-Caveat Lector-
an excerpt from:
LORDS OF THE RIM - The Invisible Empire of the Oversea Chinese
by Sterling Seagrave (C) 1995
G. P. Putnam's Son
200 Madison Ave
New York, New York
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Chapter 10
THE CANNIBAL
IN A NATION WHERE RULERS AND ENTREPRENEURS ARE traditionally at odds,
such as China, greed is the opposite of virtue. In a nation where rulers and
entrepreneurs collaborate, such as Japan, greed is easily confused with
patriotism. Add an overdose of military ambition and the effect is
intoxicating. Tsuji Masanobu blended these elements with messianic energy and
visionary genius. For a while he was one of the most dangerous men on the
planet. He was involved in some of World War II's boldest exploits, including
the escape of General Honda Masaki from Allied encirclement in Burma, he was
personally responsible for the grisly purges of civilians in MaIaya and
Singapore during the war; and it was he who contrived the nightmare bIoodbath
of Overseas Chinese known as Sook Ching. When he was not busy watching his
men murder Chinese, Tsuji was cutting deals with Chinese gangsters and
entrepreneurs. Thanks to such deals, many Overseas Chinese quislings emerged
from the war rich men, future leaders of the Pacific Rim. Tsuji, not
incidentally, was a cannibal; in Burma he hosted a dinner party where the
main course was the liver of a captured American pilot.
By the 1920s, Japan was ready for Tsuji. All people are vulnerable to
what Carl Jung called "psychic epidemics." Nobody upsets the Japanese more
than they upset themselves. When they are calm, they are among the world’s
most rational people, but they are completely irrational about vengeance.
They feel like perpetual victims, intimidated by the group, policed by
samurai, ruled by tyrants who hide behind silk screens. In the l9th century,
when Commodore Perry's gunboats forced it to open up after centuries of
deliberate isolation, Japan for the first time felt abused by Westerners, and
although they suffered much less at Western hands than the Chinese did, they
could not endure humiliation with the same fortitude. Tsuji, the
superpatriot, made it his mission to exact revenge.
Yamagata Aritomo and other farsighted Japanese military leaders saw to it
that they paid particular attention to Western arms and methods and closely
studied the Gerrnan army model. While rationalJapanese were fascinated by
their great experiment with industrialization and democratization, Tsuji and
others used modernization as a cover to build a separate military power base
for conquest on the Asian mainland.
As the 20th century dawned, Japan emulated the West by becoming an
aggressive imperialist power. In 1895 it took Taiwan from China. As spoils of
war in 1905, she got from Russia the lower half of Siberia's Sakhalin
peninsula, the lease of Manchuria's Kwantung peninsula, and most of Russia's
Manchurian investments. In 1910 she annexed Korea. German holdings in the
Pacific and in Shantung were seized during World War I, along with the big
German naval base at Tsingtao. By 1920 Japan was a major imperialist power in
North Asia.
Further conquest of the mainland appealed to Japanese gangsters,
militarist, and patriots alike. For Tokyo's growing economic needs, conquest
was imperative. As her industry grew, Japan's need for raw materials became
urgent. Her population outgrew domestic agriculture. Need for food imports
became pressing. In the minds of someJapanese, these needs became mixed with
the craving for conquest, domination, and revenge.
While Siberia was seen by some as the logical target, China was given the
highest priority: most of Japan's foreign investments were con centrated
there. In 1901 the Foreign Ministry offered to train, protect, and subsidize
anyJapanese prepared to do business in China or Korea.
The War Ministry persuaded members of the zaibatsu merchant dynasties
(including Mitsui, Mitsubishi, and Okura) to set up a company called Heavenly
Peace to promote arms sales to Chinese warlords and revolutionaries. After
the Manchu downfall in 1911, Tokyo undermined each new strongman to keep
China from being reunited. Japanese agents of the paramilitary sects Black
Ocean or Black Dragon backed rival warlords and provoked demonstrations.
Japanese were encouraged to emigrate to Manchuria to run confiscated
farms and commercial properties. Seeding Manchuria quietly enlarged Japan's
presence on the Asian mainland. Not counting soldiers, a million Japanese
moved to North Asia to make their fortunes, 800,000 to Manchuria alone.
There, in an area the size of New England, much of it covered with red
sorghum, life was good, thanks to strict secret police control and terrorist
suppression of the Manchu population. Colonists lived better than Japanese at
home.
An unexpected boost to Tokyo's ambitions came when World War I distracted
Europe, leaving the China trade to America and Japan. The United States was
Japan's best export customer, and American trade with Japan was considerably
larger than its trade with China. This could have become the constructive
partnership of the Pacific Rim— but Washington and Tokyo were more interested
in competing over China. Like jealous young suitors in a brothel, both
America and Japan were convinced that they had a "special relationship" with
China. In fact, Japan had been a frequent partner for centuries, but no
matter how often they cooperated, they could never agree about who was in
charge. Before the 1890s, China had always had a superior attitude, and Japan
became resentful of every imagined slight. Cooperation is not a concept that
comes easily to countries spellbound by absolutism.
After World War I, when Europe returned to Asia's markets, Japan saw it
as unfair competition. She could no longer survive without China's raw
materials. If the West regained dominance, Japan would be elbowed aside. If
Tokyo grabbed complete control, her trade and
industry would be secure The Chinese would not play along. With the end of
dynastic rule and the beginning of republican government, nationalism flooded
down the Yangtze. There were boycotts of foreign goods and protests against
foreign meddling. Tokyo could not decide whether to allow her position in
China to deteriorate or to force China into a submissive role, as she had
Manchuria and Korea. In Tokyo boardrooms, there was a lot of frustration,
followed by agreement. Immediate action would be taken by all the
conglomerates. In this hypnotic Japanese manner, military, corporate,
government, and underworld appetites converged.
Unlike with Japan's military, fascinated by the destructive power of the
industrial age, the zaibatsu were avid practitioners of Sun Tzu, content to
influence events obliquely. Civilian governments consistently favored big
business over the military. Defense budgets were cut, the size of the army
reduced, naval construction slowed. This had a predictable effect.
Rightists were alarmed. Society was becoming too bourgeois, merchants too
powerful, youth too vulgar. The feudal system, with its paternalism toward
peasants, had been replaced by an industrial culture that trapped laborers in
conditions of slavery. In these grim conditions, socialism and communism were
taking hold. Growing food riots and strikes convinced patriots that the only
solution was “the blood of purification"—a return to ancient values and
authoritarian rule. Since 1900 secret organizations of superpatriots had
multiplied, dedicated to domestic terrorism and foreign conquest. Business
and political leaders were assassinated in spectacular ways, attracting
attention to the political views of the killers. Japanese politicans were
depicted as slaves of greedy businessmen. Curiously, the huge fortunes of
Japanese army generals, and their method of acquisition, never became a major
political issue.
The sumo match between overlarge army and overweight business came to a
thudding climax with the Great Depression. Massive unemployment in Japan was
followed by famine. Villages starved, workers were on breadlines. Right-wing
Japanese portrayed the Depression as a plot by Western racists. Militarists
decided to seize what they needed or wanted in North Asia. Caution ceased to
be their main concern.
Japan's obsession with North Asia was out of control. Only this would
satisfy military needs, business needs, social needs, and appease the craving
for revenge that energized the nobility, the zaibatsu, the military, the
secret societies, and the underworld. They were convinced that the West had,
for racial reasons, deliberately blocked their search for raw materials and
marketplaces. The ultraright had long planned for this moment. To them,
coexistence was irrelevant. Government leaders who disagreed would be
assassinated.
The stronghold of this extreme thinking was not Japan, but Manchuria.
Japan's Kwantung Army, which occupied southern Manchuria, was allowed such an
independent position after 1919 that it becarne a rival power base to Tokyo,
a separate command not subject to scrutiny by civilian politicians and Tokyo
government officials. This put Kwantung officers in a position to traffic in
heroin and to extort money, goods, land, and favors from the Manchurian
population, without supervision.
The decision to make the Kwantung Army independent turned out to be an
act of suicidal folly. With uncontrolled power and unprecedented access to
wealth, its officer corps became insatiable, recklessly plotting conquest on
the mainland. It was unnecessary to refer their plans to Tokyo. They
conspired with generals at home to trigger martial law and eventually to
bring about the installation in Tokyo of a military dictatorship. They were
able to carry out terrorist acts inside Japan through cells of military
fanatics who craved a return to purified authoritarian rule.
One of the Kwantung Army's first major conspiracies was the killing in
1928 of the Manchurian warlord Marshal Chang Tso-lin Then, in 1931, the
Kwantung Army staged the phony Manchurian Incident, declaring that Chinese
soldiers had dynamited the south Manchurian Railway and attacked Japanese
guards. The army said it had no choice but to occupy Mukden. Actually, the
bomb plot had been the work of young officers in Tsuji's group, including his
alter ego, Ishiwara Kanji. A brilliant graduate of staff college, Ishiwara
had spent three years studying in Germany, where—like so many Japanese
officers—he had become infatuated with the concept of Total War expounded by
Clausewitz and refined by Moltke. On his return to Japan, Ishiwara became a
lamboyant instructor at staff college. To young Japanese officers, it was
intoxicating to think in terms of total destruction, purification by fire,
annihilation of the enemy, and mass suicide for mythic ends. These
apocalyptic visions stirred the primal juices of supermen.
Central to Ishiwara's vision, and to that of Tsuji and other hot bloods,
was that Japan must save the world frorn misguided ideologies, including
parliamentary democracy. Their mission involved Total Wars against Russia,
Britain, and America. Entire societies would be incinerated. Like the metal
of meteorites folded into katana swords, the people of the world would be
melted and reforged underJapan's hammer. The Kwantung Army would lead the
way. A first step was for China to welcome Japanese domination in Manchuria.
The West did nothing. When the seizure of Manchuria was not repudiated,
militarists concIuded they could contrive further ''incidents” and take
Chinese territory at whim.
Following its annexation, Manchuria became the main supplier of heroin
down the China coast, displacing the Shanghai-based Green Gang. The gang's Ku
brothers, one of whom ran the Shanghai waterfront while the other served on
Generalissimo Chiang's general staff, negotiated an accommodation with the
Japanese army that persisted until 1945, covering drug distribution and the
swap of American Lend Lease materials. In the 1930s, Japan earned over $300
million a year from distribution and sale of Manchurian opium and heroin.
pp128-133
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Tsuji intended to let the Overseas Chinese know that their masters had
arrived Since the 1890s, the Japanese had tried to persuade all Chinese to
get behind Japan's leadership in the struggle with the West. Few Chinese, at
home or abroad, trusted Tokyo. After centuries of coping with their own
bureaucratic treachery, the Chinese had ~ew illusions about Japanese
leadership. Educated Chinese knew that the Japanese viewed them as
hopelessly, biologically corrupt. Perhaps, but they were far from stupid.
They saw through Japanese propaganda about Asian harmony, and understood long
before the West did that militarists working with gangsters had used the
Kwantung Army to seize power in Tokyo. Thus in their eyes, the Japanese army
had become a gangster terrorist army, no better than the KMT—but much more
ruthlessly efficient.
Failing to persuade Overseas Chinese not to participate in boycotts of
Japanese goods, and not to remit money to the nationalist or com munist
leadership in China, Japan resorted to bribery, intimidation, extortion, and
secret deals with Overseas Chinese businessmen. Once in control of cities in
Fukien and Kwangtung provinces, theJapanese were able to threaten reprisals
on families in the ancestral villages.
Japanese agents infiltrated Overseas Chinese secret societies and triads.
They started duplicate societies with the same names and hand signs. The
strike south was followed by gruesome mass killings of Chinese who had taken
part in anti-Japanese boycotts. Tsuji's techniclue was terror, mass rapes of
the wives and daughters of middle-class Chinese and Westerners, mass
beheadings, and vivisection on fully conscious Chinese prisoners. To make
certain that new Japanese officers did not hesitate to carry out atrocities,
they were obliged to undergo brutal exercises to dehumanize all contact with
Chinese. Japanese seldom misbehave individually; they tend to do it
collectively. The training worked so well that, as one Kempeitai officer
boasted, "If more than two weeks went by without my taking a head, I didn't
feel fit. Physically, I needed to be refreshed."
pp141-142
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Despite the immediate military success of the strike south, the Japanese
occupation of Southeast Asia was a disaster. The main pur pose had been to
rescue Japan from economic collapse by seizing control of Southeast Asia's
oil and other raw materials. This was a complete failure. First, the Japanese
discovered that the region's resources were controlled by the Overseas
Chinese or could only be obtained with their cooperation. Most Overseas
Chinese had been alienated by Tsuji's Sook Ching and similar terror campaigns
in Mainland China or in other conquered countries. To rectify the situation,
cleverness was needed, not terror. Japan's best brains, technicians, and
financial managers were busy in North Asia and the Home Islands. Little
talent could be spared for SoutEleast Asia.
With centuries of experience in undermining and corrupting bureaucrats
and conquerors, the Overseas Chinese helped make South east Asia and the
China coast a terrible drain on the Japanese war machine, weakening Tokyo as
the Allied counterattack gathered momentum. No development capital could
be provided by Tokyo. It had to be raised in Southeast Asia from loot,
extortion, or the hijacked bank deposits of local populations. The occupied
countries also were to be self-sufficient in consumer goods. Accordingly, the
zaibatsu—Mitsui, Mitsubishi, Sumitomo, Nomura, and Hitachi—took over Chinese,
Dutch, British, and American firrns, tried to exploit strategic resources,
and set up monopolies in commodities. Mitsui's monopoly of salt and sugar,
and Mitsubishi's monopoly of rice, drove long-established Chinese merchants
out of business. Prices shot up. Japanese sale of operating licenses to
Chinese and native entrepreneurs led to universal corruption. Malayan tin
production nearly collapsed. Indonesian tea cultivation fell by half. The
result was unemployment, inflation, hunger, and hoarding. Japanese banks
moved in to rescue (or exploit) the situation. Lotteries and gambling firms
were started in an effort to lure black money out of Overseas Chinese hiding
places.
Japanese officials became involved with local underworld figures and war
profiteers. A former Kempeitai agent explained after the war that "in big
cities or large villages, there were always pariahs. We'd find them and train
them, threaten them, cajole them We'd tell them, 'If you take the wrong
course, we'll killl you, but if you do what you're told, you'll have to build
warehouses to hold your fortune.' We'd then bring out the opium. 'I’ll do it!
' they'd say in a minute. Every day we received large amounts of the drug . .
The opium came down from staff level at division headquarters The better we
did, the more opium came."
pp145-146
. . . the situation now between the people of Thailand and theTeochiu.
Although most Overseas Chinese around the Pacific Rim are Hokkien, in
Thailand the majority are Teochiu. There are more Teochiu in Bangkok than any
other city on earth, including Hong Kong and Swatow, where they all came
from. They control the Thai econamy and its biggest banks and enterprises, as
the fig depends on the durian. Over hundreds of years, the Thai government,
the aristocracy, and the armed forces have depended upon Teochiu patronage,
as the durian depends upon the fig Teochiu secret armies control most of the
international heroin trade flowing out of the Golden Triangle. This probably
makes the Teochiu the world's richest tribe in terms of black money They have
been in business a lot longer than the Colombian cocaine cartel, and they
have been rolling over vast sums since the boys in Medellin and Cali were
going to mass on their mother's hips. Nobody knows how much the Teochiu have
salted away in offshore accounts the world over: they have their own banks,
which rank among the world's most prosperous. Hong Kong police files describe
the brotherhood as the most clannish, secretive, and powerful of all Chinese
secret societies. It is the ultimate Chinese tontine.
The Teochiu saga reveals much about the dark side of the Overseas Chinese
syndicates. lt is both illustrative and cautionary to observe how they gained
oblique but profound control of Thailand, sustauined that control over
centuries, and in recent decades have found new ways to maintain their grip.
>From their primary bases in Thailand and Hong Kong, the Teochiu ran a truly
vast international smuggling network in the old days, dealing chiefly in rice
and drugs, but today also dealing in a broad range of commodities,
electronics, and weapons—helped by the fact that Teochiu are the
second-largest Chinese group in Vietnam, Malaysia, and Indonesia. They are
not the only smugglers, to be sure. What is true of the Teochiu and their
methods is also true in varying degrees of the Hokkien, Hakka, and other
Overseas Chinese, wherever they operate as traditional syndicates—which is
just about everywhere, including New York City, Los Angeles, Sydney, and
Vancouver. The fact that there are thousands of innocent Teochiu all over the
world who do not participate in these tribal operations does nothing to
diminish the manipulative and malignant role of the mainstream.
They owe their rise in Siam to a half-Chinese general named Taksin, who
reunited Siam after Burmese invaders sacked the capital in 1767. Taksin had
become a general the easy way. His father was a Teochiu businessman who grew
rich because he outbid Chinese rivals to get a royal tax-farming monopo]y,
which licensed him to collect taxes for the king (the successful bidder
agrees in advance to pay the king a certain amount for the year; whatever
more he can squeeze out of the popula tion, he gets to keep). Thanks to his
father's connections, young Taksin rose rapidly to the top. Making himself
king, Taksin surrounded himself with Teochiu advisers who received noble
titles. They in turn saw to it that their Teochiu cronies were given royal
monopolies over trade and rackets. In this manner, the Teochiu long ago
gained high positions in Siam's aristocracy, government, commerce, and
industry. In the 20th century, the Teochiu stayed in control, despite the
arrival of large numbers of Chinese migrants speaking other dialects.
While Thailand prides itself on never having been under the direct rule
of a European colonial power, its people have lived under indirect rule by
Overseas Chinese for centuries, however well-disguised. Compared with the
rest of Southeast Asia, the Thais have coexisted with the Overseas Chinese in
remarkable harmony. However, it has only been possible with a lot of money
changing hands under the table. Crucial to this arrangement is the fact that
the Chinese in Thailand are different psychologically fiom those who run
Mainland China itself. As coastal hybrids, the Teochiu, outcasts in their own
homeland, never wanted direct rule in their adopted home. They were content
to control the economy.
149-151
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Preparing for its conquest of Southeast Asia, Tokyo held out the prospect
that Bangkok could regain control of the entire Tai linguistic area,
including Laos, parts of southern China, and the Shan States of British
Burma. In expectation of that great day, and to emphasize its traditional
claim, the country's name was changed to Thaiiand.
Fear of Japan caused many Overseas Chinese to seek Thai citizen ship, but
they found themselves blocked by new requirements of military or government
service and fluency in colloquial Siamese. Chinese schools and newspapers
were closed. Police raided triad headquarters and private homes. Community
leaders were jailed, deported, or assassinated, and just before Pearl Harbor,
three defiant Teochiu leaders were arrested. When the Japanese army arrived,
prominent Chinese fled upcountry, many of them joining the underground Free
Thai movement started by Pridi, who was working with Allied intelligence.
Others collaborated with the Japanese.
The outcome of Thailand's ongoing power struggle with the Chi nese begun
in 1910 by Rama VI ultimately depended on who won the war, but the actual
victor was completely unexpected. As the Japanese army stormed from Thailand
into Burma, its commanders invited their Thai counterparts to occupy the Shan
States. The Shan city of Kengtung became headquarters for the Thai Northern
Army under Major General Phin Choonhavan, military governor of what was to be
called the United Thai State. For him it was the chance of a lifetime. Phin
was one of the army junta that had seized power in Bangkok in 1932 and
installed Marshal Phibun. His Chinese connections were so good, and he was so
deft at manipulating people, that by the time the Japanese arrived in 1941,
he was commander of the Northern Army, whose zone of responsibility included
Chiengmai and the Thai sector of the Golden Triangle. Chiengmai is Thailand's
G-spot, the center of all gratification in guns, drugs, girls, teak, gems,
and jade. Whoever controls Chiengmai as governor, or as chief of the Northern
Command, controls the cookie jar. Opium proceeds provided General Phin with
limitless resources that were not subject to government oversight. Thanks to
his excellent high-level connections in Thailand's Teochiu syndicates, the
general was able to build a power base fueled by drugs and rackets that after
the war ushered him and his subordinate officers into absolute power in
Thailand at the head of military dictatorships for most of the next half
century. As we will see, Phin's romance with the Teochiu mafia made a love
baby of the drug trade, and led to its explosive growth to what is now over
2,600 tons of opium per year, which generate billions of dollars in black
money worldwide.
It was no coincidence that Thailand's army occupied the Shan States and
gained access to the finest opium-growing area in the world. Colonel Tsuji
and other planners of the strike south were intimately linked to the Japanese
and Chinese underworlds. They had long been involved in marketing Manchurian
opium throughout East Asia, and both the Japanese army and the Nationalist
Chinese government actively engaged in opium and heroin traffic during the
war. The KMT sold crudely processed brown heroin directly to the Japanese
army of occupation.
For his part, General Phin contacted the Nationalist Chinese in Yunnan in
April 1944 and arranged to meet General Lu Wi-eng, commander of the KMT 93rd
Division. In secret talks between the KMT and the Japanese, in which General
Phin and Colonel Tsuji participated, it was arranged; for the KMT to smuggle
American Lend-Lease supplies to the Japanese. Five years later, when Mao was
victorious in China's civil war, remnants of this same 93rd Division escaped
into Burma's Shan States. There they seized control of the best opium-growing
areas in the Golden Triangle, and resumed a lasting military and commercial
alliance with General Phin in Thailand—all made possible by Japan's wartime
intercession.
But before looking at the consequences and leaving Colonel Tsuji behind,
we must allow him his last flourish. By then, Tsuji had shifted his attention
to Burma. In 1944 he visited General Phin in Kengtung, then helped General
Honda Masaki escape encirclement by Allied forces. To celebrate this and
other feats of daring, Tsuji invited fellow Japanese officers to a banquet at
which the main course was the liver of a captured American pilot. In the
summer of 1945, he was arrested by the victorious Allies and charged with
cannibalism, but he escaped and hid for months in Thailand posing as a
Buddhist monk, protected by General Phin Choonhavan. Since the 1920s, Tsuji
had been intimately acquainted with the KMT secret police boss, Tai Li, and
making contact with KMT intelligence officers in Bangkok early in 1946, Tsuji
arranged to be smuggled to Chungking. There, he personally gave Generalissimo
Chiang the idea of using defeated Japanese soldiers against Mao's communists,
to save China from being overrun by the Reds. The Generalissimo was greatly
excited by the possibility of saving himself and his regime in this way, with
Japanese military help. Working through Tai Li and the American naval
intelligence officer in Chung king, Milton "Mary" Miles, Chiang Kai-shek
secretly contacted General Charles Willoughby, MacArthur's G-2 in Tokyo. Both
MacArthur and Willoughby were lifelong ultraconservatives with a visceral
loathing for Marxism and a deep-seated fear of the consequences of a
communist victory on the Mainland. As part of the deal, Generalissimo Chiang
persuaded General MacArthur to release a group of senior Japanese war
criminals—all friends of Tsuji—who had been imprisoned by the Americans in
Sugamo Prison. When these men were freed, they paid the KMT government a huge
undisclosed sum from looted war booty, which was tantamount to Hermann
Goering paying David Ben Gurion to get him off the hook at Nuremberg. These
men then became leaders of postwar Japan and founders of the ruling Liberal
Democratic Party.
pps159-161
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Credit for some of Phin's success in manipulating the Overseas Chinese
must go to his "adopted son," Udane Techapaibul, a handsome, urbane Teochiu
businessman who engineered many of these takeovers of Chinese businesses As a
young man, Udane had been informally adopted by General Phin because of his
uncanny grasp of the secret inner workings of Chinese community networks.
Udane was the son of a pawnbroker who owned an opium den and shares in
manufacturing rice whiskey. With Phin's backing, Udane started his own liquor
busi ness and was phenomenally successful in cornering a large part of the
market. He then went into lumber, importing, banking, and insurance, with
similar success. After the war, with Phin's clique in power, Udane became
managing director of the syndicate that oversaw the sending of remittances to
China, head of the government sugar corporation and the government rice
consortium, and an officer of the Teochiu Association and particularly of the
Chao-yang Hsien Association—one of the most powerful Teochiu native-place
tontines. This had the salubrious result that Phin's “adopted son" headed the
govemment rice consortium, while a son-in-law controlled all rice smuggling.
On the surface it was one big, successful family. However, a bitter
struggle was developing between Phao and Sarit over the drug trade It was
largely a difference in style Phao was supremely vulgar. Sarit was a
self-made patrician. They kept separate camps. Phao was based on Field
Marshal Phin's mansion on Soi Rachakrul, while Sarit maintained his following
at a Villa on Soi Si Sao Theves.
The "Rachakrul Ratpack," as it was discreetly known among the embassies,
included Field Marshal Phin and his family and followers, many of them
Chinese. The Si Sao Theves Group (''Seesaw Thieves'' in the embassies) had
Sarit as leader, backed by a circle of formidable senior officers.
Between them, these two groups now had control of the world's wealthiest
Overseas Chinese community, not to mention navies, tourism, temples,
brothels, palaces (and one of the world's great cuisines). But they chose to
quarrel over drugs.
The Golden Triangle was about to become the world's largest source of
heroin The big change began in 1949, when the civil war in China ended with
Generalissimo Chiang fleeing to Taiwan. KMT army remnants bottled up by
communist forces in Yunnan escaped into Burma, where they seized ,control of
the best high-altitude poppy growing areas in the Shan States. This was the
same KMT 93rd Division that had sold American Lend-Lease supplies to the
Japanese. It was now under the command of General Li Mi. Since Generalissimo
Chiang labored under the delusion that he couLd recover the Mainland, General
Li Mi was ordered to stay in the Shan States and to sustain his army by
taking over all opium-tar marketing, and to escort each year's bounty to
Thailand, where it could be processed into morphine base or various grades of
heroin and brokered by the KMT to Teochiu syndicates for export.
Senior members of General LI Mi's staff have each said on separate
occasions that Li Mi received this instruction directly from the
Generalissimo, and that it was reaffirmed by his son, General Chiang
Ching-kuo, when he became overseer of Taiwan's intelligence services and
eventually president of Taiwan. The Chiang's high-level involvement in the
drug trade was no great surprise, because the Generalissimo had kept his
government afloat in Nanking during the 1930s by sharing Green Gang earnings
from drug trafficking, while serving personally as chief of China's
opium-suppression campaign. This meant he suppressed everyone else's drug
profits. True, after decacdes of effort, the KMT had little believability,
but it was the world's richest political party, and is to this day. It had a
substantial economic presence in Bangkok in the form of wealthy individuals,
powerful community associations, industrial groups, and the underworld
syndicates of each dialect group, which shared Taiwan's anticommunist
mind-set and were encouraged to move drugs through Taiwan. Thus they had
parallel financial interest. Although Hong Kong was unmatched as an offshore
conduit for heroin, Taiwan provided sanctuary for drug-runners and corrupt
Hong Kong police officers on the run, and offered money laundering facilities
that were incomparable because they were impenetrable. When opium-growing
in Mainland China was ended by the communists, the Shan States became the
leading Asian drug source. The CIA was backing General Li Mi's KMT remnants
in military operations to harass the communists along Chinats back border.
Materiel provided by a CIA subsidiary called Sea Supply was airlifted to
General Li Mi's troops by Air America and other CIA contract airlines.
Because he portrayed himself as a great enemy- of communisrn, Police
General Phao was fully backed and supplied by the CIA. This gave him an
additional way to exert pressure on the Overseas Chinese community by
threatening to denounce as a communist sympathizer any businessman who
refused to meet his extortionate demands. (It is now generally accepted that
no serious communist threat to Thailand ever existed, but was exaggerated to
justify the agendas of Phao and the CIA.)
CIA support gave Phao the upper hand over his rival Sarit. Between 1950
and 1953, Sea Supply gave Phao $35 million worth of weapons, cornmunications,
and transport. The Agency helped Phao create his own armored division, air
force, pocket navy, and border police, whose reciprocal responsibilities were
to see that Sea Supply shipments reached the KMT opium armies, while nobody
interfered with the drug trade. By 1954 Bangkok had become the main source of
hard drugs in the Far East, and most of the flow came via General Phao.
Drug profits increased so fast that General Sarit's "clean" group could
not resist scooping up some, which nearly led to civil war. Near Lampang in
1950, a drug shipment traveling south by army convoy ran into a roadblock set
up by the police. When the army threatened to shoot, the police pointed out
their heavy machine guns. The standoff lasted two days, until Sarit and Phao
arrived to escort the drugs personally to Bangkok, where they split the
proceeds.
Phao's greed was growing out of control. He bullied wealthy Chinese
businessmen into appointing him or one of his associates to the boards of
more than twenty corporations. He helped himself to their treasuries and
moved huge sums of gold through Overseas Chinese channels to offshore
accounts, including major gold bullion deposits in Swiss banks. To terrorize
his enemies, he arrested scores of student leaders and dissident
intellectuals, many of whom never reappeared and were rumored to have been
cremated alive. At long last, in a eomedy of errors, Phao was finally brought
down by Sarit, through his own Chinese banker. Everybody has a soft spot.
That rather unusual banker was the Horatio Alger of the Overseas Chinese f
inancial worlid, a grade-school dropout wha became one of the world's richest
amd most powerful tycoons; while the Thai military dictatorship, thought it
was taking advantage of his financial wizardry, he was turning his local bank
into a world-class multinational ;and setting himself and other Chinese like
him as free as the birds on Buddha's birthday.
pps170-173
-----
HE LIVED IN A BIG MANSION ON WIRELESS ROAD IN BANGKOK, next door-to the
residence of the American ambassador and just across the street from the
United States embassy, which was devilishly awkward. That made it difficult
for Washington to come right out and accuse him of being "the financial
kingpin of the heroin trade."
They had other reasons to be careful of how they handled him. He was
among the world's richest Overseas Chinese, one of the top five most powerful
leaders of the global Teochiu community. He had built the biggest private
bank in Southeast Asia, one of the most profitable on the planet, and he was
the personal banker for everybody who was any body in the Bangkok military
regime. In those days of General Phao, the drug trade was high-level
government business, so no Thai banker could avoid all contact or
contamination. The people involved were generals and field marshals, after
all, not Sicilian thugs in black shirts with mustard-colored neckties. In
Asia, the underworld is just the underwear of the overworld. Why get excited?
Anyway, Washington was picking up the tab.
His name was Chin Sophonpanich, the eldest (and only male) of five
children born in Bangkok to a Teochiu father and a Thai mother. His official
biography dodges around his place of birth, implying that he was born in
China. This subterfuge was necessary because Chin's mother was his father's
secondary wife, and not pure Teochiu, which would have diluted Chin's ranking
in Teochiu circles. More important, as a young man Chin dodged military
service by forfeiting Thai citizen ship, claiming to have been born in China,
in Chao-yang Hsien—one of the seven hsien around Swatow. His father, who
worked in Bangkok as a clerk, took him to Swatow for several years as a
child. Chin claimed he attended prirnary school there, then dropped out of
secondary school due to poverty. When he became rich, Thai citizenship again
became desirable, so he went to great expense to acquire it, with the help of
powerful friends.
In Bangkok at age seventeen, Chin found work as a clerk in a shop. Then
the business burnt down in 1930, the result of arson, he sailed for China on
a Teochiu rice-smuggling junk, and made a number of voyages with smugglers
from Swatow to Bangkok. In China, he married Lau Kwei Ying. Each time he
returned from a voyage, she became preg nant. Of their four children, only
two boys survived, but they were to be his principal heirs. Chin had no
stomach for ocean voyages, so when he reached Bangkok in 1936, he gave up the
sea and moved in with a friend five years his junior, Udane, the “adopted
son" of General Phin Choonhaven. Chin and Udane had the same ancestral home
in China, Chao-yang Hsien, and members of the Chao-yang Hsien Association
were the most influential Chinese in Thailand.
pps174-175
-----
As we've seen, Phao's police were Thailand's biggest domestic drug
traffickers, moving major shipments of opium and heroin in collaboration with
the Teochiu syndicates. The border police escorted KMT opium caravans from
Burma tO police warehouses in Chiengmai, then by train or police aircraft to
Bangkok. There it was loaded onto cargo vessels and escorted offshore by the
marine police to freighters headed for Taiwan or Hong Kong.
If the opium was for domestic consumption, the border police "ambushed”
the smugglers at the border and took the load to Bangkok, where they
collected a government reward of one eighth of the retail value. The opium
then vanished. Phao personally led some of these phony gun battles. After the
"capture" of twenty tons of opium in July 1955, Phao authorized a reward of
$1,200,000 and hurried to the Finance Ministry, where he signed the check.
Next, he delivered the reward personally to the "informant." Phao then
claimed that most of the twenty tons had been dumped at sea and that what
remained would be sold to pharmaceutical companies to recover the reward
money.*
{*Some time later, I was having lunch in Bangkok with Prince Jimmy Yang of
Kokang State, which produces the world's finest opium. Kokang was just east
of the Shweli Valley, where I spent my childhood. During the season, the
hills were mauve with opium popples. Jimmy was an old friend. His family had
ruled Kokang for generations. His sister Olive, known far and wide as "Miss
Hairylegs," commanded the Kokang State army with a Magnum revolver strapped
to her hip. She was also well known for her love affair with a chubby Burmese
actress.
Since 1962, when Burma became a military dictatorship, many ethnic
leaders like Prince Jimmy had to go underground or into exile, and supported
their rebel forces by collaborating with the KMT opium armies. Once, Jimmy
had to flee for his life and ended up flat broke in Paris, living for a year
in a tiny chambre de bonne in the Chinese quarter, nearly starving. Now he
was prosperous again.
I asked Jimmy if any of General Phao's twenty tons had really been
dumped in the ocean.
"Oh, yes! Oh, yes! " Jimmy laughed, looking up moonfaced from a bowl of
rice noodles and chicken coconut curry. "All twenty tons were dumped into the
ocean—but luckily there was a ship in the way. Not an ounce got wet."}
Phao's greed now had become so public that even his father-in-law, Field
Marshal Phin, finally turned on him. Phao was relieved of his post as deputy
minister of finance. General Sarit's newspaper led the attack, accusing Phao
of being a CIA puppet. Sea Supply Corporation was said to have participated
actively in Phao's drug trafficking. Prime Minister Phibun also denounced
Phao's close ties to Taiwan: "The Kuomintang causes too much trouble," Phibun
said. "They trade in opium and cause Thailand to be blamed in the United
Nations."
Early one morning in September 1957, tanks from Sarit's First Division
moved into traditional coup positions. Phao was allowed to leave for
Switzerland, while Phibun fled to Japan. The operational independence of
Phao's national police was ended, and hundreds of American CIA agents were
thrown out of Thailand.
Sarit made himself a field marshal, appointed his crony General Thanom as
prime minister, and another crony, General Praphat, as minister of the
interior.
At Bangkok Bank, Chin worried that Sarit might simply kill him, take over
his bank, and loot it. One of Sarit's followers, a member of the board of the
bank, told Chin it might be simpler to resign immediately and name him
chairman. After giving the matter some thought, Chin outsmarted them all.
He invited the new interior minister, General Praphat, over for a
conversation. His selection of Praphat was said to have been influenced by a
Chinese fortune teller who told him "the chairman of the bank should be a
short, fat person." Because he resembled the cartoon character, the CIA had
given Praphat the code name “Porky." He was tough and resourceful, with his
own large following. Not even Sarit was likely to challenge anything Praphat
did.
During their private conversation, the banker and the general reached an
accommodation, and the following day it was announced that General Praphat
had been named the bank's new chairman. What ever it cost, Chin had a new
protector. But this did not make him bulletproof.
Sarit was furious. When Chin went to Sarit's mansion (without the usual
basket of fruit) to explain Praphat's appointment, the field marshal would
not receive him The message was painfillly clear. Prudently, Chin caught the
next plane for Hong Kong and five years in self-exile.
In Chin's absence, Sarit's government became just as deeply involved in
drugs, although they went about it in a different way, letting others move
the heroin while the army and police provided very expenslve milltary escort.
With Chin out of sight, but the interior minister in charge, Bangkok
Bank's fortunes continued to improve, with sixteen domestic branches, four
overseas, and declared assets of nearly $50 million.
During his five years of exile, Chin was based in Kowloon, running his
Commercial Bank of Hong Kong. Since Mao's victory in 1949, the Teochiu
Brotherhood had shifted its headquarters there from Swatow. In Kowloon, Chin
groomed Robin Chan, his eldest son by his first marriage, to take over
management of Commercial Bank, and his younger son, who used the Thai name
Chatri Sophonpanich, to take over Bangkok Bank.
During his years in Hong Kong, Chin strengthened his Teochiu connections
at the source, rose high in the esteem of the Teochiu Brotherhood, and
learned much about modern banking methods, computers, telecommunications, and
offshore finance. After Marshal Sarit died of natural causes in 1963, Chin
waited a few weeks for the body to get cold, then returned to Thailand. It
was agreed that General Praphat would remain chairman of Bangkok Bank, but
Chin would resurne his roIe as chief executive officer. They worked in
harness for the next twenty years as power broker and moneyman.
To enhance the international leverage of Bangkok Bank and his
Commercial Bank of Hong Kong, Chin arranged to link them to all Teochiu
banking nodes in Asia and the West, starting with Singapore and Taiwan As one
of the new leaders of an increasingly high-tech global Teochiu community, he
became a financial ambassador, travelling to the Philippines, Malaysia,
Singapore, and Indonesia, cultivating rich Overseas Chinese who were not
Teochiu, such as Indonesian magnate Liem Sioe Liong, a Hokchia. To pursue his
own ends, Liem had long collaborated with Teochiu smuggling syndicates
throughout the archipelago. He and Chin had much in common. They were both
bankers and dollar billionaires. With such vast sums of money, both had a
need to keep their personal assets salted offshore. Chin was one of the first
to bridge the ancient gap of enmity between dialect groups when he and Liem
became friends and lent each other millions of dollars to cover occasional
lapses in liquidity. This cross-tribal collabora tion had major significance
for world banking by bringing about offshore financial linkages between big
Overseas Chinese institutions such as Chin's Bangkok Bank and Liem's First
Pacific.
The strategy of the Teochiu leadership was to create their own
multinational banking network around the world, with their own satellite
communications. The financial conglomerate built around Bangkok Bank,
Commercial Bank of Hong Kong, and other subsidiaries and components of the
Sophonpanich clan became a giant Teochiu kongsi, tied together by
interlocking directorships. Its patriarch was the chubby kid with the
grade-school education who turned out to be a financial genius. Now that he
was a banking mogul, honors poured in. In Thailand, Chin became chairman of
the Chao-yang Hsien Association, the richest hsien association of the richest
Overseas Chinese tribe. He also became president of the umbrella
organization, the Teochiu Association of Thailand. In Kowloon, he was named
permanent chairman of Hong Kong’s separate Teochiu Chamber of Commerce. All
of this plainly identified him as one of the five most powerful Teochiu in
the world, if not number one. After Chin's death in 1988, following a long
illness, management of the bank was inherited by his son, Chatri. Despite ups
and downs, in 1993 Bangkok Bank was named one of the world's five most
profitable banks by a British credit rating agency. Its first branch in China
was opened in Chin's hometown, as part of the billion-dollar developrnent of
Shantou, the Mainland's Special Econornic Zone at Swatow. It was a fitting
monument to an extraordinary career. An even greater monument was the fact
that Washington never got up the courage to denounce Chin in public. Drug
Enforcernent Agency staff working in the embassy across the street from
Chin’s mansion complained bitterly, but spent their time chasing small fry.
Meanwhile, in Indonesia, Chin's banking friend, Liem Sioe Liong, was
doing very nicely for himself as well. .
-----
Aloha, He'Ping,
Om, Shalom, Salaam.
Em Hotep, Peace Be,
All My Relations.
Omnia Bona Bonis,
Adieu, Adios, Aloha.
Amen.
Roads End
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