China cashes in its N Korean casino chips
By Michael Rank
North Korea's admission, or claim, that it has nuclear weapons may have stolen the headlines, but that's not the only regional problem in the bizarre nation that loves to keep the world guessing. It is also caught up in a rift with its closest friend, China, following the closure of a little-known casino that was an important income-earner for the impoverished Pyongyang regime.
The entire clientele of the Hong Kong-owned Emperor casino was Chinese, so China's decision to ban its citizens from visiting the complex, situated not far from the Chinese border on North Korea's east coast, has caused a severe strain in relations between the two neighbors, even though they are officially close, "like lips and teeth".
The ban comes as part of a general Chinese crackdown on gambling, which even in quasi-capitalist China is regarded by some, at least in the leadership, as a decadent time waster and is losing the country billions of dollars a year as Chinese gamblers are increasingly addicted to blowing their money away outside the country. Gambling is illegal in China, except in the tiny former Portuguese enclave of Macau, although there's no shortage of illegal gambling dens nationwide for those in the know.
The forced closure, since it has no patrons, of the luxurious Emperor casino and hotel complex has stunned the North Koreans, who have long been highly pragmatic in their sources of foreign exchange, despite the country's rigidly Stalinist political system, which has also resorted to drug-smuggling and money-laundering in its quest for greenbacks.
The ban on Chinese visiting the Emperor followed the discovery that a senior Chinese transport official had gambled away over 3.5 million yuan (US$420,000), much of which he had stolen from public funds, at the North Korean casino. In a panic, the Chinese authorities discovered that Cai Haowen, an ethnic Korean, was far from the only Chinese official who had been frittering away public money there, and Beijing ordered travel agencies in the Yanbian border region to stop all tours to the casino.
Pyongyang reacted to the ban by rushing the head of its state tourism bureau to Yanbian to talk to Chinese officials, but apparently in vain, and there is little sign that the casino will reopen in the near future, if ever.
Some cynics, however, say that barring gambling patrons is probably part of another short-lived anti-corruption campaign that will go the way of other anti-corruption sweeps into the dust-bin of history. Others say the current Chinese leadership is serious about tackling corruption, since it undermines the credibility of the Chinese Communist Party (CCP).
The casino complex is owned by Hong Kong's Emperor Group, headed by controversial multi-millionaire Albert Yeung Sau Shing, who is said to have triad links, as well as close ties with the CCP.
Few foreigners have visited the Emperor Leisure Center, as it is officially known. It is in one of the poorest areas of notoriously secretive North Korea, and local people are strictly banned from entering the complex.
The crackdown comes as part of a general ban on gambling casinos on China's borders, which has grown into a vast industry in recent years. No fewer than 84 casinos and gambling dens have been reported closed, most of them on China's southwestern border with Myanmar, Laos and Vietnam, although there are also a few near the frontier with Russia. China's official Xinhua news agency quoted some experts as estimating that Chinese gamblers spend about 600 billion yuan (US$72 billion) in overseas casinos annually, although Professor Wang Hongjun, of the Chinese People's Public Security University in Beijing, said this figure was "seriously exaggerated".
North Korea has not commented publicly on the closure of the Emperor, but will no doubt be hoping that the closure will not last long, and it may gain some comfort from the fact that when China cut off a vital oil pipeline last March - as a warning over a North Korean missile test - that only lasted a few days. Analysts say that China has major economic leverage over Korea - oil and grain deliveries, political support and such activities as the casino - and could exert pressure on Pyongyang to rejoin the six-party talks on persuading the North Korean regime to abandon its nuclear weapons program.
Ties between the two neighbors, although supposedly imbued with a "deep fraternal friendship" have become increasingly strained over recent years as Beijing has discarded communism in all but name while Pyongyang remains committed to its bizarre brand of rigid socialism and the Cultural Revolution-style personality cult of its leader Kim Jong-il.
Reflecting the sensitivity of the relationship, when China announced that the fugitive gambler Cai Haowen had been arrested on a train on February 6, it only said that he had been visiting a casino in a "neighboring country", and did not name North Korea.
Some 50,000 Chinese are reported to have visited the $180 million Emperor each year. Its Chinese-hosted website boasts that "our smiling hospitable hostesses will keep your spirit thriving into the wee hours" and it invites you to "immerse yourself in our heated indoor swimming pool to sweep off any weariness induced by your hectic schedule". It has, or had before the closure, 575 employees, of whom 275 are North Korean while the rest are Chinese, with a few managers from Hong Kong.
The North Korean government takes 70% of the North Koreans' salary. Asked how he felt about the government deducting most of his pay, one North Korean worker said, "The casino makes a lot of money for our country, and we are very honored to make a contribution, so we are not worried about how much we earn."
Needless to say, most visitors leave the Emperor much poorer than when they arrived, and one unlucky gambler is said to have committed suicide by throwing himself from the top floor. Losers can also take advantage of the pawnbroker's shop at the complex where they can pawn their cars and even their homes if necessary.
In an apparent sop to the Chinese, the North Koreans officially do not allow visitors to bring in more than $5,000, but this regulation is not enforced and gamblers can in practice bring in as much money as they like. But there is a strict ban on bringing in cell phones and other electronic gadgets, reflecting North Korea's paranoia about foreign influences.
There is a luxurious 150-room hotel attached to the casino and gamblers are offered free rooms if they spend over $3,000. The rooms have satellite TV and even feature "adult channels".
When the complex opened in 1999, Kenny Wong, an executive at the Emperor, told The Associated Press that North Korean officials originally opposed the word "casino" in the hotel's name because "they didn't want the North Korean people to know what the word 'casino' means."
The casino is situated in the so-called Rajin-Sonbong Free Economic and Trade Zone, which was launched with much fanfare in 1991 as a magnet for foreign investors. But North Korean xenophobia and bureaucracy have ensured that investment has been minimal, and now it seems that the biggest project in the 746 square kilometer zone is set to die.
Michael Rank is a former Reuters correspondent in China, now working in London.
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