Making Millions from Behind Bars

When Brazilian authorities extradited Luiz Fernando da Costa (A.K.A. Fernandinho Beira-Mar) from Colombia in early 2001, he was already a well known criminal in Brazil. He had escaped from prison twice, orchestrated a number of assassinations from his prison cell, formed a business relationship with the First Capital Command, had managed to strengthen his Rio de Janeiro-based organized criminal group, known as the Red Command, to the point of unprecedented success, and perhaps most importantly for him, had secured a cocaine-for-guns bartering agreement with the FARC in Colombia.

He was living among the FARC as a fugitive from Brazilian law in 2001 seeking treatment for a gunshot wound when the Colombian military captured him and his girlfriend, Jacqueline Alcantara de Moares, after learning from Fernando’s pilot where they were located deep in the Colombian Amazon. The two lovers were immediately separated. And when Fernando entered the Brazilian justice system, the media portrayed him as Brazil’s top drug trafficker, while the police and politicians called him a small fish in a big pond.

Last week, the Brazilian Federal Police concluded an 18-moth investigation called Operation Felix designed specifically to detect and dismantle Fernando’s drug trafficking network. By the time the Feds had finished their blitz of arrests and seizures during the week of 19 November, they had arrested Jacqueline, now Fernando’s wife, and seized hundreds of thousands of US dollars, and thousands more Brazilian reales, apart from a car wash, a gas distribution depot, and an Internet café.

During the investigation, the Feds learned that Fernando, through lawyers, his brother in law, and his wife, had grown his international smuggling network from 2001 from prison. The network includes operations in Rio de Janeiro, Sao Paulo, the southern Brazilian state of Paraná, which borders with Paraguay, and the state of Mato Grosso do Sul, which borders Bolivia.

Fernando had operated a ranch in Paraguay, complete with a runway, from where he received cocaine shipments likely from Bolivia, a second country where the Federal Police think he has long-standing contacts. Fernando’s relationship with the FARC never ended, as evidence from messages seized at Jacqueline’s house in a Rio de Janeiro suburb proved.

The Federal Police now admit that Fernando, along with his wife, commanded a network of organized criminal groups across Brazil, providing them with cocaine and other supplies, while taking a cut off the top. His wife alone earned some US$250,000 a month from the Rio branch of their enterprise, focused mainly on supplying the Red Command – perhaps others - with drugs and guns. This is not much money by Colombian or Mexican standards, but an exceptional amount of money considering the man behind the business has been literally behind bars since 2001.

This case is another reason why Latin America needs a regional police force. Ameripol is already in place, but we’re not sure if it will have any effect, as information and intelligence sharing is tricky business.

Meanwhile, news out of Venezuela indicates that the military there is not at all happy with Chavez’s proposed Constitutional reforms, to be voted upon by popular referendum on 2 December. According to the Miami Herald, one of Chavez’s reforms would have nurfed the National Guard, placing more importance on the so-called “Territorial Guard”. Many viewed this move as one that would put more power in the hands of the men and women most loyal to Chavez.

High-level officers, unhappy with this change, circulated emails, while in Fort Tiuna, the country’s largest barracks based in Caracas, anti-reform pamphlets were passed among the rank and file. This particular proposal was made public on 15 August. And Chavez removed it from the list on 25 August – an interesting indication of the influence the military still has on the Venezuelan president.

Finally, seven people fell to the death in Salvador de Bahia while attending a soccer game there. The section of stadium seating where these unfortunate fans were jumping and screaming for their team fell away (see photo of the missing section and ambulance on the street below). Such infrastructure problems continue to plague Brazil, especially in the aviation sector. But the death of soccer fans due to poorly maintained stadium seating is an embarrassing incident in a country that has recently accepted the vote to host the World Cup in 2014.

REUTERS/Welton-agencia O Globo

Cross-border intel and assassins, and challenges in Guatemala

An interesting piece from the San Diego Tribune reports that a Mexican intelligence officer will soon begin working with US agents based at the Immigration and Customs Enforcement (ICE) bureau in San Diego. Of course, such an arrangement raises questions of corruption and the dangers of leaks when sharing intelligence.

“You’ve got to go down that road cautiously, but at the same time we’ve got to go full speed ahead,” the San Diego ICE bureau chief told the Tribune.

I would expect that if this pilot program prospers, there will be more Mexican intelligence officials working across the border with ICE investigation units in Phoenix, El Paso, Dallas, Houston, Laredo, and Brownsville.

In Dallas a young man names Rosalio Reta killed for the first time at 13. Four years later, he’s killed some 30 people, all for the enforcement arm of Mexico’s Gulf Cartel known as Los Zetas. Operating as a state-side assassin for Los Zetas, Reta is just one of many young men US authorities believe to be closely associated with Mexican organized crime.

Reta turned himself into the DEA. Calling an agent from prison in Mexico, Reta confessed to two homicides in Texas, hoping to be extradited. Such was his fear of Zeta reprisal for having made a mistake that allowed his target to live and land him in a Mexican jail.

Meanwhile, as Guatemalan president-elect Alvaro Colom prepares to take power in January, the outgoing Public Minister, who oversees public security, held a press conference to announce that 14,000 unserved arrest warrants have accumulated over the past three years. But the Guatemalan National Police only has 35 men assigned to the task of serving these warrants. It was a small bomb for Guatemalan public security, one that underscores, beyond any speculation about organized crime or street gangs, how far the new president has to go before he can make up for his predecessor’s lack of attention on basic public security matters.

Meanwhile, in neighboring Belize, authorities are beginning to report the presence of Mara Salvatrucha, the same street gang whose presence and activities in Guatemala, Honduras, and El Salvador is considered a threat to national security.

This gang’s presence in El Salvador, for example, contributes to recently reported statistics that place the murder rate between January and September 2007 at ten people a day. The total number is 2,677. And this is good news, as this number is 281 less than the number of those murdered during the same time period last year.

Tons of money, Org. Crime victory, and a blow to Chavez

At the end of last week, Mexican authorities seized the largest cocaine shipment in the country’s history – 21.3 metric tons (23.5 tons) according to the Attorney General’s office. The cocaine has an estimated street value of USD 2.7 billion, based on calculations that use the US government’s average price of USD 118.70 for a gram of cocaine sold inside the United States. I’ve seen more conservative figures, closer to USD 1.4 billion, but with a little quick math it’s easy to see how much Mexican drug trafficking organizations stand to earn a year.

(picture from Mexico's office of the Attorney General)

If 21.3 metric tons of cocaine is worth USD 2.7 billion inside the United States, then the 290 metric tons the US Government Accountability Office (GAO) estimates as the annual flow of cocaine from Mexico to the United States would be worth near USD 35 billion.

Now compare those earnings to the USD 1.4 billion that the US government wants to spend to help Mexico combat drug trafficking organizations that at the end of October were brazen enough to try and import 21 metric tons of cocaine into Mexico. Something doesn’t add up.

While Mexican authorities were counting sacks of cocaine, Guatemalan authorities were counting votes. Left of center candidate Alvaro Colom won the presidential run-off election, defeating his opponent and former military intelligence office Otto Perez. Two facts emerged from these results: a relatively low number of Guatemalans voted in the run-off elections and by choosing Colom, those that voted indicated they do not support the mano dura or “iron fist” policies promoted by Perez.

In Honduras and El Salvador, these policies have lead to increased levels of violence. Cops arrest individuals with tattoos because they assume they’re pandilleros, or street gang members. The police crackdown creates a response from the pandilleros, who in turn convince cops that death squads are the best way to exterminate the street gangs. The net result is extrajudicial killings and bold, gang-style murders. Neither are pretty.

So Guatemalans chose to avoid that trap and go with a man who is more focused on economics and reform, but who many believe has made deals with organized crime. That’s bad news, especially in Guatemala. According to the GAO, some 70 percent of the cocaine that enters Mexico passes through Guatemala. But it gets worse. Reports say Colom has "vowed" to use the Guatemalan army to combat drug trafficking organizations. We'll see if he comes through on that promise.

Part of the USD 1.4 billion counter-narcotics package will go to Central America. But if US authorities think they’ll get real help from the Colom administration, they may run into some serious challenges. Time will tell.

Meanwhile, former Venezuelan Defense Minister and General Raul Baudel broke camp with long-time friend and Venezuelan president Hugo Chavez this week when he told the nation to vote against Chavez’s proposed constitutional reforms, passed by the National Assembly on 2 November.

Baudel is now on a nation-wide campaign to give Venezuelan’s an insider’s argument for why the nation should not hand over authoritarian control to Hugo Chavez, who, by the way, is quite upset. Apart from Baudel’s significant defection, Chavez must deal with thousands of students who for over a year now have continued to build an increasingly vocal segment of the opposition.

The students remain a thorn in Chavez’s side, but Buadel’s participation in the opposition could turn into something altogether more interesting and significant as we march closer to the 2 December nation-wide referendum to approve or reject Chavez’s reforms package. Approval would be tantamount to the last nail in the coffin for Venezuelan democracy. Rejection would be a major blow to Chavez’s political position. Again, time will tell…

Spies, sovereignty, and drug trafficking

Media coverage of the Merida Initiative (Plan Mexico) continues as strong as ever. The IHT completed an interesting piece on the money laundering component, suggesting that Mexican organized crime launders up to USD 10 billion in US banks every year. The Washington Post did a piece on gun smuggling, which was not well received in some circles. I also did a piece on the same topic, here.

Most cannot deny that as many as 2,000 guns were smuggled from the US to Mexico a day during the six-year administration of former Mexican president Vicente Fox, but many will disagree over how the US plays a role in this very important aspect of the US-Mexico drug trade. Adam Isacson has completed an interesting comparison of the proposed Mexico aid package with Plan Colombia. The Mexican package, by many accounts, is a great start but could use more money and less focus on the military solution.

One thing is for sure. The front-line of what Washington calls the “War on Drugs” has moved from Colombia to the US-Mexico border. The enforcement arm of the Gulf Cartel, Los Zetas, paid a man in Laredo, Texas some USD 15,000 to kill an American citizen in 2006, for example. Members of Los Zetas are rumored to have taken control of the I-35 interstate corridor, maintaining a presence of many three-man cells that carry out orders from car theft to distribution and, at times, assassination.

Their presence in Texas and other US states was, in part, what prompted the Bush administration to meet with Mexican president Felipe Calderon in Merida, Mexico last year to discuss a bilateral policy to combat drug trafficking – hence the “Merida Initiative”.

Meanwhile, both the United States and Colombia have for some time now operated spies on Mexican soil both with and without the permission of the Mexican Justice department.

One FBI agent, Samuel Martinez, managed to infiltrate Mexican organized criminal rings and remain there for years. He worked this beat for 26 years in total. The DEA has also placed undercover agents, and as one anonymous DEA official told a Mexican daily, sometimes they can’t tell the Mexican government everything because the agent must react to the situation at hand, which sometimes means entering Mexico unannounced. His priority is to maintain his cover, not respect Mexican sovereignty – an understandable position I think.

When Colombian Attorney General, Marioo Iguarán, told CNN en Español that Colombian spies have entered Mexico as undercover agents without alerting Mexican officials, it prompted a strong denial from the Mexican Attorney General and Minister of Foreign Affairs. To be clear, in most cases, Mexican officials are alerted. But sometimes they cannot be.

Iguaran pointed out a very relevant fact: drug trafficking organizations are now more international than ever. Years ago, there were clear lines between the Colombians, Mexicans, and those in between in the Caribbean or Central America. But as the drug trade has been democratized to a level where many smaller organizations work with a number of specialists from smugglers and money launderers to distributors, producers and chemical importers, the international nature of the drug trade has placed a very real strain on sovereignty. Moving forward with any transnational plan to combat drug trafficking organizations must take into account that at times sovereignty must be ignored, otherwise the traffickers have already won.