Security professionals need to look urgently at the effects of illicit trade and the relevance not only to their organisation’s health and wealth, but that of society, argues Rod Cowan.
A tourist in Indonesia buys cheap DVDs for her friends back home. An Australian street market stall holder sells a mother the latest branded football jersey for her teenage son. A former IRA member meets a buyer in a Belfast warehouse to sell washing powder. All are breaking the law.
But few people – outside of specialised law enforcement outfits – seem particularly concerned. More to the point, the buyers are oblivious as to who profits from their purchases.
Indeed, buying fake goods – or even gear “off the back of a truck” – is viewed as a victimless crime and there is little to separate what are seen as relatively benign scams, such as fake Rolexes, and other operations that can have far more dire consequences.
As Moisés Naim, editor and publisher of Foreign Policy, puts it: “The same ‘knockoff markets’ sell not only bootleg books and DVDs but pirated Microsoft and Adobe software; not only faux Gucci and Chanel accessories but bogus brand-name machinery made with substandard parts that can cause industrial accidents; not only placebo Viagra for gullible mail order shoppers, but also expired or adulterated medicines that don’t cure but kill. In defiance of regulations and taxes, treaties and laws, virtually anything of value is offered for sale in today’s global marketplace – including illegal drugs, endangered species, human chattel for sex slavery and sweatshops, human cadavers and live organs for transplant, machine guns and rocket launchers, and centrifuges and precursor chemicals used in nuclear weapons development.”
In her book, Global Outlaws, Carolyn Nordstrum writes: “Trillions of dollars move around the world outside […] legal channels. These dollars flow through millions of hands, thousands of institutions, and hundreds of borders. They ruin the lives of some and create vast empires of profit for others.”
With those empires comes power to corrupt, change the fabric of society, and seriously affect the economy.
Counterfeits alone carry huge costs. For example:
- US companies lose up to $US250 billion a year because of counterfeiting
- the European Union believes 100,000 jobs a year are lost to counterfeit trade
- cost to government includes not only paying for law enforcement but also losing out on tax revenue
- consumers face possibly deadly consequences from the likes of pirated medicine or substandard vehicle parts.
Moreover, the problem is growing rapidly:
- Interpol believes that counterfeit trade has grown eight times faster than legitimate trade since the 1990s.
- Twenty years ago, annual commercial losses were thought to be about $US5 billion. That figure is now thought to be around $500 billion.
- Counterfeit trade now equates to between 5-10 per cent of world trade – on par with the GDP of Australia.
Well-financed, agile, and often global organised networks trafficking in people, drugs, weapons, tobacco, and counterfeit goods, operating daily on a global scale, are channeling their profits from what are often low risk / high return operations directly into funding serious organised crime and terrorist networks.
Evidence clearly ties terrorism with illicit trade, with the two not only functioning in much the same way, by means of highly effective, decentralised mobile networks, but also enabling and feeding off each other.
With the exception of narcotics, however, illicit trade has not been a priority in law enforcement. Indeed, it is only in recent years with the increase in counterfeiting and intellectual property crime, along with the morally reprehensible people trafficking, that attention has been paid to illicit trade by the likes of the United Nations and the international law enforcement community.
In October 2013, over 500 people – mostly law enforcement officers, ‘policy wonks’, IP specialists, company representatives – travelled from 60 countries to Dublin’s Croke Park, which has been at the heart of Irish sporting life for over one hundred years. However, the attraction was no Gaelic football game or some other major sporting event, it was the 2013 International Law Enforcement Intellectual Property (IP) Crime Conference – a three-day event, co-hosted by Interpol and the An Garda Siochána, in partnership with UL, addressing a range of issues behind IP crime.
Interpol has already had some successes with its Trafficking in Illicit Goods and Counterfeiting (TIGC) programme, which, since its launch in 2012, has already led to the seizure of more than $US300 million in counterfeit items and hundreds of arrests worldwide.
However, successes, even if counted in the millions of dollars, are not necessarily evidence of winning. And, although the fight has begun to intensify of late, with more government officials, activists, technology developers, and university researchers redoubling their efforts, the question is: how to make such efforts pay off?
The conference delegates are told closer cooperation between the public and private sectors is essential to combat the ‘sinister consequences’ of illicit trade and counterfeiting.
Pointing to the terror attack on the ‘In Amenas’ gas facility in Algeria in January 2013, masterminded by Mokhtar Belmokhtar, known as ‘Mr Marlboro’ for his illicit trade activities, Interpol Secretary General Ronald K Noble warned of the very real consequences and dangers of criminal and terrorist networks gaining funding through illicit trade and counterfeiting. “The risk of relying solely on law enforcement services could be too high for the safety and security of citizens worldwide,” said Noble.
“We face a reality where our governments have increasingly limited abilities to financially support the fight against illicit trade, a reality where private sector entities are also affected and willing to join this fight. Profits from crime could be reaching anyone, anywhere, and Interpol believes that now is not only the time to act, but to anticipate, innovate, partner and be proactive.”
Ireland’s Garda Commissioner, Martin Callinan, echoed Noble: “The importance of cooperation between the public and private sectors in the fight against IP crime cannot be understated. Consumers are put at risk through the sale of inferior, dangerous goods. Businesses are deprived of a return for their investment in the product’s development. Governments and citizens lose out on revenue and employment opportunities.”
More pointedly, one speaker, Sergeant David Lake, head of the Phoenix Police Department’s Business Economic Stability Team (BEST), warned that a number of factors – ranging from diversion of law enforcement resources, to the war on terror, to the downturn in the economy – are creating a perfect storm in what he refers to as the ‘shadow economy’.
“In all industrialized countries there are two concurrently running economies,” says Lake. “There is the legitimate, sanctioned, licensed and regulated economy and there is also the ‘Shadow Economy’ that trades in stolen, counterfeit or illicit property. The legitimate economy serves to anchor communities, create jobs and produce revenue for state and local governments through taxation. The ‘Shadow Economy’, however, destroys communities, costs jobs, reduces tax revenues and increases violent criminal activity.
“Over the last decade, a perfect storm has created an environment where the ‘Shadow Economy’ is beginning to overrun the limited law enforcement measures currently in place to combat its growth. The impact of this increase in organised commercial crime seriously threatens our economic future.”
New approaches and strategies are clearly needed and new approaches to law enforcement, interdiction and prosecution need to be explored as a matter of urgency.
If those approaches are to include police and private cooperation, the logical starting point would be corporate security departments and private security companies.
As preoccupation with terrorism continues to wane, security managers looking to maintain relevance within their organisations and security firms looking to enhance their role would do well to put illicit trade on the agenda as a major threat – not only to their companies but to civil society in general.
Whether security professionals, organisations, associations and academics will be proactive in doing so or not, remains to be seen.