Transnational Organised Crime and the Threat to Global Security

							Trans-national Organised Crime & The Threat to Global Security
Conclusions from 1st Global Governance Roundtable May 2007 London

Security of the People
The Commission on Global Governance recognised that “global security extended beyond the protection of borders, ruling elites and exclusive state interests to include protection of the people.”

Trans-national Organised Crime versus Terrorism
• Both organised crime groups and terrorists use similar tactics (e.g. online fraud, cyber security breaches, drug trafficking and kidnapping) and operate on a decentralised cell structure • The motive is the key distinction • Criminals are driven by financial gain • Modern terrorists are motivated by political and sometimes religious goals

The Growth of Trans-national Crime
Contributing Factors:

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Increasing Globalisation The end of the Cold War More Open Borders Weakening of global institutions Resurgence of ethnic and regional conflicts Exploitation of expanding financial markets & rapid technological developments – Collaboration between terrorists and organised crime groups

Examples of Threats
• Smuggling of nuclear materials and technology (to develop WMD) Trafficking in exploitable people Drug trafficking Money Laundering Worsening of debt Identity Theft

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American Organised Crime – A History Lesson
• Generally believed to have been introduced in USA following arrival of Italian immigrants Capone Group which ran organised crime in Chicago was involved in several enterprises Involved a coordinated approach Network consisted of politicians, businessmen and lawyers

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The Players in Organised Crime
• General perception of players is ‘good guys’ in government versus the Mafia • Gangsters are opportunists e.g. American pilots have been involved in the transportation of drugs (such as cocaine) from Columbia to the USA • Opportunity is therefore a bigger factor than ethnicity

The Myth of Success
• Mafia myth replaced by ‘socalled’ American success against organised crime Americans world leaders in fight against organised crime due to heavy investment in resources Historians have criticised techniques as having minimal impact on ‘bigger picture’ Methods employed focus on arrest and punishment of harmful people rather than a strategic and coordinated approach designed to reduce the opportunity for harmful activity

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The Fight Against Organised Crime
• Need for American model of organised crime to evolve in the face of new techniques and tools used by criminals • Policy makers should also start rethinking their assumptions • Prime reason for this is globalisation and vast integration of world markets - increased both number of criminal opportunities and destruction that organised crime can wield

The International Response
• 1994 – UN organised World Ministerial Conference on Organised Trans-national Organised Crime • Objective – to mobilise international cooperation to combat organised crime • Government representatives from over 100 countries attended • United Nations Convention on Trans-national Organised Crime (UNTOC) came into force in 2003 • Countries signing convention committed themselves to American model of battling organised crime

Factors Contributing to the Problem
• Criminals motivated by profits are believed to be more dangerous than those motivated by ideological beliefs • Corporate scandals such as Enron and Worldcom involved respectable people • Companies flourished due to de-regulated market in which they operated • Capitalism in USA is poorly regulated and therefore offers opportunities for organised crime • Historically, ‘respectable capitalism’ in the USA has been aided and abetted by organised crime • Poverty and inclusion e.g. the ever increasing gap between the rich and poor • Unchecked immigration

Money Laundering
• • A source of illegal corrupt wealth 4 main areas for this source of income

“Bent” government Human Trafficking Drugs Arms Smuggling

Money Laundering Statistics
• • • • • • • • • Oct 2004 – report by Robson Rhodes estimated amount of money being laundered was £40 billion Types of economic crime were asset misappropriation and cheque fraud Report by Serious Organised Crime Agency (SOCA) estimated figure as £20 billion Money represented drug dealing, arms trafficking and smuggling people Recent report by IMF showed that money laundered accounted for 2 – 5% of world’s GDP (between $800 to $2000 billion) Estimate by US General Accounting Office in 2003 showed amount of dirty money flowing around world in range of $500 billion to $1 trillion Top 3 world financial centres (i.e. New York, London and Tokyo) attract all the dirty money Cost of crime arising from fraud estimated to be £12.98 billion in 2005 Fact – criminals are attracted to financial havens and problem increased over issue of bank secrecy

Corporate Crime – The Enron Saga
• • • • • • • • • • • Set up in 1985 from merger of Houston Natural Gas and Internorth CEO – Kenneth Lay was avid deregulator Hoped to gain from new opportunities Possible due to Reagan administration’s moves to loosen government controls Lay developed close relationship with Republican party Valhalla group in New York was part of Enron Speculated in crude oil and refined products Headed by Louis Borget (he and others were profiting from manipulating company’s books) Set up fake corporations and used this to create phony transactions Transactions engineering to appear like money making enterprises Borget and his cohorts paid millions of dollars in bonuses

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Lay knew of the matter but took no action as profits were coming in Even though frauds were exposed and Borget convicted, Lay did not inform shareholders in annual reports Seeds of destruction were being sowed for Enron’s eventual fall with Lay’s policy of minimal supervision Under Jeffrey Skilling, Enron became 7th largest US company by 1990s in terms of revenue Skilling would eventually become CEO He and his staff accumulated millions of dollars worth of salary, bonuses and stock options Donated to political parties - $2.4 million spent in 2000 Enron thus well placed in effort to deregulate California’s energy grid (which was poorly managed) End result – blackouts and very high prices for consumers during Californian energy crisis of 2000/01

People Smuggling & Trafficking
• Governments do not take any action as they will have to go ‘head to head’ with EU Employers need to focus on verifying identity documents and tackling issue of identity theft and forgeries Vulnerable people include women and children Many leave their countries to migrate elsewhere with dreams of a better life; others are coerced into leaving through deception or force

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Threat Assessment
• UK Threat Assessment 2006 -07 published by SOCA on 31st July 2006 painted picture of an emerging sophisticated fraud infrastructure composed of niche specialists and service providers • Best system in world can be produced to combat organised crime; however greater need for dedicated and professional people with a greater sense of moral values, ethos and commitment to eradicating this threat • Governments have responded to the threat by applying international standards • EU trying to establish a common approach • Several new crime bills introduced in UK - Proceeds of Crime Act (POCA) in 2002 - most significant

Challenge of Radicalisation
• Europe is facing a challenge against demographic backdrop due to high birth and fertility rates amongst its ethnic minorities • e.g. Muslims estimated at present to account for 1% of Austria’s population but figure predicted to increase to 14% by 2051 • In Germany, a Deutsche Islam Government set up to prevent exclusion of Turkish and Lebanese community • Britain is currently at risk of sleepwalking into segregation

The Challenge
• Europe’s challenge surrounds successful integration of Muslim minorities • UK’s problem - no such thing as British values or identity • Due to a number of factors:

decline in nationalism and end of religion with majority of community barely going to church

Attractiveness
• • In case of Islam - transnational Muslim identity Radicalism is attractive due to methods used by perpetrators and masterminds Examples are persuasive messages in the form of telecasts (particularly on the internet), identity politics and the use of imams from overseas

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What are we doing wrong?
• Governments do not pay enough attention to ‘fence sitters’ who ultimately provide support to hardcore extremists Community intelligence is more important than foreign intelligence Europe’s approach to terrorism is criminalisation of it Criminalisation ultimately treats symptoms and not causes USA tends to treat the issue with military attacks These target end user and ultimately inflict damages on civilians rather than instigators and thus create resentment even among moderate Muslims in the West

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Integration
• • The Muslims in Europe need to be mobilised to integrate Example of success story is that of Indians from Uganda

Possible Solutions to Problem of Transnational Crime
There is a need to define a global ethos and values

Possible Solutions
• Focus is required at strategic level on what defines human morals and values • Corporate and political criminality needs to be viewed in same vein as Mafia style crimes • Governments, society and businesses need to challenge the ‘status quo’ and lobby for changes to legal and financial structures at local, national and international levels to reduce opportunities for organised criminals • Better research and studies are required before laws are passed • G8 particularly need to focus on this issue

Possible Solutions
• The G8 needs to undertake more pro-active role in creating global risk management frameworks focusing on the causes and consequences of trans-national crime issues • Definition of organised crime needs to be widened to include ‘grey’ areas such as disposal of toxic waste • If this were to be criminalised then companies would be less likely to make profits • Disposal of toxic waste inevitably damages the environment and presents a threat to the security of people • Consideration should be given to the idea of finding a way of ‘bringing in from the cold’ international criminals and terrorists

Overall Conclusions
Dispelling the Myth

Myth of Organised Crime
• Public’s general understanding of organised crime is that it is perpetrated by super-gangster organisations such as Mafia and Colombian drug cartels • Players in organised crime consist of individuals and groups that civil society is expected to respect • Tangled web includes politicians, corporations and lawyers. • Gangsters are opportunists who are driven by motivation to make profit by any means necessary

Challenge of Organised Crime
• • Organised criminals have benefited from globalisation and misguided policies both at national and international levels Other factors contributing to problem are poverty, social deprivation, exclusion and high levels of unchecked immigration Criminal species will evolve and change giving rise to new ones, the challenge therefore is to identify their habitats and eliminate them Money laundering is another source of illegal and corrupt wealth To combat this type of trans-national organised crime, committed and professional people are required to breathe life and take tenacious action Establishment of anti-money laundering structures, committees and laws on their own are not enough

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Radicalisation
• Europe’s challenges in terms of radicalisation are threefold:

– demographic trends are reasons for concern – radicalisation is not a terrorism or criminalisation problem – empowerment of the common people in terms of integration and identity management.

Addressing the Challenges
• Policies are required which address and attack the root social and historical causes and identify the consequences of organised crime and not just symptoms Corporations need to be held more to account with regard to respect for the environment and civil society May involve a greater degree of control in the form of government regulation Civil society and businesses need to take greater strides in calls for reform of financial and legal structures in order to reduce opportunities for organised criminals to thrive Definition of trans-national crime needs to be widened and clarified to include illegal dumping of toxic waste Corporate criminality has to put onto same stage as crimes committed by super-gangster organisations

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Addressing the Challenges
• A re-examination of definition and meaning of global ethos and values and how to embed and integrate the positive messages from this research is required in the struggle against organised crime at local, national and international levels • May also involve holding more inter-faith dialogues which will enable us to further understand and respect each of our cultures • Consideration should be given to the idea of finding a way of ‘bringing in from the cold’ international criminals and terrorists

The Global Governance Pantheon Ltd