Seafood, smuggling, and money laundering are interrelated offshoots of China’s growing seafood demand increasingly being investigated by foreign authorities.
This was illustrated by the buckets of euro bank notes put on display last year by Spanish police, who busted a smuggling rings illicitly bringing eels from Spain to China and Hong Kong. The Guardia Civil (Spanish federal police) and Europol arrested seven smugglers, two of them Chinese citizens, who smuggled European eels – a protected species in Spain – to Hong Kong, where they were fetching EUR 7,000 (USD 8,600) per kilogram.
Spanish police’s “Operation Abia,” which targeted the eel smugglers, shows the increasing association of criminality and seafood. Spanish fishermen got EUR 180 to 350 (USD 221 to 430) per kilo for catching the eels. Another EUR 300 (USD 368) per kilogram went to the smugglers who got them from Spain to Athens, Greece, according to Spanish investigators who track the smuggling of a protected species as well as the money laundering involved.
Chinese demand for rare species has spawned a huge smuggling industry. Chinese authorities have apparently been investigating Chinese criminal networks smuggling abalone from South Africa, apparently in exchange for opiate drugs trafficked to Africa. Similar stories have emerged from Mexico and the Philippines, where smugglers trawl for wild cucumbers prized in Chinese markets. Not to mention the huge grey trade in coral fish illegally caught in Southeast Asian waters and destined for Chinese dining tables.
By its nature, smuggling results in illegal laundering of money. The Spanish government is separately in a long-running prosecution of the Industrial and Commercial Bank of China – the world’s largest bank by assets – for laundering EUR 200 million (USD 246 million) out of Spain back to China. Much of the money was from Chinese smugglers and criminal networks, according to the Spanish judicial papers. The documents include transcripts of wire-taps recorded at the bank that feature conversations between bankers and money launderers.
Money laundering (and the lost taxes and criminality involved) has increasingly come onto the radar of cash-starved authorities in Europe – and in China, where collecting taxes from conspicuous consumption goes hand-in-hand with the authorities’ pursuit of official corruption. But this has bumped up with another priority in China – protecting the value of the yuan. China has proven adept at restricting the international outflow of funds in the past year in order to protect the value of its currency.
Some of the fishing firms named in NGO and newspaper reports are major state-owned entities banking with state-owned banks. Publicly China denies ad nauseum that its firms are illegally fishing – and ignores most of the cases involving Chinese vessels reported in foreign press. But such cases embarrass Chinese authorities. Firms licensed by China to fish in Africa include major names like CNFC, Boyuan, and Lian Run. These are known entities, trading with huge government fuel subsidies. Tracking their financial flows should be easy for authorities in Beijing given these firms use Chinese banks to store funds from their activities.
Where a fishing firm is found to have engaged in illegality, then the funds from that illegal activity can be seized under Chinese money laundering laws. Taking their funds at source would be an effective way of limiting some of the damaging practices of Chinese fishing firms overseas. Consider some of the incidents from the past 12 months: Senegal caught seven Chinese vessels in its waters – thanks in part to faster patrol vessels. In Djibouti in May 2017, the Fuzhou-based Fu Yuan Yu 9886 was tracked (by the Observateurs environmental group) fishing in a marine protected area known for its rare corals. Fishing for mackerel and barracudas, the Fu Yuan Yu uses drag nets (with metal weights) which have caused massive damage to rare corals. The Chinese authorities have been made aware of these incidents. But they don’t seem to have taken any action yet.
Failure to act will have consequences. In Djibouti, the fishery co-operatives have protested due to the damage to their livelihoods by larger illegal Chinese vessels. Two dozen African governments together called on China to stop – that was in December 2015. Bordering Djibouti, the much-vilified Somali pirates, who caused havoc in recent years in the Arabian Sea and Indian Ocean shipping routes, were in many cases fishermen whose waters were fished-out by vessels from Europe, Russia, and China.
More recently, anger in South Korea at Chinese fishermen essentially exporting illegally-caught Korean catch back to Korea led to several incidents recently of the Korean Coast Guard firing on Chinese boats. Two Chinese fishermen died in one such incident in early January.
To stamp out mass illegality in the huge Chinese seafood industry, the Chinese government must take action where it hurts the fishing companies the most – in the pocketbooks. Seizing earnings from the trade of illegally caught fish would be the quickest and most effective way to fight both illegal fishing and international money laundering.
