China extends its evil tentacles to India, Nepal and Bangladesh as massive financial frauds come to light

OPED by Vaishali Basu Sharma

Since the Covid-19 pandemic, China has been trying to present itself as a reliable partner for economic recovery. But like Chinese vaccines that have raised questions about their effectiveness, the country’s partnership in economic recovery involves waste, fraud and political manipulation.

In addition, Beijing has failed to crack down on the corruption and criminality that Chinese government-affiliated companies routinely use in South Asia to gain an unfair advantage.

Corruption is often a key element of Chinese economic engagement in the region. Estimates suggest that China is responsible for the largest illicit financial flows (IFFs) related to corrupt business practices, by value globally, particularly to developing countries. Chinese citizens are regularly detained in Asian countries on suspicion of involvement in various illegal activities.

How Chinese Apps Fooled Indian Borrowers

During the pandemic-induced lockdown, dozens of Chinese-owned companies Microcredit applications began to operate in India under very murky terms. Claiming to play fair, Chinese instant loan apps Momo, CashBus, Timely Cash, Y Cash, Kissht, Robo Cash, Fast Rupee, Cash Mama and Loan Time were offering payday loans to Indians, targeting borrowers in the bottom end of earnings. scale. Many of these apps show over a million installs. Borrowers are charged exorbitant interest rates and processing fees.

In case of non-payment, these Chinese micro-loan applications adopt aggressive recovery campaigns; Borrowers are sent bogus official-looking documents such as FIRs (Indian Police Reports), legal notices, court summonses, credit rating service downgrade alerts, and even signed and stamped warnings from the Indian Reserve Bank. India that really scare these financially disadvantaged borrowers who lack basic knowledge about finance.

According to blockchain data platform Chainalysis, CChinese Cryptocurrency Addresses Sent Over $2.2 Billion value of digital tokens to addresses linked to illegal activities such as scams and darknet operations between April 2019 and June 2021.

India’s Enforcement Directorate has come across cases where black money was transferred to Chinese citizens by converting the Indian rupee into cryptocurrency.

Chinese illegal activities in Bangladesh

Recently, a Chinese national was arrested by Indian authorities as he tried to enter the country illegally across the border with Bangladesh and was found to have supplied at least 1,300 Indian SIM cards to their counterparts in Chinathat were supposedly used to steal data and defraud individuals and banks.

It has emerged that Chinese citizens opened fictitious companies and bank accounts, as well as operated fictitious mobile phone numbers using these SIM cards. Last year’s scam involving rogue Chinese investment apps like Powerbank, Sun Factory, Ezplan was staggering in its scale with over 5 lakh people in India losing more than Rs 150 crore.

China proactively seeks engagements in developing countries, approaching public or private stakeholders, timing project completion to coincide with elections in the partner country. When his embezzlement of megaproject funds came to light, the Chinese government was forced to retire of financing three infrastructure projects in Bangladesh.

Under an approved government-to-government (GTG) project, China manipulated that it would employ Chinese contractors without any possibility of hiring local contractors. Furthermore, these companies increase the amount of expenses by repeatedly extending the duration of the project under various pretexts.

The bridge over the Padma River in Bangladesh, which is being built by a Chinese company. (via Twitter)

The project involving the construction of rail lines at both ends of the Padma Bridge and tanks at the bottom of the Karnafuli River in Chittagong is experiencing long delays and huge cost overruns, with spending more than double the original budget due to repeated extensions. .

Chinese companies and workers are known for frequently violating the environmental and labor regulations of the countries in which they operate.

In Bangladesh, infrastructure projects and coal plants are causing widespread displacement of densely populated rural areas and endangering their ecosystem. Residents of the affected areas have been protesting to stop the relentless land grab by Chinese companies and for better working conditions at power plants.

Bad payments, poor labor facilities, impracticality, and corruption are hallmarks of Chinese projects not only in Bangladesh, but almost anywhere they have entered infrastructure development.

In a recent case, it was found that ‘bandroll’, a thin ribbon wrapped in bye and cigarette packs, allegedly obtained exclusively from the Bangladeshi government by manufacturing companies, were being illegally printed by a Chinese company, based in Shenzhen.

The Chinese company called ‘Digit Anti Fake Company Ltd’ (DAFC) supplied counterfeit shoulder bags resulting in fraudulent tax evasion of over BD Taka Rs 250 crore to Bangladesh. He also participated in the printing of other forged passports, electoral ballots, national identity documents, birth registration certificates, etc.

Nepal also on the receiving end

As the scale of Chinese investment in Nepal has increased, so has its reputation for engaging in nefarious and unscrupulous business practices. In December 2019, authorities arrested 122 Chinese citizens living illegally in Nepal and involved in financial fraud through electronic transactions.

Anti-China protests in Vietnam in 2014 - Wikipedia
Archive image: 2014 Vietnam anti-China protests – Wikipedia

As Nepal’s law enforcement agencies conducted investigations, China’s Ministry of Public Security (MPS) exerted influence and quickly brought the 122 defendants back via special plane to Beijing. Chinese citizens have been found to operate criminal networks to hack bank ATMs and smuggle gold into Nepal.

This kind of embezzlement by Chinese citizens, in which the state seems complicit, is not unique to Asia. In Africa, the scale of Chinese corruption is widespread and increasingly well documented. From paying bribes to win contracts to incessant delays in dealing and concealment of illegal profits, Chinese corruption takes many forms.

Bloomberg reported on the extent of control exercised over Congo’s mines by Chinese companies, and how $3 billion in infrastructure financing promised by Chinese companies never came. In Nambia, four Chinese tycoons allegedly ran a $300 million tax fraud scheme.

Amazon has permanently banned More than 600 Chinese brands in 3,000 different seller accounts. He launched an investigation after the Wall Street Journal alleged that device makers like RavPower, part of Chinese consumer electronics company Sunvalley Group, offered gift cards in exchange for reviews.

Within China, too, the government’s plan to boost the semiconductor industry has actually led to a series of reckless investments in ill-planned projects, in which companies “with insufficient knowledge of integrated circuit development have he blindly went into the projects.” These went bankrupt within a couple of years after stealing multi-million dollar investments from government bodies.

Chinese syndicates and criminals have been extremely efficient at creating flexible and loose multinational structures that are often linked with legitimate business enterprises and thereafter exploiting weaknesses in the law enforcement systems of relatively more powerful states. weak.

The People’s Republic of China is aware that massive amounts of IFF are being produced under the Belt and Road Initiative (BRI). Why else would the Xi Jingping government commit to a new “Clean BRI” in 2019, promising to promote transparency and integrity and fight corruption?

However, there hardly seems to be any shift towards more transparent deals. In a post-pandemic situation where developing countries are also seeking a quick economic recovery, there is a risk of falling prey to illicit financial flows from China.

  • (The author is an analyst of strategic and economic affairs. She has worked as a consultant in the Secretariat of the National Security Council for almost a decade. She tweets at @basu_vaishali). PERSONAL VIEWS
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