July 17, 2024

Wei Qingtao, a crime family heiress involved in numerous illicit activities, previously displayed his opulent lifestyle on China’s Tiktok version, Douyin. He often displayed his extravagance from Myanmar’s remote Kokang zone, bordering China, showcasing luxurious vehicles, rare cigars, and private airplanes. However, this display of wealth came to an abrupt halt in November, when his social media accounts disappeared and he surfaced in a confession video under Chinese custody.

His arrest, along with the detentions of around 15 other alleged top crime family members, was highly publicized in Chinese news, serving as a demonstration of Beijing’s extensive powers. The Chinese Communist Party argued that the apprehensions are proof of their commitment to eradicating international criminal activity, regardless of the sinners’ locations.

Chinese media praised the detentions of the Myanmar crime syndicates, showcasing their efficacy in handling cyber-crime. The People’s Daily underlined the arrests as a solemn warning to law offenders that they wouldn’t escape subpoena irrespective of their might.

However, reality is different. A Washington Post probe found that Kokang’s criminal networks, mainly piloted by the Wei, Bai, and Liu families, have maintained longstanding ties with Chinese officials. Moreover, evidence indicates the Kokang syndicates significantly engaged with Chinese state officers in economic tasks worth hundreds of millions of dollars.

Although Kokang is almost inaccessible to journalists, the United Nations has found tens of thousands of people trafficked in its many scam compounds. Moreover, The Post discovered over 1,100 criminal instances related to Kokang over the past decade while analyzing Chinese court records.

The Kokang families, who operated legal and illegal enterprises simultaneously, acted as dependable associates and stability enforcers as Chinese President Xi Jinping advanced his colossal Belt and Road Initiative. In May 2023, for instance, the Liu family attended a significant China-Myanmar border trade fair advocating “mutually-beneficial cooperation” in Myanmar’s capital.

Frequently Asked Questions

What were the crimes committed by the Wei, Bai, and Liu families?

The alleged crimes by the Wei, Bai, and Liu families include human trafficking and enslavement, money laundering and global cyberscams. They ran both legal and illegal businesses, often from the same property.

How did China suppress these crime families?

The Chinese Communist Party led a crackdown on these crime families to demonstrate their commitment to eradicating international criminal activity. Wei Qingtao, along with about 15 other alleged top crime family members and their associates, were arrested and their cases were highly publicised in Chinese news.

What is the significance of Beijing’s crackdown on these crime families?

The crackdown represented China’s ability to exert its influence and take action against criminal activity. It served as a demonstration of Beijing’s extensive powers and its commitment to eradicating international criminal activity. However, the investigation revealed that these crime syndicates engaged significantly with Chinese state officers in various economic tasks, indicating a complex relationship.The Washington Post has uncovered the operations of powerful families in Myanmar who have managed to create an elaborate criminal network that brings in billions annually. According to the U.N. Office on Drugs and Crime (UNODC), these families have exploited a mostly ethnic Han Chinese region called Kokang, establishing it as a hub for atrocities like scam operations and trafficking. As a result of their influence, they were assumed untouchable by Jeremy Douglas from UNODC.

However, the ripple effects of the scams and trafficking started causing unrest among Chinese victims who lost substantial amounts of money. Eventually, China had to act against these families as internal turmoil began to rise. In May, China’s Anti-Fraud Center reported a remarkable figure of $157 billion, intercepted since 2021, relative to scam activities, although countless cases remain unsolved.

Even though China is attempting to dismantle these networks, it has been a challenging task. These intricate organizations, tied to the Kokang families, have shown resilience, according to data derived from visits to their offices in Yangon, Myanmar’s commercial capital, and analysis of their cryptocurrency wallets by Chainalysis. There seems to be a surge in other scam operations led by competing groups in different parts of Myanmar and Southeast Asia.

It’s worth noting that these families played a significant role in developing the Chinese-Myanmar economic tie. Jason Tower of the U.S. Institute of Peace remarks that their financial influence emerges from these illegal businesses and an extensive network of relationships they’ve built with top political and economic figures all over China.

Kokang has a reputation for its association with various vices, including methamphetamine production and gambling. This notorious reputation expanded under the rule of the warlord Peng Jiasheng and his rebel army MNDAA. The notorious clans, which control almost every aspect of life in Kokang, were rewarded with control over the region and its underground economy after the defeat of the MNDAA by the Myanmar military in 2009. Over time, by leveraging their ethnic Chinese identity, they have become cornerstones of President Xi’s regional investment strategy and have intensified the relationship between Myanmar and the Chinese Communist Party.

### Frequently Asked Questions

#### What type of scams were the families conducting in Myanmar?

The families from the Kokang region were involved in various illicit activities, from drug trafficking and running underground gambling rings to scam operations that swindled thousands of Chinese citizens.

#### Why was China pushed to take action against these families?

The scam operations conducted by these families led to growing public discontent among China’s citizenry, pushing the issue into the political realm. Chinese authorities were thereby compelled to take action.

#### How have these families managed to resist eradication despite crackdown efforts?

The families have built sophisticated criminal networks, entrenched in the fabric of Myanmar’s economic and political spheres. Despite crackdown efforts, many of these operations remain active, showing how deeply rooted they are within these systems.
In an effort to bring stability to borderlands, Beijing has focused on development projects, such as the Qingshuihe port connecting Yunnan, China, to Kokang, Myanmar. Liu Yun, a fellow at the Taihe Institute, a Beijing think tank, suggests that China’s chief objective for Kokang is to secure the border by addressing economic and livelihood issues.

An Asian Development Bank spokesperson has mirrored Liu’s sentiments. They have stated that the Yunnan-Lincang development project intends to enhance economic growth potential and the standard of living in China and surrounding areas. This project, they assure, complies with ADB policies and procedures.

Yet, beneath the surface, something more dark and complex was brewing. Economic diversification lead some families, like Liu’s Fully Light Group, into myriad lucrative industries. This ranged from real estate and hotels, to agriculture, cigarettes, and pesticides to name a few. This expansion led to the establishment of subsidiaries in China and Cambodia.

In the heart of the Kokang empire, things were not as rosy. Casinos became notorious grounds for underground banking and money laundering. The Kokang clans even harbored grand plans of turning their territories into tourist destinations. They were envisioning their own little version of Macao.

Walking on this path, they erected lavish casinos that opened their doors to high-rollers and ordinary gamblers, 24 hours a day. Despite the allure of these dazzling casino floors, a more sinister industry emerged. Since 2018, Crouching Tiger Villa, owned by the Ming family, became the hub of criminal activities. Chinese court documents reveal how this area was ridden with “criminal syndicates” smuggling people and forcing them into scam jobs.

## Frequently Asked Questions
### What is China’s approach in the borderland regions?
China aims to bring stability to these regions by focusing on developmental projects. They believe that improving economic conditions and livelihoods could secure their borders.

### What is the Yunnan-Lincang project?
The Yunnan-Lincang project is devised to escalate the potential for economic growth and enhance the standard of living of residents in the concerned parts of China and its bordering areas.

### What is the situation in Kokang, Myanmar?
In Kokang, underground banking, money laundering, and other illicit activities have reportedly increased in popularity. Despite being promoted as potential tourist destinations, these areas have become notorious for their criminal activities.In just a few years, Crouching Tiger Villa expanded immensely into a hub for scam operations. The closure of borders due to Covid-19 halted cash influx to casinos, pushing the shift towards this scam economy. The military coup in Myanmar in 2021 hugely facilitated this shift. General Min Aung Hlaing secured economic and political support from families, including tax payments, amid sanctions from the West.

The famiiles thus felt invincible, as claimed by Horsey at the ICG. The scammers, coming from as near as China and as far as Malaysia, were more or less imprisoned in Kokang’s specially designed compounds. They were trained to connect with potential victims that could be stripped off their savings.

These compounds for scam operations were often located in the same hotels and casino complexes where the clans were based. Some of them were purpose-built and characteristically had barricaded windows, high walls, and military snipers patrolling the rooftops.

The Crouching Tiger Villa was one of the harshest compounds, where caged animals like lions, tigers, and bears were used to intimidate the workers. The clans also hired security staff from foreign countries to safeguard their interests. By 2023, Beijing had to take action against these operations due to increasing domestic and international pressure.

The victims of these scam centers hailed from as many as 35 nations, with the majority being from China. A popular Chinese movie, “No More Bets”, depicted this situation and went on to become one of the highest-grossing films in the country. Beijing expressed its apprehensions officially in August 2021 when the Chinese ambassador cautioned the Myanmar authorities to eliminate the scams and gambling.

##### Frequently Asked Questions

**Q1: What led to the growth of the scam economy in Kokang?**

The 2021 coup in Myanmar facilitated the growth of scam operations in the region. The border closures due to the Covid-19 pandemic also pushed the shift from casinos to scams.

**Q2: How were the scammers trained and where were they located?**

Scammers were essentially confined in purpose-built compounds and were trained to connect with and exploit potential victims for their savings. The compounds often were part of existing hotels and casino complexes.

**Q3: How did the issue of scam operations become a concern at the international level?**

By 2023, the operations had grown to such an extent that Beijing had to take action amidst increasing domestic and international pressure. The victims spanned 35 countries which also added to the international concern.
A joint effort between local authorities in Laos and Cambodia, alongside officers from China, conducted a series of raids on cyber scam bases in the area. However, the Kokang tribe in Myanmar vowed to stamp out such practices themselves. The ensuing apprehensions were primarily a show, according to U.N. officials and researchers.

Different outfits in Myanmar also commenced their own operations against the immoral companies, no doubt influenced by the actions of Beijing. According to Xu Peng, a PhD candidate at the SOAS University of London who has meticulously studied the Myanmar-China borderlands, Beijing had sent several warnings to the Myanmar military.

As the news spread that China wanted its citizens back, escape attempts surged. In one instance, guards opened fire on more than 100 people trying to evade the Crouching Tiger Villa. An independent consultant acquainted with the event reported that four undercover Chinese police officers were among those who lost their lives.

Emboldened by Beijing’s decisive efforts, the Myanmar National Democratic Alliance Army (MNDAA) allied with two other armed ethnic groups, and attacked military locations throughout the country. The phrase they used was “wipe out the scammers, rescue our compatriots.” On January 6, the MNDAA took control of Laukkaing, which marked the first time they had complete dominion in the area in fifteen years.

According to the [Ministry of Public Security](https://english.www.gov.cn/news/202405/27/content_WS66546691c6d0868f4e8e788d.html#:~:text=BEIJING%2C%20May%2027%20%2D%2D%20Over,Security%20(MPS)%20on%20Monday.), around 49,000 scam workers have been sent home to China since last July. Unfortunately, many fraudsters have evaded capture and major figures in the clans may face charges in China.

A company named Chainalysis investigated addresses of cryptocurrency wallets linked to one such fraudulent group, the Lius’ Fully Light Group. They found that these outfits continued to move money around as recently as April. The cryptocurrency of choice is Tether, which is pegged to the value of the dollar.

Despite these events, cyber scams are still flourishing, particularly in Cambodia, Laos, and even farther afield in places like Dubai, South Africa, and Georgia. Jürgen Stock, the Interpol secretary general, warned in March that this issue is developing into a global human trafficking crisis.

As a direct consequence of Beijing’s crackdown, cyber scams run by ethnic Chinese groups are shifting to target English speakers, including Americans, more than Chinese victims in an effort to avoid retaliation from Beijing.

### Frequently Asked Questions

1. **What has been the impact of the crackdown on cyber scams?**

It forced many cyber scam companies to shut down and sent a strong message, enabling the repatriation of around 49,000 scam workers back to China. However, some of these outfits continue to operate and have now started to target English-speaking victims over Chinese to avoid Beijing’s attention.

2. **Why is Tether the cryptocurrency of choice for these scam operations?**

Tether is preferred because it’s a stablecoin, meaning its value is tied to the value of the dollar. This makes it less volatile than other cryptocurrencies, providing a certain level of financial stability for these illegal operations.

3. **What is being done to combat the expansion of cyber scam operations?**

Governments and international organizations, such as the United Nations and Interpol, are ramping up efforts to crack down on these operations. This includes legal actions, raids, arrest operations, and public awareness campaigns to educate the public about these scams. However, these unethical operations continue to persist and are evolving to avoid detection.
Former International Justice Mission member, Jacob Sims, suggests that people are evacuating the Kokang region to escape China’s growing law enforcement. It seems these illicit enterprises and human rights offenses continue, adapting to China’s domestic policies.

A shocking example of this occurred in April when the Myanmar National Democratic Alliance Army (MNDAA) broadcasted a public trial of its own soldiers, three of which were subsequently executed on charges such as kidnapping and murder. The EU sternly criticized these actions as absolute defiance of human dignity.

MNDAA distributed a distressing video as propaganda showcasing the trial and execution process. (Video: Kokang123 News)

According to Morgan Michaels, a scholar at the International Institute for Strategic Studies, China’s main concern in Kokang is not the unlawful businesses rather the illegal activities that involve and harm Chinese nationals.

Moreover, China’s crackdown seems to have left an eerie silence over the region. Once thriving establishments, like the casinos and hotels, owned by Kokang crime families, now sit vacant. Notable spots such as Wei’s club, Hanley Interstellar, and the bullet-plagued Crouching Tiger Villa are currently unoccupied, as video evidence confirms.

However, a few of the region’s exotic animals, including a tiger and five bears, managed to outlive the conflict. They are now reliant on rebel soldiers for their daily chicken meals.

Contributions to the report from Alicia Chen in Taipei, Taiwan, and two reporters based in Myanmar.

## Frequently Asked Questions

### What has been the response of the European Union to the actions of the Myanmar National Democratic Alliance Army?

The European Union has significantly disapproved of the public trials and subsequent executions carried out by the MNDAA. They have openly condemned these actions as a complete denial of human dignity.

### How have Kokang’s local establishments been affected by China’s enforcement growth?

The local landscape has significantly changed with well-known establishments and casinos, once owned by Kokang crime families, now deserted. Verified video evidence confirms the abandonment of places such as Hanley Interstellar and the Crouching Tiger Villa.

### How are the surviving exotic animals from the conflict in Kokang managing to stay alive?

The leftover exotic wildlife, including a tiger and five bears, have managed to survive the conflict. They are currently contained in cages and are dependent on rebel soldiers for their daily meals.