Chinese gamble with their lives in the Philippines amid waves of kidnappings

(By Caixin journalists Tang Ailin and Han Wei)

It was in the 1990s when Manila was labelled by international media as the “kidnapping capital of the world”, where violent organised crime gangs and guerilla groups seeking an easy payday or political goals would snatch people off the streets and hold them for ransom.

In the intervening years, this underworld industry has only grown more expansive and sophisticated in the Philippines capital and across the country, aided by nebulous cross-border networks of accomplices and the latest technology. In previous years, local Chinese Filipinos were the prime targets. Today, it’s nationals from the People’s Republic of China that are increasingly becoming the preferred victims.

While it is difficult to compile cross-national statistics on kidnapping, most analyses put the Philippines in the top 10% of the worst countries, according to a 2021 annual report by the Philippine Strategic Associates. In keeping with previously established trends, foreign victims were mostly of Chinese ethnicity or ancestry, with 44 Chinese nationals and one Malaysian, representing 38% of the total of foreign victims, said the report.

The Philippines’ vast gambling industry, with revenues worth US$5 billion last year making it the biggest in Asia, coupled with its sparsely populated islands, remote villages and a lengthy judicial process, creates an environment conducive to criminal activity. A propensity for victims to stay silent make Chinese individuals particularly vulnerable targets.

“[Chinese] victims often pay large ransoms quickly and are reluctant to provide clues to the police, which allows the kidnappings to continue” said Teresita Ang See, a Chinese-Filipino civic leader who founded the Movement for Restoration of Peace and Order.

The country’s police in the first ten months of 2023 reported 20 kidnappings, with most victims being Chinese, according to a report in The Philippine Star.

In June, the deadly kidnapping of two ethnic Chinese medical executives made headlines, capturing the public’s attention in China and exposing just how meticulously the criminals plan their traps that increasingly use the lure of business opportunities to bring their victims to the Southeast Asian country.

The victims — Xia Keifu, a Chinese national and marketing executive at Suzhou RainMed Medical Technology Co. Ltd., and Sun Jing, a Chinese American sales agent for the company — were abducted after being invited to Manila to explore supposed opportunities. Despite their relatives paying the ransom, the two were ultimately killed, with the kidnappers still at large.

This alarmingly well-orchestrated case was not an isolated incident. Similar tactics have emerged in several kidnapping cases in recent years, with Chinese businessmen becoming the primary targets.

“In most cases, it’s Chinese people kidnapping other Chinese,” said Cai Zhiqun, vice-director of the Manila Chinese Community Service Center under the Federation of Filipino-Chinese Chambers of Commerce and Industry.

Caixin has previously reported that in January a Chinese executive from a company based in Germany and his Austrian-Chinese friend were kidnapped upon arriving in the Philippines. They had been invited by a Chinese man, who claimed to be a businessman from Cyprus, to explore potential commercial ventures. Despite their families paying part of the ransom, the two remain missing. In both cases, the kidnappers demanded the ransom be paid in Tether or USDT, a “stablecoin” cryptocurrency pegged to the US dollar.

“These cases may have been carried out by transnational criminal organisations that operate in both Europe and Southeast Asia,” said Ang See, who has been involved in efforts to combat the kidnapping of Chinese nationals for over 30 years.

The tactics employed by kidnappers in the Philippines have evolved in recent years, shifting their focus from individuals linked to gambling to businessmen seeking commercial opportunities, said Ang See.

Kidnapping first thrived in the Philippines during the 1990s, primarily targeting local ethnic Chinese businesspeople and carried out by criminal gangs as well as by separatist guerilla groups, such as Abu Sayyaf. From 2010, it surged again with the boom of the gambling industry, leading to the development of a sprawling criminal network that encompasses gaming, telecom scams, human trafficking, kidnapping and money laundering. Mainland Chinese and Taiwanese gangs have become deeply involved in these activities, often targeting ethnically Chinese victims.

The expansive criminal networks, lax immigration controls, diverse geographic conditions — with an archipelago of over 7,100 jungle-clad mountainous islands — and a corrupt police force and legal systems have made the Philippines a safe haven for criminal gangs, said experts interviewed by Caixin. Unwittingly increasing their appeal as targets, most Chinese victims prefer to pay the ransom rather than report the crime, allowing many kidnappers to easily evade legal consequences, they said.

In July, Philippine President Ferdinand Marcos Jr banned online casinos and directed the gaming regulator to close these operations by the end of the year. Marcos criticised the operators, stating that their activities had ventured into illicit areas such as financial scams, money laundering, human trafficking, kidnapping and even murder.

“The grave abuse and disrespect for our laws must stop,” he declared.

Following Marcos’s decree, the Philippine Bureau of Immigration instructed all foreign workers employed by Philippine Offshore Gaming Operators (POGO) — estimated at around 20,000 — to leave the country within two months. Many of those affected are Chinese nationals.

Indeed, Chinese telecom fraud gangs have increasingly infiltrated the Philippine gambling industry and other Southeast Asian markets in recent years, as Beijing intensified a domestic crackdown.

Local Chinese community leaders and scholars have praised the Philippine government’s offshore gambling ban, believing it will help address the wave of kidnappings. However, they also caution that the policy could drive criminal gangs to other regions, and continued vigilance is necessary.

“We need to remain particularly vigilant against increasingly sophisticated transnational criminal organisations, not just focusing on Chinese people or confining our efforts to the Philippines,” said Ang See.

Many of those engaged in criminal enterprises related to the gambling sector had foreseen the Philippines’ crackdown, just as they did with a previous campaign in Singapore, a Fujian resident who worked for the offshore gambling industry in the Philippines, told Caixin.

“In the short term, their ability to make quick money will definitely be affected,” said the Fujian native. “But it’s no big deal, businesspeople will always find opportunities.”

Between the middle of the 19th century and early 20th century, 20 million Chinese immigrants settled in Southeast Asia, according to the Migration Policy Institute, forming one of the largest and most influential overseas Chinese communities in the world. That figure has continued to grow, with the ethnic Chinese population now numbering around 1 million and making up 1% to 2% of the total population, playing a crucial role in growing the local economy.

Before the Asian financial crisis in 1997, Chinese-owned businesses dominated key sectors such as textiles, steel, plastics, construction materials, logistics, and food and beverage, with about one-third of the 500 largest companies in the Philippines being Chinese-owned, according to local media reports.

In the early 1990s, kidnappings became commonplace in the Philippines, with wealthy local Chinese residents the primary targets. So dire was the situation it attracted the attention of the world’s press.

In 1992, The New York Times published an article titled “Abductions ‘Traumatize’ Chinese in Philippines” highlighting the severe physical and psychological harm they were causing to the Chinese Filipino community.

The article described how Chinese-Filipino families would give their children then-rare mobile phones before going to school, urging them to call home every hour. Some children were also accompanied by burly bodyguards wherever they went.

The sheer number of kidnappings, coupled with what was viewed as the government’s inadequate response, angered the Chinese community and sparked waves of street protests and strikes, pressuring leaders in Manila to intensify their crackdown and stamp out related police corruption.

According to Ang See, a second wave of kidnappings began in 2010, with Chinese nationals — not just Chinese Filipinos — now both the kidnappers and victims, operating in gangs often linked to the gambling industry.

The number of casino debt-related kidnappings involving Chinese victims was 16 in 2017, growing to 31 in 2019, according to Dai Fan, director of the Center for Philippine Studies, Jinan University, cited data from the Philippines’ Anti-Kidnapping Group.

Public records indicate that these cases frequently involved deceiving victims into borrowing money for gambling, then kidnapping them when they fail to repay the debt and subjecting them to physical abuse as they demand relatives of the victims pay a ransom for their release.

A third wave of kidnappings accompanied the boom in online gambling, a local Filipino journalist told Caixin. These abductions were often linked to the human trafficking industry, which operates alongside offshore gambling and telecom fraud. The primary targets include Chinese job seekers, employees of gambling operations, and underground bank workers involved in illicit activities.

More recently, tourists and self-employed Chinese individuals in the Philippines have also become targets, several local sources said.

During former President Rodrigo Duterte’s administration, the Philippine offshore gaming sector flourished as the government legalised 60 POGOs catering exclusively to foreign gamblers over a three-year period starting in 2016.

After offshore gambling was legalised, some licensed operators began renting their licenses to unregistered firms, said Alvin Camba, a researcher at the University of Washington in the US. This shift led to gambling becoming a conduit for telecom fraud and associated crimes, such as money laundering and kidnapping.

As bilateral relations improved under Duterte, tens of thousands of Chinese nationals arrived in Manila, boosting the local property market and the economy. But along with those positive inputs, they also added to the crime rate. According to Ang See, nearly three million Chinese citizens entered the Philippines in the two years following 2016, with 250,000 to 300,000 being new immigrants. Of these new immigrants, 90% obtained work visas, and 71% were employed in the offshore gambling industry.

“The criminal problems linked to offshore gambling are deeply entwined with the Philippine political and bureaucratic systems,” Camba said. Low police wages, coupled with a flood of money, have led to widespread corruption, with this issue affecting not only the police but also other agencies, such as immigration, with some officers even referring to it as a ‘profit-making competition’,” said Camba.

The Covid-19 pandemic, which broke out worldwide in 2020, kept people at home for long periods leading them to indulge in online entertainment, exacerbating the rise of online gambling and telecom scams and an increase in human trafficking and kidnapping. Many of these cases involve transnational gangs operating in other Southeast Asian countries, such as Cambodia, Myanmar and Thailand.

Consequently, the criminals don’t just target Chinese nationals. Studies indicate that people from over 40 countries and regions have been trafficked in Southeast Asia.

“What began as a regional crime threat has evolved into a global human trafficking crisis,” noted Interpol in a global alert issued in June 2023. “Almost anyone in the world could fall victim to human trafficking or online scams perpetrated through these criminal networks.”

Recent cases targeting Chinese businesspeople have showcased increasingly sophisticated tactics, such as gaining the victims’ trust over months and committing crimes on weekends, when police are usually understaffed, to avoid detection. Criminals have also increasingly targeted victims through offline methods in the US and Europe.

This shift occurred after President Marcos took office in 2022 and intensified the crackdown on offshore gambling. According to local journalists, as gambling operations have been forced to leave the country, the previous model of kidnapping for the purpose of human trafficking has gradually shifted to kidnapping purely for extortion.

The two medical executives killed in June were invited by a woman claiming to work for the Philippine medical equipment firm Medev. The suspect, identified as Li Na, provided an invitation letter with Medev’s letterhead, along with documents showing the company’s business credentials as a medical equipment distributor and importer. It was later confirmed that the invitation was fraudulent and that Li was not an employee of the company.

“They first identified a target and then tailored a scheme, inviting him abroad for a business trip to discuss cooperation,” according to a friend of the victims who spoke to Caixin.

In a 2019 case, two ethnic Chinese businessmen were approached at a trade fair in Europe by someone who invited them to invest in property in the Philippines. Upon arriving in Manila, they were abducted and later released after their families paid a ransom in the millions of RMB in USDT, according to Ang See.

All these cases share a common pattern: victims were lured with promises of business opportunities in Southeast Asia and were then kidnapped as soon as they arrived at Manila airport, said Ang See.

In recent years, kidnappers have increasingly demanded ransoms be paid in cryptocurrency, particularly USDT. Also known as Tether, USDT has gained popularity among criminals for its ease of transfer, anonymity, and stable value.

Introduced by Tether Ltd. in 2014, USDT is a stablecoin, a type of cryptocurrency designed to maintain a stable value. Unlike volatile cryptocurrencies such as Bitcoin or Ethereum, USDT is pegged 1:1 to the US dollar, meaning each USDT is equivalent to one US dollar.

USDT’s appeal to criminals lies in its ease of conversion to dollars and other currencies. Its anonymity and the difficulty in tracing transactions make it ideal for illicit activities, including kidnapping, human trafficking, drug trafficking, illegal gambling, online fraud and money laundering.

A policy briefing released by the United Nations Office on Drugs and Crime in January highlighted that stricter capital controls in Southeast Asian countries and pandemic-related movement restrictions have severely limited traditional money laundering methods, such as smuggling and casino operations. Consequently, the anonymity and rapid transaction capabilities of virtual currencies have made them the preferred method for laundering money.

A preference not to report crimes to police have made Chinese victims a prime target, with released kidnap victims quickly leaving the country, either out of fear or due to coercion by their kidnappers. Often they are unwilling to return to the Philippines to cooperate with the police investigation.

“Ninety-nine percent of cases remain unresolved,” Cai said. According to a 2013 report by local newspaper The Philippine Star, only 35 cases out of 102 recorded kidnappings related to offshore gambling since 2019 have proceeded to court, with just one case reaching a verdict.

“Even if a case is successfully filed and suspects are arrested, the lengthy and expensive local judicial process often discourages victims,” said Ang See, adding that many victims end up spending more on litigation than the ransom they paid.

This article was first published by Caixin Global as “Cover Story: Chinese Gamble With Their Lives in the Philippines Amid Waves of Kidnappings”. Caixin Global is one of the most respected sources for macroeconomic, financial and business news and information about China.

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