Chinese crime syndicates are spreading in Southeast Asia

Amidst the forested peaks of the Lao jungle, the glittering lights of casinos and hotel resorts can be seen from afar. The area in northwest Laos is called the “Golden Triangle Special Economic Zone”. A largely lawless zone controlled by the Chinese mafia, also known as the triads.

In the city center the colossal “Kings Romans” casino rises above the sea of ​​buildings. It is the center of power and the official residence of Chinese gangster Zhao Wei, who signed a 99-year lease with the Laotian government in 2007. He promised to transform the 3,000-hectare spit of land where Thailand, Myanmar and Laos meet into a thriving tourist hub. Instead, a center for international drug, wildlife and human trafficking has emerged. Online fraud was developed as a new business area due to the Covid pandemic – with effects as far away as Germany.

Lawless island in the Laotian jungle

If you pass through the lock guarded by the zone’s security service, you think you are in a booming small Chinese town. Luxury cars from Mercedes-Benz and BMW without license plates curve around the brand-new apartment blocks, supermarkets and casino complexes. Construction workers from Myanmar, which has been ravaged by the civil war, are lying on the concrete and resting. An international airport is to open soon so that customers can fly into the gambling enclave directly from Macau, China or Hong Kong.

However, the Covid pandemic has stopped the flow of visitors to the golden triangle for the time being. The days when hordes of mainland Chinese squandered tens of thousands of yuan at the baccarat tables and ate tiger and bear body parts were more than two years ago. The promenade of “China Town”, once frequented by prostitutes and clients, has also been swept empty.

The reason: The pandemic has slowed down the lucrative business of gambling, prostitution and illegal animal trade. In their distress, the criminal long-term tenants have switched to a more crisis-proof source of income: online fraud.

“Industrial Scale” Online Fraud Factories

For the new business area, workers from all corners of Asia are being lured to the special economic zone with lucrative job offers. They usually don’t end up in the glamorous casino complexes as promised, but in the faceless office buildings of the casino city, where hundreds upon hundreds of workers are kept like modern day slaves. Your passports will be confiscated upon arrival. Illegal entry is billed, and the interest is often so high that the workers can hardly work it off with their forced labor. Debt bondage is what the experts call it.

One of them was Ann from Chiang Rai, Thailand. The fish seller traveled to the golden triangle in early 2022 to take a job as a well-paid administrator. “When I was there, I quickly realized that scammers were at work here,” the 29-year-old told DW. She was presented with a contract in Mandarin, peppered with passages she could not understand. The promised monthly salary was half that previously agreed. The contract said you had to work a whopping 16 hours a day. The activity consisted of “flirting on Facebook with fake profiles to potential victims from the West,” says Ann. Once the relationship has been established, a Chinese department manager takes over and tries to persuade the “customers” to make supposedly safe “investments”.

Those who don’t rip off successfully enough are threatened, beaten or sold on to the criminal gangs. Ann just wanted to get away, so she contacted a Laotian smuggler who, after paying 44,000 Thai baht (around 1,200 euros), smuggled her through the lock of the special economic zone. “As soon as I was back on Lao soil, I ran to the river as fast as I could.” She crossed the Mekong in a wobbly longboat and made it to the safe shores of her homeland.

Casino resorts are thriving across Southeast Asia

The casino enclave in Laos is not unique. In the border regions of Myanmar, Vietnam, Laos and Cambodia, where the state is weak and poverty widespread, similar crime islands have mushroomed. Deutsche Welle has excerpts from an unpublished UN analysis showing the extent of the casino epidemic. The United Nations has counted over 240 casinos in Southeast Asia, many of them in so-called “extra-territorial” special economic zones.

How many of them are criminally subverted remains unclear. What is clear, however, is that over 100 casinos have established themselves in Cambodia alone. Mainly in the coastal city of Sihanoukville, known as a safe haven for Chinese crime syndicates. “There are clear links between Zhao Wei’s special economic zone in Bokeo (Laos) and the Cambodian operations,” UNODC regional representative Jeremy Douglas told DW.

Here and there, the lack of Chinese tourists has turned gambling dens into online fraud factories. Hundreds of Thais, Vietnamese, Indonesians, Malaysians and Taiwanese have had to be freed from the clutches of the triads in recent months. Thailand has already sent its own police units to southern Cambodia to buy forced laborers free. Taiwan recently created a task force to seek out and assist victims of human trafficking. Taiwan’s National Police Agency estimates that around 2,000 of its nationals are currently being held in Cambodia.

Also Germans among the victims of fraud

The scam factories in Southeast Asia are causing colossal damage. According to the Chinese police, the illegal turnover of crypto and phone scams in 2020 amounted to 5.7 billion euros – not counting gambling scams.

Germans also fall into the crypto traps. One of those cheated is Sabine, who, out of shame, does not want her real name published and has been given a pseudonym by DW. “Last year a young man wrote to me via the LinkedIn business platform,” the woman, in her mid-40s, recalled in an interview with DW. The Asian wrote to her almost every day and built up a relationship of trust with her over the course of two months. One day he steered the conversation towards cryptocurrencies, telling about dream returns.

She bought shares in digital currencies for a total of 130,000 euros. “I ‘invested’ in Bitcoins and Ethereum through an investment platform called ASX.” What Sabine didn’t know, the website and the platform were specially created scam websites.

The money has disappeared to this day, the man obviously never existed – all the pictures on his profile came from a fitness influencer from Taiwan. “How am I supposed to know that? I don’t know these young influencers,” says the German with Chinese roots.

All her savings, which she put aside for old-age provision and for the education of her children, flowed into the pockets of the triads in the Laotian border triangle. “We were able to trace this investment platform back to a group in Laos in the ‘Golden Triangle Special Economic Zone’. Just a few steps from Kings Romans Casino,” says Elisa Warner of Deutsche Welle from the non-governmental organization Global Anti-Scam Org, which works to help victims of fraud worldwide .

Tolerated by local authorities

Prosecuting the scammers in the Laotian hinterland is difficult if not impossible. As a rule, the owners of these casino facilities are closely linked to the local power structures. In the case of the “Golden Triangle” special economic zone, the Laotian government even has a 20% stake in the project. In return, Zhao Wei, sanctioned by the US authorities, who holds the other 80% of the shares, is allowed to regulate matters in the border triangle himself. “This is highly problematic,” says Jeremy Douglas, head of the South East Asia office of the United Nations Office on Drugs and Crime (UNODC). “These groups operate autonomously and make their own laws.”

Lao officials only enter the area with their permission. Zhao maintains its own police force, which operates even outside the zone. The DW reporter was also stopped on the street in the region by five “policemen” with sirens and flashing lights while he was researching this article. Only after heated discussions and after consulting official Lao authorities did the security people return to the casino city. But not before they put the reporter on their “black list” and issued an entry ban.