOK (AP) — The head of Myanmar’s military government has charged that a major offensive in the country’s northeast by an alliance of armed ethnic minority organizations was funded in part by profits earned by one of the groups from the region’s lucrative drug trade, state-controlled media reported Thursday.

The allegation made by Senior Gen. Min Aung Hlaing came after his government was caught off guard by fierce fighting in several towns in the country’s northeastern border region.

On Oct. 27, the Arakan Army, the Myanmar National Democratic Alliance Army and the Ta’ang National Liberation Army, branding themselves the Three Brotherhood Alliance, launched a coordinated offensive in northern Shan state.

The military has acknowledged losing control of three towns in northern Shan state, including a major border crossing point for trade with China, but not explained why the army failed to put up an effective defense.

“Today’s problem in Shan state (North) was triggered by narcotic drug problems,” the state-run Global New Light of Myanmar newspaper cited Min Aung Hlaing saying at a meeting Wednesday of the state National Defense and Security Council. “Earnings from narcotic drugs were spent on seizing power through the armed struggle. Such a plan was covered by drug production and trafficking.”

The group he accused of drug trafficking, the Myanmar National Democratic Alliance Army, denied his allegation.

Large-scale drug production and trafficking has long been rife in Myanmar’s border areas, historically involving opium and heroin, and in the past decade methamphetamine. The drug trade has been attributed to various ethnic minority groups for funding their armed movements, but members of the army, especially at the regional level, have also been accused of involvement.

The Global New Light of Myanmar reported that at the defense council meeting, Acting President Myint Swe warned that the country is in critical condition and could be torn apart if the military does not take effective action against the groups that carried out the attacks.

Min Aung Hlaing was reported to have told his Cabinet last week that the military would counterattack those who attack military camps despite the bonds of trust he claimed to have formed with ethnic minority groups.

Thursday’s report cited him as saying the conflicts in Shan state occurred because the Myanmar National Democratic Alliance Army, or MNDAA, has used profits from illicit drug production to grow stronger so it can become the dominant force it once was in what is known as Kokang Special Region, whose capital is Laukkai, on the border with China.

The MNDAA is the fighting arm of Myanmar’s Kokang ethnic minority.

Min Aung Hlaing was cited as saying that since 2006 there have been 18 major drug cases in the Kokang area, with 140 people arrested and drugs with a total value of 71.6 billion kyat ($34 million) seized.

Lee Kyar Wai, an MNDAA spokesperson, denied the drug accusations, saying the group has implemented anti-drug measures and alternative crop farming in the Kokang region since 2007.

He said the ethnic alliance’s offensive aims to “eradicate the oppressive military dictatorship, build the nation based on the federal democracy system and combat the widespread online gambling fraud that has plagued Myanmar, particularly along the China-Myanmar border.”

Myanmar is already riven by what some U.N. experts have called a civil war after armed resistance arose to oppose the army’s 2021 seizure of power from the elected government of Aung San Suu Kyi.

The alliance’s offensive has been seen as aiding the nationwide armed struggle led by the People’s Defense Force, the loosely organized armed force of the National Unity Government, the major opposition organization that claims to be Myanmar’s legitimate government. Some ethnic armed groups have allied themselves with the People’s Defense Force.

The situation is complicated because both the military government and the groups in the Three Brotherhood Alliance maintain good relations with China, and both claim to be trying to shut down cybercrime scam operations that are based mostly in casinos and hotel complexes in Myanmar’s border areas.

China has recently sought to have these operations shut down. They are largely run by ethnic Chinese entrepreneurs, employ large numbers of Chinese — often tricked into working for them — and their targets are also often Chinese.