New Delhi’s ‘Chinese hawala scam’ and Dalai Lama spying case – is there more than meets the eye?

On August 11, Indian tax authorities raided the offices of several Chinese entities and their associates across the New Capital Region, accusing them of running a hawala network – a remittance system that exists outside the banking structure – that was actually a front for a US$131 million money-laundering scheme.

“Search action revealed that at the behest of Chinese individuals, more than 40 bank accounts were created in various dummy entities, entering into credits of more than 10 billion rupees (US$134 million) over the period,” the authorities said in a statement. They also found evidence of transactions involving Hong Kong and US dollars.

A 41-year-old Chinese national and several bank employees were arrested. But more explosive allegations soon followed.

The Chinese citizen, Luo Sang, alias Charlie Peng, was accused of using WeChat – the now-banned Chinese app – to communicate with Buddhist monks living in the Indian capital who he then bribed in exchange for spying on the Dalai Lama, the Tibetan spiritual leader living in exile in northern India’s Dharamsala.

India's Income Tax Department told local media that Luo had, through couriers, sent between 200,000 and 300,000 rupees (US$3,997) to individuals living near Majnu ka Tila, a Tibetan settlement of about 3,500 homes in New Delhi. India is home to the world’s largest community of refugee Tibetans who fled after a failed 1959 uprising against Chinese rule.

The colony has many restaurants and boutique shops, making it an attraction for foreign tourists as well as students. It is easily accessible as it is connected to the main interstate bus terminal.

The accusations have alarmed officials of the Tibetan government-in-exile, and raised concerns about the Dalai Lama’s safety. But there are also questions about whether there is more than meets the eye.

Luo’s arrest comes as ties between India and China have sunk to new lows amid an ongoing troop stand-off along their disputed border, with India taking measures to ban Chinese technology, restrict Chinese imports and entice businesses away from manufacturing in China.

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There have also been nationalistic calls within India for New Delhi, which has always adhered to the one-China principle, to make strategic use of the Tibetan diaspora in its stand-off with China.

Tsewang Gyalpo Arya, who oversees foreign relations for the Tibetan cause, accused Beijing of attempting to “infiltrate the security apparatus of his Holiness the Dalai Lama” and stirring up trouble such as the ongoing border dispute with India and sending naval ships to the South China Sea.

“China should be focusing on helping the world fight a pandemic instead of engaging in such misadventures,” said Gyalpo Arya in a telephone interview from Dharamsala, where the Dalai Lama lives and where the Central Tibetan Administration headquarters is located.

A senior Tibetan official based in New Delhi, who requested anonymity as he was not authorised to speak to the media, said: “One thing is for sure – our community is very vigilant about Chinese attempts to infiltrate.”

He added that similar accusations of Chinese nationals spying on the Dalai Lama had emerged some years ago in Himachal Pradesh, a state north of Delhi and closer to the Himalayas.

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A community leader in Majnu ka Tila said investigations showed that none of the residents had anything to do with Luo. The Hindustan Times newspaper said he was originally from Tibet and had moved to Nepal, then India, and had bribed lamas or monks to get information.

Other media reports said Luo held a fake Indian passport was married to a woman from the country’s northeast.

The community leader maintained that none of the “nine or 10” lamas at the two temples in the area were involved in any such bribery, but acknowledged that Luo had lived close to the colony until two years ago and could have met spies there.

“We do not know for sure. The Indian government will issue clarifications once the investigations are concluded,” he said.

Chinese foreign ministry spokesman Zhao Lijian, when asked about the raid and allegations of money laundering a regular press conference on August 12, said: “I am not aware of the situation. What I can tell you is that the Chinese government always requires Chinese enterprises to abide by international rules and local laws and regulations when conducting cooperation with foreign countries.

“At the same time, the Chinese government is committed to safeguarding the legitimate rights and interests of Chinese enterprises and citizens. We hope the Indian side will provide a fair, just and non-discriminatory environment for Chinese enterprises’ operations in India.”

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Late last week, Indian media showed a video purportedly recorded by Luo on August 15 in which he claimed in Mandarin that he was innocent and that his business dealings were all above board.

Jayadeva Ranade, a former senior bureaucrat who served at India’s embassy in Beijing and now runs the Centre for China Analysis and Strategy, a Delhi-based think tank, said the story given out by the government agencies and police so far did not fully add up.

He noted that Luo was arrested by New Delhi police two years ago for alleged fake identification papers based on a tip-off, but was released after questioning. Police this week said they were gathering evidence at that time for his recent arrest.

“Why did they let go of him in 2018 when they already had him? It is surprising,” Ranade said.

Ranade said he had seen “blogs and articles in Chinese media by those who have accessed areas in India’s northeast which cannot be accessed without permission”.

“These individuals manage to go in and out, and could potentially be working for Chinese intelligence. In this case, the target was the Dalai Lama. The Chinese have been successful in penetrating the Tibetan diaspora in the past,” said Ranade.

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In 2013, a man of Tibetan origin was arrested in Dharamsala for spying for China, local media reported at the time.

Ranade said Luo’s arrest was to send a signal to his country of origin.

“Relations between India and China are currently already damaged. So, it is also a caution to Chinese companies and individuals in India who are not above board.”