U.N. crime chief says drug money flowed into banks

VIENNA: The United Nations’ crime and drug watchdog has indications that money made in illicit drug trade has been used to keep banks afloat in the global financial crisis, its head was quoted as saying on Sunday.

Vienna-based UNODC Executive Director Antonio Maria Costa said in an interview released by Austrian weekly Profil that drug money often became the only available capital when the crisis spiralled out of control last year.

“In many instances, drug money is currently the only liquid investment capital,” Costa was quoted as saying by Profil. “In the second half of 2008, liquidity was the banking system’s main problem and hence liquid capital became an important factor.”

The United Nations Office on Drugs and Crime had found evidence that “interbank loans were funded by money that originated from drug trade and other illegal activities,” Costa was quoted as saying. There were “signs that some banks were rescued in that way.”

Profil said Costa declined to identify countries or banks which may have received drug money and gave no indication how much cash might be involved. He only said Austria was not on top of his list, Profil said.

-  International Herald Tribune

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Mexican Drug Gang Tentacles Reach Europe, Africa

Violent Mexican cartels that have killed thousands in a drug war at home this year are increasingly smuggling drugs to Europe by way of Africa.

Under pressure from a government and army crackdown at home, the drug gangs are seeking new lucrative markets.

Recent high-profile arrests of Mexicans around the globe show how the Gulf cartel and its main rival, the Sinaloa federation run by Joaquin “Shorty” Guzman, are moving beyond their traditional market in the United States.

A 15-month international drug sweep called “Project Reckoning” captured 500 Gulf cartel collaborators in the United States, Mexico and Italy, where the Mexicans have teamed with the notorious Italian ‘Ndrangheta crime syndicate.

The arrests, which came to a head in September, were one of the biggest busts of Mexican operatives working with European counterparts. They came as Mexican cartels move in on trafficking routes traditionally dominated by Colombians, who produce most of the world’s cocaine, experts say.

Mexican President Felipe Calderon has deployed thousands of soldiers and federal police to dangerous U.S.-Mexico border towns to take on drug gangs after coming to office in 2006.

“Given the pressure from the Calderon government, we are seeing some of the Mexican groups seeking alliances with Europeans,” University of Miami drug expert Bruce Bagley said.

Cocaine can be sold for more than four times as much in Europe as in the United States and in 2005 some 80 percent of the drug not destined for the U.S. market went to Europe, according to the United Nations.

The U.S. government estimates cocaine consumption in western Europe has increased nearly 60 percent since 1998, creating huge opportunities for profit.

The shift comes as Colombian cartels are splintering from years of government pressure, opening more trans-Atlantic opportunities for Mexican gangs either collaborating with or working around the Colombians.

The capture in Spain in September of top Colombian cartel member Edgar Vallejo, who pioneered trafficking routes to Europe via Africa, has made room for Mexican operatives, a senior Drug Enforcement Administration official told Reuters.

“This key Colombian trafficker gets popped in Europe and had a fairly big fraction of the market and that arrest may contribute to the flux in of this entire global model of world wide dominance of cocaine distribution,” he said.

DRUG VIOLENCE

The major fear is the violence that has plagued Mexico in recent years will spread as the cartels expand.

More than 5,300 people have died in 2008, many tortured or decapitated as rival traffickers fight each other and the government.

Seventeen people were killed in Guatemala last month in a shootout between Mexican drug gangs and their proxies and a U.N.-backed study warned this week that Mexico’s drug war is spilling over into Honduras. Europe has so far been free of major narco-violence.

The poor and weak states of West Africa make an ideal base of operations for international drug traffickers, according to the United Nations.

In July, two Mexicans were among crew members arrested landing a plane with fake Red Cross markings in Sierra Leone packed with more than 600 kilos of cocaine. It was the largest drug bust in the country’s history.

As well as being a shipment point for cocaine, Mexico is the No. 1 producer of methamphetamine for the United States. Organized crime groups are seeking more clandestine routes since Mexican authorities have cracked down on the legal import of its main ingredient, pseudoephedrine.

A seizure in Democratic Republic of Congo last year of several tonnes of pseudoephedrine indicates Mexican drug cartels could be using Africa’s Atlantic seaboard for transport or storage purposes, Interpol says.

Mexicans also are going straight to coca-growing countries in South America to buy up the raw material for cocaine that may end up in Europe.

Peruvian President Alan Garcia recently blamed a rash of drug-related violence in his country — the world’s second-largest cocaine producer after Colombia — on powerful Mexican drug cartels collaborating with local drug lords.

Mexican Drug Gang Tentacles Reach Europe, Africa - World - Javno

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