Although one of the most pivotal and recognizable moments in Cowboy Bebop, the betrayal of Mao Yenrai by Vicious in "Ballad of Fallen Angels" remains among its most opaque. While Vicious' hand in Mao's killing is clear, how different characters imagine and justify the murder offers a complex and chilling picture of the elements of betrayal.
Understanding the context of this murder requires insight into the structure of the Red Dragons. Likely emulated after the organization from Shadowrun, Bebop's Red Dragon Syndicate resembles both the Chinese Triad and Italian Cosa Nostra. This much is confirmed in dialogue by Carlos, the White Tiger who meets with Mao. Carlos calls Mao "capo" -- short for the Italian word Caporegime -- a term used to designate a higher-ranking mafia captain. In the structure Bebop uses, a capo leads formally initiated "made men" (such as Vicious), who themselves lead their own crews of non-vested associates (Spike). In Bebop, ultimate control of the Syndicate belongs to the shadowy trio of elders known as the Van.
Mao Was Effectively Sacrificed by the Red Dragons
"He was a beast that lost his fangs; that's why he had to die."
The implied question of "Ballad of Fallen Angels" is the involvement of the Red Dragon's Van in Mao's murder. While Episode 5 is vague on this question, the Van themselves revisit the issue in the introduction to "Jupiter Jazz, Pt. 1." In an audience with Vicious, the Van coldly allude to Mao's murder by ominously reminding Vicious and the assembled body that those who go against the will of the Van are punished. Vicious uses the opportunity to call their bluff, asking theatrically if they believe him to be capable of killing his own mentor, to which remarkably the Van demurs, refusing to implicate Vicious directly -- likely out of fear of exposing their hand. Instead, they lie, referring to Mao's death as "bad luck."
The scene is purposefully theatrical, protecting both the true guilty parties as well as reinforcing to the assembled audience a rule common to mafia organizations, which normally guarantee their members some level of internal protection. In reality, the depraved ruthlessness of the Red Dragon Syndicate offers no such guarantees; even captains like Mao are sacrificed like chess pieces.
From these details, it can be inferred that not only are the Van aware of Mao's murder but responsible for it. The picture is chilling; while Mao was directly killed by his right-hand man, Vicious, he was, in fact, betrayed by his superiors, who effectively sacrificed Mao in order to assassinate Carlos, hurting their White Tiger rivals. The Van's cryptic mention of "punishment" indirectly blames Mao, weakly implicates Vicious but, most importantly, obscures their own responsibility. This illustrates the ruthlessness of the Red Dragons, which Vicious' words to Spike in the cathedral confirm.
Vicious Holds Spike Ultimately Responsible for Mao's Death
"...You would never have done this if Spike were here."
While the Van sanctioned Mao's death, what enabled Vicious to commit this betrayal was his own moral decay -- a fact that Mao calls out directly. When he hears this, Vicious only smiles in tacit assent, the implication of which is proved later in his confrontation with Spike. Upon their meeting, Vicious compresses the entire chain of events leading up to Mao's murder in two cryptic remarks; these prioritize his personal and symbolic dimensions over the practical terms.
Although the second remark ("He was a beast who lost his fangs. That's why he had to die") implicates the Van and the Red Dragons, it is the first ("When angels are forced out of heaven, they become devils. Wouldn't you agree, Spike?") that truly answers Spike's question -- and before he can even ask it. As such, the priority is clear: Vicious holds Spike ultimately responsible for Mao's death -- Spike's betrayal set Vicious on his subsequent moral spiral, turning him into a "devil" who was willing to carry out the Van's monstrous orders. It's a chilling window into the twisted psyche of Bebop's most opaque character, made possible by Keiko Nobumoto's gifted screenwriting.