(Bloomberg) -- Never miss an episode. Follow The Big Take Asia podcast today.
Listen and follow The Big Take Asia on Apple Podcasts, Spotify or wherever you get your podcasts
Here is a lightly edited transcript of the conversation:
Oanh Ha: On the banks of the Mekong River in Laos -- there's a startling sight -- after traveling through small plantations of coffee and bananas -- a winding road descends into what looks like a city emerging from the jungle.
Matthew Campbell: It completely stands out.
Ha: Matt Campbell is Asia editor for Bloomberg Businessweek.
Campbell: There are really tall buildings, huge skyscrapers. There is a big shopping complex. You can hear music and see neon light shows at night.
Ha: A spectacular fountain show plays in the middle of an open plaza. Choreographed jets of water dance, in sync with Chinese music, and neon spotlights. In the area around it, there's an artificial lake, and nearby, a large casino. But amid this seemingly gleaming new city – there are allegations that something much more sinister is taking place here.
Siti: Yeah. They keep my passport when I arrived the first time in the Laos land.
Ha: We're calling this woman Siti, and we’ve altered her voice due to safety concerns. Siti says she was trafficked to work in what is believed to be a fast growing type of business in this area of Laos known as the Golden Triangle Special Economic Zone. She says she was forced to work in a scam center here, duping people for money.
Siti: I become a scammer, and they teach me how to become a scammer.
Ha: And Siti’s believed to be one of many.
Campbell: By the estimates that have been made. And of course they are estimates because to some extent, this is unknowable. Tens of thousands of people working in the scam business in the special economic zone.
Ha: The US Treasury Department has imposed sanctions on what it says is the criminal organization that runs this area -- and the United Nations Office on Drugs and Crime has identified the zone as a nexus of money laundering. But the sanctions have had no obvious impact on the zone’s expansion and Lao leaders has never taken action against the chairman of the zone – a Chinese businessman named Zhao Wei.
Ha: Welcome to the Big Take Asia from Bloomberg News. I’m Oanh Ha. Every week, we take you inside some of the world's biggest and most powerful economies, and the markets, tycoons and businesses that drive this ever-shifting region. Today on the show: inside the Golden Triangle Special Economic Zone. How a hub created for economic development became a hive of criminal activity and why authorities don’t seem interested in stopping it.
Ha: The Golden Triangle Special Economic Zone in Laos has been a notorious drug smuggling passageway for about a decade. But beginning around 2022, in the midst of Covid, police and diplomats in Southeast Asia took note of what appeared to be a major new business here in this part of Laos: crypto scam centers.
Campbell: Places where workers, many of them trafficked and held against their will, spend their time trying to befriend people online and persuading those people, generally in rich countries, so U.S., Western Europe, to some extent, China, to make scam investments where they then lose all their money.
Ha: One former scam center worker that Matt spoke to was a woman we are calling Siti – she’s a young Indonesian who says she was trafficked to work there.
Campbell: She had a very typical experience in that she answered a job ad on Facebook. In her case, it was to work doing computer graphics, which matched quite well with her skills. She was told the job would be in Thailand, but in fact, she ended up in Laos in a building that was like a prison, and where she was forced to work against her will, scamming people in the United States.
Siti: They pay for everything until I arrived in Laos, but after that, everything changed. They lock us, all of us inside.
Ha: Matt says Siti told him she had to surrender her passport, and she couldn’t leave the building without an access card. She was allowed to keep her phone, but her managers would routinely go through her messages. Siti says she was taught to the run the scams like this.
Siti: I need to have sad story for meet the guy in online chatting. Then I get the customer trust.
Campbell: Often the initial contact is made on dating sites. So someone who's actually in a fluorescent-lit office in the special economic zone is posing as a young, single woman who's living somewhere in the U.S., stringing along generally a man who they're talking to.
Siti: I have two places. It's California and another one is Virginia. Then I say like, yeah, I'm very sad woman. And then I’ll say I also don't have husband. That's why I come to looking. Maybe I have a lucky things for meet a guy in this online dating.
Campbell: And the way this works is called pig butchering. And the metaphor, it's a bit inelegant, is that you're fattening a pig and then you eventually slaughter it. And the fattening the pig is building trust, building a relationship with these online marks. And gradually, and, without pushing too hard, convincing this “customer” to make investments in generally crypto. And like all the best scams, these ones pay off at first.
Siti: It's real profit, like 1,000, 2000. Then after that you put more, until you put all of your money. And then after very big, we catch.
Campbell: They move in for the kill, butchering the pig if you like, and then maybe you put in your whole life savings. You put it onto a crypto platform that is controlled by this scam center and that money disappears. Poof, it's gone.
Ha: Siti and several other scam center employees told Matt there were consequences if the workers failed to get enough “customers” –
Campbell: They are punished severely with things like beatings or electric shocks.
Siti: One of Chinese man didn't get the customer after, I'm not sure how many long. And they punch him with a whip.
Campbell: So you saw this man being whipped?
Siti: Yeah. Until the blood, everywhere. They put this guy in front of the lift, elevator for show us. This is punishment you will get, if you didn't allow our rules.
Ha: Siti was desperate to get out but the place was heavily guarded and she says she didn’t know who to trust.
Siti: I see also one time, someone tried to run out from the building, and he get the electric shock. At 3 a.m. he get the electric shock. I say, why still this? It's not human. So then he said, if you try, if you still want to go out, they will kill you.
Ha: Scam centers like this one Siti worked in are incredibly lucrative businesses in this unique special economic zone in Laos, as Matt and his colleague Patpicha Tanakasempipat highlighted in their investigation. A recent report by the United States Institute of Peace, a Congress-funded research institution, estimated that the amount stolen by scam centers in Mekong countries “likely exceeds $43 billion dollars a year.” That total includes considerable losses in the US and Europe, as well as China. So who is behind this alleged criminal enterprise?
Campbell: The founder and the face of this project is a Chinese businessman named Zhao Wei.
Zhao Wei (in Mandarin): Well, it’s not a great thing that the Golden Triangle has a terrible reputation.
Campbell: Zhao Wei portrays himself as a kind of kindly godfather who is bringing development to Laos in a somewhat paternalistic way. There is a lot of talk about, you know, helping the Lao people better themselves, helping them tap the prosperity of China, bringing them out of poverty.
Zhao (in Mandarin): People used to say that you’d lose a kidney in the Golden Triangle, but actually, this place is peaceful.
Ha: Here, Zhao Wei is speaking to several media outlets in a YouTube video posted earlier this year.
Zhao (in Mandarin): Because we are here to promote tourism, to boost the economy. Now, through our joint efforts, we are turning this place into a region that is developed economically and financially in all aspects.
Ha: After the break – how did Zhao Wei come to run this place? And if the Golden Triangle Special Economic Zone really is a hub of criminal activity -- why is he still in charge?
Ha: The Golden Triangle Special Economic Zone was the brainchild of a Chinese businessman named Zhao Wei.
Campbell: He's from the far northeast of China in Heilongjiang, which is a very cold, largely rural province. He left school before his teenage years, ended up working various sort of odd jobs. And somehow in the 90s, ended up in a casino business in Macau, just next to Hong Kong.
Ha: Zhao built a large casino business in the Asian gambling capital, and then when the market got crowded in Macau, he moved the operations in the mid 2000s to Southeast Asia, to less-regulated places like Myanmar and eventually Laos. And it was in Laos, this small landlocked country sandwiched between Thailand and Vietnam, where Zhao developed close relationships with decision makers in the country. In 2007, he struck up a deal with the Lao government to set up this special economic zone, which he said would bring growth and prosperity to the country.
Campbell: When this was beginning, the pitch to the local population was more or less that this is going to be great for you. This is going to bring a lot of development, there are going to be jobs, and you will benefit.
Ha: The government entrusted 39 square miles and control of the project to Zhao by granting him a 99-year lease that gave him de facto control over the city. He started with building a gambling palace, and from there, it’s grown into what’s become a small city and effectively a fortress for Zhao himself.
Campbell: He's in charge. Lao law may theoretically apply, but in practice, law enforcement, regulation, that's all up to the special economic zone's managers, namely Zhao Wei and his lieutenants. Lao police have not been able to enter except with permission of management. So it was almost like a little empire within a sovereign country. In which, Zhao Wei and his colleagues had just about complete control and they appear to continue to enjoy that status.
Ha: And as the special economic zone grew and more money poured in, it didn’t take long for law enforcement agencies in the U.S. and Thailand to suspect that more was going on beneath the surface.
Campbell: Within a few years of Zhao Wei setting up this place beginning construction. Law enforcement officials in the region were getting reports that large amounts of methamphetamine were being trafficked through the site.
Ha: In 2018, The U.S. Treasury Department slapped sanctions on what it called the Zhao Wei Transnational Criminal Organization. It said the special economic zone was a hub for the trafficking of drugs, people and wildlife as well as money laundering and bribery. And more recently, the special economic zone has diversified into hosting scam centers. Zhao said in the past that drugs and the trafficking of drugs and people are prohibited in the zone and that “we definitely do not allow scamming.”
The Golden Triangle Special Economic Zone management didn’t respond to Bloomberg’s detailed request for comment from Zhao. Lao government officials also didn’t respond to requests for comment on this story. After Bloomberg sent inquiries, Lao state media reported that the government had ordered the removal of scam centers in the special economic zone by late August.
State media said the shutdown ordered on the scam centers came after a meeting between Zhao and high-ranking officials from the Lao Ministry of Public Security, as well as the governor of the Lao province where the economic zone is located. But Matt says it’s unclear how, or whether, such an order will be enforced. And he says despite the allegations of crimes from international authorities, there wasn’t much law enforcement action from Laos before this latest announcement on state media.
Campbell: And the reason for that is simple. The Lao government is actually an investor in the project. The Lao government, when the special economic zone was created, took a 20 percent stake in the project. We don't know if it's still a 20 percent stake. There is some indication the stake may actually have gone up. Zhao Wei is in business with the Lao government in this project.
Ha: But the crimes alleged to be happening in the Golden Triangle economic zone aren’t just problems for the Lao government. The vast majority of the alleged scam victims are from the US, Europe and China. And in recent months, Lao authorities, presumably at the urging of the Chinese government, have arrested more than 1,000 Chinese citizens who were allegedly working inside scam operations in the economic zone. They were deported back to their home country. And last year, according to the US Institute of Peace, these scam operations across Southeast Asia together stole more than $3.5 billion from Americans. So why hasn't the US taken further action?
Campbell: Even if you are the DEA or the FBI or one of these American law enforcement agencies which have global reach, at least on a good day, you're still constrained by sovereignty.
Ha: Meaning there is only so much you can do about alleged crime that’s happening in another country, even when it is reportedly targeting your citizens.
Campbell: The special economic zone is in Laos. The Lao government doesn't appear to have a problem with it.
Ha: Zhao himself hasn’t been charged with any crime, but he does appear to be careful.
Campbell: As far as we know, he certainly is not traveling anywhere where he could be subject to a U.S. extradition request.
Ha: And as for the young woman we are calling Siti the Indonesian worker Matt talked to who said she was forcefully held inside a scam center in the economic zone. She did eventually find a way out. Two months after her arrival in Laos, Siti saw her chance.
Campbell: The way she escaped in her account is that she was taken across the river into Thailand to renew her permission to work in Laos and took the opportunity at that point to make a run for it.
Siti: Because when they sending us, they didn't go with us. They just sending us alone, but there they have someone, but we didn't know who is the person who waiting for us there.
Ha: When she was taken over the border into Thailand to renew her visa, she saw a moment when it seemed like nobody was watching and jumped into a taxi. That got her to the airport in Chiang Rai in northern Thailand.
Siti: I telling the taxi guy, like, please help me, I want to go to airport. Then, they follow me until to the airport. The two guys, the big one, they looking for me and I hiding in a counter.
Campbell: In Siti's case, she made it to the airport in Chiang Rai. She says she actually ended up hiding in a sim card shop behind the counter while she waited for a flight that a friend had booked for her online. And then she made it out and eventually back to Indonesia, her home country.
Ha: Siti says she was lucky. She’s the only one who took off on that visa run to Thailand. But Matt says countless other trafficked laborers are still trapped, forced to work at the scam centers like the one Siti escaped from.
(Added the transcript)
©2024 Bloomberg L.P.