Empire of Crime

by Tim Newark

  As the Sri Lankan government dithered, Knowles decided to get some competition into the deal and wooed the Prime Minister of the Maldives, another former British colony. He let the information slip to Sri Lanka and within 24 hours the reluctant Finance Minister had agreed to the deal and signed it at Lord’s cricket ground in London.

  ‘I was now destined to be Mr 5%,’ remembered Knowles excitedly. The great wealth he had been working towards for so long was now within his grasp.

  ‘A week later, after months of flying backwards and forwards to Sri Lanka, the price of gold, which had always been fixed, was allowed to float on international markets. Gold suddenly became cheaper in India! The contract and project was now worthless.’

  After so much investment in time and travel, it was a considerable blow to Knowles. But, just as he wondered what on earth he could do next, another proposal came his way. The CIA had maintained their interest in him as a gentleman who could pull together elaborate schemes.

  ‘I was approached by a guy called Miles Copeland [a senior CIA officer],’ said Knowles, and they discussed a number of bizarre ideas. ‘One was to sell a dummy nuclear bomb to Colonel Gaddafi of Libya. He was being a pain in the ass to the West at the time and we could embarrass him hugely.

  ‘Miles liked the idea and said he was sure he could get the full cooperation of the CIA, and he was just off to the USA and would discuss it with them. Unknown to me, US policy had changed, and the US government decided on a policy of appeasement with Gaddafi. Instead of informing me of the decision, they decided to blow it … in an ungentlemanly way, but quite amusing.’

  They leaked the story to the media, saying falsely that Knowles had disappeared to Moscow with the advance payment of £1.5 million he had received from the Libyans for the fake bomb. A girlfriend was later surprised when he turned up in London. But, then again, his friends expected such tall tales from him.

  What was it that kept this relatively privileged young man so interested in pursuing gold-plated schemes in the Far East?

  ‘My early youth passion was philosophy,’ he admits now. ‘Not academically, but authentically as the search for Truth. I chose to see life as a game, and to play, which included many a form of risk-taking and adventuring. I also decided, as part of that playing, to go fortunehunting, with little interest in money but a great interest in the challenges in acquiring it.

  ‘But one day my understanding of the game of life changed. In seeking help to get the approval of the Indian Prime Minister on a project, I had enlisted the willing support of the acclaimed holy man Swami Muktananda. He said to me the Game of Life is not as you think. It’s played on another level and there are rules to the game you have not yet discovered. I resolved to go back on my quest, this time with a difference. There appeared a choice between Wisdom or Wealth.’

  One of the last imperial adventurers ultimately turned his back on his elaborate money-making projects and is now a mystic philosopher living happily in Ireland.

  As the British Empire entered its twilight period in South-East Asia, narcotics warlords fought over control of the illicit drugs trade. The British Ambassador in Bangkok reported one particular opium battle being fought in August 1967 on the Thai–Laotian–Burmese border between druglord Chan Chi Fu and Kuomintang (KMT) gangsters.

  Half-Chinese, half-Burmese Chan was the main opposition to the KMT gangsters, who had muscled into the narcotics business in the region since they had fled from communist China. Chan had hijacked a KMT opium train in Burma, so the Chinese nationalist generals were hungry for revenge.

  Chan had brought ten tons of opium into Laos on pack animals from Burma to be delivered to an airstrip on the Laotian side of the Mekong River. As Chan approached the airstrip, the KMT sprang their trap. Some 900 heavily armed KMT troops opened fire on the mule train. But Chan had powerful friends in Laos who resented the intrusion of the nationalists on their territory and Laotian aircraft came screaming in, bombing and strafing the KMT gunmen.

  Burmese trucks arrived with ammunition for Chan’s men and they fought off the nationalist assault, keeping their opium. Under this intense fire, the KMT lost half their men; the Laotian commander told American agents he would use napalm and fragmentation bombs to drive out ‘the invaders’.

  ‘According to the Americans,’ said the British Ambassador, ‘this particular gang of [KMT] Chinese bandits are ruffians, even by the standards of that area. They have proved so unamenable that even Taiwan will have nothing to do with them.’

  Chan Chi Fu kept his grip on the opium trade until he was imprisoned by the Burmese government in 1969 for being too close to the Shan separatist movement. After five years, he came out of jail, taking the Shan name of Khun Sa – under which he became even more infamous – and recruited a new army. Over the next two decades, he manipulated the Shan cause so that he ended up controlling more than half of the opium passing through the Golden Triangle, which amounted to half the world’s heroin supply.

  ‘He has delivered as much evil to this world as any Mafia don has done in our history,’ said a US Drug Enforcement Administration officer.

  Much of this avalanche of opium was destined for Hong Kong.

  By 1970, the colony was Britain’s last major overseas territory. The increasing influx of narcotics was playing havoc with the British government’s efforts to maintain law and order. So much so, that Sir David Trench, Governor of Hong Kong, sent a report to the Foreign and Commonwealth Office in London alerting them to the spiralling crime rates. Murder and robbery were up dramatically and lurid newspaper articles regularly reported Hong Kong citizens being hacked and killed in Triad-related assaults.

  ‘The problems we are facing have no political roots,’ said Sir David. ‘Indeed, among our critics for permitting the current violence are – not unexpectedly – the Communists, who lose no opportunity of ridiculing our efforts to deal with the situation, while finding our Western ways and our Western pursuit of affluence to be the causes of it.’

  The Governor blamed the influence of the Triads, as well as the high population density of the island.

  ‘The really disturbing fact is that the carrying of weapons, chiefly knives, sharpened files and other cutting weapons, is far more prevalent than it was,’ continued Sir David. ‘There is a very unpleasant tendency towards a far greater readiness on the part of our younger criminals, who are proportionately on the increase, to use them hastily, needlessly and viciously.’

  Gang fights had rocketed from 69 in 1968 to 153 in the first half of 1970, as low-level Triad factions fought for domination of the streets. Armed robberies were up, too.

  ‘All this is causing widespread disquiet,’ said the Governor. ‘There is a marked surge of Chinese opinion in favour of much stronger measures being used against those who perpetrate acts of violence. The recent conviction of three youths on a charge of murder resulting in the imposition of the death sentence was greeted with widespread and undisguised approval.’

  In an effort to hold back the crime wave, the Hong Kong Police stepped up its stop-and-search operations, introduced road blocks and raided gang-related premises, resulting in the capture of a large array of dangerous weapons. Despite these measures, Sir David believed the maintenance of law and order was being let down by the introduction of increasingly liberal methods of punishment. Hong Kong criminals had been deterred by the threat of deportation, but neither the Taiwanese nor the Chinese communists were willing to have gangsters dumped on them. As for younger criminals, the courts, under the influence of the UK, were not imprisoning them.

  ‘What is so concerning people here,’ concluded Sir David, ‘is that they are both unused to violent crime in Hong Kong and aware of how bad it can get amongst their own people when it gets out of control. In the present state of Chinese public opinion, therefore, we need to show we are taking remedial action to the best of our ability. We need to try to meet the criticism that an excessively “progressive” attitude to crime and punishment in the past h
as brought about this deterioration – which, indeed, may well be true. But at the same time we shall have to take care to keep things in proportion and avoid excessive and unacceptable ways of dealing with offenders.’

  When the Governor’s alarming report arrived in London, it did not especially upset the Foreign and Commonwealth official who received it.

  ‘We agree that the figures are disturbing,’ came the response, ‘but the pattern is the same in many other places and is, I am afraid, symptomatic of the times in which we live.’

  Crime figures in Birmingham were then dispatched to show that Hong Kong’s crime wave was little different from that experienced in several British cities!

  Two years later, a new Governor of Hong Kong, Sir Murray MacLehose, alerted the British government to the fact that the colony was a major centre of drugs trafficking. Known affectionately as the ‘Jock in the Sock’, the Glaswegian governor pulled no punches.

  ‘Our estimate is that the Colony now has not less than 60,000 drug addicts,’ he said, ‘and probably considerably more, out of a population of four million – proportionally one of the highest, if not the highest, in the world. Its geographical position astride the main communications routes in the area has made it almost inevitable that Hong Kong should also have become a centre of the illicit trade in narcotics.’

  The Governor estimated that fifty tons of raw opium and ten tons of morphine were imported illegally into Hong Kong every year. The colony was a major producer of heroin from imported opium, which was exported clandestinely to the United Kingdom, the United States, Canada and Australia. Total turnover of the underworld drugs business in Hong Kong was estimated to amount to $HK1 million a day. The Americans joined in the disapproval of Hong Kong’s criminal reputation.

  ‘Its well organised, secretive, criminally oriented groups,’ thundered a report to the US House of Representatives in Washington DC, ‘provide the brains and banking required to operate a sophisticated narcotics trafficking ring. As a widely-used, international free port, it provides the trafficker an excellent point for trans-shipment of heroin and other opiates to their ultimate destinations, including the United States.’

  Vast shipments of narcotics were hitting the streets all across the western world. In June 1972, two Hong Kong Chinese stepped off a BOAC flight at Heathrow airport in London. When the customs officers went through their luggage, they hauled out a bedroll tucked inside a kit bag. Taking a knife, they slit open the bedding and out tumbled 50 packs of heroin. It was part of the biggest haul of heroin smuggled into the UK at that time, worth approximately £350,000 to its distributors. One of the smugglers, a 53-year-old Chinese restaurant owner, was sentenced to nine years in prison; the other received eight years.

  Shortly afterwards, the Governor of Hong Kong appointed a Commissioner of Narcotics to deal with the rampant problem. The commissioner got a surprising break in December 1972.

  ‘I was approached in Hong Kong by a Yunnanese gentleman whom I have known on and off for a number of years,’ he said. ‘He told me that Law Sing-hon, who is the principal trafficker in illicit opium and its derivatives in the region of Burma adjacent to Laos and Thailand and who controls the area, had contacted him in the Colony by courier.’

  The courier produced a document in which the 37-year-old Law Sing-hon – more widely known as Lo Hsing Han – detailed his involvement in the trade in Burma and how Kuomintang troops protected it. These irregulars, mostly Yunnanese, formed an army called the Burma Self-Defence Force. At the end of the letter, Law said he wanted to get out of the opium business and wanted the informant to arrange a meeting with the Americans on the Thai– Burmese border to see what could be done to that end.

  CIA and US Bureau of Narcotics and Dangerous Drugs officers stationed in Hong Kong flew out with the informant to meet Law Sing-hon on the Thai side of the border with Burma. He showed them no fewer than 24 opium-refining factories. He then put forward his outline for ending the illicit traffic in Burmese opium.

  ‘The Americans are reported to have made it clear to Law Sing-hon,’ said the Commissioner, ‘that they could not engage in any programme of crop substitution in Burma without the concurrence of the Burmese Government in Rangoon – a Government for which Law expressed complete contempt, declaring that he was “The Government” in this region.’

  Without committing themselves to any further action, the Americans passed his proposal on to their superiors in Washington.

  ‘Why Law should want to get out of the opium business and have made an approach to the Americans at this period in time is not clear,’ stated the Commissioner. ‘He is only a young man and maybe sees himself becoming an international outlaw and an embarrassment the Burmese Government may feel obliged to liquidate. He has been pilloried in the press recently and is notorious as one of the world’s major opium traffickers.

  ‘On the other hand,’ considered the Commissioner, ‘he may have made so much money that he can well afford to get out of the trade and may hope to redeem his character by lining up with the Americans in a campaign to stamp out opium growing and trafficking. Perhaps a combination of both is somewhere near the truth. But before he goes he is astute enough to realise that provision must be made for the future livelihood of the opium growers and his troops.’

  That, as always, was the problem. How could a native population so used to the benefits coming from producing the raw material of the narcotics trade be enabled to swap that for an alternative income? As the Commissioner concluded, it would need agreement between Law and the socialist Burmese government to allow pacification, crop substitution and resettlement in order to stop drug trafficking and heroin manufacture. That seemed unlikely, bearing in mind Law’s attitude to the Burmese government and the endless vicious feuding between narcotics warlords in the region.

  The Hong Kong Narcotics Commissioner’s report was a tantalising account of how even a drugs baron might want to halt the flow of illicit drugs in the Golden Triangle, but it didn’t mean anything would really change.

  The reason why Law perhaps wanted to get out of the drugs business came later in 1973, when he was arrested by the Thai government for his alliance with the rebel Shan army. Shan commander Khun Sa (the former Chan Chi Fu) took over his business.

  Initially sentenced to death, Law was released in 1980 and went back to the narcotics trade, rebuilding his empire. A decade later, he was re-investing his criminal millions in legitimate construction and energy projects in Singapore, and managed also to keep close sanctionbusting relations with the Burmese dictatorship. Having blown their links with him in the 1970s, the Americans had long lost their opportunity to deal with him.

  Sir Murray MacLehose, Governor of Hong Kong, was equally wary of suggesting a quick fix for the narcotics problems faced by the colony.

  ‘The fact is that the eradication of drug abuse and illicit drug trafficking in Hong Kong lies largely outside our control,’ he lamented. ‘We shall do what we can, but an effective solution can only be found with the co-operation of other countries in this area.’

  The Jock in the Sock understood this would involve persistent negotiations with Thailand, Burma and Laos, and that the Americans, with the United Nations, were the only ones who could exert any kind of pressure on these governments to change their ways.

  ‘I realise that, particularly in Burma, where production is greatest and government control least effective, the difficulties will be enormous and the necessary financial assistance considerable,’ he said. ‘I recognise that the action I have proposed in the international field will be delicate, laborious and probably expensive. But something must be done, and be done soon, if we are to make real headway against this problem, which is as serious for its social effects on the Colony as it is for the international reputation of its British administration.’

  The irony was that 70 years after the British had hoped to wipe their hands of the opium trade, it was causing their imperial administrators an even greater headache. Indeed, it
might well have been better for all concerned if the British Empire had kept its monopoly on the opium trade and policed it more effectively. Instead, it was now run by Asian opium barons whose activities were far beyond its reach.

  The Walled City of Kowloon remained the dark symbol of uncontrolled crime in Hong Kong in the 1970s. Its fetid, enclosed alleyways haunted by emaciated addicts, gaunt prostitutes and Triad gangsters continued to dissuade police from entering. Christian missionary Jackie Pullinger famously ventured into its shadowy labyrinth, describing a grotesque world comprising illegal dog restaurants and child prostitutes. Everything was stolen from the outside world, including the electricity, tapped from the public supplies by a tangle of wires.

  But you cannot steal sanitation, so excrement must be emptied into the stinking alleys below. At street level there are two toilets for all thirty thousand people; the ‘toilets’ consist of two holes over overflowing cesspools, one for women, one for men.

  Yet, within this hell, Pullinger found a certain kind of order. There were schools, and she even managed to make Christian converts among the Triad gangsters.

  ‘Despite its reputation, the Walled City is relatively crime-free compared with the neighbouring parts of Kowloon,’ noted a government official. The reason for this was that organised criminals abhorred disorganised crime and thieves were regularly disciplined by Triad gangsters. Most of the poor people within the Walled City were employed by drug dealers. It was only when anti-vice campaigns began to have some impact on the slum that its inhabitants were compelled to turn to robbery. The worst danger was from fire. It was impossible for the emergency services to negotiate the maze of alleyways and when a building was weakened by fire, it simply collapsed.

  Whenever the Hong Kong government tried to do something about the Walled City, they came up against the problem that it fell within disputed territory. Under the original agreement with Peking in 1898 – by which the New Territories of Hong Kong were leased for 99 years – Chinese officials had been allowed to exercise jurisdiction within Kowloon, so long as it did not clash with British interests. For 20 years after the Second World War, the Chinese communists had ignored the growing slum, but when the British tried to clear and resettle some of its inhabitants, local communists kicked up a fuss.