PRATO, Italy – On a rainy June afternoon, six Chinese mobsters hurried across the plaza of a drab apartment complex near the medieval gates of this Tuscan textile capital. Their targets, two gang rivals in their early 20s, were eating in a small Chinese diner.
Drawing machetes, the attackers stormed in. They hacked one man to death, splattering tables and walls with gore. The second victim fought his way out. Trailing blood in the rain, he staggered through the plaza pursued by his killers, who finished him off on the sidewalk around the corner.
The slaughter on Via Strozzi in 2010 was part of a startling escalation of mob violence in Prato, which has one of Europe's biggest Chinese immigrant communities. The ensuing police investigation was long and difficult, leading as far as China. For the first time, Italian police mapped the rapid spread of the Chinese mafias that were terrorizing immigrant enclaves and leaving a trail of casualties across Europe.
As the investigation culminated in 2017, detectives made another ominous discovery: The kingpins in Italy had high-placed friends in Beijing. Telephone intercepts detected a meeting between an accused crime boss in Rome, Zhang Naizhong, and a member of a high-level Chinese government delegation on a diplomatic visit to Italy, senior Italian law enforcement officials say.
“A guy like Zhang does what the consulate doesn't do, or does it better,” a senior Italian national security official said.“If you want in-depth street information, intelligence, you go to a guy like Zhang. He has a network, power, resources. He knows the diaspora. He is feared and respected.”
As the regime of President Xi Jinping expands its international power, it has intensified its alliance with chinese organized crime overseas . The Italian investigation and other cases in Europe show the underworld's front-line role in a campaign to infiltrate the West, amass wealth and influence, and control diaspora communities as if they were colonies of Beijing's police state.
Around the world, China's shadow war of espionage, long-distance repression, political interference and predatory capitalism is drawing attention and alarm. Governments and human rights groups have denounced in recent months a global network of covert chinese police stations that spy on Chinese migrant communities and persecute dissidents - wherever they live.
As ProPublica has reported, the Chinese state has sent illegal undercover teams to chase down fugitives in wealthy US suburbs, surveilled and silenced chinese students on foreign campuses, and allegedly supported the chinese money laundering underworld that fortifies cartels inundating the Americas with deadly drugs.
But the rise of Chinese organized crime in Europe has caught authorities largely off-guard. An examination of it offers an unusually vivid look at a covert alliance in action. ProPublica has documented a pattern of cases, some of them unreported and others little-noticed internationally, in which suspected underworld figures in Europe have teamed up with Chinese security forces and other state entities.
The partnership appears to mix geopolitics and corruption for mutual benefit. Gangsters help monitor and intimidate immigrant communities for the regime in Beijing, sometimes as leaders of cultural associations that are key players in China's political influence operations and long-distance repression, Western security officials say.
ProPublica has learned that suspected underworld figures in Italy and Spain took part in launching several of the secret Chinese police stations that caused an uproar when their existence became public last year.
The Chinese Communist Party“takes the most powerful, richest, most successful figures overseas and recognizes them as the nobility of the diaspora,” said Emmanuel Jourda, a French scholar on Chinese organized crime.“And it doesn't matter how they made their money. The deal, spoken or not, is: 'You gather intelligence on the community, we let you do business. Whether legal or illegal.'”
In exchange for their services as overseas enforcers and agents of influence, the Chinese state protects the mobsters, Western national security officials say. Although supposedly wanted in China, a top figure in the Italian case traveled freely to his homeland and oversaw his European rackets from China without interference from authorities there, according to court documents and law enforcement officials.
And in Europe - as in the United States - national security chiefs say the Chinese government refuses to cooperate with their investigations of Chinese organized crime.
Money is another driving force in the alliance. Diplomatically delicate prosecutions in Italy, Spain and France have resulted in convictions and fines against Chinese state banks that worked with Chinese criminals to launder the proceeds of widespread tax evasion, customs fraud and contraband.
Chinese mafias have also become the preferred money launderers for the Continent's drug traffickers, whose onslaught poses an unprecedented threat to several governments .
Stretching across Europe, the underground Chinese money networks pump billions of illicit dollars into China's economy. During one recent year, police at Rome's Fiumicino Airport arrested 16 couriers carrying a total of more than $41 million bound for China.
“It is hard to imagine that this activity is not welcomed by the Chinese authorities,” said the chief prosecutor in Prato, Giuseppe Nicolosi.“Large amounts of money are returning to China.”
The implications for the United States are urgent, authorities say, because the same tactics and networks plague Chinese American communities. US law enforcement has tracked interactions between Chinese government operatives and Chinese American mobsters who harass dissidents, engage in political interference and move offshore funds for the Communist Party elite, US national security officials say.
“Organized crime is doing services for the Chinese government” on both sides of the Atlantic, a veteran US national security official said.“There are deals between organized crime and the Chinese government. The government tasks them to expand influence and become eyes and ears overseas. Once they get themselves established, there are locals they can corrupt. It's a classic modus operandi.”
US national security officials are also concerned because Europe is a vulnerable front in China's offensive to divide and weaken the West.
Until recently, Chinese malign activities were not a priority in Europe. Although US intelligence agencies warned European counterparts about intensified contacts between the Chinese state and underworld, most security forces were busy with Islamist terrorists and Russian spies during the past decade, Western national security veterans said.
“When they started recognizing the threat, they didn't have the resources,” said Frank Montoya, a former FBI counterintelligence chief.
Today, governments are scrambling to respond to what Europol, the agency that coordinates police cooperation on the Continent, has called“an increasing threat to Europe.” They have realized that the problem reverberates beyond Chinese immigrant neighborhoods and challenges national security and the rule of law.
“There was a lack of awareness of the danger,” said the chief anti-mafia prosecutor in Florence, Luca Tescaroli, whose jurisdiction includes Prato. He has created a unit to fight Chinese mafias. But, he said:“We cannot criminalize the Chinese community. We know they are also victims of intimidation, extortion and violence.”
The Chinese embassies in Italy, Spain and France did not respond to requests for comment from ProPublica. In the past, Chinese diplomats have denied involvement in transnational repression and other illegal activities abroad.
To assemble a picture of the intertwined agendas of the Chinese regime and its expatriate mafia groups, ProPublica interviewed more than two dozen current and former national security officials in Europe and the United States, as well as Chinese immigrants, human rights advocates and others. ProPublica granted anonymity to some sources because of safety concerns or because they were not authorized to speak publicly. In addition, ProPublica reviewed court documents, reports by governments and nongovernmental organizations, academic papers, press reports and social media posts.
The Boss from Beijing
Prato's Chinatown starts just outside the stone ramparts, narrow lanes and Romanesque cathedral of the city's historic center. Its immigrant energy extends to the Macrolotto industrial park on the edge of town, where signs on warehouses and workshops mix Chinese words with names like Flora, Kitty and Style.
More than 6,000 Chinese-owned businesses give Prato an outsized role in the diaspora. Numbers like that tell the story of the second-biggest city in Tuscany.
In 1990, there were 520 residents of Chinese origin, according to an Italian government study. Today, officials say Prato has one of the largest Chinese communities in proportion to the city's size in Europe: close to 40,000 out of a total population of about 200,000. That includes as many as 10,000 undocumented immigrants. Italy has Europe's third-largest Chinese population after the United Kingdom and France.
The immigrants came initially to work in the mills and factories of this longtime hub of the textile and garment industries. Gradually, they became owners and employers. In 2019, voters elected two Chinese Italians to the City Council - a first.
Still, life for many Chinese residents feels like a crossfire. Although the newcomers have invigorated the economy, some Italians accuse Chinese merchants of evading taxes, paying low wages and other shady practices. Non-Chinese robbers and thieves prey on them because of the belief that they carry large amounts of cash.
And Chinese immigrants, of course, were the prime victims of the rise of Chinese organized crime in the 2000s. As mobsters established themselves, unprecedented violence broke out among warring factions from Fujian, a coastal province known for smuggling and migration. Police in Prato started calling Fujian the Calabria of China, likening it to the mafia hotbed located in the toe of the Italian boot.
After the double murder on Via Strozzi in 2010, the half-dozen detectives of the local anti-mafia squad began an investigation christened China Truck. Despite the daunting language barrier and a lack of expertise on Asian mafias, it evolved into an all-out, eight-year effort to dismantle a criminal organization.
In 2011, witnesses told police about Lin Guochun, aka Laolin, the reputed boss of Prato, court documents say. Lin had made his way from Fujian to Italy via Portugal and the Czech Republic, where he had allegedly ordered the murder of a rival smuggler of migrants, according to Italian court documents and Italian law enforcement officials.
Lin's empire encompassed extortion, gambling, contraband, prostitution and drugs. In Prato, he held court in his nightclub, a grim property with dark glass walls that offered package deals of prostitutes and ketamine. His swaggering crew ruled Chinatown, court documents say.
In 2013, the father of a massage parlor owner told prosecutors that two of Lin's thugs had demanded 100,000 euros and given him a beating that put him in the hospital with skull trauma and a broken nose, court documents say.
“My countrymen are afraid of them,” the battered extortion victim said, according to court documents.“They are part of an organization of cruel people who threaten and demand money.... If someone challenges them, they beat and wound and use other violent methods.”
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Zhang Naizhong. Photo: Gangsters Inc
Surveillance led to another breakthrough even higher in the criminal hierarchy. Police identified the alleged boss of bosses in Rome: Zhang Naizhong.
Zhang, a trim and dapper trucking executive, was from Zhejiang, a more prosperous province next to Fujian that sends many immigrants to Europe. After the slaying of one of Zhang's rivals in Naples in 2006, a court convicted him of helping the accused killers escape, but appellate judges overturned the verdict, court documents say.
During conversations intercepted on the phone and in his BMW, Zhang described himself as a ruthless“madman” and ordered henchmen to threaten people, court documents say. Expounding on the“rules of the mafia,” he told a subordinate in 2013 that true loyalty meant being“ready to go to prison and to kill people,” court documents say.
“I'm the most powerful boss in Europe,” Zhang declared, according to court documents.“Ask anyone ... if you're not a friend, you're an enemy ... if you're an enemy, then you're finished! ... A guy can point a pistol at me and because of my personality ... I'll tell him: 'Pull the trigger!' You understand, brother? ... I am the boss and so the boss can decide anything.”
Zhang teamed with Lin to conquer the market for the distribution of goods among Chinese business enclaves in Europe, court documents say. Working with police in other countries, Italian detectives charted the kingpins' alleged war on competing transport companies, court documents say: murders in Italy; shootings and stabbings in Spain, France, Germany and Portugal; a litany of arson attacks, assaults and threats.
Back in Prato, though, the accused gangsters did not keep a low profile. In fact, some of them were active in the array of Chinese cultural associations that shape the social landscape in diaspora communities. The associations, often named for the province immigrants came from, do good works: sponsoring cultural and sports activities, distributing protective equipment during the pandemic, raising money for charity causes in their home provinces.
But suspected underworld figures and their associates held posts in the Fujian Overseas Chinese Association in Italy that enhanced their power on the street and at a political level, according to court documents, Italian law enforcement officials and Chinese media. Lin, the alleged Fujianese boss of Prato, appeared on a list of“consultants” to the association in 2016.
Wiretaps, surveillance cameras and media reports documented meals, events and phone conversations in which Lin and other targets in the China Truck case interacted with prominent leaders of the Chinese community, Italian politicians, Chinese diplomats and visiting Chinese government officials.
In 2012, the president of the Fujian association in Prato intervened to resolve an underworld conflict involving Lin's son, according to court documents and law enforcement officials.
That same leader of the association later attended a conference in Beijing with top officials of the United Front Work Department, the arm of the Chinese Communist Party dedicated to political spying and interference overseas, according to photos and media reports. The United Front has become a dominant force in the diaspora , which it exploits to gain political and economic influence.
Such well-placed homeland connections appeared to pay off. Although Lin was wanted by Chinese police for past extortion offenses in China, he spent long periods there unmolested by authorities while he supervised his criminal enterprises in Italy by phone, according to Italian court documents and senior Italian law enforcement officials.
He also enriched himself with investments in the Chinese mining sector, court documents and senior Italian law enforcement officials say. Lin“succeeded in resolving the judicial cases in which he was charged, and was thus able to resume thriving economic activities” in China, a court document says.
As the investigation peaked in late 2017, detectives stumbled onto startling evidence of Lin's influence in high places. In interviews with ProPublica, Italian law enforcement officials said a series of intercepted phone calls revealed how close the Prato mob chief was to Chinese political figures.
According to the Italian officials, on the morning of December 11, 2017, Lin placed a call from Beijing to Zhang in Rome. Lin said an important friend, whom he described as a“boss from Beijing,” was visiting Rome. The boss had a busy schedule of meetings with Italian politicians, Lin said. But it would be good if Zhang could take him to dinner, see the sights, maybe a soccer game.
Zhang then called his secretary and driver to organize excursions to the Vatican and the Colosseum for the VIP visitor. That evening, Zhang had dinner with him, Italian officials said.
Analyzing translations of the calls afterward, detectives came to an alarming conclusion: The“boss from Beijing” was a member of a Chinese delegation that had met with Italy's prime minister at the time, Paolo Gentiloni, and his cabinet ministers. Led by China's Vice Premier Ma Kai, the delegation included senior officials in China's ministries of foreign affairs, development, industry and commerce.
“It's very probable that Zhang hosted and dined with a senior official from the delegation,” a senior Italian law enforcement official said.“We suspect that it was a prominent member of the delegation.”
Police reconstructed the episode based on the translated conversations rather than physical surveillance, law enforcement officials told ProPublica, and could not identify the visitor or the reason for the sit-down. But the analysis indicated he was a government official, national security sources said.
Italian and Chinese diplomats declined to comment on the episode, which was first reported in italian media . Chinese state-mafia contacts like the one that allegedly took place in Rome are not unusual, Western national security officials said.
“China uses a range of proxies and cutouts, and organized crime is one of those proxies,” a US intelligence official said.“We see a growing brazenness in [Chinese] malign influence operations.”
Sometimes, expatriate gangsters even set themselves up in foreign countries with the blessing and support of corrupt allies in the Communist Party elite back home, a veteran US national security official said.
“The gangsters are told to go establish themselves in a certain country, given different business opportunities,” the veteran US national security official said.“Transportation help, getting consumer goods out of China, the government helps organized crime there. Chinese corrupt officials can make it easy to move goods out of China.”
The Chinese politicians who meet with Chinese gangsters overseas“represent their government as well as their own self-interest,” he said.
Weeks after the mysterious encounter in Rome, Italian investigators rounded up dozens of suspects on mafia-related charges resulting from the China Truck investigation.
Italian police conduct raids against Chinese organized crime in Prato, Italy, during the operation known as China Truck in 2018. Photo: Screenshot / YouTube
A police team swarmed a discreet hotel in Prato where Zhang was staying and arrested him and his adult son, Zhang Di, rousting them from their beds at dawn. The son got agitated and shouted at the officers, police said. But his father, the accused boss of bosses, stayed cool while officers took him into custody.
Zhang and his son have pleaded not guilty. Their lawyers did not respond to requests for comment. Prosecutors also charged Lin, but he remains at large. Lin's son was not charged.
The China Truck prosecution painted the first detailed picture of alleged mob activity among Chinese immigrants in Italy. Soon, even more evidence would emerge of a brazen alliance between accused expatriate gangsters and the Chinese security forces.
Outlaw police
The headquarters of the Fujian Overseas Chinese Association in Italy occupies a corner building on Via Orti del Pero in the heart of Prato's Chinatown. The two-story structure looks bedraggled. It has blue steel doors, barred windows and fading sand-colored walls.
But in March of last year, the place made headlines. Chinese media announced“good news” from prato : the inauguration of the Fuzhou Police Overseas Service Station in the Fujian association's headquarters. Leaders of the association would work with officers of the Municipal Public Security Bureau in Fuzhou, the capital of Fujian province, to enable immigrants to renew Chinese driver's licenses and do other bureaucratic tasks in Prato, a Chinese media report said.
Among six community leaders pictured beneath the station's blue banner was the association's executive vice president at the time: Zheng Wenhua.
Zheng, also known as Franco, seemed a puzzling choice to open a police station. Four years earlier, Italian authorities had accused him of being a top figure in the Prato underworld.
Investigators first identified him in 2011 when police stopped him. He was in his Jaguar accompanied by an alleged enforcer for Lin, the reputed Fujianese mob boss, court documents say. Officers found a clasp knife and a marijuana cigarette in the car and confiscated Zheng's license, court documents say.
In 2013, Zheng allegedly became involved in the aftermath of the incident in which two thugs beat up the father of a massage parlor owner. Zheng tried to silence the battered extortion victim by sending a“volunteer” interpreter into a police interview to control what he said, court documents say. In a phone call recorded by police, Zheng warned the victim not to implicate bosses, court documents say.
“Come on ... this could have consequences for Laolin...,” he said, according to the documents.“...And that would not be a good thing.”
During the China Truck raids in 2018, authorities charged Zheng with“a prominent role” in Lin's crew overseeing the“management of clandestine gambling dens and exploitation of prostitution,” court documents say.
Yet Zheng remains a civic leader. He has met with visiting Chinese dignitaries including the mayor of Fuzhou, spoken at community events and attended a gala in February featuring the mayor of Florence and the Chinese consul, according to media reports and photos. In March, he was elected president of the Fujian association. (Zheng has pleaded not guilty and is free awaiting trial. He and other representatives of the Fujian association did not respond to requests for comment.)
And Zheng wasn't the only one with alleged ties to both the underworld and the new Fuzhou police station in Prato. China Truck prosecutors charged another vice president of the association with helping Lin obtain fraudulent immigration papers. Photos at the Fuzhou police station show three more community leaders whose personal and business links to gangsters surfaced during the investigation, according to court documents and senior law enforcement officials. None of them were charged, though authorities seized five bank accounts belonging to one man.
Despite the celebratory Chinese media reports, the station was part of a global campaign of repression, according to Western officials and human rights advocates.“You have criminals who terrify the community involved in a police station that further terrifies the community,” a senior law enforcement official said.
Safeguard Defenders, a human rights group, has revealed a network of more than 100 covert stations overseen by Chinese provincial police forces in more than 50 countries. Based in cultural associations, businesses and homes, the outposts help persecute dissidents and support operation fox hunt , which deploys undercover police and prosecutors illegally across borders to track down people accused of crimes – justifiably and not – and take them back to China, according to Western officials and human rights advocates.
In Madrid, a video showed community leaders at a covert station of the zhejiang provincial police talking via videolink with a fugitive in Spain and law enforcement officials in Zhejiang. In a typical pressure tactic, Chinese police and prosecutors back in Qingtian County sat with a relative of the fugitive, who eventually returned home and accepted a plea deal, according to chinese media reports cited by the human rights group.
In Aubervilliers, a gritty Paris suburb, a Chinese French garment executive who managed a station admitted in a published interview to helping Chinese police“persuade” a fugitive to return to China in 2019, Safeguard Defenders found. Although no further details about the case were available, a senior French national security official told ProPublica that undercover Chinese police came to France and illegally repatriated two people during that time. The senior official did not say whether the head of the Aubervilliers station was involved.
After safeguard defenders issued its report last year , at least 12 countries began investigations.
The US reaction was the strongest. Targeting an illegal station in New York, federal prosecutors charged two chinese american leaders with stalking and harassing dissidents for Chinese authorities including the Fuzhou police – the same force involved in the Prato station. (United Front officials also helped set up the New York station, US authorities say.)
“Harry” Lu Jianwang of the Bronx and Chen Jinping of Manhattan. Photos: FBI / US Department of Justice
“It is simply outrageous that China's Ministry of Public Security thinks it can get away with establishing a secret, illegal police station on US soil to aid its efforts to export repression and subvert our rule of law,” the acting head of FBI counterintelligence, Kurt Ronnow, said at the time of the arrests in April.
In response, Chinese Foreign Ministry spokesperson Wang Wenbin accused US authorities of making“groundless” accusations.“There are simply no so-called 'overseas police stations,'” Wang said.“China adheres to the principle of non-interference in other countries' internal affairs, strictly observes international laws and respects the judicial sovereignty of all countries.”
The Chinese Embassy in Rome did not respond to a request for comment from ProPublica.
Some European national security officials downplayed the disclosures about the stations, echoing the Chinese government's line that the outposts offer convenient consular-type services. The response to the problem in Europe has often been handled quietly by counterintelligence agencies rather than law enforcement. But most European officials interviewed by ProPublica said the stations aid spying.
“The suspicion is that the goal of these stations is to enable Chinese authorities to control and monitor the Chinese diaspora community,” Tescaroli, the Florence prosecutor, said.
There are 11 Chinese police outposts in Italy, more than any other country, and three in Prato. They multiplied during past Italian governments, which had notably close relationships with beijing .
In 2016, Italy began a program that allowed visiting Chinese police officers to conduct joint uniformed patrols with Italian police. The stated goal was to improve protection of Chinese tourists and immigrants, but the patrol program fomented the spread of the unofficial stations, said Laura Harth, the campaign director of Safeguard Defenders. Photos show Chinese officers at the stations, sometimes joined by Italian police.
“They used the joint patrols to launch pilot stations,” Harth said.“China described it as one of its biggest achievements.”
Although Italian national security officials told ProPublica the patrols were largely symbolic, they said they have caught Chinese police officers using authorized visits as a cover to pursue people in the diaspora.“But when they tried to do anything more than patrol, they were warned to stop,” a senior Italian national security official said.
The policing alliance was“a bad idea” because it“reinforced the fear” in the Chinese Italian community, a senior Italian law enforcement official said.
Across the Mediterranean, Spain is another place where the secret Chinese stations allegedly converge with the criminal underworld. In Barcelona, two covert stations operate a mile apart in a translation agency and a restaurant, according to human rights activists and Spanish security officials.
The stations are based in the Eixample, a central area of tree-lined avenues, stately modernist architecture and octagonal intersections. As in Prato, the Fuzhou police administer the Barcelona facilities from afar, and the staff are mostly Fujianese members of groups including the Association of Fujianese Entrepreneurs in Catalunya, according to Spanish officials and human rights advocates.
And as in Prato, community leaders affiliated with the stations appear in the organized crime files of law enforcement, according to the police of the Catalan autonomous region, a force known as the Mossos d'Esquadra.
At least five of those community leaders have records in Spain for crimes including human smuggling, falsification of documents, receiving stolen property, labor law violations and fraud, Catalan police officials told ProPublica. Police have detected at least two of those people at meetings with suspected Chinese mob figures, the police officials said.
The leaders involved in running the stations interact frequently with Chinese diplomats as well as Spanish politicians, according to police officials.“These are people of great relevance in the Chinese community,” a police official said.“The local politicians may not always realize who they are meeting with.”
Representatives of associations and businesses tied to the Barcelona stations did not respond to requests for comment. The Chinese Embassy in Madrid also did not respond to a request for comment.
In France, authorities already knew about the Chinese stations and monitored them for intelligence purposes, a French national security official said.
After the revelations last year, French officials met with representatives of the Chinese Embassy and the Chinese community and told them to curtail the covert activities, a senior French national security official said. The senior official said a Chinese police attaché insisted he knew nothing about the matter – until French officials showed him a photo of himself at one of the stations.
China's embassy in Paris did not respond to a request for comment.
Across Europe, investigators have discovered that the Chinese underworld makes itself useful to the Chinese state in another, crucially important arena: money.
River of money
Imagine a vast river of cash flowing from Europe to China.
It flows from the booming marijuana industry in and around Barcelona, where Chinese mobsters are players in illegal growing and international trafficking.
It flows from the garment industry in the Aubervilliers area (the site of a covert Chinese police station and the French branch of Zhang's trucking empire), where merchants have been charged with laundering money for drug lords.
And it flows from shops, nightspots and warehouses in Prato and other Italian cities where the Guardia di Finanza, the agency that fights financial crime, has discovered a veritable underground banking system based on tax evasion, customs fraud and contraband.
This illegal machinery has pumped billions of dollars into the Chinese economy, authorities say.
Although China has the most formidable police state in the world, law enforcement chiefs in Europe complain about its steadfast resistance to helping their investigations into organized criminal activity by Chinese migrants.“We get no cooperation from the Chinese government,” said Tescaroli, the chief anti-mafia prosecutor in Florence.
Worsening suspicions of official complicity, Chinese state banks in Europe have emerged as active partners of money laundering organizations. Exhibit A: the Industrial and Commercial Bank of China, a state-owned institution, the biggest bank in the world based on total assets.
The Industrial and Commercial Bank of China in Shanghai. Photo: Asia Times files / AFP
In 2011, ICBC opened a branch in Madrid on a thriving downtown boulevard filled with museums, luxury hotels and cafe terraces. The bank's visiting global chairman marked the occasion with Spain's economy minister, who said the new branch would be a bridge to emerging markets.
Five years later, a dramatic scene played out when Spanish police officers raided the bank, seized piles of documents and arrested executives, escorting suspects out with their heads covered.
The bank had surfaced during investigations of Chinese criminal groups that smuggle contraband and evade taxes and customs duties – activities that generate stockpiles of cash. Surveillance of suspects moving cash led police to the icbc branch in madrid .
Thanks to wiretaps and an inside witness, police learned that bank executives set up an audacious system in which criminals delivered suitcases and boxes full of euros to the bank day and night, court documents say.
The bank sent hundreds of millions to China through illegal mechanisms such as fake identities and fraudulent invoices. Managers advised crime bosses about how to transfer funds to China covertly. The Madrid branch did not issue a single alert about suspicious financial operations to Spanish authorities between 2011 and 2016, court documents say.
During the investigation, the top ICBC executive in Madrid became general manager at the bank's European headquarters, indicating potentially wider corruption, prosecutors said.“The close connection between this Spanish branch and the headquarters in Luxembourg indicates that this illicit conduct could repeat itself in other European branches,” prosecutors warned in court documents.
Chinese diplomats complained publicly and in talks with Spanish leaders about the case, according to Spanish national security officials. But in 2020, the general manager in Luxembourg and three Madrid executives pleaded guilty to money laundering charges . The Spanish court imposed sentences of three to five months and a $25 million fine. ICBC issued a statement saying the bank was law-abiding and had cooperated with authorities.
It was not an isolated case.
In France, the bank of china paid a $4 million fine in 2020 to settle a prosecution for aggravated money laundering. Authorities charged that the state bank failed to notify French tax authorities about more than $40 million sent from 168 accounts during a two-year period. The money came from fraud, tax evasion and other illicit activities by Chinese entrepreneurs based in France, prosecutors said. Bank of China officials said in a statement that the settlement was not an admission of guilt.
In Italy, the bank of china paid $22 million in 2017 to settle a case in which a whopping $4.7 billion went illegally to China. Executives aided and concealed transfers of cash from Prato and Florence during a four-year period, authorities said. The former director general in Milan and three other employees received two-year suspended sentences in the aptly named“river of money” prosecution . The bank said the settlement was not an admission of guilt.
The river of money has many tributaries, law enforcement experts say. Italian investigators have detected bulk cash loads smuggled to China in maritime containers, express mail packages and the luggage of airline passengers.
And police forces across Western Europe track couriers driving shipments of criminal proceeds east to Turkey, Bulgaria and especially Hungary, where it is easier to deposit and repatriate the funds in banks with little interference on either end, according to Italian prosecutors and other European officials. In a Spanish case, a jailed Chinese suspect told interrogators that a network smuggled cash“hidden in goods transported in vans” and used“passports of Chinese citizens to send the money as immigrant remittances” from the“Chinese Bank in Budapest, Hungary” to China, court documents say.
Italian investigators identified another bank in Hungary, China's closest ally in Europe, that received more than $1.2 billion in clandestine cash deliveries from across the Continent and wired the money to China between 2017 and 2018.
Chinese financial crime networks pose“an elevated threat” in Europe, according to a recent french law enforcement report . They have become the preferred money launderers of the drug trade and act as brokers for international deals, delivering cash on demand so that cartels don't have to transport funds across borders, European security officials say.
The clients are top drug traffickers: Italians, Albanians, Latin Americans and a violent Morocco-connected cartel, the Mocro Maffia, that has become a national security threat in the Netherlands and Belgium.
The trend resembles the rise of Chinese money laundering groups that have transformed the US drug trade by giving fast and cheap service to Latin American cartels. as propublica has reported , US national security officials say the Chinese state supports that activity.
European authorities have similar suspicions.“It is a kind of state criminality,” a senior Italian law enforcement official said.
Striking back
Five years after Italian police rounded up the accused gangsters in 2018, the continuing saga of the China Truck case illustrates progress and setbacks in the response to a threat that caught Europe largely unawares.
A total of 79 defendants are still awaiting trial in Prato. The proceedings have been slow because of the sheer scope of the case, the labyrinthine justice system and the laborious demands of translation. An acute lack of interpreters continues to plague the case. During the investigation, police at one point had to suspend wiretaps because taped conversations in the Fujianese dialect were piling up untranslated.
It is also Italy's first prosecution of a Chinese organization for mafia-level conspiracy, which is a complex offense to prove. Appellate panels have questioned the evidence for the mafia-related charges, releasing defendants from pre-trial custody.
Last September, a court convicted some defendants for individual offenses and acquitted others such as Zhang, the alleged boss in Rome. In the case of Zheng, the community leader involved in the Prato station, the statute of limitations ran out on some charges against him. Lin is no longer facing trial because his whereabouts are unknown. But Zhang, Zheng and the others still face trial on the mafia conspiracy charges.
Although it has been an uphill battle, authorities say they have disrupted the underworld.“Like the Italian mafias, the Chinese mafia has understood, or is coming to understand, that if you are too violent, the police react,” a senior Italian law enforcement official said.“It is bad for business. Violence attracts attention. It has happened less since the China Truck prosecution.”
Europe is hurrying to respond to China-related threats. After an investigation, the United Kingdom's minister of state security recently announced that the government had ordered China to shut down unauthorized police stations, calling them“unacceptable.”
The new Italian government of Prime Minister Giorgia Meloni has taken a tough line. Intelligence and law enforcement agencies have created units focused on Chinese organized crime and malign influence. A parliamentary anti-mafia commission will examine alleged wrongdoing in Prato's Chinese manufacturing sector and illicit money flows to China. Public attention has led to the shuttering of the Fuzhou station in Prato.
As for the double homicide on Via Strozzi, the case opened a door into a secret world. Prosecutors charged 20 people in the murder and related crimes, winning convictions in the latter cases. But the accused killers remain out of reach, authorities say, in China.
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