Three months after their extradition from Thailand to face bribery and money laundering charges in the United States, two naturalised Marshallese citizens pleaded guilty on Friday in a New York court to conspiring to violate the US Foreign Corrupt Practices Act (FCPA) in connection with a multi-year scheme to bribe government officials in the Marshall Islands to pass legislation to establish a special investment zone in this western Pacific nation.
Cary Yan and Gina Zhou had been charged with three counts each of violating the FCPA and two counts of money laundering.
They pleaded guilty to one count of conspiring to violate the FCPA and the US Attorney’s Office for the Southern District of New York dismissed the other four charges. They are naturalised Marshall Islands citizens originally from the People’s Republic of China.
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“As they have now admitted, the defendants sought to undermine the democratic processes of the Republic of the Marshall Islands through bribery in order to advance their own financial interests,” US Attorney Damian Williams said in a statement.
“I commend the career prosecutors of this Office and our law enforcement partners for bringing this corruption to light and ensuring that justice is done.”
Yan, 51, and Zhou, 35, are awaiting sentencing. They have been held without bail pending final disposition of the case.
Yan faces a maximum five-year term in prison and a fine of up to US$200,000, while Zhou faces a maximum prison term of three years and 10 months and a fine of up to US$150,000, according to the plea agreement between their defence attorneys and the SDNY prosecutors.
“Beginning at least in 2016, Yan and Zhou began communicating and meeting with Marshall Islands officials in both New York City and the Marshall Islands concerning the development of a semi-autonomous region within a part of the Marshall Islands known as the Rongelap Atoll,” said the US indictment that was unsealed on September 2 on Yan and Zhou’s arrival in New York following extradition from Thailand.
“The creation of the proposed semi-autonomous region was intended by Yan, Zhou, and those associated with them to obtain business by, among other things, allowing Yan and Zhou to attract investors to participate in economic and social development projects that Yan, Zhou, and others promised would occur in the semi-autonomous region.”
Their aim was to establish the Rongelap Atoll Special Administrative Region (RASAR). But because it ran afoul of the Marshall Islands constitution and required exemption from multiple Marshall Islands legal oversight and enforcement provisions, President Hilda Heine’s administration refused to introduce the proposed RASAR legislation to Nitijela (parliament) for consideration in 2018.
Yan and leading Marshall Islands officials had officially launched the RASAR plan in Hong Kong in April 2018, but never met legal requirements to move the plan forward in the Marshall Islands.
Starting in early 2018 and “continuing until at least on or about November 1, 2018, Yan and Zhou offered and provided a series of cash bribes and other incentives to obtain the support of Marshall Islands legislators for the RASAR bill,” said the US indictment.
Heine’s administration held off the attempt to push RASAR legislation into parliament in late 2018 and survived an attempt to unseat Heine through a vote of no confidence in November.
After the national election a year later, when Nitijela reconvened in January 2020, Heine lost the presidency to David Kabua.
Shortly after the new government took office in 2020, “Yan and Zhou began emailing and meeting with certain Marshall Islands officials to continue their plan to create the RASAR,” said US prosecutors.
“In or about late February 2020, the Marshall Islands legislature began considering a resolution that would endorse the concept of the RASAR, a preliminary step that would allow the legislature to enact the more detailed RASAR Bill at a later date.”
US prosecutors said that in early March, “Yan and Zhou met with a close relative of a member of the Marshall Islands legislature in the Marshall Islands.
During the meeting, Yan and Zhou gave the relative $7000 in cash to pass on to the official, specifying that this money would be used to induce and influence other Marshall Islands legislators to support the RASAR Resolution.
“Yan and Zhou further stated, in sum, that they knew that the official needed more than $7000 for this purpose and that (they) would soon obtain additional cash for the official.”
US prosecutors said that at this meeting in early March 2020, Yan and Zhou “also discussed having previously brought larger sums of cash into the Marshall Islands through the United States and that they planned to do so again in the future”.
By the third week of March 2020, the Nitijela passed the RASAR Resolution “with the support of legislators to whom Zhou and Yan had provided bribes and other incentives,” said the prosecutors.