updated 6/9/2004 2:05:33 PM ET 2004-06-09T18:05:33

Police raided a huge methamphetamine factory in Fiji’s capital Wednesday, arresting seven people and seizing enough chemicals to make $540 million worth of the drug.

Officers found drugs “bubbling away” in a three-building complex stacked with drums of chemicals and equipment, Fiji Police Commissioner Andrew Hughes said. They arrested four Asians and three Fijians, Hughes said.

The same day, police in Hong Kong arrested a man suspected of laundering proceeds for the drug syndicate that runs the Fijian laboratory. Hong Kong police said the four Asians arrested in the Fiji raid were Hong Kong residents.

Police in Malaysia also arrested six other members of the same syndicate, Hong Kong officials said.

The raid underscored recent warnings by Australia and New Zealand that South Pacific countries could become havens for organized crime if they did not improve their policing, stamp out widespread corruption and improve their economies.

“This is a frightening example of trans-national organized crime elements using Fiji as a staging ground for their illegal activities,” Hughes told reporters. “Increasingly, we are seeing these elements coming to Fiji and joining up with local organized criminal groups.”

Fiji’s parliament is debating tougher drug laws that would increase sentences for serious drug offenses from a maximum of 20 years to life in prison.

Hughes said the laboratory, on an industrial site on the outskirts of Suva, was set up to produce methamphetamine for the Australian, New Zealand, U.S. and European markets.

An initial assessment of the chemicals found in the warehouses showed that there was enough to produce 2,200 pounds of crystal methamphetamine, Hughes said. He said the laboratory had the capacity to produce 1,100 pounds of the drug each week.

New Zealand and Australian federal police were in Fiji to assist with the investigation. New Zealand police experts will stay for about two weeks to clean the warehouses of toxic wastes, Hughes said.

Fiji, a nation of 869,000 people, lies in the South Pacific about 2,200 miles east of Australia.

In the arrest of the suspected money launderer, Hong Kong police found $3.84 million in cash and a large amount of jewelry during raids on several unspecified locations.

The suspect, an ethnic Chinese living in Hong Kong who was identified on by his surname, Tsoi, was in custody but was not immediately charged, said Edwin Hung, a spokesman for the police.

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