TIP, MONEY LAUNDERING, PROTECTING AMCITS: CG

C O N F I D E N T I A L SECTION 01 OF 03 HONG KONG 000255

SIPDIS

SIPDIS

DEPT FOR G/TIP AND EAP/CM
NSC FOR DENNIS WILDER

E.O. 12958: DECL: 02/11/2028
TAGS: KCRM SMIG SOCI PGOV PHUM CACS CH MC MG HK
SUBJECT: TIP, MONEY LAUNDERING, PROTECTING AMCITS: CG
CUNNINGHAM SPEAKS TO MACAU CHIEF EXECUTIVE HO

REF: 07 HONG KONG 2775

Classified By: Consul General James B. Cunningham, for reasons 1.4 (b)
and (d)


1. (C) SUMMARY: In a productive and friendly meeting January
29 with Macau's chief executive, Edmund Ho, Consul General
Cunningham received positive initial reactions to our plans
to expand contacts with the growing American community there
and to strengthen liaison with the Macau government to ensure
that we could better protect Americans in case of large-scale
accidents or emergencies. Ho was warmly welcoming of the
U.S. presence there, and strongly supported improved
emergency coordination between the U.S. Consulate in Hong
Kong and his government. Ho noted voices from "a minority"
of Macau citizens, who complained about the effect that the
large U.S. investors were having on Macau's small society and
economy, but remarked that officials in Macau and Beijing
understood the overwhelmingly positive effects the foreign
investments were having in Macau -- but they needed to remain
responsive to other viewpoints, as well. The CG pushed
strongly for Macau to complete its new legislation against
trafficking in persons. Ho affirmed that the anti-TIP
legislation was near completion; a week later we received
word that the legislation had just cleared the vetting
process in the Executive Council (i.e., the cabinet) and
would be presented to the Legislative Assembly for approval
by mid-February. In response to the CG's urging, Ho also
stated his government would continue to tighten controls on
money-laundering; he claimed that the Banco Delta Asia (BDA)
was dying "a slow death," and its owner was trying to find a
way to sell it. END SUMMARY.


2. (C) COMMENT: Government decision-making in Macau flows
straight from Chief Executive Ho, who has been very
responsive, even visionary, in his ability to push his
government to improve its capacity to deal with issues of
serious concern to the United States, in particular, TIP,
money laundering, North Korean exploitation of Macau
financial institutions and protection for the burgeoning
American business community. He made perfectly clear that,
despite grumblings and sometimes quite pointed anti-American
rants in the press, his government and -- more importantly --
Beijing itself understood and supported the expanding U.S.
business interests there. These sentiments were echoed in a
similarly positive meeting the CG had the same day with the
PRC's MFA Commissioner to Macau (septel). END COMMENT.


3. (C) Consul General Cunningham opened the discussion with
the chief executive (who was unaccompanied) by noting that he
was in Macau to touch base with the American business
community, the Macau government and the PRC Ministry of
Foreign Affairs commissioner. The Consulate wants to help
ensure the U.S. community is perceived positively by Macau
society. The CG stated he also wants to build up our
Consulate General's ability to coordinate with Macau
authorities and the American community in the event of an
emergency affecting American citizens. The ferry accident on
January 11 (note: in which 19 passengers were seriously
injured) was an example of the kind of incident for which the
U.S. and Macau governments needed to prepare, the CG
remarked.


4. (C) Chief Executive Edmund Ho said Macau welcomed the U.S.
investors and that Macau's development, spurred by inflows of
foreign money and expertise, was going well. Macau was
experiencing a few negative effects, such as increased
inflation, widening income gaps, and the sense among "a
minority" of its community that some Macau citizens and
businesses were "not benefitting as much as they should" from
the rapid economic growth. He noted that while most Macau
citizens see the American presence as a positive thing, and
the average workers "don't care where the money comes from,
they just want the jobs that come with it," others,
particularly local businesses, were complaining that it was
difficult for smaller local companies to participate in the
business boom. Many Macau businesses are not accustomed to
dealing with the large-scale operations of the international
companies and so had a hard time selling their products and
services. The large foreign investors feel more comfortable
sourcing goods and services from similar large operations
from Hong Kong. "I have been pushing the Macau business
people to step up to the challenge," said Ho.


5. (C) Ho also remarked on the occasional explicit
anti-Americanism that appears in public commentary in Macau.
"The American presence is having a lot of political effects,"
he claimed. "Some people are saying the U.S. companies help

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the U.S. government interfere in local politics, or that the
U.S. companies themselves may start interferring directly in
politics, supporting legislators who might, in turn, support
their interests. The Macau government must work under the
Basic Law and the Central Government. We all have to walk a
thin line between 'interference' and 'healthy interaction,'"
he cautioned. That said, Ho clarified that, "many
politicians here and in Beijing correctly understand the
situation (i.e., the positive effects of the U.S. presence
and Macau's open-door policy) but they have to be responsive
to people with many different points of view."


6. (C) The Consul General agreed that the American business
community needed to be seen as actively and positively
contributing to Macau's society and he has been pressing them
to find ways to do so. Participation by local businesses in
the economic growth was important, as was the need to bolster
U.S. businesses' images as good neighbors in Macau. Ho
agreed those were good ideas, but urged -- twice -- that the
U.S. business community in Macau find ways to actively assist
people in the Chinese mainland, through charitable or other
works. "We in Macau have the money to take care of
ourselves. China is where they should work. China (i.e.,
Beijing) thinks that with so many of its citizens spending so
much money gambling in Macau, you ought to give something
back." (Note: Approximately one half of Macau's 27 million
tourists in 2007 came from mainland China.)


7. (C) Pointing to the estimated doubling of the size of the
American community in Macau and the expected large increases
in Americans working and visting there, the Consul General
informed CE Ho that we wanted to work closely with his
government to carefully protect the interests and safety of
Americans. The ferry accident, though thankfully no
Americans were injured, was an example of the kind of
situation that might arise that would require rapid, clear
communication and coordination between our governments. The
CG noted that, even before the ferry accident, his officers
had been assessing Macau's emergency response plans and
capacity, visiting hospitals, transportation facilities and
hotels and making important contacts for future emergency
liaison. CE Ho welcomed all of these actions and stated very
clearly his government's willingness to work with us to set
up these links and procedures before they became necessary.


8. (C) The CG told Ho that, because of the rapidly expanding
American presence and business interests in Macau, we felt a
strong need to increase our interaction with and presence in
Macau, and were now reviewing options to do so. The CG
ideally would like to be able to station an officer full-time
in Macau, but that did not seem feasible in the near term.
We were thus looking at alternatives, including other types
of representation in addition to the existing informal warden
system. CE Ho took note of this, and said his government
wanted to help us take care of the American community, but
that we would all have to think carefully about what form the
representation would take. Ho wondered whether the Amcham
would be able to help us in these duties and offered, without
elaborating, to allow his staff to assist the U.S. in these
efforts.

Still Need Action on Trafficking in Persons and Anti-Money
Laundering
-------------- --------------


9. (C) The Consul General then raised two issues on which
we're looking for continued progress: trafficking in persons
(TIP) and anti-money-laundering (AML). Following up on
several previous conversations between himself and the Consul
General, CE Ho said that Macau's new anti-TIP legislation is
in its final stages and he expects to have some news for us
"soon." The CG urged CE Ho to press the legislation forward
to the Legislative Assembly (LA) quickly -- by the end of
February, if possible. CE Ho took the point, but judged it
difficult to get it to the LA in that timeframe. He would
try, however, to ensure it was at least officially reported
to the Executive Council (ExCo) for vetting by the end of
February. (Note: On February 1, three days after the CG's
meeting with Ho, the Macau government announced several new
anti-TIP measures: it has established a TIP reporting hotline
and would be placing posters at border crossing points and in
hospitals to raise TIP awareness, among other measures.
Then, on February 6, Macau's second-ranking official called
our deputy principal officer to report that, indeed, the
Macau government had sped up vetting by the Executive Council
of the new legislation: Exco had just approved it and the
legislation would be presented to the LA for passage right
after the Chinese new year, i.e., in mid-February.)

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10. (C) On anti-money laundering, the CG raised the July 2007
Asia Pacific Group mutual evaluation of Macau and urged the
CE to implement the recommendations in the final report (ref
A),including pursuing membership in the Egmont Group. The CG
also noted that State Department INL DAS Ambassador Schweich
would be coming to Macau later that week to discuss global
narcotics and money laundering issues with the Macau
authorities. CE Ho affirmed the Macau government's
committment to battle money laundering, pointing to the
territory's legislative and bureaucratic improvements in
recent years. CE Ho then raised the Banco Delta Asia case,
noting that the bank "is not doing well at all." The North
Korean issue was now completely "wrapped up," but the bank
cannot do any other kind of business (note: they are limited
to only local, Pataca transactions, and cannot even deal with
Hong Kong dollars). The Macau government had helped them out
with a loan, said Ho, and had given them some "management
assistance," but the bank is "going down the slope to a slow
death." The owner, Stanley Au, is "just looking for a
buyer," claimed Ho.


11. (C) In conclusion, the Consul General remarked on the
expanding cultural and educational links between the U.S. and
Macau. We already have an American Corner at the University
of Macau and a Fulbright program, but the U.S would like to
set up something broader and more formal. We have been in
contact with several universities in Macau about establishing
a joint Association for U.S.-Macau Academic Exchanges
(AMUSAE). Universities wanted to participate, said the CG,
but an issue about the Macau government approving their
funding for it seemed to be a sticking point. CE Ho said he
would talk to the Secretary of Education and try to resolve
the issue.
Cunningham