Behind the Arrest of Macau’s ‘Junket Mogul’: Focus on Money Laundering

December 2, 2021 Updated: December 7, 2021

News Analysis

Alvin Chau Cheok-wa, the head of Macau’s biggest casino junket operator Suncity Group, was arrested last week along with 10 others for allegedly running illegal cross-border gambling and a money-laundering syndicate. Junket operators are outfits that bring in high rollers to play at casinos.

According to Macau police, all of the arrested have confessed that they set up gambling platforms overseas and conducted online betting activities illegally, but have refused to cooperate on the money laundering allegation.

But Chau’s nickname “Rice Washing wa,” meaning money laundering in Cantonese, suggests what he is more easily associated with. The Macau police said that they learned in August 2019 that a criminal ring led by Chau had allegedly established platforms and transferred assets illegally.

Chau was arrested at midnight on Nov. 27, only hours after prosecutors at Wenzhou, a city in eastern China’s Zhejiang Province, suddenly issued a statement that they launched a separate investigation of Chau’s alleged criminal activities, adding that it found the amount of money laundering committed by Chau’s operations was “extremely huge.”

Wenzhou police in the statement said that Chau had contracted gambling rooms in casinos in Macau and other places since 2007, and opened online gambling platforms in the Philippines and elsewhere in 2016. As of July 2020, Chau had recruited more than 12,000 mainland Chinese as his agents, 199 of whom were the shareholder-level agents, it said. Chau had allegedly arranged for Chinese citizens to go to the overseas gambling rooms to take part in the cross-border online gambling, the police said. More than 80,000 mainland Chinese gamblers became his members, it added.

According to a 2019 investigation report by Economic Information Daily, a newspaper run by China’s official Xinhua News Agency, the betting stakes involved in Chau’s syndicate amounted to one trillion yuan each year.

Wenzhou authorities also issued a warrant for Chau’s arrest and urged him to turn himself in “as soon as possible for mercy.”

The identity of the 80,000 Chinese spending over one trillion yuan on Chau’s online betting platform will be the focal point. The reporter of Economic Information Daily spent over two months contacting nearly 30 participants and found that they were people from all walks of life. Most of them were entrepreneurs and government officials, living in economically developed regions, especially provincial capitals, or large and medium-sized cities with more developed economies. Many of them are Chinese Communist Party (CCP) members.

As China’s economic engine started its momentum due to the U.S.-China trade war and the Covid-19 pandemic, Chinese leader Xi Jinping has been taking increasingly drastic steps to monitor the money flow and stem capital flight. The amount of money Chau’s syndicate transferred each year was twice as much as China’s annual lottery revenues in 2018, an amount too large to be ignored by Beijing.

Chau’s arrest came amid a tightening crackdown on Macau’s gaming industry. On Sept. 15, Macau announced a plan that it will increase government regulation on the sector, including appointing government representatives on licensed operators’ boards to oversee their dealings, and to criminalize underground banking in the industry.

At the news conference after Chau’s arrest, the Macau police repeatedly dodged the questions asking if they made the arrests under the direction of Wenzhou authorities, which would have been a very unusual move given that Macau is one of China’s special administrative regions and is supposed to operate autonomously from the mainland. Macau police instead stressed that they thought it was the proper time to act after collecting the information on their own, including data from law enforcement agencies around the world.

Since Chau’s alleged primary illegal activities did not take place in Wenzhou, the Chinese city selected by central authorities to launch the investigation and prosecution bespeaks careful calculations.

Some political analysts have suggested that Chau’s case is actually directed by Beijing, and represents a new front in Xi’s ongoing campaign against his political opponents and their allies.

Chau, a Cantonese native who was born in May 1974 and grew up in Macau, developed his business in the early 2000s. It was the time the former CCP Vice President Zeng Qinghong was in charge of Hong Kong and Macau affairs. Chau is also well known for his energetic involvement in Hong Kong entertainment and film productions and that is the domain controlled by Zeng Qinghong’s younger brother Zeng Qinghuai.

Since he took power in 2012, Xi has been struggling to get rid of the restraints of the former CCP head Jiang Zemin and his allies. Zeng Qinghong, a close ally of Jiang, apparently is one of Xi’s top adversaries. It has been long arguable among China observers that Xi has already really taken full control of the party. Eastern China’s Zhejiang Province, where Xi was governor from 2002 to 2007, is widely regarded as a safe zone for Xi and the center of his sphere of influence. It is thus not hard to understand why a city in that province was chosen to take charge of the case.

The timing of Chau’s arrest was particularly intriguing in that it comes at a time Fantasia Holdings Group, the real estate company owned by Zeng Qinghong’s niece Zeng Baobao, is sliding into a liquidity crisis after missing a payment on a $206 million bond, triggering a default—a rare public blow to hit the powerful Zeng family. Most China experts believed this was the clearest signal yet that Zeng Qinghong was beaten by Xi in the latest round of factional fighting.

In addition to political foes, celebrities in the entertainment industry could be another likely targeted group in the case. Some famous young artists, celebrities, and online influencers already have been harshly punished for tax evasion this year, while the industry more broadly was targeted by Beijing in a sweeping regulatory crackdown across a slew of sectors.

The celebrity crackdown has not only brought in the most needed money for the cash-strapped government, but also has won the support of many ordinary Chinese who regard the wealthy celebrities as spoilt upstarts. It has helped Beijing direct people’s anger away from the Party’s unpopular rule.

Also as a prolific filmmaker, Chau had invested and joined the productions of 65 movies, including several recent high-profile official propaganda movies. He has therefore been suspected of using this process as another conduit for money laundering.

In fact, right after his arrest, one of China’s most recognized newspapers Southern Weekly hinted that Chau could have engaged in money laundering by inflating actors’ pay and box office sales. Thus among the guestlist for Chau’s VIP gambling rooms, it should be unsurprising to see some actors and celebrities.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Frank Dong
Frank Dong is a journalist with more than 20 years of experience.