U.S. indicts two Marshall Islands nationals in China-linked bribery scheme


Two Marshall Islands nationals of Chinese descent were indicted by the Justice Department on charges of bribing government officials of the Pacific island-state with funds from China.

Cary Yan and Gina Zhou were extradited to the United States from Thailand to New York and charged in a federal indictment unsealed on Friday, accused of using a United Nations-approved NGO to bribe officials of the Marshall Islands government.

The bribes sought to convince the Marshall Islands government to create a separate autonomous economic zone, the Justice Department announced Friday. The charges include violations of the Foreign Corrupt Practices Act and money laundering.

Mr. Yan and Ms. Zhou pleaded not guilty in federal court in Manhattan on Tuesday. Edward Y. Kim, a lawyer for Mr. Yan, declined to comment. Lawyers for Ms. Zhou did not immediately respond to a request for comment.

The two charged in the case are naturalized Marshall Island citizens also known by their Chinese names as Hong Hui Yan or Chen Hong, and Chaoting Zhou or Angel Zhou, respectively. Court papers did not identify their original nationality, but revealed they required a Mandarin language translator at the plea hearing. The Justice Department declined to comment on the indictment.

The indictment states that the two used “funds from China and elsewhere” to attempt to bribe six Marshall Islands government officials in promoting the Rongelap Atoll project that was announced in Hong Kong in 2018.

China’s government is engaged in a major program of seeking to expand its influence in Pacific island nations as part of a strategy to counter a push by the U.S. and its regional allies.

Cleo Paskal, an Indo-Pacific affairs expert with the Foundation for Defense of Democracies, said China is covertly working in the Marshall Islands.

“Gaining influence, if not control, in the Marshall Islands is very important to Beijing,” she said. “It is strategically located between Hawaii and Asia, it recognizes Taiwan, and it is in ‘free association’ with the U.S., which means the U.S. is fully responsible for its defense and security.”

The Marshall Islands also host the Ronald Reagan Ballistic Missile Defense Test Site.

Ms. Paskal said the Chinese would like to see the Islands’ government switch diplomatic ties to Beijing and distance itself from the United States.

“That would bring China much closer to its goal of isolating Guam, the Marianas, Japan and Korea and pushing the U.S. back to Hawaii,” Ms. Paskal said.

The allegations in the indictment suggest the activities are part of a Chinese covert influence operation using surrogates, since there is no Chinese embassy in the Marshall Islands, she said.

“Yan and Zhou allegedly engaged in a multi-year scheme to bribe elected officials in the Marshall Islands and to corrupt the legislative process,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division.

Alex Gray, a former White House National Security Council official, said the Chinese are stepping up sophisticated influence operations and United Front activity in strategically significant Pacific Islands.

“The Marshalls operation is extremely concerning because of the U.S. military presence there,” he said.

Mr. Gray said the Biden administration should renew critical U.S. “compacts” with the Marshalls, Palau and Micronesia.

“These arrests show that renewing the compacts must remain the highest Pacific priority for the United States and directly impact the rest of the region,” he said.

Marshall Islands officials first disclosed the activities to the U.S. government. The case was delayed by the lengthy extradition process from Thailand, which began in 2020.

“Significant aspects of the current [Republic of Marshall Islands] government were or are aligned or implicated,” said the person who spoke on condition of anonymity. According to the indictment, Mr. Yan and Ms. Zhou sent “funds from China and elsewhere” to the United States and then to the Marshall Islands. The funds were then used to bribe numerous officials in the government.

The indictment said the objective of creating the Rongelap enclave was to further “business opportunities” for the U.N. non-government organization and the two defendants.

U.S. court papers stated six unidentified Marshall Island officials were targets of the bribery. Five accepted bribes and gifts, but one turned the offer down and appears to be a source for investigators.

Court papers did not identify the NGO but Mr. Yan until 2019 was president of the World Organization of Governance and Competitiveness.

A spokeswoman for the WOGC did not respond to a request for comment.

The organization described itself in a 2016 press release as a “mixed international organization” of unofficial and official groups with special consultative status under a UN program called Sustainable Development Goals.

The atoll is one of 29 coral atolls and four islands that make up the Republic of Marshall Islands, a central Pacific nation that became independent in 1979. The U.S. military conducted nuclear tests on one of the islands, Bikini Atoll, from 1948 to 1958.

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