China extends its evil tentacles to India, Nepal and Bangladesh as massive financial fraud comes 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 much like China’s vaccines that have raised questions about their effectiveness, the country’s partnership in economic recovery comes with waste, fraud and political manipulation.

Furthermore, Beijing has failed to act against the corruption and criminality that Chinese government-affiliated companies usually 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) linked to corrupt business practices, by value globally, particularly to developing countries. Chinese nationals are regularly detained in Asian countries on suspicion of involvement in various illegal activities.

How Chinese apps tricked Indian borrowers

During the pandemic-induced lockdown, dozens of Chinese properties microcredit applications started working in India under very shady conditions. Claiming to be playing fair, Chinese instant loan apps Momo, CashBus, Timely Cash, Y Cash, Kissht, Robo Cash, Fast Rupee, Cash Mama and Loan Time offered payday loans to Indians, targeting low-end borrowers revenues. ladder. Many of these apps boast over a million installs. Borrowers are charged exorbitant processing fees and interest rates.

When repayments fail, these Chinese microcredit apps adopt aggressive recovery campaigns; borrowers receive bogus official-looking documents such as FIRs (Indian Police Reports), legal notices, court summonses, credit rating services downgrade alerts and even signed and stamped warnings from the Reserve Bank of India which really scares away those economically disadvantaged borrowers who lack basic finance knowledge.

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.

The Law Enforcement Directorate of India has come across cases in which black money was transferred to Chinese nationals converting Indian rupee into cryptocurrency.

Chinese illegal activities in Bangladesh

Recently, a Chinese national was apprehended by Indian authorities as he attempted to enter the country illegally through the Bangladesh border and was found to have provided at least 1,300 Indian SIM cards to its counterparts in Chinawhich would have been used to steal data and defraud people and banks.

Chinese nationals were found to be opening fictitious companies and bank accounts, as well as fictitious mobile phone numbers using these SIM cards. Last year’s scam involving malicious Chinese investment apps like Powerbank, Sun Factory, Ezplan was staggering in its scale with over 5 lakh people across India losing over 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. As its embezzlement in megaprojects came to light, the Chinese government was forced to retire financing of three infrastructure projects in Bangladesh.

Under an approved Government-to-Government (GTG) project, China manipulated the fact that it would employ Chinese contractors with no opportunity to hire local contractors. In addition, these companies increase the amount of expenses by repeatedly extending the duration of the project under various pretexts.

In Bangladesh, coal-fired power and infrastructure projects are causing widespread displacement of densely populated rural areas and endangering their ecosystem. Residents of the affected areas protested to end the relentless land grabbing by Chinese companies and for better working conditions at power plants.

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

In a recent case, it was detected that ‘bandroll’, a thin ribbon wrapped around bidis and packets of cigarettes and supposed to be purchased exclusively from the Bangladeshi government by manufacturing companies, were illegally printed by a Chinese company, based in Shenzhen.

The Chinese company called Digit Anti Fake Company Ltd (DAFC) provided counterfeit comics resulting in fraudulent tax evasion of more than 250 crore BD Taka for Bangladesh. She was also involved in printing other fake passports, ballot papers, national identity cards, birth certificates, etc.

Nepal also at the end of the reception

As the scale of Chinese investment has increased in Nepal, so has their bad reputation for indulging in unscrupulous and harmful business practices. In December 2019, authorities arrested 122 Chinese nationals living illegally in Nepal and involved in financial fraud through electronic transactions.

As Nepalese law enforcement carried out investigations, China’s Ministry of Public Security (MPS) exerted influence and quickly flew the 122 defendants back via special plane to Beijing. Chinese nationals were found to be operating criminal networks for hacking bank ATMs and smuggling gold into Nepal.

This type of embezzlement by Chinese nationals, in which the state appears to be complicit, is not exclusive to Asia. In Africa, the extent of Chinese corruption is widespread and more and more documented. From paying bribes to win contracts to relentless delays in exploiting and hiding illegal income, 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 funding pledged by Chinese companies never arrived. In Nambia, four Chinese tycoons allegedly ran a $300 million tax evasion scheme.

Amazon permanently banned more than 600 Chinese brands on 3,000 different seller accounts. He launched an investigation after The Wall Street Journal alleged that gadget makers like RavPower, part of Chinese consumer electronics company Sunvalley Group, were offering gift cards in exchange for reviews.

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

Chinese syndicates and criminals have been extremely effective at creating loose and flexible multinational structures that are often linked to legitimate business enterprises and then exploiting weaknesses in the law enforcement systems of relatively weaker states.

The PRC is aware that under the Belt and Road Initiative (BRI), massive amounts of IFFs are occurring. Otherwise, why would Xi Jingping’s government commit to a new “Clean BRI” in 2019, promising to promote transparency and integrity, and fight corruption?

However, there seems to be little change towards more transparent transactions. In a post-pandemic situation where developing countries are also eyeing a rapid economic recovery, there is a risk of falling prey to illicit financial flows from China.

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