WEBVTT - How a Tiny British Island Fell Into an International Gambling Scandal 0:00:01.120 --> 0:00:04.920 How a tiny British island fell into an international gambling scandal. 0:00:05.840 --> 0:00:08.400 Online casinos were a big driver of the Isle of 0:00:08.440 --> 0:00:13.760 Man's economy. Lately they've become a liability. By Jack Adamovich 0:00:13.920 --> 0:00:19.759 Davies read aloud by Mark Leedorf. On a cool April 0:00:19.760 --> 0:00:23.080 morning in twenty twenty four, dozens of British police bordered 0:00:23.120 --> 0:00:26.080 a ferry on England's northwest coast, bound for the Isle 0:00:26.120 --> 0:00:29.920 of Man. Their arrival was kept secret. Only the most 0:00:29.920 --> 0:00:33.280 senior officials on the island, a self governed state overseen 0:00:33.320 --> 0:00:36.440 by the UK, had been notified, according to a person 0:00:36.479 --> 0:00:39.960 debriefed after the raid, for fear of jeopardizing the largest 0:00:40.040 --> 0:00:44.120 law enforcement operation in the island's history. The target was 0:00:44.240 --> 0:00:47.559 King Gaming, one of dozens of companies licensed over the 0:00:47.560 --> 0:00:51.800 preceding decade to run online casinos from the island. Internet 0:00:51.840 --> 0:00:54.800 gambling had become a big business there by that point, 0:00:54.800 --> 0:00:58.400 the second largest contributor to gross domestic product, and Man's 0:00:58.440 --> 0:01:01.440 officials were pleased to have a growth engine for their economy. 0:01:02.240 --> 0:01:04.840 The Isle of Man had been slowly lurching toward a 0:01:04.840 --> 0:01:08.360 fiscal crisis. The territory of eighty six thousand has an 0:01:08.400 --> 0:01:11.240 aging population and one of the lowest birth rates on 0:01:11.280 --> 0:01:14.160 the planet. It was facing an acute version of an 0:01:14.200 --> 0:01:18.160 existential question in front of many developed economies today, how 0:01:18.200 --> 0:01:21.640 to fund basic government services alongside an increasing number of 0:01:21.680 --> 0:01:26.280 pensions and a decreasing number of taxpayers. Online gambling seemed 0:01:26.319 --> 0:01:29.480 as good an answer as any. In public statements, the 0:01:29.520 --> 0:01:32.360 government lauded King Gaming as a vision for the island's 0:01:32.400 --> 0:01:37.120 economic future. Ministers extended the company multimillion pound tax breaks 0:01:37.360 --> 0:01:41.160 and turned out for its promotional events off island. Though 0:01:41.200 --> 0:01:44.039 the company was in trouble. A court in Beijing had 0:01:44.080 --> 0:01:47.680 just found six former King Gaming employees guilty of scamming 0:01:47.760 --> 0:01:50.640 victims in China out of more than five million dollars 0:01:50.720 --> 0:01:53.920 from an operation based in the Isle of Man's capital, Douglas. 0:01:54.560 --> 0:01:57.919 The judgment, which described the company as a criminal organization, 0:01:58.440 --> 0:02:01.160 was the catalyst for a prolonged scandal on the island, 0:02:01.520 --> 0:02:06.080 prompting criticism from the United Nations, embarrassing government officials, severing 0:02:06.080 --> 0:02:08.840 an artery of its economy, and setting off raids on 0:02:08.960 --> 0:02:13.480 multiple companies, including King Gaming. On that day in April, 0:02:13.639 --> 0:02:17.040 British law enforcement arrived in Douglass at sunrise and rode 0:02:17.040 --> 0:02:19.919 in unmarked police cars with Island police to a King 0:02:20.000 --> 0:02:23.760 Gaming office just down the road from Parliament. Officers tried 0:02:23.840 --> 0:02:26.560 and failed to break down the door to the finance department, 0:02:26.800 --> 0:02:30.040 which was unusually well fortified for an office building, says 0:02:30.040 --> 0:02:33.000 a former King Gaming employee, who, like others who spoke 0:02:33.000 --> 0:02:36.000 to Bloomberg BusinessWeek, asked not to be identified because of 0:02:36.000 --> 0:02:40.160 the criminal allegations. Police went around to the back, smashed 0:02:40.200 --> 0:02:42.840 in a first floor window and climbed through in search 0:02:42.880 --> 0:02:46.600 of financial documents, some of the people say. Across town 0:02:46.760 --> 0:02:49.280 in a disused bank leased by the company for another 0:02:49.320 --> 0:02:52.560 one of its offices, police detained about forty workers for 0:02:52.639 --> 0:02:56.440 questioning by immigration authorities. According to reports from Isle of 0:02:56.480 --> 0:03:01.520 Man Today and Manx Radio, people were arrested, but none 0:03:01.560 --> 0:03:04.200 have been charged in the UK or Isle of Man. 0:03:04.960 --> 0:03:07.440 It would be another year before the Manx government took 0:03:07.440 --> 0:03:10.480 the problem seriously enough to institute a broader crackdown on 0:03:10.560 --> 0:03:14.960 illicit internet operations. In May twenty five, it issued what 0:03:15.000 --> 0:03:19.120 it called a new National Risk Appetite, citing an increasingly 0:03:19.240 --> 0:03:23.639 complex criminal landscape in East and Southeast Asia. Since April 0:03:23.639 --> 0:03:27.120 twenty twenty four, fifty five companies operating on the island 0:03:27.160 --> 0:03:30.680 have surrendered their online gambling licenses or had them revoked. 0:03:31.200 --> 0:03:33.600 The figure represents an increase of more than one hundred 0:03:33.600 --> 0:03:36.680 and fifty percent in the average rate licenses were canceled 0:03:36.960 --> 0:03:39.640 in the four years prior to the raid on King Gaming. 0:03:40.680 --> 0:03:43.520 Many of the conditions that have drawn international companies to 0:03:43.600 --> 0:03:46.080 the Isle of Man for years are the same ones 0:03:46.080 --> 0:03:50.960 that turned it into a haven for Asian Internet scammerings. Insurance, banking, 0:03:51.000 --> 0:03:53.560 and finance businesses have sought out the island for its 0:03:53.640 --> 0:03:57.360 low corporate tax rate in many cases zero, as well 0:03:57.360 --> 0:04:01.720 as its permissive legal and regulatory systems. Countries with economies 0:04:01.720 --> 0:04:04.240 in distress feel they have no choice but to offer 0:04:04.280 --> 0:04:08.240 these enticements to keep themselves afloat, But those same policies 0:04:08.280 --> 0:04:12.640 appeal to operators of legally dubious or outright criminal enterprises 0:04:13.360 --> 0:04:17.919 with gambling. In particular, government watchdogs were dangerously inattentive, and 0:04:18.000 --> 0:04:21.080 a revolving door that formed between regulators and the companies 0:04:21.120 --> 0:04:24.800 they were supposed to be regulating only complicated things, Yet 0:04:24.800 --> 0:04:27.920 in many cases it's not clear if the government's ignorance 0:04:28.040 --> 0:04:31.960 was wilful or naive. Jonathan Davies, the head of Government 0:04:32.000 --> 0:04:35.279 communication for the Isle of Man says that regulators did 0:04:35.279 --> 0:04:38.039 their best with the information available to them at the time, 0:04:38.440 --> 0:04:41.200 and that the island has strengthened its oversight and enforcement. 0:04:41.839 --> 0:04:46.960 Any suggestion that regulators have compromised or reduced due diligence, supervision, scrutiny, 0:04:47.040 --> 0:04:50.360 or enforcement as a result of political or economic pressures 0:04:50.440 --> 0:04:55.880 is categorically false, he wrote in an emailed statement. John Webster, 0:04:56.200 --> 0:04:59.240 born across the water in Liverpool, summered on the island 0:04:59.279 --> 0:05:02.719 as a child. From nineteen seventy six to nineteen eighty seven, 0:05:02.880 --> 0:05:06.360 he served as the Isle of Man's chief economist. Webster 0:05:06.440 --> 0:05:09.279 later started a dot com business there, and by the 0:05:09.320 --> 0:05:11.640 mid two thousands it was one of the first gambling 0:05:11.640 --> 0:05:14.680 sites on the island. He lobbied the government to embrace 0:05:14.720 --> 0:05:18.040 the new industry, and at that time Webster insists it 0:05:18.080 --> 0:05:21.720 was all clean. We use the expression no one wants 0:05:21.760 --> 0:05:24.560 to lie with dogs because they get fleas. He says. 0:05:25.600 --> 0:05:29.960 As Webster sees it, the island's cultural predisposition toward hospitality 0:05:30.240 --> 0:05:33.839 created an opening for criminals to take advantage. The government 0:05:33.920 --> 0:05:36.479 is constantly looking for the next best thing because we 0:05:36.520 --> 0:05:38.599 haven't got a good thing at the moment, He says, 0:05:39.120 --> 0:05:42.200 it's quite obvious now in retrospect. If you go into 0:05:42.240 --> 0:05:44.680 a gray market where you've got lots of criminal gangs 0:05:44.720 --> 0:05:48.320 and triads, then you have to be super cautious, otherwise 0:05:48.320 --> 0:05:51.880 people are going to abuse the opportunity. The Isle of 0:05:51.960 --> 0:05:55.120 Man is famous for a few things. A stubby tailed 0:05:55.160 --> 0:05:58.520 breed of house cat called the Manx, an annual motorcycle 0:05:58.640 --> 0:06:01.760 race where a competitor's routinely die on the mountainous course, 0:06:02.200 --> 0:06:07.080 and a long and unfortunate reputation for criminality. Generations of 0:06:07.160 --> 0:06:09.920 Vikings used the island as a base to raid England 0:06:09.920 --> 0:06:13.800 and Ireland before departing in the thirteenth century. Four hundred 0:06:13.880 --> 0:06:17.200 years later, a thriving running trade smuggled goods ashore to 0:06:17.240 --> 0:06:21.840 England by passing import taxes. The British Parliament, tired of 0:06:21.880 --> 0:06:25.039 hemorrhaging treasure, effectively ended that trade when it bought the 0:06:25.040 --> 0:06:27.919 island's sovereignty from its feudal ruler, but allowed it to 0:06:27.960 --> 0:06:31.760 remain independent for a time. In the early eighteen hundreds. 0:06:31.880 --> 0:06:35.920 Island law didn't recognize foreign claims on personal debt, which 0:06:36.040 --> 0:06:39.760 lured to its shores a cash rich assortment of swindlers, bankrupts, 0:06:39.880 --> 0:06:44.479 deposed French aristocrats, and dissolute gamblers. As Spencer Walpole, the 0:06:44.520 --> 0:06:47.640 island's Lieutenant Governor and British crown representative at that time, 0:06:47.760 --> 0:06:50.680 observed from the first mention of the Isle of Man 0:06:50.720 --> 0:06:53.560 at the dawn of history, we find that its inhabitants 0:06:53.560 --> 0:06:56.919 had taken advantage of their geographical position to derive some 0:06:57.000 --> 0:07:00.760 illicit gains from the nations which surrounded them. The Isle 0:07:00.800 --> 0:07:03.520 of Man was fully committed to online gambling by the 0:07:03.560 --> 0:07:06.400 time the government appointed Mark Robeson head of e Gaming 0:07:06.560 --> 0:07:10.360 in twenty fifteen. Robesen came with a decade of experience 0:07:10.440 --> 0:07:13.800 working at internet casinos in the UK. His job was 0:07:13.840 --> 0:07:17.240 to entice online gambling companies to the island, pitching a 0:07:17.320 --> 0:07:21.200 light touch regulatory regime. The job took him to offices 0:07:21.240 --> 0:07:24.560 and conventions all around the world. As he'd recall years 0:07:24.640 --> 0:07:27.200 later in a message to colleagues found in a cache 0:07:27.240 --> 0:07:30.160 of King Gaming e mails reviewed by BusinessWeek, it was 0:07:30.200 --> 0:07:33.400 at one such conference in Berlin that he met Bill Morgan. 0:07:34.200 --> 0:07:37.680 Morgan is originally from China. He grew up in Anhui, 0:07:37.840 --> 0:07:41.280 among the less prosperous provinces on the Mainland. He ditched 0:07:41.320 --> 0:07:44.560 his birth name Liang ling Fei in twenty sixteen when 0:07:44.560 --> 0:07:48.320 he became a naturalized citizen of the Dominican Republic. Robeson 0:07:48.360 --> 0:07:51.440 wrote that in their first meeting, Morgan identified himself as 0:07:51.440 --> 0:07:54.680 a stockbroker with thousands of high net worth clients in China. 0:07:55.360 --> 0:07:58.680 Tired of merely executing their trades, Morgan said he wanted 0:07:58.680 --> 0:08:02.720 to help his clients gamble their entire fortunes instead. This 0:08:02.880 --> 0:08:06.000 was a tricky proposition. All forms of gambling have been 0:08:06.000 --> 0:08:10.080 outlawed in China since nineteen forty nine, relegated to underground 0:08:10.120 --> 0:08:13.960 games run by Chinese organized crime syndicates, or a legalized 0:08:14.000 --> 0:08:17.080 system in Macau where more money is gambled each year 0:08:17.120 --> 0:08:20.760 than in Las Vegas. Soon after their first meeting, Morgan 0:08:20.800 --> 0:08:23.160 and his team flew to the Isle of Man, and 0:08:23.200 --> 0:08:25.840 a month after that, Morgan and Robesen met again at 0:08:25.840 --> 0:08:29.120 a trade fair in Macau. Another month later, I was 0:08:29.120 --> 0:08:32.760 in Beijing meeting a much much bigger team, Robeson wrote 0:08:32.760 --> 0:08:35.720 in one of the emails seen by BusinessWeek, everything was 0:08:35.760 --> 0:08:40.960 gaining momentum. By everything, Robesen was referring to a job opportunity. 0:08:41.559 --> 0:08:44.880 In March twenty seventeen. He and Morgan, who in internal 0:08:44.880 --> 0:08:48.680 company messages was almost always referred to as BM, founded 0:08:48.800 --> 0:08:53.440 King Gaming together. Neither responded to repeated requests for comment. 0:08:54.200 --> 0:08:57.079 Not to be confused with King dot com, the maker 0:08:57.120 --> 0:09:00.720 of candy Crush, King Gaming would specialize in live streamed 0:09:00.720 --> 0:09:03.880 casino games and sports betting. It had offer a mix 0:09:03.920 --> 0:09:07.760 of Western games such as Baccarat, Roulette slots, and Texas Holdham, 0:09:08.040 --> 0:09:10.400 as well as Eastern ones such as the dice game, 0:09:10.480 --> 0:09:13.520 seek Bo and fan Tan, in which players bet on 0:09:13.559 --> 0:09:15.400 the number of objects that will be left on the 0:09:15.400 --> 0:09:18.000 table after the dealer removes them in groups of four. 0:09:18.880 --> 0:09:22.160 Hiring robeson from the Island's Department for Enterprise, where he 0:09:22.240 --> 0:09:25.080 was in charge of promoting the gambling industry, lent the 0:09:25.080 --> 0:09:29.240 company international credibility and political access. But even from the 0:09:29.240 --> 0:09:32.480 seemingly safe remove of the Isle of Man, Morgan was 0:09:32.520 --> 0:09:35.720 clearly aware of the hazards surrounding the new venture. He 0:09:35.800 --> 0:09:38.679 signed a waiver with one of King Gaming's vendors saying 0:09:38.720 --> 0:09:41.760 he was aware of the personal risks associated with setting 0:09:41.800 --> 0:09:44.960 up and running an online gaming business, which targets China. 0:09:45.880 --> 0:09:48.320 The company sought to develop more formal ties with the 0:09:48.320 --> 0:09:51.760 island's government. It moved into an office in Douglas whose 0:09:51.800 --> 0:09:55.120 only other tenant was a recruitment agency called mackenzie Fox 0:09:55.559 --> 0:09:59.480 co owned by then Treasury Minister Alfred Kanaan, whose department 0:09:59.520 --> 0:10:03.880 oversaw the island's gambling regulator, and his wife. King Gaming 0:10:04.040 --> 0:10:07.680 soon signed McKenzie Fox as its exclusive on island recruiter 0:10:08.000 --> 0:10:10.960 and agreed to pay at least seventy six five hundred 0:10:11.000 --> 0:10:14.880 pounds about one hundred and two thousand dollars for those services, 0:10:15.120 --> 0:10:20.160 according to invoices and emails. While Robeson helped cultivate these relationships, 0:10:20.400 --> 0:10:23.000 he began to express a growing sense of paranoia that 0:10:23.120 --> 0:10:26.680 representatives from his Sino Dominican business partner were running some 0:10:26.840 --> 0:10:29.959 kind of shadow company behind his back that went beyond 0:10:30.000 --> 0:10:33.480 the bounds of quasi legal gambling. If staff here are 0:10:33.480 --> 0:10:35.920 working on things I don't know about, not only could 0:10:35.960 --> 0:10:38.600 this leave our companies in trouble, but I would also 0:10:38.640 --> 0:10:43.280 be personally liable and potentially prosecuted. Robeson the company's chief 0:10:43.320 --> 0:10:46.840 executive officer wrote in a typical email from twenty seventeen, 0:10:47.600 --> 0:10:50.240 these things carry very high risks for me, and the 0:10:50.280 --> 0:10:54.120 penalties include, but are not restricted to large financial fines 0:10:54.200 --> 0:10:58.120 and jail. King Gaming was still seeking approval from the 0:10:58.160 --> 0:11:03.200 Gambling Supervision Commission for its flagship online casino kgvip dot 0:11:03.240 --> 0:11:06.640 com and couldn't legally operate until it secured a license, 0:11:07.080 --> 0:11:11.520 which is probably why Robeson's email compulsion entered overdrive. That November, 0:11:12.120 --> 0:11:15.120 Robeson said he'd received a message from Mark Varley, the 0:11:15.160 --> 0:11:19.560 Gambling Supervision Commission inspector in charge of monitoring King Gaming's activities, 0:11:19.880 --> 0:11:21.760 with a link to a website that appeared to be 0:11:21.840 --> 0:11:24.720 a wholesale clone of the one King Gaming had pitched 0:11:24.920 --> 0:11:28.560 privately to regulators. The only difference was that this one 0:11:28.600 --> 0:11:31.880 was live on the internet. What were your initial thoughts 0:11:31.920 --> 0:11:36.640 regarding similarities to the test site, Varley asked. Robeson responded 0:11:36.640 --> 0:11:39.480 a few days later with the company's assessment while it 0:11:39.520 --> 0:11:42.320 was still investigating what had happened. He told Varley that 0:11:42.360 --> 0:11:44.959 the team believed the site's source code had been pinched 0:11:44.960 --> 0:11:48.240 by an Asian company that King Gaming had considered working 0:11:48.280 --> 0:11:51.800 with a few months earlier. Varley accepted the explanation and 0:11:51.880 --> 0:11:55.080 the matter was closed. The regulator granted King Gaming a 0:11:55.120 --> 0:11:59.360 license in July twenty seventeen, Yet there were other warning 0:11:59.400 --> 0:12:03.880 signs that Bank's officials seemed to overlook. In twenty eighteen, Morgan, 0:12:04.040 --> 0:12:06.760 the owner of King Gaming, had been named President of 0:12:06.800 --> 0:12:10.400 the Chamber of Commerce for the Golden Triangle Special Economic Zone, 0:12:10.960 --> 0:12:14.120 a self governed enclave in Laos where drug smuggling and 0:12:14.200 --> 0:12:17.959 human trafficking ran rampant. The US Department of the Treasury 0:12:18.040 --> 0:12:21.640 had sanctioned the Chamber's chairman, Jao Way, and his companies 0:12:21.679 --> 0:12:24.880 earlier that year, largely for their management of the zone. 0:12:25.280 --> 0:12:29.440 Why has denied wrongdoing? The vast majority of activity in 0:12:29.480 --> 0:12:34.280 the zone is illicit, spanning drugs, human trafficking, child sexual exploitation, 0:12:34.360 --> 0:12:39.160 and crucially cybercrime, says John Woochik, a former analyst at 0:12:39.160 --> 0:12:42.800 the UN Office on Drugs and Crimes, Bangkok Bureau. It's 0:12:42.840 --> 0:12:45.520 certainly a massive red flag and should be treated as 0:12:45.520 --> 0:12:48.840 such by any authority considering doing business with Bill Morgan. 0:12:49.840 --> 0:12:52.760 Yet the Isle of Man was thrilled to have Morgan's business, 0:12:53.040 --> 0:12:55.440 and by the end of twenty eighteen, revenue from the 0:12:55.440 --> 0:12:59.120 online gambling sector was the single largest contributor to its economy. 0:12:59.679 --> 0:13:02.880 King Gaming had developed a symbiotic relationship with the government, 0:13:03.280 --> 0:13:06.160 though that relationship would soon get a little more complicated. 0:13:06.840 --> 0:13:10.520 In twenty nineteen, Robesen received an e mail from Bellow Whitbread, 0:13:10.880 --> 0:13:13.400 the wife of the Treasury Minister and co owner of 0:13:13.480 --> 0:13:17.640 King Gaming's recruitment firm. Varley was looking for a job. 0:13:18.720 --> 0:13:21.600 We'll be right back with How a tiny British island 0:13:21.600 --> 0:13:29.199 fell into an international gambling scandal. Welcome back to How 0:13:29.240 --> 0:13:32.800 a tiny British island fell into an international gambling scandal. 0:13:34.120 --> 0:13:37.000 Born on the island in nineteen eighty two, Varley had 0:13:37.040 --> 0:13:40.559 a wanderer's curiosity. He left for England and earned a 0:13:40.600 --> 0:13:43.280 law degree from the University of Leeds, where he also 0:13:43.400 --> 0:13:47.120 enrolled in the British Army's University Officer Training Corps. He 0:13:47.160 --> 0:13:50.120 then spent close to a decade in China before returning 0:13:50.120 --> 0:13:53.720 home to join the Gambling Supervision Commission. His fluency in 0:13:53.800 --> 0:13:56.800 Chinese and on the ground experience in the country made 0:13:56.880 --> 0:13:59.800 him a valuable asset on a team largely monitoring Asia 0:13:59.800 --> 0:14:05.360 Fi casinos. Still, Varley was getting restless. Robeson knew Varley 0:14:05.400 --> 0:14:07.679 could be an asset to King Gaming, and he told 0:14:07.720 --> 0:14:11.319 the recruiter to schedule an interview, but Robeson also recognized 0:14:11.360 --> 0:14:14.040 that the situation could get ugly, writing in an email 0:14:14.080 --> 0:14:17.120 to colleagues in December twenty nineteen, due to the fact 0:14:17.160 --> 0:14:19.680 he is our inspector, there is a high risk to 0:14:19.720 --> 0:14:22.560 our business if he doesn't interview well or we decide 0:14:22.560 --> 0:14:25.160 not to offer him a job. He met Varley that 0:14:25.240 --> 0:14:28.760 afternoon and reported back his impressions the next day. I 0:14:28.800 --> 0:14:32.080 don't have any doubts on his capability, Robeson wrote, My 0:14:32.200 --> 0:14:34.920 concern is with his personality and I don't know if 0:14:34.920 --> 0:14:37.480 he would be a good fit within our group. A 0:14:37.520 --> 0:14:40.960 week later, at two pm on Friday the thirteenth, Varley 0:14:41.040 --> 0:14:44.400 visited King Gaming's office, not as the company's inspector, though 0:14:44.400 --> 0:14:47.040 he still held that role, but to have his Mandarin 0:14:47.080 --> 0:14:50.280 skills put through their paces by two Chinese speaking directors. 0:14:50.840 --> 0:14:53.840 They were impressed, but the company deferred its hiring decision 0:14:53.880 --> 0:14:57.200 until the new year. In the meantime, Robeson and Varley 0:14:57.280 --> 0:15:02.360 continued to exchange formalities over regulatory matters via email. Varley 0:15:02.440 --> 0:15:05.080 came in for one more interview on February eleventh, and 0:15:05.120 --> 0:15:08.720 the next afternoon, King Gaming extended him a formal job offer. 0:15:09.240 --> 0:15:12.160 For whatever reason, Varley sent an email an hour later 0:15:12.200 --> 0:15:15.840 from his official government account asking for clarification on the 0:15:15.840 --> 0:15:19.680 company's quarterly returns That appears to be his final message 0:15:19.720 --> 0:15:23.000 as King Gaming's inspector. He joined the company as corporate 0:15:23.000 --> 0:15:25.760 affairs manager just as the Isle of Man was preparing 0:15:25.800 --> 0:15:28.760 to close its borders to international travel to halt the 0:15:28.800 --> 0:15:33.200 spread of COVID nineteen. But the pandemic created an opportunity 0:15:33.200 --> 0:15:36.480 of a different kind for King Gaming. Robeson told his 0:15:36.560 --> 0:15:39.320 fellow directors in May twenty twenty that he'd met with 0:15:39.520 --> 0:15:42.120 ex colleagues and politicians that I used to work with. 0:15:42.280 --> 0:15:45.920 He wrote, due to the impacts of Corona virus, they 0:15:45.960 --> 0:15:48.640 are now even more keen to offer assistance to us. 0:15:49.360 --> 0:15:52.080 Within three days, the government extended the company as much 0:15:52.080 --> 0:15:55.360 as five point ninety two million pounds in state funds 0:15:55.360 --> 0:15:58.200 and tax breaks to relocate up to two hundred foreign 0:15:58.280 --> 0:16:01.080 workers and construct a corporate campus for them to live 0:16:01.080 --> 0:16:04.600 and work in. At that point, regulators hadn't yet detected 0:16:04.600 --> 0:16:08.560 anything was off. The island's regulatory and law enforcement bodies 0:16:08.600 --> 0:16:13.880 take a zero tolerance approach to criminal activity, using enforcement action, investigations, 0:16:13.920 --> 0:16:18.480 and international cooperation to prevent, detect, and disrupt it Davies, 0:16:18.640 --> 0:16:22.200 the government spokesman wrote in an email, license holders are 0:16:22.240 --> 0:16:26.440 subject to thorough due diligence at entry and ongoing monitoring 0:16:26.480 --> 0:16:29.840 in line with international anti money laundering and countering financial 0:16:29.840 --> 0:16:34.960 crime requirements. Within King Gaming's leadership, though fractures were forming. 0:16:35.440 --> 0:16:37.880 Late that year, one of the directors made an alarming 0:16:37.920 --> 0:16:42.360 discovery A vast and diffuse network of international gambling sites 0:16:42.440 --> 0:16:45.760 was operating on King Gaming server and unknown people in 0:16:45.840 --> 0:16:49.600 the Philippines were claiming to represent the company there. This person, 0:16:49.600 --> 0:16:52.120 who asked not to be identified, says he reported the 0:16:52.160 --> 0:16:56.560 findings to Robesen, who immediately emailed representatives from Morgan. Robeson 0:16:56.600 --> 0:16:58.200 asked them to find a way to put a stop 0:16:58.240 --> 0:17:00.720 to it, and said if the regulator found out, our 0:17:00.800 --> 0:17:04.440 license could be in trouble. Shortly after, the director learned 0:17:04.480 --> 0:17:08.840 he'd been fired. Days later, the now former director walked 0:17:08.840 --> 0:17:12.280 into the Gambling Supervision Commission and made a whistleblower claim. 0:17:12.880 --> 0:17:15.240 He offered to walk the regulator through the evidence and 0:17:15.400 --> 0:17:18.360 was promised to follow up meeting. He says he never 0:17:18.400 --> 0:17:21.199 heard back, nor did the regulator broach the subject with 0:17:21.280 --> 0:17:26.240 King Gaming. Despite emerging comfortably from the scare, Morgan apparently 0:17:26.280 --> 0:17:30.200 wanted to clean house. He asked for Robeson's resignation, according 0:17:30.200 --> 0:17:32.760 to an email from the head of human resources. On 0:17:32.880 --> 0:17:36.720 learning of his ouster, Robeson began musing about shadow directors, 0:17:36.800 --> 0:17:39.760 illicitly calling the shots, and talking as though he were 0:17:39.800 --> 0:17:44.719 considering becoming a whistleblower too. Instead, he negotiated a nineteen 0:17:44.760 --> 0:17:47.800 page settlement agreement that garnered him one hundred and sixteen 0:17:48.200 --> 0:17:51.160 two hundred and fifty pounds in exchange for his silence 0:17:51.920 --> 0:17:55.000 with robes and gone. King Gaming had a new project. 0:17:55.440 --> 0:17:57.879 It was looking to acquire a company in the Philippines 0:17:57.880 --> 0:18:01.679 called c S Global Technology for fifty thousand dollars and 0:18:01.840 --> 0:18:04.359 import its staff to the Isle of Man using what's 0:18:04.400 --> 0:18:08.920 known as an intra company transfer or ICT visa. Now, 0:18:09.080 --> 0:18:12.560 Varley became the company's Hey, what's really going on here? Guy? 0:18:13.320 --> 0:18:17.040 After reviewing cs Global's books, he circulated a memo asking 0:18:17.080 --> 0:18:19.400 why the current owners were willing to sell for such 0:18:19.400 --> 0:18:22.480 a low price when they'd reported investing about four times 0:18:22.520 --> 0:18:26.320 that amount into the business. Moreover, how was cs global 0:18:26.400 --> 0:18:30.040 even making payroll? The company has had no real expenses 0:18:30.080 --> 0:18:32.840 in the last two years. How can we justify to 0:18:32.880 --> 0:18:35.720 Immigration that thirty plus staff have worked there for at 0:18:35.800 --> 0:18:40.920 least twelve months for ict purposes. Barley wrote his concerns 0:18:40.960 --> 0:18:44.240 went unheeded, and by July twenty twenty one, the deal 0:18:44.359 --> 0:18:48.520 was done. The visa applications contained red flags. Most of 0:18:48.520 --> 0:18:51.320 the applicants Philippines work permits had been issued to a 0:18:51.359 --> 0:18:55.160 company identified in internal King Gaming emails as a subsidiary 0:18:55.240 --> 0:18:58.840 of the Oriental Group owned by Kim Wong, who has 0:18:58.880 --> 0:19:02.000 been repeatedly accused in the Philippines Senate and other venues 0:19:02.160 --> 0:19:05.680 as having ties to organized crime, which he's largely denied. 0:19:06.320 --> 0:19:09.960 Fifteen applications contained records of travel to and work in 0:19:10.000 --> 0:19:14.879 the Golden Triangle. Immigration officials rubber stamped all the applications 0:19:15.400 --> 0:19:18.359 under a government financial assistance program that gives companies as 0:19:18.440 --> 0:19:21.000 much as ten thousand pounds for each worker it brings 0:19:21.000 --> 0:19:24.560 to the island. King Gaming took full advantage. The new 0:19:24.640 --> 0:19:27.200 arrivals were kept separate from the rest of the workforce. 0:19:27.600 --> 0:19:30.440 They were housed in seafront hotels. King Gaming had bought 0:19:30.520 --> 0:19:32.960 or leased from businesses that had been decimated by the 0:19:33.000 --> 0:19:36.840 COVID closures. Restaurant standard walk burners were brought in for 0:19:36.880 --> 0:19:40.320 the workers to prepare their meals. A former IT worker 0:19:40.320 --> 0:19:43.320 at the company who requested anonymity, says he was tasked 0:19:43.359 --> 0:19:46.400 with setting up the tech infrastructure in the buildings, including 0:19:46.440 --> 0:19:50.080 an extensive virtual private network that tunneled web traffic through 0:19:50.200 --> 0:19:54.040 Chinese servers. In hindsight, he says, the system was surely 0:19:54.080 --> 0:19:57.199 meant to conceal the worker's connection to Kink Gaming. The 0:19:57.240 --> 0:20:00.760 BBC later reported on accusations that these hotels were a 0:20:00.800 --> 0:20:04.080 home base for King Gaming employees to conduct so called 0:20:04.200 --> 0:20:08.320 pig butchering scams, where victims online are misled through flattery 0:20:08.520 --> 0:20:12.760 and metaphorically bled for money. King Gaming eventually ran out 0:20:12.760 --> 0:20:15.200 of run down hotels and old banks to pack its 0:20:15.200 --> 0:20:17.680 staff into, which is why it set out to create 0:20:17.720 --> 0:20:20.720 the seventy million pound campus on the outskirts of Douglas. 0:20:21.240 --> 0:20:24.360 The government touted it as the largest single private investment 0:20:24.400 --> 0:20:27.560 in the Isle of Man. The proposed glass and steel 0:20:27.600 --> 0:20:31.280 facility would have space for not only King Gaming's business activities, 0:20:31.520 --> 0:20:34.720 but also accommodations for as many as sixty six employees. 0:20:35.280 --> 0:20:38.679 When ground broke in July twenty twenty three, Enterprise Minister 0:20:38.800 --> 0:20:42.800 Tim Johnston praised it as a landmark development that embodies 0:20:42.840 --> 0:20:46.159 the ambitions of the Department for Enterprise to develop, diversify 0:20:46.240 --> 0:20:49.879 and grow the island's economy. In late twenty twenty four, 0:20:50.000 --> 0:20:53.960 Alfred Canaan agreed to meet for an interview on the island. Canaan, 0:20:54.240 --> 0:20:57.800 the former Treasury Minister, was now Chief Minister, essentially the 0:20:57.800 --> 0:21:00.600 prime Minister. He'd been elected a few year years earlier, 0:21:00.640 --> 0:21:03.840 and eventually gave up his job at Mackenzie Fox. He 0:21:03.920 --> 0:21:06.119 transferred his shares in the company to his wife in 0:21:06.160 --> 0:21:09.120 November twenty twenty one, but stayed on as a director 0:21:09.160 --> 0:21:13.520 and company secretary until October twenty twenty four, hours before 0:21:13.560 --> 0:21:16.680 our planned interview, Though a foreign affairs advisor reached out 0:21:16.720 --> 0:21:19.280 to say the meeting was off. It appeared that Canaan 0:21:19.280 --> 0:21:23.280 didn't want to talk about the country's gambling problem. Someone 0:21:23.280 --> 0:21:26.600 who was willing to speak, albeit briefly, was Whitbread, the 0:21:26.680 --> 0:21:30.280 Chief Minister's former business partner and soon to be former wife. 0:21:30.640 --> 0:21:33.800 She was in the process of divorcing him. She seemed 0:21:33.800 --> 0:21:36.439 to know exactly what the phone call was about. She 0:21:36.480 --> 0:21:39.600 couldn't comment on King Gaming, she said, because she'd never 0:21:39.640 --> 0:21:42.760 done business with the company, Seemingly forgetting the close to 0:21:42.800 --> 0:21:46.000 eighty thousand pounds of invoices she'd sent to it. You 0:21:46.040 --> 0:21:48.720 will not find anything on us, no connection to anything. 0:21:48.880 --> 0:21:53.240 We're PEPs, she said, using the compliance acronym for politically 0:21:53.280 --> 0:21:56.879 exposed persons. I can't possibly be involved in any of 0:21:56.920 --> 0:22:00.840 that nonsense. If we smell anything, sniff anything, think anything, 0:22:01.280 --> 0:22:04.760 we give people very wide berths. And then she revealed 0:22:04.760 --> 0:22:09.240 something striking. I've got a blanket approach now Asian gaming firms, 0:22:09.520 --> 0:22:12.760 no thank you. King Gaming had amassed a great deal 0:22:12.800 --> 0:22:15.760 of political clout through its connection with Canaan and Whitbread's 0:22:15.800 --> 0:22:19.080 firm and its employment of former government workers. But the 0:22:19.119 --> 0:22:23.600 regulator to casino operator pipeline wasn't just happening there. Ableton 0:22:23.640 --> 0:22:28.159 Prestige Global, another online casino operator, ran a similar playbook. 0:22:28.520 --> 0:22:31.800 It also shared an office with Mackenzie Fox. It also 0:22:32.000 --> 0:22:35.479 hired a senior official from the Gambling Supervision Commission. It 0:22:35.560 --> 0:22:39.280 also had to forfeit its license and was raided. Ableton 0:22:39.400 --> 0:22:43.320 declined to comment. To some the vulnerabilities of this system 0:22:43.400 --> 0:22:47.040 are evident. It creates a risk that privileged information and 0:22:47.119 --> 0:22:50.280 access will be used to game the system, says Ben Kawdock, 0:22:50.760 --> 0:22:56.600 lead investigator at the corruption watchdog Transparency International UK. Mark Rutherford, 0:22:56.800 --> 0:22:59.919 CEO of the Gambling Supervision Commission, doesn't see a problem 0:23:00.080 --> 0:23:03.160 with it. His agency will always support staff that looked 0:23:03.160 --> 0:23:06.640 to progress their career, he says, curtailing that would impinge 0:23:06.640 --> 0:23:10.719 on their rights. For Varley, the career progression was short lived. 0:23:11.280 --> 0:23:14.159 Years before the raid on King Gaming, he returned to 0:23:14.200 --> 0:23:16.879 a post in government. He serves on a team in 0:23:16.960 --> 0:23:20.880 charge of investigating international money laundering, King Gaming being one 0:23:20.920 --> 0:23:23.960 of the largest cases. The members of his group have 0:23:24.040 --> 0:23:26.879 probably done more than anyone else to force a reluctant 0:23:26.920 --> 0:23:30.760 Manx political class to acknowledge the scale of the problem. 0:23:30.960 --> 0:23:33.240 As much as the raid on King Gaming caused a 0:23:33.280 --> 0:23:35.960 stir in the Manx government, it was a report from 0:23:35.960 --> 0:23:38.800 the UN later in twenty twenty four that really made 0:23:38.840 --> 0:23:41.800