CHINA: Friend or Foe?

23 May 2023

As a member of the RCMP investigating Organized Crime, I found myself assigned to Hong Kong from 1991 through to 1994. That experience did much to shape my life and my career. Back then, I would never have expected to be exposed to the type of criminal activity and be witness to the beginning of an impact on Canada that has increased proportionately year over year.

The Royal Hong Kong Police (the word “Royal” was removed in 1997) afforded me an education that could not have been emulated in any other setting. I garnered the respect of individuals like Chief Inspector Peter Ip Pau-fuk (now deceased) who was the recognized expert in Triad (organized crime) activity; Steve Vickers, who ran the HK intelligence bureau; Steve Carruthers and Sandy Boucher who had also become well versed in organized crime activities and the fact that Canada was blindly allowing well-documented Triad criminals to emigrate to Canada.

Triads are not well understood by most individuals in the Western World. If you mention Hell’s Angels, many immediately think of criminal activity – such activity by Triads, however, is not self-evident among the general public in Canada (Chinese-Canadians being the exception).

Described as “secret societies” that originated in China some 2,000 years ago to oppose warlords, many Triads have developed over the years to become heavily involved in organized crime themselves – with activities such as prostitution, illegal gambling, money laundering, extortion, and dangerous illicit drugs.

While in Hong Kong, one of the books given to me to read was “Triad societies in Hong Kong” (1960) by W.P. Morgan, the acknowledged expert on Triads. Morgan wrote that, although triads originated in Mainland China, by the time his book was published, Hong Kong had become “the undisputed capital of triad operations.” In fact, literature available on the proliferation of the triads frequently concentrates on Hong Kong, which was essentially the closest “port of call” for the resistance movement when being forced out by the Manchurians in the various rebellions in Mainland China. Waves of triads descended on Hong Kong from the mid-1800s until the establishment of the republic. Historical records maintained by the Hong Kong Government show that, as early as 1842, British colonists had noted that these secret societies wielded significant power among the local population.

From these humble beginnings, Triads have spread throughout the world. Today. like most other criminal organizations, their focus is predominantly economic. Similar to Italian Organized Crime, they survive through an historic initiation ­ceremony which signifies that the new member has died and is reborn into the triad organization. Absolute loyalty is expected, and nothing short of that is accepted.

When I was working in Hong Kong, it was well-known that the HK film industry was Triad-controlled. This control continues to impact the industry today and has resulted in some of the biggest stars being threatened and forced to act in triad-backed films.

Another Triad mainstay is gambling, and, as we witnessed through Canada’s Cullen Commission testimony, gambling continues to be a vast money maker and vehicle for the laundering of money and for flight capital coming out of China.

Hong Kong Bay – 1977.

In May 1997, a turf war between triad groups the 14K and Wo On Lok (a.k.a. Shui Fong) erupted in China’s southern coast city of Macau, over control of the casinos. Stanley Ho, well known in Canada was at the center as he maintained control of the high roller VIP rooms and franchised them to the various triad groups, mainly 14 K and San Yee On. This also involved control of prostitution and loan sharking. Many deaths occurred between the rival gangs. An individual by the name of “Broken Tooth Kui” was arrested at that time and deemed to be the head of the 14K. Amazingly, Kui has recently surfaced again and is being linked to the establishment of casinos in Australia and Thailand.

Another major source of revenue was the illicit drug market wherein triads were involved in shipments to North America, Australia, and Europe. Hong Kong during this era was the undisputed transshipment location for drugs coming out of areas like the Golden Triangle, and for methamphetamine originating in China.

During my tenure in Hong Kong, China had a policy that triad members would be arrested and sentenced to death. This all changed just prior to the 1997 ­handover of Hong Kong from British to Chinese rule, when Deng Xiaoping, an influential former political and military leader, hinted several times that “not all triads are bad, many of them were good, and many are patriots.” In my view, this new idea of patriotic triads seemed to legitimize many of the triad activities and marked the beginning of the partnership between China and triads.

Canadian Connection

What does all of this have to do with Canada? Upon my arrival in Hong Kong in the summer of 1991, I became good friends with a Foreign Services Officer, Brian McAdam. I learned very early on that, since Canada did not have an offence for being a member of a Triad society, it was not a prohibitive ground for entry.

Recognizing that higher echelon triads had lots of money, they were considered “good candidates” for the immigration entrepreneurial program that enabled wealthier applicants to receive landed immigrant status based on agreement to make an investment in Canada. I also learned from RHKP members that Canada was considered a joke since there seemed to be no will for preventing the organized crime movement to Canada.

Needless to say, I found this appalling and, as RCMP had a role in vetting files, I had Brian provide me with all of the suspect applicant files. I then proceeded to meet with RHKP in order to ascertain what intelligence they had on each one. This resulted in the daily writing of intelligence briefs back to Ottawa detailing the criminal backgrounds and identifying any Canadian connections. The more I learned, and the more I spoke with RHKP, it became clear that Vancouver would eventually displace Hong Kong as a transshipment destination for drugs to Canada.

Deng’s pronouncement signified that North America would be facing increased Triad activity, and this rationale resulted in Project Sidewinder taking shape. The report relied on many of the intelligence briefs written during my tenure in Hong Kong with the support of Brian McAdam. We also wrote a detailed report explaining what triads are; this was reviewed and sanctioned by the RHKP and became the reference for many RCMP units, some Universities, Banks and other law enforcement agencies in Canada and the U.S.

When the Chretien Government shut down the Project, in my view this paved the way to what we are now witnessing in Canada with the Chinese influence.

Far too many PMs, since the days of Pierre Elliott Trudeau have envisaged a partnership with China based on trust and fair play. Sadly, the reality is that greed blindsided ethics, and successive governments looked the other way when questionable activities were involved. Many have welcomed individuals like Stanley Ho with open arms, notwithstanding that intelligence reports should clearly have dictated otherwise. Friendships were unwisely developed with members like Bo Chi Lai, who was eventually arrested for his role in harvesting organs from the Uyghurs, and his wife for murdering a British businessman.

This naïveté by our governments and courts has resulted in what we see today – a drug epidemic caused by precursor chemicals freely flowing to Mexican cartels leading to fentanyl manufacturing. China has little incentive to stop this flow. We are seeing huge profits being laundered into Canada and the USA, all through recognized Triad-affiliated Canadians.

Going Global

Such activity has been spreading beyond Canada and the USA. China’s Belt and Road Initiative, known as “One Belt, One Road” (OBOR), is a global infrastructure development strategy adopted by the Chinese government in 2013 to invest in more than 150 countries and international organizations. This has arguably opened the door to abuse and exploitation around the world. In Canada, investment in the ports had provided a vehicle for open export.

As Mark Shaw, director of the Global Initiative Against Transnational Organized Crime warned in March 2023, “criminal enterprises can exploit the [OBOR] projects to create new trafficking routes and connect one vulnerable area to one another more readily.”

The Australian Broadcasting Corpora­tion has recently been looking into the genesis of the Star Entertainment Group casino in Queensland. Their investigation revealed that owners Chow Tai Fook and associated companies have been linked to Chinese organized crime for decades.

Their subsequent report resulted in several inquiries. Similar to the Cullen Commission these journalists found evidence of massive triad money laundering through the casinos.

Other journalist reports have shown ties to Italian Organized Crime by China and the Triads. Crime investigators are uncovering cyber-crime attacks allegedly overseen by the People’s Liberation Army. China’s “Belt Road Initiative” has enabled their presence, with influence in many jurisdictions throughout the world. Such criminal activities cannot have gone unnoticed by governments, so why aren’t loopholes being closed more effectively?

In his book, The Art of the Deal, Donald Trump openly stated: “I’ve read hundreds of books about China over the decades. I know the Chinese. I’ve made a lot of money with the Chinese. I understand the Chinese mind.”

I would argue that it is naïve views such as this, that continue to permit China to carry out many illegal activities at the expense of democracy.

In a recently publicized speech by Vice-Admiral Mark Norman, he stated: “I genuinely believe that the global security situation has fundamentally changed in the past few years, and the complacency and attendant ‘risk management’ approaches to defence and security matters implemented by successive governments – of all political orientations – have severely undermined not only our credibility as a nation, but more importantly, our national security.”

When this is considered in the context of Chinese police stations and their “belt road initiative” it should be an alarming wakeup call for Western Governments, and more so for Canada.

VAdm Norman concluded by stating: “... the politicization of security and defence is irresponsible, dangerous and must stop immediately. These vital national interests are too important to be subject to the whims of short-term political interests and public opinion.”

It is time we accept that counter­intelligence and economic espionage efforts are regularly emanating from the government of China and the Chinese Communist Party. It is dangerously unwise to underestimate this grave threat to the economic well-being and democratic values of Canada.

Garry Clement, CAMS, CFE, CFCS, FIS, CCI has 34+ years of experience in the policing sector, including as RCMP Superintendent and Chief of the Cobourg Police Service. Currently the Chief Anti-Money Laundering Officer at VersaBank, he has worked at combatting financial crime and organized crime for more than 45 years. His book on OC is slated for release in October 2023.