Introduction
In 2007, the Lao government, in collaboration with the Hong Kong-registered Kings Romans Group, established the Golden Triangle Special Economic Zone (GTSEZ)[1] in the Ton Pheung District of Bokeo Province, Laos.
This 3,000-hectare zone, nestled along the Mekong River, was envisioned as a beacon of economic development, promising prosperity, and growth. However, beneath the veneer of progress, a sinister underworld has flourished, transforming the GTSEZ into a notorious hub of criminal enterprises.
From its inception in 2007, the GTSEZ was dominated by the Kings Romans Casino, a glittering facade that attracted Chinese tourists and gamblers. Behind the casino’s opulent doors, a dark network of illicit activities began to take root. The zone quickly gained a reputation for being a lawless enclave, where drug trafficking, human trafficking, and wildlife smuggling thrived.
In January 2018, the United States Treasury Department sanctioned the Kings Romans Group, its owner Zhao Wei, and the “Zhao Wei Transnational Crime Organization,” accusing them of using the casino to launder money and traffic drugs.
Despite these sanctions, the criminal activities within the GTSEZ have only intensified. Reports of high-grade crystal methamphetamine seizures linked to the zone surged, with drugs and precursor chemicals flowing through Laos to neighboring countries.
Now, the GTSEZ has become a breeding ground for cybercrime. Fraud factories, staffed by human trafficking victims, operate within the zone, conducting elaborate global scam operations. Victims from various countries are lured or coerced into working in these fraud centers and Phishing Farms[2], where they are forced to make fraudulent calls and engage in other illegal activities.
The Rise of the Multi-functional Criminal Enterprise
Multi-functional criminal enterprises (MFCE) have expanded beyond traditional activities like drug trafficking and extortion to include a wide range of illicit operations. These enterprises now engage in cybercrime, human trafficking for labor, arms smuggling, and environmental crimes.
This diversification allows them to spread risk and capitalize on various illegal markets.
Business-like Operations
The MFCE operate with a high degree of professionalism, employing business strategies such as market analysis, supply chain management, and financial planning.
They often use legitimate businesses as fronts to launder money and facilitate illegal activities. For example, they might invest in real estate, hospitality, or import-export businesses to mask their operations.
The zone’s unchecked criminality has had devastating consequences for the local population and the broader region[3]. The influx of illicit money has fueled corruption, undermined the rule of law, and eroded public trust in authorities. Efforts by Lao authorities to crack down on these activities have been sporadic and ineffective, allowing the GTSEZ to continue operating as a haven for transnational crime.
Worker Exploitation
Worker exploitation within the MFCE takes many forms, often involving severe abuse and coercion. Here are just a few examples:
- Forced labor is a common practice where workers are compelled to work under threat or coercion. They are subjected to long hours, minimal pay, and unsafe working conditions.
- Human Trafficking involves the recruitment, transportation, and harboring of individuals through force, fraud, or coercion for the purpose of exploitation. Victims are forced into labor or sexual exploitation. But a growing area of trafficking means victims are used in cybercrime operations, where they are made to send fraudulent emails or manage fake websites.
- Debt Bondage occurs when workers are forced to work to repay a debt. The debt is often manipulated to ensure that it can never be fully repaid, trapping the worker in a cycle of exploitation.
- Wage Theft occurs when employers withhold wages or deny workers the compensation to which they are legally entitled. This can include not paying for overtime, underreporting hours worked, or paying below the minimum wage.
- Psychological and Physical Abuse where workers are subjected to threats, intimidation, and violence to ensure compliance and prevent escape. This abuse can have long-lasting effects on their mental and physical health.
- Document Confiscation is where employers confiscate workers’ identification documents, such as passports and work permits, to prevent them from leaving or seeking help.
Cybercrime: THE New Growth Strategy of the MFCE
Cybercrime is a growing strategy. Although there are many forms, three are highly represented throughout the GTSEZ:
- Phishing: Workers send emails that are from legitimate sources, tricking recipients into providing sensitive information. Launched from the GTSEZ, they are perpetrated on a global basis.
- Ransomware: Victims are made to deploy ransomware, which encrypts data on a victim’s computer and demands a ransom for its release.
- Fraud: This includes creating fake websites or profiles (synthetic fraud) to deceive individuals into providing personal information or making payments, and fraudulent wire transfers.
The GTSEZ Impact on the World
The Golden Triangle Special Economic Zone (GTSEZ) has significant implications for the rest of the world, particularly in terms of its role in transnational crime, economic development, and regional stability.
Hub of Transnational Crime
The GTSEZ has become a notorious hub for various forms of transnational crime, including drug trafficking, human trafficking, wildlife smuggling, and cybercrime. The zone’s strategic location along the Mekong River, where Laos, Myanmar, and Thailand meet, makes it an ideal transit point for illicit goods and activities.
This has global repercussions, as the drugs and other illegal products trafficked through the GTSEZ often end up in markets around the world, fueling addiction, crime, and violence.
Economic Development and Corruption
While the GTSEZ was initially established to promote economic development, the influx of illicit money has led to widespread corruption and undermined the rule of law.
The economic benefits promised by the zone have been overshadowed by the criminal activities that dominate it. This has created a challenging environment for legitimate businesses and investors, deterring foreign investment and hindering sustainable development in the region.
Regional Stability
The criminal activities within the GTSEZ have significant implications for regional stability. The flow of drugs and precursor chemicals through Laos has exacerbated the drug crisis in neighboring countries, particularly Thailand and Vietnam. Additionally, the human trafficking operations within the zone contribute to regional instability by exploiting vulnerable populations and fueling illegal migration.
International Response
The international community has taken notice of the GTSEZ’s role in transnational crime. The United States Treasury Department sanctioned the Kings Romans Group, its owner Zhao Wei, and the “Zhao Wei Transnational Crime Organization” for their involvement in money laundering and drug trafficking. These sanctions have had no impact on the GTSEZ’s growth and expansion.
Conclusion
The GTSEZ serves as a stark example of how economic development initiatives can be co-opted by criminal enterprises, leading to significant negative consequences for the region and the world. Addressing the challenges posed by the GTSEZ requires a multifaceted approach, including stronger law enforcement, international cooperation, and efforts to promote legitimate economic development.
Next Issue
Part 2: Professional & Organized: How the GTSEZ Encourages the MFCE and What To Do About It
[1] Sources: Berkeley Policial Review, Wikipedia, Bloomberg, Newsweek, LA Times, United States Department of State, Journal of Illicit Economies and Development, Development and Surges of Organized Crime: An Application of Enterprise Theory, United Nations Office of Drugs and Crime: The Role of Technology in Human Trafficking, Arkose Labs, and other news and research authorities.
[2] Phishing farms represent a dangerous intersection of human trafficking and cybercrime. Addressing this issue requires a coordinated effort from international law enforcement agencies, cybersecurity experts, and policymakers to dismantle these operations and protect vulnerable individuals from exploitation.
[3] Forecasted population growth is to 300,000 people by 2026.