Macau just arrested a big gambling operator
Is China cracking down on casinos?
Or is this a case of General Hostility?
Welcome to China Uncensored. I’m Chris Chappell.
Macau . It’s a former Portuguese colony that’s currently ruled by the Chinese Communist Party
under the one country, two systems policy. The same one they use to rule Hong Kong.
But while the Chinese regime sees Hong Kong as a rebellious kid that needs to be disciplined,
Macau has always been the good, obedient kid.
A good, obedient kid with
A gambling problem.
Macau is the only place in China where gambling is legal.
And over the last 15 years, it’s become the biggest gambling center in the world.
On the surface, Macau may look a lot like Las Vegas.
But it’s actually a lot more like New Jersey.
Last week, Macau arrested 11 people for illegal gambling and money laundering.
One of them was this guy, Alvin Chau.
Chau was the founder and CEO of Suncity Group.
His main business was operating gambling junkets in Macau.
In fact, Alvin Chau operated so many junkets that he was known as the Junket King.
Not to be confused with my neighbor, Lenny Russo, the Junk-It King.
What’s a gambling junket, you ask? It’s a great way for rich Chinese people to get
their money out of China. They need that money to buy expensive real estate in Vancouver,
send their kid to Harvard with a Lamborghini, and most important,
set up their Swiss bank accounts before the Chinese Communist Party collapses.
The problem is, you’re not legally allowed to take more than 50,000 dollars
out of China a year. And Macau junket operators like Suncity are the solution.
How does it work? Take it away, 2017 Chris.
So let’s say you’re one of these VIP clients: a Chinese millionaire who got your money from,
you know, totally legitimate sources completely unrelated to corruption.
So there’s a casino. And it hires the junket on commission. The junket hires an agent inside
mainland China. That agent finds you, and sells you a VIP package for one million yuan.
That VIP package might include transportation, a free luxury hotel room and, plus a million
yuan worth of “free” casino chips that just happen to be included as a bonus.
This way, you’re technically paying for the package, not the chips. That makes it legal.
But there’s a catch: Those casino chips cannot be exchanged for cash. They’re called non-negotiable
chips, or rolling chips. You actually have to travel to the casino in Macau and gamble all of
them. But any chips you win back, well, those will be negotiable chips. Which you can exchange for
cash. So once you’ve spent enough time gambling that you’ve wagered all your non-negotiable chips
and hopefully won back most of them or more in negotiable chips, you can go cash them in for
any currency you want—like US dollars—and then do whatever you please with that money. You won that
money fair and square...outside mainland China! No more 50-thousand-dollar transfer limits.
Thanks for the explanation, me. So the Chinese VIPs get their money out of the country,
the junket operators make a nice commission,
and the casinos get whatever money the Chinese VIPs lose while gambling.
It’s win-win-win mutual cooperation.
And it’s quite lucrative. Alvin Chau , the Junket King,
is worth billions of dollars. At least before he was arrested.
And his company, Suncity Group, handled nearly half of the VIP market in Macau.
It was also expanding into other parts of Asia.
Like Cambodia.
And even Japan.
So why did it all come crashing down now? I’ll tell you after the break.
Welcome back.
Macau junket king Alvin Chau seemed to have it all. Money. Power.
The ability to dress like a Hong Kong film villain without people laughing at you.
Two kids with his beautiful wife.
Four kids with his beautiful mistress.
So how did he end up awaiting trial behind bars?
Well, Chau does have a shady background. It’s pretty much an open secret that he’s
involved with the 14K triad, one of the largest Chinese criminal organizations in the world.
“During his climb to the top, Chau reportedly became a disciple
of Macau triad boss Wan Kuok-koi, aka Broken Tooth Koi, in 1995.”
Ok, if you end up following a guy named Broken Tooth Koi,
chances are you’re going to end up in prison someday.
Broken Tooth Koi is one of the leaders of the 14K triad.
He was actually sanctioned by the Trump administration back in 2020.
According to the US Treasury Department, in addition to being a triad leader,
Broken Tooth is a member of the Chinese People’s Political Consultative Conference.
The CPPCC is an official political body in China,
but it’s also a part of the Communist Party’s United Front system.
United Front work involves influencing people outside China
to support the Chinese Communist Party.
So it’s no surprise that Broken Tooth Koi
built organizations to co-opt elite figures in Malaysia and Cambodia,
And was disguising his illegal criminal activities as part of China’s Belt and Road Initiative.
Sounds like a swell guy.
Alvin Chau, like his mentor Broken Tooth, is a member of the CPPCC.
I’ll get back to that in a minute.
Chau was arrested in Macau not for his junket business, but for establishing an overseas betting
platform and facilitating illegal online betting. According to the Macau police, he’s confessed.
I mean, what was the guy going to do? It was Covid, everyone was doing everything on Zoom.
But there are signs Chinese authorities also considered Chau’s junket business a problem.
A day before his arrest in Macau,
police in the mainland Chinese city of Wenzhou issued a warrant for his arrest.
They accused Chau of forming “a junket agent network in the mainland
to help citizens engage in offshore and cross-border gambling activities.”
And that he also set up an asset management company in mainland China
to help gamblers make cross-border fund transfers.
That is, he was helping people move their money out of China. A big no-no. Even though,
of course, it’s long been an open secret that that’s exactly what junkets are for.
Now Macau police claim their investigation has nothing to do with the Wenzhou authorities.
But it’s mighty convenient that they just happened to decide to arrest Chau
right after Wenzhou issued an arrest warrant for him. Especially since the Wenzhou police had no
way of arresting Chau themselves, because there’s no extradition treaty between Macau and China.
Which is good news for Alvin Chau,
because at least he’s in a Macau prison and not a mainland Chinese prison.
Because of the mentions of cross-border gambling,
some are taking Chau’s arrest as a sign of a broader Beijing crackdown on gambling.
That’s definitely part of it. Chinese authorities have been targeting cross-border gambling since
2020. Chinese leader Xi Jinping is not a fan. He’s criticized cross-border gambling several times.
Chinese media have also said Chau’s arrest is due to national security concerns.
Those “national security” concerns are actually about rich people taking huge sums of money out of
China. The Chinese Communist Party needs cash. And they don’t need Chinese people
sending their cash overseas. Especially as the Chinese economy gets worse.
But Alvin Chau’s arrest isn’t just about a gambling crackdown or stopping
capital flight. It’s also about political infighting in the Chinese Communist Party.
I’ll explain why after the break.
Welcome back.
It’s time for everyone’s favorite communist soap opera, General Hostility.
Previously on General Hostility, current Chinese leader Xi Jinping is bringing his poker
face to the final showdown with former Chinese leader Jiang Zemin. Will Jiang and his faction
stop Xi from winning the ultimate jackpot? Or does Xi have a card trick up his sleeve?
Macau Junket King Alvin Chau isn’t just a businessman and a triad member.
He’s also a political operative.
Like I said earlier, Chau is a member of the CPPCC,
a United Front organization. Which means he’s involved in United Front influence operations.
United Front operations have a long history in Macau. Although the Chinese Communist Party
only officially took over the territory in 1999, they controlled Macau way before that.
It started with the 12-3 incident on December 3, 1966, “when mainland
Maoists instigated anti-government riots [in Macau] as part of the Cultural Revolution.”
“For the next 33 years prior to the handover, Macau was unofficially administered through
business leaders and trade unions responsive to Beijing’s interests.”
In other words, Macau was basically unofficially ruled by the Communist Party
through “business leaders and trade unions” a.k.a. the United Front.
As a member of the United Front,
Alvin Chau’s business interests also supported the Chinese Communist Party’s interests.
His Suncity Group didn’t just do gambling. It also was involved in tourism,
real estate, and entertainment.
Chau told People’s Daily that he had collaborated on the production of patriotic blockbusters
such as Operation Red Sea and Operation Mekong.
Even Chau’s business expansion into Japan was in Okinawa, an island chain with a US military
base that the Chinese Communist Party has been trying to infiltrate for years.
When Chau started succeeding in Macau in the early 2000s,
Jiang Zemin was in power. And his faction has maintained influence in both Hong Kong and Macau.
There are reports that Chau was a bagman for Jiang’s faction.
A prominent Chinese dissident said his Party insider friends in the Macau system
revealed that Chau is a ‘white glove’, or bagman, and a Macau asset of top Party leaders.
Those include Zeng Qinghong, a member of the Politburo Standing Committee and
Jiang’s number two man,
and also Meng Jianzhu,
the former minister of public security, and also a member of Jiang’s faction.
If these reports are true, Chau’s arrest could be part of the power struggle
between Xi Jinping and Jiang Zemin.
Remember, Chau controlled nearly half of the junket business in Macau.
He knows exactly who gambled their money out of China.
If he had close ties with Jiang’s people, and he starts naming names,
that could be very bad for Jiang, and very good for Xi.
“The investigation of Chau could furnish the Xi leadership with incriminating evidence
to wield against the Jiang faction and other Party elite who oppose Xi Jinping.”
I wonder what the next episode of General Hostility will bring?
Alvin Chau the Junket King could be the ace in Xi Jinping’s sleeve. But will this jailbird sing?
Or will Jiang Zemin find a way to silence him instead? Find out next time on General Hostility.
What a show.
And now it’s time for me to answer a question from a fan of China Uncensored on Patreon or Locals.
Nickrh21 asks on Locals: Why are the Governments of
these countries seeking deals with China and not with the West? Is it the no strings attached,
help yourself to a bit of backhander appeal? Or is it a genuine feeling that the West’s terms are too
onerous?…Obviously the Chinese are offering something better than the West because
they are more successful so what’s the reason for that?
Nick is referring to our episode on whether China is taking over an airport in Uganda.
Well Nick, there are several reasons countries would rather take Chinese
money. A big one is just like you mentioned, Chinese loans are no-strings-attached. Well,
there are actually a lot of strings attached, but not the same ones you get from the West.
Western money often comes with strings like improving democracy in your country.
And if you’ve been the president of Uganda for 35 years,
you think democracy in your country is doing just fine, and you don’t want to change a thing.
So on one side you’ve got Western governments criticizing your human rights issues,
and on the other side, you’ve got Xi Jinping,
shaking your hand and giving you money. Which choice are you going to make?
Of course it’s not just authoritarian countries that take China’s money. In other cases,
China might be the only country really offering you a loan to build infrastructure.
The Chinese Communist Party has an advantage. They have a bunch of state-owned banks that
will make these loans, and state-owned companies that will go into these countries and do the work.
But China’s Belt and Road Initiative has made Western countries like the US
realize the danger of just sitting back and letting China colonize the world economically.
So they’re starting to make a bigger push to invest in Africa, for example.
But they’re a long way from catching up to China.
Thanks for your question, Nick. And thanks for joining us as a member of our community on Locals.
We rely mainly on viewer support to keep this show going. So, if you like what we do,
be like Nick and join us on Locals, or the crowdfunding website Patreon.
Once again I’m Chris Chappell. Thanks for watching China Uncensored.