(Seoul = Yonhap News) Reporter Koo Jeong-mo = It has been pointed out that Grand Korea Leisure (GKL), a public company that operates Seven Luck, a foreigner-only casino, sent its executives and employees overseas to directly contact local customers.
It was argued that if such activities go beyond the scope of simple customer management and amount to soliciting visits to casinos or recruiting customers, they may violate local laws or Chinese criminal law.
◇ GKL, contacting customers on overseas business trips… Raise suspicion of violation of local law
According to a source familiar with GKL on the 6th, GKL has been carrying out customer management activities in recent years, such as sending marketing staff and executives to Hong Kong, Macau, Singapore, and Mongolia to meet existing customers there, have meals, or purchase gifts for customers.
This source claimed, “For the past three years, GKL has been continuously sending employees on business trips to Hong Kong, Macau, Singapore, and Mongolia to meet local customers in person. Even after an incident in China in 2015 in which employees were arrested for recruiting local customers, the legal risks of overseas marketing are not being properly managed.”
According to business trip-related data presented by the source, the GKL CEO's business trip schedule to Singapore in June last year included meeting with specific customers and a meal worth over 1 million won at a local restaurant.
It is reported that the head of the marketing division and others went on a business trip to Hong Kong and Macau this year as well.
“Touring casino facilities or meeting local officials for benchmarking is different from meeting customers in person to encourage them to visit casinos,” the source said. “In the latter case, we must thoroughly review in advance whether there are any problems with local and Chinese laws.”
In Hong Kong, Macau, and Singapore, there are regulations on advertising and marketing related to casinos and gambling, as well as local sales activities of foreigners, so it is pointed out that if the local activities of GKL employees go beyond the scope of simple customer management and amount to soliciting visits to casinos or recruiting new customers, there is a possibility of violating local laws.
◇ Possibility of application of Chinese criminal law in case of systematic recruitment of Chinese people
In particular, if Chinese tourists in Hong Kong, Macau, Singapore, etc. are systematically encouraged or arranged to visit Korean casinos, the possibility of Chinese criminal law being applied is also raised.
In October 2020, the Supreme People's Court, the Supreme People's Procuratorate, and the Ministry of Public Security issued a joint opinion stipulating that overseas casino officials' solicitation of Chinese customers would be subject to punishment. In December of the same year, the Criminal Law Amendment Bill was passed, and a new penalty provision for organizing Chinese citizens' participation in domestic and overseas gambling was established in Article 303, Paragraph 3.
This provision stipulates that if a Chinese citizen is organized to participate in gambling outside the country or outside the country, if the amount is large or there are other serious circumstances, he or she will be punished according to the provisions of the crime of opening a casino.
Accordingly, the basic punishment is imprisonment or detention for up to 5 years and a fine, and if the case is serious, the punishment is imprisonment for not less than 5 years but not more than 10 years and a fine.
China explained that the criminal subjects of this provision are not limited to Chinese people.
In a briefing by China's Ministry of Public Security on February 5, 2021, Vice President Li Ruiyi of the 3rd Criminal Trial Chamber of the Supreme People's Court said that the criminal subject of this provision is an "ordinary subject" and that "any person, including Chinese citizens and foreign citizens, who organizes Chinese citizens to participate in cross-border gambling will be subject to crackdown."
Accordingly, if a GKL employee of Korean nationality systematically invites Chinese people to participate in Korean casino gambling, there is a possibility that he or she may become a subject of a crime under Article 303, Paragraph 3 of the Criminal Act. However, whether meeting existing customers for a meal or introducing them to a casino constitutes an 'organization' as defined by the law, the specific content and scale of the act must be considered.
Whether Chinese criminal law can actually be applied is also a separate criminal jurisdiction issue. Article 6 of the Chinese Criminal Code provides that if one of the acts or results of the crime occurs within Chinese territory, the crime is deemed to have occurred in China.
Therefore, even if you contacted a customer overseas, if you contacted a customer or recruiter in mainland China or part of the customer recruitment process, such as making a reservation or transferring funds, was done within China, China's criminal jurisdiction may be recognized.
On the other hand, if business activities are conducted only in Hong Kong, Macau, Singapore, Mongolia, and Korea, and there are no actions or results connected to mainland China, the application requirements of Article 8 of the Chinese Criminal Code regarding foreigners' overseas crimes must be separately considered.
◇ Employee arrested in China in 2015… GKL “We are not recruiting new customers”
In the past, GKL had employees arrested by Chinese police in connection with recruiting local customers.
In June 2015, Chinese public security investigated Korean casino companies such as GKL and Paradise and employees of local travel agencies on charges of brokering gambling and violating the Foreign Exchange Management Act in the process of recruiting customers.
According to the Korean Embassy in China at the time, 14 employees of casino companies such as GKL and Paradise, as well as travel company officials in charge of visa agency and airport reception, were arrested by Chinese public security.
In October of the same year, China's state-run China Central (CC) TV reported that Chinese public security conducted a comprehensive investigation in Beijing, Hebei, Shanghai, and Jiangsu, arresting 13 Korean responsible persons and 34 Chinese national agents or executives.
At the time, the media reported that Korean casinos had offices in China and systematically lured locals, providing free airline tickets, lodging, and travel, and paying commissions linked to chip purchases or customer losses to brokers who introduced customers.
Since then, Chinese authorities have continued to crack down on the recruitment of Chinese customers at overseas casinos.
Regarding these suspicions, GKL refuted that its overseas employees are not engaging in sales activities such as recommending casino visits or recruiting new customers.
GKL explained, "We are not conducting sales activities such as directly recommending visits to casinos or recruiting new customers locally," and "We are conducting work centered on responding to inquiries and requests from existing customers, collecting customer opinions, providing convenience related to visiting Korea, and supporting customer service."
He also added, “We have not conducted any marketing-related business trips to China since the 2015 incident.”
