Chinese mafia’s “state within a state”

The arrest of the “godfather” of the Chinese mafia in Spain in mid-October has lifted the veil on crime within the community and reflects the power, complexity and international cohesion of these criminal groups.

Published on 24 October 2012 at 11:27

Surely not in its worst nightmares could the Chinese community in Spain have imagined an event so damning to their image as Operación Cheqian-Emperador (Operation Emperor). For a group that makes discretion the bedrock of its way of life – and one of its strengths – the information that has been splashed across the headlines could not be worse: wild tales of how criminal gangs have allegedly defrauded the Spanish Treasury of 35,000 million euros, violent extortion by the gang headed by Gao Ping, corruption and businesses tied to prostitution and to drug-trafficking.

Though one must not judge the whole Chinese community by its parts and not all the 170,000 Chinese living in Spain can or should be judged by the same yardstick, the spread of Chinese businesses through Spain and to other parts of the world contains aspects that invite reflection at the very least.

Like all immigrants, the Chinese leave home with no other purpose than profit. But this migration, dizzying in its evolution in countries like France, Italy and Spain, has not come with full social integration, but too often has been limited to strictly business contacts. It is precisely this failure to integrate into the host societies – expressed by the concept of “Chinatown” – that has helped give rise to “states within a state”, in the words of several police inspectors, to a kind of Chinese extraterritoriality where justice or working conditions, for example, are determined by the Chinese and not by the state.

Operation Emperor has exposed a web of money laundering and tax evasion of gigantic proportions. Two elements stand out in the police operations over recent years against human trafficking, exploitation of workers and tax fraud. The first is the expansion of inter-Chinese criminal networks in our territory, which are organised in pyramids and proliferate in parallel in various sectors. Import-export is the only one of these sectors probed in the current operation, but the reverberations likely extend to other traditional sectors that Chinese immigrants are active in – restaurants, clothes retailers, agencies, realtors, bars, and so on.

Exceptional mobility and organisation

The system – which we have also investigated in other countries – works more or less like this: the Chinese businessman “imports” illegal labour through his networks and through “snakeheads”, and exploits those workers over the years to run his business (restaurants, shops, workshops), until the debt has been paid in full. The instability and the living and working conditions imposed on the workers is sometimes brutal. The new immigrant, after paying off the debt for being brought to the promised land, subsequently pays to be legalised and to obtain papers – as if by magic, Chinese agencies controlled or participated in by the same bosses also have a hand in that pot.

Finally, the new immigrant takes out a debt with the network in the form of an informal credit to start up his own business, and this way he moves up from the ranks of the exploited to the ranks of the exploiters. Selling omelette skewers or finished shirts at very little profit, the new employer has to manage somehow to pay off the start-up loan, and so resorts to bringing in more immigrants through his own business, putting them into debt and exploiting them. If the traditional sectors are already saturated by other Chinese and the new entrepreneur has neither fear nor scruples, he can move into completely illegal sectors, such as prostitution, gambling and drug trafficking.

The second element that makes this story even more complex is the spreading across the globe of networks that, at their roots, are curiously highly concentrated. In Europe, most Chinese immigrants come from the province of Zhejiang, and largely from the town of Qingtian, the epicentre of Chinese emigration to Spain and Italy, and a region that has developed rapidly thanks to remittances.

These migrants, who arrived first in the Netherlands and France, and later moved towards the Mediterranean, have exceptional mobility and organisation. They head for where they can find work or do business, where they can score a deal big enough to let them retire early and head home to China, where it may be easier to repatriate the money and pay zero tax on it.

Spain, as one of the last countries in Western European to receive Chinese immigrants, should look to its neighbours to avoid greater evils, promote integration and avoid situations like those blighting the town of Prato, in Italy. In this Tuscan town, about thirty kilometres from Florence, the tension between Chinese and Tuscans is constant.

A kind of apartheid

The traditional home of Europe’s most prized textiles, the Chinese began arriving there in the 1980s, employed by Italian family firms that exported their textiles throughout Europe. In less than a decade, the first generation of Chinese textile entrepreneurs was born, and today they control 60 percent of the trade, with over 4,800 businesses and an official population of about 25,000 Chinese out of a total of 200,000.

The underworld has proliferated at the same rate and Prato today is an epicentre of the criminal and money-laundering activities of the Chinese mafias in Europe. “The proliferation of Chinese crime in the region is the highest among all the immigrant groups,” says a police inspector who has been following the phenomenon for more than ten years.

In the city, some of the locals and the Chinese have nothing to do with each other, and live in a kind of apartheid. The Italians take a very hostile view of Chinese enrichment and accuse them of tax evasion and of bringing nothing to the region: the fabric, the machinery, the workers and the dealers are all Chinese. Only the final customer is Italian. How then does the region benefit?

The Chinese take offence at all being tarred with the same brush. What’s more, political power has only made things more difficult: in 2009, the anti-Chinese populist Roberto Cenni was elected mayor, and the communities now seem to be further from each other than ever. It’s a less than healthy breeding ground for a solution to a problem that, in Italy as in Spain, calls for more adaptation by the Chinese, starting for example by spreading the wealth by hiring local staff, and for greater tolerance on our part towards a group whose presence has deservedly earned influence and prestige in our societies.


The “Little Emperor” who wanted to be a Guggenheim

Dozens of people suspected of having laundered hundreds of millions of euros – among them 53 Chinese and 17 Spaniards – were arrested on 17 October in Madrid in a sweeping police operation. Dubbed “Operation Emperor”, it brought together more than 500 agents around the country.

The organisation that has been broken up is suspected of having laundered 1.2 billion euros in four years of alleged trafficking. The investigation has exposed a vast web that laundered money from prostitution and extortion through front companies like karaoke bars and restaurants.

According to the prosecution, the dirty money was also invested in tax havens, with the help of Spanish and Israeli go-betweens, or taken back to China by car or train. Among those arrested is Gao Ping, believed to be one of the leaders of the ring. Patron of the commercial zone of Fuenlabrada on the outskirts of Madrid, which is considered one of the biggest centres of Chinese businesses in Europe, Gao, 45, arrived in Spain in 1989. He cultivated good contacts in the world of politics and the Spanish economy and was also a passionate art collector, notes El País

Ping did not dedicate his energies solely to wholesale […] His ambitions lay in something else: art. In Beijing he inaugurated the Iberia Center for Contemporary Art, one of the largest private spaces dedicated to art in the Chinese capital.

His model —

[He] aspired to emulate the Guggenheims, the family of American industrialists and philanthropists that began by importing embroidered cloth from their native Switzerland towards the mid-nineteenth century and made their fortunes in mining and smelting.

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