At 7 a.m. on December 1, 2012, with a crush of media waiting nearby, the Coloane Prison in the Chinese territory of Macau released one of the region’s most notorious gangsters — Wan Kuok-Koi, better known by his street name: Broken Tooth. Dressed in a white, long sleeve shirt, the then 57-year-old Wan had served nearly 14 years in prison for a host of crimes, including loan sharking and illegal gambling. In the 1990s, when Macau was still administered by Portugal, Broken Tooth had been the ruthless and feared leader of 14K, a violent triad group. He was accused of attempting to kill the city’s police chief, and he controlled a major network of “junket operators,” middlemen who bring in high-stakes gamblers and collect their debts on behalf of casinos.

Today, however, Wan has a new calling. Rather than leading an organized crime syndicate in Macau, which is now under Chinese rule, Broken Tooth has recast himself as an international businessman and Chinese patriot¹He has a pro-Beijing association and reports say he has the backing of a Chinese state-owned railway affiliate who travels across Asia building a suite of entertainment and tourism related companies,²A US Institute of Peace study says Wan’s company even launched a marijuana-infused alcoholic beverage branded with symbols of Chinese triad groups some of them tied to China’s signature foreign policy drive — the so-called Belt and Road Initiative, or BRI, a state-backed effort to construct a modern day Silk Road that connects China with the outside world.³Wan has a World Hongmen History and Culture Association in Cambodia, which promotes Chinese cultural interests and has ties to many of his business, according to the USIP.org report.

His business interests are focused mostly in Southeast Asia. In Cambodia, for instance, he set up a security firm to protect Chinese interests overseas. He formed a cryptocurrency firm — reportedly intended for casinos — that two years ago raised $750 million in an initial coin offering. ⁴(A 2018 report in The New York Times tied Wan’s virtual currency firm to Cambridge Analytica, the British political data firm.) And in Myanmar, one of the world’s least developed countries, he may be embarking on his biggest project yet: a $18 billion economic development zone focused on Chinese tourism and entertainment.⁵This US Institute of Peace report says Wan (Broken Tooth) has a Hongmen Security firm in Cambodia, an Allin Group in Hong Kong and Cambodia an engineering firm and a links to a Cambodia Central Investment Group. See charts page 6.

A promotional video for Allin Group shows Wan at his cryptocurrency launch in 2018.

This past March, he was all smiles at the Marriott Hotel in Kuala Lumpur, Malaysia as he announced his ambitious project in Myanmar. With the top button of his shirt undone, his blue tie loose, Wan stood on stage to detail how his firm — the Dongmei Group — planned to build the Saixigang Industrial Zone Port Project, a “smart city” with a range of tourism, leisure and entertainment opportunities near Myawaddy — a southern border town in Myanmar’s Karen State. The plan, which covers eight square miles, include hotels, office buildings and nightclubs, as well as an international airport servicing flights from cities in China and Southeast Asia.

Saixigang, he promised, would become “the Shenzhen SEZ of Myanmar” — a reference to the success China had in the economic boomtown of Shenzhen.

And while Wan — who could not be reached for comment — made no mention of gambling, which is illegal in Myawaddy, people familiar with his project say gambling is expected to be a centerpiece of a complex that will cater to Chinese clients. At the event, he posed for photos with Malaysian officials, business executives and celebrities, like singer-songwriter Shila Azmah, who once performed for Chinese leader Xi Jinping. Saixigang’s promotional materials show colorful blueprints, with green spaces, a ferris wheel and hot air balloons. Perhaps more importantly, the project is promoted as part of the Belt and Road Initiative, which gives it a veneer of state support and represents Beijing’s promise to deliver infrastructure projects abroad.

Marketing Saixigang as a BRI project could help provide access to financing, improve relations with regional government officials, and attract a hive of Chinese tourists. But in reality, experts say, Saixigang’s plans are centered on illegal gambling. If true, this could spell trouble for Beijing. 

“It is perfectly clear that the so-called special economic zone in Karen State is being built to house illegal and largely online gambling operations,” says Jason Tower, Myanmar Country Director at the United States Institute of Peace, citing Broken Tooth’s involvement in casinos elsewhere in Asia. The white paper for Broken Tooth’s crypto-coin, Tower adds, included “a full section explaining how the coin and the associated blockchain can be used by casinos and their clients to evade detection by law enforcement.”

It is highly unlikely that Beijing, which condemns Chinese involvement in cross-border gambling, would sanction such a development or want its Belt and Road Initiative associated with it. But analysts say there’s little to stop private investors like Broken Tooth from associating with the BRI. (To be clear, Broken Tooth has not been accused by the authorities of any wrongdoing.)

From its inception, the BRI has been kept purposefully vague. There is no public list or database of BRI projects, and no way of knowing what Beijing has or has not officially sanctioned. According to Jonathan Hillman, author of The Emperor’s New Road: China and the Project of the Century (2020), this was a deliberate strategy. “When it launched the Belt and Road, China avoided putting forward criteria for projects,” Hillman says. “That was politically savvy in the short run, allowing interest groups within and outside China to repackage their activities as supporting the BRI.”

But with private investors taking advantage of Beijing’s ambiguity, Hillman says “the BRI brand has been stretched beyond recognition.” 

In the case of Saixigang, experts say the project appears to have the blessing of the military-backed Karen Border Guard Force⁶Members of the militia appeared at a signing ceremony, as well as businessmen with ties to illicit casinos and criminal businesses that migrated from Sihanoukville, Cambodia.

“There are already significant red flags around Myawaddy,” says Jeremy Douglas at the United Nations Office of Drugs and Crimes, citing the “characters and investors involved.” While other economic zones in the region — such as the Golden Triangle SEZ in Laos — are known magnets for Asian organized crime, Douglas says the developments in Myawaddy are “more concerning given the purported size of the investment, the lack of government, the different ethnic armed groups and factions involved, and the fact that the area is already known as a significant drug trafficking route.”

While China claims the BRI will increase trade and connectivity in the region, it seems not to have realized that illicit flows may also increase under its banner. Given how toxic projects like Saixigang could become for China’s signature foreign policy initiative, should Beijing consider intervening?

ONE BELT, ONE ROAD

The BRI was first proposed by Chinese President Xi Jinping in Kazakhstan in 2013. The initiative is often referred to as the “New Silk Roads,” a nostalgic throwback to the trade network linking Asia to Europe that is often thought of as a pre-modern form of globalization.

The modern BRI consists of the Silk Road Economic Belt and the Maritime Silk Road, a two-pronged approach to boosting trade and connectivity between China and the world. On land, China foresees a colossal network of railways, roads and power projects linking China to Asia and then on to Europe. At sea, China has prioritized port investments in the Indian Ocean, Southeast Asia, Eastern Africa and Europe. By Xi’s own admission, the BRI’s ambition is to “break the bottleneck of Asian connectivity,” a reference to Asia’s annual infrastructure gap of approximately $459 billion, which China seeks to fill.

But seven years after its announcement, the scope and scale of the BRI is still unclear. Analysts say the BRI encompassess 70 countries. China, however, claims more than 125 countries will participate. The World Bank estimates $575 billion will be spent, mostly on energy and transportation projects. But the BRI also includes soft infrastructure, including digital connectivity, and the development of 50 special economic zones (SEZs). The ever-expansive BRI has thus come to be described as “breathtakingly ambiguous,” with no criteria for what qualifies as a BRI project.

Moreover, while one goal of the project was to create goodwill in the region, the BRI has, at best, received a mixed reception in Asia. Much of the negative press is tied to accusations that China has engaged in “debt-trap diplomacy” — the idea that China has lured poor, weak nations into taking on unsustainable levels of debt to gain leverage over them. The cost for Laos, for instance, to fund the $6.7 billion China-Laos railway is estimated at 40 percent of its GDP. In all likelihood, the country will not be able to pay its debts to China, giving China and Chinese companies the upper hand in, say, negotiations for control of its power grid. 

But some analysts say this narrative gives Beijing too much credit. An August 2020 report published by London-based think tank Chatham House argues that not only has China not benefited strategically from the BRI, but that in Sri Lanka and Malaysia, “the two most widely cited ‘victims’ of China’s ‘debt-trap diplomacy,’” the local governments took advantage of BRI to pursue their own domestic agendas.

Regardless of individual projects, the bottom line is clear: The BRI has not been the straightforward foreign policy win that China hoped it would be.

“The BRI is not a brand that inspires confidence,” says Brian Eyler, Southeast Asia program director at the Stimson Center. “Despite the second round of Beijing’s BRI reform [in 2019] that promised more transparency, moving away from the debt trap and green development, there is still little to show for that and a lot to do to improve the image of Chinese companies and laborers operating abroad.”

As China adjusts its approach, Cambodia might serve as a cautionary tale. China has said that Cambodia would play a major role in the BRI, and beginning around 2016, Chinese investors pumped $1 billion into one of Cambodia’s new special economic zones. Almost overnight, Sihanoukville, a sleepy beach town, was transformed into an enclave for casinos, illegal gambling and other shady activities. It now stands out as a nightmarish example of how BRI investment can marginalize the local population — 30 percent of Sihanoukville residents were Chinese migrants as of 2019 — and breed illicit activities.  

Under pressure from China, Cambodia clamped down on illegal gambling in Sihanoukville in 2019, forcing some Chinese investors to relocate elsewhere in Southeast Asia. Myawaddy emerged as an attractive alternative. Indeed, the Chinese characters used in the name Saixigang (赛西港) translate in English as “Surpass Sihanoukville,” and investors in Saixigang include one of Broken Tooth’s business partners from Cambodia, Chen Jiale, whose real estate company developed a casino in Sihanoukville.

But it could be more difficult for China to interfere with Saixigang. Myanmar maintains delicate balances between local militias and the military — high wires that Broken Tooth seems adept at navigating. At the signing ceremony for the project in February 2020, he was pictured posing for photos with the militia members of the Karen BGF. A recent probe was launched by the Myanmar military investigating claims that the Karen BGF paid bribes to senior members of the military to turn a blind eye to gambling in Myawaddy.

“Chinese businesses are allowed to do whatever they want around Myawaddy district,” says a representative from a coalition of Karen community based organizations, Karen Peace Support Network. The person asked not to be named for fear of retribution. “If they break the law, local authorities don’t pursue them as they would locals… Even the local government doesn’t want any trouble with the BGF, which is under the control of the Myanmar army.” 

Resentments about Chinese investment in Myanmar seem to be growing. Following the Rohingya crisis in Myanmar in August 2017 — in which thousands of Rohingya Muslims were subject to mass killing and rape by Myanmar’s military with the United Nations describing the situation as a “textbook example of ethnic cleansing” — many Western and European partners pulled out of the country. Chinese money has filled the vacuum.

Thinzar Shunlei Yi, a Burmese youth activist, says it feels as if Myanmar has “no other choice.” 

“Only Chinese companies — some with bad reputations — are interested,” she says. “It feels like we’re in a vicious cycle, where the nations that have no regard for rights violations happening inside the country will come and exploit us.”

China’s flagship BRI projects in Myanmar is the China-Myanmar Economic Corridor (CMEC), which will connect China’s southwestern territories to the Indian Ocean. It is a crucial geopolitical opportunity for China’s broader Southeast Asian ambitions, and to consolidate BRI deals long under discussion, Xi Jinping visited Myanmar’s capital, Naypyidaw, in January 2020. 

“Locals are very much critical of Chinese investments, whether it is CMEC or regular Chinese foreign investment,” says Khin Khin Kyaw Kyee, China analyst at the Institute of Strategy and Policy-Myanmar. “This stems from past experience, in which previous Chinese investment has brought a negative impact to Burmese communities.”

But with legitimate and not-so-legitimate Chinese investment projects all happening at once in the country, the BRI brand seems to be taking a hit. 

IS BEIJING WATCHING?

There are signs Beijing is waking up to its BRI problem in Myanmar. Last August, the Chinese embassy in Yangon released a statement denying that another Chinese-led online gaming project in Myawaddy — Shwe Kokko New City — has anything to do with the BRI. This was unprecedented. Following an influx of Chinese workers moving to Shwe Kokko, significant local resentment and media scrutiny, the Myanmar government has assembled a task force to investigate the development. 

While Beijing does have a blacklist associated with the BRI, which names “copycat” companies that are co-opting the initiative, there is little clarity as to the implications, if any, of being listed. Projects such as Saixigang and Shwe Kokko are not established by the Chinese state but the private sector, and their investments are registered in foreign territories, which Beijing may regard as beyond its jurisdiction. Some argue China has no responsibility for them, just as Western governments are unaccountable for dodgy deals when its citizens venture overseas.

But given how important the BRI is to the CCP, some analysts say there is incentive for Beijing to act.

“China is aware of the reputation that its investments have in Myanmar,” says Moe Thuzar, a fellow at the ISEAS-Yusof Ishak Institute in Singapore. “It is trying to work out what constitutes the BRI in this region, and trying to look at the reputational damage that might occur and minimize it.”

Some analysts have pressed for stricter criteria in defining BRI projects, and placing greater due diligence requirements on investors. But this is a difficult undertaking given the lack of access to these projects. 

In March 2020, for example, Frontier Myanmar reporter Naw Betty Han was detained for 24 hours by Karen BGF for reporting on casino developments in Shwe Kokko. Though she was previously also following Saixigang, she now hesitates to return to the region. “After I was arrested and released,” Han says, “I received blackmail saying that I would be killed if I return to Karen state and to the Myawaddy borderland area.”

Even locals have struggled to gain a clear picture of what’s taking place at Saixigang. According to the KPSN representative, “Only Saixigang staff and laborers are allowed to access the restricted project area, which is tightly guarded by armed forces.”

Only Chinese companies — some with bad reputations — are interested. It feels like we’re in a vicious cycle, where the nations that have no regard for rights violations happening inside the country will come and exploit us.

Thinzar Shunlei Yi, a Burmese youth activist

Satellite imagery, however, indicates significant construction has taken place in the past six months. And Dongmei employees have proudly shared images and videos online documenting the construction. 

Dedicated Facebook groups for Chinese laborers in Myawaddy are flooded with Chinese-language advertisements suggesting there is no shortage of work. One Dongmei employee claimed that 20,000 workers would be housed in on-site accommodations at Saixigang by the end of 2020, with 60,000 moving into its offices next year — employment statistics that, if true, could complicate Beijing’s willingness to intervene.

“These BRI projects abroad play a key role of keeping the Chinese population pacified,” says Eyler, at the Stimson Center. “There’s a lot to be critical of the Party right now, but these investment opportunities keep high-level elite businessmen quiet and rich, and they also appease laborers — who might be protesting in the streets if they couldn’t find jobs at home.”

Others note that similar stories of casino developments in ‘smart cities’ and SEZs suggest that the Saixigang project may not end well for China or Myanmar. In the Golden Triangle Special Economic Zone in Laos, for example, the Kings Romans Group, headed by Chinese entrepreneur Zhao Wei, has been designated and sanctioned as a transnational organized crime group by the U.S. government. 

“Casino-led developments in this region where the rule of law is inadequate create the perfect venue for the convergence of crime types; money laundering, drugs, human trafficking, wildlife consumption and trade,” says Debbie Banks, Tiger and Wildlife Crime Campaign leader at the Environmental Investigation Agency.

Whether Myanmar will prevent illicit activities from taking root in Myawaddy is unclear, but the authorities in China dislike cross border gambling. Last month, Chinese state media announced that Chinese authorities arrested 60,000 suspects tied to cross-border gambling in 2020, pushing a clear narrative: the CCP stands firmly against the illegal industry.

Now, the Chinese Ministry of Culture and Tourism is set to launch a blacklist of cities associated with illegal gambling that Chinese tourists will no longer be permitted to visit. According to Tower, at the US Institute of Peace, “There are rumors that Myawaddy will be among the cities included. Such a move would help tremendously, as it would likely check the flow of Chinese workers into the area, thereby undermining the ability of illegal online casinos to operate there.”

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