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Rodrigo Duterte’s former advisor identified as drug lord

International Criminal Court, Rodrigo Duterte, Davao, Mindanao, ICC, Michael Yang

World

Rodrigo Duterte’s former advisor identified as drug lord

Testimony in a new International Criminal Court (ICC) case corroborates a police report claiming Michael Yang, who is close to Philippine President Rodrigo Duterte, ran meth labs on the island of Mindanao in the early 2000s. Yang has since been linked to alleged procurement corruption, and a Philippine Senate committee has suggested he could face criminal charges.

Explosive new testimony at the International Criminal Court (ICC) alleges that a close associate of Philippine President Rodrigo Duterte has long-standing ties to the narcotics trade.

Duterte has, since 2016, spearheaded a merciless ‘war on drugs’ that critics say is merely cover for widespread unlawful killings of thousands of Filipinos.

In mid-September, the ICC opened an investigation into the campaign. Human Rights Watch has said the killings “could amount to crimes against humanity.” The Duterte administration has said it will not cooperate with the investigation.

The recent testimony to the ICC, which contributed to its decision to open an investigation, comes from Arturo Lascañas, who says he was a member of the “Davao Death Squad,” an elite police unit formed in 1988 and allegedly controlled by Duterte during his two-decade mayorship of Davao City on the island of Mindanao.

His account describes hundreds of extrajudicial killings carried out by the squad while Duterte was mayor, years before he became president and launched his bloody nationwide anti-drug crackdown.

The 186-page affidavit, submitted to the ICC in 2020 and obtained by Rappler, repeatedly names Duterte associate Michael Yang as the coordinator of a network of methamphetamine labs in Mindanao in the early 2000s.

A separate intelligence report from 2017 by a former anti-narcotics policeman also says that Yang, a Chinese national active in business in the Philippines, ran drug labs. Lascañas’s affidavit is the first independent corroboration of the detailed claims in that report.

Yang and his business partner Lin Weixiong – who was also linked to narcotics in the 2017 police intelligence report – have risen to prominence in the Philippines since Duterte became president.

Yang spent a year as Duterte’s presidential economic advisor in 2018, and under Duterte both he and Lin have emerged from obscurity to secure lucrative business contracts, broker deals for major capital investments, partner with Chinese state-owned enterprises, and take key roles in associations devoted to China’s Belt and Road Initiative, a giant infrastructure strategy being pushed around the globe.

The evidence in Lascañas’s ICC testimony and the police intelligence report suggests that Duterte and Yang may have had drug connections going back to the early 2000s, when Duterte was still mayor. Duterte has said he first met Yang in 1999.

The testimony also concludes that Duterte and his son Paolo Duterte worked with Yang and other Chinese businessmen in Davao in the illegal drug trade.

Harry Roque, a spokesperson for Duterte, dismissed the claims. “The affidavit is hearsay unless subjected to cross examination,” Roque said in a text message to reporters.

Yang, via his lawyer, also refuted the allegations.

But the link to narcotics is not the only controversy swirling around Yang and Lin. Over the past two months, the duo and their network of companies have been engulfed in a COVID-19 supplies procurement scandal, as earlier revealed by Rappler and OCCRP in a joint investigation.

Yang’s role was central to a series of allegedly overpriced COVID-19 supply contracts worth nearly US$175 million awarded by Duterte’s government to Pharmally Pharmaceutical Corporation, which is a sister company of the controversial Taiwan-based Pharmally International Holdings. The company’s senior executives, along with Zheng Bingqiang, Yang’s top China-based business partner, are wanted in Taiwan for serious financial crimes — unrelated to the Philippines — that have defrauded investors of tens of millions of dollars.

The Philippine Senate subsequently ordered Yang to appear for questioning, which he did via video link. The country’s department of justice has put him on an immigration watchlist, while a Senate committee recently recommended possible charges against him.

The Senate also summoned Lin and his wife, Rose Nono Lin — exposed by Rappler and OCCRP in a separate joint investigation as the key director for companies across Yang and Lin’s network – to testify regarding the procurement scandal. Rose Nono Lin confirmed her involvement with the companies named in the Rappler and OCCRP investigation.

In the mid-1990s, Duterte, then mayor of Davao City, heard from an underworld informant that a hitman had been sent to assassinate him. He gathered trusted members of the notorious Davao Death Squad and instructed them to find the assassin.

Within hours a suspect had been captured, along with a female companion, although no weapons were found. Duterte personally beat his would-be killer, then ordered that both he and his companion be beheaded. The squad members summarily strangled the pair to death, then chopped their heads off with an axe.

This is just one of several gruesome stories told by Lascañas, who says he was a Davao Death Squad member for more than 20 years, in his affidavit to the ICC.

Lascañas became a whistleblower in 2017, fleeing the country and later describing the squad as Duterte’s “personal killing machine.”

The Philippines’ Wild South

Mindanao, the largest island in the southern Philippines, is rich in resources and agriculture but contends with poverty, crime, smuggling, poor infrastructure, and both Communist and Islamist insurgencies that have persisted for decades.

By the late 1990s, the island had also become a node in a regional network of drug labs producing crystal meth, also known as “shabu” or “ice.” The Davao Death Squad, made up of elite police officers, was ostensibly deployed against this drug trade and other criminal activity, though Lascañas claims that Duterte took advantage of the squad’s loyalty and “greed for money” to further his own personal and political interests.

The group carried out, with impunity, several hundred extrajudicial executions of mostly drug dealers and petty criminals in Mindanao between 1998 and 2005. Rappler counted at least 129 extrajudicial killings described in the affidavit, all of which Lascañas was directly involved in between 1998 and 2015. Separate investigations published by Human Rights Watch estimate the total number of extrajudicial killings to be significantly higher.

The testimony portrays Duterte as ruthless but, according to Lascañas, he is equally capable of making bedfellows of former enemies when it suits him.

Yang is named in the ICC affidavit as a coordinating operator of clandestine meth labs in Mindanao — the exact type of labs that the Davao Death Squad was regularly conducting murderous raids against.

Lascañas recounted a series of gruesome murders the squad carried out during a raid on one Davao lab on Dec. 31, 2004. Describing the lab as being run by chemists from China, he claimed he interrogated the main lab operator, Alan Sy, who was the only suspect at the scene who spoke Tagalog. Sy is also named in the Acierto report as a player in the drug trade.

Sy told Lascañas that most of the lab workers did not have their passports with them as they were all “apparently in the possession of their employer, Mr. Michael Yang, of DCLA business establishment of Davao city,” referring to Yang’s Davao-based company. The man then tried to bribe Lascañas into freeing him and three of his compatriots. Instead, they were executed and buried together in a “common grave”.

Lascañas later detailed how, through his surveillance of suspected shabu or meth labs in Davao, he observed couriers regularly scuttling back and forth from Yang’s DCLA Plaza shopping mall, where shabu dealers have been reported to operate.

The testimony outlines connections between Yang’s operations in the city and Duterte’s mayor’s office. Lascañas says he learned from local intelligence sources in 2013 that Yang had a particularly close connection to a deputy mayor of Davao who acted as a “customs broker,” allegedly allowing shipments from Yang’s drug operations to be smuggled through Mindanaoan ports, hidden in trucks of consumer goods. He also said Yang was linked to Sammy Uy, a prominent Davao Chinese businessman with longtime ties to Duterte.

Lascañas’s claim that Yang played a key logistical role in the Mindanao drug trade corroborates an intelligence report submitted in 2017 by Eduardo Acierto, a retired police colonel who worked as an anti-narcotics operative for more than 15 years.

The report, covered by media in the Philippines but never made public, documented a network of Chinese businessmen with close ties to Duterte that operated Mindanao meth labs. A diagram of these operations in the report placed Yang and another of his business partners, Allan Lim, right at the center of the network.

The leaked ICC affidavit from Lascañas is the first independent corroboration of the Acierto report.

Via his lawyer, Yang said the Lascañas affidavit and Acierto report were both “without factual basis.” He said no evidence had been submitted to any government authority to substantiate the allegations and that he had faced no criminal charges.

Acierto claimed his informants pointed to Yang as being the main facilitator of drug shipments and the handling of meth chemicals and equipment.

According to the report, Yang, whose alias is “Dragon” owing to a dragon tattoo on his arm, was associated with a China-based drug trafficking syndicate controlled by a kingpin known as Johnson Chua, for whom an arrest warrant has been issued in the Philippines.

In the early 2000s Yang’s partner in the drug trade was Allan Lim, according to Acierto. This is likely the same person as Yang’s current business partner Lin Weixiong, says Acierto, who used photographs and mug shots to show that the same person had used two identities.

Acierto compiled the report after seeing Yang suddenly emerge as a key figure in Duterte’s inner circle in 2015, when Duterte was photographed visiting Yang and his associate Zheng at the headquarters of Yang’s flagship company, Fudesheng (known as Fullwin Group in English), in Xiamen, China.

While the report remained hidden from public view, the Philippine National Police ignored its findings and blocked further investigations into Yang’s alleged drug links, Acierto claimed. He then blew the whistle in 2019. Duterte’s administration has dismissed the claims against Yang and the police accused Acierto of complicity in drug dealing, corruption, and extortion.

Like Lascañas, Acierto has been forced into hiding. Philippine authorities are offering a reward for his capture.

Recent reporting by Rappler and OCCRP has revealed how, over the course of Duterte’s presidency, Yang and Lin have risen from relative obscurity to enjoy significant commercial successes. In that time, they have become leading brokers for Chinese investments into the Philippines.

Yang has even entered the corridors of power in the Philippines: In January 2018 Duterte hired him as a presidential economic adviser, a role he served in for a year.

Today, Yang and Lin are spearheading a wave of new investments across several industries. Two holding companies they control, Paili Estate and Paili Holdings, together claimed to run more than 50 subsidiary companies operating across several sectors in the Philippines.

The two companies have won big contracts in the last few years, including for a major industrial zone and real estate project. One of them has also signed a memorandum of understanding to develop a $650-million “Techno-Industrial Zone” with China National Heavy Machinery Corporation, a major Chinese state-owned enterprise.

Pai Hong Realty Corp, another company linked to Yang and Lin, has broken ground on a planned 76-story condominium project overlooking Manila Bay. Company records show Rose Nono Lin – Lin’s wife – as corporate secretary, while Chinese media describe Lin Weixiong as the company’s general manager. Pai Hong, also known as Philippine Billion Real Estate Development, has connections to a Chinese state-owned enterprise.

Through his wife, Lin has also secured a foothold in the controversial Philippine offshore gaming industry. Xionwei Technology, a company in which Rose Nono Lin is the largest shareholder, is listed as a Philippine Offshore Gaming Operators (POGO) business. She is the company president on paper, although Lin Weixiong has been reported to be the chairman of the company.

What’s a POGO?

POGO is short for Philippine Offshore Gaming Operators, a service industry that has grown exponentially in the country over the past five years. POGO companies, many of which were reported to be ultimately controlled by Chinese nationals, provide online gambling services to players mostly from mainland China, where all formal gambling is illegal. The industry has generated controversy in the Philippines due to documented links to organized crime, money laundering, corruption, and human trafficking.

As Yang and Lin’s influence has grown in the Philippines, so too have their global ambitions. In 2018 and again in 2019, Yang’s Fudesheng applied to the Hong Kong Stock Exchange to have a Cayman Islands-registered entity, Fudesheng Financial Group, listed on the Hong Kong Growth Enterprise Market.

According to the company’s prospectus seen by OCCRP, Fudesheng Financial Group is ultimately controlled by Yang and his close associate Zheng Bingqiang through an obscure network of British Virgin Islands-based companies, and described itself as a provider of financial services.

“I have no personal involvement in the business activities of Mr. Zheng and I cannot comment on any accusations against him in Taiwan”, Yang told OCCRP via his lawyer.

As over two million Filipinos suffered with COVID-19, Duterte gifted Yang and his associates a chance to profit from the outbreak.

When Duterte’s government handed out a series of allegedly overpriced contracts for supply of COVID-19 personal protective equipment (PPE), by far the biggest beneficiary was Pharmally Pharmaceutical Corporation, a relatively unknown sister company of Taiwan-based Pharmally International Holding Company Limited.

Despite the Philippine subsidiary’s capital barely exceeding $12,000, it bagged nearly $175 million in supply contracts that were deemed overpriced, far exceeding any other supplier of PPE. It was awarded another $45 million in contracts in 2021.

It has since been revealed that the owners of Pharmally are wanted by Taiwanese authorities for alleged financial fraud and the company has close ties to Yang, who has since been identified as a key financier and guarantor of the PPE deal. Pharmally was delisted from Taiwan’s Stock Exchange in April 2021.

The Philippine Senate has launched an inquiry into the procurement scandal and summoned Yang, Lin and his wife to give testimony.

In a response to a request for comment on the Pharmally scandal, Yang sent OCCRP statements he submitted to the Senate in which he denies having any connection to Pharmally or exerting any undue influence over the award of the PPE contracts.

Calls to a number for Pharmally in Taiwan were not answered. In a September statement to the Philippine Senate, shared with reporters, Pharmally’s CEO Huang Tzu Yen denied the company had received favorable treatment in the award of PPE contracts. He said the “drastic demand” for PPE equipment had “drastically increased its prices” at the time of the contract award and praised his company for successfully delivering “critically-needed, life-saving equipment” to the Philippines.

In a separate testimony, a former Pharmally employee claimed that Pharmally had “swindled” the government, though she retracted the statement some days later.

Philippine Vice President Leni Robredo described the scandal as “unforgivable”, while a Senate committee recently recommended considering criminal charges against both Pharmally’s directors, as well as Yang.

As Rappler and OCCRP previously revealed, Yang and Pharmally’s Philippine operations are connected on paper through Lin’s wife, Rose Nono Lin, and Gerald Cruz, another Philippine national. Both are directors of a Pharmally subsidiary, as well as founding incorporators of the main Philippine subsidiary of Yang’s Fudesheng investment company in the Philippines.

Yang and Lin Weixiong also appear in 2017 video leading introductions at a meeting between Duterte and senior executives at Pharmally.

In December 2020, Taiwan’s Ministry of Justice issued international arrest warrants for Pharmally chair Huang Wen-Lai and several of Pharmally’s senior executives, along with Yang’s China-based associate Zheng.

Investigators found widespread malpractice at Pharmally, including falsification of financial accounts and attempted manipulation of the stock price by its executives. Authorities also allege that Huang, the chairman, illegally moved the equivalent of close to $25 million into personal bank accounts. Employees of accounting firm Deloitte & Touche Taiwan were also accused of helping falsify the company’s financial reports.

Huang and his son reportedly fled Taiwan for Singapore around the time Taiwanese authorities began looking into the company in the second half of 2020. Trading of Pharmally’s Taiwan shares was suspended in August 2020.

Rappler sent comment requests to residential and commercial addresses for Lin Weixiong and Rose Nono Lin, but received no response.

Yang and Lin have opened doors for the Duterte administration in China. In September Duterte admitted he had asked Yang to “lay the groundwork” for deals with China struck during Duterte’s presidency.

Yang and Lin have assumed quasi-diplomatic roles while also making public charitable donations in the Philippines and mainland China.

In 2017, Yang and Lin appeared to broker a meeting between Philippine government officials and senior Communist Party officials from China’s Fujian province. The following year, Yang and his brother Yang Hongjiang both attended a Chinese Communist Party-sponsored conference in Beijing for overseas nationals, as Philippine representatives of the All China Federation of Returned Overseas Chinese.

Yang, Lin, and Yang’s two brothers play key roles in promoting China’s flagship Belt and Road Initiative in the Philippines, holding leading positions at several business associations, including the Philippine Silk Road International Chamber of Commerce. One of Yang’s brothers founded and owned the Hong Kong-based company “Sino-Philippine International Cooperation Consulting Co Ltd”.

Another brother shares the title of ‘Honorary President of the Philippine Chinese Youth Chamber of Commerce’ with She Lunkai, another Belt and Road entrepreneur handling huge sums of planned investments in Southeast Asia. She Lunkai has faced media allegations of links to crime and has been on the run from Chinese authorities.

Yet even before the Pharmally debacle and narcotics revelations, recent manoeuvres by Yang’s companies, and the Taiwan arrest warrant for his associate Zheng, suggest that Yang’s star has already begun to fade.

In September 2020, his Fudesheng Financial Group registered to cease its business activities in Hong Kong, suggesting the planned IPO is all but dead. Then in November 2020 Fudesheng Group’s other Hong Kong-based arm transferred control of the entire company to three obscure entities in the BVI.

Back in Manila, Yang has come under immense pressure to come clean on his past, and his present. He cited “hypertension” as his reason for refusing to turn up at the Senate for questioning, although he did appear via video link.

As the Philippine Senate and Department of Justice try to track down Yang, many of the websites linked to his companies have been taken down, or made private.

Duterte has rushed to defend Yang with characteristic bombast, just as he did in 2018 when the police intelligence report first linked Yang to narcotics. A Philippine senator responded to Duterte’s attack on the Senate’s probe into Yang by calling the president a “cheap politician, as cheap as they come”.

With 2022 presidential elections looming, the embarrassing controversies linked to Yang have weighed on the 76-year-old Duterte. The president’s popularity has dipped in recent months and former political allies in the Senate have turned against him. In early October Duterte announced he was retiring from politics and would not run for vice-president in the elections, as he had previously planned.

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Contents published under this byline are those created by the news team of WeeklyBlitz

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