How China's Corrupt Are Making Macau Rich

Ahead of the anniversary of Macau passing under Beijing's control, and a delicate visit from Xi Jinping, a closer look at the troubling formula of the former Portuguese colony.

The Sands Macau casino
The Sands Macau casino
Federico Varese

MACAU — President Xi Jinping's visit to Macao to mark the 15th anniversary of the former Portuguese colony returning to Chinese sovereignty won't be any kind of victory lap. China's leader is worried about the growing financial crime in the region, where it is estimated that $202 billion is recycled through the peninsula's casinos every year.

This immense sum comes from the People's Republic as well. Party officials and directors of public companies spend bribes they accumulate during the year at the gaming tables and sauna-brothels in Macau's many hotels, while the rest is used to buy real estate, companies and government bonds in the West.

The explosive mixture of endemic corruption and money laundering on such a massive scale demonstrates capitalism's fragility in the state inaugurated by Deng Xiaoping. For 400 years, Macau was a Portuguese colony. Today, both the young and the elderly chat in the main square near the ancient Catholic cathedral, while the restaurant menus are Mediterranean.

In the heart of the modern city, 33 casinos have been built since 1999 thanks to both Chinese and American investment. Kitsch is a must: The Venetian Hotel has a replica of the Italian lagoon city, with canals and gondoliers who serenade young couples.

Nevertheless, the model works, and Macau now boasts almost triple the profits of Las Vegas. But behind the cardboard facade of the faux St. Mark's Square and the luxury brand shops hides a corrupt economy.

My journey into this world begins in the secret VIP gaming rooms, where the minimum bet is $10,000. To find these VIP rooms, you must head up to the top floors of the most prestigious hotels, such as the Lisboa or Galaxy, where access is strictly invitation-only.

In one of these clubs I met Xin, a gentleman in his sixties with broad shoulders, black hair and a strong, charming smile. He speaks Mandarin, Cantonese and English, and his job is to convince wealthy Chinese to gamble in the club where he works.

It's not necessarily easy work. Advertising green tables in China is illegal, and the citizens of the People's Republic can't legally spend more than $3,200 per day, a figure that doesn't enable gamblers here to do much more than look out the door of their hotel rooms. Public officials are prohibited entirely from entering casinos.

"My art is to convince the Mandarins to come to Macao," Xin says. "I take them to the best saunas in the city, where they can choose from hundreds of prostitutes — from Russian to Thai. Everything is at my expense."

After they are hooked, the next step is to give the players no less than $150,000 in virtual money that can be used only in his club. (It's the same system used in Montenegro's casinos, managed by shady businessmen from the southern Italian city of Bari).

Here, there are no rules that protect vulnerable gamblers who end up on the streets too soon. Once, a customer was at the tables for six days in a row and eventually had to be taken away in an ambulance. The losses are staggering. The head of a propaganda department lost $15 million once, while the former deputy mayor of a small town in northeastern China threw blew $1.6 million in three days. Both were shot.

Organized crime is charged with collecting the debts once players have returned home. In one case, members of the 14K — the most powerful mafia group in Macau — went to Canton to recover $335,000 on behalf of Xin. The unfortunate debtor, who was by then bankrupt, wound up in the hospital. In another case, the same gang visited an official in Shanghai. Because he stubbornly refused to pay, they killed his girlfriend.

Debt collection is a powerful factor in the spread of the mafia on the mainland. The Triad in Macau and Hong Kong have forged alliances with gangs in mainland China, creating powerful transnational groups.

Moving money

The hardcore gamers are responsible for just a fraction of Macau's dirty economy. The rest comes, more or less, from legitimate business in China. Anyone who wants to get money out of the country must go through places such as Zhuhai, a city with more than one million inhabitants near the border of Macau.

Inside a casino in Macau — Photo: Lablascovegmenu

Here, in a shopping center a few meters away from the border controls, you can buy counterfeit DVDs and video games, cell phones and drugs. There are also about 30 shops that seem to be completely empty. "If you give me the Chinese currency, we'll get you Hong Kong dollars beyond the border," an older woman tells me.

She runs one of the informal "banks" that, according to a Reuters survey, move more than 1 billion RMB (about $160 million) every day from Zhuhai to Macau. This flow of money entirely escapes the controls of Chinese authorities.

Business people who can't wait for official permits to import or export capital, corrupt officials eager to launder bribes, and criminal groups who need to move their immense profits from drug trade and human trafficking all use this banking system that is based entirely on trust.

The lady invites us to a room in the back of the seemingly empty store to explain how the system works. The customer delivers the money, along with their passport number. In return, they get a secret code. With this and their passport, they can withdraw the sum in a foreign currency directly from the tills of Macau's casino the same day.

Bo Xilai, the former party chief of Chongqing, who was accused along with his wife of murdering a British businessman, was able to transfer $1.2 billion. "We must be careful of scams," says the woman, "but they are rare."

The Chinese model of state capitalism has reached a turning point. Widespread corruption generates disastrous choices, environmental damage, property speculation and unsafe construction. The proximity of the turbo-capitalist centers of Hong Kong and Macau allow capital to be hidden abroad easily.

The campaign against state corruption and money laundering President Xi Jinping has launched can't merely limit itself to exemplary execution. It must promote the creation of new laws with institutions that can be monitored. Otherwise it will just remain a cardboard initiative — much like St. Mark's Square at the Venetian Hotel.

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Ecological Angst In India, A Mining Dumpsite As Neighbor

Local villagers in western India have been forced to live with a mining waste site on the edge of town. What happens when you wake up one day and the giant mound of industrial waste has imploded?

The mining dumpsite is situated just outside of the Badi village in the coastal state of Gujarat

Sukanya Shantha

BADI — Last week, when the men and women from the Bharwad community in this small village in western India stepped out for their daily work to herd livestock, they were greeted with a strange sight.

The 20-meter-high small hill that had formed at the open-cast mining dumpsite had suddenly sunk. Unsure of the reason behind the sudden caving-in, they immediately informed other villagers. In no time, word had traveled far, even drawing the attention of environment specialists and activists from outside town.

This mining dumpsite situated less than 500 meters outside of the Badi village in the coastal state of Gujarat has been a matter of serious concern ever since the Gujarat Power Corporation Limited began lignite mining work here in early 2017. The power plant is run by the Power Gujarat State Electricity Corporation Limited, which was previously known as the Bhavnagar Energy Company Ltd.

Vasudev Gohil, a 43-year-old resident of Badi village says that though the dumping site is technically situated outside the village, locals must pass the area on a daily basis.

"We are constantly on tenterhooks and looking for danger signs," he says. Indeed, their state of alert is how the sudden change in the shape of the dumpsite was noticed in the first place.

Can you trust environmental officials?

For someone visiting the place for the first time, the changes may not stand out. "But we have lived all our lives here, we know every little detail of this village. And when a 150-meter-long stretch cave-in by over 25-30 feet, the change can't be overlooked," Gohil adds.

This is not the first time that the dumpsite has worried local residents. Last November, a large part of the flattened part of the dumpsite had developed deep cracks and several flat areas had suddenly got elevated. While the officials had attributed this significant elevation to the high pressure of water in the upper strata of soil in the region, environment experts had pointed to seismic activities. The change is evident even today, nearly a year since it happened.

It could have sunk because of the rain.

After the recent incident, when the villagers raised an alarm and sent a written complaint to the regional Gujarat Pollution Control Board, an official visit to the site was arranged, along with the district administration and the mining department.

The regional pollution board officer Bhavnagar, A.G. Oza, insists the changes "aren't worrisome" and attributes it to the weather.

"The area received heavy rain this time. It is possible that the soil could have sunk in because of the rain," he tells The Wire. The Board, he says, along with the mining department, is now trying to assess if the caving-in had any impact on the ground surface.

"We visited the site as soon as a complaint was made. Samples have already been sent to the laboratory and we will have a clear idea only once the reports are made available," Oza adds.

Women from the Surkha village have to travel several kilometers to find potable water

Sukanya Shantha/The Wire

A questionable claim

That the dumpsite had sunk in was noticeable for at least three days between October 1 and 3, but Rohit Prajapati of an environmental watchdog group Paryavaran Suraksha Samiti, noted that it was not the first time.

"This is the third time in four years that something so strange is happening. It is a disaster in the making and the authorities ought to examine the root cause of the problem," Prajapati says, adding that the department has repeatedly failed to properly address the issue.

He also contests the GPCB's claim that excess rain could lead to something so drastic. "Then why was similar impact not seen on other dumping sites in the region? One cannot arrive at conclusions for geological changes without a deeper study of them," he says. "It can have deadly implications."

Living in pollution

The villagers have also accused the GPCB of overlooking their complaint of water pollution which has rendered a large part of the land, most importantly, the gauchar or grazing land, useless.

"In the absence of a wall or a barrier, the pollutant has freely mixed with the water bodies here and has slowly started polluting both our soil and water," complains 23- year-old Nikul Kantharia.

He says ever since the mining project took off in the region, he, like most other villagers has been forced to take his livestock farther away to graze. "Nothing grows on the grazing land anymore and the grass closer to the dumpsite makes our cattle ill," Kantharia claims.

The mining work should have been stopped long ago

Prajapati and Bharat Jambucha, a well-known environmental activist and proponent of organic farming from the region, both point to blatant violations of environmental laws in the execution of mining work, with at least 12 violations cited by local officials. "But nothing happened after that. Mining work has continued without any hassles," Jambucha says. Among some glaring violations include the absence of a boundary wall around the dumping site and proper disposal of mining effluents.

The mining work has also continued without a most basic requirement – effluent treatment plant and sewage treatment plant at the mining site, Prajapati points out. "The mining work should have been stopped long ago. And the company should have been levied a heavy fine. But no such thing happened," he adds.

In some villages, the groundwater level has depleted over the past few years and villagers attribute it to the mining project. Women from Surkha village travel several kilometers outside for potable water. "This is new. Until five years ago, we had some water in the village and did not have to lug water every day," says Shilaben Kantharia.

The mine has affected the landscape around the villages

Sukanya Shantha/The Wire

Resisting lignite mining

The lignite mining project has a long history of resistance. Agricultural land, along with grazing land were acquired from the cluster of 12 adjoining villages in the coastal Ghogha taluka between 1994 and 1997. The locals estimate that villagers here lost anything between 40-100% of their land to the project. "We were paid a standard Rs 40,000 per bigha," Narendra, a local photographer, says.

The money, Narendra says, felt decent in 1994 but for those who had been dependent on this land, the years to come proved very challenging. "Several villagers have now taken a small patch of land in the neighboring villages on lease and are cultivating cotton and groundnut there," Narendra says.

They were dependent on others' land for work.

Bharat Jambucha says things get further complicated for the communities which were historically landless. "Most families belonging to the Dalit or other marginalized populations in the region never owned any land. They were dependent on others' land for work. Once villagers lost their land to the project, the landless were pushed out of the village," he adds. His organization, Prakrutik Kheti Juth, has been at the forefront, fighting for the rights of the villages affected in the lignite mining project.

In 2017, when the mining project finally took off, villagers from across 12 villages protested. The demonstration was disrupted after police used force and beat many protesters. More than 350 of them were booked for rioting.

The villagers, however, did not give up. Protests and hunger strikes have continued from time to time. A few villagers even sent a letter to the President of India threatening that they would commit suicide if the government did not return their land.

"We let them have our land for over 20 years," says Gohil.

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