A pair of Chinese scam artists wanted to turn a radiation-soaked Pacific atoll into a future metropolis. They ended up in an American jail instead.

How they got there is an untold tale of international bribery and grifting that stretched to the very heart of the United Nations.

The stakes could scarcely have been higher for Hilda Heine, the former president of the Marshall Islands.

A new OCCRP investigation reveals details of how Chinese-born fraudsters Cary Yan and Gina Zhou paid more than US$1 million to UN diplomats to gain access to its headquarters in New York, before embarking on a controversial plan to set up an autonomous zone near an important US military facility in the Pacific Ocean.

For years, Hilda Heine’s remote archipelago nation of just 40,000 people was best known to the world for Cold War nuclear testing that left scores of its islands poisoned.

Sitting in the centre of the Pacific Ocean, the country was a strategic but forgotten US ally.

But the arrival of a couple of mysterious strangers threatened to change all that. With buckets of cash at their disposal, the Chinese pair, Cary Yan and Gina Zhou, had grand plans that could have thrust the Marshall Islands into the growing rivalry between China and the West, and perhaps fracture the country itself.

Public controversy
First proposed in 2017, while Heine was still president, Yan and Zhou’s idea raised public controversy.

With backing from foreign investors, the couple planned to rehabilitate one irradiated atoll, Rongelap, and turn it into a futuristic “digital special administrative region.”

The new city of artificial islands would include an aviation logistics center, wellness resorts, a gaming and entertainment zone, and foreign embassies.

Thanks in part to the liberal payment of bribes, Yan and Zhou had managed to gain the support of some of the Marshall Islands’ most powerful politicians. They then lobbied for a draft bill that would have given the proposed zone, known as the Rongelap Atoll Special Administrative Region (RASAR), its own separate courts and immigration laws.

Heine was opposed. The whole thing reeked of a Chinese effort to gain influence over the strategically located Marshall Islands, she told OCCRP.

The plan was unconstitutional and would have created a virtually “independent country” within the Marshall Islands’ borders, she said.

The new Chinese investor-backed zone would also have occupied a geographically sensitive spot just 200 km of open water away from Kwajalein Atoll, where the US Army runs facilities that test intercontinental ballistic missiles and track foreign rocket launches.

Became a target
But when President Heine argued against the draft law, she became a target herself. In November 2018, pro-RASAR politicians backed by Yan and Zhou pushed a no-confidence motion to remove her from power.

She survived by one vote.

Even then, the president said she had no idea who this influential duo really were. Although they seemed to be Chinese, they carried Marshall Islands passports, which  gave them visa free access to the United States. Nobody seemed to know how they had obtained them.

“We looked and looked and we couldn’t find when and how they got [the passports],” Heine said. “We didn’t know what their connections were or if they had any connections with the Chinese government.

“But of course we were suspicious.”

The plan came to an abrupt end in November 2020, when Yan and Zhou were arrested in Thailand on a US warrant. After being extradited to face trial in New York, they pleaded guilty to a single count of conspiracy to bribe Marshallese officials.

Both were sentenced earlier this year. Zhou was deported to the Marshall Islands shortly after her sentencing, while Yan is due for release this November.

But although the federal case led to a brief burst of media attention, it left key questions unanswered.

Who really were Yan and Zhou? Who helped them in their audacious scheme? Were they simply crooks? Or were they also working to advance the interests of the Chinese government?

OCCRP spent nearly a year trying to find answers, conducting interviews around the world and poring through thousands of pages of documents.

What reporters uncovered was a story more bizarre — and with far broader implications — than first expected.

Aubrey Belford, Kevin G. Hall and Martin Young are investigative writers for the Organised Crime and Corruption Reporting Project (OCCRP). Republished with permission.

Article by AsiaPacificReport.nz

Three months after their extradition from Thailand to face bribery and money laundering charges in the United States, two naturalised Marshallese citizens pleaded guilty on Friday in a New York court to conspiring to violate the US Foreign Corrupt Practices Act (FCPA) in connection with a multi-year scheme to bribe government officials in the Marshall Islands to pass legislation to establish a special investment zone in this western Pacific nation.

Cary Yan and Gina Zhou had been charged with three counts each of violating the FCPA and two counts of money laundering.

They pleaded guilty to one count of conspiring to violate the FCPA and the US Attorney’s Office for the Southern District of New York dismissed the other four charges. They are naturalised Marshall Islands citizens originally from the People’s Republic of China.

“As they have now admitted, the defendants sought to undermine the democratic processes of the Republic of the Marshall Islands through bribery in order to advance their own financial interests,” US Attorney Damian Williams said in a statement.

“I commend the career prosecutors of this Office and our law enforcement partners for bringing this corruption to light and ensuring that justice is done.”

Yan, 51, and Zhou, 35, are awaiting sentencing. They have been held without bail pending final disposition of the case.

Yan faces a maximum five-year term in prison and a fine of up to US$200,000, while Zhou faces a maximum prison term of three years and 10 months and a fine of up to US$150,000, according to the plea agreement between their defence attorneys and the SDNY prosecutors.

“Beginning at least in 2016, Yan and Zhou began communicating and meeting with Marshall Islands officials in both New York City and the Marshall Islands concerning the development of a semi-autonomous region within a part of the Marshall Islands known as the Rongelap Atoll,” said the US indictment that was unsealed on September 2 on Yan and Zhou’s arrival in New York following extradition from Thailand.

‘Attracting investors’
“The creation of the proposed semi-autonomous region was intended by Yan, Zhou, and those associated with them to obtain business by, among other things, allowing Yan and Zhou to attract investors to participate in economic and social development projects that Yan, Zhou, and others promised would occur in the semi-autonomous region.”

Their aim was to establish the Rongelap Atoll Special Administrative Region (RASAR). But because it ran afoul of the Marshall Islands constitution and required exemption from multiple Marshall Islands legal oversight and enforcement provisions, President Hilda Heine’s administration refused to introduce the proposed RASAR legislation to Nitijela (parliament) for consideration in 2018.

Yan and leading Marshall Islands officials had officially launched the RASAR plan in Hong Kong in April 2018, but never met legal requirements to move the plan forward in the Marshall Islands.

Starting in early 2018 and “continuing until at least on or about November 1, 2018, Yan and Zhou offered and provided a series of cash bribes and other incentives to obtain the support of Marshall Islands legislators for the RASAR bill,” said the US indictment.

Heine’s administration held off the attempt to push RASAR legislation into parliament in late 2018 and survived an attempt to unseat Heine through a vote of no confidence in November.

After the national election a year later, when Nitijela reconvened in January 2020, Heine lost the presidency to David Kabua.

Shortly after the new government took office in 2020, “Yan and Zhou began emailing and meeting with certain Marshall Islands officials to continue their plan to create the RASAR,” said US prosecutors.

Law consideration
“In or about late February 2020, the Marshall Islands legislature began considering a resolution that would endorse the concept of the RASAR, a preliminary step that would allow the legislature to enact the more detailed RASAR Bill at a later date.”

US prosecutors said that in early March, “Yan and Zhou met with a close relative of a member of the Marshall Islands legislature in the Marshall Islands.

During the meeting, Yan and Zhou gave the relative $7000 in cash to pass on to the official, specifying that this money would be used to induce and influence other Marshall Islands legislators to support the RASAR Resolution.

“Yan and Zhou further stated, in sum, that they knew that the official needed more than $7000 for this purpose and that (they) would soon obtain additional cash for the official.”

US prosecutors said that at this meeting in early March 2020, Yan and Zhou “also discussed having previously brought larger sums of cash into the Marshall Islands through the United States and that they planned to do so again in the future”.

By the third week of March 2020, the Nitijela passed the RASAR Resolution “with the support of legislators to whom Zhou and Yan had provided bribes and other incentives,” said the prosecutors.

This article is republished under a community partnership agreement with RNZ. 

Article by AsiaPacificReport.nz