June 19, 2024
Is an alleged drug kingpin from China investing millions in a port in Laos?

Is an alleged drug kingpin from China investing millions in a port in Laos?

What they weren’t told is this: According to the United States, Zhao is one of the world’s most notorious narcotics traffickers.

Hong Kong corporate records show Zhao is the majority shareholder of Kings Romans. Both Zhao and Kings Romans were sanctioned by the US government in 2018 for their purported role in the narcotics trade and other alleged crimes — meaning he was barred from using the US financial system, and any funds he holds in US banks likely would have been frozen as well.

Zhao denies the allegations and says he is a legitimate investor. In interviews, he has said his goal is to turn the GTSEZ into a major tourist destination and bring jobs to one of the world’s poorest places.

Right now, the region’s biggest attraction is a huge casino that caters largely to visitors from mainland China, where almost all gambling is illegal, and foreigners, because gambling is outlawed for Laotians.

But there are plans for massive expansion.

The government of Laos allows the GTSEZ to operate with limited oversight from the central authorities, in theory to spur more investment. But officials outside the country worry that Laotian authorities signed a Faustian bargain, trading control in the border region to an alleged drug kingpin in exchange for economic growth.

Zhao’s exact role in the new port, which is about 12 miles upriver from the casino, isn’t known. But the fact that he attended the groundbreaking ceremony alongside a Laotian deputy prime minister and the provincial governor has caught the attention of law enforcement and government officials outside the country.

If Zhao is the legitimate investor he says he is, the project could simply be a smart example of vertical integration. Constructing a modern port in an unfrequented part of Laos could help service a new tourist city.

But if Zhao is who the US government says he is, experts such as Jeremy Douglas, the Southeast Asia representative for the UNODC, worry that any involvement by the alleged drug kingpin could result in an increase in the production and export of illicit narcotics from the Golden Triangle. That’s especially worrying considering that drug smugglers appear to be increasingly using Laos as a synthetic narcotics trafficking corridor.

“To put a piece of infrastructure like this in the hands of this gentleman and his companies is, frankly, unbelievable,” Douglas said. “We’re really concerned.”

Zhao’s alleged ties to the project

The actual company behind the new investment, according to the Vientiane Times article, is Osiano Trading Sole Co., Limited. Khonekham Inthavong, whom state media reported was Osiano Trading Sole Co.’s president, said the project was meant to boost trade in goods and services in Laos, especially in the Golden Triangle.

Inthavong said the project is a joint venture “between domestic and foreign partners highly experienced in construction across the region,” per the Vientiane Times. He added that his company was established in 2012 “under Lao regulations with a network of business interests covering tourism development and agriculture, road construction and ports, real estate, insurance and a non-deposit taking microfinance institute.”

However, Inthavong and Osiano Trading Sole Co. appear to have sprouted up out of nowhere in the past two years. Searches in Laotian media and online of both Inthavong and his company turn up news of a few investments this year, but nothing before 2019.

A search through Laos’ business registry muddies the waters even further. It shows Osiano Trading Sole Co. was registered in July 2020 by Yoma Inthavong. It’s unclear if that individual is related to Khonekham Inthavong.

But Khonekham Inthavong registered a different business with a similar name, Osiano Land and Investment Sole Co., in 2018. It’s unclear what relationship these two businesses have with each other.

CNN was unable to reach Osiano Trading Sole Co.; Osiano Land and Investment Sole Co.; or Khonekham Inthavong for comment. Neither of the companies had a phone number, email address or exact physical address listed in their Laotian enterprise registration details. They do not appear to have websites, social media accounts or any sort of web presence — which is unusual for a company apparently involved in such a large-scale project. Messages sent to a Facebook account that appeared to belong to Inthavong went unanswered.

Despite Zhao’s lack of connection to the port on paper, Douglas said that “connecting dots between Zhao Wei and Osiano is not difficult.”

“Based on the intelligence we’ve received, Zhao is using a partnership with Osiano to expand the reach of his special economic zone,” Douglas said.

When asked for comment, the Laos Ministry of Public Security referred CNN to the Laos Ministry of Foreign Affairs, which has not responded to CNN’s formal letter. Calls to Laos’ Ministry of Industry and Commerce went unanswered.

A view over the Mekong River to the Kings Romans Casino in Laos.

Who is Zhao Wei?

In media images, Zhao, 68, is frequently seen flashing a wide, confident smile.

He does not appear to have done an interview with English-language media in the past five years. He declined to speak with CNN for this story and did not answer questions via email through a GTSEZ representative.

But the GTSEZ has an active public relations arm online, especially on the Chinese social media platform WeChat, where its posts read like official dispatches from a foreign ministry. They show Zhao meeting Laotian government officials and accepting gifts at various functions. In one post, Zhao appears beside what looks like a Laotian government helicopter. But unlike a stereotypical dark-suited Chinese diplomat, Zhao is often dressed more casually in brightly colored button-down shirts.

Since taking control of the GTSEZ, Zhao has spoken with Chinese and Laotian media on multiple occasions to share his story. As he tells it, it’s a classic rags-to-riches tale.

Zhao says he was born in a rural village in northern China, the fifth of nine children. His father died of cancer when he was five. After a brief formal education, Zhao says he taught himself Traditional Chinese Medicine to support his family.

“I studied medicine hard because I wanted to help and serve others,” he said.

Zhao’s passion for entrepreneurship, he says, was sparked later in life, after a friend invited him to join a lumber business. It’s not clear how he transitioned from that enterprise into the gambling industry.

But after reportedly working in casinos in Macao and Myanmar, Zhao built his own in one of the world’s biggest illicit drug-producing regions.

The Kings Romans Casino sits along the Mekong River inside the GTSEZ and is, quite literally, its crown jewel — the massive crown that tops its roof is visible across the Mekong River in neighboring Thailand. In recent years, new buildings have sprouted up around the casino, including what appears to be a massive, gilded hotel.

This photograph from February 2018 shows a massive construction project behind the Kings Romans casino, shorty after the company was sanctioned by the US Treasury Department.
The exterior of the Kings Romans Casino and newly built structures around it are seen in early 2020.

Zhao says his company has also invested in improving the standard of living for local people by building schools, temples, roads and sports grounds in Laos, Thailand and Myanmar — claims that CNN could neither verify nor disprove.

“He’s doing all of these sorts of PR efforts back in China and in Laos to make it appear that, well, I’m actually one of the good guys,” said Jason Tower, a researcher based in Myanmar for the US Institute of Peace.

However, Zhao’s expansion in the GTSEZ has paralleled a rise in the synthetic drug trade, especially methamphetamine. In 2010, the UNODC estimated that the East Asian and Pacific meth trade was worth about $15 billion. By 2019, the next time the agency estimated the value of the trade, it had ballooned to somewhere between $30 billion and $61 billion — with most of it coming from the Golden Triangle.
The casino has been a major headache for anti-drug authorities outside of Laos. The United States accused Zhao of using it to launder dirty money, allegations he denied at a news conference in 2018 after Washington sanctioned him.

Zhao says he and his businesses “strictly” comply with the law.

The Kings Romans Casino complex stands illuminated at night in this file photograph from 2017.

Why the port matters

There’s no doubt Kings Romans is driving growth. In the past decade, $900 million has been spent on infrastructure projects in the zone, including building shopping complexes, roads, healthcare facilities and waterside landscaping. Total investment since the project began in 2007 is a staggering $2 billion, the GTSEZ says on its WeChat channel.

Zhao and his companies have, in effect, built the foundations for a tourist city that can house 50,000 people. That’s no small feat considering that the GTSEZ is built on land that was, just years ago, Laotian jungle.

A security guard stands at an entrance to a building in the Kings Romans Casino in this file photograph from 2017
Visitors have a few other options besides the casino: They can see the blooming red-flowered Kapok trees on Don Xao island or visit several quaint villages and markets, a Chinatown and some temples.

Much of that is thanks to Zhao’s vision.

He claims when he first visited the Golden Triangle, he was struck by the area’s natural beauty. It was rural and remote, like China before its economic opening in the late 1970s. Zhao said in various interviews that he saw potential for tourism and agriculture. He said he hoped to create a thriving new economy that would give locals the chance to abandon the drug trade.

“Those people are the victims of drugs because they don’t know anything else,” he said in a 2011 profile in Chinese state media.

“I think it is worthwhile to use gambling, which is small harm, to get rid of the bigger harm like drugs,” Zhao said.

So in 2007, Kings Romans signed an agreement with the Laotian government to jointly develop a tourist area in the region. Three years later, Laos’ Prime Minister signed a decree formally establishing the GTSEZ, effectively leasing the land to Zhao for 99 years.

The agreement stipulated that the GTSEZ would run its own affairs — from urban planning to municipal finances and even security in certain cases. Foreign experts who monitor the area say authorities on the ground answer to Zhao, which has effectively turned the zone into his “own personal fiefdom,” Douglas at the UNODC claims.

And the GTSEZ is only set to get bigger. Those who run the the zone want to be able to accommodate 200,000 people. They are planning to build resorts, golf courses and a museum, per the GTSEZ website. They plan to have a restaurant row along the river and a street lined with bars nearby. They want five-star hotels — the gilded building next to the casino appears to be one. And there are even plans for a plastic surgery center.

So adding a new port to supply this up-and-coming tourist destination in a remote part of the world makes business sense.

More construction projects underway in the special economic zone are seen in this photograph from November 2020.

According to the Laotian state media article announcing the Ban Mom project, the port will take three years to build, and over the next nine years other supporting facilities, such as warehouses, plant and animal quarantine centers and staff dormitories, will follow.

Experts worry that, despite the rapid development, Laos is making the same mistake at Ban Mom Port that it did with the GTSEZ: giving a man with a dubious reputation more power in an under-policed part of the world.

Brian Eyler, the Southeast Asia program director at the Stimson Center, a Washington-based think tank, said the port project seems redundant because there are already two well-established ports on the Thai side of the Mekong River that facilitate commercial trade from China to Bangkok.

“The port is mostly unnecessary for active commercial traffic,” Eyler said in an email. “The Ban Mom Port will only facilitate commerce between China and Kings Roman Casino (Golden Triangle Special Economic Zone) and most commerce that happens around the casino is illicit trade in drugs and wildlife and human trafficking.”

Douglas explained the port could end up being used to ship precursor chemicals — the ingredients to make synthetic drugs — into the Golden Triangle and export the finished product down the Mekong, one of the most important waterways in Southeast Asia.

“There’s already a lot of allegations that he’s (Zhao) an active money launderer, he’s involved in drug trafficking and various forms of transnational crime,” Douglas of said. “If he’s involved in those activities, then the port can be used for these things.”

Upriver from the Golden Triangle, the Mekong divides Laos from Myanmar’s restive Shan State. Portions of Shan are controlled by warlords and militias who allegedly provide cover to some of the world’s biggest synthetic drug traffickers. Burmese police conducted one of Asia’s biggest drug busts in decades in Shan earlier this year, seizing nearly 200 million methamphetamine tablets, more than 500 kilograms of crystal methamphetamine and 35.5 metric tons and 163,000 liters of precursor chemicals used to manufacture illicit drugs.

This industrial-level manufacturing of synthetic narcotics requires a steady flow of chemicals to make them, and until now, transporting precursors into Shan State has been a major logistical hurdle, according to Douglas.

“The fact is, there’s only a few ways you can really get high volumes of precursors into Myanmar,” he said. “Using this port, there’s an easy entry. You just simply take a boat upriver six or eight hours.”