A major S E Asian Drug Dealer finally nabbed

DavidFL

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Well worth a read

Drug deals, dirty money and links to Beijing: Australian police bring down Asia’s ‘Mr Big’

By Nick McKenzie, Chris Uhlmann and Joel Tozer
23 January 2021

One of world’s most wanted alleged drug barons – a billionaire dubbed Asia’s El Chapo – is set to finally face justice in Australia after federal police carried out a covert plot to arrest him after he was deported from Taiwan.

Tse Chi Lop, 56, was arrested after departing on a flight to Canada on Friday in a stunning coup for the Australian Federal Police, which has tracked his suspected involvement in multiple billion-dollar drug importations into Australia since at least 2008. They will push for him to the extradited to Australia to face trial. He was arrested during a stop over in the Netherlands in response to a request from the AFP.

Tse is the most important alleged drug importer to be nabbed by the federal police in two decades, with police intelligence sources estimating his syndicate is allegedly responsible for up to 70 per cent of all narcotics entering Australia.

The organisation at the centre of the case, known variously as The Company or the Grandfather Syndicate, exploited Crown casino's weak corporate controls to launder funds, according to police intelligence sources, court files and gaming data leaked from Crown Resorts.

Suspected members of the organisation also have high level links to governments across the region, having invested in large infrastructure ventures under the Chinese Communist Party’s Belt and Road Scheme, a massive economic project that aims to build trade and transport links from East Asia to Europe.

Tse’s close associate, Triad boss "Broken Tooth" Wan Kuok Koi, was blacklisted by the US government in December, which alleged Wan had attached his extensive criminal operations to Beijing's Belt and Road initiative.

A 2012 briefing from the Australian Criminal Intelligence Commission described The Company’s members' “well-established network of contacts across many governments as well as legitimate business and company structures, that enables them to mask and support their criminal activities".

Last year, AFP deputy commissioner Karl Kent described the organisation as “being a huge threat to Australia … not only in terms of illicit drugs but in terms of people smuggling, in terms of firearms.” In a 60 Minutes interview, he estimated The Company’s revenue to “exceed the gross domestic product of some of the states in which they operate.”

The Australian Criminal Intelligence Commission lists Tse as a Priority Organisation Target, a designation the criminal intelligence commission chief Mick Phelan has previously said is reserved for those entities suspected of causing significant harm to the nation.

Tse’s arrest will be heralded not just in Australia but by the US government and authorities in New Zealand, Canada, Japan, Myanmar, Laos, Thailand and across Europe, places which have all served as markets or supply hubs for Tse’s organisation.

Policing authorities say that, more than any other alleged Asia Pacific drug trafficker, Tse represents the modernisation and corporatisation of organised crime. The syndicate he allegedly helps control is an amalgam of once competing Chinese Triad groups that have variously worked with Australian bikies, South American cartels and European crime bosses.

The Company mostly avoided generating media headlines and viewed violence as bad for business as it industrialised drug production via super laboratories in Myanmar’s lawless Shan State and accessed massive stockpiles of precursor chemicals in southern China.

The syndicate is alleged to have dispatched expendable “shore parties” to its most profitable market in Australia to handle wholesale distribution to local drug bosses. When these shore party drug runners or domestic distributors were occasionally busted by the AFP or state agencies, Tse allegedly shrugged it off as a business expense. He also had inside help.

A police intelligence report circulated among overseas agencies warned The Company had corrupted policing and security agencies across Asia. A former investigator told The Age and The Sydney Morning Herald that Tse had boasted “Macau in my pocket.”

In 2019, Tse even obtained the contents of a highly confidential Australian Federal Police document circulated among partner forces which alerted him to the fact that he was a high value police target.

That fact makes the story of his investigation and planned extradition— pieced together by The Age and Herald over two years and conversations with more than a dozen Australian and Hong Kong serving and former investigators — even more remarkable.


Tracking a drug boss

In 2011, the Australian Federal Police began monitoring a millionaire Melbourne greengrocer with an unusual profile. Vietnamese born Australian national Suky Lieu was under surveillance as he met well established Italian mafia clan bosses in Melbourne. He also dined with Asian organized crime figures and he knew bikies.

Intelligence suggested he was a man in demand because of his access to a seemingly endless supply of imported narcotics being distributed in Sydney and Melbourne. A quietly spoken and determined federal police drugs investigator, Roland Singor, along with a small team of AFP investigators and analysts began closely tracking Lieu as part of probe code named Volante.

Media and press releases surrounding Lieu’s eventual arrest in 2013 depicted him as a Mr Big on par with Tony Mokbel. But phone taps later aired in Lieu’s court case revealed he was more akin to a logistics manager who was following orders from afar.

“We were seeing a lot of offshore conversations where they were talking about supply and demand price, concealments, projects that they were undertaking,” recalled Singor when he was interviewed last year by 60 Minutes and The Age and Herald.

Singor was guarded about the precise content of the phone interceptions and classified intelligence captured in 2012. But Victorian court records reveal Lieu appeared most deferential when dealing with a man in Hong Kong with the Cantonese nickname Sam Gor or Brother Three.

“He was based offshore, a very, very cautious individual. He didn't directly deal with people here in the nuts and bolts,” Singor said. “If something went wrong for example, or a seizure occurred, or money was intercepted here, his broker and his managers would interact and then refer to the fact that the big boss wasn't happy, that they had to answer for these seizures.”

Following offshore leads can take years and cost millions and infuriate budget-conscious senior police in Canberra. Even so, Singor’s federal police crew in Melbourne pushed for more time and money. Their lobbying paid off.

“We started to hear about a reference to a very high-ranking member of this organization who had global reach, had global control, and had a serious ranking globally as an international trafficker,” says Singor. “He was referred to as Sam Gor, the Brother Three in Cantonese.”

Adding to Singor’s intelligence picture was a classified and highly controversial probe code named Dayu and run between 2008 and 2012 by the Australian Crime Commission (later renamed the Australian Criminal Intelligence Commission).

In an operation still mostly hidden behind court suppression orders and secrecy classifications, the ACC had allowed and even facilitated the movement of drug money from Australian to Asia in the hope it would help identify offshore crime bosses who had taken over the drug trade from traditional domestic crime groups.

Letting dirty money cross international borders rather than seizing it pushed the risk appetite of Australian law enforcement chiefs to breaking point and despite impressive results, Dayu would ultimately fizzle out amid bitter inter-agency turf wars and allegations of rogue conduct.

But before it did, investigators believed they had identified a Chinese triad-led international organization whose members whispered about a boss they called “Grandfather.” The ACC named it The Grandfather Syndicate but as investigators eavesdropped on more conversations involving the group's members, they chose the name used by the group itself: The Company.


The Company

A 2012 ACC intelligence briefing claimed the multinational organization was made up of about two dozen "seats" or executive management positions held by formerly warring triad bosses across Asia, who shifted in seniority and location according to demand and supply. It claimed money from drug ventures was laundered in Australia and poured into a range of ventures including "high-profile internet gambling facilities across south-east Asia, Asian hotel chains and resorts, commercial construction companies, property companies in Hong Kong and Vietnam", as well as casinos.

Among The Company 's most valuable assets was its “infiltration" of governments and police and security agencies across Asia. According to the ACC briefing, "the pooling of resources of the main triad groups has allowed them to merge their contacts, assets and holdings”.

These contacts, intelligence briefings warned, included high-ranking Asian government officials and their relatives, including figures with close ties to Hun Sen regime in Cambodia, a top politician in Vietnam and a Chinese government official who had worked with Interpol.

Singor and the AFP’s Operation Volante picked up where the crime commission’s Operation Dayu left off, filling in a still-emerging intelligence picture about the operations of The Company.

Court records reveal Singor and his fellow AFP detectives tracked millions in cash back to Crown Casino in Melbourne. The cash, generated by Suky Lieu's drug sales, was given to a high-roller tour business known as a junket operator. Crown licensed and paid that business to attract wealthy gamblers to come to its Southbank casino.

The court records detail how this junket in turn wired millions of drug dollars to Hong Kong. Some of the alleged orders to do so were issued by Brother Three and were recorded on phone taps aired during the prosecutions of Suky Lieu’s associates.

At Crown’s Perth casino, another high-roller tour junket closely linked to Brother Three was turning over even more money – hundreds of millions of dollars in cash via gamblers who arrived on private jets from Macau in 2015.

The still-ongoing Bergin inquiry in NSW into Crown’s organized crime dealings recently heard how this Perth junket was owned by a business also running a chain of Hot Pot restaurants in Macau.

The Bergin inquiry heard how a Crown manager had warned back in 2015 that this junket was linked to Macau’s “underground network”.

The Macau police provided Australian authorities a further sliver of intelligence about the Hot Pot junket. A suspected silent partner in the Hot Pot business was an extremely discrete but obscenely wealthy businessman. His name was Tse Chi Lop but some of his associates referred to him in Cantonese as Sam Gor.

Tse Chi Lop was Brother Three.


Closing in on Tse

By 2015, Tse, a short, middle-aged and pudgy faced man who looked more accountant than crime boss, was firmly on the radar of drug enforcement agencies across the globe.

Police believe Tse, a Canadian national born in Guangdong Province in Southern China in 1964, became a low ranking member of a Triad crime syndicate known as the Big Circle Gang before migrating to Canada in the 1980s. In 1996, the FBI arrested him in connection to a drug importation ring in the US that was sourcing heroin from the Golden Triangle in Asia.

Police intelligence suggests that, after serving nine years in jail, Tse re-established his Triad connections, including to the notorious head of the 14K triad organisation, Wan Kuok Koi, a gangster more commonly known as Broken Tooth.

While the ostentatious Broken Tooth was busy generating news headlines, including by launching a crypto-currency, investing in Myanmar’s casino industry and promoting the Chinese Communist Party's enormous Belt and Road global infrastructure agenda, Tse was suspected by police to be easing quietly into one of The Company’s top "seats" or executive positions.

Critical to The Company’s success was its supply hubs in corruption-prone Asian countries and regions like Shan State in Myanmar, which is governed by ethnic warlords.

An International Crisis Group report last year noted that “the drugs trade would not be possible without high-level corruption in those countries – including China, Laos and Thailand – through which large consignments of drugs or their precursors are smuggled.”

The other key to The Company’s success was corrupting logistics and shipping companies in drug-hungry markets like Australia, where voracious consumers are prepared to pay a premium for ice, cocaine and other drugs.

The AFP’s Operation Volante had shut down Lieu and 35 others, the key alleged Australian distribution hub for Tse, but it was quickly replaced.

In April 2017, the AFP’s Operation Jackaranda seized a record 903 kilograms of methamphetamine also linked to Tse. At the time, it was Australia’s largest ice bust. Six months later, the federal police and Taiwanese authorities intercepted another huge drug shipment that had arrived in Western Australia. The syndicate was also implicated in the seizure of 600 kilograms of methamphetamine from a yacht moored at Naha port in Okinawa. It was billed in the media as Japan’s largest drug bust.

As months of investigations turned into years, the federal police patiently tracked Tse and his associates via a newly badged operation codenamed Kungar.

Federal police liaison officers in Myanmar, Washington, Thailand, China and Hong Kong worked with trusted counterparts in local agencies to gather fresh intelligence on The Company’s operations.

Last year, Reuters reported that the United Nations Office on Drugs and Crime had estimated The Company’s meth revenue in 2018 at $8 billion a year, but said it could be as high as $17.7 billion.

In December 2019, the AFP intercepted yet another drug shipment from Bangkok: 1.6 tonnes of methamphetamine and 37 kilograms of heroin worth an estimated $1.2 billion. Police also arrested a couple running a shipping and freight logistics business, who are accused of helping smuggle the contraband past authorities.

Federal Police Deputy Commissioner Karl Kent described the seizure last year in an interview with 60 Minutes as another record bust, bigger than any before it. But his comments also marked a decided shift in the AFP’s rhetoric. Bigger busts were not indicative of success but the endless war of “attrition” against powerful and shadowy crime conglomerates.

“This has raised deep concerns in every jurisdiction in this country about the volume that we're seizing because it tells us that there is a significant volume, probably about the same, that we're missing,” Kent said.


Financial sanctions

Kent hinted in his interview that Tse was still being hunted, but that police were also focussing on new strategies to disrupt and deter powerful international syndicates who could replace bosses almost as quickly as they could find fresh drug mules.

The American government would move first.

On December 9, the US Treasury Department blacklisted Tse’s close associate Wan Kuok Koi, aka Broken Tooth, using "Magnitsky Act" financial sanctions that were originally designed to crush corrupt Russian oligarchs. The listing of Broken Tooth was aimed at the Chinese Communist Party (CCP) and more politically symbolic than practical. But it also prevented the triad boss from dealing with any US financial outlet or business.

In its formal statement, the Treasury Department said Broken Tooth was a member of the CCP’s Chinese People’s Political Consultative Conference, a Beijing advisory body. It also accused him of using the CCP’s Belt and Road project to legitimise his criminal activities.

“This continues a pattern of overseas Chinese actors trying to paper over illegal criminal activities by framing their actions in terms of ... major initiatives of the CCP," the Treasury statement said.

Australia has no equivalent financial sanctions regime.

To catch Tse, the AFP would have to rely on an old and time consuming tool: a Mutual Assistance Request from Attorney-General Christian Porter to the Taiwanese government, where Tse was suspected to be hiding.

Throughout 2019, lawyers from the Commonwealth Director of Public Prosecutions extracted evidence about Tse from the case against Suky Lieu as it finalised a brief of prosecution.

Brother Three was finally to face justice in Australia.


Who are the other Brothers?

His arrest in the Netherlands and plans to extradite him, while undoubtedly a significant law enforcement success, leaves many questions.

In his interview last year, Deputy Commissioner Karl Kent cautioned that locking up the next El Chapo or Brother Three was less a priority than finding ways to attack the infrastructure that organised crime groups need to prosper.

“It's not just about that individual. It's the whole network and how can we have an effect on their business mode,” he said.

There is evidence these strategies are already working. The Australian Criminal Intelligence Commission is dedicating resources to expelling from Australia all the casino junket operators linked to The Company. By the end of 2020 it had crippled the operations of the world’s biggest junket company. Policing agencies are lobbying the federal government to introduce an Australian version of the Magnitsky Act, allowing authorities to financially blacklist suspected crime bosses and corrupt officials.

The greatest legacy of Brother Three may be to force policing agencies to rethink how they operate and measure success.

“Make no mistake, someone will take their place and they'll take their place very, very quickly,” Kent said last year.

International police and security agencies are already examining who may have filled Tse’s shoes as well as the most obvious question posed by Tse’s story. Who is Brother One and Brother Two?

Source: The Sydney Morning Herald. 23 January 2021.
 
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DavidFL

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Here's another earlier investigative report of their activities from 2019

Brother Number Three: The hunt for Asia’s El Chapo

The Asia-Pacific region is awash in crystal meth. A multinational task force is on the trail of a China-born Canadian national who, police tell Reuters, is the suspected kingpin of a vast drug network that is raking in up to $17 billion a year.

By Tom Allard 14 Octobrer 2019.

He is Asia’s most-wanted man. He is protected by a guard of Thai kickboxers. He flies by private jet. And, police say, he once lost $66 million in a single night at a Macau casino.

Tse Chi Lop, a Canadian national born in China, is suspected of leading a vast multinational drug trafficking syndicate formed out of an alliance of five of Asia’s triad groups, according to law enforcement officials. Its members call it simply “The Company.” Police, in a nod to one of Tse’s nicknames, have dubbed it Sam Gor, Cantonese for “Brother Number Three.”

The syndicate, law enforcers believe, is funneling tonnes of methamphetamine, heroin and ketamine to at least a dozen countries from Japan in North Asia to New Zealand in the South Pacific. But meth – a highly addictive drug with devastating physical and mental effects on long-term users – is its main business, they say.

In what it calls a conservative estimate, the United Nations Office on Drugs and Crime (UNODC) puts the Sam Gor syndicate’s meth revenue in 2018 at $8 billion a year, but says it could be as high as $17.7 billion. The UN agency estimates that the cartel, which often conceals its drugs in packets of tea, has a 40% to 70% share of the wholesale regional meth market that has expanded at least fourfold in the past five years.

This unprecedented boom in meth production has triggered an unprecedented response, Reuters has learned. Tse, 55, is the prime target of Operation Kungur, a sprawling, previously unreported counter-narcotics investigation. Led by the Australian Federal Police (AFP), Operation Kungur involves about 20 agencies from Asia, North America and Europe. It is by far the biggest ever international effort to combat Asian drug trafficking syndicates, say law enforcement agents involved in the investigation. It encompasses authorities from Myanmar, China, Thailand, Japan, the United States and Canada. Taiwan, while not formally part of the operation, is assisting in the investigation.

A document containing AFP profiles of the operation’s top 19 syndicate targets, reviewed by Reuters, identifies Tse as the leader of the syndicate. According to the document, the organization has “been connected with or directly involved in at least 13 cases” of drug trafficking since January 2015. The document does not provide specific details of the cases.

A Taiwanese law enforcement flow chart identifies Tse as the “Multinational CEO” of the syndicate. A U.S. Drug Enforcement Administration (DEA) intelligence document shared with regional government agencies says Tse is “believed to be” the leader of the Sam Gor syndicate.

Police have not publicly identified Tse as the suspected boss of the trafficking group.

Some investigators say that the scope of the syndicate’s operation puts Tse, as the suspected leader, on par with Latin America’s most legendary narco-traffickers. “Tse Chi Lop is in the league of El Chapo or maybe Pablo Escobar,” said Jeremy Douglas, Southeast Asia and Pacific representative for UNODC. “The word kingpin often gets thrown around, but there is no doubt it applies here.”

Reuters was unable to contact Tse Chi Lop. In response to questions from Reuters, the AFP, the DEA and Taiwan’s Ministry of Justice Investigation Bureau said they would not comment on investigations.

During the past year, Reuters crisscrossed the Asia-Pacific to uncover the story of Tse and his Sam Gor network. This included interviews with more than two dozen law enforcement officials from eight countries, and reviews of intelligence reports from police and anti-narcotics agencies, court filings and other documents. Reuters spoke to militia leaders in Myanmar’s Shan State, the heart of Southeast Asia’s Golden Triangle, where the syndicate is suspected of mass producing drugs in so-called super-labs. Reuters reporters also visited the Thai compound of one of the syndicate’s alleged drug lords.

What emerges is a portrait of an organization that is truly transnational. Four of the 19 Sam Gor syndicate leaders on the AFP list are Canadian citizens, including Tse, whom police often refer to as “T1” - the top target. Others hail from Hong Kong, Macau, Taiwan, Malaysia, Myanmar, Vietnam and mainland China.

The syndicate is enormously wealthy, disciplined and sophisticated - in many ways more sophisticated than any Latin American cartel, say anti-narcotics officials. Sam Gor supplies a bigger, more dispersed drug market and collaborates with a more diverse range of local crime groups than the Latin cartels do, including Japan’s Yakuza, Australia's biker gangs and ethnic Chinese gangs across Southeast Asia.

The crime network is also less prone to uncontrolled outbreaks of internecine violence than the Latin cartels, police say. The money is so big that long-standing, blood-soaked rivalries among Asian crime groups have been set aside in a united pursuit of gargantuan profits.

“The crime groups in Southeast Asia and the Far East operate with seamless efficiency,” says one veteran Western anti-drugs official. “They function like a global corporation.”

Like most of the law enforcement agents Reuters interviewed, the investigator spoke on condition of anonymity.

In addition to the contrasts between their drug operations, there’s another, more personal, difference between Tse Chi Lop and Joaquin ‘El Chapo’ Guzman or Pablo Escobar. The jailed Mexican cartel boss and the deceased Colombian cocaine trafficker have been feted in song and on screen for their extravagant lifestyles and extreme violence. Precious little has been revealed about Tse’s life and career. Unlike the Latin drug lords, Tse is relatively discreet - and still free.

A TRIP, A TRAP
Tse Chi Lop was born in Guangdong Province, in southern China, and grew up during China’s Cultural Revolution. Amid the bloody purges, forced labor camps and mass starvation, a group of imprisoned members of Mao’s Red Guard in the southern city of Guangzhou formed a triad-like criminal enterprise called the Big Circle Gang. Tse later became a member of the group, say police, and like many of his Big Circle Gang brethren moved to Hong Kong, then further afield as they sought sanctuaries for their criminal activities. He arrived in Canada in 1988.

In the 1990s, Tse shuttled between North America, Hong Kong, Macau and Southeast Asia, said a senior AFP investigator based in Asia. He rose to become a mid-ranking member of a smuggling ring that sourced heroin from the Golden Triangle, the lawless opium-producing region where the borders of Myanmar, Thailand, China and Laos meet.

In 1998, according to court records, Tse was arraigned on drug-trafficking charges in the Eastern District Court of New York. He was found guilty of conspiracy to import heroin into America, the records show. A potential life sentence hung over his head.

Through a petition filed by his lawyer in 2000, Tse begged for leniency.

His ailing parents needed constant care, he explained. His 12-year-old son had a lung disorder. His wife was overwhelmed. If freed, vowed Tse, he would open a restaurant. He expressed “great sorrow” for his crime, court records show.

The entreaties appear to have worked: Tse was sentenced to nine years in prison, spent mostly at the federal correctional institution in Elkton, Ohio. But his remorse may have waned.

After he was freed in 2006, police say he returned to Canada, where he was supposed to be under supervised release for the next four years. It’s unclear when Tse returned to his old haunts in Asia. But corporate records show that Tse and his wife registered a business, the China Peace Investment Group Company Ltd, in Hong Kong in 2011.

Police suspect Tse quickly returned to the drug game. He “picked up where he left off,” said the senior AFP investigator. Tse tapped connections in mainland China, Hong Kong, Macau and the Golden Triangle, and adopted a business model that proved irresistible to his customers, say law enforcers. If one of his drug deliveries was intercepted by police, it was replaced at no extra cost, or deposits were returned to the buyers.

His policy of guaranteeing his drug deliveries was good for business, but it also put him on the radar of police. In 2011, AFP officers cracked a group in Melbourne importing heroin and meth. The amounts were not huge - dozens of kilos. So, rather than arrest the Australian drug dealers, police put them under surveillance, tapping their phones and observing them closely for more than a year. To the frustration of the Australian drug cell, their illicit product kept getting intercepted. They wanted the seized drugs replaced by the syndicate.

The syndicate bosses in Hong Kong were irate - their other drug rings in Australia were collecting their narcotics and selling them without incident. In 2013, as the patience of the syndicate leaders wore thin, they summoned the leader of the Melbourne cell to Hong Kong for talks. There, Hong Kong police watched the Australian meet two men.

One of the men was Tse Chi Lop. He had the center-parted hair and casual fashion sense of a typical middle-aged Chinese family man, said one AFP agent. However, further surveillance showed Tse was a big spender with a keen regard for his personal security. At home and abroad, he was protected by a guard of Thai kickboxers, said three AFP investigators. Up to eight worked for him at a time, and they were regularly rotated as part of his security protocol.

Tse would host lavish birthday parties each year at resorts and five-star hotels, flying in his family and entourage in private jets. On one occasion, he stayed at a resort in Thailand for a month, hosting visitors poolside in shorts and a T-shirt, according to a member of the task force investigating the syndicate.

Tse was a frequent visitor to Asia’s casinos and fond of betting on horses, especially on English races. “We believe he lost 60 million euros (about $66 million) in one night on the tables in Macau,” said the senior Asia-based AFP investigator.

As the investigation into Tse deepened, police suspected that the Canadian was the major trafficker supplying Australia with meth and heroin, with a lucrative sideline in MDMA, commonly known as ecstasy. But the true scale and breadth of the Sam Gor syndicate only became apparent in late 2016, police say, when a young Taiwanese man entered Yangon airport with a bag of white powder strapped to each of his thighs.


ALADDIN’S CAVE OF INTEL’
Cai Jeng Ze was heading home to Taiwan, walking through the airport with a Jimmy Choo leather bag and two mobile phones. It was the morning of November 15, 2016, and Cai seemed nervous, picking at his blistered hands. This tic aroused suspicion, said a former Myanmar police commander who oversaw the investigation. “His hands were bad because he had been handling the drugs,” the commander told Reuters. “Methamphetamine is very toxic.”

Cai was stopped and searched. Taped to each of his thighs was a small bag containing 80 grams of ketamine, a powerful tranquilizer that doubles as a party drug. “We were very fortunate to arrest him. Actually, it was an accident,” the commander said. Myanmar police, tipped off by the DEA, had been monitoring Cai. But they had lost track of him. Airport police had no idea who he was.

Cai told airport police the bag on his thigh contained a “pesticide or vitamin for flowers and plants,” according to Myanmar court records from his trial for ketamine trafficking. A friend, said Cai, had given it to him to pass on to his father. Cai’s flight was about to leave and there was no drug test for ketamine at the airport, the commander said.

Unimpressed with the explanation, police held him overnight. The next day, anti-narcotic officers turned up at the airport. One recognized him from surveillance work he’d been conducting.

Still, Cai refused to talk. Police say that videos they later found on one of his phones might have explained his silence. The videos showed a crying and bound man, and at least three assailants taking turns burning his feet with a blowtorch and electrocuting him with a cattle prod. In the videos, said one investigator, a sign can be seen with Chinese calligraphy saying “Loyalty to the Heavens.” The banner was a “triad-related sign,” he added.

The tortured man, according to two AFP officers who viewed the video, claimed to have thrown 300 kg of meth from a boat because he mistakenly believed a fast-approaching vessel was a law enforcement boat. The torturers were testing the veracity of the victim’s claims. By filming and sharing the videos, triad members were sending a message about the price of disloyalty, the officers said. Reuters has not seen the video.

The torture videos were just one of the items allegedly found in Cai’s two iPhones. The alleged Taiwanese trafficker was a diligent chronicler of the drug syndicate’s activities, but sloppy when it came to information security. Inside the phones, police say, was a huge photo and video gallery, social media conversations, and logs of thousands of calls and text messages.

They were “an Aladdin’s Cave of intel,” said one AFP commander based in North Asia.

For at least two months prior to his arrest, Cai allegedly travelled around Myanmar cobbling together a huge meth deal for the syndicate, according to a PowerPoint presentation by the Drug Enforcement Division of the Myanmar police outlining its investigation. One telling discovery: a screenshot of a slip from an international courier company recording the delivery of two consignments of packaging, manufactured to hold loose-leaf Chinese tea, to a Yangon address. Since at least 2012, tea packets, often containing one kilo of crystal meth each, had been cropping up in drug busts across the Asia-Pacific region.

Two days after Cai’s arrest, Myanmar police raided a Yangon address, where they seized 622 kilograms of ketamine. That evening, they captured 1.1 tonnes of crystal meth at a Yangon jetty. The interception of the drugs was a coup. Even so, Myanmar police were frustrated. Nine people were arrested, but other than Cai they were lower-level members of the syndicate, including couriers and a driver. And Cai still wasn't talking.

Then came a major breakthrough. Swiping through the gallery of photos and videos on Cai’s phones, an AFP investigator based in Yangon noticed a familiar face from an intelligence briefing he had attended on Asian drug traffickers about a year earlier. “This one stuck out because it was Canadian,” he recalled. “I said: ‘Fuck, I know who you are!'”

It was Tse Chi Lop.

The Myanmar police invited the AFP to send a team of intelligence analysts to Yangon in early 2017. They went to work on Cai’s phones.

Australia had been a profitable drug market for Asian crime gangs since the end of the Vietnam War. For at least a decade, the AFP had fed all its historic files on drug cases, large and small, into a database. A senior Chinese counter-narcotics agent described the database, which includes a trove of names, chemical signatures of seized drugs, phone metadata and surveillance intel, as the most impressive cache of intelligence on Asian drug trafficking groups in the region.

The AFP analysts cross-referenced the contents of Cai’s phones with the database. They discovered photos related to three big consignments of crystal meth that were intercepted in China, Japan and New Zealand in 2016, according to investigators and Myanmar police documents. Later, a team of Chinese anti-narcotics officials connected photos, telephone numbers and addresses in Cai’s phones to other meth busts in China.

For regional counter-narcotics police, the revelations upended their assumption that the drugs were being trafficked by different crime groups. It became clear the shipments were the work of just one organization. A senior Chinese anti-narcotics agent said they believed Cai was “one of the members of a mega-syndicate,” which had been involved in multiple “drugs cases, smuggling and manufacturing, within this region.”

Cai was found not guilty in the ketamine case, but is still in jail in Yangon, where he is on trial for drug trafficking charges related to the meth seizures. Reuters was unable to contact Cai’s lawyer.


METH PARADISE
During his time in Myanmar, Cai is suspected of traversing the country, testing drug samples, organizing couriers and obtaining a fishing boat to transport the illicit cargo to a bigger vessel in international waters, according to police and the Myanmar PowerPoint document. His phones contained pictures of the vehicles to be used to transport the meth, the spot where the meth was to be dropped off, and the fishing boat.

The police reconstruction of Cai’s dealings in Myanmar led to another major revelation: The epicenter of meth production had shifted from China’s southern provinces to Shan State in Myanmar’s northeastern borderlands. Operating in China had provided the Sam Gor syndicate with easy access to precursor ingredients, such as ephedrine and pseudoephedrine, that were smuggled out of pharmaceutical, chemical and paint factories in the Pearl River Delta Economic Zone. Shan gave Sam Gor the freedom to operate largely unimpeded by law enforcement.

Armed rebel groups in semi-autonomous regions like Shan State have long controlled large tracts of territory and used drug revenues to finance their frequent battles with the military. A series of detentes brokered by the Myanmar government with rebel groups over the years has brought relative calm to the region - and allowed illicit drug activities to flourish.

“Production facilities can be hidden from law enforcement and other prying eyes but insulated from disruptive violence,” analyst Richard Horsey wrote in a paper this year for the International Crisis Group. “Drug production and profits are now so vast that they dwarf the formal sector of Shan state.”

The Myanmar government and police did not respond to questions from Reuters.

Along the road to the village of Loikan in Shan State, there is evidence of drug-fueled prosperity. The two-lane road skirts a deep ravine known as the “Valley of Death,” where ethnic Kachin rebels from the Kaung Kha paramilitary group clashed for decades with Myanmar’s army. Now, high-end SUVs thunder past trucks carrying building materials and workers.

The Kaung Kha militia’s immaculate and expansive new headquarters sits on a plateau nestled between the steep green hills of the jagged Loi Sam Sip range. About six kilometers away, near Loikan village, was a sprawling drug facility carved out of thick forest. Police and locals say the complex churned out vast quantities of crystal meth, heroin, ketamine and yaba tablets - a cheaper form of meth that is mixed with caffeine. When it was raided in early 2018, security forces seized more than 200,000 liters of precursor chemicals, as well as 10,000 kg of caffeine and 73,550 kg of sodium hydroxide - all substances used in drug production.

The Loikan facility was “very likely” to have been the source of much of the Sam Gor syndicate’s meth, said the Yangon-based AFP officer.

“Some militia were involved in the lab,” said Oi Khun, a communications officer for the 3,000-strong Kaung Kha militia, in an interview. He paused, then added: “But not with the knowledge of senior members” of the militia.

One person in Loikan described how workers from the lab would come down from the hills. The men, like most of the villagers, were ethnic Chinese. But they dressed better than the locals, had foreign accents, and had a foul smell about them.

“I asked them once. ‘Why don’t you bathe?’” the person said. “They said they did, but there was nothing they could do about the smell.”

The rank chemicals used to cook the meth had seeped into the skin of the men, who seemed unperturbed that the signature stench might reveal their illicit activities. “We all knew,” the person said. “We just didn’t talk about it. That just brings you danger.”

Meth lab managers and chemists are mostly Taiwan nationals, say Thai police. So, too, are many of the crime network’s couriers and boat crews who transport the drugs across the Asia-Pacific.

Shan’s super-labs produce the purest crystal meth in the world, the senior Chinese counter-narcotics official told Reuters. “They can take it slow and spread (the meth) out on the ground and let it dry.”

The UNODC estimates the Asia-Pacific retail market for meth is worth between $30.3 and $61.4 billion annually. The business model for meth is “very different” to heroin, said the UNODC’s Douglas. “Inputs are relatively cheap, a large workforce is not needed, the price per kilo is higher, and profits are therefore far, far higher."

The wholesale price of a kilo of crystal meth produced in northeastern Myanmar is as little as $1,800, according to a UNODC report citing the China National Narcotics Control Commission. Average retail prices for crystal meth, according to the UN agency, are equivalent to $70,500 per kilo in Thailand, $298,000 per kilo in Australia and $588,000 in Japan. For the Japanese market, that’s more than a three-hundred-fold mark-up.

The money the syndicate is making “means that if they lose ten tonnes and one goes through, they still make a big profit,” said the Chinese counter-narcotics official. “They can afford failure. It doesn’t matter.”


‘MONEY, MONEY’
The analysis of Cai’s phones was continuing to provide leads. On them, police say they found the GPS coordinates of the pick-up point in the Andaman Sea where fishing boats laden with Myanmar meth were meeting drug motherships capable of being at sea for weeks.

One of the motherships was a Taiwanese trawler called the Shun de Man 66, according to the Taiwanese law enforcement document reviewed by Reuters. The vessel was already at sea when, in early July 2017, Joshua Joseph Smith walked into a marine broker in the Western Australian capital of Perth and paid $A350,000 (about $265,000 at the time) for the MV Valkoista, a fishing charter boat. Smith, who was in his mid-40s and hailed from the east coast of Australia, inquired about sea sickness tablets. According to local media, he didn’t have a fishing license at the time.

After buying the boat on July 7, Smith set the Valkoista on a course straight from the marina to meet the Shun De Man 66 in the Indian Ocean, an AFP police commander said. After the rendezvous, the Valkoista then sailed to the remote Western Australian port city of Geraldton on July 11, where its crew was seen “unloading a lot of packages” into a van, the commander said.

“We knew we had an importation. We know the methodology of organized crime networks. We know if a ship leaves empty and comes back with some gear on it, that it hasn’t just dropped from the sky in the middle of the ocean.”

Investigators checked CCTV footage and hotel, plane and car hire records. The phones of some of the Australian drug traffickers were tapped. It soon became apparent, police say, that some of Smith’s alleged co-conspirators were members of an ethnic Lebanese underworld gang, as well as the Hells Angels and Comanchero motorcycle gangs, known as “bikies” in Australia.

As they put together their deal to import 1.2 tonnes of crystal meth into Australia, Smith's associates met with Sam Gor syndicate members in Bangkok in August 2017, according to a copy of an AFP document reviewed by Reuters. The Australians reconvened in Perth a month later.

Bikers may have a reputation for wild clubhouse parties and a self-styled mythology as outsiders, but these Australians had refined tastes. They flew business class, stayed in five-star hotels and dined at the finest restaurants, according to police investigators and local media reports. One of those restaurants, said the AFP commander, was the Rockpool Bar & Grill in Perth. The restaurant offered a 104-page wine list and a menu that included caviar with toast at about $185 per serving.

On November 27, 2017, the Shun De Man 66 set sail again, this time from Singapore. The vessel headed north into the Andaman Sea to rendezvous with a smaller boat bringing the meth from Myanmar. The Shun De Man then sailed along the west coast of the Indonesian island of Sumatra and dropped down to the Indian Ocean.

The Indonesian navy watched and the AFP listened.

When the Shun De Man finally met again with the Valkoista in international waters off the West Australian coast on December 19, an Asian voice could be heard shouting “money, money,” according to the commander and local media reports. The Shun De Man’s crew had one half of a torn Hong Kong dollar bill. Smith and his crew had the other half. The Australian buyers proved their identity by matching their portion to the fragment held by the crew of the Shun De Man, who then handed over the meth.

The Valkoista arrived in the Australian port city of Geraldton following a two-day return journey in rough seas. The men unloaded the drugs in the pre-dawn dark. Masked members of the AFP and Western Australian police moved in with assault weapons and seized the drugs and the men. Smith pleaded guilty to importing a commercial quantity of an illegal drug. Some of his alleged associates are still on trial.

Taiwan’s Ministry of Justice Investigation Bureau said it had “worked together with our counterparts on the investigation” of the Shun De Man 66 and that this had led to the “substantial seizure of illicit narcotics” by the Australian authorities in December 2017. The bureau said it was “aware that Taiwanese syndicates have participated in maritime drug trafficking in (the) Asia-Pacific region,” and was working “collaboratively and closely with our counterparts to disrupt these syndicates and cross-border drug trafficking.”


NIMBLE, ELUSIVE, UNFAZED
As the investigation into the syndicate deepened, police concluded that crime groups from across the region had undergone a kind of mega-merger to form Sam Gor. The members include the three biggest Hong Kong and Macau triads, who spent much of the 1990s in open warfare: 14K, Wo Shing Wo and Sun Yee On. The other two are the Big Circle Gang, Tse’s original triad, and the Bamboo Union, based in Taiwan. In the words of one investigator, the syndicate’s supply chain is so complex and expertly run that it “must rival Apple’s.”

“The syndicate has a lot of money and there is a vast market to tap,” said Jay Li Chien-chih, a Taiwanese police senior colonel who has been stationed in Southeast Asia for a decade. “The power this network possesses is unimaginable.”

Investigators have had wins. In February last year, police busted the Loikan super-lab in Myanmar, where they found enough tea-branded packaging for 10 tonnes of meth. The Shun De Man 66 was intercepted that month by the Indonesian navy with more than one tonne of meth aboard. In March 2018, a key Sam Gor lieutenant was arrested in Cambodia and extradited to Myanmar. In December, the compound of Sue Songkittikul, a suspected syndicate operations chief, was raided in Thailand.

Located near the border with Myanmar, the moat-ringed compound had a small meth lab, which police suspected was used to experiment with new recipes; a powerful radio tower with a 100-km range; and an underground tunnel from the main house to the back of the property.

Sue wasn’t there, but property and money from 38 bank accounts linked to him and totaling some $9 million were seized during the investigation. Sue is still at large.

But the flow of drugs leaving the Golden Triangle for the wider Asia-Pacific seems to have increased. Seizures of crystal meth and yaba rose about 50% last year to 126 tonnes in East and Southeast Asia. At the same time, prices for the drugs fell in most countries. This pattern of falling prices and rising seizures, the UNODC said in a report released in March 2019, “suggested the supply of the drug had expanded.”

In the Sam Gor syndicate, police face a nimble and elusive adversary. When authorities had success stopping the drug motherships, police said, Sam Gor switched to hiding its product in shipping containers. When Thailand stopped much of the meth coming directly across the border from Myanmar by truck, the syndicate re-routed deliveries through Laos and Vietnam. This included deploying hordes of Laotians with backpacks, each containing about 30 kilos of meth, to carry it into Thailand on narrow jungle paths.

Over the years, police have had little success in taking down Asia’s drug lords. Some of the suspected syndicate leaders have been involved in drug trafficking for decades, according to the AFP target list. The last time a top-level Asian narcotics kingpin was successfully prosecuted and imprisoned for more than a short period was in the mid-1970s. That’s when Ng Sik-ho, a wily Hong Kong drug trafficker known as Limpy Ho, was sentenced to 30 years in prison for smuggling more than 20 tonnes of opium and morphine, according to court records.

So far, Tse has avoided Limpy Ho’s fate. He is being tracked, and all the signs are he knows it, say counter-narcotics agents. Despite the heat, some police say they believe he is continuing his drug operations, unfazed.

Source: Reuters 14 October 2019.
 

Oddvar

Ol'Timer
Mar 18, 2013
442
260
63
Time to read to get some back ground info. Even Mao himself needed the "Green Gang" in Shanghai.
I can recommend every book by this author.

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DavidFL

Administrator
Staff member
Jan 16, 2003
12,330
2,717
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Chiang Khong
www.thegtrider.com
Yeah Bertil's books are always fantastic.
He has a new one out on the Wa too now.


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Guzzibs

Member
Jul 20, 2018
20
26
13
Great read and fascinating to follow the links and money laundering thru Crown and others. Legalising would have to be a viable option to bring it under control.