Today is our third episode looking at Chinese online scam syndicates. We’ve looked at a pig butchering scam in the Pacific island of Palau. We’ve talked to Neo Lu, the victim of a scam compound in Dongmei Zone on the Myanmar-Thai border. He’s one of an estimated 220,000 people who’ve been trafficked into forced labor scam syndicates in mainland Southeast Asia. And it’s not just Chinese nationals. Research by one of our guests suggests that the nationals of 66 different countries have been trafficked to work in these compounds. So today, for a broader perspective on this industry, we’re joined by Jason Tower, the country director for the Burma program at the United States Institute of Peace. And Greg Raymond from the ANU’s Strategic and Defense Studies Centre.
Graeme Smith 00:10
Welcome to Little Red Podcast which brings you China from beyond the Beijing beltway. I’m Graeme Smith from the Australian National University’s Department of Pacific Affairs. In this episode, I’m flying solo because my co-host is on leave, a very well-earned break indeed. As always, we’re on air thanks and support from the Australian Center on China in the world. Today is our third episode looking at Chinese online scam syndicates. We’ve looked at a pig butchering scam in the Pacific island of Palau. We’ve talked to Neo Lu, the victim of a scam compound in Dongmei Zone on the Myanmar-Thai border. He’s one of an estimated 220,000 people who’ve been trafficked into forced labor scam syndicates in mainland Southeast Asia. And it’s not just Chinese nationals. Research by one of our guests suggests that the nationals of 66 different countries have been trafficked to work in these compounds. So today, for a broader perspective on this industry, we’re joined by Jason Tower, the country director for the Burma program at the United States Institute of Peace. And Greg Raymond from the ANU’s Strategic and Defense Studies Centre. Jason, you first. I mean, it’s never a great idea to do the third episode as a prequel. But could you maybe give us a bit of a potted history on how so many scam compounds came to pop up on Myanmar’s border with Thailand?
Jason Tower 01:40
Yeah, no and first of all, thanks for having me on. Great to be a part of this. I listened to the earlier couple of podcasts on this topic, and they were great. So really, this grew out of a very dramatic expansion of illicit Chinese capital networks who for the past two decades, have been chased out of the PRC as they tried to continue to tap into that $40 to $80 billion per year market for illicit online gambling in China. Any form of gambling in China is, of course, illegal, and maintaining online gambling outlets in China is also illegal. So, you saw where many of these networks went to the Philippines, they went to Cambodia, they went to the China-Myanmar border, and they worked to set up spaces where they could operate offshore online gambling in impunity. Or often even in many cases, like the Philippines, they work to actually influence local elites to build a legal platform for these activities. Why not go beyond just online gambling and go into scamming, go into other forms of fraud? So, you saw, really throughout the 2000s, 2010s that in these different countries across Southeast Asia, they built more and more webs of influence to be able to perpetrate, not only the online gambling operations, but also scams targeting Chinese nationals. Well, you started seeing these crackdowns. I mean Chinese law enforcement chased after some of these actors even in the Philippines and into Cambodia. And you then saw that by around 2017 some of the networks that had been involved in those two countries pivoted to the Thai-Myanmar borderland area. And that was really when illicit Chinese capital networks made their first incursion into that particular space. 2017, you saw the rise of what is now known as the Shwe Kokko Yatai New City compound, which was initiated by a criminal cartel based out of the Philippines and Cambodia. And then that followed a range of additional compounds that started growing along that space of the Thai-Myanmar border. This is along the main trade corridor between Thailand and Myanmar, Myawaddy-Mae Sot. So Myawaddy is on the Myanmar side of that border. By the time of about 2020, you saw where there were about four or five of these large compounds that had started to take shape. But you saw where the elected government, at the time, which was moving towards trying to reform and bring more of the economy under civilian control, pushed back against a lot of this. And you actually saw where some of these compounds were getting shut down in 2020, just on the eve of a military coup, which unfortunately has plunged Myanmar into chaos. And you’re now seeing where there, we’re in the fourth year of a multifaceted violent conflict in the country. After the military coup, you saw a surge in these compounds. You went from having less than maybe half a dozen of them to having several dozen of them. And now this entire river area that separates the Thai and Myanmar border around Mae Sot-Myawaddy, this is really over 100 kilometres of river. It’s now lined by criminal compound after criminal compound. How did this happen? Well, you had a key Myanmar military proxy. This is the border guard force of the Myanmar military, which brought all of these malign actors into the region. And I think after the coup you saw where this became a major source of revenue for those militia groups. And it became kind of a space where criminal actors could more or less operate in impunity, operate these scam centres in impunity on that border.
Graeme Smith 05:55
And it seems that, I mean, when you look at this on a map, a lot of it seems to overlap with areas that formerly you would have associated with drug trafficking networks. I mean, is that coincidence? Or have, in some ways, these compounds arisen out of an existing culture of criminality?
Jason Tower 06:12
In order to understand this, we have to look a little bit at the history of this Border Guard Force and border guard forces more broadly in Myanmar. So part of the Myanmar military’s efforts to try to consolidate its control in the periphery, this is both along the China border as well as on the Thai border, was to push factions of different ethnic insurgencies to partner with it. So basically, to abandon struggles to support particular ethnic groups or ethnic movements for autonomy. And instead to align and come under the control of the Myanmar military. The Myanmar military, in the early 2000s introduced a scheme where by which ethnic armed organisations could come under the Myanmar military’s umbrella, in exchange for giving them the right to deal more or less in any form of business activity that they wanted to, regardless of the country’s laws. And so on the Thai-Myanmar border, you saw where one of the key insurgency groups it was formerly known as the Democratic Karen Buddhist army. It took this deal, an individual named Chit Thu basically signed up with the Myanmar military. He became a border guard force, giving the Myanmar military a lot more control in that region. And in exchange for that, he started operating and scaling up all of these illicit activities. You see where there’s been a pattern of drug trafficking, of smuggling, of illicit resource transaction, of environmental crimes, all of these things happen along that border now, with the Myanmar military’s Border Guard Force being the key player, involved. In 2017 with the sudden arrival of these Chinese mafia groups, you saw where that border guard force suddenly had an opportunity to really scale up and move into a range of other criminal markets. And so from there, you saw the expansion of the illicit online gambling business into that area. But then, I think, more importantly, the extremely lucrative, sophisticated online scamming or pig butchering scams also came into the same area, so there’s a lot of overlap with other criminal markets. But the key thing is, is you have this, this mafia like group that operates under the Myanmar military, which controls that territory, making, you know, kind of that place a natural partner for a lot of these illicit capital groups from China.
Graeme Smith 08.49
And Greg, if you could take us maybe across the border. I mean, all of these compounds that Jason’s been talking about, they run on Thai money, Thai electricity, and Thai internet. Yet the Thai government, and particularly the new prime minister, who was installed in mid-August by the highest court in the land, always described as pro-China. I mean, why aren’t Thai authorities doing more to target Chinese crime syndicates just across the border from them in Mae Sot?
Greg Raymond 09:16
Well the simple answer to that is they’re partners in many of these enterprises. So, I mean, there’s been a very long history of the Thai military cooperating with elements in Burma, in the drug trade that really goes back to the Cold War and working with Chinese syndicates. I mean, the Kuomintang, when they were sheltering in Thailand and Burma were involved in the drug trade that was sponsored, in fact, by the CIA. So Thai generals were involved in that trade then, and they appear to be still involved in various illicit enterprises across their borders, whether that be Laos, Cambodia or Myanmar. They’re often also involved in sponsoring casinos, because gambling is also formally illegal, except for one particular lottery in Thailand. So, Thais wanting to go and gamble have to go across borders, and Thai military and police have been very involved for decades. But there was, I guess, an attempt to sort of throw a little bit more light on this this year, actually, one of the liberal political parties in Thailand was then known as “Move Forward.” It’s been dissolved and has come back as the “People’s Party”, and before it was “Move Forward”, it was “Future Forward.” So, it’s in third incarnation now, and they keep trying to rattle the cage of the conservative establishment, who also in many ways, are a kleptocratic establishment. So one of their firebrand politicians, a young MP by the name of Rangsan Maneerat stood up in the Thai parliament in April this year as part of a no confidence motion against the Thai Prime Minister, who was then Srettha Thavisin and made the statement that he believed that at least 17 of the casinos and probably scam centres along the Moie River, along that Thai-Myanmar border were, had Thai partners, or Thai partial, partially owned by Thais. And most of these Thai military or police figures, and he, you know, describes some of them as, you know, owning immense properties with swimming pools and golf courses. And, you know, he expressed surprise that a police salary could, you know, enable that kind of wealth. But it’s pretty clear that there’s connections. And in fact, one of the kingpins, one of the scam centres, a Chinese transnational businessman who’s now actually in prison in Thailand, at the request of Chinese authorities, hasn’t yet been handed back. And some of the reason he hasn’t been handed back promptly is because there have been some senior Thais who are probably involved in that particular, in his particular scam centre, which is known as Shwe Kokko. It’s that scam centre is run by an individual who’s known by five different names, but She Lunkai is one of them. He appears to have quite close links to to various figures in Thailand. This is where it gets nebulous, but there’s certainly a lot of folklore around this. And one story I heard this year is that while in prison, in inimitable Thai style, he has his own chef, so he’s not a run-of-the-mill prisoner by any means and no, Thailand doesn’t always bend over when Chinese authorities want them to, if they’ve got other interests at stake.
Graeme Smith 13:11
Let’s, let’s zoom in for a minute just on Dongmei Zone, this place where Neo, who was in our last episode, was imprisoned for half a year. The Dongmei camp, the experiences that he described there, and the sort of the scam cartel, I mean, how typical was that sort of small-scale pig butchering operation in your experience, Jason. Was it a fairly representative scam compound?
Jason Tower 13:36
Yeah, so Dongmei, the history behind it is that one of the most notorious criminals in the Chinese speaking world, Broken Tooth, also known as Wan Kuok-koi, he initiated that zone. He initiated it in close partnership with a range of elite figures from Malaysia. And in fact, there was even a large, quite flashy ceremony that was held to mark the introduction of a number of investors into that zone that was held in Kuala Lumpur just before the world started to lock down around Covid-19. One thing to recognise about the scam syndicates is that you have these large compound owners who are generally partnering with some local elite. So, in the area where Dongmei is present, Broken Tooth on the one hand, is the one you know from the Chinese mafia world who has initiated this whole thing with the Myanmar military’s Border Guard Force. And then they’re providing a large amount of real estate, they’re providing security, they’re providing internet connections. They’re really providing all of the hardware as well as the software that the criminal syndicates need to enter into the zone and to set up shop. So in some ways and I’ve referred to these as Special Criminal Zones, because that’s kind of what they do, right? I mean, the Special Economic Zone is supposed to cut a lot of red tape and allow economic actors to come in and do things at a relative comparative advantage when it comes to costs, when it comes to taxes and other benefits. The Special Criminal Zone is, kind of, is designed to do the same thing. Then inside of the zone, of course, you have a lot of these smaller scam syndicates. Some of them will maybe purchase property in the zone and then lease that out to other syndicates. Others will just directly lease from an entity like Dongmei, or in the case of Shwe Kokko Yatai, they will lease space directly from Yatai. So, what you end up getting is you have literally hundreds upon hundreds of individual scam syndicates that are operating inside of these zones, operating inside of a place like Dongmei or like Yatai. But they’re operating with some autonomy inside. I mean, obviously it’s the compound owners and the Border Guard Force that are providing all of the protection and external security, but then they’re bringing in their own security to sort of manage things within the compound. They’re also determining their own focus as to who they scam, what sorts of criminal markets they get involved in. You know, the scam syndicates, once inside, have some autonomy to do that. But that’s kind of how the overall setup works. I think what was described in that last podcast is very typical, noting, though, that each individual scam syndicate often has a different focus. Some of them are maybe focused very specifically on a particular state in the United States, looking for victims, say retirees from Florida. Others are focused on scamming people in Singapore or others are maybe focused on scamming in India. Part of the reason why they’re going and reaching out to try to bring in labor, bring in victims of human trafficking and forced criminality from so many different places around the world is they’re looking to tap into all these different markets for their scams, and that’s what leads to them ultimately try to pull in a broader and broader range of individuals. The scam syndicates are specialising, and they’re working to make their scams more and more effective. And again, I think that that was also described in the last podcast how this really operates as a business, with these criminal actors thinking about costs, thinking about the efficiency of the scamming and so on.
Graeme Smith 17:29
Yeah, and that was probably one of the more alarming things that he said, and it was almost as an aside. This conversation that Neo had with one of his bosses, and they were reflecting that scamming China wasn’t as profitable as it used to be. And that, in fact, scamming English speaking countries was now twice as profitable as trying to scam people in China because WeChat was cracking down, and the central government also was occasionally raiding these compounds. I mean, do you think there’s going to be a big shift, especially with, you know, for example, generative AI coming in as a thing where these now focus, rather than China, focus, in many ways, on safer targets like the United States?
Jason Tower 18:07
This started during the pandemic, where a lot of these scam syndicates, I mean, they were no longer really able to do this as effectively in China after China put out this ban on cryptocurrency. That made it, meant it was a lot harder for Chinese who are getting scammed, because these scams are using crypto, right? It was a lot harder for them to actually access crypto. And then, of course, you had the labour problem, right? I mean, during Covid, China not only restricted the ability of its nationals to travel overseas. It called its nationals back. And it particularly targeted people in Southeast Asia. So, if you were a Chinese national who had been to Southeast Asia, or that was staying in Southeast Asia, I mean, you could face some pretty serious consequences just for not going back home, including having your assets frozen, including even having some of your assets confiscated, or even including having some crackdowns on your relatives. So, this meant that the criminal actors had to look for other sources, both of well, targets of scams, but then also for other sources of labor. And so that started this process of globalisation where the criminal syndicates were looking more and more to how do we tap into this global market? How do we bring in scammers from these different countries, and how do we scam effectively in other markets around the world? Now, the pace of this picked up dramatically after this massive crackdown occurred on the China-Myanmar border last October. And basically what happened there was some fairly savvy ethnic armed organisations. These are resistant factors in Myanmar. They keyed in on the fact that China had a big problem in Myanmar, that the Myanmar military regime was providing an umbrella for all of these scam syndicates to perpetrate online scams targeting Chinese nationals. And that that was causing China to really bleed out in a very big way, according to the Myanmar National Democratic Alliance army, which was one of those key ethnic armed groups that launched this, this operation, Operation 1027, which sought to eradicate the Myanmar-China border of these scam syndicates. They claim that roughly $9 billion per year was being stolen from China by the scam syndicates there. So, this operation actually led to the Myanmar army’s Border Guard Force losing. They were defeated on the battlefield, which sent roughly 45,000 people out of scam syndicates back across the border into China. Of course, many of the kingpins and scam syndicate heads were not among those who were sent back. They pivoted. They went to the Thai border, because these are highly linked and very well-connected criminal actors. So, they pivoted to the Thai border, and they started to rework their business model. They knew it was going to be harder and harder to scam Chinese, and they started targeting more and more that global audience. So, you’ve really seen, I think, since last October, with this, this big operation, the Chinese police are telling a story of diminishing losses to scams. They’re claiming as of I believe it was June, a 30% decline in online scams targeting Chinese nationals. Meanwhile, though, in the US, we’re seeing a massive uptick in this. We’re seeing pig butchering scams just really hitting almost every state in the United States now, and we’re seeing it hit other jurisdictions as well. I mean, you’re hearing about it. It’s off the charts across Europe and Japan and Korea and many other places, and also, I think, importantly, across Southeast Asia as well. And I think you know, really part of it is that you’ve got Chinese law enforcement cracking down somewhat selectively. So, they’re focusing their resources on people that are doing scamming in China or causing capital outflows from China. But then others, I mean again and we go back to Broken Tooth and Wan Kuok-koi, he’s a very, very active individual, very public, and he’s living in China, and he’s operating this scam syndicate. And you don’t really hear about that scam syndicate being cracked down on. Why? Well, perhaps, and you see he’s opening new businesses left and right in China, perhaps a lot of those funds are being brought back into the Chinese economy. Meanwhile, other scam syndicates, if they focus more on that international market, there’s less of a chance that they’re going to get cracked down on by Chinese law enforcement. There’s now a need for other countries to really look at what the PRC is doing, and to have some pretty frank conversations with the PRC on this issue. I mean, is this going to be similar to the Fentanyl crisis in the US, where you have the PRC kind of looking the other way, as a lot of these crime groups scam Americans or scam people from other countries. Or will the PRC start sharing intelligence and information about who is behind this and be more helpful in terms of cracking down on some of these crime groups that are, in fact, now I think starting to really hit other countries around the world pretty hard.
Graeme Smith 23:11
Yeah, and I think it’s a really interesting question around police cooperation, and we’ll get to that in a bit. The Australian police love to work with their Chinese counterparts. They absolutely love them because they’re so effective in getting stuff done, more effective than they are over here. But Dongmei isn’t the only scam compound on the Thai-Myanmar border. Just to the north of where Neo was held, is a place you both mentioned called Shwe Kokko, home to the Yatai New City development. And even more so than Dongmei zone, it hasn’t been at all shy about its efforts to attract investors, and I’ll just play a clip from one of its promotional videos.
Clip 23:50
Promotional clip.
Graeme Smith 23:59
Among the many claims that are made in this video. It claims to connect the Indian and Pacific Oceans. It brags of its access to high-speed rail and highways to Singapore and Bangkok. I mean, Greg, you’ve recently been to Shwe Kokko, the Yatai New City place. I mean, what did you find there? Was it anything like the glamorous place portrayed on these promotional videos?
Greg Raymond 24:21
Look, it wasn’t quite a city. It wasn’t quite a smart city that many investors in Thailand have been sort of dreaming of, or have been sold a 100 kilometre zone of factories and smart industries. But there was a lot going on in terms of building. So originally, apparently, the Yatai company got a license from the central Myanmar government to build luxury villas of 5.5 hectares, I think it was. But by the time they did that promotional video that I think you saw, they’re talking about 100 square kilometres of development. So, what I saw was somewhere between those two extremes. There was row after row of tin working man’s or labourer’s cottages and cranes on the horizon and some pretty enormous buildings being constructed. And these are sort of rearing out of what is largely either farmland or jungle, and look to be, I guess, some form of casino, judging by the facades which were at the front of these buildings, which were complete with cavorting nymphs, Greek gods, and other decorations. And the actual functioning part seemed to be relatively limited at that point. There were some very small gaming rooms run by some local Burmese Karen employees, mostly women, and there was a short stay hotel, I think, timed by the hour, I think for the benefit of the workers there. But big plans were clearly afoot and clearly significant sums being invested in there. There was already, I guess, an area with food and shops and offices, and it was driving past one of those that we received some very hard looks from some Chinese-origin gentlemen. And then that was probably at the time that we decided that the plan to perhaps stay there wasn’t going to be a good one. And we left and drove back to Myawaddy that day. So look, there was certainly ambition, very visible. No, the kinds of eco city, smart city, industry hub with connective infrastructure wasn’t, wasn’t, wasn’t in evidence at that point in time. But look, you know, if you look at the Golden Triangle SEZ on the on the Laos-Myanmar border, then you know, who knows it could still head in that direction. Zhao Wei seems to be creating all sorts of things up there, including, I understand it, a go-kart arena.
Graeme Smith 27:29
I have not heard of the go-kart arena. I mean, you know, given there’s these large amounts of finance, what role did Thai banks play in all of this Greg, are they, are they, where’s the money coming from? To put it bluntly.
Greg Raymond 27:41
Look I don’t know if Thai banks have financed any of Yatai, but certainly, Thai banks have been laundering money for figures in the Myanmar junta. That’s been established. The UN rapporteur released a report this year and noted that though Singapore had done its best to get its banks out of laundering Burmese funds, the same hadn’t happened in Thailand. And Siam Commercial Bank, amongst others, were still doing business with figures from the SAC, from the junta. So, yeah, that’s in terms of what their exposure is to the criminal elements of Eastern Myanmar. That’s a really good question.
Jason Tower 28:33
What’s interesting about She Zhijiang and the criminal cartel that he’s behind is just the web of connections that are there all across the region. So up until now, I mean, if you go to Manila, you’ll find that you still actually have a large Yatai presence there. There’s a large Yatai spa. Seemingly, there are other activities that are going on around this Yatai Spa. Then you had She Zhijiang in Cambodia, and that’s, of course, where he got the new passport and reinvented himself. Because if you look at the history here, going back to Chinese court cases from before 2014, that is when, you know, Chinese courts first launched a case against She Zhijiang for his cross-border criminal activity in the Philippines targeting people across China. But somehow, despite the fact that there were arrest warrants issued for She Zhijiang he managed to get a new passport with a new name in Cambodia around the end of 2017. And then you know, you also see where Hong Kong appears in this story. Actually the main entity that made the investment into Myanmar in the first place, and those couple of villas that Greg talked about that were really the only part of this that ever received any approval from Myanmar central authorities. You know, that actually was coordinated through a presence that had been registered in Hong Kong. And then, of course, there was the Beijing entity of She Zhijiang’s operation. She Zhijiang, actually, had a whole Yatai that was registered in Beijing, under the names of a couple of his key collaborators. These were two individuals, one who seems to be more of an underworld figure, and the other a guy by the name of Zhong Baojia who actually has held a number of official positions on Hainan Island, they held that entity there. And then, you know, to just make the matter even the make this more complicated, then there were also business entities in Singapore, where a couple of companies were registered under She Zhijiang’s name. And it seems that that’s where a lot of the financial technology that was supposed to power the Yatai New City was actually being designed and developed and innovated. So, you sort of see where there’s this broad web of connections. I mean, part of this may be just tapping into resources in different places, but I think part of it also was the ability and the agility of the criminal networks to kind of pivot and tap into different financial and technological resources across the region in order to facilitate all of this activity. I mean, clearly the Thailand connections are also interesting. I think because you really have seen where She Zhijiang, for example, around all of this, he bought into an airline in Thailand. There was a whole big ceremony that was around Yatai HG, taking over shares of something that was called Wisdom Airways, which was going to then have these charter flights going from China down to Mae Sot to be able to bring people across the border into that zone. What did the Thai authorities do with someone like She Zhijiang at this point? He’s claiming that he’s Cambodian and he should be extradited to Cambodia. The Chinese obviously see where he’s created a lot of problems in the China-Myanmar relationship. Because going back to 2020, you had the NLD [National League for Democracy] government actually pushing back, questioning, why in that video, is it showing that She Zhijiang is implementing part of the China-Myanmar Economic Corridor, when Myanmar planners were never consulted on that, they were never really brought into the loop on that. And probably the answer as to why the Chinese police are looking for She Zhijiang links back to the fact that the NLD government played a pretty strong role in pushing back and pointing out that massive criminal activity was taking place there in partnership with the Myanmar military, which was very threatening to the NLD government. And I think after the February 2021 coup, that proved to be very much the case.
Graeme Smith 32:59
And it is one of the great ironies that the overthrow of the democratic administration in Myanmar has actually made things harder for China in Myanmar, more than anything. Another thing that I found really intriguing about Neo’s account was the money laundering and the role of cryptocurrency in the money laundering. They were all being paid in Tether, this sort of so-called stablecoin of crypto, and a lot of the partners seem to be involved in blockchain to set up this sort of virtual financial infrastructure that almost seems to operate beyond traditional financial systems. I mean, I mean, how important is crypto to money laundering and these operations staying, you know, basically keeping their money out of reach of law enforcement?
Jason Tower 33:45
I think it’s critical, because if you look at the way in which these scams are perpetrated, they’re all using cryptocurrency. I mean the pig butchering scams have become almost synonymous with these crypto trading platforms that are often under the control, I mean, these platforms are directly under the control of the criminal cartels. And so crypto seems to be very much fundamental to this whole operation and the ability to use a wide range of both outright fraudulent platforms to trick people into putting crypto into a wallet somewhere and then transferring that to the criminal actors, that’s key. But then once they actually have, you know, that crypto in their control, they need to launder it, which means that this whole industry has arisen around, you know, getting crypto mules, crypto money mules, to basically move crypto across the blockchain, move it into different wallets, and then bring it out somewhere. So, I would say that cryptocurrency is fundamental to their operations. I think it’s also interesting to go back and look at the history of some of this, because if you look at what She Zhijiang was doing, this is again, a proponent of that Yatai New City project. Going back to 2017, 2018, 2019 in the Philippines, he was rolling out all of these different new forms of payment applications that worked with cryptocurrency. You then saw where he set up a whole association, a foundation that supported the development of blockchain around the world. And you saw him, along with a number of other actors who are known to be involved in fraud and scams in different places across the region, they started organising all of these cryptocurrency road shows, where they would bring in some of the key players in the crypto development space. They would put them up on a platform. They would buy influence with them. And then you saw where this foundation started giving out grants to all these crypto developers to develop different types of financial tech that the criminal networks could ultimately incorporate into their scams and incorporate into their business models. So I think in many respects, you saw what these networks were doing was they were becoming some of the key players advancing the development of cryptocurrency, and that gave them, I think, a lot of control and influence, but it also put them several steps ahead of regulators, several steps ahead of law enforcement, and that continues to be the case until now.
Graeme Smith 36:23
And look, we’ve unfortunately lost Greg due to the vagaries of Japanese internet. But what got me interested in this whole thing was a case back in 2017 in Fiji where 77 alleged cyber criminals were hooded and put onto his China Southern Airline and flown all the way to northeast China to Changchun, to be tried on the border with North Korea, in this Korean ethnic zone, for their crimes in no less than six different courts. Ultimately, 400 people went on trial. I mean, what usually happens to these people? You were mentioning, over 30,000 being pushed across the border into China from these scam compounds. Do the Chinese authorities distinguish between who was trafficked and who was organizing? Or is it just like you’re working in these scam organizations, we’re going to lock you away?
Jason Tower 37:15
In one respect, it’s good to see that there’s a crackdown on crime and that you’re seeing some of these scam syndicates get more pressure. But then, you know, there are now reports of about 50,000 people being repatriated from Burma since last September. And the vast majority of these are being treated as criminals. And if you look at the video clips of these people going across, I mean, there are people in crutches, there are people who are noticeably disheveled, who look underfed. I mean, these don’t look like, you know, high level criminal players. They look really like the rank and file of people who’ve been involved in forced criminality. And so, I think the question then is, are any of these people getting designations as victims of human trafficking? Well, they should be. I mean, if they’re in there and they’re being tortured, and their rights to leave, to exit the compounds are being withheld from them. I mean, that is a clear instance of a violation of their fundamental human rights. But that doesn’t seem to be something that’s so prominent in the response to this in China. And I think if you look at what’s going on in many other countries, there’s also a tendency to treat all of these people, even people who have been openly tricked into going into the compounds, to treat them as criminals and to give them quite harsh criminal sentences after they’ve been brought out of the compounds. And I think that that’s kind of across the board. You’re seeing similar kinds of trends happening with victims from many different countries around the world as this has been increasingly internationalized. And I’d say, you know, along with this, in some sense, is the fact that countries are treating people who’ve been trafficked or who’ve been tortured or who are in really difficult circumstances inside of those compounds as criminals. That actually plays to the favor of those that are holding them in captivity, because these poor people know, well, even if I escape, I’m going to have to deal with long prison sentences. I’m going to have to deal with legal problems. Think life is not going to be so good outside of the scam syndicate either, so maybe that even creates incentives for them to try to find some way to make it work inside, find some way to become a successful scammer inside. It’s really a terrible set of circumstances for people who wind up inside of these compounds.
Graeme Smith 39:38
Yeah. I mean, that was absolutely what I was seeing in Fiji, is these people who are being hustled and balaclaved and roughly treated. Most of them were teenage or women in their early 20s in their pyjamas. I mean, they didn’t look like hardened criminals at all, and yet they were being treated as such and paraded and humiliated for the cameras by the Chinese police. Now a final kind of looking forward question, because Louisa always likes me to have one of those. I mean, how do we deal with this, like in a global sense, because China has this thing called the Global Security Initiative, and in some ways, it would seem to make sense to cooperate more closely with Chinese authorities, because these are Chinese scammers. I mean, how do we go about addressing, you know, this out-of-control scam industry on the borderlands of China? Is it a matter of working more closely with China, or are there other strategies we should be looking at?
Jason Tower 40:36
This is much, much bigger than just a couple of criminal groups running amok on a border, you know, on the China border, or on the Thai-Myanmar border. You know, you have industrial scale scam compounds that already are deeply embedded in three countries in mainland Southeast Asia. You have a presence of these criminal groups still in the Philippines, which I will say, has been doing a lot more to crack down, to send signals that it’s going to crack down pretty harshly on this. But then you have the same criminal networks that are weaving webs of influence all around the world. You mentioned Fiji. They’re in the Pacific Islands. They’re now extending into different parts of Africa. They’re in the Middle East, particularly targeting Dubai. So, you really have a risk now that these criminal compounds are going to spread all around the globe. And then, of course, the criminal networks behind them are constantly adapting new technologies. The scams are becoming more sophisticated. We’re hearing a lot more beyond sort of the traditional pig butchering scams, which at this point have a lot of them have focused on, on romance scams or building relationships of trust that way. You’re hearing a lot more about these very, even more sophisticated, customs scams that are now targeting individuals who the criminals have actually gotten quite a lot of information about in advance of perpetrating the scam. These criminal groups, I mean, they’re really trying to build a foothold all over the world at this point. And they’re targeting a broader and broader range of countries. You see where they’ve gotten access to all these sophisticated technologies. They’re continuing to invest in different technological spaces. They’ve been able to find ways to launder money on scales we’ve never seen before. I mean, if you look at some of the recent money laundering cases, such as the case out of Singapore, this is the single largest money laundering case in human history that has been now exposed by Singaporean police. And that’s really just the tip of the iceberg in terms of what’s going on here. So, I think what needs to happen looking forward, is first that countries need to identify this for what it is. It is a global security threat. This is something that countries around the world need to start really looking at, how do we keep our homelands free from this? How do we prevent these scammers from stealing more and more from really, all demographics across different countries, right? I mean, because you have elites in countries who are getting hit by this, you’ve got the middle class, all these people whose bank accounts are being emptied out by this, but then you also have the poor people who are seeking jobs online, who get trafficked into this. So, it’s really something that hits every demographic that you can think of in a wide range of countries around the world. 66 countries, I’ve said this before, and it’s in USIP’s report that came out in May, 66 countries have been trafficked into this. And over 110 countries have now been hit by the scams. I think in order for individual countries to combat this, they’re going to need to really adopt whole of government approaches where they’re, you know, kind of building out strong coordination across law enforcement, with banks, with other financial institutions. And looking at this problem set from all angles, to think about how to cut off the financial flows, how to prevent more people from getting pulled into this, and how to really raise awareness. But then also the international cooperation is really critical. Because what we’ve seen, I think, over the last couple of years with this is that the criminal networks can pivot very rapidly, both geographically, you know, they can pivot from being on the China-Myanmar border to go over to Cambodia. They can go back from Cambodia to the Myanmar-Thai border. If the Myanmar-Thai border were to become unstable again, I mean, you have the Laos Golden Triangle Zone, and then you have all these other hubs that they’re looking at around the world. So, if you’re just going to have some bilateral crackdowns, what’s going to end up happening is Philippines decides to ban POGOs, and everybody rushes off and becomes more embedded in Myanmar and the Thai-Myanmar border. So, you’re going to need countries around the world to coordinate their action to ensure that when the Philippines cracks down, Thailand is ready, China is ready, the US is ready. They’re ready to prevent this from coming across other borders. So coordinated action is going to be one of the most effective ways of dealing with this. I mean, you mentioned the Global Security Initiative. I think one problem with this is that there’s also this instinct or incentive, this, this incentive on the part of the Chinese police to politicize this whole thing, right? And so I think what ultimately needs to happen is that this whole matter of how to deal from, deal with this issue from a law enforcement vantage point needs to be depoliticized. It needs to be disconnected from China’s Global Security Initiative. If you know, the prerequisite or condition for getting some Chinese support and intelligence is that countries have to sign up to the Global Security Initiative and have to somehow voice support for China revising global security norms. I don’t think that’s going to work. Countries are simply not going to want to do that. The fact that you have law enforcement in many countries who’ve become deeply involved in this, particularly in Myanmar, where you know the Myanmar state is, is basically the protector and guarantor of these criminal enterprises. I mean, that needs to be disrupted. And so, where China could play more of a role is in doing just that. I mean applying more pressure on the Myanmar military, preventing the Myanmar military from doing this. You’ve seen where China’s actually given some quite high-profile awards to some of the senior generals that are involved in all this criminal activity very recently. And, you know, I think China’s Great Wall commemorative medal went to, actually the head of police of Myanmar. That was earlier this year, despite the fact that the Myanmar military’s Border Guard Force is still very actively involved on the Thai-Myanmar border in perpetrating this criminal activity. And very recently, he even organized a public prayer service where all of the members of that Border Guard Force, including himself, wore T-shirts with the likeness of She Zhijiang, the person who’s in that Thai prison, praying for his return. So, they’re praying not for his return to China to face criminal sentencing. They’re praying for his return to Shwe Kokko to continue operating this criminal hub. This is a global crisis that’s out of control. It needs governments around the world to take it seriously. It really needs societies to start mobilizing, and it needs countries to collaborate in dealing with this problem.
Graeme Smith 47:28
Jason, I really want to get home hold of one of those T-shirts if I can. If you do come across one, please, please send it to me. Jason, thanks so much for your time.
Jason Tower 47:37
Yeah, thanks so much for having me on.
Graeme Smith 47:39
You’ve been listening to Little Red Podcast, which brings you China from beyond the Beijing beltway. Many thanks to our guests, Jason Tower and Greg Raymond. Our editing in this episode is by Andy Hazel, background research by Wing Kuang, social media and transcripts by Juliette Baxter. Our theme music is by Suzie Wilkins and our cartoons and GIFs are courtesy of Seb Danta, bye for now.
