Chinese-Linked Casinos in Pacific Islands Are Vehicles for Corruption, Expanding CCP Influence: Analysts

By Venus Upadhayaya
Venus Upadhayaya
Venus Upadhayaya
Reporter
Venus Upadhayaya reports on wide range of issues. Her area of expertise is in Indian and South Asian geopolitics. She has reported from the very volatile India-Pakistan border and has contributed to mainstream print media in India for about a decade. Community media, sustainable development, and leadership remain her key areas of interest.
May 30, 2022 Updated: June 10, 2022

A Fijian court handed down a sentence and ordered a Chinese casino developer to pay $650,000 on April 28 for causing substantial damage to the environment while undertaking unauthorized development on Malolo Island in Fiji’s west.

The case also highlighted the marathon struggle of Australian surfers Navrin Fox and Woody Jack who held a stake in the land adjacent to the one owned by the Chinese company, Freesoul Real Estate. Freesoul had ripped out a part of a reef, dumped waste, blocked other landowners, and disturbed traditional fisheries to build a resort and Fiji’s first-ever casino.

Fox and Jack helped bring attention to this case and managed to stop the environmental destruction. Yet many other Chinese-linked casino projects in the Pacific are causing less visible forms of harm, and are flying under the radar away from public scrutiny, experts say.

Casinos are China’s tools to serve its expansionist and influence operations in vulnerable, investment hungry economies like those of the Pacific Island Countries (PICs), according to experts and sources who told the Epoch Times that setting up casinos is one of the first things the Chinese ask for when a PIC says it’s open to investment.

“I was in a meeting in which Tongan representatives were in London talking to a room full of potential investors and the first thing the Chinese representatives asked about were casinos,” Cleo Pascal, a non-resident senior fellow at the Washington-based Foundation for Defense of Democracy, told The Epoch Times in an email.

“They asked repeatedly. The Tongan representative said no, it was against their beliefs. But the Chinese investors will keep asking.  And maybe, one day, they will find someone with different (or no) beliefs.”

Grant Newsham, a director at One Korea Network and a senior fellow with the Center for Security Policy and the Yorktown Institute. told the Epoch Times that the $650,000 fine issued by the Fijian court would do no damage to the Chinese.

“[It] is not even a slap on the wrist. The Chinese must be laughing. The $600,000 bond is maybe 1/1000th of the actual damage. You don’t just ‘repair’ reefs and mangroves. The reefs take thousands of years to develop, and mangroves are only a little faster,” Newsham said in an email.

Casinos and BRI

Within the larger Asia Pacific region, the Pacific has the highest investment need, in percent of GDP, until 2030, at 9.1 percent, according to the Asian Development Bank estimates of 2017, and a 2018 report (pdf) by the Organization for Economic Co-operation and Development (OECD) said China’s “Belt and Road Initiative” (BRI) can “certainly help” to provide some of this investment.

BRI is a trillion-dollar infrastructure investment project launched by the Chinese regime to bolster its economic and political influence worldwide.

Out of the 15 independent PICs, 10 have signed onto BRI, the latest being the Solomon Islands which joined in 2019 after it switched its 36-year-old diplomatic recognition from Taiwan to the Chinese regime.

Epoch Times Photo
Chinese Foreign Minister Wang Yi (L) and his counterpart Solomon Islands’ Jeremiah Manele (R) attend a press conference in Honiara on May 26, 2022. (STR/AFP via Getty Images)

Chinese Foreign Minister Wang Yi landed in the Solomon Islands on May 26 with a large delegation at the start of an eight-nation tour, and the Associated Press reported that Wang is hoping to strike a deal with 10 PICs during the visit. These deals cover everything from security to fisheries.

The United States in 2020 sanctioned the Chinese gangster and triad boss, Wan Kuok Koi, also known as “Broken Tooth,” who owns casinos and VIP rooms across PICs and South East Asia, alleging he was leveraging BRI for corruption in the region.

Wan is a member of the Chinese People’s Political Consultative Conference, a political advisory body to the Chinese Communist Party, the Treasury Department said at the time.

He is also “a leader of the 14K Triad, one of the largest Chinese organized criminal organizations in the world that engages in drug trafficking, illegal gambling, racketeering, human trafficking, and a range of other criminal activities,” the department said.

The 14K Triad has engaged in similar activities in Palau, an island nation in the Western Pacific, it added.

Epoch Times Photo
Media surround the car as Wan Kuok-koi (C) is driven away from the Macau prison by two unidentified men on Dec. 1, 2012. (Laurent Fievet/AFP via Getty Images)

The Treasury Department also blacklisted an organization based in Cambodia set up by Wan called the World Hongmen History and Culture Association, which officials said was an effort by 14K Triad to legitimize itself.

Two other organizations owned and controlled by Wan were also sanctioned: Palau China Hung-Mun Cultural Association and the Hong Kong-based Dongmei Group.

“The World Hongmen History and Culture Association is spreading across Southeast Asia, establishing a powerful business network involved in the development and launching of cryptocurrencies, real estate, and most recently a security company specialized in protecting BRI investments,” the Treasury said.

“The Chinese enterprises behind the BRI projects have several things in common: their leadership has links to criminal networks or actors involved in illicit activities in other parts of Southeast Asia, as well as China; they have pre-existing organizations engaged in casinos and cryptocurrencies; they advertise themselves online to be associated with Beijing’s BRI and flaunt connections with key Chinese government agencies, and all of them have established associations that actively seek to assist Chinese nationals,” it added.

Broken Tooth in Palau

Wan came to Palau in 2019 and was given licenses to run two casinos in the country then, a research expert with decades of experience in PICs and with knowledge of triads’ activities in the region told The Epoch Times under the condition of anonymity.

Chinese media reports at the time said that the then-President of Palau Thomas Remengesau Jr. issued Wan with a Casino gaming license and a Pachinko online gaming license.

“Broken Tooth in Palau established Hongmen Chinese Association and then he brought thousands of Triad members in Palau and then started conducting online casinos in many hotels,” said the source.

According to Chinese media reports, Wan was also given the license to create Hongmen Special Economic Zone at the island of Angaur for which a 99-year contract was signed with the Palau government.

The report said that Wan announced that he would raise HK$200 billion to turn the nine square kilometers of the island into an international gaming and entertainment resort of the century. He also announced that all key payments in the Hongmen Special Economic Zone would be conducted in Hongbi or HB, the cryptocurrency launched by Wan, according to the report.

Another Chinese media report showed images of purported gaming licenses granted to Wan.

Remengesau, however, denied those reports at the time. He told local media the Island Times that he didn’t endorse the establishment of casinos in the country since they were illegal.

The then-president said when he met Wan he wasn’t aware of his identity and was alerted later to this by the Taiwan government. The Island Times cited records from the attorney general to show that Wan had registered a nonprofit called the “Palau China Hung-Mun Cultural Association,” and noted that nonprofits are not permitted to do business in Palau.

The president’s office did not return an inquiry from The Epoch Times about the alleged gaming licenses granted to Wan.

A Chinese woman, Xiaoxue Xu identified as Wan’s wife by Palau’s Ministry of Justice in 2019 was denied entry into the country for alleged falsification of identity, reported the Island Times.

Palau’s administration said at the time that Xu was involved in illegal business activities in the country and the matter was under investigation.

The unnamed source said the Chinese regime, triads, or other criminal gangs operate through their sophisticated connections in PICs, “although they check each other. Criminals can easily gain access to political leaders in small island states, including Broken Tooth, etc” and this can “easily lead” to corruption.

Casinos and Political Connections

Experts say that the Chinese affiliated entities allegedly work through a complex network of sophisticated business and political connections to run casinos, and carry out crime and other illegal activities in the PICs.

Newsham said that Chinese casino companies usually bribe local politicians and officials and this creates an opening for other Chinese entities in the country.

“It also can lead the country’s political alliance to shift towards to PRC—and result in things like shifting diplomatic recognition from Taiwan to PRC or to vote in favor of PRC positions at the United Nations and other international organizations,” he said, referring to the acronym for the Chinese regime’s official name, the People’s Republic of China.

Newsham, who’s also a former U.S. diplomat and business executive with years of experience in the Asia Pacific region, said that building a casino gives China a physical presence in a country or location, adding that this is “part and parcel” of the communist regime’s expansionist agenda.

“It also creates a ‘pro-China’ constituency in a place it did not exist. How so? The casino promises revenue for cash-strapped local governments. The casino also promises plenty of jobs for locals—although this rarely materializes as jobs, including construction and gaming; jobs are usually filled by Chinese workers or other foreigners,” he said.

When Chinese players come into PICs legally or illegally—setting up businesses and buying or leasing real estate, they create a pro-China constituency of people who enter into an economic cycle with Chinese entities, according to Newsham.

“All in all, this Chinese presence creates ‘influence.’ An influence translates into political power, as well as commercial power, and one-day military power—as the PLA gains access,” he said, referring to the acronym for the Chinese Communist Party’s military, the People’s Liberation Army.

The unnamed expert source said growing Chinese influence cultivated through Chinese casinos and business operations could be seen in the Solomon Islands, an island nation in the South Pacific that has recently drawn scrutiny when its prime minister, Manasseh Sogavare, signed a controversial security deal with the Chinese regime late last month.

“The political situation in the Solomon Islands tells this clearly. The current Sogavare government used the Pacific Casino Hotel in Honiara, owned by the late Patrick Leong, as a base of political operation,” said the source adding that within the precinct of Pacific Casino Hotel there are multiple businesses, including a major casino licensed to Leong.

Leong was one of the country’s richest Chinese businessmen and a naturalized citizen whose properties had been targeted in politically-instigated riots since 2006.

The unnamed source said it’s known within the power circles in the Solomon Islands that the Leong family allegedly has ties with the Chinese Communist Party. “CCP utilizes the Chinese diaspora all over the world as their united front,” the source said referring to the regime’s “united front” strategy that seeks to coopt and influence local elites to adopt policies friendly to the CCP.

The Epoch Times reached out to the Pacific Casino Hotel management for a response on the allegations against the hotel’s owners but did not receive a reply by press time.

Epoch Times Photo
Celsus Talifilu, a political adviser to the premier of Solomon Islands’ Malaita province. (Courtesy Celsus Talifilu)

Celsus Talifilu, a political adviser to the premier of Solomon Islands’ Malaita province told The Epoch Times that casinos in the country are linked to the logging industry. Malaita is the most country’s populous province and is at the center of resistance against Sogavare’s pro-China policies.

More than half of China’s tropical log comes from the Solomon Islands and its neighbor, Papua New Guinea, and for the Solomon Islands, this accounts for 80 percent of its total exports, according to conservation news site Mongabay.

“[There are] lots of connections between politicians and the logging companies. Logging companies affected the political governments as well. And in that sense it’s through that connection that there’s a connection with the casinos as well,” said Talifilu.

Money from the gaming industry influences lawmakers and the connections between that industry and politicians is very visible, according to Talifilu.

“Basically those owners of casinos are mostly people who also participated in the logging industry, not only the Chinese but also the Vietnamese who own casinos,” he said.

One of the businesses in the Pacific Casino Hotel is called Cowboy’s Grill, which is an entertainment venue opened and operated by Philippine-Chinese logger Johnny Sy, according to the unnamed source.

“This logger (tropical timber logging businessman) was a major supporter of Sogavare and a mentor of Sogavare’s nephew, [Robson] Djokovic and also a mentor to current Attorney General, John Muria Junior,” alleged the source.

The Island Sun, a leading media outlet in the Solomon Islands, cited documents while reporting that Sy, who is Sogavare’s Special Envoy to the Philippines, sold Cowboy’s Grill for $1 million to a company called Clandestine Entertainment Ltd, whose shareholders include Sogavare’s Chief of Staff Robson Djokovic, Attorney General John Muria Junior and the lawyer for OUR (Ownership, Unity and Responsibility) Party, Wilson Rano.

The Epoch Times reached out to Muria Junior on Linkedin but did not receive a reply by press time. The publication was unable to reach out to Djokovic.

Rano, in a response provided to The Epoch Times after the press deadline, denied allegations of Chinese influence being filtered through Solomon Island casinos.
None of the three casinos in the country are owned by Chinese, he said in an email, adding that Asians are the main customers in these casinos.
Rano, who is also the director of Cowboys Grill, said the venue was sold to Clandestine Entertainment “long before OUR party got registered.”

“I am sure I have my constitutional Right to Free Association, political conscience and right to free enterprise,” he said.

OUR Party was founded by Sogavare in 2010 who was then opposition party leader, with eight opposition MPs. They first contested the election as OUR party candidates in the same year. OUR Party’s 2021 convention was held at the Cowboy’s Grill, according to Solomon Islands Broadcasting Corporation.

Pascal, the analyst, accused Sogavare of letting CCP proxies, agents, and companies run riot, “distorting the economies and politics of Solomons” after his government switched diplomatic recognition from Taiwan to the Chinese regime in 2019.

CCP influence in politics has increased so much, according to Pascal, that out of the 50 lawmakers in parliament, 39 who were supportive of Sogavare were last year provided with additional money out of the National Development Fund, jointly operated by the Solomon Islands government and the Chinese embassy. The 11 left out were those who were “by and large, less supportive” of Sogavare, Pascal said.

Epoch Times Photo
An aerial view shows burnt-out buildings in Honiara’s Chinatown on Nov. 27, 2021, after calm returned to the Solomon Islands’ capital after days of rioting left at least three dead and reduced sections of the city to smoldering ruins. (Jay Lioafasi/AFP via Getty Images)

In this context of increasing CCP influence, the Pacific Casino Hotel in the nation’s capital Honiara, which had borne the brunt of rioters in 2006 and 2019, again became the epicenter of anti-China riots in 2021.

Various political rival camps in the Solomon Islands are known by the names of ​​the plush hotels they frequent in Honiara where they enjoy patronage from its owners. Sogavare’s camp has been using Pacific Casino Hotel as a base for political operations, and are thus known as the “Pacific Casino Hotel camp.”

Talifilu said that the people in the Solomon Islands are worried about the moral implications of these casinos run by the Chinese or the Chinese diaspora and the country is yet to adopt any legislation restricting casino activity.

“From time to time, you hear people talk about it, especially in the churches, and even common people who are affected by these operations of casinos. People are addicted to it, but there is no support system from the state to rehabilitate those who are addicted,” said Talifilu, adding that with casinos comes night clubbing and with that comes along other social problems.

The Epoch Times reached out to Solomon Island’s Prime Minister’s Press Secretariat on Facebook, the only way to online reach Sogavare for a response against these various allegations including links with CCP through the logging companies and casinos but didn’t get a response during the press time.

Intelligence Gathering

Chinese-linked casinos in PICs are also “useful platforms” for Chinese intelligence-gathering operations and recruitment operations, according to Newsham.

A 2018 report (pdf) by the US-China Economic and Security Review Commission said that Chinese-backed casinos in the Pacific are a threat to U.S. military in the region.

Newsham said that the Chinese establishing casinos in the islands of Saipan and Tinian, part of the Commonwealth of the Northern Mariana Islands, a U.S. territory, was deliberate, and was aimed at setting up a foothold in a location of strategic importance to the U.S. military and the United States’ defenses in the Pacific region.

“The Chinese casinos on Saipan and Tinian (U.S. territory) and the Chinese presence that came with them was well-positioned for potential intelligence operations given the proximity to U.S. military installations and U.S. military operations,” he said.

Along with intelligence gathering, the Chinese regime also tried to erode the Northern Mariana Islands’ longstanding allegiance to the United States and support for U.S. military activities.

“The Chinese casinos are now closed down for not paying taxes and after having been sued for underpaying their labor force. But the PRC did have one major success. They were able to bolster local opposition to a proposed US Marine/US Navy amphibious and combined arms training area in the Northern Marianas. This plan is dead,” said Newsham.

This article was updated to include an emailed response from Wilson Rano.

Venus Upadhayaya
Venus Upadhayaya reports on wide range of issues. Her area of expertise is in Indian and South Asian geopolitics. She has reported from the very volatile India-Pakistan border and has contributed to mainstream print media in India for about a decade. Community media, sustainable development, and leadership remain her key areas of interest.