Pair Arrested for Trying to Create Mini-State in Marshall Islands
Duo extradited to US for attempt to influence Marshall officials via bribery
By: Toh Han Shih
Two naturalized Marshall Islands citizens have been extradited to the US over a failed attempt to set up their own mini-state exempt from many of the laws of the Pacific Island country, which is caught in the geopolitical contest between the US and China.
The couple, Cary Yan and Gina Zhou, unsuccessfully tried to induce Marshalls officials to set up a special administrative region like the Hong Kong SAR on one of the country’s atolls, in the process bribing several Marshalls officials and nearly toppling the president of the nation, who has since left office. The Marshalls is one of the few countries to recognize Taiwan instead of China.
Yan and Zhou were accused by the US of state capture, which is defined as political corruption in which private business interests bribe officials of a country to significantly influence decision-making. The US Department of Justice has charged Yan and Zhou with violating the US Foreign Corrupt Practices Act, money laundering, and conspiracy to commit those offenses in connection with a scheme to bribe Marshalls officials, said in a September 2 DOJ news release.
The Marshalls, a handful of five islands and a score of atolls with a population of only 58,000, are a relic of World War II, when the US wrested them from Japan. They were given full sovereignty in 1986 although the US has retained responsibility for security and defense and, according to the State Department, “the Government of the Marshall Islands is obligated to refrain from taking actions that would be incompatible with these security and defense responsibilities.”
The islands are mainly famous – or infamous – for Bikini Atoll, where the US tested nuclear weapons from 1946 to 1949. Now Washington is concerned about them as China seeks to expand its reach across the Pacific.
Yan is also known as Hong Hui Yan or Chen Hong, and Gina Zhou is also called Zhouting Zhou or Angel Zhou. The two “allegedly engaged in a multi-year scheme to bribe elected officials in the Marshall Islands and to corrupt the legislative process,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division.
The scheme, said U.S. Attorney Damian Williams for the Southern District of New York, “was designed to influence and manipulate the legislative process of the Republic of the Marshall Islands in order to benefit themselves and their associates financially. Yan and Zhou's bribes blatantly flouted the sovereignty of the Republic of the Marshall Islands and its legislature.”
Around 2016, Yan, Zhou and several other people founded an NGO in New York City, according to the indictment, with Yan as chairman and president, while Zhou was his assistant.
In December 2016, the two began discussions with islands officials over a proposal to develop a semi-autonomous region in Rongelap Atoll, which Yan and Zhou said would attract investors, the indictment disclosed, saying they organized a conference in Hong Kong in April 2018 to launch an initiative to establish the “Rongelap Atoll Special Administrative Region” (RASAR), to be created by a piece of legislation called the RASAR bill.
Zhou and Yan arranged for several Marshall Islands officials to fly to Hong Kong to attend the conference, according to the indictment.
In September or October 2018, officials said, Yan and Zhou bribed a Marshall Islands lawmaker to sponsor the bill. In October 2018, Zhou also provided what she described as an interest-free loan of US$22,000 to a lawmaker who sponsored the measure and tried to push it through the legislature, said the indictment.
In November 2018, then President of Marshall Islands Hilda Heine, who objected to the bill, narrowly survived a vote of no confidence by one vote short of the 17 votes needed in parliament to topple her.
"The vote of no confidence is about the so-called Rongelap Atoll Special Administrative Region, or RASA scheme, which is an effort by certain foreign interests to take control of one of our atolls and turn it into a country within our own country," Heine told RNZ (Radio New Zealand) on November 9, 2018.
Heine said she had no evidence that Chinese state interests were involved in the RASAR, but added, “We have to be cautious knowing what the geopolitical situation is in the Pacific region, and I think it's important for the government to do its own due diligence and make sure that the sovereignty of the Pacific is secure.”
Around December 1, 2018, a Marshall Islands official sent an email to Yan and Zhou which promised “revenge” against Heine. In November 2019, Marshall Islands held elections for its parliament, which pushed Heine out of office. Yan and Zhou continued meeting with officials to push their plans, as alleged in the indictment.
Around March 7, 2020, Yan and Zhou gave $7,000 to a relative of a Marshall Islands to pass on, specifying the money was to be used to support the RASAR bill, the indictment alleged, with more promised afterwards.
The minuscule nation is part of the arena of US-China competition. On June 3, Chinese Foreign Minister Wang Yi said that during his trip to South Pacific Island Countries, he met and held talks with 17 country leaders and more than 30 ministerial officials. During his visit, China and the countries signed and reached 52 bilateral cooperation outcomes on areas including the Belt and Road Initiative, China’s plan to connect with other nations through infrastructure projects like ports, Wang added.
The visit by Wang apparently startled the US into action. From June 14 to 16, a US delegation led by Joseph Yun, an envoy of US President Joseph Biden, visited the Marshalls. A spokesperson for the US State Department said Yun would hold talks on US economic assistance.
The Marshall Islands is one of the few countries to recognize Taiwan instead of China. In March, Marshall Islands President David Kabua made a five-day state visit to Taiwan, receiving a medal from Taiwan President Tsai Ing-wen.
On August 7, the Marshalls’ permanent mission in Geneva expressed support for Taiwan and condemned China for firing missiles near Taiwan on August 4 in response to US House Speaker Nancy Pelosi’s visit to Taiwan.
On August 5, Heine, now a senator, tweeted, “Kudos to Speaker Nancy Pelosi and President Tsai-ing Wen for defying the odds to stand in solidarity on the side of freedom and democracy. Other countries should not interfere with Taiwan’s friendly interaction with the world.”
Toh Han Shih is chief analyst of Headland Intelligence, a Hong Kong risk consultancy.