Organized Crime Threatens the New World Order

by Daniel Brandt
From NameBase NewsLine, No. 8, January-March 1995

Many journalists would donate their typewriters to charity after writing something like The Terror Network. Claire Sterling got it wrong in 1981. The Soviet Union, she claimed then in broad strokes buttressed with imaginative anecdotes, was behind almost every act of terrorism since 1968.

Sterling's sources in 1981 were unwittingly derived from a CIA disinformation campaign in Europe. This was the top-secret assessment of CIA analysts at the time, revealed years later. When your own disinformation comes back to haunt you, the spooks call it "blowback." This one blew up and left egg all over the CIA. Sterling, however, stands by her book and stonewalls the controversy. Not only did she keep her typewriter, but she keeps cranking out new books.

CIA director William Casey picked up Sterling's book in 1981 and announced that it was worth more than what he was getting from his Agency analysts. Casey ordered Robert Gates to reconsider the assassination attempt on the Pope in light of Sterling's new "evidence," and Gates dutifully issued a report making the case for Soviet involvement. In effect, the CIA director ordered his analysts to believe the disinformation that their own Agency had created. Most analysts feel that objectivity counts for something, and hostility toward Gates was evident at his confirmation hearings in 1991.

It wasn't just Casey's fault. His deputy director, Bobby Inman, was convinced that Sterling was right, and so was Eugene Tighe, head of the Defense Intelligence Agency. Secretary of State Alexander Haig started it with his first press conference in January, 1981, when he accused the Soviet Union of "the training, funding, and equipping of international terrorists." [1]

The disinformationists have taken a powder for now and Sterling, a grandmother based in Tuscany, Italy, increasingly has to make do with just the facts. "Octopus," published in 1990, was a straightforward account of the Sicilian mafia. Last year, "Thieves' World: The Threat of the New Global Network of Organized Crime" put the period at the end of the "Terror Network" decade. Forget about Moscow-led terrorists -- it's Russian organized crime that's taking over the world, in cahoots with Sicilians, Asians, and Colombians.

Chances are that Sterling is closer to getting it right this time, because large-scale disinformation is apparently not a significant part of the current global situation. The CIA, in State Department parlance, is OBE, or overtaken by events. A stagnant, self-satisfied bureaucracy eventually pays its dues. An individual journalist, by contrast, can keep a straight face, without so much as an apologetic blush. [2] For journalists, the line between reporting and entertainment was blurred long ago, about the time that television started reporting the news.

One reassuring clue that Sterling's latest book, Thieves' World, is more reliable than The Terror Network, is that no one disagrees with her assumptions. To begin with, her thesis is more modest: major organized crime groups are forming alliances of convenience, are getting more sophisticated, and collectively they represent a major threat to the established order. She is not claiming that there's a single source behind all this evil. Moreover, her evidence on organized crime comes from officials in various countries, East and West, who are in a position to know. These officials are not bound by common ideological constraints. When they agree among themselves, their observations are based on the evidence.

If Sterling has a hero these days, it's probably Louis J. Freeh. He directed the organized crime team for New York's southern district during the 1980s, and was the lead prosecutor in the Pizza Connection case, where his efforts did not go unappreciated in Sterling's book "Octopus." Since his appointment as FBI director in July, 1993, Freeh has frequently spoken of the need to coordinate global law enforcement in the fight against organized crime.

In Berlin last June, Freeh called on European police to join in an "international alliance against crime," citing organized crime, hate crimes, and thefts of nuclear materials. Funds once used for the cold war should now be used to fight crime: "We have no time to waste -- the enemy has already broken through the gate." Freeh was accompanied by Thomas A. Constantine, head of the Drug Enforcement Administration (DEA); Ronald K. Noble, assistant secretary of enforcement at the Treasury Department; Robert S. Gelbard, assistant secretary of state for international narcotics matters; Stanley E. Morris, director of FinCEN (Financial Crime Enforcement Network); Eljay B. Bowron, director of the Secret Service, and a dozen other officials. The delegation also visited Austria, the Czech and Slovak Republics, Poland, Hungary, and other Eastern European countries. [3] The CIA, on whose turf these officials were parading, was conspicuously absent from the lineup.


Then on July 4, Freeh opened an FBI office at the U.S. embassy in Moscow. Later reports indicated that the FBI was unable to staff the office for six months because they had insufficient Russian speakers, but for road shows like this, it's the symbolism that counts. Countries are now on notice that a failure to cooperate may adversely affect their ability to obtain foreign aid. In Moscow, Freeh repeated his warning about Russian gangs with the capability to steal nuclear weapons. Russian interior minister Viktor Yerin, who signed an information-exchange pact with Freeh, said there have been "neither attempts nor actual thefts" of nuclear bomb components. Then Yerin added, not reassuringly, that his agency was investigating "around 50" cases involving the theft of radioactive materials. [4]

Liberal icons such as senator John Kerry (D-MA) are as worried about organized crime as old cold warriors. Roy Godson is from the National Strategy Information Center (NSIC), a group founded by William Casey. It wasn't that long ago that Kerry was holding hearings on contra drug-running, about the same time that Godson was helping Oliver North raise money for those same contras. Now they agree with each other.

"Organized crime is the new communism," Kerry said last summer, "the new monolithic threat." He had just held two days of hearings on the problem. Godson estimates that international crime groups outperform most Fortune 500 companies. They deliver drugs, illegal aliens, and laundered money, and provide services like violence and extortion -- all with organizations that resemble General Motors more than they resemble the traditional Sicilian mafia. [5]

Jack Blum is also traveling the conference circuit on organized crime. Blum was a staff investigator for Kerry from 1987-1989. By the time Blum came on board, Kerry's investigation had turned toward Manuel Noriega, and finally hit a wall in front of the Bank of Credit and Commerce International (BCCI), where Noriega, the CIA, Abu Nidal, Bert Lance, and Clark Clifford all did business. [6]

How did liberals like Kerry and Blum become soul mates with Casey supporters like Roy Godson, and "KGB-dunnit" storytellers like Claire Sterling? What has happened in the last decade to cause them to show up at the same conferences, signing each others' autograph books? Is organized crime a threat of such magnitude that old enemies are now friends against the new, larger enemy?

Certainly this perception forms a major part of the picture. The arms race could not be sustained, but U.S. strategists kept it going because they knew the Soviet economy would be the first to fold. Now the world is faced with a disposal problem: thousands of poorly-guarded warheads, and hundreds of unsafe reactors (20,000 safety violations during 1993 inspections, and 78 shutdowns for safety reasons). Reactors are rusting away on the Soviet fleet, many with nuclear fuel aboard. No one seems to be in charge -- Russia's missile control center recently had its power cut off temporarily for not paying its electricity bill. [7] This is the fallout from the strategic brilliance that gave us the cold war.

Elsewhere drug cartels instantly transfer huge sums around the world with "wire" (actually satellite) transfers, using offshore banks. Through these banks they manipulate accounts drawn in the names of "shell" corporations, which were probably bought off-the-shelf from Panamanian lawyers. By now the economies of a number of tiny sovereign nations are completely dependent on laundering transactions. These countries will not threaten their livelihoods by changing their bank secrecy laws.

It's a mess we've created -- a global mess, outside the control of nations with limited jurisdictions. Because of this, fewer pundits today are taking positions based on ideological commitments. The cold war is over, and ideology on foreign-affairs issues is now the province of religious and ethnic fundamentalists, not Washington elitists. There is a new willingness, at least for now, to look at the evidence objectively rather than selectively. There's a sense that we must stop fighting over who leads the wagon train, and start circling the wagons instead. Global organized crime is an issue that transcends the old cold-war categories.

As we begin to respond to these challenges, a question emerges about the sort of responses that might be deemed appropriate. William J. Olson, a former deputy secretary of state for narcotics matters who is now with NSIC, believes that "all the tools in our security tool box," including intelligence operations, should be used. "You don't always have to get them into court," he said last summer. [8] Presumably there are many at the CIA's directorate of operations who feel the same way, now that they've lost their main enemy and might be facing extinction.

Will we approach organized crime as a law enforcement problem, with some semblance of due process, or will we lapse into covert action? The answer to this will determine whether we can continue to claim the moral high ground. There are too many similarities between legitimate transnational corporations and illegal cartels already; the respect for law, or at least for the appearance of propriety, is all that separates them. If we lapse again into covert dirty work, our claim to legitimacy lapses with it. (There are exceptions, of course. If a criminal group obtained a nuclear warhead, then preemptive action would be justified. But short of this we must be careful before opening our bag of dirty tricks.)

In one of the most encouraging developments of 1994, the CIA appears to be out of the loop on the issue of organized crime. Not only are they floundering over their internal security problems, but their old-boy provincialism is slow to apprehend our new world situation. (It's clear by now that their old-world assessment of Soviet strategic and economic strength was wrong as well.) The CIA, over the years, has shown poor judgment -- Vietnam, for example. To invite the CIA in now would be to invite further disaster.

In operational terms, it would also resemble a conflict of interest. Too often the CIA has cooperated with the mafia. This is true in the area of assassinations, but it is also true for smuggling drugs and arms. In the Golden Triangle during the Vietnam years [9], in Bolivia during the "cocaine coup" of 1980 [10], and during the contra war against Nicaragua [11], the CIA supported dope cartels in the name of their peculiar anti-communism. And in the process of setting up and sustaining their many proprietary corporations while maintaining deniability, the CIA wrote the book on money laundering. Then there's the carrot and stick of CIA foreign policy: bribing foreign leaders who meet with their approval (even brutal dictators), and overthrowing those who don't (even though they are elected by the people).

The final insult to due process is that the CIA is unaccountable for all of the above and more. We have a legal system that loses jurisdiction as soon as the secret state claims that evidence cannot be disclosed due to national security. If the CIA as an institution cannot be considered an example of "organized crime," then these words have no meaning. Their perpetual excuse -- that they merely follow the president's orders (Why not just say "no"?) -- is irrelevant; it's the perception that counts. If the CIA gets involved in the fight against organized crime, the cooperating international forces of law, order, and due process will lose whatever moral high ground they can currently claim.

The DEA feels strongly that too many of their drug-cartel cases never get to court because the CIA considers them sources of information. Tension between the FBI and CIA is also increasing as the FBI, in the wake of the Aldrich Ames case, is assuming more responsibility for counter- intelligence. The Ames case is also a reminder that in the one area where no resources were spared, the CIA's information and analyses were so faulty that they failed to predict the collapse of the Soviet Union.

It's beginning to look like the CIA has lost so much credibility that it has become a liability -- generally when trying to cooperate with nervous foreign governments, and particularly when dealing with law enforcement in Russia. The CIA is so dirty that the FBI, two decades later, makes J. Edgar Hoover look like Mr. Clean by comparison.

CIA director R. James Woolsey, who resigned in December, was not popular with Congress, and some predict that the CIA will be split up soon in a major reorganization of U.S. intelligence. The Agency, therefore, seems desperate to become a player in this new game of organized crime. A secret CIA report leaked recently to the Washington Times states that ten of Russia's major banks are linked to organized crime groups, and three top banks have been involved with insider speculation on currency exchange markets. [12] But their sordid history haunts them. Why assume, for example, that the CIA is leaking this because they're upset over lawlessness? After the Castle Bank, Nugan Hand Bank, and BCCI scandals, many around the world will justifiably assume that the CIA is angry over not getting a piece of the action!

No one needs the CIA to tell them that the situation in Russia is worrisome. In fact, the CIA has only a "highly uncertain estimate" of the size of the Soviet nuclear arsenal, estimating it at 30,000 warheads with a margin of error of 5,000. (This margin of error could melt every journalist and his faulty Pentium computer chip many times over, yet the Pentium gets the media hot seat, while the CIA leans back with their feet on the desk. Such is the state of journalism in the U.S.)

The CIA's margin of error on plutonium and weapons-grade uranium is hundreds of tons. [13] Energy secretary Hazel O'Leary and defense secretary William Perry were proud of the success of Project Sapphire, in which enough uranium to make more than 20 bombs was safely transported from Kazakhstan to Tennessee. U.S. taxpayers paid $30 million for this shipment, which was only two-thirds of one ton. At this price it will take considerable belt-tightening by taxpayers to get the rest -- assuming we know if and where it exists.

In every area, U.S. policy toward Russia is as pathetic as the above example suggests: too little, too late on issues that matter, and too much, too soon on issues that don't. It started with the Bush administration's clandestine support for Boris Yeltsin, followed by our "shock therapy" financial aid. This aid was designed to force instant privatization on a society that was not ready for it. By now the situation is so chaotic that a return to authoritarian rule may be inevitable. If this happens, it's likely that it will occur in a climate of hostility toward the U.S.

If the CIA has only a vague idea of what's happening, then perhaps Russian officials themselves have a clue. In a report released in January, 1994, the Interior Ministry estimated that "70 percent to 80 percent of privatized enterprises and commercial banks have been forced to pay bandits." Almost 150 major criminal gangs were active then, with over 3,000 smaller ones under their command. Murder is up 27 percent from 1992, many of them professional hits. Bankers now require bodyguards and armored cars (35 bankers were murdered over the past year), and banks hire their own security squads, who sometimes use preemptive violence. [14]

At the Hoover Institution last December, former Yeltsin economic advisor Peter Filippov explained how organized crime gets their clutches into newly-privatized businesses. He used a vodka factory as an example. The government demands 80 percent of the factory owner's profits, so the owner declares only 20 percent of his production output. The mafia infiltrates a few men into the factory, and figures out the actual production. Then the mafia boss approaches the owner and threatens to report him to the authorities. The factory owner pays the mafia 50 percent, which is still better than paying the government 80 percent.

Another example cited by Filippov is the use of the mafia by businessmen to collect their outstanding loans. This is less expensive than waiting months or years, while the economy inflates, for a lawsuit to work its way through the system. No one goes to the police to complain about the mafia, "because the police are the best organized crime group in Russia." [15]

Russia is also a dangerous place for journalists. Dmitri Kholodov was investigating corruption in the Western Army Group, where officers enriched themselves by selling off military equipment before pulling out of Germany. Last October 17, Kholodov picked up a briefcase at a train station on a tip, and took it back to the newsroom at Moskovsky Komsomolets. He was killed when it exploded as he opened it. Since then the newspaper has tried to implicate Gen. Pavel S. Grachev, Yeltsin's defense minister, in the killing (Grachev has two Mercedes sedans that were purchased with illegal profits). Gen. Matvei P. Burlakov was the commander of the Western Army Group; at the insistence of Grachev, Burlakov was appointed deputy defense minister last August, before an official investigation into the profiteering was completed. Yeltsin dismissed Burlakov two weeks after the killing of Kholodov, but Grachev hangs in there. [16]

Russian organized crime is not confined to Russia. It also operates in New York, San Francisco, Los Angeles, Miami, Philadelphia, Boston, and Chicago. Most crime among Russian emigre groups in the U.S. involves financial fraud, insurance and tax scams, or the laundering of dollars that originated as rubles, probably from criminal activity in Russia. In 1989, only 8,000 visas were granted to travelers from the former Soviet Union. In 1993 it was 140,000. Russia's criminal records system is too chaotic to check all of the visa applicants. [17]

Europeans officials have bigger worries than laundering, because the loose borders and customs in Europe make it ideal for smuggling nuclear materials and narcotics. Hans-Ludwig Zachert, the president of Germany's federal police, said his agency investigated 18 alleged thefts of nuclear materials in 1992. [18] Last August a sample of low-grade plutonium was intercepted in Germany, one of at least four cases of nuclear smuggling there in 1994. Police in the Czech Republic seized 6.6 pounds of uranium last December, and arrested a Czech nuclear physicist and two men from the former Soviet Union. Tests confirmed that the uranium was weapons-grade, although the amount wasn't enough for a bomb. [19]

Nor is Russian organized crime the only problem. As European borders loosen and Italy increases pressure on the mafia, southern France is sprouting pizzerias, banks there are winking at money laundering, and smuggling is profuse. Last year a French parliamentarian who denounced organized crime on the Riviera was shot dead in her car. A French parliamentary commission found that organized crime was investing in casinos, golf courses, restaurants, and other premium real estate. [20]

In Naples, Italy last November, the United Nations sponsored a conference for top officials from 138 countries. Italian prime minister Silvio Berlusconi, who hosted the conference, said the fight against crime is a global war that can be won only if countries unite. [21] (One month later Berlusconi, in office for just seven months, resigned over allegations of bribes to tax officials by his Fininvest SpA media and retail company.)

Officials in the U.S. had barely begun congratulating themselves on the last decade's campaigns against Italian mafia families, when new concerns were expressed over gangs from Asia. The Chinese Triads smuggle weapons out of China and Vietnam, and aliens and heroin into New York, Los Angeles, and San Francisco. In Russia they work with criminal groups to swap heroin for abandoned Soviet weapons. Their local muscle in the U.S., used for drug dealing and protection rackets, comes from Chinese and Vietnamese street gangs. [22] Even Beijing's justice minister has denounced the Triads as a threat to the mainland's "social stability." [23] The smuggling of aliens and heroin also has strong connections to Taiwan, apparently even involving officials within Taiwan's military and intelligence community, beyond the reach of civilian law enforcement there. [24]

The Japanese Yakuza specializes in high-level financial fraud. In Japan it extorts money from major corporations and buys politicians, while in the U.S. the Yakuza invests in golf courses and other real estate, for use as fronts for money laundering. The extent to which the Yakuza might be a moving force behind Japanese investment in the U.S. is unknown -- the trail stops cold in Japan, where bank secrecy is total. Yakuza gangsters can even sue the Japanese National Police for releasing information to U.S. officials. [25]

In the cocaine department, the Cali cartel has replaced Pablo Escobar's Medellin cartel as the major problem. Escobar was killed in a shootout with police in December, 1993, after escaping from a plush prison 17 months earlier. In contrast to Escobar's brutal methods, the Cali cartel operates legitimate businesses, carefully launders its money, and even built Colombia's best soccer team. Officials estimate that the Cali-based traffickers manage about 85 percent of the cocaine traffic between South America and the U.S. [26]

The Cali cartel is slick enough to grease its way into the Colombian government at a level only dreamed of by Escobar. According to Joseph Toft, who retired last October in frustration after heading the DEA office in Bogota for more than six years, millions of Cali cartel dollars went into the campaign coffers of newly-elected president Ernesto Samper. Toft predicts that Cali members will surrender soon to the government, but on secret terms dictated by them that will keep their operations and fortunes intact. "In reality, the whole thing is a farce," he said, and described Colombia as a "narco-democracy." [27]

Most ominous of all, according to Claire Sterling, these organized crime groups -- which traditionally have been more concerned about protecting their turf than about expanding their markets -- are now sharing resources in a new spirit of global cooperation. The is the theme that runs through Sterling's Thieves' World, as she quotes law enforcement officials who deal with the problem. For example, the Triads and Yakuza use Cosa Nostra connections in America "to penetrate the country's law enforcement and judicial communities through long-established Cosa Nostra contacts. The fact that the Cosa Nostra gives them access to its private collection of corrupt judges and cops suggests extraordinary levels of complicity." [28]

The Cali cartel works with organized crime in Russia, and uses their networks to get the cocaine into Europe. A metric ton of Cali cocaine was seized in St. Petersburg in 1993. In New York that year, two Russian immigrants and a pair of Italian mafia figures were convicted of working together to import large amounts of heroin. [29]

When the DEA and IRS set up a bank to snare money launderers in January, 1992, they were able to "look into the boardrooms of the Cali cocaine cartel," according to one federal agent. While the top echelons of the Cali cartel were not penetrated, they did get to "peek into how money launderers were operating internationally." Last December, after two years of operation, 88 persons in three countries were arrested as a result of the sting. One was Pasquale Locatelli, described by DEA officials as "the head of an Italian organized crime group working with the Cali cocaine cartel to bring drugs to Europe." [30]

What does it mean when every organized crime group is working with all the others? On one level it's as inevitable as transnational corporations that build factories where labor is cheaper or tax incentives more attractive, or that simply move goods to wherever the market seems promising. Modern communications make this sort of mobility routine; a major business that neglects to cut deals all over the world is the exception these days.

For criminal groups, the flexibility of transnational connections offers the additional advantage of keeping one step ahead of the law. It takes seconds to wire money across a border, but it takes years to get even minimal consistency in the legal systems of various nations. In many industrial nations, money laundering is not even a crime. The standards of evidence vary widely for wiretapping, search and seizure, and extradition. An operator who doesn't see these discrepancies as opportunities, simply isn't hiring the right lawyers. [31]

Cooperation between organized crime groups is presently perceived by those groups as mutually beneficial. As markets become saturated, this cooperation will be replaced by competition. Organized crime working together is not a conspiracy at the level that Sterling perceived the KGB sponsorship of terrorism to be a conspiracy, nor does she claim otherwise.

For now, the competition is between government groups and organized crime. An interesting question is extent to which criminal cartels will supplant nation-states as the de facto unit of political organization in some parts of the world. The average citizen might not even notice. Now he pays taxes, later he will pay tribute to the Organization for protection. It's difficult to see how cartels can be less efficient, more violent, or less judicial than what citizens have experienced under many governments. With America in Vietnam, and with Russia in Chechnya, draftees were forced to wage war against civilians defending their homes. How much more violent can you get than this? And remember, too, that the "rule of law" in America and the former Soviet Union built systems based on tens of thousands of nuclear weapons.

Libertarian cynics will argue that the outcry against organized crime amounts to sour grapes from politicians, some of whom are worried that they've been brown-nosing the wrong bosses, or taking bribes from the wrong special interests. They're losing control and they don't like it. The concerns these politicians express do not represent a concern for the people, any more than the mafia chieftain believes that exacting tribute from the shopkeeper is an act of civic responsibility.

As they try to curtail organized crime, governments will have to convince citizens that they offer a better deal. The options are too close to call in Russia today, and none are attractive. But government is becoming a second choice in America as well -- in the streets, at least, if not in the halls of Congress. At a "computers and privacy" conference last April, one official from the White House was trying to make the case that the FBI ought to have easier access to the nation's digital telephone network for the purpose of wiretapping.

"How many people here fear they are at greater risk from government abuses of power than criminal activity?" asked David Lytel from the Office of Scientific and Technology Policy. Most of the audience raised their hands. Someone shouted, "What's the difference?"

And then several months later, the Digital Telephony Act sailed through Congress anyway, without debate. It was considered a personal victory for FBI director Louis Freeh, who lobbied hard for the bill. 1. A devastating account of the Terror Network debacle can be found in David Yallop, Tracking the Jackal: The Search for Carlos, the World's Most Wanted Man (New York: Random House, 1993), pp. 559-67, 572-4, 586-7. Yallop spent eight years uncovering the facts behind Carlos, and has no tolerance for Sterling's shoddy work in The Terror Network.

2. Sterling herself is unrepentant as of 1991, claiming that revelations ten years later confirm the thesis in her book, which she describes as containing "massive proof that the Soviet Union and its surrogates have provided the weapons, training and sanctuary for a worldwide terror network aimed at the destabilization of western democratic society." See her letter to the editor in the New York Times, 26 October 1991, p. 18.

3. Elizabeth Neuffer, "FBI Director Presses World Effort on Crime," Boston Globe, 29 June 1994, p. 4; "U.S. Intel Junket to the East," Intelligence Newsletter, 7 July 1994.

4. Jonas Bernstein, "U.S., Russia Sign Anti-Gangster Pact," Washington Times, 6 July 1994, p. A12.

5. Leslie Alan Horvitz, "FBI Enters Global Battle on Organized Crime," Washington Times, 19 July 1994, p. A9.

6. James Ring Adams and Douglas Frantz, A Full Service Bank: How BCCI Stole Billions Around the World (New York: Pocket Books, 1992), 381 pages.

7. "Soviet Nuclear Complex at Risk," Associated Press, 23 November 1994.

8. Horvitz, p. A9.

9. Alfred W. McCoy, The Politics of Heroin: CIA Complicity in the Global Drug Trade (Brooklyn NY: Lawrence Hill Books, 1991), 634 pages.

10. Michael Levine, The Big White Lie: The CIA and the Cocaine/Crack Epidemic -- An Undercover Odyssey (New York: Thunder's Mouth Press, 1993), 472 pages. Levine was a DEA agent in Argentina in 1980. He discovered that the Argentinean junta and the CIA supported the Bolivian cocaine generals.

11. Celerino Castillo III and Dave Harmon, Powderburns: Cocaine, Contras and the Drug War (Buffalo NY: Sundial, 1994), 240 pages. Castillo was a DEA agent in El Salvador during the contra war, and discovered that Oliver North's agents were running drugs.

12. Bill Gertz, "Most of Russia's Biggest Banks Linked to Mob, CIA Report Says," Washington Times, 5 December 1994, p. A1.

13. Seymour M. Hersh, "The Wild East," Atlantic Monthly, June 1994, p. 68.

14. Stephen Seplow, "In the New Russia, Blood Trails Billions," Philadelphia Inquirer, 30 January 1994, p. A1.

15. Arnold Beichman, "Russia's Devious Ways of Doing Business," Washington Times, 20 December 1994, p. A17.

16. Steven Erlanger, "Scandals Put Russian Defense Chief on the Defensive," New York Times, 2 November 1994, p. A3.

17. Charles J. Hanley, "As Russian Crime Grows, So Do the U.S.-Russian Police Links," Philadelphia Inquirer, 20 February 1994, p. A2.

18. R. Jeffrey Smith, "Freeh Warns of a New Russian Threat," Washington Post, 26 May 1994, p. A1.

19. "Czech Police Seize Uranium," Associated Press, 19 December 1994; "Seized Uranium: Weapons Grade," Associated Press, 20 December 1994.

20. William Drozdiak, "European Unity -- for Organized Crime," Washington Post, 2 August 1994, p. A20.

21. Reuters, "138 Countries Seek to Combat Global Crime," Los Angeles Times, 24 November 1994, p. A16.

22. Richard Cole, "Asian Gangs Could Be the Future of U.S. Organized Crime, Experts Warn Law Enforcement," Los Angeles Times, 17 July 1994, p. B4.

23. "Global Gangs," Wall Street Journal, 5 December 1994, p. A14.

24. Marlowe Hood, "The Taiwan Connection," Los Angeles Times Magazine, 9 October 1994.

25. Claire Sterling, Thieves' World: The Threat of the New Global Network of Organized Crime (New York: Simon & Schuster, 1994), pp. 155-8.

26. Pamela Constable, "U.S.-Colombian Drug War Shifts Its Focus to Cali," Boston Globe, 23 January 1994, p. 1.

27. Peter Copeland, "Traffickers Planning a Deal, Ex-Agent Says," Washington Times, 19 October 1994, p. A10.

28. Sterling, Thieves' World, p. 151.

29. Steve Coll, "Russian Crime Syndicates Moving West," Washington Post, 2 April 1994, p. A1.

30. Michael Hedges, "DEA-IRS 'Bank' Hits Cocaine Cartel in Pocketbook," Washington Times, 17 December 1994, p. A2.

31. This isn't the Cali cartel's problem; they have an army of lawyers in Colombia greasing the system. And in the U.S. they have Michael Abbell on their payroll. Until he resigned in 1984, Abbell was the Justice Department attorney in charge of U.S. efforts to extradite drug lords from Colombia. Last September, federal agents raided Abbell's office in Miami, looking for evidence that he advised his Cali clients on how to launder money and thwart investigators.

Sidebar from NameBase NewsLine, No. 8, January-March 1995:

From Color Copiers to Cyberwar: Organized Crime Goes High-Tech

It seems there's a "growing convergence between the technology required for military operations and the technology required for law enforcement," according to a memorandum of understanding (MOU) signed last April by attorney general Janet Reno and the Secretary of Defense. This MOU stemmed from studies by DoD's Advanced Research Projects Agency, the National Institute of Justice (NIJ), and the FBI. The studies found that "recent technological advances suggest a current ability to enhance the effectiveness of both OOTW [Operations Other Than War] and LE [Law Enforcement] missions."

One area of interest at both the Pentagon and NIJ, which is the research and development agency of the Justice Department, is the development of less-than-lethal weapons. Typically these use microwave, electrical, chemical, impact, or light energy. There's no clue in this MOU, which merely spells out some preliminary departmental arrangements, as to what sort of technology they have in mind. But once in place, the bureaucrats cannot fail to notice that organized crime has also jumped on the high-tech bandwagon. It seems that law enforcement has some catching up to do; more attention will have to be focused on crimes made possible by the latest technologies.

Today's high-end color copiers, for example, can be used to counterfeit almost anything, from currency to identification cards. Recently federal investigators reported that a well-organized "Vietnamese gang" has been cashing counterfeit corporate checks at banks across the country. After sidetracking a real check and making a copy, the account is verified to make certain it has a large balance. The copy is then scanned into a computer, and information on the check, from the payee to the bank name to the account number, is manipulated as needed. The new forgery is produced on a high-quality laser printer that uses the standard magnetic encoding. If the person cashing the check gets caught, he turns out to be a "mule" who doesn't know much about his handler.

Another example of high-tech crime is cellular phone fraud, which is costing the companies that pick up the tab about $1 million per day. The technology required to clone someone's phone is within reach of small-time operators, so organized criminal groups might not be the major problem here. All that's needed is a radio scanner to capture account numbers, and the know-how to program these numbers into phones. With 17,000 new phones sold every day, the industry is just trying to keep up with demand, and only recently began hiring their own investigators. Law enforcement, the industry complains, cannot figure out how to deal with the problem.

Instructions for hacking a cellular phone can be found on the Internet, but the FBI is looking nervously at the Internet for a different reason. Foreign intelligence services are exploiting the Internet to obtain information, according to FBI assistant director of operations, R. Patrick Watson. Even here the FBI seems behind the times. These days reconstituted cold warriors in Washington are more interested in technically-savvy organized crime, mostly from Russia, and claim that U.S. financial and information systems are at risk. At a conference sponsored by the Center for Strategic and International Studies last September, there was mention of universities in Bulgaria that teach how to create more effective software viruses. This gem was from Dain Gary, who runs the Pentagon-funded Computer Emergency Response Team in Pittsburgh. Even open-source enthusiast Robert Steele agrees that "it's a dangerous world" and the clandestine service should be doubled in size. Steele also wants funding for an "unclassified threat assessment which can be used to alert citizens and corporations as to the vulnerability of their information in cyberspace."

Internet hacking is merely an annoyance for the Pentagon compared to the problem of weapons of mass destruction (WMD). At the first conference of its type last November, sponsored by the Pentagon's National Defense University, the issue of WMD proliferation was discussed. Experts are concerned that within five years, fundamentalist religious and ethnic groups will be acquiring and using nuclear, biological, and chemical weapons, ushering in an age of super-terrorism. The CIA now has a Counter-Proliferation Center, and WMD intelligence is a new priority throughout the intelligence community. The feasibility of preemptive interdiction is also being studied.

Remember those scud missiles during the Gulf War? They had a hard time hitting anything, and it wasn't because we were shooting them down. Why not install a guidance system that utilizes a GPS receiver, available to the public for $200? The Global Positioning System is based on signals from 24 satellites orbiting 11,000 miles above the earth, and GPS receivers provide a readout of latitude, longitude, and altitude. "Even in its commercial mode, it could help missiles reach their targets with an accuracy of approximately 100 meters," Henry Sokolski, a Defense Department non-proliferation official, told Congress.

Rand Corporation is churning out studies on "cyberwar" and "netwar," and even CompuServe has a forum section on OPSEC (operations security) and information warfare. Some might be inclined to dismiss this as an attempt by security professionals to create a market for their services. It has a ring to it that resonates with those anti-Soviet pronouncements, offered during the 1980s by a cottage industry of self-styled, professional anti-terrorists.

Anti-proliferation, on the other hand, is a serious business. But even here there is abundant hypocrisy. The U.S. share of the world market in arms sales is 70 percent, with Germany and Russia competing for second place, each with about 10 percent. The Pentagon, by now almost indistinguishable from the arms industry itself, even helps U.S. corporations make their pitch at international trade shows of weapon systems. Although President Clinton plans to cut back on U.S. arms exports soon, it remains to be seen whether he's willing to disappoint the major corporations that have so much to lose.

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