Correction for the Record: "Private Eyes Discuss Macau Risks"
I-OnAsia's PRWEB release titled "Private Eyes Discuss Macau Risks" dated March 3, 2005 included misstated that I-OnAsia had noticed links between Macanese triad groups and WMD dealers. I-OnAsia has only been monitoring alleged links between Triads and WMD, but has not confirmed such links. The below body includes this correction
(PRWEB) March 5, 2005 -- Managers considering expanding operations in Macau,
or making personal investments in real estate there, must remain alert to
security and reputation risks in the enclave. Here I-OnAsia seeks to assess
these risks by answering two questions: “Is Macau a violent place?” and “Are
local businesses going completely legit?”
I - Is Macau a Violent
Place?
I-OnAsia expects that the overall number of violent cases in
Macau, as well as the magnitude of the cases themselves, will fall compared to a
year ago.
Most likely, this is because with the local economy booming,
Macanese gangsters have been far too busy making money by maintaining the peace
to resort to violence. Analysis of law enforcement actions in Macau, Hong Kong,
and Guangdong against organized crime in the region supports this fact.
In 2004, Hong Kong listed businesses with operations in Macau saw their
stocks rise by over 500%, and property investors there have more than doubled
their money. In November 2004, the South China Morning Post reported an 18.7%
year on year drop in violent cases, which far outpaced the overall decline in
the crime rate of 4%. During the first three quarters of 2004, there had also
been far less high impact gangland conflict of the type experienced before a
1999 truce brokered between rival gangs and the subsequent incarceration of 14K
Triad boss “Broken Tooth” Wan Kuok-Kui. The largest coordinated anti-triad
enforcement action in 2004, which was code named Sun Rise and resulted in the
arrest of an amazing 1,569 suspected triad members, was aimed at combating vice
(such as prostitution, illegal bookmaking, and illicit drugs).
A year
ago, I-OnAsia’s analysts expected that the opening of the first western style
casinos in Macau in the second half of 2004 would have lead to increased
infighting amongst gangs in Macau for the scraps of business remaining at the
older establishments. While sources report that the new casinos took as much as
one third of all table traffic from the likes of the Lisboa, turf battles
between old and new players did not occur. In part this success may be
attributed to the efforts of local law enforcement and security personnel at the
new casinos. Yet, I-OnAsia anticipates that new security regimes are not robust
enough to claim full credit.
Reliable sources state that local triad
gangs are finding strategic advantage in delivering vice to patrons at older
casinos. The most important of their services appears to be money laundering.
China disclosed in March 2004 that RMB20 billion (US$4.1 billion) is being
laundered through Macau casinos per annum, and the Far Eastern Economic Review
reported that Stanley Ho Hung-Sun and his Sociedade Tourismo de Macau (“STDM”)
was at the centre of a “huge multi-million dollar money-laundering scheme” later
last year. Further intelligence suggests that Macanese triads have benefited
from the disruptive forces of the Internet, and de facto liberalization of
bookmaking in the region. Economic growth also appears to be stimulating demand
for prostitution, illicit drugs, and counterfeit goods. When business is good,
it appears, no one has time to fight.
While violent crime in Macau is at
low ebb, the enclave remains a violent place, and reversion to the bad old days
remains a possibility. In the first nine months of 2004, Macao Security Forces
logged over 600 cases involving violence in Macau, and weapons including steel
bars, clubs and knives, were seized during Sun Rise. Indeed, I-OnAsia’s
directors have recently investigated subjects engaged in intimidation and
extortion in Macau.
If China’s currency becomes freely convertible or if
China mounts an anti-money laundering crackdown of the size and scale aimed at
combating smuggling in the late 1990s, great hardship would be imposed on
beneficiaries of the status quo. Likewise if property prices plunge, or other
significant shocks to the economy arise. (One need only look at 2003, when SARS
hurt travel and tourism in Macau and crime rose by 9.2% from the prior year, for
support of this assessment.)
Separately, it is not inconceivable that
personal rivalries or the rise of new players not party to the 1999 truce agreed
between the local triads (e.g. the “Little Circle” gangs) could disrupt the
peace. Further, future police actions could result in sharp rises in violence.
In 2004 there were few tangible enforcement gains made against senior Triad
leadership in Macau. Sun Rise resulted in no arrests of dragonheads, or senior
office bearers. The only high profile detention was of Wan ally Tommy Li
Yiu-Ming, who voluntarily surrendered. With the creation of an anti-corruption
watchdog in Macau similar to Hong Kong’s ICAC, and the increased pressure
brought to bear by foreign investors on local law enforcement officials to
further crack down on criminal activity, it is possible to foresee a day where
arrests lead to disruption of the peace agreement and a resumption of gangland
violence.
II - Are Local Businesses Going Completely “Legit”?
It
is often argued by some influential Macanese that local people previously
engaged in illicit activities are transforming themselves into legitimate
businessmen and women. With time their past misdeeds will be forgotten and a
significant portion of the population will leave the underground economy
completely. Therefore, the argument goes, foreign investors should overlook the
past when considering business relationships with local partners in Macau.
To be sure, the long lines of applicants for limited positions at
foreign businesses in Macau show the strong desire for legitimate work. However,
it is I-OnAsia's assessment that many Macanese still maintain ties to organized
crime. To date a large number of the very worst characters have yet to truly “go
legit”.
Most recently, I-OnAsia has been monitoring links between
Macanese triads and brokers of Weapons of Mass Destruction, as well as the
rising instance of counterfeiting (incl. counterfeit currency, not just fake
consumer goods). These problems, as well as others discussed above, suggest that
Macau has a long way to go before it can declare itself in the clear. Foreign
investors would be well advised to carefully consider the background and
reputation of any potential local partner.
About I-OnAsia
Since
founding in 2001, I-OnAsia has become one of Asia's largest investigations and
risk consulting companies. Its core business is the objective and discreet
collection of commercial intelligence from the field, often on behalf of other
investigations companies and security departments lacking an on-the-ground
response capability in Asia.
I-OnAsia is Hong Kong headquartered, with
resources concentrated in North Asia. The company employs over 45 full-time
project managers and associates. Staff prepare both qualitative and quantitative
risk assessments, vet employees, conduct pre-transaction due diligence,
undertake surveillance, investigate fraud, combat intellectual property
infringement and "dumping", trace assets, and gather sensitive business
intelligence. I-OnAsia's case managers have experience working throughout Asia
across a broad range of industries.
# # #
Source : http://www.prweb.com/releases/2005/3/prweb214694.htm