The Karen Border Guard Force is providing the military with frontline soldiers in exchange for business protection, allowing its “new city” project to emerge as a hub for online scams.
When Ma Moe Pyae Soe visited Shwe Kokko in February, during the Lunar New Year festival, she felt like she’d been transported to China. “Everywhere I looked, there were red festive lanterns, Chinese-language signs and Chinese people,” said the woman, who was visiting a friend in the area. She told Frontier she was also staggered at the scale of the new city of high-rise hotels and gaudy casinos that, in less than four years, had sprouted up on this obscure stretch of the Thai-Myanmar border in Kayin State.
Shwe Kokko Myaing, to give the place its full name, sits on a bend of the Thaung Yin River that divides Myanmar from Thailand. It is 16 kilometres north of the trade hub of Myawaddy, opposite the Thai city of Mae Sot. Frontier drove north of Mae Sot in late April, to view the new city from the Thai side of the river and see how it had changed since a visit to the area two years before. In place of dusty construction sites were gleaming multistorey hotels with neon signs in Burmese and Chinese, and workers were scaling the scaffolding of new buildings under construction.
The new city project – a partnership between an expatriate Chinese investor and an ethnic Karen Border Guard Force under the Myanmar military – has clearly enjoyed a reversal in fortunes since a Myanmar government probe in 2020 brought the seemingly illegal construction work to a halt. Interviews with residents and workers revealed a booming economy fuelled by Chinese money.
U Myo Naing*, a security guard at Shwe Kokko who spoke to Frontier while visiting family in Mae Sot, said he and other workers were paid in Chinese currency. His monthly salary of 2,900 yuan (K802,000, or US$433) was well beyond what he could earn elsewhere in Myanmar, even in the commercial capital Yangon. A Shwe Kokko resident, Saw Naing Tin*, said that, in 2020, the yuan became the de facto local currency – a phenomenon formerly unheard of outside of areas of Myanmar on the Chinese border. “Previously, we used only Myanmar or Thai currency,” he said, adding that the transition was due to “more and more Chinese people coming to do business with Chinese workers”.
An official at the Department of Immigration in Myawaddy, who asked not to be named, told Frontier in May that there were 1,225 Chinese nationals legally residing at Shwe Kokko. An unknown number are believed to be working there illegally. A report by the Karen Peace Support Network, a civil society group, in March 2020 estimated up to 10,000 mostly illegal Chinese workers, although the subsequent COVID-19 pandemic has since altered informal migration patterns.
Even less clear, at first, was the source of Shwe Kokko’s newfound wealth. Myo Naing claimed not to know what happened in the building he was paid to guard, and Naing Tin said that he and the other residents of the original village settlement of Shwe Kokko were barred from entering the new city without prior permission from the BGF, which keeps tight control over the area.
A March 2020 report by Brussels-based think tank the International Crisis Group said the presence of “thousands of Chinese-speaking white-collar workers” and the installation of “high-capacity internet connections” suggested the new city was being built as a front for online gambling aimed at people in China, where the practice is banned but demand remains huge. In previous years, the Philippines and Cambodia had emerged as hubs for the industry, estimated to be worth $24 billion a year across Asia, but when Beijing pressured these countries to crack down on online gambling in 2019, many operators sought safe havens elsewhere. The lawless environment of Shwe Kokko, in a border area carved up between different armed groups in a multi-decade civil war, meant it could provide such a haven.
Despite this possibility, evidence for online gambling at Shwe Kokko has so far been only circumstantial. However, investigations by Frontier have found what appears to be a growing industry of online scams operating from the new city, of which gambling may only be a part.
‘We have to pretend not to know’
Ma Su*, an accountant at a Chinese firm in Shwe Kokko, said companies there were recruiting people to work as online scammers, often under false pretences. “Workers recruited online are told they will earn a good salary at a casino, but [on arrival] are ordered to work as scammers instead,” she told Frontier. Those who refuse have to pay hefty sums in “compensation” to their new bosses, she said, and attempts at escape are regularly thwarted by the tight security around each business; prostitution charges are sometimes filed in retaliation against female recruits.
Ma Su said that although there are “many such cases of human trafficking” in the new city, legitimately employed workers such as herself were often too fearful to speak openly about them. “We are working and living in the area, so we have to pretend not to know some things,” she said.
Human trafficking for scamming operations is not new to Shwe Kokko. Via Ma Su, Frontier spoke to Ko Aung Myint*, a 32-year-old man from the town of Heho in southern Shan State, who said he arrived in the new city in April 2020 to start what he thought would be a casino job paying 5,000 yuan a month. He was ushered into a multistorey building with a suspiciously heavy deployment of armed BGF soldiers and private Chinese security guards.
“As soon as I entered, the Chinese [supervisor], who spoke a little Burmese, explained the business concept,” Aung Myint said. This concept did not involve gambling but the use of fake accounts and pre-prepared scripts on online platforms such as Facebook, Tinder and WhatsApp to lure people into fraudulent get-rich-quick schemes. “I told them I wouldn’t do it and wanted to leave, but they said I had to pay them first,” he said.
Aung Myint couldn’t afford the 30,000 baht (US$851) ransom they were demanding, particularly after having sold some of his belongings to pay 10,000 baht to secure the supposed casino job to a Myawaddy-based broker, who disappeared after escorting him to Shwe Kokko. “They [the bosses] told me that if I were a woman, I could take on sex work, but for men, there was no other choice. I wouldn’t be allowed to leave the job without paying them compensation,” he said.
After witnessing some staff being physically assaulted, Aung Myint feared for his life. He phoned family members, who then contacted U Thant Zin Aung, a lawmaker for Myawaddy Township in the Kayin State parliament. The MP, who was from the National League for Democracy, negotiated with the BGF and only two days after Aung Myint’s arrival at Shwe Kokko he was escorted to freedom without having to pay the ransom.
Aung Myint is conscious of how lucky he was to have an elected MP fighting his case, when, less than a year later, lawmakers were all deposed by the military coup of February 1, 2021. Dozens of them were arrested, driven into hiding or killed. “I was released because my case took place before the coup,” he said, adding that people being trafficked into Shwe Kokko now have little prospect of being rescued.
There have been more recent reports of human trafficking in the area. The Bangkok Post reported in April that two Thai women had escaped across the river to Mae Sot from a casino on the Myanmar side of the border. They told Thai police they had been forced into sex work after being told they would receive public relations or non-sexual entertainment jobs, and could only be released if they each paid a 25,000-baht ransom. One of the women said about 300 Thai women were trapped in the same circumstances. The casino wasn’t named, but its proximity to Mae Sot suggests it was one of the at least 18 casinos on BGF-controlled land just north of Myawaddy, rather than at Shwe Kokko.
While Aung Myint was tricked into a scamming job, recent Burmese and Chinese language job adverts from Shwe Kokko on Facebook are a little more upfront about the nature of the work.
On June 10, through a simple search using keywords, Frontier viewed several dozen of these adverts that were posted within the last month in job-seeking Facebook groups, mostly by accounts with limited personal information and generic photos, indicating they may be inauthentic. Several of the Chinese language groups were dedicated to Shwe Kokko and had several thousand members each. A search of Chinese social media platforms, however, yielded no relevant results, possibly due to automatic censorship.
The posts in Chinese were seeking Chinese-speaking applicants, while those in Burmese were looking for people with English or Chinese skills, with the latter being promised higher salaries. Many of both the Burmese and Chinese language posts contained the same assurances that no contract, deposit or proof of ID was required to get the job, and that no compensation had to be paid by those who later wished to quit – an apparent effort to pre-empt human trafficking concerns. All invited further enquiries via Telegram, a messaging platform known for its privacy and limited content moderation.
Most of the job descriptions described vague “marketing” and “customer service” roles, and none explicitly mentioned scamming. However, they contained hints that were later confirmed through private contact with a recruiter.
Several Chinese language posts on the same group advertised for a “User Growth Specialist” to work “on the early part of the luring chain”. Two Burmese language posts, from May 30 and June 4 respectively, described the role as “Customer service (Romance chatting)”. When Frontier contacted the Telegram account supplied in the latter post, posing as a job seeker, someone who claimed to be a member of staff at a Chinese company called Yone Sheng at Shwe Kokko explained the role. For 10 hours a day, six days a week, the successful applicant would use a fake online identity to initiate “romantic” conversations with people, based on English or Chinese language scripts, with the goal of eventually luring them into investing in fake business schemes.
The same account behind the job post had also shared links on Facebook to two online gambling platforms. This was the only explicit reference Frontier could see to this industry among all the job posts and recruiter accounts, and the standard use of proxy servers by gambling platforms makes it difficult to determine where they are operated from. Overall, it was difficult to tell whether the predicted boom in online gambling at Shwe Kokko had been substituted with an all-purpose scamming industry, or whether online gambling was developing in parallel, on a more secretive basis.
The Shwe Kokko story
The apparent flourishing of online scams at Shwe Kokko depends on a particular political and conflict environment. This rests, in turn, on a convergence of interests between the Karen BGF, which controls the area, and the Myanmar military. Understanding this convergence, which has strengthened since the coup in February last year, requires a walk back through the area’s complex history.
Before it hosted casinos, Shwe Kokko served as a hub for smuggling cattle into Thailand and as the headquarters of the BGF, which is a breakaway faction of the insurgent Karen National Union that in 2010 was integrated into the Tatmadaw. For years, the horizons of the group’s charismatic leader, Colonel Saw Chit Thu, had extended well beyond the scruffy village of Shwe Kokko, where he kept his incongruously opulent home, Kokko Villa. After amassing a business empire that included quarrying, illicit border trade and a 100-acre amusement park on the outskirts of the state capital Hpa-an, the BGF agreed a joint venture in 2017 with a Hong Kong-registered company called Yatai International.
The company, chaired by Chinese-born businessman She Zhijiang, had invested in a new city project on the Cambodian coast called Long Bay and was proposing something just as grandiose for Shwe Kokko. The village would be dwarfed by an adjoining US$15 billion “new city” over 73,000 hectares, with an airport, a 1,200-room hotel, casinos and an industrial zone, according to planning documents seen by Frontier.
In 2018, the Myanmar Investment Commission approved a modest first phase of the project: the construction of 59 luxury villas over 10.3ha for $22.5 million. However, the following year, Frontier saw construction work extending well beyond these limits. A BGF spokesperson said approval of a second phase was pending. It never came: the investment commission in June this year told Frontier that it had never even received an application for a new phase. The commission said it agreed last year to extend the implementation period of the first phase until January 2023, but without widening its scope.
Growing media attention on the runaway construction work, and allegations that the project might serve as a front for illegal online gambling, eventually forced the hand of the NLD government in 2020. In June of that year, it launched an investigation into the new city and officials began making regular site visits, prompting building work to halt.
The probe embarrassed the military, which is responsible for keeping its ethnic auxiliary forces in line. In December 2020, large numbers of soldiers descended on Myawaddy, impounding almost 150 vehicles smuggled from Thailand through the BGF’s illegal trade gates and forcing BGF leaders to the negotiating table. The demand was for them to either resign or give up their businesses, but when Chit Thu and two of his top commanders – Major Saw Mote Thone and Major Saw Tin Win – duly offered to quit, thousands of BGF soldiers vowed to do the same. A chastened Tatmadaw sent a high-level delegation to the BGF on January 15, hoping to avert the mass resignation.
Negotiations were continuing at the time of the military coup on February 1, 2021, which re-ignited large-scale conflict with the KNU. The military bombed Karen villages from the skies for the first time since signing a bilateral ceasefire with the KNU in 2012, and the group retook several strategic bases that it lost to the Tatmadaw decades ago. Kayin has since seen regular fighting, in which the military has lost hundreds of men. Pushed to the frontlines, where their knowledge of the mountainous terrain is an essential asset, BGF soldiers have accounted for many of the deaths. “In the past, the military led operations and the BGF provided support,” a member of the group told Frontier on condition of anonymity. But now, he said, “we are like a suicide squad.”
The heavy rate of attrition has prompted the BGF to ramp up forced recruitment in Karen villages, residents told Frontier. A man from We Pyan village in Hpa-an Township said that on May 1 about 50 soldiers from the BGF’s 1014 battalion stormed his and five other nearby villages, blocking the exits with vehicles and firing guns into the air before seizing more than 100 men. Myanmar media have reported similar examples of forced recruitment elsewhere in Kayin, and a resident of Shwe Kokko told Frontier this was supplemented by onerous demands for money. The resident said 500 baht (K26,395, or $14) was “collected by force” from each household in six villages near Shwe Kokko in the second week of May, to fund a welcome ceremony and award bonuses for troops from two BGF battalions who were temporarily returning from frontline duties.
The anonymous BGF member, who works with senior members of the group, said the BGF’s costly frontline role was the result of a deal the group’s leaders reached with the military in mid-January 2021, when they were also given forewarning of the coup. “They agreed to take the lead in [military operations] if they wanted to keep doing business,” he said.
The BGF were quick to taste the fruits of this deal. In May last year, Frontier reported that the riverside casinos and trade gates on BGF land close to Myawaddy town had reopened the previous month, after being closed for two years due to COVID-19. The 27 trade gates – informal ferry crossings on the Thaung Yin River – handled up to $1.5 billion in goods in pre-pandemic times. Meanwhile, an anonymous BGF member said negotiations were underway in the months following the coup to resume the new city project in Shwe Kokko, possibly as a “joint venture with the Tatmadaw”.
The extent of recent construction work at Shwe Kokko, seen by Frontier in April this year, suggested that the negotiations quickly led to a full-scale resumption. Demands for a fundamental restructuring of the new city project and other BGF enterprises – with the possibility of partial Tatmadaw ownership – also seem to have been watered down. As the money rolls in again, official roles have been shuffled to give the appearance of a division between military and business matters within the BGF, although little appears to have meaningfully changed. Major Mote Thone, who had administered the riverside territory containing the trade gates and at least 18 casinos, and Major Tin Win, who oversaw business leases in Shwe Kokko, were both reassigned to frontline battle duties. In their stead was placed a retired senior officer in the BGF, Saw Min Min Oo.
“During talks, the Tatmadaw said the BGF should only engage in military matters, so BGF leaders transferred direct economic management to a former member who is currently in business,” Min Min Oo told Frontier, referring to himself. However, Min Min Oo is merely taking a more hands-on approach to a job he has played for years. He has been managing director of Chit Linn Myaing Co Ltd, the BGF’s main holding company, for more than a decade. He is also the only Myanmar national listed among the directors of Myanmar Yatai International Holding Group, the joint venture company behind the new city project, on Myanmar’s company register. The company filed its latest annual return in March, with no changes to director roles.
Few, however, consider Min Min Oo a major decision-maker. The BGF’s general secretary and acknowledged leader, Chit Thu, only holds a “consultant” position and is not listed as a director for any of the Chit Linn Myaing subsidiaries, but his conspicuous personal wealth indicates that he is a major beneficiary.
While a handful of BGF leaders and foreign investors may be enriching themselves, the area that hosts their money-making schemes is sliding deeper into chaos. The nature of the pact that underpins Shwe Kokko’s emergence as a criminal hub – in which Tatmadaw protection is exchanged for the BGF’s supply of soldiers as cannon fodder – demonstrates how the military’s determination to consolidate its coup is aiding organised crime and inflicting harm well beyond Myanmar’s borders. In the absence of peace and genuine democracy, the harm will radiate across the region for years to come.
Additional reporting by Gavin Gao
* denotes the use of a pseudonym for safety reasons