Tuesday, February 8, 2011

Colombia's OTHER Smuggling Problem

Scotland's Dream, Colombia's Problem?
Just imagine the frustration: You're a big-time drug cartel boss; you've managed to smuggle a load of cocaine to the United States or Europe and sell it for millions. You bribed and smuggled your load across borders, past civil and military authorities and rival gangs and even escaped the hazards of storms and floods along the way. Now your cool millions are in friendly hands over there in New York, Miami or Madrid...but that won't do you much good, since your employees, supplies and the mansion you want to buy are all back here in Colombia (or Peru or Venezuela or Bolivia...)

So, what's an ambitious drug boss to do?

The situation's not so easy, particularly with authorities on the lookout for travelers with tens of thousands of dollars strapped to their bodies and for big, unexplained bank transfers. But, fortunately for our protagonist, there is a solution, in an elegant combination of money laundering and money smuggling.

Here's what you do: Your employees set up an import-export company on some Carribean island where authorities ask few questions and appreciate a nice new Roles every now and then. That company buys merchandise - exactly what matters little - and ships it to Colombia (or Peru or Bolivia...), where it's all sold. Now, you've got your money inside the country, as well as a good story for how you got that money. The system's so good that you might not even care much if you sell your product at a loss. After all, you made a ton on the drug sale, and the main thing is to get your hands on your money. So, you can afford to be generous.

In Colombia, such schemes have been carried out with with products such as weapons, cigarettes, liquors and even such hum-drum items as dishwashers. To secretly import his wealth, one entrepeneur imported tools such as hammers and wrenches, but filled them with gold. (Imagine the happy surprise for someone who bought a used hammer at a flea market and then accidentally broke it apart.)

Smuggling's in the news now because of government reports that more than three-quarters of the liquor consumed in Colombia is contraband, as are many cigarettes. That means lots of damage: it hurts honest local businesses, deprives government of taxes (which finance public health services) and artificially lowers the costs of those liquors and cigarettes, luring more kids in particular to start smoking and drinking.

Many of these boxes lack the required graphic warning -
does that mean they were smuggled in?
Perhaps the most sinister part of this is the information gathered some years ago by the Center for Public Integrity and others indicating that big tobacco companies conspired to get their products smuggled into Colombia, where they were often used to bring in drug profits. The tobacco companies say they have no control over where their products are eventually sold - even though they shipped huge quantities of cigarettes to tiny Carribean islands. At the same time, they were apparently encouraging smuggling, the tobacco companies were also arguing to the Colombian government that the smuggling showed that tobacco taxes were too high. Oh, pity those poor cancer sellers!

Around the world, tobacco smuggling has been documented as a funding source for terror groups, just as has happened with Colombian guerrillas and paramilitaries. Last year, tobacco product smuggling reportedly doubled, costing the government several million dollars in taxes.

Colombian provincial governments sued tobacco companies for their lost tax money, and eventually settled out of court. Now, however, it all appears to be happening again.

By Mike Ceaser, of Bogotá Bike Tours

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