India Arrests Chinese Spies for Money-Laundering Scheme

India Arrests Chinese Spies for Money-Laundering Scheme
Hong Kong and US dollars in Hong Kong,on Jan. 12, 2008. (Laurent Fievet/AFP/Getty Images)
Venus Upadhayaya

NEW DELHI—An alleged money-laundering network raided by Indian tax officials a few months ago was operating with the support of China's People's Liberation Army (PLA), with the goal of funding Pakistan's intelligence agency's efforts to disrupt peace in India, Indian media reported this week.

Luo Sang, 42, a Chinese national, was arrested on Aug. 11 during raids by Indian officials in 21 locations around Delhi and in the National Capital Region (NCR). Sang, aka Charlie Peng, was born in Lhasa, Tibet, and was schooled in Nanjing, China.

India Today, which obtained the investigation documents, reported that Sang had acquired a fake Indian identity and was a board member and a major shareholder in five companies based in the Delhi-NCR region.

The investigation, which is continuing, is focusing on the role played by Sang's Indian partners and two other Chinese nationals, Guohua Lu and Jianfeng Lu. The money-laundering operations are likely to total much more than the $135 million (1,000 crores) initially reported, media reports say.

Sang, who held 40 Indian bank accounts, was allegedly running operations to destabilize the Indian economy. His companies were dealing in Chinese herbs and electronic goods.

“A subsidiary of Chinese company and its related concerns have taken over Rs 100 crores bogus advances from shell entities for opening businesses of retail showrooms in India,” said the Central Board of Direct Taxes (CBDT).

The story resurfaced this week as the Indian media outlet Times Now cited the Ministry of Home Affairs about Sang's alleged connection to the PLA and how the PLA was running the scheme in support of Pakistan's Inter-Service Intelligence's (ISI) disruption efforts in India.

The alleged scheme is a "serious challenge" to the already tense India–China relationship, Harsh Pant, the director of studies and head of the strategic studies program at Observer Research Foundation, a New Delhi-based think tank, told The Epoch Times.

India and China have been locked in a border standoff in Ladakh since May, and the bilateral relationship between the two neighbors worsened following a bloody conflict in Galwan on June 15.

"It is also clear that Chinese and Pakistani agents are working in tandem in such networks," said Pant, who is also a non-resident fellow at the Washington-based Center for Strategic and International Studies (CSIS). "This recent hawala channel [money laundering] was supported by the Pakistani spy network in India."

Meanwhile, money laundering by Chinese nationals was also reported in Australia, where two men were arrested in Sydney for money laundering through illegal drug sales. The Chinese operators had used Daigou, a Sydney-based surrogate shopping business popular with the local Chinese community, Reuters reported.

PLA Networks in India

Dr. Manjari Singh, an associate fellow with the Center for Land Warfare Studies, an autonomous think tank of the Indian army, told The Epoch Times that most of the PLA networks in India operate under the guise of generic business operations.

"Most of these networks seem to work through what is known as front organizations, wherein the showcase business is a generic one and behind that, all the espionage activities are conducted," Singh said.

"For instance, in August when the Chinese national, Charlie Peng, an alleged kingpin of some sort of Chinese racket, was arrested in New Delhi, his showcase business was of import-export of medical and electronic goods."

She said the networking between Chinese and Pakistani spies is "equally active" in India.

"Fake Indian passport, marrying Indians for resident proof, bribing Indian employees in sectors responsible for easy access to hawala are some of the ways how a PLA spy network functions. Additionally, given that China excels in the cyber sector, hacking into accounts of government offices, strategic assets, etc. cannot be ruled out," Singh said.

She said that the discovery of this money laundering and spying networking isn't much related to the worsening of India–China relations post-Galwan, since India has long faced such challenges from Pakistan and China.

"The arrest of Peng ... opened up the Pandora's box on the possibility of such networks actively functioning in India right under our nose," said Singh. Cracking down on such networks is important for India in the context of its worsening relationship with communist China, she added.

"While the human spy aspect of it will be dealt with by closely monitoring individuals with suspicious and dubious track records, it is also important for India to look into the technological component of espionage," she said.

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.