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Taking loan sharking into account: a case study of Chinese vest-pocket lenders in Holland

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Abstract

Chinese organized crime has long been accused of playing an active role in the illicit usury world, except that there are no known empirical studies depicting how it is actually done. A rare opportunity arose when a Dutch police agency seized one set of financial records documenting detailed transactions of a loan shark working incognito inside a Dutch casino. A detailed analysis of these accounting records suggests that the Chinese loan sharks work with a wide range of clients, primarily Chinese but also non-Chinese. Exorbitant interests were levied on the loans and large volumes of cash were loaned out, with the vast majority accounts in good standing. The bookkeeping records revealed a rather smooth business transaction environment, where some customers were acquaintances from connected social networks, while others were not. Although the seized records left some questions unanswered, the case provided a rarepeek into a secretive financial world that has remained largely unknown to the research community.

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Notes

  1. The term Ah Long is an abbreviated version of Dai Yee Long (大耳窿), which literally translates as big ear hole. This cantonese term referring to loan sharks most likely originated in Hong Kong. One explanation has it that moneylenders wore big earrings to identify themselves. But the exact origin remains unclear.

  2. Information regarding this petition can be found at http://www.lfcon.nl/.

  3. Around that period, the Chinese community in the Netherlands consisted largely of legal citizens from mainland China (23,471) and Hong Kong (17,147). Most of them worked in the Chinese restaurant sector or had a business related to this secotr (e.g. supplying wholesale foodstuffs). Furthermore, an unknown number of illegal migrants from mainland China also resided in the Netherlands. Estimates put their number between a couple of thousand to over 10,000 people. In addition, about 25,000 Chinese from Surinam, Indonesia, Malaysia and Singapore were also living legally in the Netherlands (Harmsen 1998).

  4. Legally speaking, there are limits to the size of such operations. If more than 2 loans are made in a short period of time and/or the working capital of the loan shark is somebody else’s money, the loan shark breaks the law for providing banking services without a license. Loan sharking itself does not carry any penalty.

  5. Since we were unable to get any clarification of the original investigating officers, it remains unclear whether the missing records were misplaced by the loan shark, not created in the first place, or lost during the police raid. Judging from the flow of bookkeeping entries, we suspected that there was a disruption in the personnel involved in the business.

  6. Ah is not part of a real name but a colloquial term signifying acquaintance or friendship.

  7. In 1997 the euro hadn’t been introduced in the Netherlands, and the figures recorded in the seized records were therefore in Dutch guilders. For easier understanding and simplification, we converted all figures in current American Dollars, which taking inflation into account would be about the present day value of those loans.

  8. This source of information, however, was not enough to fill in gaps in the ledger because it did not include names or loan numbers to trace back to the main ledger.

  9. The total number of clients (and therefore the number of loans they took out) is probably higher. However, we are missing the records of a number of weeks.

  10. If the interrupted loans were included, the rate on returns would have been a slightly better because these loans were being repaid in more than one week.

  11. This is the exact amount of losses found in the ledger. However, in the notebook we also found some other loans (good and bad) that, for unclear reasons, weren’t included in the ledger. Because these loans had no history attached to them, we left these out of our calculations.

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Authors and Affiliations

  1. Research Division, The Dutch National Police, P.O. Box 11, 3970 AA, Driebergen, The Netherlands

    Melvin R. J. Soudijn

  2. Department of Sociology, San Diego State University, 5500 Campanile Drive, San Diego, CA, 92182-4423, USA

    Sheldon X. Zhang

Authors
  1. Melvin R. J. Soudijn
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  2. Sheldon X. Zhang
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Correspondence to Melvin R. J. Soudijn.

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The views expressed herein are solely those of the author’s and do not necessarily represent those of the Dutch National Police.

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Soudijn, M.R.J., Zhang, S.X. Taking loan sharking into account: a case study of Chinese vest-pocket lenders in Holland. Trends Organ Crim 16, 13–30 (2013). https://doi.org/10.1007/s12117-012-9155-3

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