Organized Crime and Government

by Leonard Manfred

"Corruption, is defined broadly as ‘the abuse of public power for private gain.’ " 

from 'Controlling Organized Crime and Corruption in the Public Sector,'

by Edgardo Buscaglia and Jan Van Dijk

Clean government, transparency is the aim of democratic governance, however, there are forces at work that seek to infiltrate, divert, corrupt; because frankly, there is money to be made.

If you have any doubts that corruption in government is a problem just turn your gaze to the likes of the current administration in Washington D.C. 

Our current President has used his position to line the pockets of his friends, and benefited their kind from sea to shining sea without scant a thought for morality, ethics or the suffering unleashed.  His ubiquitous rascal grin says it all.

Even prior to ‘baby’ Bush being ‘elected’ President, the Bush clan had been involved directly or indirectly with some of the most atrocious scams; the BCCI scandal, Enron, the relaxing of laws to benefit multinational corporations and relaxing taxation of the class of the super-rich.

Lately Bush's policies are causing the ruination of the country as a result of the constant ‘feeding’ of the war machinery. This too is a scam, because those who are profiting are the defense contactors and the ancillary corporations tied to the defense industry. 

Our tax dollars are being channeled to corporations that have ties to the Bush/Cheney clan; KBR, Halliburton,  Bechtel, DynCorp, and the subsidiaries of the Carlysle Group. 

Moneys have ‘disappeared’, contracts paid for reconstruction of Iraq have seen marginal or nonexistent results--over-priced results, and redundant billing--in the end scams, that rifle the pockets of American taxpayers.

In fact the U.S. government has failed 10 consecutive audits.  As of 2006, the government failed to account for 53% of its reported assets or for an additional $790 billion, or 27% of its NET costs.  The U.S. government by its own accounting, is in a shambles of missing money! [ 1 ]

While George Bush’s brother Neil cavorts with Russian mobsters,[ 2 ] the war in Iraq goes badly for America, and Afghanistan, thanks to America, becomes the premier Narco-State of the planet. [ 3 ] Afghanistan currently supplies 90% of the world's traffic in opium and that trade accounts for a large portion of Afghanistan's economy, this according to the World Bank. [ 4 ]

According to Antonio Maria Costa, Executive Director of the UN Office on Drugs and Crime, “Afghanistan is both the largest cultivator of opium in the world, and the world’s largest supplier, a double record…” ( address to the Diplomatic Academy, Warsaw Poland 02-01-2005) this since the U.S. invaded the country. 

So the question must be asked: Has the Bush administration and the American State facilitated these events?

Look at the figures; prior to the U.S. invasion of Afghanistan, opium production was being radically reduced by the Taliban. As of 2006, Afghanistan is being called a Narco-state by the UN.  Drug production in Afghanistan has increased 60% just in 2006.  Since the U.S. invaded Afghanistan, the opium business increased 3200%  No, that's not a misprint, it increased three thousand two hundred percent in five years! [ 5 ]

Coincidence?

Bush’s father during the 1970’s, while at the CIA, was the ‘handler’ of Panamanian dictator Manuel Noriega, who it is widely accepted was involved in the drug trade., providing assistance to the Medellin cartel of Pablo Escobar.  A ‘handler’ is an expression used by the intelligence community signifying someone who manipulates or ‘controls’ the actions or events of those who are being manipulated. 

George H. W. Bush denied any knowledge of Noriega’s drug activity while at CIA, and as president he was instrumental in Noriega’s downfall and ultimate imprisonment in the United States for drug trafficking, racketeering and money laundering. 

Noriega has alleged that Bush Sr. framed him, because Noriega balked at further manipulation by the U.S. government and says he was unwilling to be involved in drug trafficking on Panamanian soil.

Agents active in the DEA, CIA, and Israeli Intelligence have since made statements supporting some of Noriega’s allegations.

Noriega was one of the individuals implicated in laundering money through the defunct Bank of Credit and Commerce International (BCCI). BCCI was a bank involved in laudering money for CIA covert operations.  Among those who received funds through BCCI was Osama bin Laden. Financial dealings between the Bush clan and the principal investors of BCCI are too extensive to detail here. [ 6 ]

The Tentacles of Organized Crime

Corruption has always been part and parcel of American democracy, more so than most Americans will care to admit to, or even know much about.  The tentacles of bribery, organized crime, and noxious ‘business’ practices of the black market have become over the decades since the 1800’s  a major pillar of America’s economy.  The extent of the pillar is largely unknown, but some scholars have stated that sixty percent or more of America’s economy is based on illicit funds channeled through legitimate ‘front’ businesses, banks, and Wall Street brokerage firms.

The extent of the illegal empire of drug money and black market funds constantly moving through the American economy has bolstered banking profit margins, provided startup capital for new ventures, injected much needed capital into the housing sector for new construction, and consumer lending--one of the driving forces that has propped up the dollar, and the American economy. 

According to figures stipulated by an Italian trade association in the year 2000, organized crime in Italy controls 1 in every 5 businesses in that country  [ 7 ]. 

In Italy alone the Mafia is said to have an annual turnover of $133 Billion per year (15% of Italy’s gross national profit).  Illicitly arrived at moneys are funneled through real estate, health related clinics and hospitals, restaurants, hotels, supermarkets, retirement homes, and banking firms.

It is estimated that Italian Mafia operations produce enough profits to pay off Europe’s public debt.

The Italian business association further claimed that it had knowledge that as much as $11 Billion is funneled through Italian stock purchases, and a similar amount winds its way into the Italian real estate sector. [ 7 ]

In Canada the extent of such operations has been estimated by the government as $4 Billion, just in the three most populous provinces of Quebec, Ontario, and British Columbia.  These figures do not include smuggling operations of tobacco, and jewelry, which account for an estimated additional $1.5 Billion per year. [ 8 ]

In Canada as much as $17 Billion in profits are laundered through businesses alone and wind up remaining in the country; a greater amount is thought to flow through Canada to other countries.

Organized crime’s drug operations in Canada are estimated at $10 Billion per year. The RCMP, the Mounties, identify the primary organized groups as the Italian Mafia, Asian organized crime gangs, Colombian organized crime, and biker gangs.  [ 9 ]

Organized Crime is First Recognized

The original concept of ‘Organized Crime’ was a term coined by the Chicago Crime Commission, which was created in 1919.  The commission sought to promote changes in the justice system.  In its final report, the commission stated that Chicago had an underbelly criminal class that numbered at least 10,000 who operated with impunity as a result of incompetence, and corruption in city government. [ 10 ]

Serious discourse concerning organized crime and corruption re-emerged in the 1950’s.  As a result of a Senate Committee headed by Estes Kefauver, which concluded that numerous criminal groups operated throughout the country and were tied together by a 'sinister criminal organization known as the Mafia.' 

The Committee established for the first time that organized crime was not just a manifestation of local conditions but rather a national phenomena.  This knowledge was realized as a result of testimony provided the Committee by the Federal Bureau of Narcotics (the precursor to the DEA-Drug Enforcement Administration).  But Hoover and the FBI constantly ridiculed and denied that national organized crime existed.

A strategy to fight organized criminal activity would take another two decades, when Congress deliberated and passed the RICO statute in 1970.  But the tentacles of organized crime have continued to extend within the U.S., by some accounts unabated.

As recently as the 1980’s, it was discovered by the FBI, that all windows installed by the New York City Housing Authority, included a ‘fee’ that would kickback to organized crime families based in the city, that amounted to tens of millions of tax dollars. [ 11 ]

More recently this past summer, New Yorker journalist William Finnegan had this to say about the New York metropolitan area: 

“Organized crime, meaning La Cosa Nostra and criminal syndicates such as the Colombian drug cartels, operate extensively and very profitably in and around the Ports of New York and New Jersey.  This suggests a significant degree of corruption, or at the very least ineffective law enforcement….the authorities have ostensibly been making serious efforts for fifty years or more to chase organized crime off the docks, with little apparent success… in the thirties the harbor was run by Irish mobs… these days the rough division of territory has the Genovese crime family controlling the New Jersey side of the port and the Gambino family running the New York side…the Mob’s presence is less visible, more subtle, than in the bad old days…”  [ 12 ]

These reports are further supported by a report prepared by the NJ State Commission of Investigation in the mid 1990’s, which concluded that several organized crime groups operated in the state, among which included the Italian Mafia, Colombian drug cartels, Japanese Yakuza, Dominican, Puerto Rican, Cuban, Asian youth gangs, and African-American groups.

“Remember this about the mafia: they are a mirror image of capitalism,”

 

said Selwyn Raab, an author and former NY Times crime reporter.

 

“They are diversified. That’s why they last.”  [ 13 ]

Organized Crime’s Global Reach

According to Dr. Mora Stephens; 

“Cooperation among global organized crime groups has increased as restrictions have lessened between international borders… Transnational organized crime groups pose more of a threat to international financial markets as the world economy becomes increasingly interdependent.  Laundering billions of dollars in organized crime money worsens national debt problems because the large sums of money are then lost as tax revenues to that country’s government.”  [ 14 ]

Financial institutions which are the most vulnerable to manipulation by organized crime, are institutions that have public offerings of stock ownership. In Russia, the Russian Interior Ministry estimates that most of its 200 banks are controlled by organized crime, as well as 50% of the nation’s financial capital. 

Control of the banks is exercised by either actual ownership and operation, or through violence or threats of violence, and intimidation of key individuals managing and operating the banking establishments.

Tactics

The political impact of organized crime is pernicious, violent, and yet subtle. The Sicilian Mafia provide key examples as to how organized criminal groups operate and extend their influence.  The Mafia uses its vast resources of economic power to take over legitimate businesses, and then either eliminate or acquire competitors.  They obtain protection from the justice establishment; politicians, judges, key law enforcement agents, first by bribery but if unsuccessful--then through intimidation, such as by using threats of assassination regarding the target’s family.

As the networks of corruption extend themselves, they also serve as key weapons of ‘legitimate’ authority to nullify or subvert, ongoing investigations, or individuals that pose a threat to the networks themselves, or the underlying criminal organization. 

Essentially organized crime utilizes the corrupted as direct agents to ‘contain’ others, by using their positions to sabotage or subvert ongoing investigations, or actions in the public interest, that would be contrary to the aims of the criminal network.

Organized Crime and Government Protection

Corruption in public service is not new, in fact corruption within the political class has been a notorious avenue that has provided protection to the networks of organized crime, but in the 1990’s a new and more shocking disclosure presented itself-- actual partnership between organized crime elements and the U.S. government in the traffic of drugs and arms.

The Iran-Contra Scandal brought to light a network of criminals and government agents trafficking drugs and guns.  A later disclosure by investigative journalist Gary Webb of the San Jose Mercury News showed that U.S. intelligence was providing assistance and protection to networks of organized crime who were importing drugs to be sold in the inner cities of America. His series, entitled 'Dark Alliance' shocked the world. [ 15 ]

The San Jose Mercury News later retracted Webb’s work, and created conditions that led to his inability to work as a journalist again.  Webb declared that his pariah making was a government inspired manipulation of mainstream media.

Senator John Kerry, who headed a the Senate Subcommittee on Terrorism, Narcotics and International Operations of the Committee on Foreign Relations (December 1988), had earlier arrived at very similar conclusions to those of Gary Webb, as did another government report [ 16 ] regarding possible collusion between organized crime elements and agents within the U.S. government, or its agencies. 

The Kerry report stated the following:

“The drug cartels are so large and powerful that they have undermined some governments and taken over others in our hemisphere.  They work with revolutionaries and terrorists.  They have demonstrated the power to corrupt military and civilian institutions alike.”  [ 17 ]

It is estimated that the illicit drug trade in the United States produces $100 Billion in profits for organized crime, and this is a conservative estimate.  [ 18 ]

Other Nations

According to the United Nations:

“The internationalization of organized crime is evidenced by the increasing expansion of major illegal markets…moreover criminal organizations have expanded their opportunities to enter licit [legal] society through the globalization of financial and economic markets and their interaction and cooperation with other organized criminal groups in different countries.”  [ 19 ]

Havens for laundering of profits has shifted from Colombia to Mexico, islands in the Caribbean, the Far East and other nations off the ‘beaten path’.  Lately, increased activity of drug smuggling off the Western coast of Spain and Portugal’s northern shores, point to new foci warranting concern regarding the extension of influence of the networks of organized crime into new routes of traffic into the European Union.

Europol has characterized the threat in this manner:

"Member States report links between their indigenous  organized crime groups and Dutch organized crime. Similarly, links with Spanish organized crime groups are mentioned by most west European countries, in particular in respect to cannabis and cocaine trafficking.  Italian organized crime groups remain significant (threats)…"  [ 20 ]

 

“There is every indication that the trade in heroin from Afghanistan is regaining its momentum (in the EU)… [ 21 ]

 

“Spain represents the main entry point for this drug, prior to distribution throughout the EU. It also seems that organized crime groups involved in cocaine trafficking tend to restrict themselves to this one drug.”  [ 22 ]

Spain and Portugal which have extensive fishing fleets and long maritime coastal areas along the Atlantic Ocean and Mediterranean Sea provide opportune entry and exit points for traffickers.  Corruption of their justice, banking, and financial institutions are sure to follow similar examples seen in other nations like Italy and the United States.

The intertwining of organized crime and the state can be visualized and understood when we examine how each profits from the activities of the other.  A case in point is Macau, a former Portuguese colony off mainland China.  Macau is touted as a tourist mecca, however it is a haven for gambling, prostitution, and drug traffic, this according to Sio-chak Wong, Director of the Judiciary Police force in Macau.  [ 23 ]

The Macau administration has shown reluctance to crack down on illegal activities, because the flow of money generated by these enterprises wind up in local banks and businesses which in effect buttresses the sustainability of the economy and the overall health and welfare of the state. 

Likewise in Thailand organized criminal groups like the Jao pho, and the United Wa, have infiltrated legitimate society to such an extent that they have positions in local and state government, ‘control’ the police, key government bureaucrats, and military figures. [ 24 ] 

Even China is not immune, as recent traffic activity in drugs, points to a renewal of the old Silk Trade routes being utilized by drug traffickers. 

Conclusion

As organized crime further infiltrates conventional institutions of society, the ‘health and welfare’ of that same society begins to change so as to accommodate what were once considered pernicious threats to its citizenry, but which now are being interpreted as a‘support’ of business activities and whole economies. 

The advent of this 21^st century, will be seen in hindsight as the rise of organized crime and unavoidably as the dusk of civilized society, if current trends are permitted to continue.

The Democratic State generally upholds the sovereignty of the nation and the rights of its citizens.  All citizens in such an environment are treated (theoretically) equally regardless of social position, wealth, gender, religious or political affiliation. 

Organized crime on the other hand, is permitted to exist by bribery, intimidation, corruption-- it is a sort of feudalist tradition of hierarchy that facilitates theft, civil, and human rights abuses.

Both of these structures of societal control are opposites of one another-- so as democracy grows, organized criminal activity decreases, and vice versa. 

It is essential that government be transparent and open. Secrecy, closed meetings, favors, political donations/bribes facilitate the aims of organized crime, and harken the destruction of civilization. 

The threat that corruption and organized crime pose to society is a real one, although subtly recognizable. 

Leonard Manfred is a contributing correspondent.

This essay has been exclusively published with the author's permission on this website. He can be reached at LM@thecitizenfsr.org

For an American perspective on corruption in government in the early 20th century, read the accompanying article:  Corruption isn't the Exception...

NOTES:

1. 'Government Fails 10th Consecutive Audit', http://www.govexec.com/story_page.cfm?articleid=357108&dcn=todaysnews  

2. 'What a Carve-Up', http://www.guardian.co.uk/russia/article/0,,1655229,00.html

3. 'Field of Dreams', http://www.usnews.com/usnews/news/articles/050606/6afghan.htm

4. 'Afghanistan: Drug Industry and Counter-Narcotics Policy,' http://snipurl.com/15da3

5. 'Who Benefits from the Afghan Opium Trade?' by Michel Chossudovsky, Global Research, Canada, http://www.globalresearch.ca/index.php?context=viewArticle&code=CHO20060921&articleid=3294 

 6. 'The Bush Family Saga', BCCI, by William Bowles, http://www.informationclearinghouse.info/article3333.htm 

7. 'Mafia 'Gripping Italian Economy'', BBC News, 11-14-2000, http://news.bbc.co.uk/1/hi/world/europe/1023221.stm 

8. Organized Crime Impact Study, Public Safety & Emergency Preparedness Canada, April 10, 2002 

9. ibid 

10. Chamberlain,H.B. Crime as a Business in Chicago, Bulletin of the Chicago Crime Commission, No. 6, Oct/1/1919, p. 1-6.

11. 'Suspected NY Mob Leaders are Indicted in Contract Rigging,' NY Times May 31, 1990.

12. The Docks of NY, Interview with William Finnegan, The New Yorker Magazine, June/19/2006 issue.

13. 'Feds Trying to Tie Union Boss to Mob,' South Florida Business Journal Oct./09/2005, http://www.thelaborers.net/ila/feds_trying_to_tie_union_boss_to.htm

14. Paper delivered at the Woodrow Wilson School Policy Conference on Intelligence Reform in the Post-Cold War Era, Jan. 6, 1996.

15. 'Dark Alliance' Day One, America's Crack Plague, Aug/18/1996 http://www.narconews.com/darkalliance/drugs/day1main.htm

16. 'Obscuring Propriety: The CIA & Drugs,' by Frederick Hitz, International Journal of Intelligence and Couterintelligence, Vol 12, Number 4, December 1, 1999, p. 448-462,  see also www.namebase.org/hitz.html )

17. Drugs, Law Enforcement, and Foreign Policy, A Report by Senate Subcommittee on Terrorism, Narcotics and International Operations of the Committee on Foreign Relations, 100th Congress, 2nd Session, December 1988, Summary Remarks.

18. Gadson and Olson, International Organized Crime, Society, Jan/Feb 1995, 32:2, 22-23.

19. Global Studies on Organized Crime, UN Interregional Crime & Justice Research Institute Feb 1999, p.4.

20. 2003 European Union Organized Crime Report, Europol, ISBN 92-95018-21-4, Luxembourg, p.14. 

21. ibid, p.19.

22. ibid, p.20.

23. Asian Transnational Organized Crime and its Impact on the U.S., Flinckenauer and Chin, Rutgers University, March 2006, National Institute of Justice Report TDL#1700-215.

24. Gelbard, R., ‘Burma: The Booming Drug Trade.' In Rotberg(ed.) Burma: Prospects for a Democratic Future, Wash, DC, Brookings Institution Press. 1998.

Posted  December 20, 2006

URL:  www.thecitizenfsr.org                     SM 2000-2011 

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