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Organized Crime and the 21st Century
Centre for Criminology
Faculty of Social Sciences
The University of Hong Kong
On 26th June 1999, The Centre for Criminology held its first
seminar on Organized Crime and the 21st
Century. The purpose of the seminar was to bring together practitioners,
researchers and other interested parties to discuss the trends and potential
directions in organized crime in the HKSAR and neighboring areas as we
move into the next millineum. A number of experts presented their research
findings and practical knowledge about organized crime trends in Hong Kong,
Macau, China and Russia. The seminar concluded with a panel discussion
on the overall patterns and the legal issues of addressing organized crime.
These proceedings include the presentations of each of the speakers.
I would like to acknowledge several people who contributed to making
the seminar a success including Mr. David Hodson who was the co-organizer
of the seminar and co-editor of the proceedings. Special thanks also to
those who helped with the administration of the seminar: Mr. Lau Wing Yat,
Davy; Chong Wai Kei, Simon; Kwok Suk Wai, Francisca; Chuek Siu Man, Maggie;
and George, Omana. Teresa Mora provided editorial assistance. The Centre
for Criminology also appreciated the co-sponsorship of SPACE, University
of Hong Kong.
The Centre for Criminology will continue to publish proceedings from
some of its seminars. I hope you will find this one and future ones to
be of interest.
Karen A. Joe Laidler
Associate Professor
Research Fellow of the Centre for Criminology
Organized Crime and the 21st
Century Seminar
Sponsored by The Centre for Criminology & SPACE,
The University of Hong Kong
HKU-SPACE Admiralty Learning Centre
3/F, Room S6 Admiralty Centre
Harcourt Road, Hong Kong
Saturday, 26th June 1999
9:00-9:15 Registration
9:15-9:30 Introductory Remarks
Honourable Justice K. Bokhary, Court of Final Appeal, HKSAR
9:30-10:05 Organized Crime in Hong Kong
Mr. Ip Pau Fuk, Peter. Chief Inspector, Hong Kong Police
10:05-10:40 The Role of Corruption in Organized Crime in Hong Kong
Mr. Gilbert Chan, Assistant Director of Operations, Hong Kong Independent
Commission on Corruption.
10:40-11:00 Gambling and Organized Crime in Macau
Ms. Leong Veng Mei, Candy. Sociology Department, University of Hong
Kong
11:00-11:10 Short Break
11:10-11:45 Organized Crime in China
Dr. Chu Yiu-Kong. Visiting Assistant Professor, Sociology Department,
University of Hong Kong.
11:45-12:20 Organized Crime in Russia
Dr. William Chambliss, Professor, Sociology Department, George Washington
University, Washington, D.C.
12:20-1:00 Panel Discussion and Questions
Mr. Mike Blanchflower, Deputy Principle Government Council, Department
of Justice, HKSAR
Preface / Foreword
Mr. David Hodson, Director of Centre for Criminology, University
of Hong Kong and Former Assistant Commissioner of Hong Kong Police.
1:00-1:10 Closing Remarks
Introductory Remarks
Honourable Justice K. Bokhary, Court of
Final Appeal, HKSAR
Dealing effectively with crime is probably as complex
as it is important. We now have the means of co-ordinating and developing
the multi-disciplinary efforts that are required to deal with crime. Situated
in the University of Hong Kong's Faculty of Social Sciences, the Centre
for Criminology is, as I think you will agree well placed to perform this
vital task of co-ordination. It is with great satisfaction that I find
myself this morning by no means confined to talking about what the Centre
proposes to do. Rather, I am able through the efforts of others ( let it
be acknowledged ), to speak also about what the Centre has already done
and is proposing to do. One of those things is this seminar. But the privilege
of introducing the distinguished speakers and the interesting agenda is
one which I will not claim because the documents speak for themselves as
do the reputation of the speakers and the obvious vital importance of the
subject. I also understand that some of the others will perform this task
of introduction.
For my own part, I will speak more generally and you will be happy to
hear, briefly. The Centre is indeed fortunate to have secured Mr. David
Hodson's services as the first Honorary Director. He is a well respected
and well known figure in Hong Kong, having served the community in the
capacity of an Assistant Commissioner of Police and he has also served
in other capacities. The Centre has appointed six Honorary Fellows, and
in alphabetical order, they are Dr. Philip Beh, Dr. Roderic Broadhurst,
Dr. Fu Wah Ling, Dr. Sheilla Hamilton, Dr. Karen Joe-Laidler, and Dr. Harold
Traver. Among them all, they obviously constitute a formidable multi-disciplinary
gathering of experience and enthusiasm. Dr. Beh is a forensic pathologist.
Dr. Fu is a Visiting Professor at the University of Hong Kong with the
School of Law, and Dr. Hamilton is a Forensic Scientist. Rod, Karen and
Harold, who I have the honour of being on first name terms with, are with
the Faculty of Social Sciences in which the Centre has found its home.
They should know how very grateful I am to them for the help, guidance,
and encouragement they have given me since I was first asked in September
last year to become involved in the proposal for establishing a Centre
for Criminology. In this vein, I should acknowledge on the Centre's behalf,
the support of the University's Council, and the help and support of Professor
Wong Siu Lun the Pro-Vice Chancellor and Professor Cecilia Chan, the Dean
of the Faculty for Social Sciences, who so kindly helped in providing the
Centre with a home. Already the Centre has several research efforts underway.
These include:
1. - 'Past, present and future trends in the abuse of Ice in Hong
Kong'.
2. - 'Alcohol, Domestic Violence and Cultures of Conflict Resolution
in Hong Kong'.
3. - 'The Development of a Criminal Justice Statistics Book'.
4. - 'Homicides in Hong Kong'.
5. - 'A Training Session on Death Investigations in Cambodia'.
These are the works that have already been done. These are titles which
demonstrate the great range and relevance of the research in hand. One
should never underestimate the difficulties which may lie in the Centre's
path but I have every confidence that this necessary and, let us face it,
bold initiative will succeed. It remains only for me to bid you welcome
and to thank you.
Introductory Remarks
Mr. IP, aged 54, is a Chief Inspector with the Hong Kong Police Force.
He is currently attached to the Criminal Intelligence Bureau in charge
of the Research Unit, which is tasked with the monitoring of all Triad
related matters. He also oversees the training and functioning of the Triad
expert cadre in the Force.
Mr. IP has over 33 years of police experience, 27 of which were spent
in the criminal investigation field. Having begun training as a Triad expert
in 1984, Mr. IP is now the leading Triad expert in the Hong Kong Police
Force. During the past thirteen years, Mr. IP has on over 50 occasions,
been called upon to give expert evidence on Triad related matters at various
levels of the court in Hong Kong. Mr. IP is an internationally renowned
Triad expert. He has been invited on several occasions to testify in the
Crown Courts in the United Kingdom as well as in the courts in San Francisco,
U.S.A. On all these occasions, his evidence has been accepted in the courts.
Apart from conducting research on the subject of the Triads, Mr.
IP also regularly involves himself in the debriefing of Triad personalities,
thus gaining first hand information on the activities of these secret societies.
Between 1989 and 1994 Mr. IP trained over seventy one officers of
the Hong Kong Police Force to become Triad experts. He also frequently
provides talk and training sessions to overseas law enforcement officers.
Mr. IP is now in his final year for his Master of Philosophy Degree
in Sociolinguistics specializing in Triad language at the University of
Hong Kong. Together with his university lecturers, they have written an
article on "The Speech-act offence: Claiming and Professing Membership
of a Trim Society in Hong Kong" which was published in the July 1996 edition
of 'Language & Communication'.
Mr. IP is married with three children. He enjoys outdoor activities
and is the Chairman of the Police Adventure Club in Hong Kong.
ORGANIZED CRIME IN HONG KONG
Mr. Ip Pau Fuk, Peter, Chief Inspector,
Hong Kong Police
Introduction
Triads are secret societies and are declared unlawful under the Laws
of Hong Kong. The history of Triad Societies goes back to 1674 when secret
societies were formed for patriotic reasons to overthrow the Manchurians.
With the passage of time, they turned into criminal groups. The word 'Triad'
is an English designation for the sacred symbol of the societies, a triangle
enclosing a secret sign derived from the Chinese character HUNG. The resulting
symbol represents the triangular union of heaven, earth and man. The character
Hung can also be translated into the English word RED. The first secret
societies or 'Triads' were known as the HUNG MUN (Hung Association) or
Hung Sect. These secret societies have also been known as the Heaven and
Earth Association or Sam Hop Wui and, more commonly, the Black Society
Association or Hak She Wui. This latter term is now generally used to describe
all Triads, and represents the public feeling that Triads are sinister
and evil rather than a mystic brotherhood.
As a result of distortion and of exaggerated reporting by the media
as well as sensational stories featured in movies, there are many myths
about what Triads are and how they operate in Hong Kong.
Organization of Triads
The traditional structure of a Triad Society is very well organized.
When they first formed 300 years ago, it was for political motives with
the ultimate aim of overthrowing the government of the time. In modern
terms, they can be described as guerrillas or terrorists. The present day
structure of Triad Society is a more simplified version of that which formerly
existed and this modified version is now common to the majority of the
societies today. The three principal officials in a Triad Society are the
Chairman , Treasurer and the individual group leaders.
Today's Triad office bearers will normally all be of the 'Red Pole'
(426) rank, other ranks of office bearer status having fallen into disuse.
The Chairman is often elected at an annual or bi-annual meeting and may
be any office bearer of '426' rank or above. Usually the most influential
office bearer with the largest group of followers or the most wealthy,
will be successful. The Treasurer will also be elected at the same
meeting and can also be an office bearer. This position is often of equal
importance to that of the Chairman. In most Triad societies, the Chairman
and Treasurer are also the same person.
At present, there are over 50 known Triad societies in Hong Kong, of
which 15 to 20 of them regularly come to the attention of the Police by
their involvement in crime. This of course does not mean that the remaining
societies whose names do not surface frequently are inactive, but possibly
only that their activities go unreported for a variety of reasons. The
clandestine nature of the Triad movement precludes an accurate assessment
of the total number of Triad members and society membership ranges in size
by considerable degrees.
Triad societies are in fact a collection of loose-knit groups or gangs
rather than a monolithic criminal organization, such as the Mafia and Boryokudan
whose power is diffused from a central core through an organized chain
of command. The table below gives a comparison between the Triads and the
Mafia.
A Comparison, Between Triads and Other Organized
Crime Groups
Triads
Mafia/Boryokudan
Collection of loose-knit group (gangs)
A monolithic criminal organization
Independent power base
Power diffused from a central core
Horizontal organization
Rigid chain of command
Chairperson - limited influence, honorary post
Chairperson - the Godfather
Full autonomy
Central leadership
Profit belongs to individual gangs
Profit goes to organization
Disputes settled through negotiations
Disputes adjudicated by core leadership and fights
Made up of criminal fraternities
A criminal enterprise
Despite the fact that today's Triad members
do not belong to one gigantic organization, some of them however, continue
to use Triad jargon, rank structure etc. This convinces a new recruit that
he has indeed joined an awesome elite and this is used to instill fear
into members of the public.
Triad groups are horizontal organizations, a network of criminals who
co-operate in criminal activities based on personal introductions and mutual
interests. Triad leaders do not usually direct or become directly involved
in the criminal activities of their gang members, nor do they dictate to
their members what criminal activities they should or should not get involved
in. However, there is some difficulty in separating reality from the media
myth.
The best description about Triads was illustrated by the testimony of
a Hong Kong villain before a US Congressional Hearing on Asian Organized
Crime. He said:
"Triad members do favours for each other, protect each other, provide
introductions and assistance to each other, and engage in criminal schemes
with one another, but Triads generally do not have the kind of strictly
disciplined organizational structure that some other criminal groups have.
For example, a Triad member would not necessarily be required to get permission
from the head of his particular Triad in order to engage in a particular
criminal undertaking, even if this particular deal involved an outsider
or even a member of another Triad".
His description is spot on. Most Triad societies are really just fraternities.
Within a particular Triad fraternity there are several gangs that are usually
dominated by a particular individual and are often territorially based.
The leader will not generally derive any share of the profits from his
members' activities. His role is to provide an environment where crime
can flourish and to mediate in disputes.
It is not unusual for the different Triad groups, both in Hong Kong
and overseas, to work together where there is a specific opportunity to
make money. However, it is important to understand that there is no international
Triad network or centralized control over cross-border Triad activities.
Triad membership is merely a 'lubricant' which facilitates personal contacts
and co-operation between different Triad groups or individuals.
Romanticized legends and the patriotic aims of old secret societies
in ancient China are far removed from the present day realities in Hong
Kong. Triads are cowardly thugs who prey on the weak, the innocent and
the foolish. By using the reputation of the old-style Triad societies and
by spreading the myth of one invisible, indivisible and all powerful organization,
Triad gangs know that they can instill fear into their victims. This reduces
the chance of resistance, avid retaliation and terrifies them into silence.
Triad recruitment of students remains a problem, however, there is no
indication of an organized Triad campaign to enter schools for recruitment,
and most recruitment of students probably occurs outside schools. In recent
years, the more sophisticated Triad members, referred to as second-generation
Triads, have received their higher education paid for by monies generated
through illegal means. Such persons are now involved in white-collar crimes.
Street Gangs, Youth Gangs and The Triads
Triads most often come to police attention at the lower levels of their
activities where their involvement in criminal activity is primarily through
youth and street gangs. Youth gang members are of school age, between 12
and 18 years old. They are influenced by their elders and join gangs as
a form of identity. They are basically juvenile delinquents who bully other
kids and are a nuisance to their neighborhood. Some of them will leave
their gang as they change school, move home or take up employment, but
others will, after joining a Triad society, eventually graduate into a
street gang and then pursue a life of crime.
Street gang members are slightly older, normally aged between 18 and
25. The majority will become members of a Triad society. Some have regular
jobs but others are unemployed. The leaders of these gangs will often be
Triad office-bearers and their activities will be more organized and directed
towards street-level crime and extortion of various kinds in their own
territory. These gangs, due to the nature of their activities, are more
inclined to use violence to enforce their demands and to fight other rival
gangs. A few of the more successful street gang leaders, as they accumulate
more assets, will either start their own syndicate or join an existing
one, thus graduating into the upper levels of organized crime activity.
The major difference between a youth gang and a street gang is that
the former does not lay claims to any territory whereas the latter normally
asserts control over a certain area, e.g. a street block, a park or a housing
block.
Triad Activities
Triad gang activities are mainly territorial and fall into one or more
of the following categories:
(a) Extortion and protection racketeering of shops, small businesses,
hawkers, construction sites, car valet services, and places of public entertainment
such as bars, billiard halls etc
(b) Monopolizing control of non-franchised public transport routes
(c) Monopolizing control of decoration companies
(d) Street-level dangerous drug trafficking
(e) Illegal gambling, such as casino operations
(f) Prostitution and Pornography
Whilst the range of criminal activity sounds awesome, an analysis of
all detected crime in Hong Kong indicates that only about 5% to 10% of
all detected crime is connected with Triads. This includes gang fights
arising from inter-gang conflicts, intimidation, serious assaults etc.
One unfortunate development however, is that in recent years, Triads have
gained access to firearms and are prepared to use them to settle disputes,
which was rarely the case a few years ago.
Organized crime in Hong Kong
At the highest level of criminal activity, some organized crime syndicates
have Triad members in their ranks. Others do not, or if they do, Triad
membership is merely incidental and is not a qualification for being accepted
by the syndicate. There is a commonly held misconception that the illegal
drug trade in Hong Kong and in other countries that involve Hong Kong Chinese,
is monopolized by Hong Kong Triads. This makes sensational news but is
simply not true. Triad membership is not a prerequisite for joining a drug
syndicate; it is experience, expertise, coronets or money that counts.
Whilst it may be true that many drug traffickers have Triad connections,
Triad membership itself does not organize crime syndicates that specialize
in such activities as loan sharking, smuggling, credit card fraud and counterfeiting.
Therefore, it should not be assumed that when a 14K Triad member is arrested
for a drug offense that it is the work of the 14K Triad Society.
Organized crime activities in Hong Kong follow the same pattern as in
many other countries. Syndicates will endeavor to become involved in commercial
activities that are ostensibly legal. This activity is used as a front
to disguise contacts and wealth and can be very profitable if free market
forces can be manipulated by using fear or favor in an unacceptable manner.
These criminal organizations also attempt to create an environment which
is favorable for their activities. They may wish to give themselves an
aura of respectability by mixing with credible social figures or by receiving
endorsement, sometimes unknowingly, from government officials.
Illegal acts committed by members of an organized crime syndicate will
be perpetrated normally through the use of deception, fear and violence.
The persons actually committing acts of violence will usually be on the
lower rungs of the ladder. They may well be prosecuted. But those who ordered
the acts are so far removed as to make prosecution using normal procedures
very difficult.
Legislation
Hong Kong has two main legislative weapons to tackle Triad members and
organized crime personalities, namely the Societies Ordinance, which
is aimed at the individuals themselves and second the Organized &
Serious Crimes Ordinance which is designed to combat what these personalities
actually do.
The Societies Ordinance
Under the Societies Ordinance, which was enacted in 1949 with
subsequent amendments, all Triad societies are deemed to be unlawful societies
in Hong Kong. The ordinance includes a series of criminal offences relating
to Triad memberships, recruitment and activities. Any person convicted
of professing or claiming to be an office bearer or managing or assisting
in the management of a Triad society is liable to a maximum fine of HK$1
million and to imprisonment for 15 years. Membership of a Triad society
is itself an offence and upon conviction, may be fined from HK$ 100,000
to HK$250,000 and to imprisonment for 3 to 7 years.
The Organized and Serious Crimes Ordinance
The Organized and Serious Crimes Ordinance was enacted in Hong
Kong in October 1994, targeting in particular those powerful, previously
untouchable, criminal masterminds of organized crime syndicates. The main
provisions of the Ordinance were:
(a) to provide the Police with special investigative powers which would
enable them to more effectively obtain evidence against criminals involved
in persistent offences such as extortion, to trace the victims of organized
crime and to identify the financial resources of the syndicates involved.
(b) to provide heavier custodial sentences for organized crime activities.
(c) to empower the Courts and confiscate the proceeds of the participants
in organized crime.
Introductory Remarks
Ms. Leong is currently completing her M. Phil. Thesis research on
gambling in Macau with the Sociology Department at Hong Kong University.
She holds a Bachelor's Degree in Social Sciences from the University of
Macau.
GAMBLING AND ORGANIZED CRIME IN MACAU
Ms. Leong Veng Mei, Candy, Sociology Department,
University of Hong Kong
Introduction
Macau has a total area of 23.5 square kilometers consisting of the Macau
Peninsula, Taipa Island and Coloane Island. The total population in 1998
was about 400,000. The Portuguese came to Macau as early as 1535 mainly
for trading purposes. Like Hong Kong, Macau has a colonial past. It became
a colony of Portugal in 1887 and will be handed over to China on 20th December
1999, to become a 'special economic region'.
Under the rule of Portugal, gambling was legalized in Macau, converting
it into a casino state in Asia. Macau became known as the "Monte Carlo
of the Orient". Since 1988, more than 30% of the government's public revenue
and expenditure have been derived from gambling taxes (Table 1). In fact,
Macau has built the government around the gambling industry. (Zendaian,
1993). In the period before the handover to China, the popularity of Macau
has grown and crime problems have attracted a lot of attention in recent
years.
The gambling industry yields big profits and so there are loopholes
for loan sharking, prostitution and other kinds of organized crime. Over
the last decade, the crime rate in Macau has increased from 4,717 in 1987
to 8,576 in 1996, an increase of more than 80% (Table 2). Triads have committed
most of the violent crimes, such as bombing, arson and murder. These Triads
are in one way or the other connected to the casinos, especially the "BATER
FICHA" business. The "BATER FICHA" business is the business of rolling
cash and dead chips, which will be discussed in more detail later on.
My research examines two aspects of gambling and crime. One is the macro
aspect in which I will analyse the legislation governing the gambling industry
and compare it with the reality as it exists in Macau today, examining
the permissive aspect of the regulatory laws. I will apply critical theories
and Marxism to this study. The second, is the micro aspect, here I will
analyze how the change in casino ownership affects the evolution of the
"BATER FICHA" business. With poor management in the new ownership system,
the Triads are able to monopolize the "BATER FICHA" business by using intimidation
and violence. I will try to apply Gambetta's theory in explaining the Triad's
involvement in the "BATER FICHA" business. Moreover, weak law enforcement
and corruption are linked to this problem. The methodologies used are mainly
interviews and secondary analysis.
MICRO ASPECTS OF GAMBLING AND CRIME IN MACAU
Centralized Ownership of Casinos
The history of gambling in Macau goes back as early as 1875. However,
gambling was not legalized until 1937. Only in 1962, the government had
granted Honourable Dr. Stanley Ho, Director of the Sociedade De Turisimo
E Diversoes De Macau (STDM), with the monopoly rights to all kinds of gambling
activities including casino gambling, horse racing, dog racing, mahjong
and baigepiao. The STDM has modernized casinos and has brought in some
Western games such as roulette and baccarat. Since then, gambling has developed
from a recreational to a fully integrated service industry with many "products".
Today, the STDM is the largest commercial employer in Macau providing jobs
for more than 10,000 people.
Since 1962, the Company has been granted an exclusive gambling franchise
in Macau which was extended in 1986 for another 15 years to 2001. The Company
has nine casinos and has contributed to some important infrastructure projects
(e.g. the international airport, deep-water port, the new Macau-Taipa bridge
and reclamation and development projects in Praia Grande Bay).
The gambling industry is a complex semi-recreational service industry.
It operates 24 hours a day and is open to the public. Different kinds of
people such as professional gamblers, racketeers, loan sharks and extortionists
get into the casinos. Generating considerable amounts of cash in and out
the casinos, they are attractive targets for organized crime.
The government has franchised the STDM. In return, the STDM has to pay
taxes and subsidize its infrastructures so the Police Force will provide
protection to the casinos. There are officers from the Gambling Authority
(the FISCAL) and officers from the INVESTIGADOR DA POLICIA JUDICIARIA to
make sure that the business runs smoothly and maintains order inside the
casinos. In addition to security provided by the government, the STDM has
its own security guards as well. If there are extortionists and dishonest
consumers found in the casinos, the STDM and the Gambling Authority have
the right to blacklist them so that they will be prohibited from entering
any casinos for a certain period of time. (Interview with a Macau police
officer, 23 Jan 1999)
With so much security provided by the government and the STDM, one might
think that it is quite difficult for the Triads to survive in the casino
business. However, when a consumer has lost all his money, he might want
to borrow some money to win back what he has lost. This practice generates
the loan sharking business in the casinos. From the point of view of the
casinos, if there is no loan sharking, consumers cannot easily borrow and
gamble again and so the casinos' profit will be affected. Thus, the STDM
simply lets the loan sharks run their business inside the casinos as long
as they do not disturb the order inside. As we know, loan sharking generates
a lot of easy and quick money and the collection of debts often involves
violence, therefore the loan sharking business is usually run or supported
by Triads. That is the reason why the Triads have existed in the casinos
for a long time, in fact, since the establishment of the STDM. (Interview
with a Macau police officer, 23 Jan 1999)
Although there are loan sharks inside the casinos, the STDM is able
to maintain order inside because the ownership of the casinos is centralized.
Even though the loan sharks are allowed to run their business inside the
casinos, they will be blacklisted and prohibited from entering the casinos
if they disturb the customers and therefore disturb order inside. Since
most of the loan sharks earn their living in the casinos, they will try
their best to avoid making trouble. Furthermore, since ownership is centralized,
their power inside the casinos is limited, even if some Triad members have
made a lot of profit or gained capital. In fact, for the most part loan
sharking makes only a small profit at this time.
Up to this point, it seems that the centralization of ownership of casinos
is a good way of running this business since it is easy to manage and to
maintain order inside casinos. However, too much centralization and monopolization
means that there would be less incentive for the STDM to improve their
services in order to attract more consumers. Besides, when business becomes
too large, the administrative process becomes time consuming and as a result,
resources are wasted. Moreover, with increasing competition, in the form
of new casinos opening in nearby areas or with the competition of floating
casinos in nearby sea areas, consumers may be attracted to the new casinos
that may provide better services.
In order to reduce their administrative costs and attract more consumers,
the STDM decided to change their way of doing business and they started
to contract out gambling rooms in 1984. With these contracts, the "BATER
FICHA" business was established in the individual gambling rooms.
Franchise of Gambling Rooms & The Bater Ficha Business
The STDM contracted out their first gambling room in Hotel Lisboa in
1984. Although the gambling room was rented, the property right of the
gambling room still belonged to the STDM. The STDM provided dealers and
other forms of assistance to the gambling rooms. But the owner still had
to take care of the administrative costs, profits and losses ( Interview
with a "BATER FICHA" account owner, 23 Jan 1999 ).
The contract between the STDM and the gambling room operator was not
standardized, it depended on the relationship between the operator and
Stanley Ho or other high rank employers of the STDM.
"When the gambling room owner starts his business, he has to give
the STDM an amount of 2 million dollars in the form of LC as a guarantee.
In addition, he has to buy a certain amount of dead chips, usually about
4 million per month. The profits gained from the gambling tables of his
gambling rooms will have to be shared between the STDM and the owner of
the gambling room, usually 55% for the STDM and 45% for the owner. In addition,
the gambling room owner has to pay the rent for each gambling table, which
is approximately three hundred thousand dollars per table. He is also responsible
for the commission of the "BATER FICHA" business inside his gambling room."
( Translated from the Next Magazine, 18th December 1998 )
In order to attract more customers to the casinos, the STDM uses the dead
chips system as a kind of marketing tool in some gambling rooms. Dead chips,
also called nonnegotiable chips, are chips that cannot be turned back into
cash. They can only be used for gambling purposes and their purpose is
to give the customers more incentive to gamble. The owners of the gambling
rooms use their own dead chips which can only be used in their own gambling
rooms. This is their own exclusive "BATER FICHA" business. The term "BATER
FICHA" is a colloquial term used in Macau and Portugal and refers to the
practice that only exists in Macau casinos. The term is not recognized
legally but it does exist in police records. The two words are the Portuguese,
"BATER" meaning 'to pile many' while "FICHA" means 'chips', so the whole
term means 'piling many chips'. The "BATER FICHA" business involves the
rolling of chips between the customers (gamblers) and the chip rollers.
The "BATER FICHA" guys (chip rollers) will get a commission for the amount
of dead chips exchanged. ( Interview with a chip roller, 23rd January 1999
)
The structure of the "BATER FICHA" business is just like a pyramid.
After the gambling room operator enters a contract with the STDM, he has
to buy a certain amount of dead chips from them, say 4 million per month.
Since that is a great amount of dead chips, the gambling room operator
has to find more customers through the establishment of the "BATER FICHA"
business. The gambling room operator will invite people with an interest
to run the "BATER FICHA" business and also invest a large amount of capital
to open an account with his gambling room. This person is often called
the middleman or the account owner. He will get a commission for the amount
of dead chips rolled for cash chips. Each man's power is limited and usually
the account owner will then invite or employ his friends or "brothers"
to run the "BATER FICHA" business. This means that his friends or "brothers"
work as sales agents and will get commissions from the account owner. They
will then approach the customers and ask them to exchange the cash chips
for the dead chips, they are often called the "BATER FICHA" guys or Chip
Rollers. When their operations become more profitable, each of them will
have their own branch and continue to build up their territory.
Although it is possible for the big customers to open an account with
the gambling room directly, it is often difficult in practice. The gambling
room operator usually wants to build his own "BATER FICHA" business with
the account owners who are his friends or brothers and therefore can keep
control over them more easily. The operator will give lots of reasons,
such as the gambling stake is not enough or that the customers have to
open an account for a longer period of time, in order to discourage customers
to open a direct account . Since most of the customers are not long term
gamblers and they don't want to keep their money on hold, they generally
choose the services of the chip rollers. In addition, they will also get
more benefits from the chip rollers. Chip rollers are able to provide customers
with jetfoil tickets, discounted or free hotel rooms and will company the
customers to gamble or travel in Macau. No matter whether the customer
wins or loses, the customer can pay the chip rollers by cheque, thus tourists
or gamblers from overseas do not need to carry huge amounts of cash with
them. Sometimes chip rollers will exchange dead chips with the customers
at a discount. At present, there are no legal norms or regulations governing
this "BATER FICHA" business so it lies within a gray area under the casino
regulations.
In fact, the practice of contracting out gambling rooms and the establishment
of the "BATER FICHA" business has benefited the STDM. The STDM gets a more
permanent income from these gambling rooms as the owners have to pay the
rent and buy a certain amount of dead chips per month. Besides, the STDM
can reduce their administrative costs and increase the amount of their
customers since through the "BATER FICHA" business, the operators also
work as sales agents.
The Bater Ficha Business and the Triads
The criterion of becoming a gambling room owner, is that the owner must
have huge amounts of capital. The owner has to buy approximately 4 million
dollars of dead chips per month with the STDM and he has to pay rent on
each gambling table inside his room. In addition, the owner of the gambling
room must have a good relationship with high rank officers of the STDM.
Since this business involves a large amount of capital, trust must be built
between the gambling room owners and the STDM. (Interview with a "BATER
FICHA" account owner, 23d January 1999)
Since the contracting out of the first gambling room in 1984, the number
has expanded to more than 40 rented gambling rooms today. Most of the owners
are wealthy businessmen but some of them may have earned their money from
past illegal businesses. However, they are not necessarily Triad members
themselves. Usually, Triad members who are active in casinos do not have
enough capital to invest in gambling rooms, but there are a few exceptions.
(Interview with a "BATER FICHA" account owner, 234 January 1999)
Besides providing company, free jetfoil tickets, free meals and free
accommodation for their customers, some chip rollers will also lend money
to their customers. Their customers come from all social classes and some
may even have a Triad background. Therefore, the chip rollers need to have
strong backing to collect on their debts. Thus, the Triads provide this
protection service to them. Since the "BATER FICHA" business lies in the
gray area of the gambling regulations, it is difficult for those involved
in the "BATER FICHA" business to seek official protection. Furthermore,
some chip rollers also work as loan sharks, an illegal activity in Macau,
so it is ridiculous for the rollers to seek official protection. Another
function of the chip rollers is to protect their own customers from the
so called "hang outs". The "hang outs" are people who beg the gamblers
for tips when the gamblers have won a game. If the "hang outs" are unsuccessful
in obtaining tips from the gamblers, they may use violence or threats against
the gamblers. Thus, it is very difficult for the chip rollers to protect
their customers if they do not have the Triads to support them. (Interview
with a chip roller, 22nd January 1999)
Since the numbers of their customers has a direct effect on their income,
there is fierce competition between the different "BATER FICHA" teams as
well as between the chip rollers themselves. If they do not have the Triad's
support including the use of violence, they could hardly survive in this
business. In addition, even their own customers can be stolen by their
competitors. If they cannot resolve the problem of competition between
themselves, how can they manage to survive in such a fluctuating market?
Thus, Triads intervene and stabilize the market, they play the role of
'trade union' and they use violence to ensure the benefits for their members.
The Police and the Triads
The Gambling Authority is the only government department that has the
right to directly monitor the casinos. There are more than a hundred FISCAL,
who are responsible in monitoring order in the casinos and to make sure
that business runs smoothly. They also have the right to blacklist unwelcome
people and prohibit them from entering any of the nine casinos. Before
the contracting out of gambling rooms, there were loan sharks in the casinos.
Since they were not very powerful, the FISCAL let them make a living in
the casinos with the provision that they did not disturb public order.
Since Macau is a colony of Portugal, Macau's legislature is modeled
on the Portuguese legislature. The Police Force is divided into three departments,
of which the INVESTIGADOR DA POLICIA JUDICIARIA specializes in investigations
on organized crime. Although the law enforcement agencies are not united,
in the past, they did have the power to control the Triads, mainly because
the Triads were less powerful before the decentralization of casino ownership.
If one Triad society caused trouble, the police was able to suppress that
society.
There is now a shift in power between the Triads and the police. The
Triads have become the master. The law enforcement agencies do not have
the power to suppress violence and some of the police officers even become
the targets of the Triads. The most shocking incident was on 1st
of May 1998, when the car of the director ( Antonio Francisco Marques Baptista
) of the INVESTIGADOR DA POLICIA JUDICIARIA was bombed. He was lucky because
he was not in his car at that time. ( Translated from the Macao Daily News,
2nd May 1998 ).
Since higher rank officials may have deals with some of the Triads,
lower rank officers will not take action if they do not receive any orders
from their boss, otherwise, lower rank officers may get into trouble. (Translated
from the Next Magazine, 23rd May 1997) Under this working situation and
with political uncertainty, the morale of the police force is affected.
Theoretical and Policy Implications
Gambetta (1993) offers a unique economic theory to explain the role
of private protection provided by the Sicilian Mafia. Gambetta disagrees
with the thinking that the Sicilian Mafia are international entrepreneurs
(Arlacchi) or extortionists (Schelting), he believes that they are protectors
providing protection to buyers and sellers in an "inscrutable market".
Gambetta (1993) also disagrees with the claim that the Sicilian Mafia
is highly centralized or disorganized. He believes that the organization
within the family is military and hierarchical and that the different Mafia
families are connected in the form of loose cartels. There are about 100
such families in Sicily. There is a commission connecting the Mafia families
in each province except Messina and Siracusa. The functions of the commission
are to enforce rules, to discipline the members and to take care of the
replacement of the boss. One has to go through secret ceremonies and rituals
before becoming a member of the Mafia family so as to protect their trademark.
Gambetta argues that on the issue of whether Mafia provides extortion
or protection, this depends on the variable of time; that is the duration
of protection time. For a long term contract, organized crime provides
protection
for the business. On the other hand, organized crime provides extortion
for
short term contract business. He states that the Mafia chooses to provide
protection in small territories, therefore monopolizing all business transactions.
As a protector, they have to know what is happening in their own territory.
The services that the Mafia provides include protection against extortion
and competition as well as dispute settlement. They also provide services
in the area of debt collection. They sometimes help to maintain public
order in their territory. Gambetta and Reuter (1995) state that those industries
which have low product differentiation, low barriers to entry, low technology,
unskilled labor, inelastic demand for products and a large number of small
firms and unionization are more likely to turn to the Mafia for help. This
move serves to protect themselves against competitors and to form controlled
cartels. Illegal enterprises are most vulnerable to Mafia protection because
they cannot seek official protection.
The Macau casino business has gone from the first contracting out of
gambling rooms to the establishment of the "BATER FICHA". However, those
who run the "BATER FICHA" are not employers of the STDM, which means that
they are not protected by the STDM. Besides, the "BATER FICHA" business
lies in a gray area where there is no legal regulation governing its operation.
Again, those who are in this business cannot get adequate protection from
the Police Force. In this unscrupulous market, there is demand for private
protection against new competitors and a demand for dispute settlement.
The "BATER FICHA" teams then turn to Triad societies such as the 14K, the
Shui Fong and the Big Circle Boys for private protection, mainly because
of these societies' established reputation. The Triads function as a "trade
union" in this market and are willing to use violence to protect their
members. Thus the Triads have become more involved in the "BATER FICHA"
business, resulting in the three Triad societies sharing the markets and
forming themselves into a kind of cartel so as to prevent newcomers into
the market.
Cartels easily break up when one of the Triad societies or a leader
of the factions becomes so wealthy and powerful that he wants to invade
others' territory. This is what happened in Macau, as one of the leaders
of the 14K, nicknamed broken tooth, became so powerful that he wanted to
invade the territory of the Shui Fong, resulting in a battle between the
Triads. As a result of this, the cartels have fallen apart. The STDM and
the Gambling Authority have not set up the new rules of game and that together
with weak law enforcement, means that the Triads have become more powerful.
The problem of violence continues and the economy has become unstable.
If this problem persists, it will affect the handover on the 20th December
1999 and the policies afterwards.
We have seen that the reason that Triads have become more powerful,
is due to the failure of casino management in the "BATER FICHA" business.
Since the Gambling Franchise is only granted to the STDM until 2001, the
STDM has no incentive to set the new rules of game. Instead, they are more
concerned with the short-term goal of making as much profit as possible
before 2001. In addition, the Triads see that the market for private protection
is only short-term, so they are moving increasingly into extortion. In
order to solve these problems, it is necessary for the Central Government
to decide the future of the Gambling Franchise. Since Macau is built around
the gambling industry, it will not help much if we only consider anti-Triad
policies. The best and the immediate thing to do, is to set new rules of
game in the "BATER FICHA" business and in the gambling industry as a whole.
Introductory Remarks
Our next speaker is Dr. Chu. He received his Phd in the UK and since
then, has returned to Hong Kong. He is currently finishing a book on triads
and business. He will publish it with Routledge Press. He guest lectures
in China, Taiwan and various places in Europe, including UK, Belgium and
the Dutch police forces.
ORGANIZED CRIME IN CHINA
Dr. Chu Yiu-Kong, Visiting Assistant Professor,
Sociology Department, University of Hong Kong
I think it's time for us to move from HK and Macau, to China. Yes actually
today is very good for me to travel around the world and later William
will give us the presentation about Europe. I am sure that most of you
have been to China, is that right? At least you've been to Shenzhen for
shopping or having a massage. We are talking about legal and informal ones.
What do you feel about China? I don't mean I need a massage. Do you feel
safe when you are in China? No? Do you have a sense of disquiet? If you
ask Chinese citizens, they have got the same feeling, ' law and order are
not very good and crime problems are getting more serious.' But I would
like to remind you, if you asked Chinese people, let's say in the 1980s
or up to 1990, ( not now to 1998) about organized crime, Chinese people
would have told you that they do not know anything about organized crime.
They had no idea about drugs, prostitution, gambling or loan sharking,
the Triads or the Mafia or even gangs. Why? Because they did not have much
direct experience with organized crime before that time. So organized crime
is very new to China, they have just got this concept recently.
Actually in 1993, when I was in China, I attended an international conference
on organized crime. A lot of police officers came and asked me, "What is
organized crime?" "What are Hong Kong triads?" They wanted to learn more,
because now they have this problem.
During Mao Tse Tung's era, there was no organized crime problem, I mean
before the 1980s, because society was largely controlled by the Communist
party. Actually in 1964, China officially announced that they had no problem
with sexually transmitted diseases. This means that they had no problem
with prostitution. Also, they said they had no drug addiction problems.
It also meant that they had no drug related problems. Why? Because under
Mao's rule, people in the cities were put in a 'dan wai' ( work
unit ) and in the rural areas, they were put in communes. So you just stayed
there and you could not move freely, unless you got permission, everything
was supplied by the 'dan wai' or the commune. Money was not important.
If you wanted to buy something, you needed to have coupons. If you wanted
to go to some other unit, you had to ask your superior's permission. So
if you wanted to commit a crime, you had no chance to do it. Even if you
did, it would be hard for you to escape, because you were under the control
of your 'dan wai' or commune.
The Communist party was in control of government and had a strong belief
in society as a great civil society and during the Cultural Revolution,
even the family system was destroyed. So it was very hard for organized
crime or any crime to develop. In this case, because crime was not taken
seriously, and there was actually, very little of it in communist China,
the police force was not professional at all. I can tell you that before
1992, the police force in China, had 1.2 million police officers with no
ranking system. They had no superintendent, inspector or any of these things.
So you can see that they were not professional and they didn't need a professional
force.
Now we come to 'Den Xiao Ping'. Things changed in 1978 when Deng came
to power and implemented his reforms. If you go to China now and go out
onto the streets you will find a lot of interesting things. On a street
advertising poster, it advertises medical services for treating sexually
transmitted diseases. It means that now, they have this problem. Why ?
Why has organized crime been revived in 'Deng's' China? Or why after 1978
? The reason is because Deng implemented dramatic reforms changing the
economy from a planned economy to a market economy. It means that now China
has a lot more money and you can go and buy goods. Money is getting more
and more important. People can go around without restrictions. And they
can communicate with other people. Also, the amount of private properties
is increasing and a lot of Chinese and foreign investors come to China.
I mean, there is the relaxation of social control. That's why criminals
have appeared there. I can give you some indicators. China has a population
of 1.2 billion. Do you know how many people are eligible to vote? Do you
know how many? I think it's about 100 million. And most of those come from
Middle China provinces, they want to get to coastal provinces because there
are a lot of factories over there. Like the shoe factories in Dung Kwun.
A lot of workers who come from other provinces in China have now moved
to the Guang dong area, and the situation is quite bad. Actually not too
many people can get a job, so if people run out of money, they stay in
that area and are stationed there. The development of organized crime in
the area in the last ten years, can be roughly divided into three categories.
The first is in the 1980s, when most crime is localized. The second is
starting from 1985, when there is more inter-provincial crime. Criminals
are now moving around to commit crimes. The third is from 1990 to the present
where more inter-regional and transnational crime criminals are also involved
in Hong Kong, Macau and China or overseas communities.
Some examples of localized organized crime in the early 1980s are the
'lau man' in China, well in Western society they are similar to bandits.
Actually they are called street gangs in HK or in Western society they
are thought of as a group of young people that create public disorders,
eat in restaurants without paying as well as other such things.
If some families have connections to local government officials or police,
they become powerful and become local tyrants, the so called 'ngo ba'.
They run underground casinos, loan-sharking businesses and victimize local
people. Also, they have bandit gangs in rural China. Actually most of those
are farmers and peasants, they find it hard to get rich, so they go to
the railway or the road seeking opportunities.
In the case of inter-provincial organized crime, in the last 10 years
it has become a very large criminal organization in China as they move
around the country. After committing such crimes as stealing money or obtaining
stolen properties, they then move on to other provinces. In China they
call these groups the mobile criminal gangs, or the 'lau shu fan tsui'.
Furthermore, I think it is very interesting that they are now robbing drivers.
Why? I don't know whether you have observed that taxis in China are different
from that of Hong Kong. They have a so called 'anti-violence' net installed
in the taxis. They also have a sign mentioning that the front seat is for
children and women only. If you are a man, you cannot sit in the front.
Why? Because there are a lot of robberies. Why? You can ask, there are
also taxi robberies in Hong Kong, although the number is not very large
and the robbers are only interested in stealing money from the taxi drivers.
But in China, they kill the taxi driver. That is because they are not only
interested in the money, but they are also interested in the car. They
will kill you and then steal your car and get big money for it. If they
don't kill you, you could report them to the police and they will be in
trouble. So we find that in many cases, taxi drivers are killed, especially
when they drive nice, brand new taxis.
In the last ten years, a lot of highways have been built in China. One
of them is the one from Shenzhen to Canton and another one is from Shenzhen
to Santau. A lot of lorries and coaches have been robbed by criminal gangs
on these highways. They use all means to stop you and then they rob you
clean. And so something interesting is happening here. Some of the coaches
from Shenzhen to Canton, have been robbed frequently, so now if you take
the coach and if you are a resident of Shenzhen, when you sit down, the
staff will come and take down your Will ! And then just in case something
happens, they will check against their records for you. So you can see
that the situation is getting worse.
The abduction of women. Would you like to know why they abduct women?
For prostitution? Wrong! Marriage. They abduct women and then sell them
to local farmers. Why do farmers or peasants want to buy wives? Maybe not
enough women, but we have got a lot of women in Shenzhen! The first thing
is that if you want to get a wife through the formal channels, you would
have to pay HKD $8000. But if you bought one through the black market,
it would only cost you HKD $3000. The second thing, is that even if you
wanted to get a wife through the formal channels, in some places in China
there is no electricity, no water, and the girls now want to go to big
cities, like Hong Kong and Shenzhen. They don't want to go to rural areas
and be a farmer's wife. So if you want to get a wife, it's hard to get
one through the formal channels. In some rural areas, there are rich old
men, bachelors, they call them 'kwan tsuen'. So in their middle age, they
make a decision to save money to buy girls from the outside through human
smugglers. So I mean, who are the victims? The smugglers will abduct the
girls, mainly at the railway stations. Because most of the girls who would
like to get a job in the city, are from rural areas, they hang around the
railway stations waiting for jobs such as factory work. The smugglers abduct
them by telling them that they can get them jobs in factories and then
they transport them to rural areas and sell them. But you can ask, why
don't they escape? The point is that the victims, most of them from rural
areas, have left their home town for the first time in their life. They
are usually sold in a very remote area. The girl doesn't know where she
is, she has no money, and she doesn't know how to manage. We say that this
is a very evil business, right? But in some cases, when the girls get married,
their husbands do not treat them badly. Maybe some of them are treated
very nicely, so they just settle down there. That's the problem. Some police
officers go and question the girls and ask them if they want to leave.
They say, no, I don't want to leave, because I have got a husband and also
sons or daughters as well. Is this a crime or a business and market problem?
Prostitutes. The Chinese government in the past always avoided this
problem. But in 1977, 1978, they officially admitted that they had a problem
with prostitution. The figure is 420,000. But I think the actual figure
is three or four million. I don't know if any of the gentlemen here have
visited... Actually I was just there, to do some observations... They have
girls from different provinces, they have even got girls from Vietnam.
I can tell you, you cannot get any hair cut inside, because they have got
no scissors. If you like the girl, you can buy her out and do what you
want. It's some sort of human market.
Then there are the nightclubs or karaokes. If you go to these clubs
or karaokes, outside there is usually a large group of pretty girls waiting
around, if you get inside, you can ask the leader, 'mamasan', or the 'mother'
for one of the girls. Our question here is that, are they forced into prostitution
or is it voluntary on their part? What do you think? Voluntary? I agree.
The thing to know is that there is an oversupply of girls. There are too
many girls who want to get rich through this business. The other thing
to know is that the pimp ( the Triads call him the middle-chicken ) is
not well regarded. If prostitutes are controlled by a pimp, it suggests
that the girls are forced into this business. The Chinese Government severely
punish pimps. Why? In Hong Kong, they'd say, so I live off the prostitutes,
so what? Are you going to put me in jail? That's it. But in China, if you
are on the organizing side of this business, especially if you are forcing
the girls into prostitution, you will be seriously penalized. The reason
is that you are insulting their socialist ideology. That is you are exploiting
pure working class girls. That's why in the past, there were very few so-called
chick-heads who would enter this sort of business and all did so on a voluntary
basis. However, in the last two years, I have found out about some of the
organizers of this business, especially the ones that export the girls
to Hong Kong, Taiwan, or South East Asia. But still, it's a very sensitive
issue in China.
The sad situation here, is the issue of Hong Kong pornography, right?
Maybe you have read about it before. But I would like to ask you, especially
the gentlemen here, have you had a chance to read the pornography produced
in China? No? I am an expert in this field. In Hong Kong, if you produce
pornography you can put me in jail, it's not a big deal. In China, it is
very hard for printing companies to get licenses. The other thing is, that
if the Government ever found out that you were producing pornography, there
would be a very heavy penalty. But also in China, there is a big market,
a lot of men, you know, want to read pornography. Where can they get it?
All or most of them come from Hong Kong. That's why, when you finish reading
your pornographic material, don't waste it. There is a large second hand
market in China. In Sham Shui Po, some people use containers to collect
all second hand pornography and they ship it back to China to sell them.
In China, if you buy pornography, that's fine, there is no problem. Even
if you sell it second hand from HK, you would usually ask a kid in Shenzhen,
they have a lot of pornography there, to sell it on your behalf. If the
police question him, he would just say, I am only a kid. So there is a
black market in second hand pornography in China. But still, there is no
locally produced pornography in China.
So the third case is inter-regional and trans-national crime. I am running
out of time, so I will just note other trends such as vehicle crime. In
HK in the period between 1990-1991, we had a serious problem with motor
vehicle crime. Actually, the thieves were very professional. If your car
was stolen, in a few hours time, it would be in China. This was a very
professional and serious crime. Also in 1990 up to 1991, HK suffered a
lot from armed robberies, especially gold shops. This was a joint venture
where HK criminals arranged for criminals from China to come over the border
to HK, commit the robbery and then go back to China. So I would like to
think that this is a joint venture. We always blame the mainland Chinese
saying that they are bad, they come to HK to rob us, but we have to understand
that without the HK criminal who organized these matters, how could they
manage it on their own? This is a joint out venture.
Drug-trafficking. This is the golden triangle, the triangle between
Burma, Thailand and Laos. Traditionally, the drug trafficker went to northern
Thailand, instead of Bangkok to obtain heroin, and then ship it back to
HK for local use or as a point to ship it out. This was the traditional
way. But in the last ten years, we've found that half of the heroin now
is up to the 70s or
80s. They go back to Yuennan or GuangXi and then from Yuennan, we
call it Asia Miami, just like the drugs from South America to North America
and then from Yuennan to Guangdong. Then Hong Kong smugglers come to buy
it Guangdong where it goes anywhere, sometimes, to Shani. Recently, drug
traffickers have come to use indirect routes, maybe they'll go to Lan Chow
and then come to Shan Hi and Guangdong. I want to say here, that HK played
a significant role in drug trafficking before, right? But now, if a Hong
Kong criminal wants to make money from drugs, they have to go to China,
make a connection and then get the drugs.
I'll show you something. This is Yuennan, Burma and this is Laos. In
some of the small towns near Burma, a lot of Chinese are not interested
in farming. They just want to smuggle drugs. So now you will find that
some people are very rich near the border and live in vign=center style="border-top:1px solid #DDDDDD" height="20" valign=center bgcolor="#B6D2A3">
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