Inside a city ‘built on scams’

The tall, shiny buildings which rise out of the cornfields on the Myanmar side of the Moei river are a sight so jarring you find yourself blinking to be sure you haven’t imagined it.

Eight years ago there was nothing over there in Karen State. Just trees, a few roughly-built cement buildings, and a long-running civil war which has left this area of Myanmar one of the poorest places on earth. But today, on this spot along the border with Thailand, a small city has emerged like a mirage. It is called Shwe Kokko, or Golden Raintree.

It is accused of being a city built on scams, home to a lucrative yet deadly nexus of fraud, money-laundering and human trafficking. The man behind it, She Zhijiang, is languishing in a Bangkok jail, awaiting extradition to China.

But Yatai, She Zhijiang’s company which built the city, paints a very different vision of Shwe Kokko in its promotional videos – as a resort city, a safe holiday destination for Chinese tourists and haven for the super-rich.

The story of Shwe Kokko is also one of the unbridled ambition which has rippled out of China in the last two decades.

She Zhijiang dreamed of building this glittering city as his ticket out of the shadowy world of scams and gambling which he inhabited.

But by aiming so high he has drawn the attention of Beijing, which is now keen to stamp out the fraud operations along the Thai-Myanmar border which are increasingly targeting Chinese people.

Publicity about the scams is also hurting Thai tourism – Thailand is shutting down power to compounds over the border, toughening its banking rules and promising to block visas for those suspected of using Thailand as a transit route.

Shwe Kokko has been left marooned in post-coup, war-wracked Myanmar, unable to bring in the flow of investment and visitors it needs to keep going.

Yatai is trying to fix the city’s sinister image by allowing journalists to see it, holding out hope that more favourable reporting might even get She Zhijiang out of jail.

So they invited the BBC to Shwe Kokko.

Getting there is tricky.

Ever since construction began in 2017, Shwe Kokko has been a forbidden place, off-limits to casual visitors.

As the civil war in Myanmar escalated after the 2021 military coup, access became even more difficult. It takes three days from the country’s commercial hub Yangon – through multiple checkpoints, blocked roads and a real risk of getting caught in armed skirmishes. Crossing from Thailand takes just a few minutes, but requires careful planning to avoid Thai police and army patrols.

She Zhijiang’s colleagues took us on a tour, highlighting the newly-paved streets, the luxury villas, the trees – “Mr She believes in making a green city,” they told us. Our guide was Wang Fugui, who said he was a former police officer from Guangxi in southern China. He ended up in prison in Thailand, on what he insists were trumped-up fraud charges. There he got to know She Zhijiang and became one of his most trusted lieutenants.

At first glance, Shwe Kokko has the appearance of a provincial Chinese city. The signs on the buildings are written in Chinese characters, and there is a constant procession of Chinese-made construction vehicles going to and from building sites.

Yatai is vague about the tenants of all its buildings, as it is about many things. “Rich people, from many countries, they rent the villas,” they told us. And what about the businesses? “Many businesses. Hotels, casinos.”

However, most of the people we saw were local Karen, one of Myanmar’s ethnic minorities, who come into Shwe Kokko every day to work. We saw very few of the overseas visitors who are supposed to be the customers of the hotels and casinos.

Yatai says there are no more scams in Shwe Kokko. It has put up huge billboards all over town proclaiming, in Chinese, Burmese and English, that forced labour was not allowed, and that “online businesses” should leave. But we were quietly told by local people that the scam business was still running.

Starting a decade ago in the unchecked frenzy of Chinese investment on the Cambodian coast, then moving to the lawless badlands of Myanmar’s border with China, the scam operators have now settled along the Thai-Myanmar border. Around them, the Myanmar military and a hotch-potch of rebel armies and warlords are fighting for control of Karen State.

The scams have grown into a multi-billion dollar business. They involve thousands of workers from China, South East Asia, Africa and the Indian subcontinent kept in walled-off compounds where they defraud people all over the world of their savings.

Some work there willingly, but others are abducted and forced to work. Those who have escaped have told harrowing stories of torture and beatings. Some have come from Shwe Kokko.

We were able to speak to a young woman who had been working in one of the scam centres a couple of weeks before our visit. She had not enjoyed it and been allowed to leave.

Her job, she said, was as part of the modelling team, made up mostly of attractive young women, who contact potential victims and try to build an intimate online relationship with them.

“The target is the elderly,” she said. “You start a conversation like ‘oh you look just like one of my friends’. Once you make friends you encourage them by sending pictures of yourself, sometimes wearing your night clothes.”

Then, she explains, the conversation moves to get-rich-quick schemes, such as crypto investments, with the women claiming that’s how they made a lot of money.

“When they feel close to you, you pass them on to the chatting section,” she says. “The chatting people will continue messaging with the client, persuading them to buy shares in the crypto company.”

During our brief time in Shwe Kokko we were only allowed to see what Yatai wanted us to see. Even so, it was evident that the scams have not stopped, and are probably still the main business in the city.

Our request to see inside any of the newly-built office buildings were turned down. Those are private, they kept telling us. We were escorted at all times by security guards seconded from the militia group which controls this part of the border. We were allowed to film the construction work, and the outsides of the buildings, but not to enter them. Many of the windows had bars on the insides.

“Everybody in Shwe Kokko knows what goes on there,” said the young woman who used to work in a scam centre.

She dismissed Yatai’s claim that it no longer permitted scam centres in Shwe Kokko.

“That is a lie. There is no way they don’t know about this. The whole city is doing it in those high-rise buildings. No-one goes there for fun. There is no way Yatai doesn’t know.”

“I can promise that Yatai would never accept telecom fraud and scams,” said She Zhijiang on a call from Bangkok’s Klong Prem Prison, where he is being held.

Yatai wanted us to hear from the man himself, and hooked up a ropey video link. Only Mr Wang could be seen talking to him; we had to stay out of view of the prison guards, and had to rely on Mr Wang to put our questions to him.

Not much is known about She Zhijiang, a small-town Chinese entrepreneur who Beijing alleges is a criminal mastermind.

Born in a poor village in Hunan province in China in 1982, he left school at 14 and learned computer coding. He appears to have moved to the Philippines in his early 20s and into online gambling, which is illegal in China. This is where he started to make his money. In 2014 he was convicted by a Chinese court of running an illegal lottery, but he stayed overseas.

He invested in gambling businesses in Cambodia, and managed to get Cambodian citizenship. He has used at least four different names.

In 2016, he struck a deal with a Karen warlord Saw Chit Thu, who controls territory in Myanmar along the Moei River, to build a new city together. She Zhijiang would provide the funds, the Chinese construction machinery and materials, while Saw Chit Thu and his 8,000 armed fighters would keep it safe.

Glitzy videos by Yatai promised a $15bn (£12.1bn) investment and depicted a high-rise wonderland of hotels, casinos and cyberparks. Shwe Kokko was described as part of Xi Jinping’s Belt-and-Road Initiative or BRI, bringing Chinese funds and infrastructure to the world.

China publicly dissociated itself from She Zhijiang in 2020, and the Myanmar government launched an investigation into Yatai, which was building far beyond the 59 villas authorised by its investment permit and was operating casinos before these had been legalised in Myanmar.

In August 2022, acting on a Chinese request to Interpol, She Zhijiang was arrested and imprisoned in Bangkok. He and his business partner Saw Chit Thu have also been sanctioned by the British government for their links to human trafficking.

She Zhijiang claims to be a victim of double dealing by the Chinese state. He says he founded his company Yatai on the instruction of the Chinese Ministry of State Security, and insists that Shwe Kokko was then a part of the BRI.

He accuses China’s communist leadership of turning on him because he refused to give them control of his project. They wanted a colony on the Thai-Myanmar border, he says. China has denied any business relationship with She Zhijiang.

While he denied any wrongdoing on Yatai’s part, She Zhijiang, however, admitted to “a high probability” that scammers were coming to Shwe Kokko to spend their money.

“Because our Yatai City is completely open to anyone who can go in and out freely. Refusing customers, for a businessman like me, is really difficult. This is my weakness.”

It is, however, stretching credulity to believe that Yatai, which runs everything in Shwe Kokko, was unable to stop scammers coming in and out of the city.

It is also hard to think of any business other than scams which would choose to operate here. With Thailand cutting off power and telecommunications, electricity comes from diesel generators, which are expensive to run. And communications go through Elon Musk’s Starlink satellite system, which is also very costly.

Yatai’s strategy is “to whitewash the project to create a narrative that Shwe Kokko is a safe city”, says Jason Tower, from the United States Institute for Peace, which has spent years researching the scam operation in Shwe Kokko.

He says they may even “begin moving some of the more notorious components of the scam industry, like torture, into other zones”.

But he doesn’t think the plan will work: “What kinds of legitimate businesses will go into Shwe Kokko? It’s simply not attractive. The economy will continue to be a scam economy.”

When we were eventually allowed to see inside one casino in Shwe Kokko, run by a genial Australian, he told us they were going to close it down.

Inside the only customers were local Karen, gambling on a popular arcade-like game where they had to shoot digital fish. We were forbidden from doing any interviews. The back rooms, with the card and roulette tables, were empty. The Australian manager said the casino – built six years ago – had been popular and profitable when there were just one or two of them, before the civil war. But these days, with at least nine in operation, there were not enough customers to go around.

The real money was in online gambling, which he said was the main business in Shwe Kokko.

It is impossible to know how much money is made through online gambling, and how much through outright criminal activities like money laundering and scams. They are usually run from the same compounds and by the same teams. When we asked Yatai how much money they made they would not tell us – not even a ballpark figure. That is private, they said. The company is registered in Hong Kong, Myanmar and Thailand, but these are little more than shell companies, with very little income or revenue passing through them.

We turned down Yatai’s offer to see the go-kart track, water park and model farm that they have built. We did glimpse one other casino, while being taken to eat breakfast in Yatai’s own luxury hotel, though we could not go inside it. It seemed empty.

The only other facility we were allowed to see was a karaoke club, with spectacular private rooms, cavernous domes entirely covered in digital screens on which huge tropical fish and sharks swam. They also ran video loops extolling the vision and virtues of She Zhijiang. This club too seemed deserted, except for some young Chinese women who worked there.

They wore opera masks to avoid being identified, and danced unenthusiastically to music for a few minutes before giving up and sitting down. Interviews were not permitted. We were allowed to talk to a local Karen member of staff, but she was so intimidated by this we got little more than her name.

In his absence, She Zhijiang has left the running of Shwe Kokko to a young protégé, 31-year-old He Yingxiong. He lives with Wang Fugui in a sprawling villa they have built on the banks of the Moei River, overlooking Thailand, and guarded by massive Chinese bodyguards. There they play mahjong, eat the finest food and drink, and keep an eye on business.

Mr He has a slightly different explanation from his boss for the scams still operating under their noses. “We are just property developers,” he said. “I can guarantee that this kind of thing does not happen here. But even if it does, the local people have their own legal system, so it is their job to deal with it. Our job is just to provide good infrastructure, good buildings and supporting industries.”

But there is no legal system in this part of Myanmar, nor any government. It is ruled by the various armed groups which control different bits of territory along the Thai border. Their commanders decide who can build or run a business, taking their cut to help fund their wars against the Myanmar military, or against each other. Many of them are known to be hosting scam compounds.

Mr He admitted that it was the war which had allowed Yatai to obtain the land so cheaply. Karen human rights groups have accused Saw Chit Thu of driving the original inhabitants off their land, with minimal compensation, though it is clear Yatai is also providing badly needed jobs for the locals.

It is the lawlessness of Karen State which makes it so appealing to illegal businesses – and that doesn’t help the image of Shwe Kokko.

Neither do recent headlines.

Last month a 22-year-old Chinese actor, Wang Xing, was rescued from a scam centre on the border after being lured to Thailand with an offer of work on a movie shoot. His disappearance spurred a barrage of questions on Chinese social media, forcing the Thai and Chinese authorities to mount a joint operation to free him.

Chinese tourists have been cancelling their holidays in Thailand, fearing for their safety. Other rescues have followed. The BBC has been sent emails by some scam victims pleading for help; rescue organisations believe there are still thousands trapped. Nearly all are in smaller compounds along the border south of Shwe Kokko.

Yatai stressed to us that they are not the same as these rougher operations, some little more than a collection of sheds built in forest clearings. That is where all the bad things happen now, they said. They talked about KK Park, a notorious compound south of the border town of Myawaddy, and Dongmei, a cluster of low-rise buildings run by a prominent Chinese crime lord called Wan Kuok Koi, better known as Broken Tooth.

That distinction hasn’t helped She Zhijiang, who once had the ear of politicians, police bosses and even minor royalty in Thailand. Today he appears to have lost even the influence he once had in prison, to buy himself special privileges. He has complained of being roughed up by the guards.

His lawyers are appealing against the Interpol red notice used to justify his arrest, but China’s voice will probably be loudest in determining his fate.

From our interview with him, Shi Zhijiang seemed genuinely outraged over his sudden reversal of fortune.

“Before, I had no understanding of human rights, but now I really understand how horrible it is to have human rights infringed upon,” he said. “It is hard to imagine how the human rights of ordinary people in China are trampled upon when a respected businessman like me, who used to be able to go to the same state banquets as Xi Jinping, does not have his human rights and dignity protected in any way.”

It seems he really did believe he could build something which would one day transcend Shwe Kokko’s sordid origins as a scam city.

What happens to it now is hard to guess, but if the Thai and Chinese governments keep acting to shut down the scams, the money will start to dry up.