Chinese policemen watch over ivory products prepared for destruction during a ceremony in Beijing in 2015. AP Photo / Ng Han Guan
Chinese policemen watch over ivory products prepared for destruction during a ceremony in Beijing in 2015. AP Photo / Ng Han Guan

Watchdog says Chinese town is major ivory smuggling hub



HONG KONG // An environmental watchdog group says its investigation has found that a little-known town in southern China is a major hub for ivory smuggling by organized criminal gangs.

The Washington, DC-based Environmental Investigation Agency said in a report Tuesday that it uncovered a network of ivory trafficking syndicates operating out of Shuidong in Guangdong province, near Hong Kong.

The group says its investigators worked undercover posing as buyers to win the trust of a smuggling group and tracked one of its shipments from Mozambique.

Syndicate members told the EIA theirs was just one of 10-20 ivory trafficking groups operating out of Shuidong, the group said.

They claimed that 80 per cent of all poached ivory smuggled from Africa to China passes through the town - a startling figure that's impossible to corroborate.

China has taken steps to curb the demand for ivory that wildlife groups say fuels the mass slaughter of tens of thousands of elephants in Africa every year. It started shutting down ivory carving factories in March and is planning to ban all domestic retail sales by the end of the year. Hong Kong, a major transshipment hub for illicit wildlife trading, is preparing to ban local ivory sales by 2021.

The EIA said Beijing needs to follow up its policies with enforcement, though its decision to close down its domestic ivory market was "admirable."

"What EIA discovered in Shuidong, however, clearly shows transnational criminal networks are operating with near-total impunity," said Mary Rice, the group's executive director. "It is vital that enforcement agencies in Africa and China put these criminals out of business immediately."

The EIA investigators encountered the Shuidong syndicate members last year in Mozambique, which has become more popular with Chinese smugglers after neighboring Tanzania cracked down. Shuidong emerged as an ivory trading hub thanks to its role as a center for the sea cucumber trade, the report said. As China grew wealthier over the past few decades, Shuidong traders fanned out to Africa to feed growing demand for the delicacy. They were well placed to move into the illegal ivory trade when demand in China soared starting in the late 1990s.

The EIA's report said three Shuidong syndicate members revealed details and methods about their operation to smuggle more than 2 metric tonnes of ivory from Mozambique's Pemba port to Shuidong by sea via Busan, South Korea.

They bribed customs officials and shipping agents along every step of the shipment's journey, it said.

The EIA said the syndicate has now moved on to Nigeria because "yellow ivory" from forest elephants native to West and Central Africa was becoming more profitable than "white ivory" from East Africa's savannah elephants.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Company Profile

Company name: Cargoz
Date started: January 2022
Founders: Premlal Pullisserry and Lijo Antony
Based: Dubai
Number of staff: 30
Investment stage: Seed

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