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Suspected drug syndicate kingpin Tse Chi Lop. (File photo)
One of world’s most wanted alleged drug barons – a billionaire dubbed Asia’s El Chapo – is set to finally face justice in Australia after federal police carried out a covert plot to arrest him after he was deported from Taiwan.
Tse Chi Lop, 56, was arrested after departing on a flight to Canada on Friday in a stunning coup for the Australian Federal Police, which has tracked his suspected involvement in multiple billion-dollar drug importations into Australia since at least 2008. They will push for him to be extradited to Australia to face trial. He was arrested during a stop over in the Netherlands in response to a request from the AFP.
Tse is the most important alleged drug importer to be nabbed by the Australian police in two decades, with police intelligence sources estimating his syndicate is allegedly responsible for up to 70 per cent of all narcotics entering Australia.
The organisation at the centre of the case, known variously as The Company or the Grandfather Syndicate, exploited Crown casino’s weak corporate controls to launder funds, according to police intelligence sources, court files and gaming data leaked from Crown Resorts.
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Suspected members of the organisation also have high level links to governments across the region, having invested in large infrastructure ventures under the Chinese Communist Party’s Belt and Road Scheme, a massive economic project that aims to build trade and transport links from East Asia to Europe.
Tse’s close associate, Triad boss “Broken Tooth” Wan Kuok Koi, was blacklisted by the US government in December, which alleged Wan had attached his extensive criminal operations to Beijing’s Belt and Road initiative.
A 2012 briefing from the Australian Criminal Intelligence Commission described The Company’s members’ “well-established network of contacts across many governments as well as legitimate business and company structures, that enables them to mask and support their criminal activities”.
Last year, AFP deputy commissioner Karl Kent described the organisation as “being a huge threat to Australia … not only in terms of illicit drugs but in terms of people smuggling, in terms of firearms.” In a 60 Minutes interview, he estimated The Company’s revenue to “exceed the gross domestic product of some of the states in which they operate.”
The Australian Criminal Intelligence Commission lists Tse as a Priority Organisation Target, a designation the criminal intelligence commission chief Mick Phelan has previously said is reserved for those entities suspected of causing significant harm to the nation.
Tse’s arrest will be heralded not just in Australia but by the US government and authorities in New Zealand, Canada, Japan, Myanmar, Laos, Thailand and across Europe, places which have all served as markets or supply hubs for Tse’s organisation.
Sydney Morning Herald/Supplied
Last year, AFP deputy commissioner Karl Kent described the organisation as “being a huge threat to Australia … not only in terms of illicit drugs but in terms of people smuggling, in terms of firearms.”
Policing authorities say that, more than any other alleged Asia Pacific drug trafficker, Tse represents the modernisation and corporatisation of organised crime. The syndicate he allegedly helps control is an amalgam of once competing Chinese Triad groups that have variously worked with Australian bikies, South American cartels and European crime bosses.
The Company mostly avoided generating media headlines and viewed violence as bad for business as it industrialised drug production via super laboratories in Myanmar’s lawless Shan State and accessed massive stockpiles of precursor chemicals in southern China.
The syndicate is alleged to have dispatched expendable “shore parties” to its most profitable market in Australia to handle wholesale distribution to local drug bosses. When these shore party drug runners or domestic distributors were occasionally busted by the AFP or state agencies, Tse allegedly shrugged it off as a business expense. He also had inside help.
A police intelligence report circulated among overseas agencies warned The Company had corrupted policing and security agencies across Asia. A former investigator told The Age and The Sydney Morning Herald that Tse had boasted “Macau in my pocket.”
In 2019, Tse even obtained the contents of a highly confidential Australian Federal Police document circulated among partner forces which alerted him to the fact that he was a high value police target.
That fact makes the story of his investigation and planned extradition– pieced together by The Age and Herald over two years and conversations with more than a dozen Australian and Hong Kong serving and former investigators – even more remarkable.
Tracking a drug boss
In 2011, the Australian Federal Police began monitoring a millionaire Melbourne greengrocer with an unusual profile. Vietnamese born Australian national Suky Lieu was under surveillance as he met well established Italian mafia clan bosses in Melbourne. He also dined with Asian organised crime figures and he knew bikies.
Intelligence suggested he was a man in demand because of his access to a seemingly endless supply of imported narcotics being distributed in Sydney and Melbourne. A quietly spoken and determined federal police drugs investigator, Roland Singor, along with a small team of AFP investigators and analysts began closely tracking Lieu as part of probe codenamed Volante.
Media and press releases surrounding Lieu’s eventual arrest in 2013 depicted him as a Mr Big on par with Tony Mokbel. But phone taps later aired in Lieu’s court case revealed he was more akin to a logistics manager who was following orders from afar.
“We were seeing a lot of offshore conversations where they were talking about supply and demand price, concealments, projects that they were undertaking,” recalled Singor when he was interviewed last year by 60 Minutes and The Age and Herald.
Singor was guarded about the precise content of the phone interceptions and classified intelligence captured in 2012. But Victorian court records reveal Lieu appeared most deferential when dealing with a man in Hong Kong with the Cantonese nickname Sam Gor or Brother Three.
“He was based offshore, a very, very cautious individual. He didn’t directly deal with people here in the nuts and bolts,” Singor said. “If something went wrong for example, or a seizure occurred, or money was intercepted here, his broker and his managers would interact and then refer to the fact that the big boss wasn’t happy, that they had to answer for these seizures.”
Following offshore leads can take years and cost millions and infuriate budget-conscious senior police in Canberra. Even so, Singor’s federal police crew in Melbourne pushed for more time and money. Their lobbying paid off.
“We started to hear about a reference to a very high-ranking member of this organisation who had global reach, had global control, and had a serious ranking globally as an international trafficker,” says Singor. “He was referred to as Sam Gor, the Brother Three in Cantonese.”
Adding to Singor’s intelligence picture was a classified and highly controversial probe codenamed Dayu and run between 2008 and 2012 by the Australian Crime Commission (later renamed the Australian Criminal Intelligence Commission).
In an operation still mostly hidden behind court suppression orders and secrecy classifications, the ACC had allowed and even facilitated the movement of drug money from Australian to Asia in the hope it would help identify offshore crime bosses who had taken over the drug trade from traditional domestic crime groups.
Letting dirty money cross international borders rather than seizing it pushed the risk appetite of Australian law enforcement chiefs to breaking point and despite impressive results, Dayu would ultimately fizzle out amid bitter inter-agency turf wars and allegations of rogue conduct.
But before it did, investigators believed they had identified a Chinese triad-led international organisation whose members whispered about a boss they called “Grandfather”. The ACC named it The Grandfather Syndicate but as investigators eavesdropped on more conversations involving the group’s members, they chose the name used by the group itself: The Company.
SCOTT MCNAUGHTON/Sydney Morning Herald
Millions laundered through Crown’s casinos in Melbourne and Perth.
A 2012 ACC intelligence briefing claimed the multinational organisation was made up of about two dozen “seats” or executive management positions held by formerly warring triad bosses across Asia, who shifted in seniority and location according to demand and supply. It claimed money from drug ventures was laundered in Australia and poured into a range of ventures including “high-profile internet gambling facilities across south-east Asia, Asian hotel chains and resorts, commercial construction companies, property companies in Hong Kong and Vietnam”, as well as casinos.
Among The Company ‘s most valuable assets was its “infiltration” of governments and police and security agencies across Asia. According to the ACC briefing, “the pooling of resources of the main triad groups has allowed them to merge their contacts, assets and holdings”.
These contacts, intelligence briefings warned, included high-ranking Asian government officials and their relatives, including figures with close ties to Hun Sen regime in Cambodia, a top politician in Vietnam and a Chinese government official who had worked with Interpol.
Singor and the AFP’s Operation Volante picked up where the crime commission’s Operation Dayu left off, filling in a still-emerging intelligence picture about the operations of The Company.
Court records reveal Singor and his fellow AFP detectives tracked millions in cash back to Crown Casino in Melbourne. The cash, generated by Suky Lieu’s drug sales, was given to a high-roller tour business known as a junket operator. Crown licensed and paid that business to attract wealthy gamblers to come to its Southbank casino.
The court records detail how this junket in turn wired millions of drug dollars to Hong Kong. Some of the alleged orders to do so were issued by Brother Three and were recorded on phone taps aired during the prosecutions of Suky Lieu’s associates.
At Crown’s Perth casino, another high-roller tour junket closely linked to Brother Three was turning over even more money – hundreds of millions of dollars in cash via gamblers who arrived on private jets from Macau in 2015.
The still-ongoing Bergin inquiry in NSW into Crown’s organised crime dealings recently heard how this Perth junket was owned by a business also running a chain of Hot Pot restaurants in Macau.
The Bergin inquiry heard how a Crown manager had warned back in 2015 that this junket was linked to Macau’s “underground network”.
The Macau police provided Australian authorities a further sliver of intelligence about the Hot Pot junket. A suspected silent partner in the Hot Pot business was an extremely discrete but obscenely wealthy businessman. His name was Tse Chi Lop but some of his associates referred to him in Cantonese as Sam Gor.
Tse Chi Lop was Brother Three.
Sydney Morning Herald/Supplied
Alleged drug kingpin Tse Chi Lop.
Closing in on Tse
By 2015, Tse, a short, middle-aged and pudgy faced man who looked more accountant than crime boss, was firmly on the radar of drug enforcement agencies across the globe.
Police believe Tse, a Canadian national born in Guangdong Province in Southern China in 1964, became a low ranking member of a Triad crime syndicate known as the Big Circle Gang before migrating to Canada in the 1980s. In 1996, the FBI arrested him in connection to a drug importation ring in the US that was sourcing heroin from the Golden Triangle in Asia.
Police intelligence suggests that, after serving nine years in jail, Tse re-established his Triad connections, including to the notorious head of the 14K triad organisation, Wan Kuok Koi, a gangster more commonly known as Broken Tooth.
While the ostentatious Broken Tooth was busy generating news headlines, including by launching a crypto-currency, investing in Myanmar’s casino industry and promoting the Chinese Communist Party’s enormous Belt and Road global infrastructure agenda, Tse was suspected by police to be easing quietly into one of The Company’s top “seats” or executive positions.
Critical to The Company’s success was its supply hubs in corruption-prone Asian countries and regions like Shan State in Myanmar, which is governed by ethnic warlords.
An International Crisis Group report last year noted that “the drugs trade would not be possible without high-level corruption in those countries – including China, Laos and Thailand – through which large consignments of drugs or their precursors are smuggled”.
The other key to The Company’s success was corrupting logistics and shipping companies in drug-hungry markets like Australia, where voracious consumers are prepared to pay a premium for ice, cocaine and other drugs.
The AFP’s Operation Volante had shut down Lieu and 35 others, the key alleged Australian distribution hub for Tse, but it was quickly replaced.
In April 2017, the AFP’s Operation Jackaranda seized a record 903 kilograms of methamphetamine also linked to Tse. At the time, it was Australia’s largest ice bust. Six months later, the federal police and Taiwanese authorities intercepted another huge drug shipment that had arrived in Western Australia. The syndicate was also implicated in the seizure of 600kg of methamphetamine from a yacht moored at Naha port in Okinawa. It was billed in the media as Japan’s largest drug bust.
As months of investigations turned into years, the federal police patiently tracked Tse and his associates via a newly badged operation codenamed Kungar.
Federal police liaison officers in Myanmar, Washington, Thailand, China and Hong Kong worked with trusted counterparts in local agencies to gather fresh intelligence on The Company’s operations.
Last year, Reuters reported that the United Nations Office on Drugs and Crime had estimated The Company’s meth revenue in 2018 at NZ$8.5 billion a year, but said it could be as high as $18.9b.
In December 2019, the AFP intercepted yet another drug shipment from Bangkok: 1.6 tonnes of methamphetamine and 37kg of heroin worth an estimated $1.2b. Police also arrested a couple running a shipping and freight logistics business, who are accused of helping smuggle the contraband past authorities.
Federal Police Deputy Commissioner Karl Kent described the seizure last year in an interview with 60 Minutes as another record bust, bigger than any before it. But his comments also marked a decided shift in the AFP’s rhetoric. Bigger busts were not indicative of success but the endless war of “attrition” against powerful and shadowy crime conglomerates.
“This has raised deep concerns in every jurisdiction in this country about the volume that we’re seizing because it tells us that there is a significant volume, probably about the same, that we’re missing,” Kent said.
Tse’s arrest in the Netherlands and plans to extradite him, while undoubtedly a significant law enforcement success, leaves many questions. (File photo)
Kent hinted in his interview that Tse was still being hunted, but that police were also focussing on new strategies to disrupt and deter powerful international syndicates who could replace bosses almost as quickly as they could find fresh drug mules.
The American government would move first.
On December 9, the US Treasury Department blacklisted Tse’s close associate Wan Kuok Koi, aka Broken Tooth, using “Magnitsky Act” financial sanctions that were originally designed to crush corrupt Russian oligarchs. The listing of Broken Tooth was aimed at the Chinese Communist Party (CCP) and more politically symbolic than practical. But it also prevented the triad boss from dealing with any US financial outlet or business.
In its formal statement, the Treasury Department said Broken Tooth was a member of the CCP’s Chinese People’s Political Consultative Conference, a Beijing advisory body. It also accused him of using the CCP’s Belt and Road project to legitimise his criminal activities.
“This continues a pattern of overseas Chinese actors trying to paper over illegal criminal activities by framing their actions in terms of … major initiatives of the CCP,” the Treasury statement said.
Australia has no equivalent financial sanctions regime.
To catch Tse, the AFP would have to rely on an old and time consuming tool: a Mutual Assistance Request from Attorney-General Christian Porter to the Taiwanese government, where Tse was suspected to be hiding, or to any of the other countries where he travelled.
Throughout 2019, lawyers from the Commonwealth Director of Public Prosecutions extracted evidence about Tse from the case against Suky Lieu as it finalised a brief of prosecution.
Brother Three was finally to face justice in Australia.
Who are the other Brothers?
His arrest in the Netherlands and plans to extradite him, while undoubtedly a significant law enforcement success, leaves many questions.
In his interview last year, Deputy Commissioner Karl Kent cautioned that locking up the next El Chapo or Brother Three was less a priority than finding ways to attack the infrastructure that organised crime groups need to prosper.
“It’s not just about that individual. It’s the whole network and how can we have an effect on their business mode,” he said.
There is evidence these strategies are already working. The Australian Criminal Intelligence Commission is dedicating resources to expelling from Australia all the casino junket operators linked to The Company. By the end of 2020 it had crippled the operations of the world’s biggest junket company. Policing agencies are lobbying the federal government to introduce an Australian version of the Magnitsky Act, allowing authorities to financially blacklist suspected crime bosses and corrupt officials.
The greatest legacy of Brother Three may be to force policing agencies to rethink how they operate and measure success.
“Make no mistake, someone will take their place and they’ll take their place very, very quickly,” Kent said last year.
International police and security agencies are already examining who may have filled Tse’s shoes as well as the most obvious question posed by Tse’s story. Who is Brother One and Brother Two?
Sydney Morning Herald