The Chinese Communist Party (CCP) has been consistently complicit in aiding cartel crime, ProPublica senior reporter Sebastian Rotella said during a Federal Newswire interview.
"In the words of Admiral [Craig S.] Faller, the former head of SouthCOM, he said to us on the record [that they were] ‘at least tacitly supporting the money launders,'" Rotella said in the April 11 interview. "There was all kinds of evidence for that in the case we looked at."
Rotella referred to China as "the most formidable authoritarian police state on the planet."
"It has incredible control of its diaspora, not to mention its old territory and its own economy," Rotella continued. "Enormous amounts of money are flowing in and out of banks and businesses in a way as one DEA investigator said, ‘there's no way that this was normal business activity'."
Rotella is a finalist for the Tom Renner Award for his article, "How a Chinese-American Gangster Transformed Money Laundering for Drug Cartels," which looks at the connection between U.S. citizen and businessman Xizhi Li, who in October 2021 was sentenced in U.S. federal court to 15 years in prison for leading a money-laundering network that laundered tens of millions of dollars in drug proceeds for foreign drug trafficking organizations.
Li runs a "side racket selling fraudulent documents" and he has connections "in the Chinese elite, because Li was more of a working immigrant," Rotella said.
There also is "considerable evidence of specific individual connections" between Chinese officials and Li and others involved in the illegal activities such as money-laundering and document forgery, Rotella said, including individual clients, "theoretically corrupt elite," and "at least one senior military officer" who received a fake Guatemalan passport from Li.
"That raises another question; is he providing services in exchange for being allowed to do this business with Chinese officials?" Rotella said. "He had contacts with Chinese officials under diplomatic cover in the United States, according to investigators going back several decades."
Rotella also mentioned "a high-level State Department official" who said "we are seeing more and more of this activity and often it's hard for us to see how much of it is just gangsters working with corrupt officials or how much is gangsters being allowed to operate."
China is aware or even potentially supports Chinese money launderers who do business with Mexican cartels, according to Rotella.
"It's a difficult area, but I think there's a lot of evidence pointing in that direction," Rotella said. "If you read the article, you know we try to phrase it as carefully and judicially as possible. I think we have strong on-the-record sourcing about both individuals and Chinese institutions that are involved. That led to the strong indication the Chinese state is at least aware of and tacitly involved in and perhaps more actively involved in this."
There also is evidence that the money laundering activities are connected to the fentanyl trade in the U.S., Rotella said, though he also quickly added that "it wasn't our main focus."
"Obviously as you said the laundering and the question of what U.S. officials have said on the record is at least tacit support of the laundering which leads you into the question of fentanyl, because much of the laundering now is obviously happening for organizations that deal in fentanyl," Rotella said. "It's so much more prosperous and so much easier to smuggle."
Brookings reported in March of last year that China moved to regulate fentanyl and two of its precursors in 2019 but remains the drug's top supplier in the U.S., most of it supplied indirectly. Brookings reported that China's cooperation in counter-narcotics efforts as being "highly selective, self-serving, limited and subordinated to its geopolitical interests."
Brookings also reported that China has refused co-responsibility with Mexico for the fentanyl epidemic and instead maintains Mexican law enforcement should step up, even as more and more Chinese criminal actors - such as money launderers - expand their operations within Mexico.
About 1 million Americans have died from drug overdoses since 1999, according to the Brookings report.
Fentanyl is cheap to produce and high in potency, so many drug traffickers mix it in with other drugs, according to the U.S. Drug Enforcement Administration, which reports its agents have found the synthetic opioid in basically every street drug, as well as in counterfeit prescription pills. Mexican cartels use raw ingredients from China to produce fentanyl cheaply and then mix it in with other drugs for trafficking into the U.S.
Digital currency "is definitely something" emerging as Chinese organized crime worldwide "is specializing in this kind of laundering cash supply service" and there is tie-back to the CCP, Rotella said in the interview.
He said that people talking about that tie-back "all sort of agree the Chinese government was aware of it."
