Examining the Link between Organized Crime and Corruption Research Team:
Loosi Azarian, Valeria Bondareva, Leah Liu,
Maggie Mergen, Orevaoghene Odu,
Pallavi Sengupta, and Tahina Vatel
Client:
The World Bank Group
Point of Contact: Dr. Francesca Recanatini,
Senior Public Sector Specialist
1
Table of Contents
Abstract ........................................................................................................................................... 3 Introduction ..................................................................................................................................... 4 Methodology ................................................................................................................................... 5 Case Studies .................................................................................................................................... 6 Argentina: 2002 - 2014 ............................................................................................................... 7 Bulgaria: Mid 1990s - 2009 ...................................................................................................... 10 Honduras: 2010 - Present .......................................................................................................... 14 Iraq: 2004 - 2006 ....................................................................................................................... 17 Jamaica: 2009 - 2010................................................................................................................. 20 Mexico: 1940s -1980s ............................................................................................................... 23 Paraguay: 2012-2015................................................................................................................. 26 Analysis......................................................................................................................................... 29 Further Research ........................................................................................................................... 33 Conclusion .................................................................................................................................... 36 2
Abstract
Our project uses seven case studies to explore the link between organized crime and corruption.
In each of our cases, we find a strong symbiotic relationship between the two phenomena that
mutually reinforce each other. The cases are applied to three academic frameworks to inform our
understanding of the nexus. We then recommend further research to better understand the link
and its impact on the quality of governance and development.
3
Introduction
The purpose of our research is to contribute to the World Bank Group’s understanding of the link
between corruption and organized crime. To demonstrate the link, we focus on case studies from
Argentina, Bulgaria, Honduras, Iraq, Jamaica, Mexico, and Paraguay. These cases vary in time
period, dating back to 1940s. In each case, the corrupt official(s) abused state resources and/or
power to aid organized criminal group(s) and advance personal gains.
To examine the nature of the relationship between organized crime and corruption, we analyzed
our case studies using three separate academic frameworks developed by Robert Legvold, Susan
Rose-Ackerman, and Sarah Chayes. We then identified further areas of research to expand the
understanding of the nexus between organized crime and corruption.
This study offers significant evidence that organized crime and corruption enjoy a mutually
beneficial relationship. For this reason, any efforts to combat either phenomenon must take into
account their symbiotic relationship. The link, as well as the factors that strengthen it, should be
of interest to international development organizations, such as the World Bank Group.
4
Methodology
For the purposes of our study, we used Edgardo Buscaglia and Jan van Dijk’s criteria of
organized crime. In their view, organized criminal groups share the following common elements:
1) structure; 2) permanence; 3) commit serious crimes for profit; 4) use violence; 5) corrupt
officials; 6) launder proceeds and; 7) reinvest in the licit economy.1 For corruption, we used the
definition adopted by the World Bank Group—“the abuse of public office for private gain.”2
Although corruption and organized crime have widely been studied as separate concepts, there is
a scarcity of literature exploring the connection between the two. To develop seven case studies,
we consulted a wide variety of sources: academic books and scholarly articles, official
government documents, articles written by investigative journalists, NGO reports, and
WikiLeaks cables. The information obtained was used to develop seven case studies.
Academic publications and NGO’s reports were useful for providing background information for
each case, while investigative journalism and WikiLeaks cables were helpful in establishing the
nexus between organized crime and corruption. Investigative sources, such as the Organized
Crime and Corruption Reporting Project3 and InSight Crime in America,4 were widely used in
this report. These two sources provided the team with a better understanding of the methods used
by organized crime groups and corrupt government officials to protect the illicit business and
extract personal benefits. The team also relied on local newspapers, such as La Nación and ABC
Color, to gain an understanding of the local context of the countries studied.
In addition, the team used government sources such as the websites of the U.S. Department of
State and the U.S. Department of the Treasury to obtain background information on corrupt and
illicit activity. In the analysis section, the team relied on relevant academic literature to provide a
more in-depth understanding of the connection between organized crime and corruption.
1
Edgardo Buscaglia, and Jan Van Dijk, "Controlling Organized Crime and Corruption in the Public Sector," Forum
on Crime and Society 3, no. 1 & 2 (December 2003): 3-34,
http://www.unodc.org/pdf/crime/forum/forum3_Art1.pdf.
2
Countries Combat Corruption: The Role of the World Bank, prepared by the Poverty Reduction and Economic
Management (PREM) Network of the World Bank (Washington, DC, 1997), accessed April 27, 2016, 8,
http://www1.worldbank.org/publicsector/anticorrupt/corruptn/corrptn.pdf.
3
The Organized Crime and Corruption Reporting Project highlights corruption and organized crime issues in
Eastern European, Central Asian and Caucasian nations.
4
InSight Crime mostly reports on South and Central American countries.
5
Case Studies
The case studies examine the link between organized crime and corruption in the following
seven countries:
Country
Time Frame
Argentina
2002 - 2014
Bulgaria
1990s - 2009
Honduras
2010 - Present
Iraq
2004 - 2006
Jamaica
2009 - 2010
Mexico
1940s - 1980s
Paraguay
2012-2015
6
Argentina: 2002 - 2014
Forms of Criminal
Activity:
Drug Trafficking and Collusion with Pharmaceutical Industry
Forms of Corruption:
Illicit Campaign Financing and Personal Bribes
Organized Crime
Group Involved:
Mexican Sinaloa Cartel and the Colombian Oficina de Envigado
Cartel
Government Officials/
Agencies Involved:
Individuals indicted: Chief of SEDRONAR, José Ramón Granero and
five other associates from the ministry including his secretary, Miguel
Zacarías.
Individuals implicated: Former President Cristina Fernández de
Kirchner
Overview
In 2014, José Granero, the former Minister of the Secretaría de Programación para la Prevención
de la Drogadicción y la Lucha contra el Narcotráfico (Secretary of Programing for the Prevention
of Drug Addiction and for the Fight Against Narco-trafficking or SEDRONAR), was indicted for
aiding ephedrine traffickers. SEDRONAR is an Argentinian state agency with the mission to
prevent drug addiction and fight narco-trafficking. During Granero’s tenure as Minister (20052011), more than 43 tons of ephedrine, a major component in the production of
methamphetamine, were imported into Argentina, of which roughly ten percent were used by the
licit pharmaceutical industry.5 There are strong indicators that the ephedrine was sold to
Mexican and Colombian drug trafficking organizations (DTOs). Along with Granero, five of his
aides were officially charged, including Miguel Zacarías, who had close ties with former
President Cristina Fernández de Kirchner.6
Historical Context
Because Mexico increased regulations on ephedrine imports throughout the mid-2000s,
trafficking of methamphetamine became more difficult for Mexican and Colombian DTOs.
Argentina, with relatively lax controls, a history of corruption, preexisting smuggling routes, and
a robust pharmaceutical industry, became an ideal replacement location for the DTOs. 7
Most ephedrine imported into Argentina is being used to make methamphetamine, or other illicit
drugs. From 1999 to 2012, almost 56 tons of ephedrine were imported into Argentina, but only
5
Douglas Farah, “Through the Looking Glass: The Fernandez De Kirchner Government's Narco Corruption and the
Diminished Rule of Law,” International Assessment and Strategy Center, October 2014, accessed March 27, 2016,
http://www.strategycenter.net/docLib/20141018_Farah_LookingGlass_1014.pdf.
6
Ibid.
7
Patrick McDonnell, "Argentina a New Hub for Meth Traffickers," Los Angeles Times, October 13, 2008, accessed
March 27, 2016, http://articles.latimes.com/2008/oct/13/world/fg-ephedrine13.
7
approximately 2.2 tons were required by licit pharmaceutical businesses. Of this amount, 40
tons were imported between 2007 and 2008. Taking into account that the licit pharmaceutical
market in Argentina requires approximately 0.17 tons per year, it is presumed that the vast
majority of the incoming ephedrine was siphoned to illicit purposes.8
In 2008, the Argentinian police discovered a methamphetamine laboratory in Ingeniero
Maschwitz, a suburb of Buenos Aires. The laboratory contained enough chemicals to make
200,000 tablets of methamphetamine.9 In that same year, three pharmaceutical businessmen
were murdered in what became known as the “triple crimen.”10 These events enlightened the
public on the illicit ephedrine trafficking occurring in Argentina.
Nexus between Organized Crime and Corruption
In October of 2014, federal judge María Servini de Cubría indicted Granero and five of his
subordinates, for aiding ephedrine traffickers from 2005-2011. During Granero’s tenure at
SEDRONAR, lax policies and poor oversight within the agency allowed more than 12 tons of
ephedrine to be sold to drug cartels.11 Subsequent investigations found that SEDRONAR
officials had altered documents used to regulate ephedrine importation. Specifically, there were
many errors, oversight and irregularities within SEDRONAR’s National Precursor Chemical
Registry. Also, the import authorization process was tampered with, allowing legal imports to be
sold illicitly.12 The minister and civil servants working at the agency altered official
documentation meant to regulate importation in order to sell the ephedrine to DTOs.
Ephedrine trafficking was profitable for the few businesses that imported the ephedrine.13
Pharmaceutical companies import ephedrine at roughly US $90 to US $120 per kilo, and sell the
product to Mexican cartels for almost US $ 10,000 per kilo.14 This markup is much more
lucrative than selling the product to legal vendors, thus increasing the profits for pharmaceutical
companies and incentivizing more collusion with DTOs. DTOs use the Argentinian
pharmaceutical industry (and the corrupt government regulatory agency) to foster a lucrative
illicit market and meet demand for methamphetamine.15
Pharmaceutical executives colluded with Argentinian politicians to help finance campaigns. Two
pharmaceutical executives connected to drug cartels—one of the murdered businessmen in the
8
"Confirman El Procesamiento Del Ex Titular De La Sedronar José Granero En La Causa De La Efedrina," La
Nación, November 5, 2014, accessed March 27, 2016, http://www.lanacion.com.ar/1741572-se-confirmo-elprocesamiento-de-jose-granero-en-la-causa-de-la-efedrina.
9
Natalie Southwick, "What Role Do Mexican Cartels Play in Argentina Drug Violence?" In Sight Crime, November
06, 2013, accessed March 27, 2016, http://www.insightcrime.org/news-analysis/rosarios-rising-violence-and-itsroots-in-mexican-cartels.
10
Sol Amaya, "Triple Crimen: Cronología Del Caso Que Derivó En La Escandalosa Fuga," La Nación, December
30, 2015, accessed March 27, 2016, http://www.lanacion.com.ar/1858048-triple-crimen-cronologia-del-caso-quederivo-en-la-escandalosa-fuga.
11
Douglas Farah, “Through the Looking Glass” 10.
12
Ibid.
13
"Confirman El Procesamiento Del Ex Titular De La Sedronar José Granero En La Causa De La Efedrina."
14
Gustavo Carabajal , "El Triple Crimen Pasó a La Justicia Federal," La Nación, February 4, 2016, accessed March
27, 2016, http://www.lanacion.com.ar/1868089-el-triple-crimen-paso-a-la-justicia-federal.
15
Natalie Southwick, "What Role Do Mexican Cartels Play in Argentina Drug Violence?"
8
“triple crimen” and the other, Mario Segovia, who was sentenced to 14 years in prison for selling
9,800 kilos to the Sinaloa Cartel in Mexico—provided campaign contributions to Fernández de
Kirchner during the 2007 election.16 One third of Fernández de Kirchner’s declared campaign
donations, upwards of US $1.5 million, were from the pharmaceutical industry.17 The deep ties
between the pharmaceutical industry and drug cartels, along with various other inconsistencies
within Fernández de Kirchner’s campaign financing prompted multiple allegations regarding her
2007 campaign financing practices.18
Miguel Zacarías, an indicted SEDRONAR employee, is believed to have orchestrated the
scheme, and also has close ties to Fernández de Kirchner.19 In 2014, Judge Servini de Cubría
requested Fernández de Kirchner provide phone records that prosecutors believe will
demonstrate that, on at least 34 occasions, known drug traffickers called the Presidential Palace
and SEDRONAR. As of 2016, Fernández de Kirchner has not yet complied with the request to
provide the phone records.20
In addition to campaign contributions, politicians receive financial and personal benefits from
colluding with corrupt organizations. Fernández de Kirchner’s personal wealth increased from
roughly US $ 1.6 million to almost $ 21 million throughout the 10 years she was first lady and
president.21 In the only instance where she discussed this increase, Fernández de Kirchner said
“I’ve been a very successful lawyer, and now I’m a successful president too, thank you.”22
Fernández de Kirchner’s unwillingness to discuss her wealth implies the source may be illegal.
Granero earned political capital as the minister of SEDRONAR. After his tenure, Granero moved
on to lead Energía Argentina Sociedad Anónima (ENARSA), a lucrative and powerful state
energy company.23 Both politicians have benefited through their respective political offices.
Actions Taken to Disrupt the Link
After a methamphetamine lab in Ingeniero Maschwitz was uncovered, and the details of the
“triple crimen,” were made known, Argentinian citizens called for political action to combat the
ephedrine trafficking. In 2008, SEDRONAR, the Ministry of Health, and the Ministry of Justice
united in a national attempt to crackdown on the illicit drug trade by curbing ephedrine imports.
While importation of ephedrine dropped in 2009, the total shipment volume was still almost
fourteen times the domestic demand. High ephedrine import volumes in 2010, 2011 and 2012
demonstrate that, although DTOs “laid low” in 2009, ephedrine importation remained a problem
withinArgentina.24
16
"Confirman El Procesamiento Del Ex Titular De La Sedronar José Granero En La Causa De La Efedrina."
Douglas Farah, “Through the Looking Glass,” 5.
18
Delia M. Ferreria Rubio, “Argentina: Two Cases,” in Dangerous Liaisons: Organized Crime and Political
Finance in Latin America and beyond, ed. Kevin Casas-Zamora, (Washington: Brookings Institution, 2013), 27-28.
19
Douglas Farah, “Through the Looking Glass,” 11.
20
Ibid, 5.
21
Ibid, 5.
22
Santiago Perez and Taos Turner, “In Argentina, Mix of Money and Politics Stirs Intrigue Around Kirchner,” July
28, 2014, accessed April 3, 2016, http://www.wsj.com/articles/in-argentina-mix-of-money-and-politics-stirsintrigue-around-kirchner-1406601002.
23
Douglas Farah, “Through the Looking Glass,” 10.
24
Natalie Southwick, "What Role Do Mexican Cartels Play in Argentina Drug Violence?"
17
9
Bulgaria: Mid 1990s - 2009
Forms of Criminal
Activity:
Fraud, racketeering, black mail, extortions, torture, drug-trafficking,
smuggling, prostitution
Forms of Corruption:
Illicit campaign finance and bribes to local and state administrative
authorities
Organized Crime
Group Involved:
Plamen Galev and Angel Hristov, known as “the Galev brothers”
Government Officials/
Agencies Involved:
Rumen Petkov, the Minister of Interior, and Ivan Ivanov, Deputy
Interior Minister.
Dupnitsa’s judiciary, police and administrative authorities
Overview
From the mid-1990s until 2009, the Galev brothers, a Bulgarian criminal group, were among the
most powerful criminal organizations operating in the country. Plamen Galev and Angel Hristov,
two former security officers, accumulated their wealth through violence, extortion and
racketeering targeted at local entrepreneurs in Dupnitsa, a mid-size town in Western Bulgaria.25
In 2007, after years of buying votes for political candidates, the Galev brothers formed their own
political party and won municipal elections.26 Through bribes and participation in local politics,
the criminal group gained control of the town’s administrative system, police and local courts,
and became “the owners of the first private city in Bulgaria.”27
The Galev brothers also exploited their connections with high-level Bulgarian officials to protect
their business.28 In early 2008, a leaked conversation between Ivan Ivanov, the deputy head of
the Bulgarian Ministry of Interior’s anti-organized crime unit, and the two mobsters revealed that
state officials had supplied information to the Galev brothers explaining how to thwart legal
investigations against them.29 Vanyo Tanov, the head of the Bulgarian anti-organized-crime
police, then accused Rumen Petkov, the head of the Ministry of Interior, of helping the criminal
group protect its methamphetamine-trafficking business.30 Under Petkov’s watch, four regional
governors and twenty policemen were moved from the Galev brothers’ neighborhood to other
25
Examining the Links between Organized Crime and Corruption, Center for the Study of Democracy European
Commission, (Washington, DC, 2010), 213.
26
P. Gounev & Bezlov, T, “Georganiseerde misdaad, corruptie en politiek in Bulgarije,” Justitiele Verkenningen 35
no. 3 (2009): 90.
27
“Bulgaria: International Search Warrant For Galevi Brothers,” Organized Crime and Corruption Reporting
Project, May 16, 2013, accessed April 4, 2016, https://www.occrp.org/en/27-ccwatch/cc-watch-briefs/1507bulgaria-international-search-warrant-for-galevi-brothers.
28
Ibid.
29
Bulgaria Rocked by Interior Ministry Scandal, WikiLeaks, April 1, 2008, accessed April 4, 2016,
https://wikileaks.org/plusd/cables/08SOFIA192_a.html.
30
"Standoff in Bulgaria With Organized Crime," New York Times, November 10, 2010, accessed April 2, 2016,
http://www.nytimes.com/2010/11/11/world/europe/11bulgaria.html?_r=0.
10
regions or forced into early retirement.31 During testimony before Parliament’s Domestic
Security Committee, Petkov admitted that he secretly met with the Galev brothers, while they
were under investigation, and agreed to resign.32 In December 2008, the Galev brothers were
arrested on a separate charge, but were released in June 2009 to run for Parliament, as permitted
by the state penal code.33
The name of the group gave birth to a new Bulgarian word “galevizatsia,” which means the
ability of criminals to act with impunity and circumvent Bulgarian state institutions.34 The case
of the Galev brothers illustrates Bulgaria's struggle to bring organized criminal groups to justice
due to widespread corruption embedded in its institutions. The Prime Minister of Bulgaria,
Boyko Borisov, called prosecution of the Galev brothers “a test for the nation.”35
Historical Context
The legacy of the 1990s, especially the challenges of transitioning to a market economy, high
rates of unemployment and lack of government control, gave rise to a plethora of organized
criminal groups that continue to dominate many spheres of Bulgarian life. According to former
U.S. Ambassador to Bulgaria, James Pardew, “organized criminal activities underlie corruption
and the ineffectiveness of the legal system … and inhibit the country’s economic development.36
Close political connections with key government officials make the prosecution of mafia bosses
in Bulgaria hard to accomplish. Organized criminal groups have been heavily involved in
financing the electoral campaigns of Bulgaria’s major political candidates and government
officials in order to ensure that the organized crime business was protected regardless of the
outcome of the elections.37 Mafia bosses in Bulgaria act with impunity due to a weak lawenforcement system, ineffective penal code, and corrupt government officials who aid the spread
of criminal activities inside the country.
Nexus between Organized Crime and Corruption
The Galev brothers extracted various benefits from state authorities. Local police gave group
affiliates prior warning of police raids and pressured the Galev brothers’ business competitors to
leave the market.38 The local administration of Dupnitsa granted the Galev brothers control over
all public procurement procedures in the region.39 In November 2010, the district court of
Kyustendil acquitted Plamen Galev and Angel Hristov of charges in racketeering, extortion and
31
Gounev, P, & Bezlov, T, “Georganiseerde misdaad, corruptie en politiek in bulgarije.”
"Standoff in Bulgaria With Organized Crime."
33
Ibid.
34
Ibid.
35
Ibid.
36
“WikiLeaks: Bulgarian Organized Crime,” July 7, 2005, accessed April 2, 2016,
https://wikileaks.org/plusd/cables/05SOFIA1207_a.html.
37
Ibid.
38
Gounev, P., & Bezlov, T, “Georganiseerde misdaad, corruptie en politiek in bulgarije.”
39
Galev Brothers Case Study: Monitoring Report, Bulgaria, Transparency International, Bulgaria, September 2014,
2, accessed on April 18, 2016, http://www.confiscation.eu/site/wp-content/uploads/2015/07/TIBG_CaseStudy1_GalevBrothers_en.pdf.
32
11
other crimes, despite the overwhelming evidence of their illegal activities.40 All of these “favors”
to criminal group were traded for bribes to government authorities and assistance in campaign
financing for both local and national political candidates.
The criminal group’s actions also created benefits for Dupnitsa’s residents. The Galev brothers
built new infrastructure in Dupnitsa and founded charitable foundations in order to gain support
for their political party.41 Residents of Dupnitsa were often paid to “look away” and refrain from
reporting on the Galev brothers’ illegal activities.42 Hence, when the police came to arrest the
Galev brothers, the local community defended them.43
Actions Taken to Disrupt the Link
The Galev brothers managed to avoid punishment and fled from the country with 40 million
Bulgarian lev after losing the Parliamentary elections. An international search warrant was
issued for both Plamen Galev and Angel Hristov.44 The Prime Minister of Bulgaria, Boyko
Borisov, declared that “sooner or later” the two criminals would be prosecuted.45
Since Bulgaria’s accession to the European Union (EU), Brussels have exerted significant
pressure on Bulgaria to reform its judicial and administrative systems. Bulgaria formed a new
agency to implement the required reforms, and a team of EU officials was dispatched to Sofia to
monitor the progress.46 Yet, the results have been negligible as corrupt government officials are
unwilling to tackle the issues of organized crime and corruption.47 The EU has considered
cutting development aid to Bulgaria, if the government fails to make significant progress on
these issues.48
40
Galev Brothers Case Study: Monitoring Report, Bulgaria, Transparency International, Bulgaria.
Gounev, P., & Bezlov, T. “Georganiseerde misdaad, corruptie en politiek in bulgarije.”
42
Ibid.
43
Ibid.
44“
Bulgaria: International Search Warrant For Galevi Brothers,” Organized Crime and Corruption Reporting Project.
45
“Bulgarian PM: We’ll Nab Vanished Mobsters ‘Sooner or Later.’ Sofia News Agency Novinite.com, May 11,
2012, accessed March 31, 2016. http://www.blackseanews.net/read/8170/.
46
“Bulgaria under pressure over crime.” BBC News, Sofia. June 7, 2008, accessed April 2, 2016.
http://news.bbc.co.uk/2/hi/europe/7440551.stm.
47 “
WikiLeaks: Только кнут действует на Болгарию.” BlackSeaNews. January 4, 2011, accessed April1, 2016
http://www.blackseanews.net/read/8170/.
48
“Bulgaria under pressure over crime.”
41
12
Appendix
Source: Gounev, P., & Bezlov, T. (2009). Georganiseerde misdaad, corruptie en politiek in bulgarije. Justitiele
Verkenningen, 35(3), 91.
13
Honduras: 2010 - Present
Forms of Criminal
Activity:
Drug-trafficking
Forms of Corruption:
Bribery, money laundering and extortion
Organized Crime Group
Involved:
Barrio 18 Gang
Government Officials/
Agencies Involved:
Honduran Police
Overview
Corruption within the Honduran political and security system is widespread, in part because of
influence of organized crime. Current and former police officers are recruited to provide
security during drug transactions, as demonstrated by the case of Celin Eduardo Pinot
Hernandez, a leader of the Barrio 18 gang who ran drug operations from the prison in collusion
with the prison director.49
Historical Context
Honduras is one of the poorest countries in Latin America and has the world's highest murder
rate.50 It remains one of the most violent countries in the world due to a significant organized
crime problem associated with drug trafficking and gangs.51 The country’s proximity to warring
nations in Central America has long made it a prime spot for the transit of illegal weapons,
contraband and drugs.52
In addition to Honduras' location, its state institutions are weak and fragile. Migdonia Ayestas of
the Violence Observatory at Honduras' Autonomous University says the government is
struggling to provide basic services, let alone patrol its borders. Furthermore, according to the
former secretary of justice for human rights, Ana Pineda, the public doesn't trust the government,
49
James Bosworth, "Honduras: Organized Crime Gaining Amid Political Crisis," (working paper, Organized Crime
in Central America, Woodrow Wilson Centre for Scholars, Washington, DC, 2010), accessed March 29, 2016,
https://www.wilsoncenter.org/sites/default/files/Bosworth.FIN.pdf.
50
"Central America and Caribbean: Honduras," The World Factbook, March 1, 2016, accessed April 18, 2016,
https://www.cia.gov/library/publications/the-world-factbook/geos/ho.html.
51
Ashley Miller, "Why Is Honduras so Violent?" Brookings (blog), October 1, 2015, accessed April 14, 2016,
http://www.brookings.edu/blogs/order-from-chaos/posts/2015/10/01-justice-human-rights-challenges-hondurasmiller-trinkunas.
52
"Honduras," Insight Crime, accessed April 18, 2016, http://www.insightcrime.org/honduras-organized-crimenews/honduras#prospects.
14
most agencies collude with organized crime or use the institutions for their own political power
and wealth. On average, only 2 percent of criminal cases end in a conviction.53
Nexus between Organized Crime and Corruption
In 2014, the Honduran Newspaper El Heraldo leaked the report of an internal affairs
investigation that revealed an extensive list of felonies committed by members of the national
police.54 The list names 202 accused officials, of which 196 are police officers. According to the
report, these police officers have allegedly become allies of drug traffickers and organized crime.
These police officers no longer protect citizens; rather, they help criminals with their activities.
They provide them confidential information, sell disclosed files, and aide in jail breaks. They
also provide police uniforms, weapons, cell phones, and narcotics. The report cites dozens of
cases where police officers have confiscated drugs and money from traffickers but have not
reported the confiscations to higher authorities. Their crimes include money laundering, bribes,
extortion, and bank robberies.55
The most alarming example of police misconduct is that of Celin Eduardo Pinot Hernandez, a
leader of the Barrio 18 gang, who ran drug operations from prison in collusion with the prison
director.56 Despite his status as an inmate, Pinot was allowed to carry a weapon, had a cellphone
and was regularly released to run his drug trafficking business. “For the past two and a half
years, he was always let out at 9 a.m. Tuesdays and Thursdays and, if not, on weekends,” a
source told the Miami Herald. “He was doing business for the boss — drugs, weapons. He would
deliver drugs and bring money.” “The boss,” the source says, was the high-ranking cop who runs
prisons.57 Pinot was released from prison after serving a nine-year sentence. Upon his release,
Pinot was shot down by the police. 58
In Honduras, managing prisons is one of the most lucrative jobs in the National Police.59
Inmates pay bribes for everything from phones to freedom and are let out to commit more crimes
at the behest of their captors. Hence it came as no surprise, when in July 2012, the vice president
53
Carrie Kahn, "Honduras Claims Unwanted Title Of World's Murder Capital." NPR. June 12, 2013. Accessed
April 20,2016.http://www.npr.org/sections/parallels/2013/06/13/190683502/honduras-claims-unwanted-title-ofworlds-murder-capital
54
Marcelo Estrada, "Leaked Report: Honduran Police in the Pockets of Organized Crime," Panama Post, February
7, 2014, accessed March 29, 2016, https://panampost.com/marcela-estrada/2014/02/07/leaked-report-honduranpolice-in-the-pockets-of-organized-crime/.
55
"Honduras: Drug Trafficking Networks Penetrated Senior Officers," El Herado, April 25, 2014, accessed March
29, 2016, https://translate.google.com/translate?hl=en&sl=es&u=http://www.elheraldo.hn/alfrente/698490209/honduras-redes-del-narcotráfico-penetraron-a-altos-oficiales&prev=search.
56
Frances Robles, "Honduras Becomes Murder Capital of the World," Miami Herald, January 23, 2012, accessed
March 29, 2016, http://www.miamiherald.com/latest-news/article1939373.html.
57
Ibid.
58
"Instability in Honduras," Aljazeera, February 8, 2012, accessed April 14, 2016,
http://stream.aljazeera.com/story/201202081941-0022030.
59
"Congress Vice President: 40 Percent of the Police Is Infiltrated by Crime," Procesco Digital, July 2011, accessed
March 29, 2016,
https://translate.google.com/translate?hl=en&sl=es&u=http://www.proceso.hn/component/k2/item/49717Vicepresidente-del-Congreso--40-por-ciento-de-la-Policía-está-infiltrada-por-el-crimen.html&prev=search.
15
of the Honduran Congress, Marvin Ponce, claimed that up to 40 percent of the country's police
force was tied to organized crime. 60
Actions Taken to Disrupt the Link
Addressing the deep-rooted nexus between police and criminal organizations and carrying out an
effective purge and reform of the police and other criminal justice institutions in Honduras, is a
challenge. In 2012, the Comisión de Reforma de la Seguridad Pública (Commission for the
Reform of Public Security) was created - a fully independent body charged with overseeing the
reforms of the police and developing proposals for the reform of the public security system.
However, the effectiveness and success of the Comisión de Reforma de la Seguridad Pública
will largely depend on the commitment and political will of the authorities to tackle the
problem.61
60
“Congress Vice President: 40 Percent of the Police Is Infiltrated by Crime,” Procesco Digital.
Leticia Salomón, "Video Podcast with Security Expert Leticia Salomón: Crime and Police Corruption in
Honduras," Washington Office on Latin America, podcast video, 6:45, accessed April. 18, 2016,
http://www.wola.org/video/crime_and_police_corruption_in_honduras_interview_with_leticia_salomon.
61
16
Iraq: 2004 - 2006
Forms of Criminal
Activity:
Oil smuggling
Forms of Corruption:
Embezzlement of government funds
Organized Crime
Group Involved:
Oil smugglers from al- Juburi’s tribe
Government Officials/
Agencies Involved:
Meshaan al-Juburi, elected Sunni Member of the National Assembly
of Iraq and Leader of Reconciliation and Liberation Bloc
Overview
In 2004, Meshaan al-Juburi, an elected Sunni Member of the National Assembly of Iraq, was
employed by Defense Minister Hazem Shaalan to provide protection for the Baiji to Kirkuk oil
pipeline against attacks from criminal gangs and insurgents.62 The Baiji refinery is one of the
largest in Iraq, and accounts for a third of the country’s oil production. Pipelines flowing from
the Baiji refinery have long been a target for oil smugglers.63 Shaalan believed al-Juburi would
be able to ensure the pipeline’s safety as many of the attacks came from insurgents from alJuburi’s tribe. Instead, attacks on the pipeline increased in 2005 under al-Juburi’s watch. AlJuburi embezzled government funds intended for the pipeline’s protection for his personal gain.
Al-Juburi also provided financial and logistical support to criminal gangs - the very group he was
charged to protect the pipeline against.
Historical Context
From 1979 to 2003, Iraq's government was an authoritarian regime led by Saddam Hussein. Oil
sales during Saddam’s regime were administered by a state monopoly. In practice this monopoly
was split into a number of independently operating companies, including North Oil Company
and South Oil Company.64 Since oil was subsidized, smugglers had an incentive to resell it to
neighboring countries such as Syria and Turkey at a higher price. Oil supply in the country was
also affected by poor infrastructure with refineries and pipelines suffering from a lack of proper
62
Robert F. Worth and James Glanz, "Oil Graft Fuels the Insurgency, Iraq and U.S. Say,” The New York Times,
February 04, 2006, accessed March 26, 2016,
http://www.nytimes.com/2006/02/05/international/middleeast/05corrupt.html?pagewanted=print.
63
Steven Mufson, "Iraq’s Biggest Oil Refinery Is on Fire. How Important Is That?" Washington Post, June 18,
2014, accessed April 03, 2016, https://www.washingtonpost.com/news/wonk/wp/2014/06/18/iraqs-biggest-oilrefinery-is-on-fire-how-important-is-that/.
64
Phil Williams, "Strategic Studies Institute of the US Army War College," Strategic Studies Institute of the US
Army War College, August 26, 2009, accessed March 20, 2016,
http://strategicstudiesinstitute.army.mil/pubs/display.cfm?pubID=930, 63 -64.
17
maintenance.
During the 1990s, UN sanctions on Iraqi oil exports contributed to the growth of oil smuggling.
The sanctions created an opportunity for criminal organizations to increase their wealth through
oil sales on the black market. After the fall of Saddam Hussein’s regime, anarchy reigned in the
country, as a result a large market for illicit activity emerged in which corrupt officials were
available to the highest bidder.
Nexus between Organized Crime and Corruption
The Defense Minister of Iraq asked al-Juburi to organize 17 battalions of soldiers to protect the
Baiji to Kirkuk oil pipeline. Instead, al-Juburi employed a few commanders while keeping
additional ghost soldiers on his payroll. The commanders then funneled the money intended for
the ghost soldiers’ salaries and equipment back to al-Juburi.65 In addition, al-Juburi helped
insurgents plan attacks on the Baiji to Kirkuk pipeline.66 Al-Juburi benefitted from continued
attacks on the pipeline, as it allowed him to pocket more government funds.
Oil smugglers benefitted from unrestricted access to the pipeline. Oil smugglers bribed truck
drivers to acquire oil from trucks en route to Iraq. The stolen oil was then sold abroad by
smugglers at a higher price, creating a shortage of oil available from legal outlets within Iraq.67
Actions Taken to Address Link
In 2005, to increase transparency within the government, Iraq’s Commission on Public Integrity
(CPI) required all government employees to sign a code of conduct. In addition, senior
government officials were required to fill out financial disclosure forms to ensure they were not
living above their means.68 The government also conducted an audit of contracts with all
ministries to investigate any wrongdoing. As a result, al-Juburi was indicted for his crimes and
expelled from the National Assembly in February 2006. He subsequently exiled himself by
fleeing to Syria.69 In addition, arrest warrants were issued against Defense Minister Shaalan and
27 other officials involved in the misuse of government funds.70 However, most of these officials
were able to evade arrest, with the exception of the former Minister of Labor and Social Affairs
Layla Abdul Latif. She was convicted and sentenced to a 6 month suspension for using public
money on personal trips for her family members.71
Despite these efforts, assassinations of individuals investigating government officials involved in
organized crime served to undermine efforts to disrupt the link. In March 2005, the head of CPI
was killed in the city of Mosul by a suicide bomber. CPI’s Engineering Manager and two Special
65
Robert F. Worth and James Glanz. "Oil Graft Fuels the Insurgency, Iraq and U.S. Say.”
Ibid.
67
Ibid.
68
"Iraq," U.S. Department of State, March 8, 2006, accessed March 30, 2016,
http://www.state.gov/j/drl/rls/hrrpt/2005/61689.htm.
69
"Press Center," Treasury Designates Individuals, Entity Fueling Iraqi Insurgency, January 9, 2008, accessed
March 26, 2016, https://www.treasury.gov/press-center/press-releases/Pages/hp759.aspx.
70
Ibid.
71
Ibid.
66
18
Investigative Unit employees were murdered later that year in road ambushes.72 In response to
these killings, CPI established a Witness Protection Program and conducted investigations of the
murders which remained unsolved.
72
"Press Center," Treasury Designates Individuals, Entity Fueling Iraqi Insurgency.
19
Jamaica: 2009 - 2010
Forms of Criminal
Activity:
Drug-trafficking
Forms of Corruption:
Election Fraud
Organized Crime
Group Involved:
Shower Posse, Christopher “Dudus” Coke
Government Officials/
Agencies Involved:
Bruce Golding, Prime Minister (September 2007- October 2011)
Overview
In August 2011, Christopher “Dudus” Coke, the leader of the Shower Posse gang based in Tivoli
Gardens, Jamaica, pled guilty to trafficking more than three tons of marijuana and thirty pounds
of cocaine to the United States and to orchestrating the stabbing of a marijuana dealer in New
York.73 The terms of the plea allowed Coke to avoid the possibility of a life sentence, and did not
require him to reveal the powerful political ties that delayed his prosecution and allowed him to
operate his drug trafficking empire unhindered. 74 The relationship between Coke and Golding is
reflective of Jamaica’s larger issue with crime and politics.
Historical Context
When the campaigning began for the 2007 Jamaican presidential elections, it was estimated that
each party would spend at least US $8 per Jamaican citizen, 60% more than the previous election
in 2002, which was estimated to cost approximately US $4.80 per citizen.75 With the
increasingly high cost of electoral politics, politicians have continued to resort to corrupt
methods to fund their parties and campaigns.76 The accumulation and use of these illicit funds
have been facilitated by regulatory laxity in the country. For instance, campaign financing in
Jamaica is regulated by the Representation of the People Act, which regulates party candidates
but does not hold parties accountable to the law. Yet although candidates are required to disclose
campaign contributions and expenditure, none of these regulations are enforced.77 The political
73
Richard Esposito, “Christopher ‘Dudus’ Coke Pleads Guilty,” ABC News, August 31, 2011, accessed March 31,
2016. http://abcnews.go.com/Blotter/christopher-dudus-coke-jamaican-drug-lord-pleads-guilty/story?id=14423475;
Chris McGreal, "Christopher 'Dudus' Coke Tells US Court: 'I'm Pleading Guilty Because I Am'," The Guardian,
September 1, 2011, accessed March 26, 2016, http://www.theguardian.com/world/2011/sep/01/christopher-duduscoke-us-court.
74
Chris McGreal, "Christopher 'Dudus' Coke Tells US Court: 'I'm Pleading Guilty Because I Am’."
75
Anthony Harriott, Organized Crime and Politics in Jamaica: Breaking the Nexus, (Jamaica: Canoe Press, 2008),
146.
76
Ibid, 150.
77
Ibid.
20
candidates are also known for using political tactics that promote violence. The increased resort
to corrupt funding and political methods that promote violence corresponds with the rise of
organized crime networks and is abetted by the poor regulatory and enforcement framework.78
Furthermore, poor public policy implemented by these parties has supported the “garrisoning”
process in which a system of community governance is established by an organized criminal
group that is embedded in a community.79
In Jamaica, the political elite and the criminal elite have become willing partners that accumulate
money and power at the expense of the people.80 Each party is incentivized by the economic and
political realities of the country. As a trans-shipment point for cocaine, Jamaica has large sums
of criminally acquired wealth that criminals seek to increase, protect, and launder through
influence and power.81 At the same time, the growing cost of political engagement and
representation incites political corruption. These realities in Jamaica reflect the mutually
beneficial relationship between the Shower Posse and the Jamaican government.
Nexus Between Organized Crime and Corruption
Tivoli Gardens, a neighborhood in Jamaica’s capital, Kingston, is a result of the collaboration
between political candidates and organized criminals. The neighborhood was built by the Labour
Party, one of Jamaica’s two political parties. It became known as the “garrisons” as it was also a
breeding ground for a criminal organization known as the “Shower Posse”— so named because
of its reputation for showering its enemies with bullets.82 Coke, as the don of Tivoli Gardens,
secured Bruce Golding’s victory as Prime Minister by ensuring support and votes from Tivoli
Gardens. Coke also thrived under Jamaica’s second party, the People’s National Party, which led
the island for nearly two decades before the Labour Party’s 2007 win.83 Golding ensured that
Coke’s illegal activities were never challenged. In fact, Coke’s heavily armed soldiers had such
fire power that they effectively prevented Jamaican law enforcement from entering the Tivoli
Gardens.84
The marginalized community in Tivoli Gardens became a third beneficiary of Coke and
Golding’s arrangement. The Shower Posse assumed state-like functions, and worked parallel to
the government. Coke provided public services, and supported the poor by sending their children
to school and buying food and clothes for their families.85 The criminal organization established
overlapping interests with politicians and law enforcement, compensating for the weakness of
the state. As a result, when Golding sent armed forces to capture Coke, the local community took
up arms to defend the drug lord.86
78
Anthony Harriott, Organized Crime and Politics in Jamaica: Breaking the Nexus, 150.
Ibid, 2.
80
Ibid, 150.
81
Ibid, 143.
82
Chris McGreal, "Christopher 'Dudus' Coke Tells US Court: 'I'm Pleading Guilty Because I Am'."
83
"Bruce Golding to Resign as Jamaican Prime Minister," The Guardian.
84
Chris McGreal, "Christopher 'Dudus' Coke Tells US Court: 'I'm Pleading Guilty Because I Am'."
85
Ibid.
86
Ibid.
79
21
Coke also had a strong influence over his co-conspirators in New York. His U.S.-based
traffickers had family members in Jamaica who were vulnerable to threats and intimidation.87
Supporting Coke may have also secured protection and wealth for these family members.
Coke’s well-resourced empire made it possible for the government and the organized crime
group to co-exist. His empire also became a non-state actor that provided protection and vital
social services through its daily presence in Tivoli’s socially ostracized community. He therefore
enjoyed protection from all sides—a shield that proved only susceptible to the United States.
Coke also had a strong influence over his co-conspirators in New York because his U.S.-based
traffickers had family members in Jamaica who were vulnerable to threats and intimidation.88
Supporting Coke may have also secured protection and wealth for these family members.
Coke’s well-resourced empire made it possible for the government and the organized crime
group to co-exist while simultaneously placing itself as a non-state actor providing an alternative
to social order through its daily presence in Tivoli’s socially ostracized community. He therefore
enjoyed protection from all sides—a shield that proved only susceptible to the international
community.
Actions Taken to Disrupt the Link
Coke’s reign began to weaken in August 2009 when, based on recorded telephone conversations,
the U.S. government requested his extradition. The recordings revealed Coke’s involvement
trafficking drugs to the United States. Prime Minister Golding’s administration initially resisted
this request, arguing that the United States illegally obtained the recordings.89 The U.S.
government was persistent and pressured Jamaica through various methods such as denying visas
to the Jamaican elite, and publicly questioning Jamaica’s commitment to its alliance with the
United States in combating transnational crime.
In May 2010, Golding finally bowed to United States pressure, and issued a warrant for Coke’s
arrest. This prompted a major Jamaican police operation, which resulted in a bloody battle
between Coke’s supporters and a combined force comprised of the Jamaican army and police
force. The violent struggle resulted in the deaths of more than 70 individuals, most of whom
were innocent residents. Coke escaped this initial battle but later surrendered to authorities,
stating that he would accept extradition to avoid further bloodshed.90 In June 2010, Coke was
extradited and was later sentenced to 23 years in U.S. federal prison.91
87
Chris McGreal, "Christopher 'Dudus' Coke Tells US Court: 'I'm Pleading Guilty Because I Am'."
Ibid.
89
Ibid.
90
Richard Esposito, Christopher ‘Dudus’ Coke Pleads Guilty.”
91
Chris McGreal, "Christopher 'Dudus' Coke Tells US Court: 'I'm Pleading Guilty Because I Am'."
88
22
Mexico: 1940s -1980s
Forms of Criminal
Activity:
Drug production and drug-trafficking
Forms of Corruption:
Bribery
Organized Crime Group
Involved:
Drug trafficking organizations (DTOs)
Government Officials/
Agencies Involved:
Dirección Federal de Seguridad (Federal Security Directorate or
DFS)
Overview
In 1947, the Mexican government established Dirección Federal de Seguridad (Federal Security
Directorate or DFS) to combat the booming illegal drug business. DFS instead abused its
authority, and became a powerful participant in the illegal drug market. High-level officers in
DFS and other law enforcement agencies, including the Federal Judicial Police (PFJ), oversaw
drug trafficking activities in their designated zones and kept the levels of conflict between drug
trafficking organizations (DTOs) under control. In 1985, after the investigations of the murders
of a journalist and a U.S. Drug Enforcement Administration (DEA) agent, DFS’s close
connection with drug traffickers was exposed, and the agency was eventually dismantled. While
DTOs continue their complicit collaboration with corrupt officials, the government was no
longer in control of the drug market.
Historical Context
The incentives for drug production and trafficking in Mexico originate from the high market
demand in the United States. After the passage of the Harrison Narcotics Law in 1914, marijuana
and heroin became illicit goods in the United States.92 While the new law had little effect on the
demand for drugs, it did decrease domestic supply significantly and as a result, the price for
marijuana and heroin in the United States skyrocketed. Meanwhile, the costs of producing and
transporting drugs remained low in Mexico, Colombia and many other countries in Latin
America. Cultivating, processing and trafficking drugs continued to grow as a lucrative business.
At first, most of the drug trade happened in the state of Sinaloa because Sinaloa where poppies
were planted to supply morphine to the United States during World War II. The drug industry in
Mexico expanded massively when Colombian drug cartels started their cooperation with
92
Paul Kenny and Monica Serrano, Mexico's Security Failure: Collapse into Criminal Violence (New York, New
York: Routledge, 2012), 30.
23
Mexican traffickers in the 1970s.93 To ensure the high-value products were safely smuggled into
the United States, drug traffickers spent a portion of their income to bribe the underpaid police in
exchange for protection.94
In response to the illicit drug trade, the Mexican government created a highly centralized agency,
the DFS. The objective of DFS was to “contain” but not “police” the drug situation.95 DFS was
violent in its methods. Through threats of torture and execution, DFS quickly gained dominance
of the criminal world.
Nexus Between Organized Crime and Corruption
DFS, cooperating with other law enforcement agencies, controlled all aspects of the drug market
in Mexico, from production to transportation. Farmers cultivated drugs in military zones, as
permitted by the commanders. The traffickers gathered the goods and transported them on
assigned routes with police checkpoints. The police collected bribes and monitored the
trafficking activities.96 As the traffickers approached the border, DFS used its police radio
system to monitor U.S. police actions, ensuring that the route ahead was cleared for the
traffickers. The top DFS commanders ordered traffickers to operate within their designated zones
to avoid competition and conflicts. 97
As both the protector and the supervisor of the drug market, DFS demanded bribes worth a
certain percentage of the value of each shipment. The commanders of DFS accumulated personal
wealth through the practice.98 The police force allegedly used the money gained from drug trade
to pay for uniforms, equipment and prostitutes.99
The nexus between DFS and drug trafficking organizations (DTOs) not only benefited the
corrupt officials but also created third party beneficiaries. DFS’s supervision of the drug industry
kept the level of violence low for the ground level traffickers and the general public. Many
people involved in the business were not professional criminals but ordinary people, including
farmers who planted corn as well as marijuana, and truck drivers who transported licit goods as
well as drugs. The government’s control of the drug market allowed individuals to maintain both
licit and illicit businesses in a stable environment. It was in all parties’ interests to maintain the
status quo.
93
Julia Preston and Samuel Dillon, Opening Mexico: the Making of Democracy (New York, New York: Farrar,
Straus, and Giroux, 2004), 327.
94
Kenny and Serrano, Mexico’s Security Failure, 47.
95
Ibid, 34.
96
Ibid, 34.
97
“How 100 Years of Failed Drug Policy Gave Rise to Mexico's Cartels,” InSight Crime, accessed March 27, 2016,
http://www.insightcrime.org/news-analysis/how-100-years-failed-drug-policy-rise-mexico-cartels.
98
Preston and Dillon, Opening Mexico, 327.
99
Kenny and Serrano, Mexico’s Security Failure, 47.
24
Actions Taken to Disrupt the Link
The grand corruption scheme lasted for more than four decades. Because of the mutual benefits
to the corrupt officials and the people involved in drug trafficking, little effort had been made in
Mexico to break the link until late 1980s. In 1984, Samuel del Villar, the Special AntiCorruption Advisor, presented a series of reports on DFS and drug traffickers to President
Miguel de la Madrid. While the president appeared to support del Villar’s investigation, he did
not approve any actual actions to combat the corruption.100
The link between DFS and drug trafficking attracted domestic and international attention
following two-high profile murder cases in the mid 1980s. In 1984, an influential investigative
journalist, Manuel Buendia, was assassinated before he could publish his findings on the close
connection between drug traffickers and Mexican government officials.101 The Chief of DFS,
Jose Antonio Zorrilla, appeared at the crime scene several minutes after the murder and allegedly
ordered agents to go to Buendia’s office and destroy his research.102 In 1985, U.S. Drug
Enforcement Administration (DEA) agent Enrique Camarena Salazar was kidnapped, tortured
and assassinated in Guadalajara, Mexico, where he was leading an operation against drug
trafficker Rafael Caro Quintero. Quintero used a DFS badge to avoid arrest.103
The investigations of both murders led to the exposure of DFS’s protection of drug traffickers.
The DEA charged Zorrilla for providing DFS badges to Caro Quintero and other drug traffickers.
Approximately 400 DFS officers were fired as a result of the investigation.104 While Zorrila
successfully fled to Spain in 1985, he was captured and sentenced to thirty five years in prison
after the investigation showed that he was in fact behind the murder of Buendia.105 DFS was
dismantled and lost control of the drug business. The link between corrupt officials and DTOs,
however, has not been entirely disrupted. Many former DFS agents joined other police forces
and continued their close cooperation with traffickers. Some of them became powerful drug
traffickers themselves.106 There is still no effective mechanism in place to stop police officers
from taking bribes from and providing protection to DTOs.
100
Preston and Dillon, Opening Mexico, 329.
“A Mexican Journalist’s Fatal Scoop,” The Washington Post, August 2, 1990, accessed April 30, 2016,
https://www.washingtonpost.com/archive/business/1990/08/21/a-mexican-journalists-fatal-scoop/62a1a040-dfe4451e-8b6d-60c41ebf1066/.
102
“Journalist's Death Unravels Network : Killing in Mexico Reveals Trail of Police Corruption,” Los Angeles
Times, July 7, 1989, accessed May 1, 2016, http://articles.latimes.com/1989-07-07/news/mn-3216_1_policecorruption.
103
Ibid, 35.
104
“Corrupt Police Are No. 1 Target : Mexico Tries to End Reign of Drug Lords in Sinaloa,” Los Angeles Times,
June 23, 1987, accessed March 27, 2016, http://articles.latimes.com/1987-06-23/news/mn-10162_1_drugtrafficker/3.
105
Preston and Dillon, Opening Mexico, 329.
106
Ibid, 330.
101
25
Paraguay: 2012 - 2015
Forms of Criminal
Activity:
Drug-trafficking
Forms of Corruption:
Bribery, kickback, extortion
Organized Crime Group
Involved:
Primeiro Comando Da Capital (PCC) and/or Comando Vermelho
Government Officials/
Agencies Involved:
Deputy Minister of Internal Security, Javier Ibarra
Overview
In November 2012, Paraguay’s national anti-drug agency, SENAD, seized over 1700 kilograms
of cocaine in what they called the Black Eagle operation. Ezequiel de Souza, a Brazilian national
living in Paraguay, was arrested on site and charged for his role in trafficking drugs from
Paraguay to Brazil. In 2015, an audio recording of a 2014 meeting between de Souza, Luis Rojas
(head of Paraguay’s anti-drug agency SENAD), and Senators Arnaldo Giuzzio and Arnoldo
Wiens was released to the press. During the meeting, which was secretly recorded by Senator
Giuzzio, de Souza declared that he gave approximately “160,000” in monthly payments to
various public officials in return for protection and a de facto license to operate with impunity.107
Although de Souza did not explicitly state which currency the payments were made in, Guizzio
maintained de Souza was speaking about U.S. dollars. Among those implicated in the recording
was Deputy Minister of Internal Security, of Security Javier Ibarra.
Historical Context
According to a 2011 UN Office on Drugs and Crime (UNODC) estimate, thirty to forty tons of
cocaine pass from neighboring countries through Paraguay per year.108 Paraguay, which borders
Bolivia, one of South America’s largest cocaine producers, and Brazil, one of the world’s largest
consumers of illegal drugs, is an attractive transit point for narcotics.109 Furthermore, because the
107
Michael Lohmuller, “Recording Sparks Paraguay’s Latest Narco-Political Scandal,” InSight Crime, June 13,
2015, accessed April 10, 2016, http://www.insightcrime.org/news-briefs/recording-sparks-paraguay-latest-narcopolitical-scandal.
108
“United Nations Office on Drugs and Crime,” UNODC and Paraguay Launch $10 Million Programme to Combat
Drugs and Crime, November 9, 2011, accessed April 20, 2016,
https://www.unodc.org/unodc/en/frontpage/2011/November/unodc-and-paraguay-launch-usdollar-10-millionprogramme-to-counter-drugs-and-crime.html.
109
“Paraguay Seizes 1,700kg of Cocaine near Brazil Border,” BBC, November 11, 2012, accessed April 20, 2016,
http://www.bbc.com/news/world-latin-america-20292675.
26
Paraguayan government’s control of its airspace is relatively weak, it is the favored stopping
point for drug flights from Bolivia to Brazil.110
Recent discoveries of cocaine processing laboratories, however, suggest that Paraguay is
becoming a production site for the drug as well.111 Although local criminal networks are
emerging in Paraguay, the drug trade in the country is largely dominated by Brazilian organized
criminal groups like Primeiro Comando Da Capital (PCC), and Comando Vermelho, which both
have a permanent presence in the country112. The latter reportedly uses its base in Ciudad del
Este to ship a ton of Colombian cocaine to Brazil per month.113
Nexus Between Organized Crime and Corruption
The Black Eagle Operation halted a large and sophisticated international narco-trafficking
campaign which used an unauthorized airstrip on a ranch in Canindeyú to ship cocaine to drugconsuming countries like Brazil. The drug seizure was one of the largest in Paraguayan history
and accounted for more than the total amount of cocaine seized the year before, in 2011.114
According to Silvio Amarilla, one of the agents involved in the raid, at least five distinct criminal
organizations used the ranch as an operation hub— PCC and Comando Vermelho apparently
among them.115 The ranch served as a place of production, storage, and business for the various
organizations; it reportedly accounted for 20 percent of the cocaine that passed through Paraguay
at the time.116
Ezequiel de Souza commanded the logistics of the operation, ensuring that the product arrived to
their destinations safely. To ensure that his part of the trafficking continued without interference,
de Souza had to become friendly with many powerful officials. During the 1 hour 11 minute
conversation which was leaked, De Souza revealed a wide network of public officials who
accepted bribes in return for complicity and protection. De Souza mentioned several
110
Elyssa Pachico, “UN: Smugglers Favor Bolivia-Paraguay Drug Flight Route,” InSight Crime, November 23,
2012, accessed April 25, 2016, http://www.insightcrime.org/news-analysis/un-smugglers-favor-bolivia-paraguaydrug-flight-route.
111
Mimi Yagoub, “Anti-Drug Chief Admits Paraguay Becoming Cocaine Producer,” InSight Crime, June 16, 2014,
accessed April18, 2016 http://www.insightcrime.org/news-briefs/anti-drug-chief-admits-paraguay-becomingcocaine-producer.;
112
“Cae un poderoso narco boliviano en Paraguay,” La Prensa, November 13, 2012, accessed April 25, 2016,
http://www.laprensa.com.bo/diario/actualidad/mundo/20121113/cae-un-poderoso-narco-boliviano-enparaguay_37704_60373.html.; Marguerite Cawley, “Paraguay Admits Brazil Organized Crime Has Taken Root,”
InSight Crime, March 3, 2014, http://www.insightcrime.org/news-briefs/paraguay-admits-brazil-organized-crimehas-taken-root.
113
Hannah Stone, “Red Command Ships 1 Ton of Cocaine Monthly from Paraguay,” InSight Crime, April 22, 2013,
http://www.insightcrime.org/news-briefs/red-command-ton-cocaine-paraguay.
114
Geoffrey Ramsey, “Paraguay Raids Massive Drug Flight Hub on Brazilian Border,” InSight Crime, November 12,
2015, accessed April 20, 2016, http://www.insightcrime.org/news-analysis/paraguay-raid-drug-flight-hub-brazilianborder.
115
Michael Lohmuller, “Brazilian Organized Crime and Corrupt Politicians: Drug Trafficking in Paraguay,” InSight
Crime, June 8, 2015, http://www.insightcrime.org/news-briefs/raids-unveil-bolivia-paraguay-brazil-cocainenetwork-coordinated-by-the-pcc.
116
“El Decomiso de 1.748 Kilos de Cocaína Revela Nuevo Modus Operandi de Narcos,” Ultima Hora, November
12, 2012, Accessed April 25, 2016, http://www.ultimahora.com/el-decomiso-1748-kilos-cocaina-revela-nuevomodus-operandi-narcos-n576823.html.
27
Congressmen by name and maintained that he could not think of a prosecutor who had not been
paid off. He also enjoyed police protection.117 De Souza claimed that he paid Minister Ibarra
U.S. $60,000 in bribes.118
Actions taken to Disrupt Link
In June 2015, the Attorney General’s office responded to mounting public pressure by launching
a formal investigation. President Cortes of Paraguay urged Rojas, Ibarra, and all other officials
implicated to cooperate fully.119 In June of 2015, Ibarra testified before the Senate, criticizing
Rojas and maintaining his innocence. In a Senate vote that followed, over two-thirds of the 45person chamber voted to censure Ibarra.120 According to the Article 194 of the national
constitution, however, a vote of censure is non-binding. Despite pressures for dismissal, Minister
Ibarra retained his position until 2016.
In January 2016, Minister Ibarra resigned from his position at the request of Minister Francisco
de Varga, after a three rifles and a shotgun were stolen from Ibarra’s parked car. While he
maintained that his decision to acquire the weapons was driven by fears for his family’s
wellbeing, his possession of two rifles belonging to the National Police and his decision to leave
the weapons unattended drew criticism.121
117
“Boliviano lideraba red de narcos en Paraguay,” Eju TV, November 13, 2012, accessed April 25, 2016,
http://eju.tv/2012/11/boliviano-lideraba-red-de-narcos-en-paraguay/.
118
Michael Lohmuller, “Recording Sparks Paraguay’s Latest.”
119
“Paraguay: Recordings Revive ‘narcopolitics’ Issue,” Courcy’s Intelligence, n.d.,
http://www.courcyint.com/component/k2/item/65212-paraguay-recordings-revive-narcopolitics-issue.html.
120
Ibid.
121
“Renunció el viceministro Javier Ibarra,” ABC Color, January 13, 2016,
http://www.abc.com.py/nacionales/renuncia-viceministro-ibarra-1444224.html.
28
Analysis
This section employs the work of Robert Legvold, Susan Rose-Ackerman, and Sarah Chayes to
develop a more in-depth analysis of the link between organized crime and corruption. We rely on
their academic frameworks to identify recurring themes in our seven cases.
The first framework used to analyze our cases was Robert Legvold’s classification of corrupt
states. In his article, “Corruption, the Criminalized State, and Post-Soviet Transitions,” Legvold
argues that corrupt countries can be placed in one of three categories: public corruption,
criminalized state, and criminal state.122 According to Legvold, public corruption occurs when
“bribery works with some agencies, or where ‘bad apples’ among public officials turn up more
than sporadically.”123 This is evident in some of our cases. For instance, in Argentina, the drug
enforcement agency was corrupted by ephedrine traffickers, while other agencies still function
properly.
Legvold defines a criminalized state as one in which “the state’s core activity may not be
corrupt, but the process by which the state acts is.”124 Most of our cases fall within this category.
For instance, in Paraguay, state operations are regularly suffused with instances of corruption.
The third category of corruption, criminal state, is the most extreme according to Legvold. In this
category, the state is in essence criminal and relies on illicit finances to sustain itself. 125 There
are few examples of criminal states worldwide and none are included in this study.
The next framework to understand the nexus between organized crime and corruption is based on
the work of Susan Rose-Ackerman. In her book, Corruption and Government: Causes,
Consequences, and Reform, she argues that “the nature of corruption depends not just on the
organization of government but also on the organization and power of private actors.”126 A
critical consequence of the relationship between organized crime and corruption is that corrupt
officials and criminal groups are in a mutually beneficial relationship. In addition, RoseAckerman believes the relative power between parties is determined by the degree to which
corruption is centralized in a government, and the number of criminal actors seeking to extract
improper gains by bribing corrupt officials.
Figure 1A demonstrates Rose-Ackerman’s framework describing four types of corruption:
kleptocracy, bilateral monopoly, mafia-dominated states, and competitive bribery. Her
classification depends on the organization of government and organization and power of private
actors in each country. Organization of government distinguishes between “kleptocracies where
corruption is organize at the top of government and other states where bribery is the province of
a large number of low level officials.”127 Organization and power of private actors distinguishes
122
Robert Legvold, "Corruption, the Criminalized State, and Post-Soviet Transitions," in Corruption, Global
Security, and World Order, ed. Robert Rotberg, (Cambridge, MA: World Peace Foundation, 2009).
123
Ibid, 196.
124
Ibid.
125
Ibid.
126
Susan-Rose Ackerman, Corruption and Government: Causes, Consequences and Reform (New York: Cambridge
University Press, 1999), 114.
127
Ibid, 114.
29
between “a small number of major corrupt private actors or... the payment of bribes
decentralized across a large number of people and firms.”128
She describes these four categories as polar types of corruption. In our case studies, however, the
lines between the categories were often blurred because of the difficulties in determining the
quantity of bribers and where the bribe recipients are concentrated within the government.
Below, Figure 1B classifies our cases in the categories of her framework that best describe the
instances we studied.
Figure 1A: Types of Corrupt Government
Multiple Bribers
Few Bribers
Bribe recipients concentrated at top
of government
centralized corruption
Kleptocracy
Bilateral Monopoly
Multiple bribe recipients at low
levels of government
Competitive bribery
Mafia dominated state
Source: Susan Rose-Ackerman, Corruption and Government: Causes, Consequences and Reform.
In the first category, kleptocracy, there are multiple criminal groups extracting gains and paying
bribes to recipients concentrated at the top of government. This can manifest itself in two ways:
extortionary states or weak states. Extortionary states have strong institutions, extract state
resources and employ policies to maintain power. By contrast, weak kleptocrats are likely to
“favor a bloated and inefficient state to maximize corrupt possibilities.”129 Two of our seven
case studies can be classified as kleptocrats. As an extortionary state, Mexico maintains strong
institutions that concentrate wealth by controlling and demanding bribes from the organized
criminal groups. Paraguay, on the other hand, can be classified as a weak state because of
inefficient policies that encourage corruption on a national scale.
The second category is bilateral monopoly, where there are few criminals extorting gains from
the state, but bribe recipients are still concentrated at the highest levels of government. Jamaica
meets the requirements for this category. In Jamaica, the political elite and the criminal elite
were willing partners that accumulated money and power at the expense of the state. Each party
benefitted by the economic and political instabilities of the country as represented by the
mutually beneficial relationship between the Shower Posse and the Jamaican government.
In the next category, competitive bribery, there are multiple bribe payers with bribe recipients
concentrated at lower levels of government. Bulgaria and Honduras could be classified in this
category. In both Honduras and Bulgaria, corruption existed at multiple levels of the government
and benefited multiple parties.
Finally, in a mafia dominated state, there are few bribers with bribe recipients at low levels of
government. Based on our findings, none of the countries we examined fit in this category.
128
129
Susan-Rose Ackerman, Corruption and Government: Causes, Consequences and Reform, 114.
Ibid, 116.
30
Figure 1B: Types of Corrupt Government (Case Studies Included)
Multiple Bribers
Few Bribers
Bribe recipients concentrated at top
of government
centralized corruption
Kleptocracy
Argentina
Mexico
Paraguay
Bilateral Monopoly
Iraq
Jamaica
Multiple bribe recipients at low
levels of government
Competitive bribery
Bulgaria
Honduras
Mafia dominated state
Source: Susan Rose-Ackerman, Corruption and Government: Causes, Consequences and Reform.
The third and final framework we use is the one developed by Sarah Chayes. Like RoseAckerman, Chayes examines the nature of the relationship between organized crime and corrupt
governments. In her recent book, Thieves of State.130 Chayes argues that the flow of funds in a
kleptocratic network moves either downward from patron to client, or upward with criminal
syndicates paying off corrupt officials. The latter provides criminal groups “first unfettered
permission to extract resources for personal gain, and second, protection from repercussions.”131
A downward movement of funds in typical patron to client nature can be seen in the Iraqi case,
where the corrupt official, al-Juburi, provided financial support to criminal groups. An upward
movement of funds from criminal groups to corrupt officials is demonstrated by several of our
case studies. In our cases, criminal groups financed political campaigns in exchange for:
protection from legal proceedings, laundering of previously acquired assets, or loyalty of a
particular political party. For example, in the Bulgarian and Jamaican cases, criminals had a
direct relationship with constituents that affected the voting outcome of elections. In the
Argentinean case, profits from illicit activity indirectly affected election results.
Overall, we observed the presence of weak institutions in various countries studied. Weak
institutions enable organized crime groups to permeate the state and manipulate the political
system to their advantage. Institutions are particularly weak in countries with profound power
vacuums. Power vacuums are especially common in post-conflict states or countries
experiencing changes in political structure. For example, in Bulgaria, the collapse of the Soviet
Bloc and the challenges of transitioning to a market-based economy created an opportunity for
criminal groups to acquire wealth illegally. Criminal groups legalized their illicit business
through political influence. In Iraq, the fall of Saddam Hussein’s regime caused a breakdown in
the country’s political structure, which allowed organized crime to flourish and gain control of
the country’s oil sector.
In our case studies, we observed three common actions taken to disrupt the link between
organized crime and corruption. The first was international pressure on the government to break
the link. For example, in Bulgaria, external pressure from the European Union (E.U.) forced the
country to set up an agency to curb corruption. The E.U. then closely tracked the agency to
130
Sarah Chayes, Thieves of State: Why Corruption Threatens Global Security (New York, New York: W. W.
Norton and Co, 2015).
131
Ibid, 60.
31
ensure reforms were implemented in the country. In 2007, Bulgaria was accepted into the E.U.132
The second type of action taken was prosecution of the organized crime group. In Jamaica,
pressure from the U.S. government forced local authorities to arrest and extradite a well-known
gang leader to the United States where he was prosecuted and convicted, thereby halting a
transnational drug trafficking operation. The third common action taken was domestic
institutional reform. In Honduras, to address police corruption, the government created a
commission dedicated to reforming the country’s security forces, with mixed results.
Despite domestic efforts and international interventions to disrupt the link, the collusion between
corrupt government officials and organized crime syndicates remains a significant challenge for
all countries examined. In Argentina, an attempt to implement national reforms to curb the
import of ephedrine had little success; as state officials implementing the reform were also
implicated in the ephedrine trafficking. Iraq, like Honduras, set up a commission to improve the
integrity of government officials. However, agents of the commission were targets of
assassination, thwarting attempts to improve transparency within the Iraqi government.133
Therefore, stronger and more effective agencies are required across all countries studied.
132
“Bulgaria,” European Union, accessed April 20, 2016, http://europa.eu/about-eu/countries/membercountries/bulgaria/index_en.htm.
133
"Press Center," Treasury Designates Individuals, Entity Fueling Iraqi Insurgency, January 9, 2008, accessed
March 26, 2016, https://www.treasury.gov/press-center/press-releases/Pages/hp759.aspx.
32
Further Research
In the course of our study, we identified additional areas of research which are critical to assess
the nexus between organized crime and corruption. A more robust analysis employing mixed
methods should be conducted. This research should determine which government agencies are
more susceptible to corruption; the types of criminal activity that are more likely to corrupt
government agencies; and effective means of disrupting the link. Additionally, the following
questions should be examined to increase understanding of the link.
First, to what extent is the private sector involved in the nexus between organized crime and
corruption? In the Argentinean case for instance, the pharmaceutical industry, enabled illicit
activity. The current scandal involving Brazilian president, Dilma Rousseff, and Petrobras, the
state-run oil company, demonstrates the private sector’s role within the link. 134 When the private
sector is engaged in illegal activities, it can become a quasi-criminal network and thus should
also be an area of of focus for further research. We believe that private sector involvement, either
through complicity, collusion, or direct involvement, can strengthen the link between organized
crime and corruption.
Second, what are the key risks present in instances where organized criminals and corrupt
officials collude? We believe state capture is one such risk. According to Legvold, state capture
occurs when corruption is so embedded in the governmental system that the state is repurposed.
When state capture occurs, laws, bureaucratic regulations, and judicial rulings are changed to
sustain organized criminal activity. Criminal syndicates use their leverage to block policy
reforms that threaten their position within the system. Consequently, the state serves the interest
of a select few instead of the broader public good.135 If the relationship between the criminal
actors and political officials were to either increase or continue unhindered, citizens would
ultimately suffer.
Below are two cases, Brazil and Guatemala, in which the risks of state capture are exemplified.
Brazil
In Espírito Santo, a Brazilian state located north of Rio de Janeiro, the local government and
illegal gambling business, jogo do bicho, became one entity. Jose Carlos Gratz, President of the
Legislature from 1997 to 2002 and a well-known criminal, converted state resources to maintain
his crime syndicate, and used illicit rents to buy votes.136Gratz expanded the power of the
legislature through changes in the budget and tax cuts to businesses that colluded with his
134
Petrobras does not fall within our study because it lacks violent components, a key tenant of the Buscaglia’s
definition of organized crime. However, it has all of the other criteria of his definition.
135
Ibid, 196.
136
Bruno Wilhelm Speck, “Brazil: Crime meets Politics,” in Dangerous Liaisons: Organized Crime and Political
Finance in Latin America and beyond, ed. Kevin Casas-Zamora, (Washington: Brookings Institution, 2013), 66.
33
criminal activities.137 Funds from the illegal gambling business were reinvested to finance
Gratz’s control of the state legislature.138
In 2002, the Brazilian Bar Association requested federal intervention to break the cycle of
corruption in Espírito Santo. Subsequently, the Brazilian Electoral Justice, a federal entity that
oversees elections, invalidated Gratz’s re-election on the grounds of vote buying. After this
incident, many officials also under investigation did not run for re-election. The new governor,
Paulo Hartung, created an anti-corruption initiative which promoted legislation that eventually
improved the welfare of citizens.139
Guatemala
In 2005, the leaders of the Guatemalan military, the National Civilian Police, and the Ministry of
Interior, created a parallel structure to the country’s law enforcement agencies.140 The group used
state resources to sponsor drug trafficking, money laundering, and extortion. The parallel
structure was also responsible for extrajudicial killings of escaped prisoners.141 In 2010, the UN
created the International Commission against Impunity in Guatemala (La Comisión Internacional
contra la Impunidad en Guatemala, CICIG) to investigate corruption within the state. The
investigation revealed high-level officials manipulated state institutions for their vested interests
and to advance their criminal activities. As a result, Hugo Soto, Chief of the Criminal
Investigations Division of the National Civilian Police, was convicted and sentenced to 33 years
in prison for extra-judicial killings.142 In addition, arrest warrants were issued to prominent
political figures, such as the Director of the National Civilian Police, the Director of the
Penitentiary System, and the Minister of the Interior.143
These cases show how state resources were redirected to enable criminal activity, and how
criminal resources were used to sustain corruption. When state capture occurs, that state has
minimal incentive to provide services to its citizens, and behaviors advancing personal gain
triumph, thus reducing the state's effectiveness. Dismantling corruption was successful when
outside forces disrupted the relationship, ensuring that the state fulfil its obligations to its
citizens.
Third, given that a link exists between organized crime and corruption, what are the implications
for development aid agencies? Alberto Alesina and Beatrice Weder argue that there is no
evidence that foreign aid reduces corruption, and that there may be strong indicators that “more
137
Bruno Wilhelm Speck, “Brazil: Crime meets Politics,” in Dangerous Liaisons.
M.R. Haberfeld, and Ibrahim Cerrah, Comparative Policing: The Struggle for Democratization (Los Angeles:
SAGE Publications, 2008), 82.
139
Bruno Wilhelm Speck, “Brazil: Crime meets Politics,” 67.
140
The Washington Office on Latin America, The CICIG: An Innovative Instrument for Fighting Criminal
Organizations and Strengthening the Rules of Law, 2015.
141
The Washington Office on Latin America, The CICIG.
142
“Press Release 041: Court Sentences Perpetrators of Extra-Judicial Killings,” August 8, 2013, The Washington
Office on Latin America, The CICIG.
http://www.cicig.org/index.php?mact=News,cntnt01,detail,0&cntnt01articleid=421&cntnt01returnid=105
143
The Washington Office on Latin America, The CICIG.
138
34
corrupt governments receive more aid.”144 As a result, corrupt governments can use aid to fund
illicit activity. Rose-Ackerman agrees with this assessment, arguing that, if politicians in power
exploit the aid given to them for personal gain, the goal of foreign lending and aid is
threatened.145 Given that a strong link between organized crime and corruption exists,
development aid can risk assisting criminal groups as financial resources are given to corrupt
agencies. Under such circumstances, it may make sense for international aid to focus on
strengthening grassroots and local institutions within a country.
144
Alberto Alesina and Beatrice Weder, “Do Corrupt Governments Receive Less Foreign Aid?” Working Paper
7108, National Bureau of Economic Research, Cambridge, MA, 1999, http://www.nber.org/papers/w7108.pdf.
145
Susan-Rose Ackerman, “Corruption and Post-Conflict Peace-Building,” Dean’s Lecture presented at the Ohio
Northern University College of Law, Ada, OH, October 4, 2007,
http://www.upenn.edu/provost/images/uploads/RoseAckerman.pdf, 4.
35
Conclusion
Through seven country case studies, the team has demonstrated a strong link between organized
crime and corruption. In each of our cases, corrupt public officials and organized crime affiliates
enjoyed a mutually beneficial relationship. Corrupt officials gained control over state resources,
in order to increase personal gain and maintain their position of power. Criminal groups took
advantage of these lapses in governance to entrench the state in illicit activity. As a result, the
two phenomena reinforced each other.
In order to understand the nature and the extent of this nexus, the team applied three theoretical
frameworks by Susan Rose-Ackerman, Robert Legvold, and Sarah Chayes. These frameworks
provided a context for an academic understanding of organized crime and corruption.
Our findings suggest a need for more a robust analysis specifically examining government
agencies most susceptible to corruption, criminal activities that are most likely to corrupt
government entities and the most effective means for disrupting the link. Additionally, the
further research should examine the risks involved when there is no distinction between
organized crime and corruption within a state.
Consequently, these risks threaten foreign aid’s effectiveness on a global scale. As a result, the
World Bank Group should better understand the link in order to lessen the risks of working with
corrupt governments.
36
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