McMafia – A Journey Through The Global Criminal Underworld is a great title, isn’t it? The second part of the title promises a look at an isolated, seemingly inaccessible sub-culture of people, evil people, who are very different from you and I. But that first word is genius, because it simultaneously redefines and expands our expectations of a non-fiction crime exposé. It initially refers to the Chechen mafia, which allowed other Russian extortion and protection syndicates to use the moniker ‘Chechen’; they literally franchised their activities throughout Russia and Eastern Europe, far beyond the original borders of Chechnya. But it’s also an effective indicator of how ubiquitous criminal global enterprise is. Just like Coca-Cola and McDonald’s and Starbucks, organized crime is an interwoven and widely accepted part of our everyday life.
Typical Westerners don’t think twice about downloading free music, software, movies or porn. Can’t afford real Louis Vuitton leather goods? Don’t worry, there are plenty of knockoffs, some so accurately copied that, the reasonable price notwithstanding, they are indistinguishable from originals. Clothes, shoes, computers and cell phones, everything including cars, make up this huge interglobal mall. Most of the people you and I know have dabbled in drugs, even though we’re reassured that they are not regular users. Drugs are easy to find, or stumble across even if you aren’t looking. Sure, it’s everywhere, but “Me? Naah!” We all know about bachelor parties, corporate junkets and impromptu sports team bashes featuring wall-to-wall prostitutes – hell, sports figures and male celebrities are outrightly encouraged to employ prostitutes, rather than take a chance that some non-professional opportunist will extort them, or simply embarrass them publicly.
Did you get a parking ticket? Was your car booted? Did your teenage son get a DUI? A restauranteur needs to wait two years for his liquor license? A landlord can’t afford repairs an inspector will require? It’s OK, I know someone who knows someone. Many of us tut-tut these seemingly unfair advantages or resources, but few blame those who take advantage of them – that’s how the world works, right?
Before you errantly think I’m moralistically admonishing you, let me assure you that many of these activities fall under the heading of plain old Human Nature. Let me also assure you that these activities are so prevalent, so taken-for-granted, that it’s easy to miss how huge the market is for these activities, how huge the true consumer base for them is, and how easily these indiscretions are transformed into fundamental philosophies about what people want and need, and how one can turn a buck to serve the ‘market’.
But the success of criminal ‘franchise’ is far more dependent on the political, legal and financial foundations that allow them to flourish rather than the simple mechanics of filling and serving ‘market’ needs.
These are the real points of Mischa Glenny’s fascinating book; that the money that circulates through the ‘shadow economy’ is often indistinguishable from other ‘clean’ capital, that the organizational structures employed by criminal syndicates are often indistinguishable from standard corporate business practices, that political decisions made by sovereign states, countries and global organizations often empower and encourage the shadow economy, and that the average world citizen has no idea how much of their citizen-lives are determined by all of this.
The first chapters of Glenny’s journey involve the fall of the Soviet Union in the late 80’s, and the transformation of Bulgaria from a gray, moribund satellite nation to a thriving hub of Euro-Asian black market enterprise. America loves its football, basketball and boxing stars. In Western Europe, it’s football (soccer) and rugby. In Bulgaria, it’s wrestlers and strongmen. And the transformation of these sporting men into a national criminal security army, combined with the corporatization of the Bulgarian state security apparatus, and the expansion of already-thriving state-sponsored arms, technology, and drug smuggling industries, resulted in a breathtaking national institutionalization of criminal enterprise. With no USSR, there was no resistance, no government, and no other economic engine. The already-thriving black markets along and near the southern borders of the USSR and China (Afghanistan, Pakistan, India, Myanmar (then Burma), Thailand, etc.) had a new major terminal across the Black Sea. Along with Bulgaria’s own black markets in stolen cars, technology, cigarettes and white slavery were added Asia’s vast contraband inventories of drugs, arms and women. Bulgarian enterprise extended across the Adriatic, through Albania, into Italy and Western Europe. Croatia, Albania and Bulgaria became the landing-point of choice for vast quantities of product from Columbia.
But this, impressive as it is, is only one of many criminal outposts here. After a quick visit to Kazakhstan, where we get a view of the oil and caviar markets there (irretrievably corrupt), we move to Russia itself, and learn of its ages-old underworld. Anyone who saw David Cronenberg’s ‘Eastern Promises’ got a glimpse of the vor-v-zakonye, the mafia-like Russian brotherhood of protection and extortion of which Viggo Mortensen’s character is a member. And what, pray tell, drove their powerful global resurgence in the 90’s? President Boris Yeltsin, and his “kamikaze cabinet” of new free-market economists.
“The prices that mattered to millions of ordinary Russians, for bread and rent, for example, were liberalized…the reform team inexplicably held down the prices of Russia’s vast natural resources – oil, gas, diamonds and metals… The coupling of a privatized foreign trade mechanism with the retention of rock-bottom subsidized commodity prices gave birth within months to an entirely new species of robber baron – the Russian oligarch. The logic of this life form is simple: buy Siberian oil for a dollar a barrel and sell it for thirty dollars in the Baltic states and before long you become a very, very rich citizen. The state was no longer getting its cut from the deal. Instead, that vast profit was going to a few individuals.”
“As the new Russia dressed itself up to look like a responsible capitalist economy attractive to foreign investment, its most powerful capitalists were raiding its key commodities, trading these for dollars, and then exporting the funds out of the country in the biggest single flight of capital the world has ever seen.”
“The Soviet bureaucrats who still administered the state did not understand how to monitor, regulate, or adjudicate the principles of commercial exchange…The police and even the KGB were clueless as to how one might enforce contract law. The protection rackets and Mafiosi were not…their central role in the new Russian economy was to ensure that contracts entered into were honored…And because the state’s legal system had all but collapsed, the oligarchs and mafia groups defined the justice system of the new Russia. Between 1991 and 1996, the Russian state effectively absented itself from the policing of society.”
The fall of the Soviet Union is rich territory for Glenny’s investigations – there are endless anecdotes of Gazprom’s illicit incursions and manipulations into energy markets in Eastern Europe, state-sponsored industries in arms and oil smuggling in Moldavia, Transnistria, and the Ukraine, gang wars between the Chechen Mafia and the Solntsevo Brotherhood (another strategic partner of the Columbian cartels). One thing that never occurred to me, or many, was that when the USSR collapsed, many Jewish Russians, criminal Jewish Russians, were welcomed as instant citizens to Israel, where they established substantial criminal enterprises in Tel Aviv and Haifa, and travelled freely around the globe on unrestricted Israeli passports.
While Glenny describes the reach and power of the shadow economy in Eastern European countries like Serbia, the Czech Republic, Hungary and Romania, it’s essentially to illustrate how Russian syndicates infiltrated those markets. I highly recommend Chris Hedges’ wonderful book ‘War Is A Force That Gives Us Meaning’ for a detailed late 20th century history of crime and corruption in Eastern Europe and the Balkan states.
Glenny’s admirable balance of overview and detail continues – the next chapters artfully describe the rise of Dubai as a financial (and money-laundering) capital of the world by relating the particular history of India’s Dawood Ibrahim, a young Muslim hustler who amassed Mumbai’s, and probably India’s, largest ever criminal organization, not only involved in the usual smuggling and protection rackets, but also in the underground gold market. Dawood eventually moved to Dubai, avoiding Indian state scrutiny while enjoying unfettered control on his various enterprises in India through a number of lieutenants and a small army of, mostly, unemployed textile workers. Dawood’s criminal empire eventually collapsed to uncharacteristically violent rival-gang infighting, but, by now, Dubai itself was not only impervious to the mess created by the Indian gangs, but it played a central role in driving Dawood’s enterprises out of Dubai. As rich as he’d become, he wasn’t worth the bother. Meanwhile, Dubai processed, and still does, a fantastic amount of global financial transactions, both overt and covert, at staggering profits. In the 90’s, Dubai’s near-galactic expansion required one-third of the world’s – the world’s – cranes for construction projects.
“For Dawood Ibrahim, Dubai was the perfect retreat. The city welcomed the wealthy; it welcomed Muslims; and it was not the least bit interested in how people had acquired their money or what they intended to do with it…”
“Dubai had become so useful for terrorists, the superrich, the United States, dictators, Russian oligarchs, celebrities, Europe, and gangsters that, to paraphrase…Talleyrand…, if it didn’t exist, the global elites would have to invent it.”
Next on Glenny’s agenda is the southern half of Africa, encompassing Nigeria’s unparalleled success as a capitol of ‘advanced-fee fraud’ (those ‘I’m a Nigerian dignitary with millions of dollars I want to put in your bank account” e-mails are an exemplary, but small-potatoes, manifestation), and South Africa’s indigenous gang culture, and their black markets in narcotics and weapons. Of course, the weapons trade, especially, features the knee-deep involvement of the Russians, coordinating the spread of weapons for Angola, Liberia, Sierra Leone and the Democratic Republic of Congo.
“A map of the main zones of conflict between the various armies and militias coincides with a map of the main concentration of (the DRC’s) natural resources…timber, gorillas, copper, diamonds, and a little-known compound called coltan…
“Coltan’s desirability resides in its properties as an efficient conductor that can resist very high temperatures, and is an essential component in laptops, mobile phones and video game consoles… anyone who has used a cell phone or computer notebook in the past decade has unwittingly depended on organized crime for his or her convenience.”
Only recently, in 1998, was the Kimberly Protocol established to bring what regulation could be brought to the ‘conflict’ diamond industry, Angola’s (primarily, but not exclusively) slave-trade culture of mined-diamonds-for-laundered-money-and-weapons. Several European governments, and DeBeers, the giant South African diamond firm, were called out for violations, and they eventually signed on to the protocol. One other alleged participant in the conflict diamond trade, understandably, didn’t participate: al Qaeda. Nonetheless, similar protocols are being established for the coltan trade.
There’s no shortage of starting points from which to “follow the money.” From Vancouver, British Columbia, we now learn that “western Canada is home to the largest per capita concentration of organized criminal syndicates in the world.” The market it serves is easy to guess: marijuana. This becomes a launching point for a discussion of prohibitions, and what a windfall to the shadow economy these policies become.
“From an economic point of view, a person’s decision to enter into the drug trade as a producer, distributor, or retailer is entirely rational because the profit margins are so high.
“On the whole, governments do not argue that drug prohibition benefits the economy. They base their arguments instead on perceived social damage and on public morality. On the contrary, it distorts the economy because it denies the state revenue from taxes that might accrue from the purchase of a legal commodity (not to mention the immense costs of trying to police the trade and the incarceration of convicted criminals).”
“…slowly, the American people may be realizing that after almost four decades of the war on drugs, dependency levels and usage are higher than ever before; that the prices of all major recreational drugs have been declining resolutely over that period; and that the state has wasted hundreds of billions of dollars in a criminal justice system that delivers a lot of crime but very little justice. The funds used to sustain bureaucracies such as the DEA that prosecute the war on drugs are a drop in the ocean when compared to the gazillions that organized crime syndicates have earned because Washington is determined to drive the market underground.”
And those ‘social damage and public morality’ concerns?
“Because of the system of financial incentives that is built into the war on drugs, and because of the protection from prosecution…that white communities enjoy, this war in the United States is waged against blacks and Hispanics. In light of his experiences, (DEA Special Agent) Matthew Fogg is now convinced that the strategy is designed as an institutional tool that is used to control African American communities and limit their social and economic opportunities. This is taking conspiracy too far, but there should be no doubt that the war on drugs inflicts massively disproportionate damage on America’s underprivileged minority communities.”
Speaking of the drug trade, we now journey to Columbia, and the birth of their underground, but essentially corporate, cocaine industry. Paralleling this development was the rise of guerilla armies, primarily FARC, initially formed to combat the exploitation of indigenous farmers by aggressive landowners and fruit companies, but later expanded to become among the principal managers of and enforcement mechanism for the cartels’ cocaine trade. When the government started military crackdowns in the rural cocaine-growing areas, FARC essentially engaged in a civil war against the government. With FARC becoming unreliable enforcers for the cartels, a new generation of paramilitaries, or autodefensas, was born, to reinvigorate coca growth. But rather than fight a war against two fronts, the Columbian government has, ironically, been supportive of the autodefensas, who basically perform the same functions that the FARC originally did, which led to the government’s crackdown in the first place.
The chapter ‘Code Orange’ starts in Sao Paulo, Brazil, where three-quarters of the internet-using population perform the majority of their financial transactions online. (Don’t think the Nigerians didn’t know that). Brazilians are in the vanguard of investigating cybercrime, detecting online viruses and spyware designed to extract any and all information that passes through, or is stored on, computers. It follows, however, that Brazil is also one of the leaders in propagating these powerful nasties, along with Russia and China.
“The clustering of cybercrime is the result of an equally complex mix. There are several prerequisites, but three are paramount: steep levels of poverty and unemployment; a high standard of basic education for a majority of the population; and a strong presence of more traditional organized crime forms.”
Brazil, of course, has an enormous culture of poverty, and a gigantic prison population, from which members of the Primeiro Comando da Capital (PCC) are continually recruited. Founded in 1993, they control a large amount of the drug distribution from Columbia, through Brazil, into Europe, West Africa and South Africa, as well as the usual domestic activity. The story here mirrors the story in most of the journey’s locations – national failures to address the fundamental social ills of its population, coupled with well-meaning but ultimately disastrous economic policies that create a thriving black market underground, exacerbated by disparate government institutions that can’t get out of each others’ way.
Glenny concludes the book with a few chapters on Asia – primarily China and Japan. Like the Sicilian mafia, and some aspects of the vor-v-zakonye, the yakuza in Japan is firmly entrenched in the halfway point between ‘legitimate’ businesses and criminal enterprise. They, far more often than not, eschew violence, and are superb business middlemen. They still run most of the gambling and prostitution in Japan, but keep these industries apart from their primary work; protection.
“By the late 1990’s…Germany had 1 lawyer for every 724 heads of population, Britain 1 for every 656, and the United States 1 for every 285 citizens. In Japan, it was one lawyer for every 5,995 people. Basically, the mafia occupies a huge segment of Japan’s de facto legal system…In its core activity, the yakuza is not only a privatized police force; it is a self-contained judicial system as well – criminal syndicates as cops, attorneys, judges and juries.”
Despite their somewhat storied history, and intrinsic role within the Japanese economy, the yakuza are just as mindful of the potential of Chinese hegemony as any other global business. In China, Glenny describes the establishment of the Political Criminal Nexus, “a profoundly corrupt relationship between local tycoons and party leaders” in Fuzhou, in the Fujian province.
“Fuzhou is no ordinary provincial – it is the center of one of the globe’s biggest illegal operations – the trade in Chinese migrant labor…half a million Fujianese were smuggled abroad between 1985 and 1995. Around a fifth of these landed on America’s eastern seaboard and headed for New York… In Sao Paulo, in Belgrade, in Berlin, in Dubai, and in South Africa, the Fujianese have either established or come to dominate the Chinese communities. The province’s distinct dialect is steadily eroding Cantonese as the lingua franca in many Chinatowns around the world.”
Also prevalent again in China are what used to be known as the Shanghai Triads. They were the primary distribution syndicate for Chinese opium, and were eradicated, with the opium industry, by Mao in 1949. But along with the slow acceptance of capitalism, and a massive growth in manufacturing, there’s also leeway for a resurgence in opium smuggling – heroin from Afghanistan and Myanmar. And the new smuggling apparatus within China is fiendishly discreet and skillful. Even with an unprecedented joint partnership between China and the American DEA, heroin traffic moving through China has accelerated.
But economically, the biggest threat to global economic stability from China is counterfeiting:
“The European Union Commission estimates that fake goods around the world are worth between $250 and $500 billion a year. Of these about 60 percent originate in the People’s Republic of China – between 20 and 25 percent of exports from China are counterfeits, while between 85 and 90 percent of products sold in the domestic Chinese market are fake.”
Subsequently, original domestic manufacturers and other non-Chinese companies are now employing foreign and domestic private security forces of their own to find and disrupt counterfeiting operations. But it’s pretty obvious that the enforcement efforts have an almost insurmountable hill to climb.
This book isn’t just fascinating real-crime history – it’s fascinating political history, it’s fascinating economic history, it’s fascinating sociocultural history. This book was right up my alley, and there are jawdropping facts and revelations on practically every few pages. Please rest assured that I haven’t even scratched the surface of Glenny’s scrupulously reported work. I highly recommend this amazing, insightful book. Mischa Glenny has done us a terrific journalistic service – I only hope the people who can make a real difference in the quality of our globalized lives are reading it, too.