Combating
corruption
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
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.
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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