【Epoch Times, June 21, 2024】”The Kokang Family is the engine of Sino-Burmese economic relations. Their economic influence stems from illegal activities and the vast network of relationships they have established with economic and political elites from various regions in China,” said a Myanmar expert on the matter.
A investigative report published by The Washington Post on June 19th revealed that Myanmar’s criminal network is not only protected by the military government of Myanmar but also by the Chinese Communist Party (CCP). The four major criminal families in the Kokang region bordering China in northern Myanmar have developed under the protection of the CCP, but when their actions displeased the CCP, they were subjected to brutal crackdowns.
The Myanmar expert stated that these Kokang criminal families are “monsters” created by the CCP but have now become uncontrollable.
According to The Washington Post’s investigation, based on statements from UN officials, Chinese court records, and analysts, the Kokang criminal network is primarily led by the Wei, Bai, and Liu families (note: there are two Liu families in Kokang, collectively known as the “four major families”), who have maintained close ties with the CCP – particularly with the Yunnan provincial government bordering Myanmar – for over a decade, while also receiving support from Beijing and the Myanmar military government. Since the military leader Min Aung Hlaing assumed power in the 2021 coup, he further solidified these families’ positions as political and economic brokers.
Evidence of the deep cooperation between the Kokang families and the CCP has been partially removed from Chinese internet and social media platforms, but some of this evidence has been archived and verified by The Washington Post. Statements, press releases, and photos from official websites and social media pages of the Kokang authorities, the Myanmar military government, and the CCP show their collaboration on several multi-billion dollar economic projects.
Kokang is off-limits to journalists, but through online video clips, photos, and interviews with over 24 individuals who have worked in Kokang, The Washington Post provides a window for outsiders to understand the region, which has over 300 scam centers also known as the “Big Compound.” The UN estimates that hundreds of thousands of people have been trafficked into the region. Interpol estimates that Kokang is a hub for an international scam network, with the scam industry it operates worldwide valued at $3 trillion.
The majority of individuals engaged in telecom fraud in Kokang are Chinese citizens who have been deceived or trafficked there. When they fail to meet their financial fraud targets or attempt to escape, they are subjected to beatings, torture, and even murder. Some cases have been verified through video clips, photos, and screenshots of messages provided by victims.
The Washington Post also examined Chinese court records, revealing over 1,100 criminal cases related to Kokang in the past decade, some specifically targeting the telecom fraud “compounds” and enterprises operated by these families. Records show that almost all criminal activities mainly involve illegal gambling, human trafficking, and drugs, and the suspects are low-ranking individuals while the heads of these families continue to collaborate with the CCP.
The Kokang families operate both legal and illegal enterprises, often simultaneously in the same real estate. As CCP leader Xi Jinping began to implement his initially $1 trillion Belt and Road Initiative to expand CCP influence regionally and globally, the Kokang families were considered useful partners for the CCP and safeguarding forces for stability in the region where they operate. Corporate records show that as Han Chinese, these families have established companies in China and obtained Chinese citizenship.
For example, in May 2023, the Liu family attended as VIPs a highly anticipated Sino-Myanmar border trade expo held in the Myanmar capital Naypyidaw. The Liu family’s company booth was adjacent to major Chinese firms like Huawei and China Telecom. Chinese Ambassador, the Yunnan governor, and the Lincang mayor all attended.
According to the UN Office on Drugs and Crime (UNODC), the CCP’s protective umbrella enables these families to rule the Kokang region, predominantly inhabited by Han Chinese, and turn the region into a center for a complex criminal network generating billions of dollars in revenue annually.
Jeremy Douglas, the UNODC representative for Southeast Asia and the Pacific, said, “They are among the most powerful and profitable casino and fraud operators in the region and are considered untouchable.”
However, this telefraud activity has sparked increasing anger among hundreds of thousands of Chinese victims and families of those trafficked to Kokang for telefraud work. With fraud and human trafficking becoming domestic political issues in China, the CCP was eventually forced to take action against these criminal families. The China Anti-Fraud Center stated at the end of May this year that Chinese authorities have intercepted $157 billion in fraud funds since 2021.
Jason Tower, the Myanmar program director at the US Institute of Peace, said, “The Kokang family is the engine of Sino-Burmese economic relations. Their economic influence stems from (illegal business) and the vast network of relationships they have established with economic and political elites in various regions of China.”
The Washington Post’s report states that Kokang, far from the heartland of Myanmar, has long been synonymous with evil, a hub for everything from heroin and crystal meth production to gambling, all of which initially thrived under the rule of Kokang warlord Peng Jiasheng and his Myanmar National Democratic Alliance Army (MNDAA). Peng Jiasheng initially received support from the CCP as well.
In 2009, the Myanmar military took action against the National Democratic Alliance Army, defeating Peng Jiasheng’s allied forces after leveraging some of his senior officials. To bring the Kokang region under central control, General Min Aung Hlaing, who led this operation, was carefully selected to lead the Myanmar military two years later and subsequently became the leader of the Myanmar military government through a coup. Min Aung Hlaing also received support from the CCP. After Peng Jiasheng’s failure, he and his allied forces fled to China for refuge and also received protection from the CCP.
Analysts say that the Bai, Wei, and Liu families who betrayed Peng Jiasheng subsequently gained control of the Kokang region and its underground economy. These families control various aspects of life in the Kokang region and have become influential figures, such as leaders of the Kokang border defense forces of the Myanmar military, legislators in the Kokang region, government leaders, and major business owners.
Richard Horsey, a senior adviser on Myanmar issues at the International Crisis Group, said, “They have engaged in various existing illegal businesses there and also established more illegal businesses.”
Meanwhile, with the CCP promoting Belt and Road Initiative investment and deepening relations between the Myanmar military government and the CCP, the Kokang families’ Chinese identities have also strengthened their positions.
According to official statements from China, local authorities in Yunnan have cooperated with these Kokang families to expand investment opportunities such as expanding port facilities and two cross-border economic zones. In 2017, when the CCP gathered foreign leaders in Beijing to attend the first Belt and Road Forum, CCTV publicized the newly expanded Lincang Shuikou Port as a demonstration project connecting Yunnan and Kokang. Soon after, the CCP allocated a $6 million central fiscal subsidy to the Shuikou Free Trade Zone on the border. The CCP’s Ministry of Finance also raised funds from the Asian Development Bank, which ultimately approved a $250 million loan after CCP officials visited the China-Myanmar border in April 2018.
Experts state that the CCP believes “development is the key to stability,” so the overall policy towards unrest in border regions is to promote economic development.
Liu Yun, a researcher at the Taihe Institute in Beijing, told The Washington Post, “The main goal of China (the CCP) in Kokang is to ensure border security, and to achieve this, they must help address economic and livelihood issues.”
A spokesman for the Asian Development Bank stated that the Shuikou Port project in Lincang, Yunnan, is aimed at “enhancing the economic growth potential and living standards of residents in these areas and adjacent areas in China,” and the development of the project “is in line with the Bank’s policies and procedures.”
The Kokang families have diversified their assets into conglomerates. Corporate records show that the “Fully Light Group” headed by the Liu family and its subsidiary companies have ventured into various lucrative industries in Myanmar, including real estate, hotels, gems, agriculture, tobacco rolling, pesticides, etc., and have opened subsidiaries in China and Cambodia.
However, according to UN officials and US diplomatic cables released by WikiLeaks, the core of the Kokang enterprise empire is gambling venues, underground banks, and money laundering activities.
High-roller Chinese gamblers and ordinary bettors flocked to Kokang from China due to numerous gaps in the border regions between Yunnan and Kokang. Huge casinos were built in the heart of Kokang, open 24 hours a day. The Kokang families also planned to build a Kokang airport, positioning Kokang as a destination for foreign tourists similar to Macau.
Behind the giant casinos, an even more sinister industry began to develop in Kokang. Chinese court documents show that since at least 2018, a “criminal group” has been smuggling people into the “Tiger’s Nest” and forcing them into fraudulent activities. According to official Chinese media and a person who worked in the scam center, the “Tiger’s Nest” is owned by the Ming family, an offshoot of the Bai family’s rise to power.
After the outbreak of the COVID-19 pandemic, which cut off the Chinese-Myanmar border, disrupting the casino’s revenue, Kokang’s economy shifted towards telecom fraud. But what really pressured Kokang was the military coup in Myanmar in 2021. With Western sanctions imposed on the Min Aung Hlaing military government, Min Aung Hlaing turned to the major families for economic and political security, requesting them to pay hefty taxes.
According to social media posts from the Kokang government and official media reports in Myanmar, these families generously donated to Min Aung Hlaing’s favorite projects, such as building marble statues and stupas, and used their relationship with the CCP to maintain bilateral trade and infrastructure projects. The patriarchs of these families became among the most decorated citizens in Myanmar, awarded multiple honors and awards, representing Myanmar at major regional summits.
Richard Horsey from the International Crisis Group said, “These families feel there is nothing they can’t do.”
Most of those engaged in telecom fraud in Kokang are from China and other countries who were trafficked there to contribute to the fraud activities. Victims of this fraud were drawn from various professions, including software engineers, housewives, and university students.
Witnesses claim that many scam centers were located within hotels and casinos built by these families years ago; some were specially designed for telefraud activities and featured distinct signs such as windows fitted with iron grilles, high walls, and even snipers from the Myanmar military on the buildings’ roofs.
An employee in a hotel owned by the Liu family that had a soundproof phone booth revealed that his work was often interrupted by screams, and he witnessed a supervisor beating three men, tying their hands behind their backs and chaining them to lead pipes.
A Taiwanese woman who was trafficked to the Kokang region shared that she was subjected to water torture after being caught trying to escape. Witnesses recalled scenes of brutality where individuals were restrained, beaten, and even killed for resisting. Victims provided verified video clips, photos, and screenshots of messages showcasing the harsh treatment they endured.
The “Tiger’s Nest” was noted to be one of the most brutal scam centers, with reports suggesting the use of lions, tigers, and bears to threaten those attempting to escape.
These families recruited foreign security personnel to protect their interests. One such example is Alex Klisevits, a former Estonian Navy officer, who responded to a recruitment advertisement seeking bodyguards for “Chinese businessmen” and ended up in Kokang. Klisevits remembered witnessing a man chained and severely beaten on his first day at work. He recalled, “When I witnessed how they punished people…I thought, ‘Where am I?'”
By 2023, facing increasing domestic and international pressure, Beijing demanded action against the telecom fraud activities in Kokang. A UN report estimated that over 120,000 people were forcibly engaged in telecom fraud activities in Myanmar. Rescue organizations suggested that this figure was likely a conservative estimate.
According to the US State Department’s Office to Monitor and Combat Trafficking in Persons, individuals working in the fraud centers in Kokang trafficked from different parts of the world, including the US, Uganda, and Brazil. However, the majority were from China.
Telecom fraud in Kokang became a public issue in China, to the extent that the highest-grossing Hong Kong movie last year, “No More Bets,” depicted the story of a Chinese software engineer trafficked to a location north of Kokang similar to Kokang, where he was forced to engage in fraud activities.
In August last year, the Chinese ambassador warned Myanmar authorities to “eradicate the poison of gambling and fraud,” stating that “this is deeply abhorred by the Chinese people.” This marked the first time the CCP publicly signaled a crackdown on Kokang telecom fraud.
Telefraud centers in Laos and Cambodia were raided by local police with the accompaniment of Chinese police. In Myanmar, the Kokang families vowed to carry out their own crackdown, claiming they would never tolerate such criminal activities in their region. UN officials and researchers stated that subsequent raids and arrests were mostly symbolic, performed for show to the international community.
Pheng Xixing, a doctoral student at the School of Oriental and African Studies at the University of London, who extensively researched the China-Myanmar border region, told The Washington Post, “China (CCP) did send a lot of signals to the Myanmar military in advance. Min Aung Hlaing, he either did not understand these signals or did not want to suppress them because of his personal history, believing that Kokang was the beginning of his rise to power.”
The imprisoned fraudsters began hearing that China was hoping they would return home, leading to more and more attempts to escape. On October 20th last year, over a hundred people attempted to escape from the “Tiger’s Nest.” During the desperate escape, security guards opened fire. The actual number of casualties during this incident reported by The Washington Post couldn’t be verified. According to Sammy Chen, a resident of Kokang, four undercover Chinese police officers were reported killed. Sammy Chen, an independent consultant, works with dozens of families from China and Thailand to help their loved ones escape from the Kokang fraud center.
This event where the four undercover Chinese were killed at the “Tiger’s Nest” marked a crucial turning point in China’s crackdown on Kokang telecom fraud activities.
Subsequently, in November, confession videos featuring key members of the Bai, Wei, and Liu families began appearing in Chinese media. Their confessional statements delivered in videos were nearly identical. Following the arrest of members of the Ming family by Myanmar authorities and their extradition to Chinese authorities, an affiliate of The Ming family, Ming Xuechang, died “by suicide with his own gun during a raid by Myanmar police,” as reported by Myanmar National TV.
Wei Qingtao, 27, the son of the Wei family patriarch Wei Chao, had been living a lavish life in Kokang: driving Bentleys and Lamborghinis, smoking rare cigars, flying private jets, throwing cash at parties in nightclubs. In his “confession video,” he appeared in prison uniform, reading his prepared confession, saying, “The money we earned from online fraud comes from the retirements of ordinary Chinese people. This time, the Chinese (CCP) government has resolved…we cannot harbor any illusions anymore.”
In December last year, over a dozen arrest warrants were issued by the CCP against the heads and other family members of the Bai, Wei, and Liu families.
Wei Qingtao’s uncle was swiftly arrested by Myanmar authorities, shackled, and escorted by dozens of police officers to a plane bound for China.
Extensive coverage in Chinese media reported on Wei Qingtao and at least 15 other key family members of these major families, along with their accomplices facing criminal charges and detainment, showcasing Beijing’s influence.
Encouraged by Beijing’s crackdown on the Kokang criminal families, Peng Jiasheng’s Myanmar National Democratic Alliance Army – now led by his son Peng Denren – formed a “Three Brothers Alliance” with two other ethnic armed groups in response to the crackdown and started counterattacking Kokang, gaining control of Kokang and attacking military government territories nationwide. The National Democratic Alliance Army launched the slogan, “Eliminate fraudsters and save our compatriots.”
On January 6th this year, the Kokang capital, Old Street, was captured by the Myanmar National Democratic Alliance Army, marking the first time in 15 years that the control of the Kokang region was completely handed over to the rebel organization. It was also the most significant territorial loss for the Myanmar military since independence.
However, analysts stated that without clear support or acquiescence from the CCP, Peng Denren and the “Three Brothers Alliance” would not have achieved victory.
Since the CCP’s crackdown on Kokang telecom fraud, the Myanmar military government has collaborated with the CCP to repatriate foreigners from Kokang. According to Myanmar’s Ministry of Public Security, since July last year, 49,000 fraudsters have been deported to China.
Myanmar officials stated that several senior members of the Kokang major families are now facing fraud charges in China and other potential indictments, potentially leading to life imprisonment, but more family members have managed to escape.
The casinos and hotels owned by the Kokang criminal families are still present but deserted. The “Tiger’s Nest” is also abandoned, with dilapidated walls riddled with bullet holes.
Though the criminal groups appear to have left Kokang, the reality shows that these criminal networks are challenging to eradicate. Chainalysis analysis of the Kokang families’ cryptocurrency wallets and on-site visits to their business office in Yangon, the business capital of Myanmar, revealed that the Kokang family-related subsidiaries and businesses are still intact.
For example, Chainanalysis found that as of April this year, the Liu family’s “Fully Light Group” and its subsidiaries – including the online casino operator “Warner International” – were still transacting hundreds of millions of dollars through cryptocurrency wallets.
Xue Yin Peh, a senior intelligence analyst at Chainalysis, said, “These criminal organizations are too complex to be eliminated through a single action.”
Jeremy Douglas from UNODC stated that the preferred cryptocurrency of the Kokang criminal groups is Tether, the largest market-capitalized and widely-used stablecoin globally pegging its value to the US dollar. Douglas pointed out that subsidiaries of the Fully Light Group, such as the Gobo East casino in Cambodia, were still transacting via Tether.
He said, “Critical segments of these corporate empires are still operating as usual.”
Other criminal groups – competing with these families – are actively operating fraudulent activities managed throughout other regions in Myanmar and Southeast Asia.
According to UN researchers and rescue organizations combating human trafficking, online fraud activities – many conducted by various Chinese criminal gangs – continue to expand into other parts of the world, especially in Cambodia and Laos, but also as far as Dubai, South Africa, and even Georgia.
Secretary-General of the International Criminal Police Organization Jürgen Stock stated in March this year, “What originally was a regional criminal threat in Southeast Asia has now evolved into a global human trafficking crisis, with millions of victims in telemarketing centers and targeted populations.”
Jason Tower from the US Institute of Peace pointed out, “The CCP helped create a ‘Frankenstein monster’ that it now cannot