THE OXFORD HANDBOOK OF ORGANIZED CRIME

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2 THE OXFORD HANDBOOK OF ORGANIZED CRIME

3 THE OXFORD HANDBOOKS IN CRIMINOLOGY AND CRIMINAL JUSTICE General Editor: Michael Tonry THE OXFORD HANDBOOKS IN CRIMINOLOGY AND CRIMINAL JUSTICE offer authoritative, comprehensive, and critical overviews of the state of the art of criminology and criminal justice. Each volume focuses on a major area of each discipline, is edited by a distinguished group of specialists, and contains specially commissioned, original essays from leading international scholars in their respective fields. Guided by the general editorship of Michael Tonry, the series will provide an invaluable reference for scholars, students, and policy makers seeking to understand a wide range of research and policies in criminology and criminal justice. OTHER TITLES IN THIS SERIES: GENDER, SEX, AND CRIME Rosemary Gartner and Bill McCarthy POLICE AND POLICING Michael D. Reisig and Robert J. Kane ETHNICITY, CRIME, AND IMMIGRATION Sandra Bucerius and Michael Tonry CRIMINOLOGICAL THEORY Francis T. Cullen and Pamela Wilcox JUVENILE CRIME AND JUVENILE JUSTICE Barry C. Feld and Donna M. Bishop CRIME AND CRIMINAL JUSTICE Michael Tonry CRIME PREVENTION Brandon C. Welsh and David P. Farrington SENTENCING AND CORRECTIONS Joan Petersilia and Kevin R. Reitz CRIME AND PUBLIC POLICY Michael Tonry

4 THE OXFORD HANDBOOK OF ORGANIZED CRIME Edited by LETIZIA PAOLI 1

5 3 Oxford University Press is a department of the University of Oxford. It furthers the University s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offices in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore South Korea Switzerland Thailand Turkey Ukraine Vietnam Oxford is a registered trademark of Oxford University Press in the UK and certain other countries. Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY Oxford University Press 2014 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by license, or under terms agreed with the appropriate reproduction rights organization. Inquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above. You must not circulate this work in any other form and you must impose this same condition on any acquirer. Library of Congress Cataloging-in-Publication Data The Oxford handbook of organized crime / edited by Letizia Paoli. pages cm. (The Oxford handbooks in criminology and criminal justice) Includes bibliographical references and index. ISBN (hardcover : alk. paper) 1. Organized crime. 2. Criminology. I. Paoli, Letizia. HV6441.O dc Printed in the United States of America on acid-free paper

6 Contents List of Contributors ix Introduction 1 Letizia Paoli PART I CONCEPT, THEORIES, HISTORY, AND RESEARCH METHODS 1. Organized Crime: A Contested Concept 13 Letizia Paoli and Tom Vander Beken 2. Theoretical Perspectives on Organized Crime 32 Edward R. Kleemans 3. Searching for Organized Crime in History 53 Cyrille Fijnaut 4. How to Research Organized Crime 96 Dick Hobbs and Georgios A. Antonopoulos PART II ACTORS AND INTERACTIONS 5. The Italian Mafia 121 Letizia Paoli 6. The Italian-American Mafia 142 Jay S. Albanese 7. The Russian Mafia: Rise and Extinction 159 Vadim Volkov

7 vi Contents 8. Organized Crime in Colombia: The Actors Running the Illegal Drug Industry 177 Francisco E. Thoumi 9. Mexican Drug Cartels 196 Monica Medel and Francisco E. Thoumi 10. Chinese Organized Crime 219 Ko-Lin Chin 11. The Japanese Yakuza 234 Peter Hill 12. Nigerian Criminal Organizations 254 Phil Williams 13. Gangs: Another Form of Organized Crime? 270 Scott H. Decker and David C. Pyrooz 14. Opportunistic Structures of Organized Crime 288 Martin Bouchard and Carlo Morselli 15. Organizing Crime: The State as Agent 303 Susanne Karstedt 16. The Social Embeddedness of Organized Crime 321 Henk van de Bunt, Dina Siegel, and Damián Zaitch PART III MARKETS AND ACTIVITIES 17. Protection and Extortion 343 Federico Varese 18. Drug Markets and Organized Crime 359 Peter Reuter 19. Human Smuggling, Human Trafficking, and Exploitation in the Sex Industry 381 Edward R. Kleemans and Monika Smit 20. Illegal Gambling 402 Toine Spapens

8 Contents vii 21. Money Laundering 419 Michael Levi 22. Arms Trafficking 444 Andrew Feinstein and Paul Holden 23. Organized Fraud 460 Michael Levi 24. Cybercrime 482 Kim-Kwang Raymond Choo and Peter Grabosky 25. The Illegal Exploitation of Natural Resources 500 Tim Boekhout van Solinge PART IV POLICIES TO CONTROL ORGANIZED CRIME 26. Organized Crime Control in the United States of America 529 James B. Jacobs and Elizabeth Dondlinger Wyman 27. U.S. Organized Crime Control Policies Exported Abroad 545 Margaret Beare and Michael Woodiwiss 28. European Union Organized Crime Control Policies 572 Cyrille Fijnaut 29. The Fight against the Italian Mafia 593 Antonio La Spina 30. Organized Crime Control in Australia and New Zealand 612 Julie Ayling and Roderic Broadhurst 31. Organized Crime Control in Asia: Experiences from India, China, and the Golden Triangle 634 Roderic Broadhurst and Nicholas Farrelly 32. Finance-Oriented Strategies of Organized Crime Control 655 Michael Kilchling Index 675

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10 List of Contributors Jay S. Albanese is professor in the Wilder School of Government & Public Affairs at Virginia Commonwealth University, US. Georgios A. Antonopoulos is professor of criminology in the School of Social Sciences and Law at Teesside University, UK. Julie Ayling is a research fellow in the Regulatory Institutions Network at the Australian National University. Margaret Beare is professor in the Osgoode Hall Law School and former director of the Jack and Mae Nathanson Centre for the Study of Organized Crime and Corruption at York University, Canada. Tim Boekhout van Solinge is assistant professor of criminology at Utrecht University and coordinator of the Criminology Course of the Dutch Study Centre of the Public Ministry. Martin Bouchard is associate professor in the School of Criminology at Simon Fraser University, Canada. Roderic Broadhurst is professor of criminology in the Australian National University s College of Arts and Social Sciences. Ko-Lin Chin is a distinguished professor at the Rutgers School of Criminal Justice, US. Kim-Kwang Raymond Choo is senior lecturer in the School of Information Technology and Mathematical Sciences at the University of South Australia. Scott H. Decker is foundation professor in the School of Criminology and Criminal Justice at Arizona State University, US. Elizabeth Dondlinger Wyman received her J.D. from New York University Law School in Nicholas Farrelly is a research fellow at the School of International, Political and Strategic Studies at Australian National University. Andrew Feinstein was an ANC member of parliament in South Africa s first democratic elections in 1994 and is now a co-director of the organization Corruption Watch, UK. Cyrille Fijnaut is professor emeritus of international and comparative criminal law at the Law School of Tilburg University, The Netherlands.

11 x List of Contributors Peter Grabosky is professor emeritus, Regulatory Institutions Network, College of Asia and the Pacific, Australian National University. Peter Hill is an independent researcher. Formerly a British Academy Postdoctoral Fellow in the Department of Sociology at University of Oxford, UK. Dick Hobbs is professor of sociology at University of Essex and at University of Western Sidney Australia. Paul Holden is a South African historian and writer focusing on corruption and governance issues. He is the author of two books on the arms trade, The Arms Deal in Your Pocket and The Devil in the Detail: How the Arms Deal Changed Everything. James B. Jacobs is the Chief Justice Warren E. Burger Professor of Constitutional Law and the Courts and Director director of the Center for Research in Crime and Justice at New York University Law School, US. Susanne Karstedt is professor of criminology and criminal justice at the University of Leeds, UK. Michael Kilchling is a senior researcher at the Max Planck Institute for Foreign and International Criminal Law, Germany. Edward R. Kleemans is full professor at the VU School of Criminology, Faculty of Law, VU University Amsterdam, The Netherlands. Antonio La Spina is professor in the School of Government and Faculty of Political Science of the LUISS University Guido Carli, Rome, Italy. Michael Levi is professor of criminology in the School of Social Sciences at Cardiff University, Wales, UK. Monica Medel is a graduate student in the Teresa Lozano Long Institute of Latin American Studies at the University of Texas, US. She previously spent fifteen years as a reporter covering drug trafficking in Mexico. Carlo Morselli is assistant professor at the School of Criminology, Université de Montréal, Canada. Letizia Paoli is professor in the Leuven Institute of Criminology at the University of Leuven, Belgium. David C. Pyrooz is assistant professor in the College of Criminal Justice at Sam Houston State University, US. Peter Reuter is professor in the School of Public Affairs and in the Department of Criminology at the University of Maryland, US. Dina Siegel is professor of criminology at the Willem Pompe Institute for Criminal Law and Criminology at Utrecht University, The Netherlands.

12 List of Contributors xi Toine Spapens is professor of criminology at Tilburg Law School, The Netherlands. Monika Smit is a researcher at WODC (Research and Documentation Centre), The Netherlands Ministry of Security and Justice and at Free University Amsterdam. Francisco E. Thoumi is a Senior Member Colombian Academy of economic Sciences and Member of the International Narcotics Control Board. Henk van de Bunt is professor of criminology at the Faculty of Law of the Erasmus Rotterdam University, The Netherlands and director of the Interdisciplinary Graduate School of Social Security. Tom Vander Beken is professor of criminology at Ghent University Law School, Belgium. Federico Varese is professor of criminology in the Department of Sociology at University of Oxford and Senior Research Fellow at Nuffield College, Oxford, UK. Vadim Volkov is vice-rector for international affairs, professor at the Department of Political Science and Sociology, and head of the Research Institute for the Rule of Law at the European University at St. Petersburg, Russia. Phil Williams is professor in the Matthew B. Ridgway Center for International Security Studies at the University of Pittsburgh, US. Michael Woodiwiss is senior lecturer in History at the University of the West of England, UK. Damián Zaitch is associate professor of criminology at Willem Pompe Institute for Criminal Law and Criminology at Utrecht University, US.

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16 INTRODUCTION LETIZIA PAOLI With two spectacular bomb attacks in 1992, the Sicilian mafia organization Cosa Nostra murdered two prominent anti-mafia judges, Giovanni Falcone and Paolo Borsellino, the former s wife, and eight members of their police escorts. The following year, it placed bombs in three of Italy s main cities, killing more innocent people and destroying historical buildings. Although these events appear to be of modest proportions vis-à-vis the death toll produced by other criminal organizations in other nations (in Mexico alone, 100,000 people are estimated to have died between 2006 and 2012 in the war staged by drug cartels; Miroff & Booth 2012), they sent huge shock waves throughout Europe and the international community. Both European policy-makers and the public worried about the Sicilian mafia s excessive power and its presumed ability to expand all over Europe. Together with the epochal fall of the Berlin Wall in 1989 and the collapse of the Soviet Union two years later, Cosa Nostra s excellent cadavers (Stille 1995) played a prominent role in putting organized crime high on the crime control agenda of the European Union, the United Nations, and most European governments. In this political and public debate, organized crime was initially identified with criminal organizations, even though much looser definitions of organized crime were finally adopted in the law books and in international treaties (see Paoli and Vander Beken in this volume for details). Media and political entrepreneurs also played an important part in that process, increasing both the fascination with and worry about criminal organizations of Italian and other origin as they had also done in the 1960s and 1970s when the Italian American mafia came to be identified as a crime control priority in the United States (Woodiwiss 2001; see also Beare and Woodiwiss in this volume). It was also thanks to the great success of the book and movie trilogy The Godfather that the Italian (American) mafia came to be seen worldwide as the archetype of criminal organizations. The same mix of factors spectacular or long-lasting bursts of violence by criminal organizations as well as the savvy action of moral entrepreneurs and media have also more recently drawn public and policy attention to the problem of organized crime in

17 2 Letizia Paoli other contexts, in both the developed and developing world: from Latin America to Australia, from Canada to China. In the United States, too, the Obama administration published a Strategy to Combat Transnational Organized Crime in 2011, after three decades of neglect of the topic (White House 2011). To enhance the fight against organized crime, policy-makers all over the world have granted special investigative powers to their law enforcement agencies. In several countries, they have also engaged in institutional reforms, setting up new police agencies and/or centralizing competences from local units to a nationwide police agency, as happened, for example, in the United Kingdom with the establishment of the Serious Organised Crime Agency in 2005 (which fused with other agencies to become the National Crime Agency in 2013). There have also been numerous regional and international initiatives, meant to foster police and justice cooperation in the fight against organized crime, and many of these have had large international support. As of March 2014, there were 179 parties to the UN Convention against Transnational Organized Crime of 2000, the overwhelming majority of the world s nation-states (for more details, see the essays written in the fourth part of the handbook). I. Organized Crime: Two Main Notions and Types Despite or perhaps because of the great public and policy interest, organized crime remains a fuzzy and contested umbrella concept. As explained in more detail in Paoli and Vander Beken (in this volume), the understanding of organized crime has since the 1920s shifted back and forth between two rivaling notions: (a) a set of stable organizations illegal per se or whose members systematically engage in crime; and (b) a set of serious criminal activities, particularly the provision of illegal goods and services, mostly carried out for monetary gain. The general public, the media, and most policy-makers primarily use the expression organized crime to refer to criminal organizations, such as the Sicilian and American Cosa Nostra, the Japanese Yakuza, Colombian and Mexican drug cartels, and other large-scale criminal groups around the world thought to have a hierarchical and lasting structure. Particularly in countries with no direct experience of such large-scale crime groups, however, scholars, law enforcement officials, and some policy-makers relate organized crime to trafficking in illegal drugs and human beings, gambling, and the provision of other goods and services that are fully criminalized or heavily restricted. To fit both notions and maximize the range of problems covered, broad, lowest-common denominator definitions of organized crime have finally been adopted at the international level and in many countries as well. Torn between the two rivaling notions, some policy-makers and law enforcement agencies use the term organized crime in both senses within the same text not to the benefit of clarity. In its 2013 Serious and Organized Crime Threat

18 Introduction 3 Assessment, for example, Europol, the European Union s police intelligence agency, speaks both of organized crime groups and serious and organized crime areas of activities (Europol 2013, p. 42). In the collective imaginary and even in the understanding of many policy-makers and some law enforcement officers, criminal organizations and criminal profit-making activities seem to go hand in hand. Famously, the Kefauver Committee, the first U.S. congressional body to deal with the problem of organized crime after World War II, claimed that there is a nationwide crime syndicate known as the Mafia, whose tentacles are found in many large cities.... Its leaders are usually found in control of the most lucrative rackets of their cities (U.S. Senate 1951, p. 131). In reality, however, the picture is more complicated, as there is no necessary link between large-scale criminal organizations à la the mafia and the criminal money-making activities they are presumed to control, as a growing body of literature, as is well documented in this handbook. Large, stable, structured criminal organizations operate in a number of countries, engaging in a plurality of money-making activities and usually also claiming some sort of control over the political, economic, and social life of their home areas of settlement. Contrary to popular perceptions, however, these organizations are a rarity. They consolidated and have survived in contexts in which government structures are weak or the latter s representatives are willing to enter into pacts with the bosses of criminal organizations. The oldest and most established among them, such as the Chinese Triads, Japanese Yakuza, and the two main Southern Italian mafia organizations, Cosa Nostra and Ndrangheta, for example, go back to the 18th and 19th centuries (Chin, Hill, and Paoli in this volume). These mafia-type organizations all emerged in contexts in which the local government authorities were not able to guarantee even a minimum of security, and the residents had to protect their property, women, and their own lives by themselves. Large-scale criminal groups posing as proto-states were also active in several parts of pre-modern Europe (Fijnaut in this volume), but most of them were swept away by the consolidation of modern government structures a counterfactual proof of mafia-type organizations dependence on the weakness of government authorities. The American Cosa Nostra rose in the early 20th century when the U.S. government still had limited authority in the Italian ethnic community, and some of its representatives preferred to come to terms with, rather than prosecute, Cosa Nostra bosses and other criminal entrepreneurs fostered by Prohibition (Albanese, this volume). Other large-scale organizations, such as the Colombian and Mexican drug trafficking cartels, developed more recently to feed the U.S. and European appetite for illegal drugs, but they, too, assumed their current shape because of the weakness and corruption of their home governments (Thoumi and Medel, and Thoumi in this volume). Whereas large-scale criminal organizations are rather rare, illegal money-making activities occur everywhere. Many of them consist of the production and sale of goods and services that are still demanded by the public, despite the fact of having been tout court prohibited or highly restricted since the early 20th century onward. As an illegal market emerges to feed this demand, these activities are often referred to as illegal market activities. In addition, there are predatory (or extortionary) money-making

19 4 Letizia Paoli activities, which produce no value added and merely entail an involuntary transfer of property by force or deceit. In their basic variants, some of these activities, such as theft or fraud, are probably as old as mankind. Many more variants have been made possible by technological progress, including the entirely new branch of cybercrime. If the stolen or counterfeited products are sold, illegal markets for these products may also emerge (for these activities, see the essays of the third part of the volume). Regardless of the type, illegal money-making activities can hardly be stopped in their entirety by democratic governments committed to the rule of law. That theft and fraud have presumably occurred since the beginning of mankind testifies to the impossibility of uprooting such problems in any political context. As long as governments are not willing to resort to authoritarian border and law enforcement methods or to disrupt legitimate trade by, say, inspecting every container crossing their national borders, they will also not be able to stop illegal market flows. Contemporary governments have even less leverage than their predecessors over illegal and legal market flows as a result of economic globalization. The diminution of state-enforced restrictions on exchanges across borders the core trait of globalization has accelerated the interconnections between previously separate domestic, legal and illegal, markets and increased the mobility of goods, capital, and human beings. For illegal organizations and other entrepreneurs, it has become easier than ever to move drugs and other illegal products from producing to consuming countries, to repatriate profits, to establish business partnerships with foreign counterparts and even to operate in foreign countries themselves. If the prospects of controlling global illegal market flows are rather bleak, government authorities, even in democratic societies, are not powerless vis-à-vis organized crime activities. In particular, government action can heavily impact the size, organization, and operating methods of the groups or enterprises that engage in predatory activities or produce, or trade in, illegal products. In countries with an effective government, in fact, large-scale criminal organizations are not allowed to consolidate, and that is why the great majority of illegal exchanges (voluntary or otherwise) in Western countries are carried out by numerous, relatively small and often ephemeral enterprises minimizing the use of violence in order to avoid attracting law enforcement attention. In other words, disorganized crime (Reuter 1983) rather than organized crime understood in terms of large-scale stable criminal organizations predominates in Western countries, reflecting the local governments capability to enforce their prohibitions (see Bouchard and Morselli in this volume). II. Policy Dilemmas The suppression of large-scale criminal organizations, the enforcement of prohibitions on specific goods and services and, more generally, the control of any form of crime, organized or not, do not come without a cost. First, these interventions involve the disbursement of considerable financial and human resources that could have been used

20 Introduction 5 elsewhere. Second, they restrict the rights of the defendants, convicts, and sometimes even of the public at large. Third, through the criminalization of specific goods and services, they also create opportunities for corruption and violence, because the criminals involved aim to obtain the covert support of government officials or the control of legitimate businesses, or because they resort to violence or the threat of violence to solve conflicts that obviously cannot be brought to court. Fourth, these policy interventions occasionally prompt the offenders and/or the final customers to engage in very harmful practices. One of the latter is body-packing, that is, swallowing cocaine or heroin balls to smuggle them across borders. The injection of diluted, impure drugs can also be considered an unintended consequence of drug prohibition, as users often start injecting to maximize the drug effects given the latter s high costs and have no control on quality because the drugs are criminalized. In other cases, an effective policy intervention in a specific country or local area may merely spread the problem elsewhere. The latter effect is known as the balloon-effect in the field of drug policy. This refers to the fact that the illegal drug industry is like a balloon: when it is squeezed or curbed in one location, it tends to bulge or reemerge in another location (e.g., Friesendorf 2007). Whereas some studies have shown that police interventions in city contexts can effectively reduce crime and not just displace it (e.g., Braga and Weisburd 2010), it seems unlikely that such effects can be replicated across cities and regions, especially for the wholesale phase of many illegal market activities. The U.S. war on drugs of the past three decades, for example, may have helped keep the U.S. drug market relatively disorganized but has failed to reach its main goal of reducing drugs availability (Reuter and Trautman 2009). Through its interdiction, moreover, it has helped spread the problem of drug production and trafficking to a number of Latin American countries, has created endless opportunities for corruption and violence in both the United States and abroad, and has unintentionally contributed to the destabilization of several, already weak Central American and, more recently, West African countries (e.g., OAS 2013). Of the world s eight most murderous countries, seven lie on the cocaine-trafficking route from the Andes to the United States and Europe. Honduras, for example, a small Central American country of 8 million people, records each year more than 7,000 murders. In the European Union, with a population of 500 million, the figure is under 6,000 (Economist 2013). Even in the United States itself, the U.S. war on drugs has produced huge social and financial costs: it is enough to say that drug convictions account for almost half of American prisoners in federal prisons and 17% of those under state jurisdiction (Carson and Golinelli 2013, p. 3). Of the adults on probation and parole, 25% and 33%, respectively, also had a drug charge as their most serious offense (Maruschak and Bonczar 2013, pp. 17 and 19). While no country can legitimately aspire to host large-scale, powerful criminal organizations or a large number of drug addicts, preventing such developments needs to be traded off with the costs and unintended consequences of the policies adopted to reach such goals and the goals of more generic crime control and health policies. The case of gambling is particularly enticing: this activity was once considered a quintessential activity of the Italian American mafia and other U.S. crime groups (e.g., Reuter 1983). However,