Contemporary organized crime : developments, challenges and responses 978-3-319-55973-5, 3319559737, 978-3-319-55972-8

Table of contents :
Front Matter ....Pages i-x
Introduction (Hans Nelen, Dina Siegel)....Pages 1-7
Front Matter ....Pages 9-9
The Bankruptcy of the Dutch Cannabis Policy: Time for a Restart (Henk van de Bunt, Thaddeus Muller)....Pages 11-23
Illicit Performance and Image Enhancing Drug Markets (Katinka van de Ven)....Pages 25-44
Front Matter ....Pages 45-45
Legal Prostitution Systems in Europe (Ronald Weitzer)....Pages 47-64
Linking Prostitution and Human Trafficking Policies: The Nordic Experience (May-Len Skilbrei, Charlotta Holmström)....Pages 65-79
Front Matter ....Pages 81-81
The Mobility of East and Central European Organized Crime: The Cases of Lithuania, Poland, Bulgaria and Romania (Dina Siegel)....Pages 83-101
1% Bikers, the Outlaw Extreme: An Evolving Subculture (James F. Quinn)....Pages 103-122
Front Matter ....Pages 123-123
Having the Blues: Money Laundering in Professional Football (Hans Nelen)....Pages 125-138
Match-Fixing (Toine Spapens)....Pages 139-154
Front Matter ....Pages 155-155
Criminal Infiltration of the Public Sector (Paolo Canonico, Stefano Consiglio, Ernesto De Nito, Gianluigi Mangia)....Pages 157-173
The Awarding of Public Contracts and Safeguarding Integrity (Stefano Caneppele)....Pages 175-185
Front Matter ....Pages 187-187
Combating Organized Crime Aussie-Style: From Law Enforcement to Prevention (Julie Ayling)....Pages 189-212
Uneasy Truths; Criminal-Informants, Witness Protection, Trust and Legitimacy in the Policing of Organized Crime (James Sheptycki)....Pages 213-230
Undercover Populism (Jacqueline E. Ross)....Pages 231-251
When Other Methods Fail… Infiltrating Organized Crime Groups in the Netherlands (Edwin W. Kruisbergen)....Pages 253-278
Back Matter ....Pages 279-288

Citation preview

Studies of Organized Crime 16

Hans Nelen Dina Siegel Editors

Contemporary Organized Crime Developments, Challenges and Responses

Studies of Organized Crime Volume 16

Series Editor Dina Siegel, Willem Pompe Institute, Utrecht University, Utrecht, The Netherlands

This series will publish theoretically significant books in two primary areas. One is the political economy of organized crime and criminality whether at the transnational, national, regional, or local levels (focus on financial crime, political corruption, environmental crime, and the expropriation of resources from developing nations). The other is human rights violations, particularly in Third World countries. Manuscripts that cover either historical or contemporary issues of the above, utilizing qualitative methodologies, are equally welcome. In addition, we are particularly interested in publishing the work of sophisticated junior scholars.

More information about this series at http://www.springer.com/series/6564

Hans Nelen Dina Siegel •

Editors

Contemporary Organized Crime Developments, Challenges and Responses

123

Editors Hans Nelen Department of Criminal Law and Criminology Maastricht University Maastricht, Limburg The Netherlands

ISSN 1571-5493 Studies of Organized Crime ISBN 978-3-319-55972-8 DOI 10.1007/978-3-319-55973-5

Dina Siegel Willem Pompe Institute Utrecht University Utrecht The Netherlands

ISBN 978-3-319-55973-5

(eBook)

Library of Congress Control Number: 2017937481 © Springer International Publishing AG 2017 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Printed on acid-free paper This Springer imprint is published by Springer Nature The registered company is Springer International Publishing AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Acknowledgements

This book contains a selection of papers that were presented during the seminars of the Centre for Information and Research on Organized Crime (CIROC) throughout the period 2012–2015. The seminars and other activities of this network organization are heavily reliant on the participation of its staff members, i.e. researchers working at various research institutions in the Netherlands who share a passion of conducting research on organized crime. All CIROC-seminars are organized by two or more of these staff members. They come up with innovative ideas for new sessions and use their international networks to invite organized crime specialists from all over the world to give key note presentations. Without the input of our colleagues and the organizational support of Wieneke Matthijsse and Carin Schnitger, CIROC would not have been able to become such an important meeting point for academic scholars, policy makers and law enforcement officials. Of course, we are highly indebted to the authors of the chapters for their willingness to revise their presentations for publication in this book. We also thank Ernesto Savona and Jay Albanese for reviewing the manuscript and for their valuable comments. Last but not least, we express our gratitude to Hendrik Jan Schwencke for his editorial assistance.

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Contents

1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hans Nelen and Dina Siegel

Part I 2

3

Drug-related Issues

The Bankruptcy of the Dutch Cannabis Policy: Time for a Restart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Henk van de Bunt and Thaddeus Muller Illicit Performance and Image Enhancing Drug Markets . . . . . . . . . Katinka van de Ven

Part II

Legal Prostitution Systems in Europe . . . . . . . . . . . . . . . . . . . . . . . . Ronald Weitzer

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Linking Prostitution and Human Trafficking Policies: The Nordic Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May-Len Skilbrei and Charlotta Holmström

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Human Trafficking and Prostitution

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Part III

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Mobility Crimes

The Mobility of East and Central European Organized Crime: The Cases of Lithuania, Poland, Bulgaria and Romania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dina Siegel

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1% Bikers, the Outlaw Extreme: An Evolving Subculture . . . . . . . 103 James F. Quinn

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Contents

Part IV

Sports and Crime

8

Having the Blues: Money Laundering in Professional Football . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 Hans Nelen

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Match-Fixing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 Toine Spapens

Part V

Procurement, Corruption and Risk Assessment

10 Criminal Infiltration of the Public Sector . . . . . . . . . . . . . . . . . . . . . 157 Paolo Canonico, Stefano Consiglio, Ernesto De Nito and Gianluigi Mangia 11 The Awarding of Public Contracts and Safeguarding Integrity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 Stefano Caneppele Part VI

Criminal Law Enforcement

12 Combating Organized Crime Aussie-Style: From Law Enforcement to Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189 Julie Ayling 13 Uneasy Truths; Criminal-Informants, Witness Protection, Trust and Legitimacy in the Policing of Organized Crime. . . . . . . . 213 James Sheptycki 14 Undercover Populism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231 Jacqueline E. Ross 15 When Other Methods Fail… Infiltrating Organized Crime Groups in the Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253 Edwin W. Kruisbergen Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279

Editors and Contributors

About the Editors Hans Nelen is Professor of Criminology at the Department of Criminal Law and Criminology at the Faculty of Law of Maastricht University, the Netherlands. He has an academic background in both criminology and law. Between 1986 and the beginning of 2001, Nelen was employed as a senior researcher and research supervisor at the Research and Documentation Centre of the Ministry of Justice in the Netherlands (WODC), mainly involved in drug, fraud, organized crime, corporate crime and police research. Between 2001 and 2006 he was a senior lecturer/associate professor and senior researcher at the Institute of Criminology of the VU University Amsterdam. Since January 1, 2007 Nelen has been working as Professor of Criminology at Maastricht University (UM). He is also director of the Master programme in Forensics, Criminology and Law, director of the Graduate School at the Maastricht faculty law and Vice-Dean Research of the Faculty Board. Nelen published a large number of books and articles on a variety of criminological subjects, i.e. corruption and fraud, organized crime, money laundering, legal professionals, the administrative approach to organized crime, cross-border police cooperation and sports and crime. Dina Siegel is Professor of Criminology at the Willem Pompe Institute for Criminal Law and Criminology of Utrecht University, the Netherlands. She studied sociology and social anthropology at the Tel-Aviv University, Israel, and obtained her Ph.D. in Cultural Anthropology at the VU University of Amsterdam, The Netherlands. Siegel worked during 2001–2008 as Assistant Professor at the Institute of Criminology of the VU University Amsterdam. From 2009 she has been working as Professor of Criminology at Utrecht University. Dina Siegel has studied and published many articles and books on post-Soviet organized crime, human trafficking and prostitution, organized crime in the diamond sector, drugs, underground banking and mobile banditry.

Contributors Julie Ayling School of Regulation and Global Governance (RegNet), College of Asia and the Pacific, Australian National University, Canberra, ACT, Australia Henk van de Bunt Department of Criminology, Erasmus School of Law, Erasmus University Rotterdam, DR, Rotterdam, The Netherlands

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Editors and Contributors

Stefano Caneppele School of Criminal Justice, University of Lausanne, Lausanne-Dorigny, Switzerland Paolo Canonico University of Napoli Federico II, Naples, Italy Stefano Consiglio University of Napoli Federico II, Naples, Italy Charlotta Holmström Department of Social work, Malmö University, Malmö, Sweden Edwin W. Kruisbergen Ministerie van Veiligheid en Justitie, Wetenschappelijk Onderzoek- en Documentatiecentrum (WODC), Den Hague, The Netherlands Gianluigi Mangia University of Napoli Federico II, Naples, Italy Thaddeus Muller Department of Criminology, University of Lancaster, Lancaster, UK Hans Nelen Faculty of Law, Maastricht University, Maastricht, The Netherlands Ernesto De Nito University “Magna Graecia” of Catanzaro, Catanzaro, Italy James F. Quinn Princeton, USA Jacqueline E. Ross College of Law, University of Illinois, Champaign, IL, USA James Sheptycki Faculty of Liberal Arts and Professional Studies, York University, Toronto, Canada Dina Siegel Faculty of Law, Pompe Institute, Utrecht University, Utrecht, The Netherlands May-Len Skilbrei Department of Criminology and Sociology of Law, University of Oslo, Oslo, Norway Toine Spapens Department of Criminal Law, Tilburg University, Tilburg, The Netherlands Katinka van de Ven National Drug and Alcohol Research Centre, University of New South Wales, Sydney, Australia Ronald Weitzer Department of Sociology, George Washington University, Washington, DC, USA

Chapter 1

Introduction Hans Nelen and Dina Siegel

Organized crime, as a field of study, has always occupied one of the most prominent places in criminology. However, from time to time, researchers tend to ask: what is new in the existing literature on organized crime; which new theoretical insights contribute to our understanding of this phenomenon; what new trends and markets have emerged in relation to organized crime activities? Is it worthwhile to continue exploring ‘old’ research areas like drugs, human trafficking and so on? Although some of these questions are hard to answer in a straightforward manner, it is clear that organized crime remains a topical and important issue. Mafias migrate, new forms of organized crime have popped up, traditional activities, and modi operandi have been replaced by modern ones. The dynamics of organized crime activities, the fluid and vague structures of criminal organizations, the slow disappearance of secrecy, and trust as a result of mass social media and new cyber technologies—all these phenomena require an adequate response from law enforcement and other local and global actors. Since its establishment in 2001, the Centre for Information and Research on Organized Crime (CIROC) has been closely following changes in research focus and the development of new trends in the study of organized crime. The CIROC researchers have organized more than 50 seminars on organized crime-related topics and published dozens of Dutch and English newsletters. The board members of CIROC are Dutch organized crime experts who are employed at the departments of criminology at the Erasmus University Rotterdam, VU University H. Nelen (&) Faculty of Law, Maastricht University, P.O. Box 616, 6200, Maastricht, The Netherlands e-mail: [email protected] D. Siegel Faculty of Law, Pompe Institute, Utrecht University, Boothstraat 6, 3512, Utrecht, The Netherlands e-mail: [email protected] © Springer International Publishing AG 2017 H. Nelen and D. Siegel (eds.), Contemporary Organized Crime, Studies of Organized Crime 16, DOI 10.1007/978-3-319-55973-5_1

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Amsterdam, Maastricht University, Utrecht University, and the WODC, the Research and Documentation Centre of the Dutch Ministry of Security and Justice. CIROC’s mission is to contribute to international cooperation and information sharing about current developments and trends regarding transnational organized crime. The Centre aims at building bridges between organized crime scholars on the one hand and policy makers and law enforcement officials on the other. One way of doing that is by inviting organized crime specialists from all over the world to give keynote presentations and discuss their findings and ideas with the audience. The most interesting papers that were presented at CIROC-seminars in the early days have been published in two volumes (Siegel et al. 2003; Siegel and Nelen 2008). This third book in the series contains a selection of papers that were presented between 2012 and 2015. The contributors provide an up-to-date understanding of various old and new aspects of organized crime, as well as the various responses that have been developed worldwide to contain serious forms of crime. The fact that the editors of this volume have been involved in CIROC from the start enables them to reflect on the trends that have occurred during the last 15 years in relation to both organized crime and its containment. After all, the topics that were prioritized during the various seminars did not come out of the blue. They reflect a specific interest in these topics, either in academia or law enforcement or both. The editors of this volume had a double task: first, to show the continuing relevance of ‘traditional’ themes in organized crime studies (drugs, human trafficking, corruption) and introduce new insights and empirical data to these fields. Seconds, they wanted to illuminate new areas and developments in the study of organized crime, such as mobile banditry and the link between crime and sports. The book reveals that organized crime continues to fascinate criminologists and that there is still much to be explored and discovered in this field.

Drug-Related Issues It will come as no surprise that some themes turn out to be recurring. Drug-related issues, for example, have dominated the agenda throughout the whole 15-year period, although a shift in emphasis can be witnessed, both in terms of the topics that are addressed in criminological studies and the themes that are prioritized by policy makers. For instance, there are new markets and trends in the use of legal and illegal substances, particularly regarding synthetic drugs (including new psychoactive substances or NPS) and the production and trafficking of cannabis. With regard to the latter, interesting developments have taken place in various countries, including the USA. In four American states (Alaska, Colorado, Oregon and Washington), the sale and possession of cannabis is now legal for both medical and nonmedical use. In light of the ‘War on Drugs’ rhetoric, which has been espoused in the USA for decades and has dominated the drug debate worldwide, this internal

1 Introduction

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paradigm shift is striking. In 2013, Uruguay became the first country in the world to legalize state-controlled sale of cannabis in order to fight drug-related crimes and health issues. Canada may follow in the near future. Last year, Canadian Prime Minister Justin Trudeau announced that a federal–provincial–territorial process was being created to discuss a jointly suitable process for the legalization of cannabis possession for recreational purposes. In Spain, so-called cannabis social clubs were introduced. They serve as a model for the supply of cannabis which rests upon the principle of collective cultivation and distribution among a closed circuit of adults (Pardal 2016). Paradoxically, the Netherlands, the country that has long been proud of its pragmatic and nonmoralistic drug policy and has tried to ‘export’ this policy to other countries, has not made any significant move during the last decade toward regulation of the supply side of the drug market. In Chap. 2 of this volume, Henk van de Bunt and Thaddeus Muller even refer to the bankruptcy of the Dutch cannabis policy. They conclude that the assumptions on which the original drug policy of the 1960s and 1970s was based are no longer valid and offer some suggestions for a restart. In Chap. 3, Katinka van de Ven explores the market of Illicit Performance and Image Enhancing Drugs in Belgium and the Netherlands. Her main conclusion is that drug policies should aim to adapt and evolve in response to emerging trends and new evidence in order to reduce potential harm.

Human Trafficking and Prostitution Next to drugs, human trafficking continuously attracts a great deal of attention. Despite other manifestations of human exploitation, most studies in this area are still centred on prostitution. An interesting development is that over the last 10 years the discourse on prostitution has changed. Moral outrage now seems to dominate the debate. Prostitutes are increasingly regarded as victims of ruthless criminals who exploit their sexual services (Huisman and Nelen 2014). This victim-oriented reframing of the phenomenon of prostitution reflects, as Garland puts it, the new political imperative in our criminal justice policy that ‘victims must be protected, their voices must be heard, their memory honoured, their anger expressed, their fears addressed’ (Garland 2001). The predominant narrative constructs sex workers as victims of sex traffickers, which denies alternative discourses of why persons become involved in sex work. In Chap. 4, Ron Weitzer examines selected European prostitution and trafficking policies and law enforcement practices. He first presents two analytical approaches relevant to European policy regimes, and concludes that they are severely flawed either because of problematic assumptions or because the data are insufficient to support the conclusions drawn by the analysts. He then examines (1) issues regarding sex trafficking, (2) public opinion in various European states, and (3) recent political struggles over prostitution policy in the Netherlands and Germany, which illustrate the kinds of debates that may arise after prostitution has been decriminalized. Chapter 5, written by May-Len Skilbrei and Charlotta Holmström, focuses on the way in which the

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Nordic countries, Sweden in particular, deal with prostitution. Their contribution is based on the empirical research into how the fight against human trafficking is formulated and institutionalized in Sweden and how this impacts on how trafficking is policed and identified. The two policy fields of prostitution and human trafficking are understood as closely linked in Sweden and are often conflated in public debates. Skilbrei and Holmström argue that this conflation is central to how the Swedish police operate and what is perceived as trafficking.

Mobility Crimes A third recurring theme in CIROC-related activities concerns mobility crimes. Two forms of ‘mobility crime’ are highlighted in this volume. In Chap. 6, Dina Siegel analyses the socioeconomic conditions facilitating the mobility of criminal groups from Lithuania, Poland, Bulgaria, and Romania to Western Europe. Her analysis shows that structural changes in the setup of criminal organizations, from the ‘old-style’ strictly hierarchical organizations of the 1990s to the present-day multiple and flexible criminal networks, have enabled a new generation of criminals to expand their areas of influence and develop new criminal markets and products abroad. In Chap. 7, James Quinn introduces us to the world of outlaw motorcycle groups and their relationship with organized crime. Over the past 10 years, this topic has featured prominently in the public and academic debate. Quinn’s chapter reviews the history and criminal activities of ‘one-percent’ bikers, with an emphasis on their psychology and organizational aspects as they evolved over the last half century. Its focus is mainly on North America but some examples are drawn from Europe and Australia. According to Quinn, the interaction of the clubs’ fraternal, gang-like and syndicate-like aspects jointly explain their actions and attitudes. The impact of social control efforts on the subculture is described as central to the development of their current practices. It is argued that these clubs represent a shadow side of western society, amplifying, and even exalting some of its more dangerous subterranean values, such as the desire for raw power, reckless expansionism and extreme tribal or nationalistic loyalty.

Sports and Crime Until recently, the relationship between sports and crime was hardly addressed by criminologists. In a sector, where financial interests and performance pressure are high, different forms of crime are likely to occur. Considering the wide range of manifestations and the (presumed) scale of crime, as well as the ambivalent social response toward all kinds of irregularities (varying from denial to downplaying the seriousness of the problem), the sports sector cries out to be studied in depth. The present volume includes two presentations that were given at a CIROC-seminar on

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sports and crime. In Chap. 8, Hans Nelen explores the sector of professional football from a money-laundering perspective. After a brief clarification on why the professional football industry is so appealing to persons and organizations looking to launder their criminally acquired assets, Nelen examines how these risks have materialized in practice, based on two cases. In both cases not only the malpractices that took place are highlighted, but also some starting points that may be used to raise barriers against financial misconduct and criminal practices in the football sector. Toine Spapens’ contribution in Chap. 9 deals with the manipulation of the outcome of sports games, i.e., match-fixing. He addresses two issues that seem to have developed into axioms in the debate about match-fixing. The first is that the rigging is mainly the work of ‘outsiders’, including organized criminals, who target ‘insiders’ (players, officials, clubs and even sports associations) for financial gain. Second, match-fixing is usually linked to the highly elusive world of Asian illegal gambling operators. Spapens challenges both ‘frames.’ He argues that the organized crime perspective is too narrow, as ‘insiders’ are equally capable of fixing matches. Moreover, according to Spapens, the illegal Asian gambling market is much more dependent on the online gambling industry than one might think.

Procurement, Corruption and Risk Assessment Recently, the authorities in various countries have become more aware of the necessity of eliminating opportunities for committing organized crime, corruption, and money laundering by means of screening and auditing the economic environment. The basic assumption that lies at the root of this strategy is that authorities should not facilitate criminal activities or do business with criminal entrepreneurs. When criminal individuals or organizations can be excluded from public contracts and/or from receiving subsidies or licences for certain economic activities, the investment of criminal capital and organized crime’s infiltration of the legal economy will be severely hindered. To this end, administrative bodies have now become involved in combating a form of crime that was previously the reserve of the police and the judiciary. The experiences in Italy and the Netherlands show that the emphasis is put on risk assessment at the microlevel: most efforts are directed at the screening of individuals and corporations. In the Netherlands, examples can also be found of screening and auditing activities that are related to entire sectors or branches. Not only the prostitution sector and coffeeshops have been scrutinized, but also the construction industry and the real estate sector. The contributions to this volume on procurement, corruption and risk assessment are both focused on the situation in Italy. In Chap. 10, Paolo Canonico, Stefano Consiglio, Ernesto De Nito, and Gianluigi Mangia describe the various strategies and tools used by criminal organizations and legal firms to take over the Italian public works sector. They found that criminal firms employ a range of methods to enter and control the public procurement business. Based on empirical research,

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including a study of official documents and interviews with leading Italian magistrates, the authors identify three models used by criminal firms to control the awarding of public procurement contracts. Stefano Caneppele’s contribution in Chap. 11 addresses the challenge of putting research findings into practice when it comes to safeguarding the integrity of public contracts. In 2008, the Italian research organization Transcrime developed a risk-assessment model to support Italian law enforcement in its fight against organized crime. The aim was to provide a tool for highlighting public contracts which, according to various criteria, showed a higher risk of infiltration by organized crime. Caneppele describes and explains the model and discusses its advantages, its limitations, and issues related to its possible future implementation.

Criminal Law Enforcement Despite the fact that in many countries dual strategies—partly based on the administrative law (and sometimes even fiscal law)—have been developed to fight and contain organized crime, it has to be recognized that criminal law enforcement still plays a primary role in effectively tackling issues of organized crime. So it does not come as a surprise that during a number of CIROC-seminars in the period 2012–2015 emphasis was placed on specific aspects of criminal law enforcement. We selected four papers that examine different aspects of covert policing and show the diversity of the use of criminal (procedural) law worldwide. In Chap. 12, July Ayling provides an overview of the Australian organized crime response landscape. Her chapter illuminates the anti-association approach that has been taken, as well as the rather ad hoc regulatory measures that currently deal with organized crime infiltration of legitimate businesses. James Sheptycki’s contribution in Chap. 13 focuses on criminal informants, witness protection, trust, and legitimacy in the policing of organized crime. The author observes that, internationally, there is an increasing call to endorse ‘witness protection’ which offers various deals, including clemency, to entice participants in illicit markets to ‘come out’ of the social environment that pervades illicit markets and to elicit incriminating statements on alleged offenders. Sheptycki raises the fundamental question as to how far we should go in the prospect of giving rewards in the sphere of immunity, reduced sentences or offering money. One of his conclusions is that the more is known about the covert practices of policing against serious and organized crime, the more evident the moral hazards of undercover policing become. Jacqueline Ross’ contribution in Chap. 14 contains an analysis of undercover policing. She shows that what sets American uses of undercover tactics apart from their French, Italian and German counterparts is the willingness of American law enforcement agencies to use such tactics against a much wider range of offenders and offences. The comparison between American and German sting operations also reveals that American and German law enforcement agencies differ with regard to their willingness to supply illegal goods and services during those operations. The final Chap. 15 is

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written by Edwin Kruisbergen. In this chapter, the results are presented of one of the few empirical studies of undercover policing in the Netherlands. It focuses on one specific undercover power, i.e., infiltration. Kruisbergen’s research shows that the course of infiltration operations is very unpredictable. This unpredictability especially holds for operations that include intended undercover buys. Strikingly, none of the 12 infiltration operations that Kruisbergen studied worked out as planned. He calls for more empirical research on methods of criminal investigation.

References Garland, D. (2001). The culture of control. Crime and social order in Contemporary Society. Oxford: Oxford University Press. Pardal, M. (2016). Cannabis social clubs through the lens of the drug user movement. Tijdschrift over Cultuur en Criminaliteit, 6(2), 47–58. Siegel, D., van de Bunt, H., & Zaítch, D. (Eds.). (2003). Global organized crime. Trends and developments. Dordrecht/Boston/London: Kluwer Academic Publishers. Siegel, D., & Nelen, H. (Eds.). (2008). Organized crime. Culture, markets and policies. New York: Springer.

Part I

Drug-related Issues

Chapter 2

The Bankruptcy of the Dutch Cannabis Policy: Time for a Restart Henk van de Bunt and Thaddeus Muller

Introduction For many years, the Dutch cannabis policy was considered unique in the world and used as an example of how the issue of cannabis could be approached differently (Korf et al. 1999; Leuw 1991; MacCoun 2011; Van der Stel 2006; Sifaneck and Kaplan 1995). Since 1970s, the sale of recreational cannabis has been regulated through the system of ‘coffeeshops’, where cannabis is sold in small quantities to individual consumers. The Netherlands liked to see itself as a role model, but in 2016 it can be concluded that its coffeeshop policy has ended in a fiasco. Based on its own research, the liberal newspaper NRC expressed the opinion that the approach to the cultivation of and trade in cannabis “is costing hundreds of millions of euros and doesn’t make any sense” (Jensma 2016). It is wholly ironic that at a time when the Netherlands is overcome by doubts about the coffeeshop model, the country of Uruguay and several states in the USA, such as Colorado and Washington, have legalised the recreational use of cannabis. What are the problems with the Dutch policy? What lessons can be learned from the Dutch experience with tolerating the use of cannabis? In order to answer these questions we must first go back in time. What were the expectations and assumptions at the end of the 1960s, when the ‘policy of condoning’ was first designed? We will look at the actual developments and critically assess the initial aims and assumptions of the Dutch policy. Second, we will focus on the developments regarding cannabis cultivation, coffeeshops and organized crime over the past 40 years. H. van de Bunt (&) Department of Criminology, Erasmus School of Law, Erasmus University Rotterdam, P.O. Box 1738, 3000, DR Rotterdam, The Netherlands e-mail: [email protected] T. Muller Department of Criminology, University of Lancaster, Lancaster, UK e-mail: [email protected] © Springer International Publishing AG 2017 H. Nelen and D. Siegel (eds.), Contemporary Organized Crime, Studies of Organized Crime 16, DOI 10.1007/978-3-319-55973-5_2

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The Dutch Cannabis Policy in Historical Perspective1 Though it is commonly thought that cannabis is legal in the Netherlands, it is not. The Dutch situation is much more complex. In short, all drug-related activities (cultivation, sale, possession and national and international trade) have been, and still are, illegal since the introduction of the first Dutch Opium Act of 1928. However, in practice, the Public Prosecutor’s Office (OM)2 is allowed to drop cases if prosecution is considered ineffective or unjust. The OM can use this option to make policy. By means of public directives (the principle of prosecutorial discretion) the prosecutor can suspend the law. The OM may allow actions that are forbidden by law. To be more precise: selling cannabis to consumers is allowed under certain conditions and the same applies to the purchase and possession of small amounts of cannabis. The Dutch policy does not regulate beyond these small transactions. It does not cover large-scale cultivation or the sale and purchase of large quantities of cannabis and this has created a mystery around the coffeeshop. The operator of the coffeeshop is allowed to make a decent profit by selling cannabis, but neither the law nor the prosecutor’s office has drawn up specific rules about the supply to his business. The operator is prohibited from cultivating cannabis or buying stock from dealers. This raises the question as to how he is supposed to run a ‘clean’ business when he’s not allowed to buy what he is allowed to sell.

The State Should Not Preach One might say that the Dutch actually take a delicate position in between prohibition and legalisation. The Dutch themselves use the concept gedogen (to condone) to explain their position in relation to cannabis. Condoning varies from the silent acceptance of lawbreaking to explicitly stating the grounds for condoning. In fact, the condoning started with silent acceptance; gradually in the past there was a transition from silent acceptance to explicit condoning in relation to coffeeshops. This explicit approval of what is legally forbidden is an essential characteristic of the Dutch cannabis policy. In essence, this policy is ambivalent because clear-cut choices for either prohibition or legalisation are avoided. The views on soft drugs were formulated in a period (ca. 1965–1976) during which fundamental debates were taking place in the Netherlands on the extent to which the government is allowed to moralise. These debates focused on the question of how the right to self-determination of the individual citizen vis-à-vis the government could be given shape. During this time, changing attitudes in the 1

This paragraph is based upon: Van de Bunt (2006). The OM is a hierarchically structured central organisation operating under the authority of the Minister of Safety and Justice.

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Netherlands towards pornography, prostitution, abortions, drugs and, later, euthanasia, were translated into legislation. The predominant view was that morality and criminal law should be kept separate as much as possible: the state should not act as a moralist. This view also dominated the debate on drugs: the government ought to respect as much as possible the right of citizens to determine for themselves what drugs or stimulants they wish to use. The 1971 report ‘Ruimte in het drugbeleid’ (Space in Drug Policies), drafted by a working group of experts,3 was particularly influential.4 One of the Working Group’s starting points was that the government should only interfere when certain behaviours endanger the health or life of others (p. 41). The Working Group was of the opinion that no such danger existed when it came to cannabis. Cannabis use might lead to a certain degree of dependency, but to a much lesser degree than the use of tobacco or opiates: “Those who have become dependent on cannabis find it easier to break their habit than those who have become dependent on, for example, morphine” (Werkgroep 1971: 20). The Working Group was also of the opinion that the use of cannabis carried few, if any, physical or psychological risks. Apart from strongly morally based views, expressed in a time during which the state was not allowed to moralise, the public debate on cannabis (as well as the Working Group’s report) was also influenced by a number of factual developments in relation to the use of cannabis and heroin.

The Simultaneous Increase in Cannabis and Heroin Use By the end of the 1960s, cannabis was mainly used by an ever-growing group of ‘countercultural’, well-educated young people from respectable social backgrounds (Cohen 1975) and its use remained largely confined to this alternative youth subculture. At the time, there were no signs of problematic cannabis use by vulnerable youngsters without prospects. In the absence of this type of user, the number of recorded cases of mental or physical complaints resulting from cannabis use was extremely low. This confirmed the view of many that the dangers of cannabis should not be exaggerated. The OM, too, put the seriousness of cannabis use into perspective. Increasingly, the charges against cannabis users were dropped. While the number of reported offences rose sharply, there was also a notable change in the OM’s prosecution policy. From 1969 on, the majority of charges for possession of small quantities of cannabis were dismissed.5 3

The working group was established in 1968 by the Central Bureau for Mental Health and consisted of 14 members representing science, drug counsellors and the department of justice. Its chairman was Louk Hulsman, at the time Professor of Criminal Law in Rotterdam. 4 In addition, there was the more ‘pro-governmental’ Committee Baan, which presented its report on drug policy to the Dutch government in 1972. 5 See De Kort’s overview (1995, p. 216).

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In the summer of 1972, something happened that had a major impact on the creation of the policy of condoning cannabis use. For the first time, cheap heroin was offered for sale on the streets of Amsterdam (Van de Wijngaart 1988: 485; Van Gemert and Verbraeck 1994: 148–149). The sale and use of heroin quickly took off and soon spread to other major cities. After the arrival of young people from Surinam around 1975, the number of heroin users and street dealers increased even more rapidly (Korf 1995).

The Separation of Markets The simultaneous rise in cannabis and heroin use had a significant effect on the revision of the Opium Act in 1976 and the subsequent practice of condoning. The threat posed by the ‘heroin scene’ turned out to be a powerful argument in favour of allowing cannabis use in coffeeshops. There were fears of a mixture of different drug users and drug dealers at the street level. In this situation, the ‘innocent’ cannabis consumer might come into contact with other drugs, which could produce a stepping stone effect. For this reason, cannabis users were allowed to buy and sell cannabis in café-like spaces, which evolved into the idea of the coffeeshop (Van de Bunt 2006: 13–14). From that moment on, the debate on cannabis policy came to be dominated by the idea of the ‘separation of markets’. Instead of the moral argument (the State should not preach), the rational argument was now brought into play. The position at the time was that cannabis and heroin should not be lumped together, in order to prevent the sale of cannabis from ending up in the same criminal circuit as the heroin trade. This, it was thought, would increase the risk of cannabis users falling into the hands of hard drug dealers and being seduced or pressured into moving on to the harder stuff. The ‘separation of markets’ thus became an important point of departure for the policy of tolerance with regard to cannabis and has remained so to this day. In order to effectuate the separation, the revised Opium Act of 1976 introduced a dichotomy between two types of drugs, namely ‘list 1 drugs’, which pose an ‘unacceptable risk’ (heroin, LSD, etc.), and ‘list 2 drugs’ (cannabis). In terms of maximum penalty, a distinction was made between the production of and trade in the two types of drugs. In 1976, the maximum penalty for international hard drug trafficking was increased from 4 to 12 years’ imprisonment, while the maximum penalty for domestic hard drug trafficking was raised from 4 to 8 years. By contrast, the maximum penalty for the cultivation of and/or trade in cannabis was reduced from 4 to 2 years. According to the legislator, this emphasis on the difference between the two types of drugs contributed to the separation of markets. In the political debate, the focus was not on increasing criminal penalties but rather on decriminalising the possession of cannabis. Possession of small quantities of cannabis remained punishable by law, but was no longer treated as an arrestable offence.

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The complete removal of cannabis possession from the penal code seemed only a matter of time. In 1976, the legislator was still hesitant to decriminalise the possession of cannabis completely, for fear of violating international treaty obligations. The legislator’s intent, however, was stated unequivocally in the Explanatory Memorandum: “Use and possession for personal use of hemp products are to be removed from the penal code as soon as possible” (quoted in De Kort 1995: 228). The government promised to make every effort to change the Single Convention. There was a degree of optimism regarding the chances of ‘other countries’ changing their views on cannabis in the not too distant future and the possibility of a separate regime for cannabis within the framework of the treaties.6 With hindsight, it can be argued that this was one of the major miscalculations in regard to the development of the condoning policy. Because possession was still an officially punishable offence, the de facto exemption from punishment needed to be realised through OM guidelines. In the spirit of the revised Opium Act, guidelines were drawn up in 1976 in which the highest investigative and prosecutorial priority was given to hard drug trafficking, while investigations into the possession of small quantities of cannabis were assigned the lowest priority. Since ‘other countries’ in Western Europe have more or less stuck to their positions over the past four decades, condoning has unintentionally been elevated to a more or less permanent status. From 1976 onward until today, there is a state of affairs in which the government allows what it has forbidden: the sale of cannabis. Readers of the relevant documents from the period prior to the 1976 revision of the Opium Act will find little analysis of the cultivation and trade in cannabis.7 The focus is squarely on the user and the separation of markets, while the functioning of the market itself is hardly mentioned at all. Little is also said about the turnover and the profits that can be made from the cultivation and trade in cannabis. The Working Group Hulsman demonstrated a considerable degree of ignorance and naïveté regarding these issues, as evidenced by the following quote: “Because cannabis is often used in small groups, people who buy cannabis for themselves are often inclined to buy some for their friends as well. The profit motive is lacking here, which is why the concept of trade does not apply” (p. 27). The committee’s horizon did not extend beyond the final link in the chain of production and trade. With respect to organized drug trafficking, the Working Group claimed to know that there was no such thing in the Netherlands. Rather cryptically, it posited that the country was too small and not interesting enough for international drug traffickers (p. 27). The Working Group literally states: “In the Dutch situation it will not be given to many to get rich from dealing in cannabis” (p. 48).

6

In his historical analysis of the Dutch drug policy, De Kort observed that many ministers as well as officials at the time thought that, within a few years, other countries would also come to realise that the ban on cannabis had been an historic mistake (1995, p. 253). 7 See De Kort’s overview (1995, pp. 185 et seq.).

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With the benefit of hindsight, it is striking that the profitability of cannabis cultivation and cannabis trade was completely overlooked at the time, even by the OM. The OM thought it is safe to leave the sale of cannabis in the hands of so-called in-house dealers, volunteers who sold cannabis to young people in youth clubs in their spare time, under supervision of the management. Where the in-house dealer was supposed to acquire his merchandise was not mentioned anywhere, and neither were the beneficiaries of the proceeds of the sales. Given these blind spots, the arrival of commercial establishments (coffeeshops) came as a complete surprise to many. Around 1980, the first coffeeshops in Amsterdam opened their doors and the next several years witnessed an explosive increase in their numbers (Van Gemert and Verbraeck 1994: 153).8 The pragmatic administrative and judicial authorities accepted this type of commercial exploitation around the start of the 1980s as a fait accompli. The advantage of coffeeshops is that they take the wind out of the sails of the street trade in cannabis. The street dealers did indeed gradually disappear, and in this way the coffeeshop contributed to the desired separation of markets (Jansen 1994). Nevertheless, at this stage there was still insufficient recognition of the profitability of the sale of cannabis and the extent to which developments in the cannabis market would come to be determined by the economic motive.9

Developments in the Cannabis Market No ‘Normalisation’ of Cannabis In 2016, 40 years after the revision of the Opium Act that provided the foundation for the condoning policy, several essential assumptions and arguments have proven to be outdated or even incorrect. First of all, problems associated with cannabis are no longer being downplayed and the government has adopted a more moralising tone. The policy on tobacco and alcohol has become more stringent, and the same applies to the cannabis policy.10 The maximum penalties for the production of and trade in cannabis have been

According to Jansen, the coffeeshop came about as the result of a kind of ‘condoning policy’ employed by a number of coffee bar owners at the time. These people allowed dealers to sell cannabis in their bars and gradually came to the realisation that they too could profit from the cannabis trade (1994: 171). 9 In 1991, in response to the new phenomenon, the OM formulated a set of criteria to be followed by these cannabis outlets. The so-called AHOJ-G criteria entailed: no advertising; no hard drugs; no public nuisance; no sales to juveniles; no sales of quantities larger than what buyers need for themselves per transaction. 10 A survey by the Netherlands Institute for Social Research (SCP) found that three-quarters of respondents did not think that drugs would be removed from the criminal code in the near future (2020) (SCP 2004: 481). 8

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increased and police investigations into cannabis plantations and dealers have intensified. Over the past 40 years, coffeeshops have been subjected to more and more restrictions. The maximum amount to be sold to one customer per transaction was lowered from 30 to 5 g, the minimum age has been specified at 18 years, and the maximum stock to be held on the premises has been explicitly stipulated (500 g).11 Furthermore, coffeeshops must not cause a nuisance in the neighbourhood12 and are not permitted to sell alcohol or hard drugs or advertise their business. All these conditions, which apply to all coffeeshops in the Netherlands, are formulated and enforced by the OM. In recent years, the municipalities have also manifested themselves in the regulation of coffeeshops. Most recently (August 2016), several major cities decided that coffeeshops are no longer allowed in the vicinity of secondary schools. The city of Amsterdam resolved that all coffeeshops located within 250 m of a school must be closed down. In this way, the city wants to discourage visits to the coffeeshop. The introduction of measures such as these clearly demonstrates that, after 40 years of condoning, the Dutch coffeeshops are still far from being seen as ‘normal’ businesses. Many coffeeshop operators regard the conditions imposed on their businesses as a serious constraint and the number of coffeeshops has fallen from 1460 in 1995 to 582 in March 2015 (Bieleman et al. 1996, 2015). In spite of all the restrictions and rules that have been imposed on them, there is one thing that was never regulated during all this time and that is the ‘mystery of the coffeeshop’, where selling small amounts of cannabis is allowed, but supplying the business is forbidden. The general views on cannabis and the sale of cannabis have not become more liberal either. A large majority of municipalities in the Netherlands (70%) are against the establishment of coffeeshops within their boundaries, and when they are already present, local policies are aimed at freezing or reducing the number of shops (Bieleman et al. 2005: 23 et seq.). With respect to the medical risks associated with cannabis, there is much less certainty than 40 years ago. Certainty about the harmlessness of cannabis has been replaced by doubt and nuance. Cannabis appears not to be as harmless for all users as was first thought in the 1970s. The number of admissions to addiction care facilities for cannabis-related problems has increased (Van Ooyen and Kleemans 2015: 192).

11

The lowering of the personal transaction size and stock limits took place in 1996. In 1994 the procurators general had already set the minimum purchase age at 18. In 2000, the requirement was added that the coffeeshop must be an alcohol-free catering establishment. 12 Efforts have been made to lower the number of visitors by only allowing residents of the municipality where the coffeeshop is established; another attempt involved granting ‘membership of a private club’ to a limited number of customers. This approach has already been abandoned.

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The Unforeseen Expansion of the Cultivation and Trade in Cannabis The Dutch drug policy has always been aimed at removing the sale and use of cannabis as much as possible from the area of criminal law. Insofar as the government had a role to play, its efforts should be focused on public health instead of crime prevention. The experts are generally positive in their assessment of the policy of condoning.13 Their reasoning is that the Dutch policy is ‘pragmatic’ or ‘rational’ and compares favourably with countries where the debate is often dominated by ideological or moral arguments (‘cannabis is bad’). There is, however, more to the story of the Dutch cannabis policy. For a long time, evaluations of the condoning policy focused exclusively on the cannabis consumer and little attention was paid to the fact that the consumption of cannabis is preceded by production and trade. By condoning the retail trade the government, in effect, shielded an illegal market, as the coffeeshops needed constant restocking. At first, cannabis was primarily imported from the Lebanon and Morocco. Later years saw the rise of the so-called nederwiet, cannabis of good quality, grown in the Netherlands and therefore relatively safe for producers and dealers. The volume of nederwiet production is many times greater than what would be needed to supply the Dutch coffeeshops. In recent years, approximately 80% of all cannabis produced in the Netherlands was destined for the export market, according to police estimates (Jansen 2012; Openbaar Ministerie & Politie 2015). Given the level of consumption in the Netherlands and surrounding countries, there is a great deal of money involved in the cultivation and trade in cannabis.14 This involves illegal income derived from illegal activities. The full extent of the effects of the volume of nederwiet production and its consequences first came to light in a parliamentary inquiry into possible wrongdoing in the fight against drugs in the Netherlands. Part of the inquiry consisted of an empirical criminological study on, among other things, the cannabis sector. The researchers concluded that indigenous perpetrators of organized criminality in particular had developed into successful illegal entrepreneurs, sheltered as they were by the policy of condoning. These ‘Dutch networks’ were involved in importing hashish and exporting nederwiet (Parlementaire Enquêtecommissie Opsporingsmethoden 1996, Appendix VIII: 19 et seq.). Later empirical studies on organized criminality shed more light on the size of the turnover of these criminal cooperatives (Klerks 2000; Spapens et al. 2007; Spapens et al. 2015). While the first generation of criminal entrepreneurs consisted of men involved in the large-scale

13

See Korf et al. (1999), De Kort (1995), Uitermark (2004) and Van de Wijngaart (1988, 1990). See, in particular, Korf’s calculations. He estimated the number of kilos of nederwiet consumed annually in the Netherlands at over 35,000. Assuming that an average cannabis plantation contains 100 plants and yields three harvests per year, he estimated the number of existing plantations at around 5000 (2003: 258 et seq.). With an estimated average retail price of 6 euros per gram, this would amount to a turnover of the retail trade in nederwiet of 210 million euros per year. 14

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import of cannabis who were bent on building their own empires, the new market for production and export attracted other actors as well. These were people living in the margin of society (travellers, migrants) who found that they could earn a lot of money by performing odd jobs in the cultivation process, such as supplying space for plantations, arranging electricity for the grow lights, etc. Particularly in North-Brabant, a region bordering on Belgium, a large turnover is made in cannabis cultivation and there is a strong social embeddedness of these illegal practices. Backed by the current ambivalence towards the moral character of cannabis, many people have turned to this illegal trade as a source of income. The Dutch policy provides an easy justification to anyone willing to work in this sector. How can the government blame growers for supplying a product that can be sold legally? The south of the Netherlands and especially the province Noord Brabant has become known as the weed barn of Europe. Half of the confiscated cannabis in the Netherlands is found in this province. Tilburg, which is second largest city in this province, produces close to a billion euro worth of cannabis a year. It is estimated that around 2500 persons work in this illegal industry, of which a significant part is run by the Turkish criminals who intimidate their own community (Haenen 2014; Wittenberg 2015). This industry recently has become more violent, resulting in 17 murders in Noord Brabant, of which half are at least drugs related (Van de Wier 2016). The strong presence of weapons in this industry also shows in the fact that almost all arrested hemp suspects in this region have a gun (Ibid.). The criminologist Bovenkerk warned that these newcomers could become entangled in the grip of “criminal nederwiet entrepreneurs (…) who by their demeanour and level of organisation created a new problem of authentic organized crime” (Bovenkerk and Hogewind 2003). His expectation that small home growers would suffer at the hands of criminal entrepreneurs has not come true. Conflicts, extortion and escalating violence seem to be mostly taking place between criminal entrepreneurs (Spapens et al. 2007). The problem is rather that so many people find it easy to acquire a position in the ‘cannabis industry’. In 2015, the VNG (the Association of Netherlands Municipalities) sounded the alarm about the ‘bankruptcy of condoning’. The mayors expressed the view that the situation has become untenable: “cannabis has become a Dutch product; its cultivation is widespread and takes place in attic rooms, business premises and farmhouses” (VNG 2015: 8). According to the VNG, the coffeeshops have developed into large-scale commercial sales channels, often operating at a supra-local level. The association concludes that organized crime has a great deal of influence on cannabis production and trade in the Netherlands (ibid.: 8). Dutch police and prosecutors are equally worried about the situation in the Netherlands when it comes to the cultivation and sale of cannabis. A 2015 analysis deems the criminal approach to cannabis cultivation ‘clearly necessary’ and points to the undermining effect of the large sums of criminal money being made in this sector (Wittenberg 2015: 14).

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The Closure of Checkpoint: The Bankruptcy of the Dutch Policy of Condoning The condoning policy towards coffeeshops has led to a great deal of confusion, as evidenced by the Checkpoint case. Checkpoint was one of the largest coffeeshops in the Netherlands. It was located in Terneuzen, near the Belgian border. In its heyday, Checkpoint catered to 2500–3000 visitors a day. In 2008, the coffeeshop was closed by the authorities because it had too much cannabis stored on its premises. Between ten and fifteen kilos of cannabis were being sold daily (Mein and Van Ooyen-Houben 2013: 35). After the closure of Checkpoint a legal battle ensued over the lawfulness of the decision to close the shop. The battle lasted for years and provided a wealth of insight into the shortcomings of the condoning policy. It also revealed a clash between the competing interests of different authorities. In the early 1990s, the old inner city of Terneuzen attracted the attention of hard drug dealers because of its strategic location on one of the trade routes from the Netherlands to Belgium and France. The response to the problem was typically Dutch: hard drug dealers were dealt with severely, but the sale of cannabis was facilitated by allowing the establishment of two coffeeshops, one of which was Checkpoint (Mein and Van Ooyen-Houben 2013: 40). The city supported the presence of the coffeeshops as a solution to the public order problems of the 1990s. Checkpoint attracted a large number of visitors, but the mayor saw no objection as he was thinking in the spirit of the separation of markets: every customer visiting Checkpoint would otherwise have bought drugs on the street. The city provided suitable accommodation and a large car park in the vicinity. The mayor even took his colleagues on a guided tour of Checkpoint as an example of the ideal modern coffeeshop. The public prosecutor had a different perspective on the situation. While the mayor sang the praises of the coffeeshop, the OM was preparing for a raid. Because of the massive sale of cannabis, the prosecutor was convinced that the coffeeshop had more than the maximum allowable amount of 500 g of cannabis in storage and that the owner was working with criminal organisations to get access to large quantities of cannabis (Maalsté and Panhuysen 2015: 58–89; Mein and Van Ooyen-Houben 2013: 53–54; Meeus and Rosenberg 2009). The prosecutor instigated a search of the premises on the first of June 2007. He did not inform the mayor because he was afraid that the information would reach the coffeeshop in advance. A total of 96 kilos of cannabis was found, of which 4.5 kg was stored in the coffeeshop. The owner was released from prison within a few days and allowed to reopen Checkpoint because the mayor was afraid that public order would be disrupted if the coffeeshop would remain closed. A second search on 20 May 2008 resulted in the finding of 4 kg of cannabis on the premises. As a result the coffeeshop was closed for 6 months, and in January 2009 it was closed permanently. The actions of the prosecutor came as a total surprise to the owner and employees of the coffeeshop. In the years leading up to the closure of the coffeeshop neither the

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police, nor the mayor or the prosecutor had indicated that the coffeeshop was getting out of control and that it had to decrease its business. In theory, they could have changed the rules for condoning the coffeeshop based on developing insights and communicated this with the coffeeshop owner, who could have changed his course of action. In 2009, 15 persons working for Checkpoint were accused of violating the rules of running a coffeeshop and of forming a criminal organisation. In 2016, there has still been no final ruling in this case, which shows that also in the courts there are different readings of the Dutch cannabis policy.

Conclusion In the NRC comment, “Fighting against cannabis cultivation is completely useless”, to which we referred in the beginning of this article, Jensma states that the responsible politicians are looking away or have no idea how to respond. He refers to the same issues as we have discussed in this article and states that it is time for a new policy, to experiment with pilot projects and start a dialogue. We firmly agree with this statement and have shown in this article how national and international developments challenge the current state of the Dutch cannabis policy. The policy is founded on perceptions which may have been sound in the 1960s and 1970s but are obsolete in the 2000s. The ambiguity of the Dutch cannabis policy has resulted in a situation in which the Dutch state is involved in an expensive ‘war’ against cannabis entrepreneurs and organized crime. One of the major reasons not to legalise the commercial production of cannabis has been the Single Convention and our relations with other countries that are strongly opposed to our lenient cannabis system. But in the last decades, we have seen tendencies towards and beyond the lenient Dutch cannabis system. Many countries have decriminalised the use of cannabis and, as mentioned earlier in this article, countries such as Uruguay and Canada and some US states have already legalised or are about to legalise recreational cannabis. There is a good chance that California, the most populous state with almost 40 million inhabitants, will legalise recreational cannabis in November 2016. It is clear that the Dutch cannabis policy has to change. We agree that the ambiguity of the system is the cause of the current bankruptcy of the Dutch cannabis policy. After almost 40 years of allowing what is prohibited, its credibility has been severely damaged. When the cannabis policy was first designed, assumptions were made that were later shown to be incorrect. The expectation that condoning cannabis would contribute to the ‘normalisation’ of cannabis and an adjustment of international treaties and rules has not been realised. The non-commercial in-house dealers have disappeared, an entire economy has sprung up around cannabis, and a substantial share of the market is now being controlled by criminal organisations. In many respects, the condoning policy has become indefensible. It is virtually impossible to explain. How can it be justified that cannabis can be sold to the

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consumer, but may not be produced or traded? What is the logic behind the 500 g limit on a coffeeshop’s trading stock? Is it allowed to keep the rest of the stock in a car parked in front of the coffeeshop? Is a coffeeshop operator liable to punishment when he buys a few hundred grams of cannabis and carries it to his shop? Many of these incongruities can be attributed to the fact that international treaties and other countries’ views on drugs have left the Dutch government with little room to pursue a divergent cannabis policy. Condoning has always been an emergency measure, designed to resolve the discrepancies between national and international opinions.15 No matter how useful condoning has proved to be in this respect, the government would lose all credibility if this temporary measure would continue to be a permanent policy.

References Bieleman, B., Biesma, S., Snippe, J., & de Bie, E. (1996). Quickscan ontwikkeling in aantal coffeeshops in Nederland. Groningen, Rotterdam: Intraval. Bieleman, B., Goeree, P., & Naayer, H. (2005). Coffeeshops in Nederland 2004. Aantallen coffeeshops en gemeentelijk beleid 1999–2004. Groningen, Rotterdam: Interval. Bieleman, B., Mennes, R., & Sijstra, M. (2015). Aantallen coffeeshops en gemeentelijk beleid 1999–2014. Groningen, Rotterdam: Intraval. Bovenkerk, F., & Hogewind, W. (2003). Hennepteelt in Nederland. Het probleem van de criminaliteit en haar bestrijding. Zeist: Uitgeverij Kerckebosch. Cohen, H. (1975). Drugs, drugsgebruik en drugs-scene. Alphen aan den Rijn: Samsom. de Kort, M. (1995). Tussen patiënt en delinquent. Geschiedenis van het Nederlandse drugsbeleid. Hilversum: Verloren. Haenen, M. (2014). Tilburg wietstad. NRC. Retrieved from http://www.nrc.nl/nieuws/2014/01/25/ tilburg-wietstad-1338670-a625678. Accessed September 31, 2016. Jansen, A. C. M. (1994). The development of a ‘legal’ consumers’ market for cannabis: The ‘coffee shop’ phenomenon. In E. Leuw & I. Haen Marshall (Eds.), Between prohibition and legalization. The Dutch experiment in drug policy (pp. 169–182). Amsterdam, New York: Kugler Publications. Jansen, F. (2012). Georganiseerde hennepteelt. Criminaliteitsbeeldanalyse. Woerden: KLPD. Jensma, F. (2016, juli 27). Vechten tegen cannabisteelt is volkomen vruchteloos. NRC. Retrieved from https://www.nrc.nl/nieuws/2016/07/27/vechten-tegen-cannabisteelt-is-volkomenvruchteloos-3399283-a1513602 Klerks, P. P. H. M. (2000). Groot in de hasj: Theorie en praktijk van de georganiseerde criminaliteit. Antwerpen: Kluwer. Korf, D. J. (1995). Dutch treat. Formal control and illicit drug use in the Netherlands. Amsterdam: Thesis Publishers. Korf, D. J. (2003). De economie van de wietkwekerij voor de Nederlandse markt. Een verkenning. In F. Bovenkerk & W. I. M. Hogewind (Eds.), Hennepteelt in Nederland: het probleem van de criminaliteit en haar bestrijding (pp. 251–263). Utrecht: Willem Pompe Instituut voor Strafrechtswetenschappen.

15

The government itself also indicated that condoning could only ever be of a temporary nature. See TK (1996/1997 25085, nos. 1–2, pp. 3–43).

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Korf, D. J., Riper, H., & Bullington, B. (1999). Windmills in their minds? Drug policy and drug research in the Netherlands. Journal of Drug Issues, 29(3), 451–472. Leuw, E. (1991). Drug and drug policy in the Netherlands. Crime and Justice, 14(1), 229–276. Maalsté, N., & Panhuysen, M. (2015). De wietindustrie. De slag om de achterdeur. Amsterdam: Nieuw Amsterdam. MacCoun, R. J. (2011). What can we learn from the Dutch cannabis coffeeshop system? Addiction, 106(11), 1899–1910. Meeus, J., & Rosenberg, E. (2009). Over de opkomst en ondergang van coffeeshop Checkoint. NRC. Retrieved from http://vorige.nrc.nl//nieuwsthema/drugsbeleid/article2195609.ece/Over_ de_opkomst_en_ondergang_van_coffeeshop_Checkpoint Mein, A. G., & van Ooyen-Houben, M. M. J. (2013). Bestuurlijke rapportage coffeeshop Checkpoint. Utrecht: Verwey-Jonker Instituut. Openbaar Ministerie & Politie. (2015). Verantwoording aanpak georganiseerde criminaliteit 2014. Den Haag: Openbaar Ministerie en Politie. Parlementaire Enquêtecommissie Opsporingsmethoden. (1996). Inzake opsporing. Enquête opsporingsmethoden. Bijlage VIII: deelonderzoek I. Georganiseerde criminaliteit in Nederland: de rol van autochtone groepen. Georganiseerde criminaliteit in Nederland: over allochtone en buitenlandse criminele groepen. Den Haag: Sdu Uitgevers. Sifaneck, S. J., & Kaplan, C. D. (1995). Keeping off, stepping on and stepping off: The steppingstone theory reevaluated in the context of the Dutch cannabis experience. Contemporary Drug Problems, 22(3), 483–512. Sociaal Cultureel Planbureau [SCP]. (2004). In het zicht van de toekomst. Sociaal en cultureel rapport 2004. Den Haag: Sociaal Cultureel Planbureau. Spapens, T., Müller, T., & van de Bunt, H. G. (2015). The Dutch drug policy from a regulatory perspective. European Journal on Criminal Policy and Research, 21(1), 191–205. Spapens, T., van de Bunt, H. G., & Rastovac, L. (2007). De wereld achter de wietteelt. Den Haag: Boom Juridische uitgevers. TK. (1996/97). 25085, nrs. 1–2. Uitermark, J. (2004). The origins and future of the Dutch approach towards drugs. Journal of Drug Issues, 34(3), 511–532. van de Bunt, H. G. (2006). Hoe stevig zijn de fundamenten van het cannabisbeleid? Justitiële verkenningen, 32(1), 10–23. van der Stel, J. (2006). De rust is weergekeerd: 25 jaar drugs, drugsbeleid en drugsgebruikers. Tijdschrift voor Criminologie, 48(2), 131–143. van de Wier, M. (2016). West-Brabant, land van hennep en intimidatie. Trouw. Retrieved from http://www.trouw.nl/tr/nl/4492/Nederland/article/detail/4257547/2016/03/06/West-Brabantland-van-hennep-en-intimidatie.dhtml. Accessed August 31, 2016. van de Wijngaart, G. F. (1988). A social history of drug use in the Netherlands: Policy outcomes and implications. Journal of Drug Issues, 18(3), 481–495. van de Wijngaart, G. F. (1990). The Dutch approach. Normalization of drug problems. Journal of Drug Issues, 20(4), 667–678. van Gemert, F., & Verbraeck, H. (1994). Snacks, sex and smack: The ecology of the drug trade in the inner city of Amsterdam. In E. Leuw & I. Haen Marshall (Eds.), Between prohibition and legalization. The Dutch experiment in drug policy (pp. 145–168). Amsterdam/New York: Kugler Publications. van Ooyen-Houben, M. M. J., & Kleemans, E. (2015). Drug policy: The Dutch model. Crime and Justice, 44(1), 165–226. Vereniging van Nederlandse Gemeenten [VNG]. (2015). Het failliet van het gedogen. Op weg naar de cannabiswet. Den Haag: VNG. Werkgroep van de Stichting Algemeen Centraal Bureau voor de Geestelijke Gezondheidszorg (Werkgroep Hulsman). (1971). Ruimte in het drugsbeleid. Meppel: Boom. Wittenberg, E. (2015). Tilburgse wietteelt vergiftigt Turkse jeugd. NRC. Retrieved at August 31, 2016 from https://www.nrc.nl/nieuws/2015/06/19/tilburgse-wietteelt-vergiftigt-turkse-jeugd1509950-a433538

Chapter 3

Illicit Performance and Image Enhancing Drug Markets Katinka van de Ven

Introduction The use of drugs for the purpose of non-medical human enhancement is a steadily growing phenomenon (Evans-Brown et al. 2012). Indeed, in today’s society people are increasingly turning to a diverse range of legal and illegal pharmaceuticals to enhance their body and mind in an attempt to, for example, look younger or be stronger. These drugs are known as human enhancement drugs (HEDs). HEDs may be divided into six categories: muscle drugs (e.g. steroids), weight-loss drugs [e.g. 2,4-dinitrophenol (DNP)], image enhancing drugs (e.g. Melanotan II), sexual enhancers (e.g. sildenafil), cognitive enhancers (e.g. methylphenidate), and mood and behaviour enhancers (e.g. diazepam)1 (Evans-Brown et al. 2012; Van de Ven 2016). One specific area of interest within the spectrum of HEDs, are drugs that are more frequently associated with professional, amateur and recreational sport: the muscle enhancers, weight-loss drugs and image enhancing drugs. These three categories are commonly referred to as performance and image enhancing drugs (PIEDs) or better known in elite sport as ‘doping substances’. Due to a growing awareness of non-athletic PIED use, and the supposed adverse health effects that go with it, these substances are considered to pose a serious public health problem, instead of being simply a sport issue (Sagoe et al. 2014). A particular concern is that the use of PIEDs by non-athletes occurs without medical supervision, and in amounts that greatly exceed recommended therapeutic 1

The different types of HEDs may be used for various enhancement purposes and are not necessarily used for one type of enhancement. For instance, Melanotan II is used for its tanning effects but is sometimes also used for its sexual properties.

K. van de Ven (&) National Drug and Alcohol Research Centre, University of New South Wales, Sydney NSW 2052, Australia e-mail: [email protected] © Springer International Publishing AG 2017 H. Nelen and D. Siegel (eds.), Contemporary Organized Crime, Studies of Organized Crime 16, DOI 10.1007/978-3-319-55973-5_3

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doses (Larance et al. 2005). Another concern, central to this chapter, is that the majority of PIEDs are not legally obtained through a physician, by means of a prescription, but instead are illegally purchased on the illicit market for PIEDs (Koert and Van Kleij 1998; Oldersma et al. 2002; Paoli and Donati 2015). In particular, sport officials and state authorities suggest that economically motivated individuals and dangerous groups are driving the illicit market for PIEDs, and specifically that ‘mafia-type’ organized crime is the main culprit (Fincoeur et al. 2014). For instance, the World Anti-Doping Agency (WADA) argues that the influx of money into global sports over the past decade has attracted the criminal underworld and led to an explosion in the illegal trade of PIEDs, and a greater potential for match-fixing (The Guardian 2013, February 15). Likewise, law enforcement authorities estimate that around 25% of all PIEDs come from the illicit market. These illicit market products lead back to the health concern outlined above as they are, at times, manufactured in unsanitary conditions with ingredients of questionable origin and efficacy, and therefore may threaten the health of those using PIEDs (Graham et al. 2009). While several studies have focused on the supply side of PIEDs (Koert and Van Kleij 1998; Oldersma et al. 2002; Maycock and Howat 2007; Kraska et al. 2010; Paoli and Donati 2015; Fincoeur et al. 2014; Coomber et al. 2015; Van de Ven and Mulrooney 2017), the topic has been generally ignored in sociology and criminology (Paoli 2012). Instead, most research tends to favour exploring the consumption side of the phenomenon, in particular in relation to elite sport. However, understanding illicit drug markets is important for policy decisions as knowledge on the production and distribution of drugs may assist in designing and evaluating source country interventions, other law enforcement efforts, harm reduction initiatives and treatment (Ritter 2006). Therefore, in order to implement (more) effective PIED-related prevention campaigns, harm reduction initiatives and/or enforcement efforts it is imperative to examine this illicit PIED market. In particular it is important to analyze the supply side from a criminological perspective. The aim of this chapter is to explore the understudied phenomenon of illicit PIED markets by examining the production and supply of PIEDs in Belgium and the Netherlands. Specifically, this chapter explores the social backgrounds, resources and cultures that drive these contemporary illicit markets, and aims to understand and analyze the actors that operate in these PIED dealing environment. While there is a large variation in the types of PIEDs used, the most commonly used substances are anabolic androgenic steroids (henceforth, steroids) (Koert and van Kleij 1998, 2002; Evans-Brown et al. 2012). However, the drug consumption of steroid users is not just confined to steroids, as they often take a mix of PIEDs (e.g. drugs to counteract the side-effects of steroids, skin tanning drugs), in addition to stacking different types of steroids (Evans 2004). The main focus of this chapter, therefore, will be on the production and supply of steroids and the ‘steroid-accessory drugs’ that go along with the use of these substances. Nonetheless, as steroids are often accompanied with the use of other substances the term PIEDs will be used to refer to all of these substances unless stated otherwise. In addition, Belgium and the Netherlands are ideal countries for studying illicit PIED markets as their respective PIED related

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policies diverge dramatically, providing us with an opportunity to explore and asses their impact on the illicit PIED market (both use and supply). While Belgium adopts a prohibitionist and tough stance against PIEDs, emphasizing enforcement measures (supply reduction), the Netherlands advances a more ‘pragmatic approach’ in which some attention is given to health care and prevention (demand and harm reduction). This chapter is organized in five sections. In the first section, I offer a description of the methodology adopted to explore this phenomenon. The second section presents the research findings, which begins with a brief outline of the historical development of illicit PIED markets in Belgium and the Netherlands. I specifically, will focus on the growth of underground labs (UGLs) in the Netherlands, and the rise of Internet trade in Belgium. In the third section I outline the general characteristics of PIED dealers in Belgium and the Netherlands and examine the profession of suppliers in more detail. In the fourth section I discuss the different motivations for dealing; in particular looking at the bodybuilding case study. In the final section, drawing on my findings I critically examine the link between the illicit PIED market, organized crime, and professional sport. This chapter finishes with a discussion and analysis of my overall findings.

Methods As part of my broader research on the production and supply of PIEDs in Belgium and the Netherlands, a number of qualitative research methods were adopted to examine the illicit PIED market. The first method consisted of a content analysis of 64 PIED-dealing cases initiated by criminal justice agencies in the Netherlands (N = 33) and Belgium (N = 31) from 2003 to 2013. Cases were chosen based upon the explicit selection criteria: (1) the case involved the production, supply or any other dealing activity related to PIEDs, and (2) the dealing activities at some point had to have taken place in either Belgium and/or the Netherlands. The criminal justice cases included (extensive) information about the investigations, recorded wiretap conversations, interrogation reports and/or court verdicts. In the Netherlands cases were retrieved through the police and Public Prosecution Service, the Fiscale Inlichtingen- en Opsporingsdienst (FIOD) (Fiscal Information and Intelligence Service), and (3) the Inspectie voor de Gezondheidzorg (IGZ) (Health Care Inspectorate). The police become involved, where it concerns the illegal production and distribution of PIEDs; cases are directed to the FIOD where it concerns fraudulent medication (e.g. counterfeit steroids); and the IGZ undertakes action where it concerns matters of public health (e.g. production of non-licensed medicine). In Belgium, there is one central unit which handles all issues concerning PIEDs: the Hormonencel. In addition, I reviewed other secondary sources for additional information on the Belgian and Dutch PIED market including, but not limited to, government reports, seizure statistics and media articles. Second, ethnographic field research at several bodybuilding sites was included to obtain an in-depth understanding of the inner workings of PIED dealing networks

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in Belgium and the Netherlands. The fieldwork was spread over a time-period of 3 years: from 2010 to 2011 and throughout 2012–2014. During this time, I interacted with bodybuilders who were directly or indirectly involved in the Dutch and Belgian PIED market. During my research I worked at a supplement shop, trained at and visited several (hardcore) gyms, attended bodybuilding competitions and a posing workshop, visited other supplement shops, and conducted voluntary work at bodybuilding competitions. By the conclusion of my fieldwork, I developed a personal network of approximately 70 individuals (30 Flemish and 40 Dutch bodybuilders), who became key informants, casual contacts/acquaintances or mediators. The goal was not to reconstruct particular life stories of certain individuals but to gain insight into how the dealing of PIEDs is perceived of and enacted in bodybuilding subcultures, the structure and organization of these dealing networks, and to understand the sociocultural relations of suppliers in these communities. Third, both authorities and those directly or indirectly involved in the PIED market were approached for interviews. The main reason to include both parties was to reveal the complex and contested dynamic between cultures of control (e.g. police and anti-doping officials) and cultures of deviance (e.g. PIED users and dealers) (Ferrell et al. 2008: 4). The majority of interviews were conducted with officials who were involved in the selected criminal justice cases (e.g. police officer, Health Inspector). Additionally, other stakeholders (e.g. physicians, anti-doping officials) were interviewed or informally spoken to in order to gain a better understanding of anti-doping regulations, PIED policy and their own relationship to the Dutch and Belgian market for PIEDs. In total 32 interviews were held with Dutch (N = 19) and Belgian (N = 13) (state) authorities. All other interviewees consisted of individuals who were involved in the illegal sale and/or production of PIEDs. In total 15 interviews (all male) were conducted with Dutch (N = 11) and Belgian (N = 4) dealers. The interviews lasted 1–2.5 h and consisted of face-to-face, telephone and/or electronic interviews. Importantly, most participants were also spoken to informally at length outside of the formal interviews. In this chapter, pseudonyms are used and in some cases the names and locations of settings have been changed. Finally, several websites were analyzed that sold steroids and other PIEDs, and focused on the Dutch or Belgian market. These websites are referred to as ‘steroid-selling’ as the main product that is being sold is steroids. As Wassink et al. (2010) point out due to the enormous number of websites it is nearly impossible to obtain a complete view of the Internet trade of PIEDs. For example, the words ‘steroids for sale’ on Google NL provided 47,500 results and on Google BE it gave 47,600 hits. In this research, the website analysis acted as a means to obtain background information, for example, about the accessibility of PIEDs, the kind of products being offered, the different payment options, the sort of advice and information being given—not only on PIEDs but, for example, on how to prevent or minimize risks and training advice—, and the language used (a positive, neutral

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or negative tone). For this reason, it was decided to keep the website analysis small including only ten websites. The ten websites were constantly checked throughout my research to see if any changes occurred and if they still existed. The website analysis was based on a similar approach as Cordaro et al. (2011) and included: website language(s), sold products, drug prescription requirements, need for creation of a personal account and subsequent login, rewarding systems, payment and shipment methods, and the use of visuals.

Findings The Development of the PIED Market in Belgium and the Netherlands: From Legitimate Medicine to Underground Labs (UGLs) and Internet Traders The legal status of PIEDs varies considerably depending on the context (see Table 3.1). For instance, as most PIEDs are considered medicine (e.g. the use of steroids to treat low testosterone in men) these substances may be legally obtained through a physician, or depending on the country, the consumption and supply of these products may be in fact legal. Consequently, there are many sources through which dealers and users may obtain PIEDs. Indeed, studies confirm that users acquire their PIEDs through numerous sources such as physicians, friends, dealers and the Internet (e.g. Striegel et al. 2006; Gezondheidsraad 2010; Hall and Antonopoulos 2015). In recent years the Internet in particular has become a growing source to purchase and sell PIEDs via online pharmacies, social media sites and forums (De Hon and van Kleij 2005; Wassink et al. 2010; Cordaro et al. 2011; Hall and Antonopoulos 2015). Indeed, the Internet is of great importance in the development of drug markets, as it leaves people free to obtain prescription medication from countries with markedly different drug laws (Walsh 2011). These prescription medications can be easily shipped to the West, often from Asian countries, via online ‘pharmacies’ (see Table 3.1). Further, PIEDs can be sold both legally (e.g. online pharmacy) or illegally online (e.g. steroid-selling website), and may originate from pharmaceutical (e.g. foreign pharmacy selling PIEDs online without need for prescription) or non-pharmaceutical online sources (e.g. steroids that are illegally produced and then sold online). While the Internet is mentioned as a separate category in Table 3.1, in essence it is all-encompassing as all other categories may fall within this source. So, the Internet is both a source and a method of sale. Until the late 1980s, most PIEDs in the Netherlands and Belgium came from medical sources (Koert and van Kleij 1998). These were either domestic products, for instance, PIEDs were retrieved through a Belgian physician, or they were purchased from countries in which less regulation exists on the pharmaceutical industry. Historically, these pharmaceutically produced PIEDs often came from

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Table 3.1 Overview of sources to obtain PIEDs

countries such as Spain and Greece, but today this has shifted further east to countries, such as Poland, Thailand and India. However, prohibition policies have prevented the diversion of pharmaceuticals and inhibited physicians from prescribing, which has lead to a cut in the supply of medicines and a growth of underground production of steroids and other PIEDs (Llewellyn 2014, April 11). Subsequently, like other countries (Llewellyn 2010; Paoli and Donati 2015), the Dutch and Belgian PIED market has evolved since the early 2000s into a market in which most PIEDs are either counterfeited or locally produced, and are more recently often sold online. However, an important difference between the two countries is that the Netherlands has a large underground steroid production culture, while Belgium predominately imports ‘home-brewed’ steroids and other PIEDs. Two factors specifically contribute to the growth of steroid underground labs (UGLs) in the Netherlands. First of all, the growth of UGLs is facilitated by the lack of regulation on raw material of steroids (and in general) in the Netherlands. Prior to 2013, raw material could be legally imported to the Netherlands and the importation of these raw materials only became a criminal offence when they were processed into a pharmaceutical form (e.g. tablets, injectable steroids). Because of this, the Dutch customs service was not allowed to confiscate raw materials unless they could prove that it was to be converted into a pharmaceutical form. In contrast, Belgium has not allowed the import or even possession of raw materials of hormones (including steroids) since 1974. Nevertheless, in the Netherlands by the end of 2013, an additional measure was adopted and implemented to control for the import of raw materials of medicine. While before anyone was free to order these

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raw materials to the Netherlands, you now need to be registered at Farmatec2 to be able to import these substances. However, in the course of my research several Dutch officials mention that it is quite easy to register with Farmatec and wondered if this barrier will truly have an effect on the existing and/or potential UGLs in the Netherlands. The second aspect that contributed to the growth of UGLs in the Netherlands is the relative ease of producing your own steroids. For example, during my research, together with one of my participants, I undertook all the necessary steps to set up my own UGL. We contacted several companies in order to get all of the necessary supplies (e.g. bottles for filling, capsules), calculated what our costs would be and how much we could sell the product for on the current market, gathered information on how to produce, created a brand, etc. In addition, I approached several Asian pharmaceutical companies in order to develop a better understanding of these distribution channels. With one company located in China I had more extensive contact. This company offered me discounts and included proof that their raw materials were of good quality (e.g. showed me lab results to verify the quality) and that the shipping methods they used were safe (e.g. sending pictures of their concealed shipping methods). Other services were offered to help start up my business (e.g. sending instructions on how to make steroids), and all the necessary equipment to produce steroids could be ordered through them as well (e.g. needles, vials, and tablet press machine). In short, I did everything in order to start an UGL, except for actually ordering the raw materials and producing the product, as this would be considered a felony. This experience revealed to me how easy and cheap it is to manufacture your own steroids in the Netherlands. Furthermore, the minimum know-how to manufacture steroids is easily available through the Internet and word-of-mouth among friends (e.g. see Decorte 2010 in relation to cannabis cultivation). Basically anyone can start his or her own UGL with very little knowledge, effort or risk. Consequently, due to lax regulations UGLs are able to promote and market their products, focus on brand recognition, and do not have to go to great lengths to hide their practices (Llewellyn 2010). The ease with which these raw materials can be ordered to the Netherlands, combined with the relative simplicity of converting these cheap precursor chemicals into potent and profitable steroids, makes the Netherlands an interesting production site for PIED dealers to settle. In contrast, that data shows that in Belgium little underground production seems to take place. Nevertheless, while domestic production plays a minor role in Belgium, the Internet is becoming the main tool for PIED purchases and sales. In 35.5% of the Belgian criminal justice cases a connection with the Internet was established: either the Belgian dealer distributed through a website, or the dealer ordered through a Dutch website to resell the PIEDs in Belgium. In contrast, in only 9% of the Dutch cases a connection was found with the Internet. In all of these

2

Farmatec is concerned with the quality, availability and affordability of medicines, medical devices and blood products. Farmatec’s responsibilities include, for example, providing pharmaceutical permits and opium exemptions. For more information see: http://www.farmatec.nl/.

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cases, the dealer distributed the PIEDs over a website: in particular to the Belgian market. One explanation for the larger, and faster growing role of the Internet in the Belgian PIED market may be the greater emphasis on supply reduction strategies in Belgium. Research on drugs markets has shown that repressive policies often simply lead to an adjustment of distribution methods and distributors (May and Hough 2004; Decorte 2010): in this case the Internet is the new ‘safe haven’ for consumers and suppliers. Indeed, the Internet has many advantages for both users and suppliers: e.g. it is anonymous, the ordering convenience is high (e.g. bigger selection and quick), and easy to transport due to open borders in Europe. It would appear then that the capacity of PIED users and dealers to adapt to the policing in Belgium has been greatly facilitated by the emergence of the Internet and this change of pace may be more accelerated in Belgium due to the repressive climate and the need for Belgian users to look for alternative sources. However, this is not to imply that the Internet does not play a role in the Netherlands. While users may be making less use of the Internet to purchase products compared to their Belgian counterparts, Dutch dealers have capitalized on the Internet to distribute their products, in particular to Belgium and other European countries. The Internet is increasingly being viewed as the driver of contemporary illegal drug markets generally speaking (Van Hout and Bingham 2013). The virtual drug market is dynamic and innovative in its capacity to distribute illegal drugs, create new substances and circumvent legislative controls (Inciardi et al. 2010; Van Hout and Bingham 2013). It is clear that the Internet is becoming a growing source for PIED users and suppliers, evidently; however, the Dutch and Belgian markets are different in this regard, not least due to PIED policy or lack thereof.

The General Characteristics of PIED Suppliers: Legal Professions, Gender and Other Defining Features The data indicates that there is a very fine and ambiguous line between the illegal and legal activities of PIED suppliers. The legal profession of PIED suppliers is often directly related to their illegal activities, and both often work hand in hand with the provision of PIEDs. The professions of the dealers found in this research may be divided roughly into four groups: (1) the fitness industry and other physical professions, (2) the healthcare sector, (3) the food, agriculture and animal health sector, and (4) the no distinctive profession or occupation group (see Table 3.2). The largest group of Dutch and Belgian PIED dealing suspects in in the criminal justice cases was those who had, and in some cases still have, a professional connection with the general gym environment. The few studies available that focus on PIED dealing confirm the heavy presence of gym-related professions and the role of the gym sector in this illicit market (Koert and Van Kleij 1998; Snippe et al. 2005; Striegel et al. 2006; Paoli and Donati 2015). However, Snippe et al. (2005) mention that gym owners, who from the very beginning played a crucial role in the

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Table 3.2 The most frequent professions found in the Dutch and Belgian PIED market Category

Examples of professions

Country

The fitness industry and other physical professions The healthcare sector

Gym owners, personal trainers, owners of a supplement shop and security personnel (Sport) physicians, pharmacists, nurses and employees of health care clinics Vets, breeders, individuals involved in animal sports (e.g. pigeon races) N.A.

The Netherlands and Belgium Belgium

The food, agriculture and animal health sector No distinctive profession or occupation

The Netherlands and Belgium The Netherlands and Belgium

distribution and sales of PIEDs in the Netherlands, have become more careful after the amendment of the Dutch law in 2001.3 As a result PIEDs may be more difficult to obtain through this channel. Still, the majority of studies maintain that the gym is the main arena in which to contact a PIED dealer. It is important here, however, to differentiate between the profession of PIED suppliers and the locations where these products are sold. For example, Striegel et al. (2006) found that 51.9% (N = 81) claimed that they retrieved their steroids exclusively from the illicit market, of which 50% reported to have obtained them through fitness centre visitors. While indeed the gym environment would be the most logical place for gym owners to operate in, this location is not just specific to the dealers with a legal profession in the gym environment. Other types of dealers may use this location, as it is simply one of the best spots to contact customers (see also Paoli and Donati 2015; Coomber et al. 2015). A difference between the Dutch and Belgian market is that in Belgium, PIED suppliers from the ‘healthcare group’ are more frequently involved. One important reason for this is the difference in medical cultures in Belgium and the Netherlands. The organization of the Belgian healthcare system is characterized by a high degree of freedom for both physicians and the patient, while Dutch physicians are more restricted by general guidelines and rebuked when they deviate from these rules (Deschepper 2002). An example related to the PIED market comes from the ‘guidelines for physicians concerning sports medicine treatment’ created by the Netherlands Association of Sports Medicine in 1996. These specific rules contain an injunction on prescribing medicine for doping purposes and instructions on informing sports people about (the risks of) doping. In cases of violations of these guidelines, sanctions may vary from an official reprimand to a definitive disqualification to practice medicine (for more details see Council of Europe 2004, July 29).

3

Prior to the legislation, PIEDs were only regulated by the Wet op de Geneesmiddelenvoorziening (WOG) (Dutch provision of Medicine Act); however, after 2001 it became part of the Wet op de Economische delicten (WED) (Economic Offences Act). The main difference being that unauthorised possession (with an intent to sell), production, import and distribution of medicines are now regarded as an economic offence. As a result of this amendment, punishment was increased and authorities were given more investigative powers (e.g. surveillance teams, wire taps).

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In Belgium, no such guidelines concerning ‘doping’ or ‘PIEDs’ exist. Further, prescribing medication is more normalized and ‘ingrained’ in the Belgian medical culture. In Belgium this has given rise to a certain pattern of expectations, which is often reinforced by the prescription habits of physicians. The cultural differences, along with state guidelines, seem to play an important role in the variations in prescribing PIEDs amongst Belgian and Dutch physicians. The third group of dealers is those with a profession in the food, agriculture and animal health sector. These ‘hormone-dealing’ networks in Belgium and the Netherlands are often comprised of vets and breeders. While some of these PIEDs designed for animals may end up on the ‘human PIED market’, these dealing networks tend to stay separate for the most part. In the majority of cases the suspect(s) in this professional category only supplied to individuals involved in the livestock industry (e.g. farmers) or other animal sectors (e.g. jockeys), and did not distribute to people for human consumption. One reason for this separation of markets is that the skill set required for injecting cattle or supplying to humans is quite specialized, creating barriers for dealers to enter both markets simultaneously. For instance, the dealers connected to the livestock industry are often involved in this market due to their legal occupation, and therefore expertise (e.g. vets or breeders). Subsequently, most of these dealers involved in the sales of PIEDs for human consumption or hormones for animals specialise in a single market. As a result, dealing channels often exist along already established legitimate structures: making it difficult for dealers not involved in this environment (e.g. gym owners) to enter this market. Finally, not all PIED suppliers included in this research have a distinctive profession. The cases and data derived from the field show that this group of dealers usually do not have a specific (personal) connection to the sport or gym environment, but make use of locations, such as gyms, to distribute their products. The growing role of these dealers has also been noted in other research on the PIED market (De Hon and Van Kleij 2005; Snippe et al. 2005; Paoli and Donati 2015; Coomber et al. 2015). Paoli and Donati (2015), for example, refer to these dealers as ‘generalist dealers’: suppliers with no distinctive profession who are willing ‘to provide their goods and services to whomever is interested in them’ (p. 121). These dealers often have no direct link with gyms or fitness centres, provide poor quality PIEDs, and engage in other illegal activities (often the supply of illicit drugs). This group of dealers also seems to make greater use of the Internet to distribute their products. Looking at the other characteristics of the PIED market we see that in both Belgium and the Netherlands the majority of PIED suppliers are men. Considering that the primary consumers of PIEDs, in particular of steroids, are men, it is not surprising that men also dominate the supply side. However, the focus of this research was largely on steroids and drugs that often are taken in combination with these products. Therefore, it could be that if, for example, illegal fat burners, which also fall under the category PIEDs, were more central to this work more female suppliers would have been present in these dealing networks. Furthermore, in the majority of the criminal justice cases the suspects did not have a criminal record, and were quite mature in age. The average age of both Belgian and Dutch PIED

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dealers was 35 years. A reason why most suspects are quite mature and why criminal records are absent is the general lack of regulation in most countries. In other illegal drug markets many dealers’ criminal records are a product of their involvement in a highly regulated market. The younger age of these dealers may also signify the greater severity of punishments leading to long periods of incarceration, and a higher rate of turnover. However, if the PIED market was to become more regulated, one may expect a growth in the criminal records of suppliers, younger suppliers and the introduction of more ‘risk-taking’ or ‘risk-tolerant’ entrepreneurial drug dealers (e.g. see May and Hough 2004; Kerr et al. 2005 regarding drug markets).

Drivers and Motivations: The Different Types of Dealers Involved in the Belgian and Dutch PIED Market Sport officials and state authorities often suggest that the individuals and groups involved in dealing PIEDs are purely interested in making profit and do not care about the health and wellbeing of users, and in particular ‘mafia-type’ organized crime is considered to be a main culprit (Fincoeur et al. 2014). Further, Paoli and Donati (2015) argue that most PIED dealers, who are not related to elite sport, have ‘no other, discernible motive other than profit to enter the trade in doping products’ (p. 99). Much literature on illicit drugs supports the notion that profit is an important driver for many drug producers and dealers to engage in these illegal practises (Desroches 2007; Decorte and Paoli 2015; Jacques and Wright 2014). The Belgian and Dutch authorities and dealers themselves in this research likewise confirm that many PIED producers and dealers are involved in this business to make money. While there are of course plenty of dealers who do not care what they sell and to whom, the data and literature indicate that there are likewise many PIED suppliers who solely supply to friends and have little or no interest in making profit (e.g. Maycock and Howat 2007; Kraska et al. 2010; Coomber et al. 2015; Van de Ven and Mulrooney 2017). These suppliers do not consider themselves as dealers, despite the fact that some make substantial profits, and are predominately involved to cover the costs of their own use or to provide a ‘community service’ (Kraska et al. 2010). For instance, the bodybuilding case study adopted in this research suggests that these PIED dealing groups and individuals are often driven by motivations derived from their social and cultural embeddedness in the bodybuilding subculture wherein they are ‘over-socialized’ into the structure and culture of bodybuilding, and follow the cultural scripts that come with their group affiliation and organization. As a result of the cultural context in which these transactions occur PIED dealers in these bodybuilding subcultures are often not far removed from an individual’s PIED use (e.g. being part of their everyday life) and PIED dealing networks amongst bodybuilders in the Netherlands and Belgium are more likely to exist of friends or ‘friends of friends’, tied together by threads of collecting meaning (Van de Ven and Mulrooney 2017). The data indicates that the

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rationale for these so-called ‘socially oriented suppliers’ to be active in these illegal activities seems to come from participating in certain subcultures rather than pursuing profitable economic opportunities. This is not to argue that financial aspects do not play a role, or that the supply of drugs is irrational, but that there are that there are other motivating factors in determining the market behaviour of these types of dealers beyond pure utility maximization (Seddon 2006). Instead, the bulk of dealers encountered during my fieldwork in the bodybuilding subculture can be best described as ‘minimally commercial suppliers’ (Coomber and Moyle 2014) for whom securing profits is not the primary motivation but rather are involved in trafficking due to the social and cultural settings they inhabit (see Fig. 3.1). Nevertheless, I also came across the so-called ‘market oriented dealers’ for whom securing profits is paramount as their involvement in trafficking derives predominantly from economic incentives (e.g. ‘generalist dealers’, the dealers with no specific profession). In addition, I identified ‘social-commercialist dealers’ (Hough et al. 2003) which are a hybrid in that they sell large quantities of PIEDs and are economically motivated, but retain a deep embeddedness in the bodybuilding subculture (Van de Ven and Mulrooney 2017). Ultimately, PIED dealers may come in a variety of ‘types’ and may be motivated by a plurality of factors, often simultaneously (see Fig. 3.1). Future research on illicit PIED markets should account for the specific characteristics of producers and suppliers and their motivations to manufacture and/or distribute PIEDs in relation to the cultural context in which the markets exist.

Organized Crime, Sport and the PIED Market In Belgium, concerns were raised about the involvement of organized crime in the PIEDs market when a government livestock inspector was murdered in 1995 by the so-called ‘hormone mafia’ (Gollin 2002, April 15). In response, the Hormonencel was created that year to control for the use of hormones in the livestock scene, and in 2003 the PIED market for human consumption was included in their task description. When looking at the first two annual reports of the Hormonencel (2004, 2005) these criminal groups are described as ‘organized crime’ with a ‘hierarchical structure’ which is displayed in ‘the form of a pyramid. The higher in the pyramid, the smaller but more specialized the actors become’ (Hormonencel 2004, 2005). However, after 2005 this model was abandoned and the word ‘organized crime’ is rarely used in reports, except in relation to pharmaceutical crime. In the Netherlands, the government began to undertake action due to the growing evidence of non-medical PIED use (e.g. Vogels et al. 1994) and, more importantly, the establishment of the growing illicit market for PIEDs (e.g. Koert and van Kleij 1998). Consequently, the law was amended in 2001 in order to more effectively combat the illicit PIED trade and specifically to curb the involvement of criminal organizations (Snippe et al. 2005). In 2002, several participants in the research of Oldersma et al. (2002) indicated that the PIED trade in the Netherlands was coming

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Fig. 3.1 A typology of PIED dealers based on their sociocultural embeddedness and commercialist interests

to be under the control of organized crime. However, Snippe et al. (2005) suspect that this assumption was based on one particular case in 2000 in which a criminal organization distributed PIEDs on a large scale. I have also spoken to a Dutch official involved in that particular investigation who remarked that he would not describe the suspects as organized crime; ‘Yes, it was organized, but there was nothing more to it’. ‘Organized’ in this context referred to the fact that the suspects used a fake company to import PIEDs, yet they did not share any of the ‘typical’ characteristics of organized crime (e.g. violence, corruption) (Varese 2010). Although Snippe et al. (2005) did find some indications for the involvement of criminal organizations, this was rather minimal. Nonetheless, in both countries by the end of 1990s and early 2000s the fear of organized crime was growing and

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prompted both Belgian and Dutch politicians to prioritise the repression of PIED production. This reaction was quite typical for that time period as organized crime appeared high on the political agenda in the Netherlands (Van de Bunt 2004), and Belgium (Fijnaut and Paoli 2004). In both countries, politicians and the general public were concerned about the problem of organized crime and were in favour of far-reaching measures. Thus, it not surprising that these worries were likewise projected onto the illicit PIED market. However, in Dutch and Belgian studies on organized crime and in police reports this type of crime is rarely linked to the PIED market (for the Netherlands see van de Bunt 2004; Kruisbergen et al. 2012, and for Belgium see DSB-SPC 2010). The absence of organized crime in the PIED markets of other countries has likewise been confirmed as indicated by the research of Paoli and Donati (2015) and in other official documents (e.g. see ACC 2011; Interpol 2014). Rather, research on the global markets for PIEDs has consistently indicated that organized crime plays a limited role due to the ease at which these drugs can be obtained, and the wide user base, which results in an extremely broad supply base. As a result, the ‘ready availability of these drugs reduces opportunities for organized crime groups to control or have significant influence in this market’ (ACC 2011: 70; emphasis added). Likewise, in this research authorities predominantly described PIED dealing networks in Belgium and the Netherlands as ‘single-working’ cells, loosely structured and non-violent. Furthermore, as bodybuilders form one of the largest using groups in the PIED market it would not be unreasonable to suggest that bodybuilding subcultures are an ideal target market for organized crime, and most of all economically rational dealers. Yet, in this research there were no indications of organized crime, nor that economic incentives were the primary motivator for dealing, even on a wholesale level. As indicated above these PIED suppliers are often neither (solely) motivated by profit nor are part of a larger dealing network. Rather, these dealers are often ‘over-socialized’ into the structure and culture of bodybuilding, and follow the cultural scripts that come with their group affiliation (Van de Ven and Mulrooney 2017). Likewise in the elite sport scene much of the available evidence would suggest that the problem of doping supply is internal to the world of sport (Athey and Bouchard 2013; Fincoeur et al. 2014; Paoli and Donati 2015). While, the dealing of PIEDs has been fashioned as a problem of ‘outsiders’, the ways in which sport structures create and promote doping opportunities have been ignored, thereby neglecting the problem of insiders. For example, when looking at several recent large-scale doping scandals such as the Armstrong affair, or the recent revelations of anti-doping corruption in Russia the accused are predominately sport physicians, coaches, anti-doping officials and the athletes themselves. Indeed, in several Belgian PIED cases included in this study connections were drawn between elite sport and the healthcare sector, such as sport physicians, general practitioners and pharmacies (see also Paoli and Donati 2015). For example, in 2010 a cyclist was discovered to have obtained a large amount of PIEDs through a general practitioner. The cyclist also ordered the PIEDs through foreign pharmacies located in Italy, Spain and Switzerland. The Dutch and Belgian cases

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and interviews included in this research indicate that most elite athletes retrieve their products from someone close top them (e.g. coach, physician) or through regular medical channels (e.g. general practitioners). However, the expansion of anti-doping to include doping suppliers appears to be deterring the medical experts from staying in the market (Fincoeur et al. 2014). Consequently, a change may be occurring in the market; whereas PIED suppliers related to elite sport were traditionally ‘cultural products’, use is now often a secretive practice and socially oriented suppliers (e.g. sport physicians, coaches) are no longer prepared to take risks of supplying PIEDs. The clandestineness of doping practices has led elite athletes who dope to increasingly consider the illicit market as a potential source for PIEDs (Fincoeur et al. 2014). Nevertheless, doping in elite sport, for now, appears internal to the world of sports, and despite the claims of anti-doping officials, seems to be far less related to the ‘criminal underworld’ and ‘organized crime’.

Conclusion and Discussion Little empirical research exists on the production and supply of PIEDs, resulting in limited (scientific) knowledge of this illicit market. Consequently, PIED-related policies, programs, and strategies in Belgium and the Netherlands are often made without having proper knowledge of their impact on the illicit PIED market. Such actions therefore may result in greater economic, social and individual harms rather than less (e.g. no access to medical services, growing underground production). The aim of this chapter was to fill this knowledge gap by providing insights into the illicit production and distribution of PIEDs in Belgium and the Netherlands. The findings presented in this chapter suggest that PIED markets in the Netherlands and Belgium have evolved over time: what began as the non-medical use of legitimate medicines has turned into a market in which most steroids are produced illegally and are often sold online or bought through a personal contact. An important difference between the two countries is that in the Netherlands more domestic underground production is reported to be taking place than in Belgium. A particular worry of these growing UGLs is that the quality of these illegally produced steroids in general is quite poor (De Hon and van Kleij 2005; Graham et al. 2009). It is important to raise awareness regarding the potential health consequences of adulterated PIEDs, and to implement harm reduction strategies, such as testing services, in order to promote and protect the health of users (Kimergård and McVeigh 2014). However, the growth of UGLs in the Netherlands is not simply a consequence of their lack of policy. In countries with a repressive or ‘zero-tolerance’ approach a growth in domestic production has been recorded as well. For instance, a similar trend was recently noted in Australia, where the use and possession of PIEDs is criminalized (Goldsworthy and McGillivray 2015, May 20). Indeed, the expansion of domestic steroid production is not simply a Dutch development, but is a growing problem in many countries (Llewellyn 2010; Paoli and Donati 2015). Even in Belgium the domestic production of steroids is slowly

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rising. In both Belgium and the Netherlands, and other countries, there is a significant demand for PIEDs, which is likely to grow in the upcoming years. In addition, ‘production techniques’ are no longer monopolized by the pharmaceutical industry or a small group of illegal producers, but rather are now easily available through the Internet, allowing for many individuals to enter this market. As long as the demand for PIEDs remains strong the illicit production and supply of PIEDs will continue to exist, regardless of the legal barriers present in a country. The increase in steroid production, therefore, cannot be explained alone by the lack of regulation in the Netherlands and the over-regulation in Belgium. Nevertheless, while domestic production plays a minor role in Belgium so far, the Internet is rapidly becoming the main tool for PIED purchases and sales. Likely, due to the more repressive policies in Belgium, Belgian users seemed to have less accessibility to personal contacts, and instead resort to other sources such as the Internet, or obtained their PIEDs through contacts in the Netherlands (Van de Ven 2016). The products bought over the Internet predominately consist of (Dutch) underground brands, and to a lesser extent exist of legitimate medicines. Nevertheless, while Belgian users may be making greater use of the Internet, Dutch dealers seem to have adopted this tool to distribute their products, in particular to Belgium and other European countries. Indeed, unlicensed and counterfeit PIEDs are easily accessible through the Internet. Aside from the issue that PIEDs may be bought for cheap and without a prescription (most PIEDs are medicine), the Internet may also serve as a substantial repository of illegal advertising and misinformation about PIEDs. For example, Cordaro et al. (2011) showed that information on steroids is often displayed in a positive light (e.g. limited adverse effects, good results) and recommended doses are often much larger than those indicated for therapeutic purposes. Subsequently, the growing role of the Internet may decrease protective factors (e.g. medical advice), while simultaneously increasing many risk factors (e.g. availability of poor quality PIEDs) (De Hon and van Kleij 2005; Wassink et al. 2010). The Internet has redefined the relationships between those who use PIEDs, those who sell PIEDs, and those who attempt to regulate and warn about the harms of PIEDs. This shift from medical products to illicit market sources in both Belgium and the Netherlands has also led to increased health risks and the rise of market-oriented suppliers (e.g. the dealers with no distinctive profession, generalist dealers). The problem with the rise of market-oriented dealers is that they bring with them a host of increased risks such as loss of expert advice (e.g. cycles), PIEDs of bad quality and a ‘hardening’ of the market in general (De Hon and van Kleij 2005; Paoli and Donati 2015). At the same time, the bodybuilding case study outlines the need to replace totalizing claims of anti-doping and state authorities regarding the illicit PIED market, with an exploration of the multifarious characteristics and motivations of PIED dealing networks in the creation of evidence-based policy. It is clear that economic incentives play a role for many drug producers and dealers, yet there is an increasing body of work describing manufactures and suppliers who are not interested in making profit (e.g. Hough et al. 2003; May et al. 2005; Potter 2009; Potter et al. 2011; Coomber and Moyle 2014). Indeed, the bodybuilding case study

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found no indications of organized crime, nor that economic incentives were the primary motivator. Rather, these dealers are often ‘over-socialized’ into the structure and culture of bodybuilding, and follow the cultural scripts that come with their group affiliation. Understanding the dynamic relationship between PIED users, their environment, and market operations is important when exploring policy options, as it enables and provides clearer understanding of the impacts of policy choices (e.g. law enforcement, education and/or treatment). While the case study may not be extrapolated to explain the characteristics and motivations behind other PIED dealing networks, it contributes another empirical case study of the proximate realities of PIED dealing networks from which we may draw some general inferences. The current anti-doping policy (the ‘war on doping’) resembles the ‘war on drugs’ on several levels such as a zero-tolerance approach and high cost using public money for repression and control (Kayser and Broers 2012). While the war on doping has yet to reach the extent of the war on drugs, a similar policy trend can be seen as the anti-doping policy elite and many countries around the world (in particular in Europe) continue to ratchet up their response to doping. Currently, the Netherlands is being pressured, both domestically and internationally, to adopt tougher measures towards the production and distribution of PIEDs. However, looking at the history of drug prohibition is seems more likely that a zero-tolerance approach will lead to more harm (Decorte 2007, 2010; Costa 2008; Kayser and Broers 2012). Importantly, increased law enforcement could potentially become a self-fulfilling prophecy as it incentivises more criminal actors to enter the market: which implies more violence and relations with other criminal activities, and possibly attracting (more) organized crime (Dorn and South 1990; May and Hough 2004; Caulkins and MacCoun 2003; Decorte 2010). We can, therefore, speculate that if the Netherlands becomes ‘tough on PIEDs’ the domestic production of PIEDs in Belgium is likely to increase, and/or that the production and distribution in the Netherlands will simply relocate to a country with a more lax regulation, while the demand for PIEDs in both countries will most likely remain. Therefore, drug policies should aim to adapt and evolve in response to emerging trends and evidence in order to reduce (potential) harms.

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Part II

Human Trafficking and Prostitution

Chapter 4

Legal Prostitution Systems in Europe Ronald Weitzer

Introduction When decriminalization and legalization of prostitution are debated in legislatures or in the media, it is usually in the abstract, without reference to actual legal prostitution systems.1 Similarly, most academic studies have been conducted in nations where prostitution or its preconditions are criminalized. This means that both knowledge and public policy are heavily skewed in the direction of a single type: illegal sexual commerce. Much less is known about nations that have more tolerant policies and thus offer an alternative to criminalization (Weitzer 2012). This chapter examines selected aspects of policies regarding prostitution and human trafficking in Europe. The first section critiques two flawed approaches to the question of whether prostitution policies are correlated with particular outcomes for the participants or for the society in question. I then examine some specific European cases, highlighting differences between distinct policy models.

An earlier version of this chapter was presented at a conference sponsored by the Center for Information and Research on Organized Crime, University of Utrecht, The Netherlands, December 3, 2014. “Legalization” here means decriminalized and state-regulated. The nature of the regulations vary considerably across legal regimes, from minimal (e.g., New Zealand) to extensive (e.g., Nevada USA, Queensland Australia) (Weitzer 2012).

1

R. Weitzer (&) Department of Sociology, George Washington University, Washington, DC 20052, USA e-mail: [email protected] © Springer International Publishing AG 2017 H. Nelen and D. Siegel (eds.), Contemporary Organized Crime, Studies of Organized Crime 16, DOI 10.1007/978-3-319-55973-5_4

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Flawed Analyses Type I: Similar Outcomes Regardless of State Policy Some scholars claim that a nation’s prostitution policy is largely or totally irrelevant. They take the controversial view that it matters little whether prostitution is legal or illegal and, if legal, the nature of government regulations. Prostitution is policy-resistant, they claim. What appear to be diametrically opposed regimes (Sweden, Holland, Germany, etc.) have little or no effect on commercial sex practices. At the macro-level, there is an “invisible hand” (globalization, neoliberalism) that overdetermines national or local realities. At the micro-level, sex workers are depicted as indifferent to state policies and incorrigible to regulation. This view has been advanced by Bernstein (2007) and Agustín (2008). They argue that what appear to be radically different prostitution policies have produced either “similar” outcomes (Bernstein) or had “no effect” (Agustín) on sex workers or on official regulation of the sex trade, and that all policy regimes are a “failure” (Agustín): What is most remarkable about the disparate array of legal strategies that Europeans and North Americans have implemented in recent years is how singular they have been in effect. . . . Despite some important surface-level contrasts. . . . regimes which legalize the sex trade as well as those which claim to seek its elimination share several common threads which link them to larger changes in the global economy. (Bernstein 2007, pp. 164, 166) Large numbers of entrepreneurs and workers, wherever regulation is found, always ignore the rules and fail to participate. Given the failure of such regimes everywhere to be and do what they claim, it is not rational to continue to argue over which of them is best. . . . Projects to control prostitution do not fit into any rational framework of social progress. (Agustín 2008, pp. 76, 83, emphasis added)

These claims are empirically unsustainable. Different regimes may have some similar effects on the ground, but Bernstein and Agustín disregard important qualitative differences between nations. There is a stark difference—both symbolic and practical—between nations where prostitution is officially condemned and participants demonized and criminalized (e.g., Sweden, France, China, United States) and nations where workers and clients are legally free to engage in sexual commerce (e.g., the Netherlands, New Zealand, Germany, Australia). Law and state policy do impact the social organization of sex work, power relations among participants, and their lived experiences (Scoular 2010). Even if many actors ignore the rules (e.g., not registering, not paying taxes, avoiding mandatory health exams), it still makes a difference to them whether they are regarded as criminals or legal actors with rights. And they also have opinions about specific laws and regulations. Although Bernstein and Agustín claim that their conclusions are empirically grounded, the evidence they present is meager and their claims are contradicted by other research. Research findings in many nations show that the type of policy regime in place can influence—positively or negatively—what happens on the ground (see Weitzer 2012). Some examples follow:

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• All of the 100 migrant sex workers interviewed in London believed that decriminalization “would improve their living and working conditions and enable them to exercise their rights more fully” (Mai 2009, p. 6). • Analysis of surveys administered to 4559 female sex trafficking victims in Europe (who had received assistance from field missions run by the International Office for Migration) concluded: “These results confirm results of many other studies that have looked at the consequences of criminalization policies. Whenever sexwork has been criminalized, sexworkers have been moved to more secluded places with the consequences of being more exposed to different kinds of risks: assault, fraud, control, and lack of freedom” (Di Tommaso et al. 2009, p. 155). These and many other studies around the world lead to the opposite conclusion from that advanced by Bernstein and Agustín. Prostitution policy has important consequences for the participants and for the wider society.

Type II: Flawed Multinational Comparisons Some recent multinational studies examine whether countries where prostitution is legal have better or worse human trafficking records than countries where prostitution is illegal. Using information on 161 countries from the United Nation’s Office on Drugs and Crime (UNODC), Cho et al. (2013) and Jakobsson and Kotsadam (2013) attempted to determine whether national prostitution laws were related to the prevalence of human trafficking. Yet UNODC had warned against using its figures either for one nation or cross-nationally, because “the report does not provide information regarding actual numbers of victims” (UNODC 2006, pp. 37, 44–45). UNODC’s caution was based on the unstandardized definitions of trafficking across countries (with some conflating trafficking, smuggling, and irregular migration); the widespread lack of transparency in data collection and reporting; and the reliance on different sources across the 161 countries (the media, research institutes, government agencies, NGOs, IOs). For some countries, only one of these sources was available. The authors concede that “the underlying data may be of bad quality” and are “limited and unsatisfactory in many ways” (Jakobsson and Kotsadam 2013, p. 93) and that it is “difficult, perhaps impossible, to find hard evidence” of a relationship between trafficking and any other phenomenon (Cho et al. 2013, p. 70). Yet they nevertheless treat the UNODC report as a data source and draw profound conclusions about the relationship between trafficking and national prostitution laws, concluding that human trafficking is more prevalent in countries with legal prostitution than countries where prostitution is criminalized. Not only are the UNODC “data” unsuitable for this exercise, given the problems noted above, but the authors’ analyses are severely flawed as well • The amount of trafficking is influenced by a variety of push and pull factors— not just the legal regime at the destination. It is difficult to control for these

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factors when many of them cannot be measured across all 161 countries in the study. A cross-sectional design (at a single time point) is used to measure something that should be examined longitudinally: the amount of trafficking before and after legalization. The latter approach would require reliable baseline figures to compare to reliable recent figures—neither of which exist. The authors use aggregate national trafficking estimates (which combine labor, sex, and other kinds of trafficking) in their attempt to assess whether legal prostitution makes a difference. This means that there is a gross mismatch between the trafficking figures and prostitution law: In assessing whether prostitution law is related to the incidence of trafficking, figures on sex trafficking alone should be used, not the totals for all types if trafficking. The core construct “legal prostitution” is operationalized crudely. The authors dichotomize the variable, demonstrating little appreciation of variations within it— particularly (1) the different types of prostitution that are legally allowed and outlawed, which differs radically from one legal system to another, and (2) the different kinds of regulation inscribed in diverse national laws. Legal prostitution is not monolithic in the activities that are permitted or the kinds of regulations in effect (Weitzer 2012). Both studies are restricted to “law on the books,” not “law in action.” To base an analysis solely on the law, rather than whether and how it is implemented, ignores potential disjunctions between law and enforcement. It is quite possible that nations where some type of prostitution is legal may have superior mechanisms for detecting sex trafficking (Weitzer 2012), a variable missing in both studies. A significant number of confirmed victims in a state with legal prostitution may be an artifact of superior oversight, investigations, or reporting by the authorities.

Unfortunately, these two studies were embraced by politicians and policy makers in several countries, and used to justify new criminalization laws. And a subsequent study by Cho (2016), using data on 149 countries from another source (an anti-trafficking policy index) recapitulates many of the same errors as Cho’s earlier study. The more recent study uses information on countries’ level of protection for human trafficking victims, which is then correlated with whether “prostitution is allowed in a country.” Information on prostitution laws is drawn from the U.S. State Department’s annual country reports on human rights, which may be defective, and Cho again mismatches the dependent variable (all human trafficking, not sex trafficking per se) with the independent variable (prostitution law). Without citing any source, Cho claims that “prostitution is closely linked to human trafficking because sex trafficking for the purpose of prostitution is the most common form of human trafficking and constitutes the largest fraction of trafficking victims” (Cho 2016, pp. 325–326). This claim is contradicted by the International Labour Organization (ILO) and the U.S. State Department. According to the ILO, “Forced commercial sexual exploitation represents 11% of all cases” of forced labor worldwide (ILO 2005, p. 12), and the State Department declares that “the majority

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of human trafficking in the world takes the form of forced labor” (USDS 2010, pp. 8–9). Cho’s (2016) study is just as flawed as the 2013 study, rendering the conclusions equally worthless. The two areas in which human trafficking data are most reliable pertain to (1) officially certified victims and (2) prosecutions and convictions of traffickers. For Europe, the U.S. State Department reports that, from 2008 to 2014, the number of “identified” victims of human trafficking totalled 76,553 (USDS 2015, p. 57).2 The annual numbers increased somewhat during this time period: from 8981 in 2008 to 10,185–11,910 for 2011–2014. For those who were criminally implicated in trafficking from 2008 to 2014, this source reports 21,590 prosecutions and 12,947 convictions in trafficking cases throughout Europe (USDS 2015, p. 57). These aggregate data are limited by the unstandardized ways in which nations record the figures. In the Netherlands, for example, the agency CoMensha collects data on trafficking victims, but its figures are problematic: “CoMensha registers officially identified and probable trafficked persons. There is no official identifying organization that determines whether the reported trafficked persons are ‘real’ victims of trafficking or not” (CoMensha 2010, p. 5). It is not clear why the agency does not report separate figures for officially identified victims, distinguishing them from probable victims. Because the Dutch figures combine the two, it is impossible to use them for any purpose, including tracking changes over time in victimization rates. And the Dutch trafficking office itself points to the potential for “false positives in CoMensha’s records, meaning that a case registered as human trafficking is in reality not, since possible victims are reported to CoMensha and there is no formal assessment” to determine whether these individuals are bona fide victims (National Rapporteur 2013, p. 1). But yet another problem with the Dutch figures is the vagueness of one of the provisions (§273f[c]) of the country’s trafficking statute, which criminalizes any person who “recruits, takes with him, or abducts a person with the intention of inducing that person to make himself/herself available for performing sexual acts with or for a third party for remuneration in another country” (National Rapporteur 2010a, p. 151). The problem with this provision is the word “inducing.” To induce is to persuade, cause, or influence an outcome. The process of recruiting or transporting another person and inducing him or her to sell sexual services may be done without deception or coercion, and thus not qualify as human trafficking according to international law. This provision of Dutch law would more correctly fall under the rubric of smuggling—with consent among the participants—rather than trafficking. And this means that the official Dutch figures on probable and identified victims is even more problematic than simply grouping these two categories together: the law itself is overly broad. Figures on prosecutions and convictions of traffickers offer more clarity (see Verhoeven et al. 2015). Dutch figures combine cases of labor exploitation, sexual exploitation, forced services, and criminal exploitation. The number of prosecuted

This report does not define “identified,” but it appears to mean officially certified victims.

2

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cases yielding convictions was fairly stable for years—67 in 2001, 79 in 2003, 73 in 2007, 77 in 2011—but increased to 151 in 2013 (National Rapporteur 2010b, 2014). Of the 691 individuals convicted between 2000 and 2008, 82% were males; 33% were Dutch nationals, 8% Bulgarians, 8% Turks, 7% Romanians, and 6% Moroccans (National Rapporteur 2010a, pp. 227, 229). The increase in convictions in 2013 does not necessarily mean that human trafficking is increasing and may instead be an artifact of increased investigation by law enforcement authorities. The Dutch government’s trafficking agency made this point in one of its annual reports: It is often said in the media that the lifting of the general ban on brothels [in 2000] has led to more THB [trafficking in human beings]. This is not a correct conclusion. Before the lifting of the general ban on brothels, THB and other (criminal) abuses were taking place in all sectors of prostitution. Some of these sectors are now under control and can be assumed to have rid themselves of their former criminal excesses, or are doing so. . . . It is possible that THB is increasing in the illegal, non-regulated, or non-controlled sectors. If this were to be the case, it still cannot be assumed that the extent of THB is now at the same or even above the “old” level it was before the ban on brothels was lifted. It is in fact likely that this is not the case. (National Rapporteur 2005, p. 91)

One implication is that legalization can help reduce trafficking, at least in the legal prostitution sector, due to greater government oversight. In the Netherlands, a Ministry of Justice report concluded that, since legalization in 2000, “it is likely trafficking in human beings has become more difficult, because the enforcement of the regulations has increased” (Daalder 2007, p. 84). The Dutch trafficking agency notes that it is “conceivable that legalization of prostitution has an impact in making human trafficking visible” (National Rapporteur 2013, p. 4). Cho (2016, p. 323) claims that “liberal prostitution policy is at best irrelevant to [human trafficking] victim protection, if not negative,” and that “Germany with legalized prostitution is known to have high inflows of human trafficking.” The basis for these claims is not revealed, and the vague “known to have” assertion violates a standard scientific canon: documented evidence. In April 2014, the upper chamber of the German legislature (the Bundesrat) found no evidence that trafficking had increased in the country. And official statistics arguably confirm this. Official statistics show a slight decrease, since 2002, in the number of persons formally certified as trafficking victims. Table 4.1 shows figures for sex trafficking, pimping, and exploitation of prostitutes before and after the law was liberalized in 2002 (decriminalizing third-party involvement in prostitution as long as it does not involve exploitation or abuse). German penal law §232 criminalizes two acts: (1) anyone who “exploits another person’s predicament or helplessness arising from being in a foreign country” and (2) anyone who “induces a person under 21 years of age to engage in or continue to engage in prostitution.” Coercion is irrelevant regarding those under 21: individuals are defined as victims of exploitation simply by virtue of their age. The figures in Table 4.1 show that the pattern in sex trafficking (§232) shows a consistent decline in all categories (cases, victims, suspects, and convictions) since the 2002 law reform. The number of cases, for example, decreased from 2000 to 2014: from 1016 to 482.

Convictions

Victims

Suspects

Cases

Suspects

Cases

Convictions 927 773 799 855 935 633 642 681 671 601 684 692 695 534 485

148 151 159 152 141 136 138 123 138 135 115 117 115 77

§232 StGB (“Trafficking in women for the purpose of sexual exploitation”) Cases Victims Suspects Convictions

2000 1365 1915 1133 153 1104 1304 766 151 1016 1197 2001 929 1295 904 138 1010 1101 620 163 746 923 2002 620 776 547 57 667 793 563 151 827 988 2003 326 439 297 25 578 685 519 113 850 1118 2004 194 245 248 14 476 578 535 71 820 1074 2005 130 205 141 4 436 612 406 92 621 731 2006 103 130 109 4 422 504 388 76 712 802 2007 58 85 67 11 360 396 353 47 655 791 2008 58 101 72 7 282 344 272 78 704 782 2009 62 94 79 3 298 330 257 33 811 978 2010 50 56 48 1 264 314 288 36 621 761 2011 62 64 62 1 238 253 257 32 636 753 2012 44 58 57 2 229 267 242 22 558 642 2013 35 45 39 2 273 321 278 15 473 555 2014 45 73 46 256 305 265 482 524 Source http://www.bka.de/nn_193232/DE/Publikationen/PolizeilicheKriminalstatistik/2014/pks2014_node.html?_nnn=true

Victims

§181a StGB (“Pimping”)

§180a (“Exploitation of prostitutes”)

Table 4.1 Prostitution and trafficking offenses in Germany, 2000–2014

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Procuring/pimping was a crime prior to 2002 but is no longer an offense provided that a worker’s “personal or financial independence” is not curtailed, for instance by dictating the type of services he or she must provide, forcing them to service any particular client, preventing them from leaving prostitution, or restricting their freedom in other ways. The latter type of pimping remains illegal under §181a of the penal code. Because of this narrowing of the definition of pimping, there has been a substantial decrease in the number of §181a pimping cases since 2002. In 2000 there were 1104 such cases, which steadily dropped to 256 in 2014. Similarly penal code §180a was amended for employers who manage prostitutes: they are now liable for punishment only if they keep a prostitute personally and economically “dependent” on their business operation; the number of cases under §180a dropped sharply between 2000 and 2014, from 1385 to 45. Regarding organized crime’s role in human trafficking or in the sex industry, the trend is less clear, given the lack of direct measures of organized crime involvement in Germany, but a government report did note a trend among certain business owners: “‘Good’ brothel operators dissociate themselves from the ‘black sheep’ in order to show how respectable their establishments are” (Federal Ministry 2007, p. 44). More generally, analysts have documented substantial variation among traffickers: “The level of organization and number of criminal groups in trafficking differs substantially from one country to another as well as within countries” (Surtees 2008, p. 47). Indeed, “There is no standard profile of traffickers. They range from truck drivers and village ‘aunties’ to labor brokers and police officers. Traffickers are as varied as the circumstances of their victims” (Feingold 2005, p. 28). Human trafficking is often small scale—involving either single individuals or small networks of friends, acquaintances, and relatives, rather than large syndicates.

Politicized Versus Evidence-Based Policy Government claims regarding prostitution and trafficking are sometimes advanced without any documentation and/or for obvious political purposes (Weitzer 2015). It is easy to make blanket and cavalier assertions regarding both trafficking and prostitution when (1) solid data are lacking, (2) the media simply recapitulate “official” claims without questioning or fact-checking them, (3) experts who challenge official assertions are ignored or denounced, and (4) the participants in sexual commerce are highly stigmatized and marginalized. This unfortunate pattern can be seen in both prohibitionist nations (e.g., Sweden) and in nations facing resistance to their current liberal policies (e.g., Germany, the Netherlands).

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The Netherlands The Netherlands provides a good example of the ways in which prostitution policy can become politicized. Over the past decade several politicians have made sweeping claims about both prostitution and trafficking. It has been asserted, repeatedly, that the proportion of sex workers in the Netherlands who have been forced into the trade is either 50–90 or 10–90%. These incredibly wide ranges demonstrate how little the authorities know about the magnitude of trafficking, and the same evidence-thin claims have been made regarding the degree to which organized crime is involved in prostitution (Aalbers and Deinema 2012; Kleemans and Huisman 2015; Outshoorn 2012; Weitzer 2012). Yet, sweeping allegations continue to be repeated by officials, abolitionist activists, and the media. Research on the migrants themselves and on the micro-level contexts in which they operate contradicts many of the official claims about their motives and experiences (Oude Breuil et al. 2011; Siegel 2012). A segment of these migrants operate with more agency and intentionality than in official and media caricatures of them. The public visibility of Amsterdam’s central red-light district (RLD) renders it more susceptible to politicization than RLDs that are outside the city center. In addition to claiming that many of the women working in the area have been trafficked, some of Amsterdam’s political leaders insist that pimps are ubiquitous, that the zone is physically deteriorating and disorderly (“out of control”), and that the visible vice tarnishes Amsterdam’s reputation. The charges are not specific to prostitution, and include bars, marijuana cafes, head shops, porn shops, peep shows, and gambling arcades—all of which are criminogenic according to the city council (Municipal Council 2008). The government plans to reduce the number of marijuana bars and window-prostitution rooms by half (Municipal Council 2008). One-quarter of the window rooms (115 out of 477) were closed between 2007 and 2015;3 business operations are banned between 4 and 8 am; and other changes have been made to “cleanse” this RLD of deviant actors, gentrify parts of it, and assert greater control over those who work and visit it. Gentrification and recasting the city’s reputation are part of an official 10-year redevelopment plan for the RLD begun in 2007, called Project 1012. According to a city government report, the main goal is to “reduce the surplus of businesses subject to criminal influences or of little economic value. This will bring to a halt the breeding ground for further neglect and decay of the area”; cleansing the city center will revive its “metropolitan allure” with “attractive amenities” and “shops for all tastes” (Municipal Council 2008, p. 15). The phrase “little economic value” is revealing, because it highlights economic motives behind the reforms and shows that they are not based on crime concerns alone. In fact, “The main aim is to attract different types of tourists, other types of businesses, and other types of investors to 3

The official goal is to reduce the number of window-prostitution units in the city from 477 to 293, a 40% reduction, and to reduce the number of cannabis bars from 76 to 50 (Project Group Emergo 2011, pp. 283–284).

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the red-light district” (Kleemans and Huisman 2015, p. 256). Regarding the city’s reputation, the official “goal was to regenerate the district into a worthy entrance to Amsterdam as one of the world’s leading cities” (Project Group Emergo 2011, p. 283). For the most part, this has been a top-down process—orchestrated by city officials—rather than something driven by local residents. In fact, the latter have mobilized to prevent the proposed changes from taking effect (Aalbers and Deinema 2012). In February 2008, residents and business owners in the RLD organized protest demonstrations and posted fliers throughout the area: “Hands Off the RLD. Enough is Enough!!!” But they have had only minimal success in resisting the gentrification efforts.4 Their powerlessness is partly due to parallel developments at the national level: over the past five years, the Dutch parliament has debated several measures designed to impose greater control over prostitution nationwide (Outshoorn 2012). The bills were first proposed in 2009. They would raise the minimum age for sex sellers from 18 to 21; create a system whereby all prostitutes must register with the authorities (they already register with the chamber of commerce to declare their earnings); and fine clients who buy sex from unregistered prostitutes. To date, it has passed only one of the two chambers in parliament. The national-level reforms are largely in sync with Amsterdam’s local changes, which makes it especially difficult for local opponents to challenge them. There have also been some externally imposed rules: A ruling by the European Court of Justice in 2015 stipulated that managers must be able to communicate with sex workers in order to ensure their safety. This means that sex workers in the Netherlands must be able to speak Dutch or English with the owners and managers of brothels, escort agencies, and windows. Most of the Eastern European sex workers in the Netherlands speak at least some English, so the ruling will not affect them, but it may impact a small number of South American workers insofar as they only speak Spanish. Missing in these policy struggles are the preferences of sex workers themselves. The authorities almost never consult sex workers or the organizations representing them, with the result that public policies on prostitution consistently fail to take their interests into account. The Dutch sex worker organizations Red Thread and Proud—in addition to the brothel owners’ and window owners’ associations—have vigorously opposed all recent government reforms. On April 9, 2015, 250 sex workers and their allies launched a street protest opposing the city’s closure of window-prostitution units. Protestors marched to city hall and presented a petition to the major, during which he was visibly embarrassed by the some of the activists. The protest received considerable media coverage but did little to change the overall gentrification policy or the government’s commitment to imposing additional controls on sex workers. A survey of 94 window prostitutes working in

4

This does not mean that residents were in complete consensus regarding the RLD; some residents have supported efforts to gentrify the area.

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Amsterdam’s central RLD in 2010 found that 80% had heard about the city council’s plans for the area (closing some window buildings; restricting working hours; mandatory registration of prostitutes; raising the minimum age from 18 to 21). Only 2% supported these plans. The overwhelming majority considered the current policies toward prostitution already too repressive (88%); believed that the city’s plans for the red-light district are “not good for prostitutes” (95%); and disagreed with the idea that “politicians understand the issues of prostitutes” (93%) (Amsterdam Sociaal 2010).5 In sum, neither the upper-middle-class status of residents nor the business background of local merchants who reject the “clean-up” efforts has translated into political influence over Amsterdam city officials, whose reforms are consistent with national-level developments. Similarly powerless is the prostitution sector: the organizations working on behalf of the sex workers and the brothel and window owners. The remaking of this RLD has been essentially top-down, imposed by local government elites. Some other Dutch cities have recently followed suit. Many window-prostitution units were closed in Alkmaar in 2011, because of alleged money laundering by one owner.6 And Utrecht’s two RLDs were dismantled in 2013, because of allegations of trafficking. The closing of one area—the boat-prostitution Zandpad area—had the unintended consequence of forcing the sex workers into underground settings and subjecting them to greater risks than previously (Siegel 2015).

Germany Germany offers another example of recent struggles over prostitution law and policy. The key 2002 law (ProstG) removed moral language from the law (prostitution was “contrary to good morals”); recognized sex work as labor; recast the ban on promoting prostitution (pimping) to apply only to individuals who infringe on a worker’s “personal or financial independence”; officially recognized contracts between workers and clients; and gave sex workers rights to social security and unemployment benefits. However, the governing coalition “intentionally formulated it [the 2002 law] so vaguely that no explicit measures were demanded by it… meaning that the public

5

The survey results are not based on a random sample, but did include a significant proportion of window workers in this RLD. Questionnaires were distributed by female interviewers who visited all window occupants present during six days in February 2010. The researchers either conducted an interview on site or left the questionnaire with the woman and retrieved it at a later time. I am grateful to Bas Merkx for providing me with the results of the survey. 6 In 2011 Alkmaar’s city council refused to renew a brothel license to an owner of 92 of the city’s window rooms because the city suspected he had bought the buildings with money from criminal activities. Today, about half of Alkmaar’s previous windows remain closed, with about 60 remaining open.

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administration of the Länder [states] could safely ignore it” (Pates 2012, p. 213). The 16 states and the municipalities are permitted to implement the law as they wish, including designating the type of prostitution permitted, where it can be located, and whether to implement the law at all (declining to ask local administrators to produce implementation guidelines). Two states (Bavaria and Saxony) refused to implement the law because they considered prostitution immoral (Pates 2012), contradicting one of the premises in the law itself. Since 2002, most German cities have designated exclusion zones that restrict sex work to certain locations (Berlin is one exception); in some places, this policy prohibits prostitution throughout the entire city and relegates it to the outskirts of the urban area (Munich, Düsseldorf). An example of how local policies differ drastically is revealed in a study of Dortmund and Leipzig. Authorities in the two cities have pursued opposite approaches in managing prostitution: Leipzig instituted repressive policies, large raids on brothels, and denigration of sex workers and their employers, while officials in Dortmund were relatively tolerant, respectful, and more collaborative in their relations with the commercial sex sector (Dölemeyer et al. 2010). In the years since the 2002 law was passed, its lack of specific, minimum standards left a serious policy vacuum, which inevitably generated criticisms from both the German left and right. One of the most consequential critiques was published in an article in the premier magazine Der Spiegel on May 27, 2013, titled “Brothel Germany: How the State Promotes Women in Prostitution.” This inaccurate and inflammatory article was widely publicized and provided further impetus to three social forces that have long sought greater control of the country’s sex industry: (1) groups that are concerned about the influx of Eastern European migrants who work in Germany’s sex industry (and the fear that some or many of them have been trafficked), (2) those who do not oppose prostitution per se but seek to rectify a perceived lack of protections for sex workers or inadequate regulations governing those who manage them, and (3) strident anti-prostitution forces in the state and civil society, whose ultimate goal is to repeal the 2002 law entirely and criminalize all types of prostitution. Legislation was proposed in Parliament in 2013 and has been modified significantly since then because of opposition to some of the bill’s provisions. A major new law was passed in July 2016, and will take effect in 2017. This legislation has the following provisions: • mandatory condom usage, and prohibition on advertising unprotected sex; • compulsory registration of all sex workers; sex workers will be required to carry a special registration card whenever they are working; • prohibiting prostitutes from living in the room in which they work (viewed as an indicator of trafficking), unless it is one worker who lives alone; • requiring prostitutes to meet regularly with counselors from the health department; • prohibition on certain business practices, such as multi-person, “gang-bang” sexual events and flat-rate brothels where the customer pays a fee and can have sex with as many providers as he wishes;

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• licensing of sex businesses and those who operate them (including those who rent rooms to workers but do not manage them); licenses can be withdrawn if it is determined that an individual is not in compliance with the other requirements listed here; • minimum standards for all prostitution venues regarding amenities, hygiene, health, and security; business owners must provide condoms and lubricant; • brothel operators must provide document their business transactions, including written contracts and payments between sex workers and operators; • if two or more sex workers operate in the same premises, they must obtain a “brothel” license.7 Some of these provisions are quite sensible, and address the current situation where prostitution is under-regulated and the lack of rights and protections for sex workers. This includes requiring business owners to keep detailed records of their agreements with sex workers; rules for enhanced health, hygiene, and security; and the licensing of sex businesses run by managers.8 The most controversial provisions (especially mandatory registration) sparked fierce resistance from the Women’s Council, the Association of Women Lawyers, Deutsche AIDS-Hilfe (an AIDS service organization), sex worker rights groups, and others. Registration of sex workers has been a failed policy in almost every country that has experimented with it (Weitzer 2012). Mandatory condom usage is almost impossible to enforce, unless the authorities conduct undercover visits and request unprotected sex. The legislation applies to both sex workers and managers/operators, but it remains to be seen whether the regulations will be applied equally to both.

Public Opinion on Prostitution Finally, it is useful to examine European laws and state policies from the vantage point of public opinion. Attitudinal data are relevant insofar as it is important for policies to be culturally rooted and for identifying nations that might be amenable in the future to policy reforms. The World Values Survey asks respondents whether they “think prostitution can always be justified, never be justified, or something in between.” For those selecting the “never justified” response, the 2005–2007 figures range from a low of 17% in Switzerland to a high of 84% in China; for the 2011–2014 period, the range is 20% (the Netherlands) to 71% (Romania) (Table 4.2). France, Sweden, Hungary, and Bulgaria are in the middle, in the 40s range. An interesting case is Norway, which had the third highest tolerance ranking in 2007 (21%), but followed Sweden in criminalizing the purchase of sex in 2009. In several nations,

7

I am grateful to Jenny Künkel and Matt Lehmann for supplying some of the information in this list of proposed regulations. 8 It can be argued that small worker-run cooperatives should not require licenses.

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however, social tolerance and legal tolerance are congruent: Switzerland, Netherlands, Germany, and Australia. The World Values Survey is not without problems. The question itself is somewhat opaque: Is the term “justified” roughly equivalent to “acceptable” or does it imply something different? And does “justified” mean the same thing to respondents in different countries? Nevertheless, the survey’s data can be used to compare public opinion with the legal order in a particular nation. The World Values Survey does not ask questions about policy preferences. For that, I have collected separate poll data from various nations. These data reveal that substantial majorities of the public favor legalization of prostitution in Britain, France, Germany, Czech Republic, and the Netherlands (see Table 4.3). Although the poll question usually stipulates “legalization” without defining it, some polls ask more specific questions. For example, one poll found that 59% of British respondents believe that “prostitution is a perfectly reasonable choice that women should be free to make” (MORI 2008), and 78% of the Dutch public agreed with the idea that “prostitution is a job like any other, as long as there is no coercion involved” (Danter 1999). In some nations, law and public policy conflict with popular preferences. France is an example, where a large majority of respondents (74%) favor legalization of brothels and oppose client criminalization (70–82%, in five polls).9 These popular preferences clash with the country’s current prohibitionist policy (Mathieu 2004, 2012) and with a bill approved by the French Parliament in 2016 that criminalized the purchase of sex. France has several influential anti-prostitution organizations that have pushed for increased criminalization; their abolitionist views were endorsed by a parliamentary commission on prostitution in 2011, which led to the client criminalization law (Mathieu 2012). Apart from the French poll, none of the others in Table 4.3 define “legalization.” It is possible that most respondents interpret “legal” simply as decriminalized, rather than imagining specific kinds of government regulation. What is needed are (1) opinion data on specific policy options (zoning, eligibility requirements, registration of sex workers, client criminalization, etc.) rather than ambiguous “legalization” or “criminalization” and (2) survey questions that document why respondents favor one type of policy over another, which can be tapped by providing them with various rationales to select from or open-ended follow-up questions.

The 2013 French poll specified the “reopening of brothels.” In five polls taken between 2011 and 2013, 70–82% of French respondents disapproved of the idea of criminalizing clients.

9

4 Legal Prostitution Systems in Europe Table 4.2 Acceptability of prostitution (% selecting ‘never justified’)

Table 4.3 Public opinion on legalization of prostitution

61 2004–2007

2011–2014

Switzerland 17 Netherlands 19 20 Norway 21 Spain 23 Germany 23 28 Britain 30 Sweden 40 41 Hungary 40 France 41 Bulgaria 46 Ukraine 57 51 Italy 58 Poland 58 53 Moldova 62 Russia 66 47 Romania 69 71 Source World Values Survey: http://www.worldvaluessurvey. org/wvs.jsp

Favor legalization (%) Britain (1998/2006) Czech Republic (1999) France (1995/2013) Germany (1999) Netherlands (1997) Portugal (2001) Source Author’s compilation of (Weitzer 2012, p. 78)

61/65 70 68/74 68 73 54 poll data from different sources

Conclusion One of the main conclusions of this chapter is the need to move away from grand, macro-level claims-making (Bernstein 2007; Agustín 2008) and data-thin multinational comparisons of prostitution policies and trafficking patterns (Cho et al. 2013; Cho 2016; Jakobsson and Kotsadam 2013). Research on legal prostitution arrangements at the country level or city level can yield much richer findings than is possible in global assessments based on dubious data (Weitzer 2015). Properly contextualized comparative studies also have the advantage of allowing researchers to identify similarities and differences within a particular country (e.g., Dölemeyer et al. 2010; Weitzer 2014). These findings demonstrate the importance of research at the subnational level, highlighting key locational differences. Similarly,

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ethnographic research on legal red-light districts in several cities (Amsterdam, Antwerp, Brussels, Frankfurt, Ghent) has documented a full spectrum of physical arrangements, social organization, government involvement, and policing styles (Weitzer 2012, 2014; Weitzer and Boels 2015). These findings can be used to test conventional assumptions about conditions that are claimed to be intrinsic in such areas (Reckless 1933; cf. Hubbard and Whowell 2008). Indeed, some red-light districts in Europe fit and others clash with the conventional image of such areas as dilapidated, socially disorganized, and criminogenic. Insofar as comparative research identifies positive and negative features in particular settings or populations, analysts are in a better position to identify “best practices” that may be implemented in other legal prostitution systems; a list of best practices is provided by Weitzer (2012, pp. 207–213). Distilling a set of standards from empirical material on a variety of societies is obviously superior to the formulation of national policies in a vacuum, without cross-fertilization from elsewhere. Policy transference can occur, at least to some degree, despite differences in national histories, cultures, and populations.

References Aalbers, M., & Deinema, M. (2012). Placing prostitution: The spatial-sexual order of Amsterdam and its growth coalition. City, 16, 129–145. Agustín, L. (2008). Sex and the limits of enlightenment: The irrationality of legal regimes to control prostitution. Sexuality Research and Social Policy, 5, 73–86. Amsterdam Sociaal. (2010). De Amsterdamse prostitutie monitor. Amsterdam: Amsterdam Sociaal. Bernstein, E. (2007). Temporarily yours: Intimacy, authenticity, and the commerce of sex. Chicago: University of Chicago Press. Cho, S. Y. (2016). Liberal coercion? Prostitution, human trafficking, and policy. European Journal of Law and Economics, 41, 321–348. Cho, S. Y., Dreher, A., & Neumayer, E. (2013). Does legalized prostitution increase human trafficking? World Development, 41, 67–82. CoMensha. (2010). Annual report. Amersfoort: CoMensha Coordination Center Against Human Trafficking. Daalder, A. (2007). Prostitution in the Netherlands since the lifting of the brothel ban. The Hague: Ministry of Justice. Danter, E. (1999, February 6). Green light at last for Dutch red light districts. Deutsche Presse-Agentur. Di Tommaso, M., Shima, I., Strøm, S., & Bettio, F. (2009). As bad as it gets: Well-being deprivation of sexually exploited trafficked women. European Journal of Political Economy, 25, 143–162. Dölemeyer, A., Pates, R., & Schmidt, D. (2010). Deviant girls, small-scale entrepreneurs, and the regulation of German sex workers. In M. Ditmore, A. Levy, A. Willman (Eds.), Sex work matters (pp. 184–202). New York: Zed. Emergo Group Project. (2011). Emergo: The joint approach to organized crime in the heart of Amsterdam. Gemeente Amsterdam/Ministry of Justice.

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Federal Ministry for Family Affairs, Senior Citizens, Women, and Youth. (2007). Report by the Federal Government on the impact of the Act regulating the legal situation of prostitutes (Prostitution Act). Berlin: Federal Ministry. Feingold, D. (2005). Human trafficking. Foreign Policy (September), pp. 26–32. Hubbard, P., & Whowell, M. (2008). Revisiting the red light district: Still neglected, immoral, and marginal? Geoforum, 39, 1743–1755. ILO [International Labour Organization]. (2005). A global alliance against forced labor. Geneva: ILO. Jakobsson, N., & Kotsadam, A. (2013). The law and economics of international sex slavery: Prostitution laws and trafficking for sexual exploitation. European Journal of Law and Economics, 35, 87–107. Kleemans, E. R., & Huisman, W. (2015). Multi-agency approaches in “criminogenic” settings: The case of the Amsterdam red-light district. Crime, Law, and Social Change, 64, 247–261. Mai, N. (2009). Migrant workers in the UK sex industry. London: London Metropolitan University. Mathieu, L. (2004). The debate on prostitution in France: A conflict between abolitionism, regulation, and prohibition. Journal of Contemporary European Studies, 12, 153–163. Mathieu, L. (2012). An ambiguous compassion: Policing and debating prostitution in contemporary France. Sexuality Research and Social Policy, 9, 203–211. MORI. (2008). Ipsos MORI prostitution survey. June 11–12, 2008. Municipal Council. (2008). Heart of Amsterdam. Amsterdam: Municipal Council. National Rapporteur on Trafficking in Human Beings. (2005). Trafficking in human beings: Third report of the Dutch National Rapporteur. The Hague: Bureau Nationaal Rapporteur Mensenhandel. National Rapporteur on Trafficking in Human Beings. (2010a). Human trafficking: Ten years of independent monitoring. The Hague: Bureau Nationaal Rapporteur Mensenhandel. National Rapporteur on Trafficking in Human Beings. (2010b). Trafficking in human beings: Seventh report of the Dutch National Rapporteur. The Hague: Bureau Nationaal Rapporteur Mensenhandel. National Rapporteur on Trafficking in Human Beings. (2013). Does legalized prostitution generate more human trafficking?. The Hague: Bureau Nationaal Rapporteur Mensenhandel. National Rapporteur on Trafficking in Human Beings. (2014). Mensenhandel in en uit beeld II. The Hague: Bureau Nationaal Rapporteur Mensenhandel. Oude Breuil, B. C., Siegel, D., van Reenen, P., Beijer, A., & Roos, L. (2011). Human trafficking revisited: Legal, enforcement, and ethnographic narratives on sex trafficking to Western Europe. Trends in Organized Crime, 14, 30–46. Outshoorn, J. (2012). Policy change in prostitution in the Netherlands: From legalization to strict control. Sexuality Research and Social Policy, 9, 233–243. Pates, R. (2012). Liberal laws juxtaposed with rigid control: An analysis of the logics of governing sex work in Germany. Sexuality Research and Social Policy, 9, 212–222. Reckless, W. (1933). Vice in Chicago. Chicago: University of Chicago Press. Scoular, J. (2010). What’s law got to do with it? How and why law matters in the regulation of sex work. Journal of Law and Society, 37, 12–39. Siegel, D. (2012). Mobility of sex workers in European cities. European Journal of Criminal Policy and Research, 18, 255–268. Siegel, D. (2015). Het Zandpad—Closing brothels or closing eyes? Den Haag: Boom Juridische Uitgevers. Surtees, R. (2008). Traffickers and trafficking in Southern and Eastern Europe. European Journal of Criminology, 5, 39–68. UNODC [United Nations Office on Drugs and Crime]. (2006). Global report on trafficking in persons. Vienna: United Nations. USDS [U.S. Department of State]. (2010). Trafficking in persons report 2010. Washington, DC: USDS. USDS. (2015). Trafficking in persons report 2015. Washington, DC: USDS.

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Verhoeven, M., van Gestel, B., de Jong, D., & Kleemans, E. (2015). Relationships between suspects and victims of sex trafficking. European Journal of Criminal Policy and Research, 21, 49–64. Weitzer, R. (2012). Legalizing prostitution: From illicit vice to lawful business. New York: New York University Press. Weitzer, R. (2014). The social ecology of red-light districts: A comparison of Antwerp and Brussels. Urban Affairs Review, 50, 702–730. Weitzer, R. (2015). Human trafficking and contemporary slavery. Annual Review of Sociology, 41, 223–242. Weitzer, R., & Boels, D. (2015). Ghent’s red-light district in comparative perspective. Sexuality Research and Social Policy, 12, 248–260.

Chapter 5

Linking Prostitution and Human Trafficking Policies: The Nordic Experience May-Len Skilbrei and Charlotta Holmström

Introduction The Nordic countries, Sweden in particular, are often held up as examples to follow for the way in which they use the penal code to direct attention and assign culpability to the purchaser of sex. Sweden introduced a unilateral prohibition against the purchase of sex in 1999 in an active attempt to target the demand side. The Swedish Sex Purchase Act attracted much attention when it was introduced. The US Trafficking in Persons Report of 2003, for instance, said the following about the Swedish example: “Implementation of Sweden’s pioneering legal approach to criminalising trafficking and prostitution will be monitored with interest as a potentially effective anti-trafficking model”.1 Ever since, politicians have made references to the effects of the Swedish Sex Purchase Act on the extent of both prostitution and human trafficking in debates over what laws to apply in their own country. The Act’s effects on trafficking are also debated in supranational forums. An example of this came in 2014, when the European Parliament issued a resolution on prostitution advising its member states to criminalise the buying of sex and to decriminalise the selling of sex: “some data confirm the Nordic model’s deterrent effect on trafficking into Sweden”.2 The 2014 Council of Europe report 1

http://www.state.gov/j/tip/rls/tiprpt/2003/21277.htm. European Parliament resolution of 26 February on sexual exploitation and prostitution and its impact on gender equality.

2

M.-L. Skilbrei (&) Department of Criminology and Sociology of Law, University of Oslo, St. Olavs plass, P.O. Box 6706, 0130 Oslo, Norway e-mail: [email protected] C. Holmström Department of Social work, Malmö University, Malmö 205 06 Sweden e-mail: [email protected] © Springer International Publishing AG 2017 H. Nelen and D. Siegel (eds.), Contemporary Organized Crime, Studies of Organized Crime 16, DOI 10.1007/978-3-319-55973-5_5

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“Prostitution, trafficking and modern slavery in Europe” states: “While each system [of regulating prostitution] presents advantages and disadvantages, policies prohibiting the purchase of sexual services are those that are more likely to have a positive impact on reducing trafficking in human beings”.3 It goes on to advise member states to “consider criminalising the purchase of sexual services, based on the Swedish example, as the most effective tool for preventing and combating trafficking in human beings”. The Council of Europe report (2014) based this advice on an estimate of the number of victims in Sweden compared to neighbouring Finland: “The number of foreign women and girls trafficked into Sweden for purposes of sexual exploitation was estimated to be between 200 and 400 by 2005, while it was approximately 15,000–17,000 in Finland (whose population is much smaller than Sweden’s)”. It is important to note here that the reason why the Council of Europe report only had 2005 figures on trafficking to reference to is the fact that the Swedish National Police stopped making such estimates because they were too unreliable, and they explicitly warned against applying such figures as an accurate representation of the real scope of the phenomenon, something the authors of the 2014 report and others seem to ignore. While many have heralded the Swedish Sex Purchase Act for its effects and its progressiveness, it has also met with much critique, particularly pointing to it impacting negatively to the development of the market and the safety and access to rights for people selling sex (see, e.g. Dodillet and Östergren 2013; Levy and Jakobsson 2014). The sex workers’ rights movement has argued that client criminalisation, in Sweden and elsewhere, is detrimental to the health and well-being of sex workers. The Global Network of Sex Work Projects (NSWP) has developed a toolkit to combat this policy which it states is downright harmful.4 While politicians and activists are eager to treat ‘the Swedish model’ either as a great success or a great failure, the challenge for researchers is to provide a satisfactory answer to the question of the relationship between prostitution laws and the scope of trafficking. Statements in debates about the Sex Purchase Act’s ability to curb trafficking are often based on assumptions or unsubstantiated data. An example of this is when individuals or organisations are quoted as saying that the Act curbs trafficking without further evidence being produced. In the Council of Europe report mentioned above it is stated that: “According to Ms Ekberg, Sweden’s National Criminal Investigation Department has received indications from Interpol and other international bodies that the country is no longer an attractive target for traffickers. Intercepted telephone conversations between pimps and traffickers show that the local prostitution market has become riskier and less profitable. Testimonies from the victims also confirm that traffickers found other

3

http://www.assembly.coe.int/nw/xml/XRef/X2H-Xref-ViewPDF.asp?FileID=20559&lang=en. http://www.nswp.org/resource/the-real-impact-the-swedish-model-sex-workers-advocacy-toolkit.

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European destinations more attractive”. This was also claimed in the official evaluation of the Sex Purchase Act (SOU 2010). It is difficult to evaluate this claim: the closest we have come to identifying its origin, is that in 2003 the National Criminal Investigation Department stated in a report that they had intercepted a phone call where suspected traffickers complained about a lack of clients in Sweden, but no further details were given. As demonstrated above, the low estimates on human trafficking to Sweden, deemed unreliable by the National Police, are taken by the Council of Europe to mean that there is little such trafficking. These figures are given attention and weight and serve as a basis for researchers to examine the relationship between prostitution laws and trafficking. To be able to ascertain whether the figures on trafficking are valid and that the basis for the conclusion that the Sex Purchase Act hinders trafficking is sound, we need to look into how these numbers are produced. This contribution is based on our own empirical research into how the fight against prostitution is formulated and institutionalised in Sweden and how this impacts on how trafficking is identified and policed. These two policy fields are understood to be strongly related in Sweden and are often conflated in public debates. We argue that this conflation is central to how Swedish police operate and thus to what gets counted as trafficking. We will describe in more detail the characteristics of Sweden’s approach to prostitution and demonstrate its relevance to how we evaluate the relationship between prostitution laws and the scope of human trafficking. Furthermore, we will describe Sweden’s anti-trafficking efforts and detail how they play out in practice and impact on what gets counted as trafficking. First, however, we will elaborate on various positions taken on the relationship between prostitution and human trafficking and present existing research on the relationship between prostitution laws and the scope of human trafficking.

What Is the Relationship Between Prostitution and Human Trafficking? The formal evaluation of the Swedish Sex Purchase Act (SOU 2010) took as its starting point that curbing demand for prostitution will curb demand for trafficking-related prostitution. Others too, including academics, assume a causal relationship between the two without further discussion. An example of how such a causal link is formulated is given by the radical feminist academic and debater Raymond (1995: 2): “when prostitution is accepted by society, sex trafficking and sex tourism inevitably follow”. Nevertheless, the relationship between prostitution

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and human trafficking is rarely explicated. This also rarely leads to debates about whether combating trafficking for other purposes could also be done through broader criminalisation. The link between prostitution and trafficking was a central topic in the debates preceding the drafting of a new UN protocol on human trafficking in 2000, often referred to as the Palermo Protocol. While its definition of human trafficking includes forced labour, servitude and the removal of organs, the negotiations leading up to the protocol and its reception revolved around trafficking for the purpose of prostitution. The previous UN instrument to address human trafficking, the 1949 Convention for the Suppression of the Traffic in Persons and of the Exploitation of the Prostitution of Others, stated that both prostitution and human trafficking are “incompatible with the dignity and worth of the human person and endanger the welfare of the individual, the family and the community”.5 Equating prostitution and human trafficking in this way was highly controversial and in the first 10 years of the convention, it was ratified by only 25 countries and most Western countries never signed or signed much later.6 An aim in the development of the Palermo Protocol was thus to find a definition that more could agree upon to ensure a strong UN instrument with broad support. The position one takes on the relationship between prostitution and trafficking depends, among other things, on the view taken on what prostitution is and why it exists. The two main positions can broadly be defined as the abolitionist position and the sex work position. The first position supposes that criminalising the purchase of sex will curb demand for trafficked services, while legalised prostitution constitutes a ‘pull factor’; and the second position argues that the legalisation of prostitution is the best way to combat trafficking as this establishes the possibility for cooperation with the industry in order to identify exploitation, as opposed to criminalising the market and pushing it underground.7 The way in which prostitution laws affect the scope of trafficking is not only a political and theoretical question, but indeed also an empirical one. In recent years, several authors have undertaken an analysis of the relationship between legislation on prostitution and the nature and extent of human trafficking (Jakobsson and Kotsadam 2013; Cho et al. 2013; Huisman and Kleemans 2014; Weitzer 2015). Some of these authors do so by analysing aggregated data on registered human trafficking in order to ascertain the correlation between the legalisation or criminalisation of prostitution on the one hand, and the scope of trafficking on the other (Jakobsson and Kotsadam 2013; Cho et al. 2013). Four findings are relevant here. First, the finding that criminalising the purchase of sex prevents trafficking

5

http://www.ohchr.org/EN/ProfessionalInterest/Pages/TrafficInPersons.aspx. https://treaties.un.org/Pages/ViewDetails.aspx?src=IND&mtdsg_no=VII-11-a&chapter=7&lang=en. 7 For an analysis of the link between prostitution and human trafficking, see Anderson and O’Connell Davidson (2004). 6

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(Cho et al. 2013; Jakobsson and Kotsadam 2013), second, that legalisation of prostitution produces trafficking (Cho et al. 2013; Jakobsson and Kotsadam 2013), third, that criminalising the purchase of sex paves the way for more or worse trafficking (Cho et al. 2013), and, finally, that there is no effect (Akee et al. 2010). Attempts to analyse the scope of trafficking through aggregated data sets and linking these to prostitution laws have been criticised for using data that build on different definitions of trafficking and different thresholds of identification, as well as for applying too simplistic an understanding of prostitution law (see, e.g. Aromaa 2007; Brunovskis 2012; Marinova and James 2012; Gallagher 2014; Scullion 2015; Weitzer 2015). We would add that it is a problem that some studies do not make it clear which data have been used in the analysis (see, e.g. Jakobsson and Kotsadam 2013; Cho et al. 2013). We will not rehash these criticisms here, but rather explore in more detail how the figures the above research relies on is produced by describing Swedish policies and mechanisms for their implementation.

Prostitution and Prostitution Policies in Sweden We will begin by taking a look at the legislation and the Swedish government’s approach to prostitution. As mentioned, Sweden is renowned for its unilateral criminalisation of the purchase of sex. Swedish debaters discussed revising legislation on prostitution throughout the 1980s and 1990s. The perceived need for a revised policy came as a result of how social work and social science research portrayed prostitution as linked to poverty, drug use and marginalisation, as well as societal gender and sexuality norms (Skilbrei and Holmström 2013). The question of gender-based power was central to the debate and the question of gender was not only made relevant to how prostitution itself was understood, but also in creating an understanding of prostitution as harmful to all women and detrimental to gender relations outside the prostitution arena as well: the existence of prostitution harms all. With these new images of prostitution and the people involved, came a focus on the clients and their responsibility for the existence of the market. Gunilla Ekberg, the advisor on prostitution and trafficking to the Swedish government, formulated what was at stake (Ekberg 2004: 1189): “the recognition that without men’s demand for and use of women and girls for sexual exploitation, the global prostitution industry would not be able to flourish and expand”. While arguments about unwanted norms and practices related to gender served as the main argument before 1999, the Swedish Sex Purchase Act is now clearly formulated as an instrument to combat trafficking (see, e.g. Ask 20118; Ekberg and

«So, after 12 years with a law prohibiting the purchase of sexual services, we can establish that in Sweden the ban is of great value in fighting prostitution and human trafficking».

8

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Wahlberg 20119). This is a case of repurposing a law: Its aims have been reformulated to meet new perceived needs based on changes in the market and new problem definitions, partly as a result of new parties and politicians coming into office. In this way, the Sex Purchase Act became an acceptable tool for politicians who might not have agreed with its previous feminist framing. Thus, the reasons why an act such as the Sex Purchase Act exists and continues to exist are dynamic and cannot only be interpreted only in terms of the explicit intentions of the politicians who fought for the act. The ways in which other agendas and politicians appropriate and repurpose legislation are also relevant to our understanding of the effects of the law on the Swedish prostitution markets and society today, as we will return to below. Also, when looking into the number of fines issued for the purchase of sex, it becomes clear that the Sex Purchase Act is not an instrument that is very actively applied.10 The number of fines issued ranges from 11 (in 1999) to 450 (in 2011) (The National Police Board 2013: 7).11 This should not be taken to mean that the act does not do anything. The central aim of the act was to deter and to change societal norms. It should be noted that this individual act is not fully representative of the way in which Sweden approaches prostitution. The explicit aim has been to first and foremost approach prostitution as a social problem that welfare provisions are best equipped to deal with. These continue to be vital tools and something that criminal justice policies are intended to complement, not replace (Florin 2012; Skilbrei and Holmström 2013). There are also other laws and regulations that are applied in the field of prostitution. While the Sex Purchase Act was introduced to direct attention and blame for prostitution towards the demand side, the Alien Act is applied in a way that punishes the seller of sex. The Swedish Alien Act Chapter 8 Section 3:2 states: “An alien may be refused entry if it can be assumed that during the stay in Sweden or in some other Nordic country he or she will not support himself or herself by honest means…”. This act is also used as a basis for deportations. In recent years, this act has solely been applied to third country nationals but in the past, European citizens have also been turned away at the Swedish border on suspicion of intending to sell sex. We thus argue that to take the unilateral criminalisation of the purchase of sex in Sweden to mean that Swedish policies target clients only and that Swedish society is sympathetic to persons who sell sex, is too simplistic. As in all contexts, complex

«The law is an expression of the political commitment and consensus in Swedish society to prevent and fight prostitution and human trafficking by targeting men’s demand for women, other men, and children for the purpose of sexual exploitation. Those men who purchase or attempt to purchase a sexual service are prosecuted and convicted; it is recognised that the law also has beneficial normative effects on the prostitution behaviour of individual men as well as on public attitudes towards prostitution and sex trafficking in Sweden». 10 The cases are almost always resolved out of court by payment of a fine on the spot. 11 Statistics from The Swedish National Council for Crime Prevention, full table presented in Tillsynsrapport 2013:7:14 Rikspolisstyrelsen. 9

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social phenomena are regulated by several strands of policy, and the way in which a country regulates prostitution with the Penal Code is only one part of the story.

Trafficking and Trafficking Policies in Sweden Sweden has signed and ratified the Palermo Protocol and the Council of Europe Convention, and is under obligation to prosecute traffickers, protect victims and prevent trafficking. Human trafficking is criminalised in the Swedish Penal Code Chapter 4 on Offences against Liberty and Peace, Section 1a: A person who, in other cases than those referred to in Section 1 (Kidnapping), by unlawful coercion, deceit, exploitation of another person’s vulnerable situation or by other such improper means recruits, transports, transfers, harbours or receives a person with the intent that he or she shall be exploited for sexual purposes, the removal of organs, military service, forced labour or other activity in a situation that places that person in distress, shall be sentenced for trafficking in human beings to imprisonment, for at least two years and at most 10 years. A person who commits an act referred to in the first paragraph against a person who is under 18 years of age shall be sentenced for trafficking in human beings even if none of the improper means described in that paragraph was used. If an offence referred to in the first or second paragraph is less serious, the sentence shall be imprisonment for at most four years.12,13

The Trafficking Act introduced in 2002 only prohibited trafficking for sexual purposes, but since 2004 Sweden has broadened its Trafficking Act to cover trafficking for labour exploitation and internal trafficking. Still, trafficking for sexual purposes is reported on separately, and the policies to combat it form part of an action plan on prostitution and trafficking for sexual purposes. When trying to establish how much trafficking is occurring in a country, there are often several sources of information. One of them is the number of cases that reach court and end in a successful prosecution. The trafficking cases in Swedish courts have so far been few, with the numbers ranging from 0 in 2004 and 2008 to 11 in 2006 (The National Police Board 2013: 7).14 There is no reason to believe that the number of prosecuted cases gives a full representation of the trafficking that takes place in Sweden, and countries often also report on the number of registered victims. The Swedish National Police Board publishes annual reports on human trafficking for sexual purposes and it argues that the Sex Purchase Act prevents potential traffickers and procurers from setting up a business in Sweden

12

Unofficial translation provided by the Swedish authorities quoted in Secretariat of the Council of Europe Convention on Action against Trafficking in Human Beings (2014). A different translation is given in a recent report by the County Administrative Board of Stockholm (2016). 13 For a comprehensive description and discussion of Swedish obligations vis-à-vis trafficking and the Swedish Trafficking Act, see Kelemen and Johansson (2013). 14 Statistics from The Swedish National Council for Crime Prevention, table presented in The National Police Board (2013: 7:13).

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(The National Police Board 2007: 8). However, the Board has chosen to avoid presenting estimates in reports after 2005. In a report published in 2012, the Board described the situation with regard to estimates of human trafficking for sexual purposes in Sweden as follows: “The number of victims discovered in Sweden depends largely on the resources which the police put into detecting this crime and on the skills that exists within the police organisation. The level of these initiatives varies between police authorities and differs from one year to another” (RPS Rapport 2012: 7).15 In other words, the Swedish National Police Board as well as the National Rapporteur on Trafficking refrains from trying to present the scope of human trafficking in numbers. One of the reasons for this has to do with an awareness of the fact that different institutions have different thresholds for what is considered trafficking based on their institutional responsibilities and responses visà-vis victims of trafficking. National figures on trafficking are produced in a context where definitions, institutions, mandates and mechanisms matter, and they should therefore not be taken to represent how much trafficking there is. Below we will explicate the institutional practices involved in identifying and registering trafficking in Sweden to demonstrate this point. Presumed victims of human trafficking for sexual purposes may be detected by the Swedish police, local social service institutions or the Swedish Migration Board. The majority of the reports are filed by the police, but sometimes plaintiffs contact the police themselves. Some reports are filed by authorities such as the Migration Board or Social Services (The Swedish National Council for Crime Prevention 2011: 17). Until recently Sweden did not have a standardised national referral mechanism, but there were established channels for inter-agency cooperation between different institutions (The Migration Board 2013: 9). However, the procedure was that the police decided what to make of the information given by other institutions or authorities and how this information should be processed. The police made an initial assessment evaluating whether a person had been the victim of a crime, and the police and a prosecutor evaluated what type of information/cases can be linked to human trafficking. However, according to the National Guidelines for working with prostitution and trafficking in Sweden, the threshold for opening a police investigation is not particularly high (The County Administrative Board of Stockholm 2011: 25). Late 2016 a national referral mechanism was introduced by the County Administrative Board in Stockholm. The purpose of the manual was to to support professionals who may identify persons who have been subjected to human trafficking (County Administrative Board of Stockholm 2016). A person who is defined as a presumed victim of trafficking can apply for a 6-month temporary residence permit on condition that he or she is willing to cooperate with the police in a legal proceeding (Aliens Act 2005/716, Chapter 5. 15 §). Potential victims of trafficking are also entitled to a 30-day period of reflection to decide whether to report a crime and cooperate with the police (ibid). Applications for temporary residence permits must be addressed to the Migration

15

Figures for forms of trafficking other than for sexual purposes are reported separately in Sweden.

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Board and are filed by a representative of law enforcement (The County Administrative Board of Stockholm 2011: 26). In other words, being identified as a potential victim of human trafficking for sexual purposes is closely connected to legal processes in Sweden (Åström 2014). Anette Brunovskis, who compared the balance struck between prosecution of trafficking and the protection of victims in seven countries, described the Swedish approach as follows: “Currently, only the police can decide on an application for a temporary residence permit [in Sweden]. This is also the case for the reflection period, though this is more of a theoretical issue, as it has never been used. However, this also has some consequences for who is identified and thereby also the numbers of reported victims” (2012: 39). A further uncertainty exists due to the fact that there is no explicit definition of a victim of human trafficking in Swedish legislation (Secretariat of the Council of Europe Convention on Action against Trafficking in Human Beings 2014). From a legal perspective, an injured party (målsägande) is a person against whom an offence was committed or who was affronted or harmed by it. The crime has to have been reported to the police and criminal proceedings initiated for the person to be considered an injured party. Whether or not a person is an injured party is decided by the court after the prosecutor has initiated a prosecution. Besides being classified as an injured party, it is sometimes necessary to be a party and/or to be heard in court proceedings to gain access to certain rights, such as interpretation, translation and reimbursement of costs, according to Swedish law (ibid: 21). Even after some revisions, the Trafficking Act is still considered difficult to apply and a typical outcome of a case if it at all goes to court is that it ends in a verdict for procuring instead of trafficking. The police and professionals within the court system describe that characteristics of the victims and their statements is an important part of the problem with building court cases. They do not always act in correspondence with their idea of a victim (for a general discussion of this, see Brunovskis and Skilbrei 2016). As described above, being counted as a victim of trafficking and being granted access to assistance are closely linked to the police and the prosecution’s need for information and witnesses. While it is stated that the threshold to initiate an investigation should be low, the perception of trafficking cases as difficult to prosecute heightens the bar, something which means that few are awarded assistance as a victim of trafficking and the victim count is low.

What Is the Link Between Prostitution and Trafficking? Understanding and assessing how trafficking is met by national governments cannot be done based on an analysis of legislation and policies as they are presented in action plans alone. Policies move from international to national agendas, and from national policy-making to national and local implementation or appropriation. To be able to study the consequences of particular policies we need an overview of the totality of what is done.

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As mentioned above, the National Police Board publishes annual reports on human trafficking for sexual purposes. These reports also contain information regarding the characteristics of those involved in what is described as suspected human trafficking for sexual purposes: The foreign girls and women recruited to Sweden for the purposes of prostitution came primarily from Eastern Europe (especially Romania, Lithuania, Estonia, Slovakia and Poland), Thailand and Nigeria. Here, a change can be clearly discerned since information about women from Lithuania being exploited for prostitution in Sweden has increased significantly in 2011 compared with previous years. Human trafficking for sexual purposes, involving victims from Romania, has been a significant problem for some years throughout large parts of Europe. In Sweden too, primarily in Gothenburg, the police noted a certain increase in the number of Romanian women being exploited for the purposes of street prostitution in 2011. The perpetrators behind this trafficking (both men and women) also came from Romania. (The National Police Board 2012: 7–8)

As we can see from this excerpt, prostitution and trafficking are spoken of interchangeably. As noted above, the fact that the police believe that particular groups of people are more likely to become victims of trafficking does not mean that they are actively trying to make assistance to these groups more widely available. Instead, they are concerned with gathering evidence. Jakobsson and Kotsadam point to how the Swedish police officers they interviewed applied a much stricter definition than the law allowed (2010: 6): “A recruiter abducts a victim in a country of origin and sells it to a brothel owner in a destination country”. Abduction is by no means a requirement for something to constitute trafficking, exploitation of someone’s vulnerable position suffices. To demonstrate the differences in figures this produces: the impact of the criminalisation of the purchase of sexual services on the scope of human trafficking for sexual purposes has been investigated, discussed and debated in scholarly literature. Conclusions drawn from several studies indicate that the scope of human trafficking is greater in countries where prostitution is legalised than in countries that practice various forms of criminalisation aimed at prostitution (see for example Jakobsson and Kotsadam 2013; Cho et al. 2014). However, these conclusions are presented with caution. As mentioned earlier, there are several methodological problems attached to the question of whether or not strict prostitution laws have an impact on the scope of human trafficking for sexual purposes. Still the conclusions of this research is given great weight in policy debates, exemplified with how the aforementioned Council of Europe report refers to Cho et al.’s findings to evidence the need for more countries to criminalise the purchase of sex.16 The question of the reliability of national data on human trafficking for sexual purposes needs to be problematized. Countries with resources and good legal systems may detect a great deal of trafficking, even if the problem may not be as

16

http://www.assembly.coe.int/nw/xml/XRef/X2H-Xref-ViewPDF.asp?FileID=20559&lang=en.

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severe as in other countries (Brunovskis 2012). Criminal data are only produced if there is legislation and law enforcement agencies who care to act on the problem and are capable of doing so (Jakobsson and Kotsadam 2013: 93). In Sweden, the data concerning human trafficking cases are based on the legal definition of human trafficking for sexual purposes. The definition is connected to human trafficking legislation, and is only used within the legal system. This means that people with a migrant background who may have experienced exploitation and coercion in prostitution, but who are not involved in legal proceedings, are not included in the count of victims of human trafficking. As a consequence, the threshold for someone to be counted is higher there than in many other places (including neighbouring Norway). Assumed victims are not awarded rights and are not counted in official statistics if they are not willing or able to cooperate with the police and prosecution in building a trafficking case.17 In addition to this, people identified as possible victims at the border do not receive assistance and are not counted, but instead receive a removal order or are sent onwards to a final destination in neighbouring countries.18 All in all, the way in which trafficking is registered in Sweden by the police, based on which victims they need to be able to stay in the country, does not only influence how many are counted in the statistics, but also which groups are counted. Social service providers come into contact with other groups of trafficking victims than the police do. They get different information from victims and have access to other sources of information (Brunovskis 2012: 11). It is, furthermore, problematic to use and compare national trafficking registration figures to say something about the extent of trafficking in a country and developments over time. It is often a case of comparing apples and oranges. A comparison between Norway and Sweden demonstrates that even countries with similar laws and cultures still produce trafficking figures that are not comparable. The countries have similar laws and ways of policing the prostitution market, but will continue to produce very different figures on the extent of trafficking. Like Huisman and Kleemans (2014), we argue that without knowledge of the details of how prostitution and trafficking legislation is actually implemented and acted upon by law enforcement, it is difficult to say anything meaningful about how different countries approach trafficking and how their approaches affect the extent of trafficking.

“The Alien Act allows for the possibility to issue a temporary residence permit to someone who is willing to witness and facilitating starting up an investigation or for a legal proceeding to be conducted. A temporary residence permit can be issued for six months and thereafter be renewed. According to the same section, an alien can also get a temporary residence permit for 30 days, in order to recover and decide whether to cooperate with authorities within crime investigation” (Aliens Act (2005/716) Chapter 5. 15 §). 18 Aftenposten 11.05.06: «Norge - et marked for menneskehandlere». 17

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Conclusion As described above, the Swedish procedures to identify and tackle trafficking have the likely effect of producing lower figures on trafficking than countries with other procedures. In other countries, the stated aim is that the needs of the police and prosecution should not be an obstacle for victims to receive assistance. In neighbouring Norway, for instance, there is a stated low threshold for identifying someone as a victim of trafficking and giving them access to assistance without cooperation with the police being a precondition. Who is counted as a victim of trafficking is based on who receives such assistance, not on who cooperates with the police. In Norway, the needs of victims are prioritised to such an extent that the police finds that it stands in the way of prosecuting traffickers, as the system gives victims few incentives to report trafficking and cooperate with the police (Brunovskis and Skilbrei 2016). In addition to taking into consideration how the figures are actually produced, researchers should be cautious of concluding on how a country approaches prostitution and human trafficking by looking at their prostitution and trafficking laws alone. Policies move from international to national agendas and from national policy-making to national and local implementation or appropriation. As researchers, we need an understanding of the totality of what is done and we need comparative work to explore the consequences of policies. We argue that to evaluate whether the Swedish Sex Purchase Act reduces human trafficking, it is also important to look at how prostitution and human trafficking are being policed in a context that is also covered by other laws. Prostitution is not policed with prostitution laws alone, and the complexity of how the phenomenon is dealt with in Sweden demonstrates that our understanding of prostitution law requires more insight into the relationship between the law on paper and the law in action. Prostitution is a highly international phenomenon, which means that the mobility of both buyers and sellers is directed by much more than domestic legislation specifically designed to have an impact on the phenomenon. What goes on inside the nation state in terms of criminal justice or other policies is not as important as policymakers appear to believe. The fact is that we do not have sophisticated knowledge about the relationship between prostitution and trafficking laws and realities. Policymakers and law enforcement operate on assumptions about how one affects the other but the issue is rarely problematised. This chapter points to how this problem is not only one of politics and activism: researchers too reproduce and give weight to statistics that are obviously dubious. We argue that the study of how these figures are produced needs to be more central to trafficking research, as sound figures are necessary for a targeted fight against trafficking. One reason why it is important to critically engage with how figures like these are taken to be more representative of reality than they actually are, is the fact that policies based on flawed statistics may produce outcomes that are detrimental to the health and well-being of people involved in prostitution and victims of trafficking. For possible victims of trafficking, the

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boundaries set between trafficking and prostitution have grave consequences, both in terms of their access to justice in the form of prosecution and access to protection in the form of victim assistance schemes. Incorrect figures may make it difficult to get an accurate overview of the scope of trafficking, but they also point our attention in a direction that may not be particularly fruitful (Scullion 2015: 27). Higher trafficking figures should not be taken to mean more trafficking. They may be equally valid as indicators of the level of efforts undertaken: more efforts, more cases brought to light. Unpacking the relationship between prostitution and trafficking is not only important to policy makers, law enforcement and social scientists, but also to victims and their futures. The solution we propose is not to do away with reliance on figures in policy development, but to be even more cautious in how they are established and interpreted, and to try to understand more about how they are produced. The fact that comparisons are made difficult due to different definitions and thresholds cannot be solved by harmonising definitions and institutional responses. There are good reasons for different agencies to approach the phenomenon of trafficking with a different outlook. The police need to have a higher threshold for identification than immigration officers, and immigration officers need to have a higher threshold than child protection services (Tyldum et al. 2015). The main lesson to be learned from this is that one should be careful not to take assessments and figures at face value in a field with such evident lack of evidence. The way forward is bringing in a level of detail in how we approach both figures and policies in order to allow us to evaluate the validity of claims made about the effects of different policies.

References Akee, R., Bedi, A. S., Basu, A. K., & Chau, N. H. (2010). Transnational trafficking, law enforcement and victim protection: A middleman’s perspective. IZA Discussion Paper No. 6226. Anderson, B., & O’Connell Davidson, J. (2004). Is trafficking in human beings demand driven? A multi-country pilot study. Geneva: IOM. Aromaa, K. (2007). Trafficking in human beings: Uniform definitions for better measuring and for effective counter-measures. In E. Savona & S. Stegonizzi (Eds.), Measuring human trafficking: Complexities and pitfalls (pp. 13–26). New York: Springer. Ask, B. (2011). Sweden: Why we criminalized purchase of sexual services. CNN International. Retrieved from: http://edition.cnn.com/2011/OPINION/03/31/sweden.beatrice.ask.trafficking/. Accessed November 28, 2014. Åström, K. (2014). Rättsliga åtgärder mot människohandel: Att skydda offer eller möta hot (Doctoral thesis). Umeå University, Faculty of Social Sciences, Department of Law, Sweden. Brunovskis, A. (2012). Balancing protection and prosecution in anti-trafficking policies. Report Nordic Council of Ministers. Brunovskis, A., & Skilbrei, M.-L. (2016). Two birds with one stone? Implications of conditional assistance in victim protection and prosecution of traffickers. Anti-Trafficking Review. doi:10. 14197/atr.20121662. Cho, S., Dreher, A, & Neumayer, E. (2013). Does Legalized prostitution increase human trafficking? World Development, 41(1), 67–82.

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Cho, S., Dreher, A., & Neumayer, E. (2014). Determinants of anti-trafficking policies: Evidence from a new index. The Scandinavian Journal of Economics, 116(2), 429–454. Dodillet, S., & Östergren, P. (2013). The Swedish Sex Purchase Act: Claimed success. In H. Wagenaar, S. Altink, & H. Amesberger (Eds.), Final report of the international comparative study of prostitution policy: Austria and The Netherlands. Platform 31: Den Haag. Ekberg, G. (2004). The Swedish law that prohibits the purchase of sexual services. Violence Against Women. doi:10.1177/1077801204268647. Ekberg, G., & Wahlberg, K. (2011). The Swedish approach: A European Union country fights sex trafficking. Solutions, 2(2). Retrieved from: http://www.thesolutionsjournal.com/node/895. Accessed November 28, 2014. Florin, O. (2012). A particular kind of violence: Swedish social policy puzzles of a multipurpose criminal law. Sexuality Research and Social Policy, 9(3), 269–278. Gallagher, A. (2014, November 28). The global slavery index is based on flawed data—Why does no one say so? The Guardian. Retrieved from: http://theguardian.com/global-development/povertymatters/2014/nov/28/global-slavery-index-walk-free-human-trafficking-anne-gallagher. Accessed April 13, 2016. Helmerson, A. (2010, July 27). Anmälda sexköp har fördubblats. Dagens Nyheter. Retrieved from: http://www.dn.se/nyheter/sverige/anmalda-sexkop-har-fordubblats/. Accessed September 16, 2016. Huisman, W., & Kleemans, E. R. (2014). The challenges of fighting sex trafficking in the legalized prostitution market of The Netherlands. Crime, Law & Social Change, 61, 215–228. doi:10. 1007/s10611-013-9512-4. Jakobsson, N., & Kotsadam, A. (2010). The law and economics of international sex slavery: Prostitution laws and trafficking for sexual exploitation. Working Papers in Economics, 458. Department of Economics, University of Gothenburg, Sweden. Jakobsson, N., & Kotsadam, A. (2013). The law and economics of international sex slavery: Prostitution laws and trafficking for sexual exploitation. European Journal of Law and Economics, 35(1), 87–107. doi:10.1007/s10657-011-9232-0. Kelemen, K., & Johansson, M. C. (2013). Still neglecting the demand that fuels human trafficking: A study comparing the criminal laws and practice of five european states on human trafficking, purchasing sex from trafficked adults and from minors. European Journal of Crime, Criminal Law and Criminal Justice, 21(3–4), 247–289. doi:10.1163/15718174-21042030. Kram, E. (2011, April 9). Prostituerade är brottsoffer. Svenska Dagbladet Opinion. Retrieved from: http://www.svd.se/prostituerade-ar-brottsoffer. Accessed November 28, 2014. Levy, J., & Jakobsson, P. (2014). Sweden’s abolitionist discourse and law: Effects on the dynamics of sex work and on the lives on Sweden’s sex workers. Criminology & Criminal Justice, 14(5), 593–607. Marinova, N., & James, P. (2012). The tragedy of human trafficking: Competing theories and European evidence. Foreign Policy Analysis, 8(3), 231–253. doi:10.1111/j.1743-8594.2011. 00162.x. Raymond, J. (1985). Report to the special rapporteur on violence against women. United Nations, Geneva, Switzerland. Massachusetts: Coalition Against Trafficking in Women. Scullion, D. (2015). Assessing the extent of human trafficking: Inherent difficulties and gradual progress. Social Inclusion, 3(1), 22–34. doi:10.17645/si.v3i1.176. Secretariat of the Council of Europe Convention on Action against Trafficking in Human Beings. (2014). Report concerning the implementation of the council of Europe convention on action against trafficking in human beings by Sweden. GRETA Group of Experts on Action against Trafficking in Human Beings, Council of Europe, Strasbourg. Skilbrei, M.-L., & Holmström, C. (2013). Prostitution policy in the Nordic Region. Ambiguous sympathies. Surrey: Ashgate. SOU. (2010). Förbud mot köp av sexuell tjänst, En utvärdering 1999-2008. Justitiedepartementet, Stockholm: Fritzes.

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The County Administrative Board of Stockholm. (2011). Nationella Riktlinjer för arbetet mot prostitution och människohandel för sexuella ändamål, Nationellt Metodstöd mot prostitution och människohandel. The County Administrative Board of Stockholm: Stockholm. The County Administrative Board of Stockholm. (2016). National referral mechanism protecting and supporting victims of trafficking in human beings in Sweden report 2016:29. Stockholm. The Migration Board. (2013). Report from EMN Sweden 2013:3 identification of victims of trafficking in human beings in international protection and forced return procedures in Sweden. European Migration Network, The Migration Board: Stockholm. The National Criminal Investigation Department. (2003). Handel med kvinnor. Lägesrapport 5 31 December 2002. National Criminal Investigation Department: Stockholm. The National Police Board (Rikspolisstyrelsen). (2007). Trafficking in human beings for sexual and other purposes. Situation Report 9: Stockholm. The National Police Board (Rikspolisstyrelsen). (2012). Trafficking in human beings for sexual and other purposes. Situation Report 13: Stockholm. The National Police Board (Rikspolisstyrelsen). (2013). Polisens förmåga att utreda ärenden om människohandel. Inspektion av polismyndigheternas förmåga att utreda ärenden om människohandel för sexuella ändamål och köp av sexuell tjänst. Tillsynsrapport 2013:7. The Swedish National Council for Crime Prevention. (2011). Prostitution och människohandel för sexuella ändamål. Report 2011:18. Tyldum, G., Lidén, H., Skilbrei, M.-L., Dalseng, C. F., & Kindt, K. T. (2015). Ikke våre barn. Identifisering og oppfølging av mindreårige ofre for menneskehandel i Norge. FAFO-rapport 2015:45. Weitzer, R. (2015). Researching prostitution and sex trafficking comparatively. Sexuality Research and Social Policy, 12(2), 81–91. doi:10.1007/s13178-014-0168-3.

Part III

Mobility Crimes

Chapter 6

The Mobility of East and Central European Organized Crime: The Cases of Lithuania, Poland, Bulgaria and Romania Dina Siegel

The transition period from socialism to capitalism, accompanied by political instability, economic chaos and new freedoms, is often described in the literature as providing the necessary conditions for the growth of organized crime in Eastern Europe. The opening up of the borders, the expansion of the EU and increased mobility are also seen as facilitating factors for cross-border criminal activities. In the present article an attempt will be made to combine these two processes—the transition and the enlargement of the EU—in an effort to explain the current activities of organized crime networks in East and Central Europe as well as their expansion to the West. Most East and Central European countries have an established tradition of organized crime, in particular since the fall of communism in the early 1990s, when a large number of local criminal organisations came to the fore. These organisations were known for their hierarchical structure, discipline and use of violence. Most criminal leaders were well connected to political figures and the business world and their activities were facilitated by corruption. In fact, the position and status of the leaders of these criminal organisations depended on their success in international business, their collaboration with the legitimate world and their ties to politics. This article is based on research data collected in 2012–2013 on itinerant East and Central European criminal groups operating on the territory of the Netherlands and Belgium. It focuses on four countries in particular: Lithuania, Poland, Bulgaria and Romania. At the time, these countries stood out in police statistics in the Netherlands. The research methods included interviews, observations and file analysis in all four countries and the Netherlands. The full research was published in Siegel (2014).

D. Siegel (&) Pompe Institute, Faculty of Law, Utrecht University, Boothstraat 6, 3512, Utrecht, The Netherlands e-mail: [email protected] © Springer International Publishing AG 2017 H. Nelen and D. Siegel (eds.), Contemporary Organized Crime, Studies of Organized Crime 16, DOI 10.1007/978-3-319-55973-5_6

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The present article will focus on the socio-economic conditions facilitating the mobility of criminal groups to the West.

The Long Transition Period The transition from socialism to capitalism involved a long and confusing process. In the social science literature, most Central and East European countries are still described as unsafe, economically unstable, and inclined to turn a blind eye to corruption and organized crime. Shifts in perceptions, images and terminology progressed with difficulty, if only because people were still afraid of government sanctions. The boundaries between legal and illegal were blurred, the process of rethinking and reorganising the basic principles of the economy was complex and organized crime took full advantage of the uncertainty and confusion surrounding business transactions. The transition process brought new economic and social conditions, such as the free mobility of people, goods and capital in all post-socialist countries. At the beginning of the nineties, organized crime in most countries in East and Central Europe resembled a ‘diabolical troika’ (Friedman 2000), a configuration consisting of members of the old state apparatus (the nomenklatura), professional criminals and people who operated on the black market, and a new type of ‘businessman’. Corruption and distortion were rampant as a result of the fact that the process of privatisation and the transition to the free market were not accompanied by effective regulation regarding the rights of ownership (Siegel 2005). Despite their similarities, there were also notable differences between the various countries in transition, not just in their internal organisation and socio-economic dynamics, but also in their position vis-à-vis other countries. For example, some countries were not only forced to rearrange their economic markets and democratic regimes, but also to assert their independence [such as the countries of former Yugoslavia (Selih 2012)] and deal with violent ethnic conflicts and socio-political unrest. The post-socialist transition period has been well studied by criminologists and there is an abundance of terms to describe the situation at the time, such as the ‘captured state’ or the ‘privatized state’ (Brovkin 1988), ‘processes of privatisation and quasi-privatisation’ (World Bank 2000), the ‘bandit state’ (Mateescu 2001) where ‘violent entrepreneurs’ (Volkov 2002) and ‘blackmailers’ (Darden 2001) operate as free businessmen. The socio-economic conditions in East and Central Europe varied from one country to another, but some general patterns can be distinguished in almost all of them. In most post-socialist countries a considerable number of police personnel moved into the private security industry, which became active in both legal and illegal markets. Entrepreneurs in the security industry turned to extortion,

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kidnapping, robbery and debt collection (Los 2003: 153). In most countries former sportsmen (athletes, wrestlers and boxers), members of army sports clubs and former soldiers played an important role (Nikolov 1997). In this period, the countries were also faced with an influx of criminal groups from abroad, mainly from the former Soviet Union and Asia (Cejp and Scheinost 2012: 163). Russian-speaking criminals operated in Poland, Turkish drug traffickers were active in the former Yugoslavia and Hungary became the target of East-Asian criminal groups (ibid.: 163). Criminal organisations from the former Soviet Union joined forces with Polish criminals (Plywaczewski 2003). Bulgarian, Romanian, Serbian and Turkish criminal groups were active in Hungary, mainly in the drug trade (KLPD 2004: 59). All these groups sought to expand their criminal markets not only in East and Central Europe, but also in Western Europe. At the same time, indigenous criminal groups mushroomed everywhere in the former socialist countries and, in a very short period of time, were able to strengthen their position. A joint characteristic of the organized crime groups in all these countries was their ambition to achieve internationalisation and the expansion of their markets and activities (Cejp and Scheinost 2012: 164, 165). Although there were slight differences in the areas of their activities, all post-socialist states faced problems with organized crime groups making huge profits through means of extortion, human trafficking, fraud and financial crimes, and the smuggling of drugs, weapons, cigarettes, cars and art.

The Enlargement of the EU—Warnings from Criminological Studies On 1 May 2004, ten countries were admitted to the EU as new member states, eight of them in East and Central Europe. The EU considered that the economy, agriculture, human rights situation and standard of living in these countries had improved to such an extent that they now complied with EU requirements. In 2002–2003 these countries had been evaluated and found to be ‘good enough’ for EU membership. It was not until the very final phase that some politicians and analysts expressed their doubts in the media, asking questions about organized crime, corruption and other serious problems. In 2007 further expansion of the European Union took place. Two important aspects of this expansion were seriously underestimated throughout the preparations. (1) There was no evaluation of the crime level in the new countries, even though many of these countries were known in the academic literature for their high levels of corruption, organized crime and violence. (2) Despite clear signals and police statistics indicating that East European criminals were already operating in West Europe and that further enlargement of the EU would be followed by even more crime from East Europe, no preventive measures were taken with regard to this issue (Siegel 2006).

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By this time, a number of international and Dutch academic reports had been published on East and Central European criminal organisations and their involvement in robbery, fraud, car theft, human trafficking and prostitution in their own countries as well as abroad (Aromaa 1998; Joutsen 2000; Krajewski 2004; Plywaczewski 2003; Bruinsma 2004; Gruszszynska 2004). Beata Gruszszynska warned that: ‘an enlarged European Union means not only more territory and a greater population, but also more crime and perpetrators of crime’ (2004: 123). The Bulgarian Center for the Study of Democracy in Sofia published 15 reports in English on organized crime, criminal markets and corruption in which they warned of possible negative consequences for the rest of Europe if Bulgaria joined the EU (CSD 1999a, b, c, d, e, f, 2000a, b, 2002a, b, 2003, 2004a, b, c, 2007). Various international organisations also presented their analyses of threats and criminal activities originating in East and Central Europe (including IOM 2000; OSCE 2002; Europol 1999; EMCDA 2002). In the Netherlands, the threat level was outlined by the police in 2004 (KLPD 2004). Violent Latvian and Polish gangs had been spotted in large Dutch cities. Many Dutch citizens anticipated problems with the new Europeans. Dutch shopkeepers, for example, were warned by their trade associations to stay alert and take preventive measures before 1 May 2004. Many of them had already had negative experiences with Polish and Bulgarian thieves. Furthermore, there was evidence that criminals interested in operating and/or living in the Netherlands had already arrived and settled there long ago. In the mid-1990s, the Van Traa Committee concluded that Russian, Yugoslavian and other East European criminals were active in the Netherlands. The problem of corruption in East and Central Europe is considered to be of major importance when it comes to organized crime. Various reports on the level of democracy within the four countries prior to their accession to the EU acknowledged that legislative and institutional changes had been implemented. However, what these reports had in common was that they all pointed to the discrepancy between legislative changes and the way in which they were applied in practice. The level of corruption has still not decreased significantly, despite pressure from the EU.

Categories of Organized Crime Groups Between the criminal organisations in the four studied countries there are many similarities as well as differences, especially with regard to the ethnic component, the role of criminal bosses, cooperation or rivalry with other criminal groups and the intensity of contacts with political and economic actors.

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Bulgaria In post-communist Bulgaria, three different forms of organized crime can be distinguished (CSD 2007: 11). The first group, the ‘force entrepreneurs’ (silovi grupirovki), consisted of former sportsmen, former police officers and former prisoners. They became more generally known as Mutri, ‘members of organized crime’ (Tzvetkova 2008: 328). Their main activities involved the protection of stores, clubs and businesses, extortion, collecting loans and punishing people who did not repay their loans. The second group, the ‘high risk entrepreneurs’ (ekstremnoriskovi predpriemachi) included legal professionals such as accountants and lawyers. They operated in close cooperation with the ‘force entrepreneurs’ and their main activities involved prostitution and smuggling cars, drugs and foreign currency. The third group included former directors of large communist companies, former officials of the communist party and former employees of the Bulgarian Communist Security Services. These people established large holding companies in order to merge thousands of smaller companies and place them under their control. They dominated the financial institutions and took charge of state-owned banking institutions such as the Bulgarian National Bank, as well as the mass media. In the early 1990s, Bulgaria was a country where organized crime groups such as TIM, VIS, MULTIGROUP and SIK were able to establish private companies in every region, including insurance companies, banks, etc. The members of these groups set up a ‘market for selling violence and security’ (CSD 2007: 15), which was the key to survival for any legal business that existed in the country at that time. Bulgarian criminologists have pointed out that the development of private security companies, a synonym for organized crime, was unique to the Bulgarian situation and unlike the development of criminal networks in other post-communist countries (Gounev 2006; Tzvetkova 2008; RB16; RB11). Tzvetkova mentions two reports prepared by the Service for Information, Coordination and Analysis (SKIAD) in 1995, which clearly associated private security with protection rackets, such as VIS-1, Club 777, DITO-Veliko Turnovo, First Private Militia, Ares, Sofia, (Ivo Karamanski’s group) and various other firms (Tzvetkova 2008: 334, 335). The transformation of the ‘force entrepreneurs’ into criminal structures occurred in 1992, when the UN imposed an economic embargo on the Former Republic of Yugoslavia. Many smuggling channels were established during this period. One of the economic branches controlled by organized crime was the car market. High demand after the collapse of socialism led to the emergence of a large black market for stolen cars. In the mid-1990s, several hundreds of cars were stolen every month, i.e. in post-communist Bulgaria every fourth family (or company) was at risk of becoming a victim of car theft (CSD 2007: 15, 16). The country was soon covered in stickers bearing the inscription ‘This property is protected by …’. These stickers guaranteed the owners of cars, shops or other small businesses that their goods would not be stolen or damaged (CSD 2007: 20). Cars bearing stickers indicating that they were protected were indeed stolen much less often than cars without stickers. ‘The first person to implement the transformation of protection

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through security into protection through insurance in Bulgaria was the boss of VIS-1, Vasil Iliev’ (Tzvetkova 2008: 339). His men would first steal a car and then demand a ransom payment (Nikolov 1997: 4). Nevertheless, these insurance companies still provided better protection than the police. They developed networks not only inside the criminal world, but also with each other: when necessary, they bought their clients’ stolen cars back from each other (Tzvetkova 2008: 342). In 1994, government regulations and the growing number of legitimate security services (set up by former MVR officers) made the private security business less popular (Tzvetkova 2008: 337) and in May 1997 the Ministry of the Interior fatally disrupted the ‘business’ when it ordered all stickers to be removed. It then introduced a licensing regime for insurance companies, which resulted in the closure of many criminal insurance companies. As a result, organized crime turned its attention to new markets and activities, such as the smuggling of alcohol and cigarettes, one of the main and most profitable activities of the ‘force entrepreneurs’. The ‘loss’ of the car market was compensated for by the investment of money in the ongoing process of mass privatisation of state companies and banks. One of the most powerful Bulgarian organized crime groups in the years 2000 was Multigroup, the successor of the two criminal organisations VIS and SIC. In 2003 its leader Iliya Pavlov tried to legitimise his business dealings, but he was assassinated. After his murder, the powerful TIM was able fill the gap and rise to a leadership position in the criminal arena. In 2003 it was in charge of 150 ‘companies’ with approximately 10,000 employees. TIM is considered to be closely connected to the Russian mafia (specifically to one of its leaders, Michael Chiornyi). Based in Varna, TIM is involved in extortion, gambling, car theft and car trafficking, drugs and prostitution. Another criminal group is VAI Holdings, established in 1991 by former wrestler Vasil Iliev and consisting of his previous VIS-1 and VIS-2 private security firms. When Iliev was shot dead in 1995, his younger brother Georgi (alias Bob) took over the leadership, together with Nikolay Mirchiov (alias Koko). Konstantin Dimitrov (alias Samokovets), a relative of Iliev, a drug lord and trafficker, was killed in the centre of Amsterdam in December 2003. The group is engaged in drug trafficking, the trade in natural gas from Russia, money laundering, trafficking stolen cars from Western Europe to the former Soviet Union, extortion, arms trafficking, gambling and prostitution. It also owns several football teams and has interests in tourism and the entertainment business. Another major player is Intergroup, which specialises in trafficking stolen cars, the heroin trade, fraud, extortion and prostitution. The group is involved in both legal and illegal enterprises ranging from drug trafficking and human smuggling and/or trafficking to business interests in sporting clubs, banks, oil, metal trading, construction and real estate. From 2001 to 2005 a ‘mafia war’ took place in Bulgaria during which several crime bosses were killed (CSD 2007: 67).

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Romania In contrast to Bulgaria, it is more difficult to differentiate between the different categories of organized crime groups in Romania after the fall of communism. However, a distinction can be made between three general groups: the first group consists of the old nomenklatura and Securitate (Secret Service) members involved in extortion and money laundering, the second group includes foreign nationals and Romanian repatriates mainly involved in smuggling drugs and cars, while the third category is specific to the Romanian context and includes the so-called interlopi. Regarding the first group, the rise of organized crime in post-socialist Romania was made possible, as was the case in Bulgaria, by the strong relationships between politicians and illegal businessmen (Mateescu 2002). However, the roots of this connection are to be found much earlier in the socialist era. The internal situation of ‘pauperisation and shortages’ and the external agenda of repaying the foreign debt, ‘created extremely fertile ground for the proliferation of trans-border organized crime’ (CSD 2002a, b: 19). Managers of state enterprises and members of the Securitate were engaged in money laundering and cigarette, drug and arms smuggling. These smuggling activities had been going on since the 1970s ‘with the goal of obtaining hard currency for Securitate’s covert operations abroad’ (ibid.). Given the overall poverty in the transition period that affected even the Securitate, its members began to divert money from the smuggling business to their own accounts, mostly in Switzerland (ibid.). The path for organized crime to flourish was paved in the early 1990s, when a massive banking fraud perpetrated by former state officials caused ‘the loss of the life savings of tens of thousands of small-scale investors’ (Salinger 2005: 272). The transition period meant ‘the beginning or, better said, the escalation of authentic Romanian organized crime’ (Albu 2007: 170). The second group included foreign nationals who played an important role in establishing smuggling channels. In response to the harsh living conditions in the 1980s, students from developing countries (mostly Arab), studying in Romania, became ‘businessmen’ and the main suppliers of the black market. After 1990 they were the first to ‘legalise’ their business. The biggest competition to the Arab smugglers seems to have come from Turkish Kurds who controlled the heroin trade. (Observatoire Geopolitique des Drogues 1997 in CSD 2002a: 20). Although at first the great majority of people involved in the drug business were foreigners, Romanian criminals are currently well integrated into drug trafficking (Albu 2007: 198). This was also the time when the repatriates appeared, people who had left Romania during communism and had become involved in drug networks. They returned to Romania either to recruit new members or to launder money (ibid.). Several of the most influential groups emerged in the 1990s. The country’s proximity to Russia facilitated the growth of drug trafficking, human smuggling, car theft and the black market in nuclear material from former Soviet republics (Salinger 2005: 272–273). The port of Constanta on the Black Sea, a major

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international hub with large commercial flows, was efficiently used by Romanian organized crime for smuggling and illegal trade (OCTA 2008). The third category of criminal groups consists of the so-called interlopi. In the Romanian media the ‘interlop’ is described as a big boss, the head of a gang, whose blessing is needed before his subordinates can enter a certain market. The ‘interlop’ is described as having ‘born aggressiveness, affective instability and double morality. A gypsy mafioso is a master at adapting to situations. He knows that there are certain people whom he must approach with humility and respect. Towards others, he manifests his power and his force’ (Pitulescu in Vertical News 2011). These professional criminal clan bosses run their own networks and do not have a clear action area. The Corduneanu clan is involved in human trafficking, drugs and card fraud. The Tanase and Gologan clans are known for human trafficking but are willing to take advantage of other opportunities. In the 1990s, the first members of organized crime belonged to ‘Raketi’ groups, which included thousands of soldiers who had returned from the ‘strategic areas’ in various East European countries. Another organized crime group in Romania in the early 1990s was led by Zaher Iskandarani. He recruited a series of associates from the interlop world in Timisoara and other towns, as well as foreign businessmen from various countries. He established good contacts with corrupt customs officials and got involved in trafficking cars stolen in the West, cigarettes, coffee, alcohol, drugs, arms and munitions, and petroleum products. Iskandarani’s group included more than 400 core members. It also had a clear division of roles and more than 11,000 participants (associates, protégées, etc.). The Clămparu network, named after its leader Ioan Clămparu, rose to prominence in the years 1988–1998. Clămparu established a human trafficking network (RISE Project-Investigation 2012), then moved to Spain, where—according to Romanian prosecutors—he still runs this network’s activities. In Spain, he monopolised the prostitution market by eliminating rival Russians and Albanians (Evenimentul Zilei 2012). His network has branches in Italy, Ireland, France and Great Britain (Ziare 2012). Another criminal group is headed by Fane Spoitoru, who used to be a boxer in the 1990s, but made a name for himself in the criminal world due to ‘the friendship of some high-ranking prosecutors and judges’ (Pitulescu in Vertical News 2011). In 1990–1991 he established businesses in Germany and later bought a coffee shop and a taxi company in Bucharest (interview with Fane Spoitoru in Evenimentul Zilei 1998). In 1996, he spread his activities to Canada, but was sent back by the Canadian authorities to Romania, where he spent a short spell in prison before being released (Vertical News 2011). Another powerful organisation is ‘the Dragon’. This network was established in 1995. The Dragon’s orders were executed by the Cămătaru clan, the Clămparu clan and the Alexa network. Each of them was in charge of a particular activity but they also worked together. If one operational unit fell into the hands of the law, their place was filled by the next group (Jurnalul National 2005).

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Today, Romania has also become an arena for foreign criminal groups, such as Chinese Triads, Vietnamese crime groups dealing in migrant smuggling, and the illegal trade in goods through Constanta Harbour, which are later sold in the Red Dragon commercial centre. The money made this way is smuggled in cars to Moldova and Ukraine and deposited in shady banks (Anchete online 2011). The Turkish mafia is involved in complex drug networks, stolen car trafficking and acts of extreme violence (Descopera 2009). As is the case in other post-socialist countries, Romanian cities are divided into spheres of influence where various criminal groups demand protection fees from both private persons and businesses.

Poland After the collapse of the socialist system in Poland, the crime rates for drug trafficking, prostitution, the use of violence against individuals, violence between groups, etc. increased as rapidly as in other post-socialist countries. Much like the situation elsewhere in Eastern Europe, a new type of criminal arose when people high up in the Polish political hierarchy became involved in criminal activities, as demonstrated by a series of economic scandals in the 1990s. The number of organized crime groups involved in economic and ordinary crimes also increased dramatically (Plywaczewski 2004: 468; RP1; Border Guard Warsaw 2012). Foreign groups began operating in Poland. The internationalisation of organized crime in Poland manifested itself in the growing presence of criminals from Belarus, Moldova, Armenia, Ukraine and other Russian-speaking organized crime groups (Plywaczewski 2004: 477). An example of such a group came from ‘Treble City’ (Trójmiasto, which consists of the three cities of Gdansk, Sopot and Gdynia). This group counted Russians and Belarusians among its members and had contacts with Polish and German groups active in the illicit arms and drugs trade. Most of the activities of the Russian-speaking groups in Poland concerned crimes against the state and social institutions, forging documents, kidnapping and robberies (Plywaczewski 2004: 477). The crime patterns in Poland changed when serious economic crimes became more commonplace due to privatisation and rapid economic development. The criminal world also became more violent: organized crime groups carried out bombings to eliminate competitors and/or traitors in Warsaw, Gdansk and Katowice (Krajewski 2004). Later in the 1990s, Poland became increasingly involved in the drug trade (Krajewski 2003), partly because of its geographical location and partly because its police and secret services were less acquainted with methods of tackling drug trafficking than police in Western Europe. In the 1990s, Poland became one of the most important countries for the production of amphetamine. It also became a major destination and transit country for human trafficking, in which a wide range of international networks were involved.

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After the fall of communism, the opening of the borders made it possible to import Western cars to Poland. The number of stolen cars increased significantly until 2002, when rates decreased again (Plywaczewski 2004: 482–483). Car theft was common in 60% of all Polish cities, particularly in Krakow and Warsaw. During these years, groups involved in car theft were among the most organized and internationally operating criminal groups (ibid.). The two largest criminal organisations, named Pruszków and Wolomin, had international contacts. Their mutual rivalry resulted in many violent incidents. The Pruszków group was led by Andrzej Kolikowski (alias Pershing), who started his international criminal career shortly before the fall of socialism. In the 1980s, he smuggled cars and currency, operating from West Germany. Later, he invested in an illegal casino in Warsaw. In 1992, during the reform period, he put together a group of 100 people and joined the Pruszków Mafia (named after the small town of Pruszków near Warsaw). This group was involved in extortion and counterfeiting. The criminal proceeds were laundered in legal businesses such as restaurants and discothèques. At the end of the 1990s, his leadership was challenged by the rival Wolomin group and in 1999 Kolikowski was murdered. The new leader of the Pruszków organisation, Leszek Danielak (alias Wañka), was arrested in 2000 (Warsaw Voice 2000a). In 2001 it was estimated that the Pruszków groups consisted of 2000 members (Warsaw Voice 2002b). The organisation was active inside Poland, especially in the Lower Silesian (Dolno-Slaskie) and West Pomeranian (Zachodniopomorskie) regions (idem, 2002). Investigative journalists estimated that there were about 400 criminal groups operating in Poland at the beginning of the twenty first century (RFE/RL 2002). In the mid-2000s the Russian criminal group Solntsevskaya, which had been active in Poland from the beginning of privatisation in the 1990s, became the leader of organized crime in the country after groups from Pruszków, Wolomin, Marki, Zoliborz and Mokotow were dismantled by the police. Today the structure of criminal groups in Poland has changed: they are less organized, smaller and more inclined to cooperate with organized crime groups in western countries. Their main aim is still the same: material gain in the form of money and territory. Violence is still widely used to maintain discipline within the group, although there is less violence involved in crimes such as robberies and extortion in comparison to previous years (Border Police Warsaw 2012). What is noticeable is the increased incidence of theft of vehicles used in construction, road building, infrastructure and agriculture. The other main activities of Polish crime groups involve human trafficking for the purpose of forced labour and phishing through the use of documents relating to loans and social assistance.

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Lithuania After the fall of socialism in Lithuania1 we can see developments in the country that are similar to the radical changes that took place in the Soviet Union. The first private ‘cooperatives’ in the Soviet Union were set up in the late 1980s. In 1992, the government announced its policy of privatisation. Those who had accumulated sufficient funds were in a position to buy state enterprises for relatively little money. These people ‘privatised’ economic enterprises in their sector and removed them from government control (Varese 2001: 24). The younger generation saw opportunities to make money without much business experience or a specialised education. The old nomenklatura was joined by new young entrepreneurs who had no government money or contacts, but a great deal of motivation and talent. Among them there were also persons connected to organized crime. According to Ledeneva, ‘organized crime in the 1990s should be viewed as an expanding network of recruits who did not inherit anything from the Soviet past: no money, no power, no connections; they were forced to use violence to make money’ (1998: 190). In Lithuania, the situation of privatisation, economic chaos and political instability was also seized upon by new groups of criminals. These were people with few prospects who were nevertheless able to quickly and efficiently build contacts with politicians, the police and the church. The dominant view is that the economic chaos and the situation of lawlessness in the transition period in post-Soviet republics made it virtually impossible for a business to survive without protection, which the government was unable to provide. As everywhere in the former Soviet Union, businesses in Lithuania came under the protection or krysha (Russian for ‘roof’) of a criminal organisation. Krysha could be provided either by criminal organisations or the police. In Lithuania in the 1990s, criminal groups functioned on the stogas principle (which was the same as the krysha model) whereby fees were levied by criminal organisations in return for the right to run a business. Those who refused to pay were threatened, physically harmed or had their properties destroyed (Gutauskas et al. 2004: 207). The main criminal groups in Lithuania after the fall of communism were the Daktarai (in Kaunas) and the Vilniusskaya Brigada and the Centurioni (in Vilnius). The Tulpinai and Zemaitukai in Panevezys (also called the ‘Lithuanian Chicago’), a group of Gaidjurgis in Klaipeda, and the Princai in Siauliai were the names of other well armed criminal organisations that did not hesitate to use violence in the process of redistributing state-owned property (Gutauskas et al. 2004: 201, 202). High-ranking police officers, judges, journalists and businessmen were among the victims murdered by organized crime (Juska et al. 2004: 164). The whole country 1

For a more detailed and full account of Lithuanian organized crime groups and their mobility in the EU see Siegel (2014). Lithuanian itinerant gangs in the Netherlands, Kriminologijos studijos, 2, p. 5–40.

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seemed to be divided into spheres of influence, where all businesses, from large corporations to street kiosks, were controlled by criminal groups. These first criminal groups acquired a dominant position on the criminal market. Some managed to infiltrate the army, the government and the banking sector. The criminal world of the former Soviet Union can be seen as a mosaic, each part representing a different criminal gang with its own military system, sphere of influence and business structure (Siegel 2005: 2). These criminal groups were structured hierarchically, with a leader at the top, followed by the leaders of various divisions, the brigadiers and the soldiers. They hired ‘specialists’, such as lawyers and financial advisors, to work exclusively for the organisation and made use of a communal fund (obshchak). Many wrestlers, boxers, weight lifters, ice hockey players and unemployed members of the KGB or the special forces of the Soviet army became members of these first criminal organisations (ibid.). By 1993, four major criminal organisations were operating in Kaunas: the Daktarai (doctors, physicians), named after their leader Henrikas Daktaras (alias Henyte) from Vilijampole, a notorious criminal suburb of the city. The second group was known as the Zhaliakalnis (from the Green Mountain district) named after a neighbourhood in the city, or Dashkiniai, under the leadership of the Dashkevitchiai brothers. One of the brothers was president of the Lithuanian Boxing Federation. The third group was known as Senamiestis (the Old City), and the fourth as the Kauliniai (also called Shancthiai). All these groups consisted of family members, such as uncles and cousins, or childhood friends from school or the neighbourhood. Mutual trust among members was based on a shared past in the streets and neighbourhoods where the recruits had grown up. Most members were Lithuanians, and the few Russians who joined were never included in the top of the organisation. This, however, did not prevent the Daktarai and Dashkiniai from seeking to cooperate with Russian criminal groups (Siegel 2014: 43–44). In Lithuania, a distinction is usually made between organized crime groups from Kaunas and those from Vilnius. The differences do not so much concern the geographical location (the cities are no more than 60 km apart), but rather the composition of the gangs. Organized crime in Vilnius is multicultural, while in Kaunas it is more nationalistic Lithuanian (Siegel 2014: 43). One example of the cosmopolitan nature of the underworld in Vilnius was the Vilniusskaya Brigada, which consisted of Lithuanians and Russians. Their leader was Boris Dekanidze, convicted in 1994 for the murder of the Lithuanian journalist Vitas Lingys. Dekanidze was the last person to be executed before the death penalty was abolished in Lithuania in 1998. Organized crime in Vilnius worked together with former KGB officers and drug barons from Central Asia. Despite differences, most of the activities and spheres of influence of these organized crime groups were well coordinated and they communicated with international criminal groups (Johnstone 2004: 368). Henrikas Daktaras, at one point considered the godfather of the Lithuanian underworld, ran an organized crime group in Vilijampole. For many years he stood at the top of a strictly hierarchical organisation consisting of approximately 200 people, with a ‘board of directors’, brigadiers, torpedos (soldiers) and a communal

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fund. After his arrest, young criminals later used Daktaras’s name and ‘brand’ to reorganize, but these young criminals were much more violent. According to police informants, the Desantininkai gang became particularly notorious for brutal assassinations and torture. They used the services of contract killers from Russia or Belarus. These criminals, who operated throughout the entire country and later moved to Germany, specialised in contract killings and car theft. An influential criminal organisation in Klaipeda specialised in the training of juvenile car thieves (Gutauskas 2004: 207). Soon after the beginning of privatisation, criminal organisations controlled a significant part of the Lithuanian economy and their members also succeeded in penetrating political and financial institutions. Some managed to infiltrate banks, the military, the government and the tax department. In his 2011 report, Gutauskas mentioned the following seven major organized crime groups still operating on Lithuanian territory: the Agurkas (Agurkiniai), Beglikas (Beglikiai), Šmikiniai, Žemaičiai, Miliai, Buduliai and Švinius (Gutauskas 2011: 66–68). These criminal groups are large organisations with a broad range of activities. All these groups are involved in extortion and drug trafficking, but some also focus on cigarette smuggling, prostitution, robbery, vehicle theft and other crimes. Other activities include counterfeiting euro banknotes and car theft, which is still the major source of income for all the groups from Kaunas. Lithuanian criminal groups also engage in fraud and the falsification of documents. The stable criminal hierarchical structures have been replaced by more flexible networks. Criminal operations are now usually conducted by small groups, in a framework of supplier–consumer or a temporary employer–employee relationship (Pullat 2009: 24). There is an emphasis on specialisation and the distribution of labour, especially as regards cross-border operations (ibid.: 26). Criminal organisations also ‘invest’ in legal companies and then demand repayment of their investment—at double the original amount. Criminal proceeds are primarily invested in real estate and luxury goods and services (Siegel 2014: 44). The younger generation of criminals has become more business-oriented and mainly operates across national borders in search of new markets and clients. They do not feel bound by the traditions and customs of the old criminals. Some groups are now focusing exclusively on money laundering, tax evasion and other fiscal and economic crimes (Gutauskas 2011: 211). These days, the chaos caused by rapid privatisation has almost disappeared in most East and Central European countries. These countries became too small a territory for the activities of local criminal groups. Large criminal organisations send their members abroad to establish new contacts and look for new opportunities.

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The Mobility of Organized Crime After establishing their position at home and, in many cases, in neighbouring countries, a number of large criminal organisations are now looking for new opportunities further west. Thus, Bulgarian organized crime groups now operate transnationally, with drugs and car theft/smuggling as their main activities. Another form of Bulgarian organized crime has manifested itself in West and Southern Europe in the shape of small itinerant criminal groups (or clans) specialised in pickpocketing, shoplifting and burglary. After the fall of communism and especially after Bulgaria’s accession to the European Union, many of these people began practicing their profession abroad because they were no longer able to ‘earn’ enough in their own country. They first started in neighbouring countries, but soon went on to become travelling thieves operating all over Europe (Siegel 2014). Romanian criminal groups are also overrepresented in police statistics in many West European countries. In the Netherlands, these groups can be tied to burglary, shoplifting, car theft and pickpocketing (Siegel 2014). Various Polish groups have also moved to Western Europe. Many criminals wanted by Polish law enforcement are hiding abroad. Poland is also still an important production and transit country for drug trafficking. Various Polish groups are engaged in the production of the synthetic drug amphetamine. The most commonly used ingredient in the illicit manufacture of amphetamine is BMK (benzyl methyl ketone), which is obtained and smuggled across the eastern border. Not much stays in Poland: some is used to manufacture amphetamine, but the rest goes to Western Europe, primarily the Netherlands and Belgium (Border Police Warsaw 2012). Due to the high prices and taxes on tobacco products, several Polish criminal groups have become involved in the production and smuggling of illegal tobacco products. The most popular smuggled goods on the black market are cigarettes from Ukraine, followed by cigarettes from Russia, Belarus and China. Other common offences involve the reactivation of pre-war companies with a view to phishing for EU grants and tax fraud related to trade rights for emitting carbon dioxide (Border Police Warsaw 2012). A special form of human trafficking in Poland involves forcing people to beg. Organized crime groups recruit handicapped persons, women with small children and children with a visible disability in other countries, especially Romania and Moldova. These people are then taken to Poland and other EU countries, usually without documents confirming their identity. They are then forced to beg, often by physical and psychological violence. Small children in particular are treated as objects: they are collected from their mothers and ‘leant out’ to other women for begging. The perpetrators of this crime are usually citizens of Moldova and Romania (Border Police Warsaw 2012). This is a new form of organized crime, even though it is not regarded as ‘organized crime’ in all jurisdictions. The Lithuanian criminal groups are now considered to be the most influential mafia both in the Baltic countries and elsewhere in East Europe. They collaborate with each other as well as with local criminal groups outside Lithuania. Criminals

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from different countries and diverse ethnic groups are apparently finding it easy to connect with each other. Cooperative relationships have developed between Polish criminals and members of the Russian mafia, between Lithuanians and grupirovki from Belarus, and between Lithuanian, Turkish and Afghan criminals, particularly in the area of smuggling and the illegal trade in drugs, cigarettes, women and oil. These relationships highlight the high degree of flexibility and mobility on the part of contemporary transnational organized crime. The Agurkiniai, named after their leader Saulius Veletchka’s nickname ‘Agurkas’, are the major Lithuanian criminal organisation operating internationally. This group focuses on car theft, robbery, extortion, fraud, women trafficking and counterfeiting. The Agurkiniai operate in Russia, the other Baltic countries and almost all of Western Europe. Two other internationally operating criminal organisations are the Shiliniai from Zhemaitiya (the northwest of Lithuania), who are involved in fraud, robbery, stealing cars, motorcycles and agricultural machinery, the illegal arms trade and drug smuggling, and the Gaidjurginiai gang (property crime and drug smuggling) (Siegel 2014). Other transnational groups include the Kamuoliniai, Shmikiniai, Beglikiniai, Shvininiai and Buduliai (Gutauskas 2011: 66–68). These organisations operate in the Baltic states, Germany, the United Kingdom and Spain. They are primarily involved in smuggling drugs and cigarettes and counterfeiting (ibid.). According to Varese, contrary to the prevailing conviction that organized crime has spread its activities across the globe as a result of open borders, criminals are often forced to move and do not always do so of their own free will. Sometimes they flee from prosecution by the justice system and/or rivalry with other criminal groups in their own countries and their relocations are not always successful. ‘What might appear the product of globalisation is in fact the consequence of state repression exporting the problem to other countries’ (Varese 2011: 8). The choice of a new location is often determined by the presence of reliable contacts, friends or family. My previous research into the post-Soviet mafia in the Netherlands (Siegel 2005) has also shown that these criminals are extremely mobile. In the 1990s, they used to come to the Netherlands for a temporary respite from the gang wars in the former Soviet Union or to settle their family in a peaceful environment, but they did not stay in the Netherlands to do any real business.

Conclusion In this article, an attempt was made to analyse the socio-economic and political conditions that led to the rise to prominence of organized crime groups in four East and Central European countries, namely Bulgaria, Romania, Poland and Lithuania. Like other post-socialist states, these four countries have undergone the transition from socialism to the capitalist market system and benefited from the expansion of the EU. As we have seen, these two processes have enabled and facilitated the rise

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and easy mobility of organized crime, as well as the emergence of new forms of cross-border crime. Structural changes in the setup of criminal organisations, from the ‘old-style’ strictly hierarchical organisations of the 1990s to the present-day multiple flexible criminal networks, have enabled a new generation of criminals to expand their areas of influence and develop new criminal markets and products abroad. The ease with which criminal organisations from different countries appear to be able to connect and collaborate with each other has further facilitated the increase in cross-border activities by these groups. The difficulties faced by law enforcement in their efforts to combat East and Central European criminal organisations, such as a lack of information, have not been addressed in this article, but it is clear that further criminological research is needed to gain more insight into the development of new markets, new forms of mobile crime, new modi operandi and the emergence of new criminal leaders.

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Krajewski, K. (2003). Drugs, markets and criminal justice in Poland. Crime, Law & Social Change, 40, 273–293. Krajewski, K. (2004). Crime and criminal justice in Poland. European Journal of Criminology, 1(3), 377–407. KLPD. (2004). Misdaad zonder grenzen. Criminaliteitsbeeld Centraal en Oost-Europa (2002– 2003). Zwolle: KLPD. Ledeneva, A. (1998). Russia’s economy of favours: Blat, networking and informal exchange. Cambridge: Cambridge University Press. Los, M. (2003). Crime in transition: The post-communist state, markets and crime. Crime, Law and Social Change, 40, 145–169. Mateescu, O. (2001). ‘Ours is a Bandit State!’ Power and corruption in postsocialist Romania. Polish Sociological Review, 4, 379–395. Mateescu, O. (2002). The dark side of the state: ‘Mafia’ and ‘National Interest’ in post-socialist Romania. Romanian Journal of Society and Politics, 2(1), 5–29. Nikolov, J. (1997). Crime and corruption after communism: Organized crime in Bulgaria. East European Constitutional Review, 6(4), 80–84. OSCE (Office for Security and Cooperation in Europe). (2002). Trafficking in Human Beings in Southeastern Europe: Current Situation and Responses to Trafficking in Human Beings. Retrieved from: https://www.osce.org/odihr/documents/at_trassde.php3 Plywaczewski, E. (2003). The Russian and Polish mafia in central Europe. In D. Siegel, H. van de Bunt, & D. Zaitch (Eds.), Global organized crime: Trends and developments. Dordrecht, Boston, London: Kluwer. Plywaczewski, E. (2004). Organized crime in Poland: Its development from ‘Real Socialism’ to present times. In C. Fijnaut & L. Paoli (Eds.), Organized crime in Europe (pp. 467–498). New York: Springer. Pullat, R. (2009). Criminal hierarchal structures: Models of organized crime in the Baltic Sea Region. SIAK-Journal - Zeitschrift fur Polizeiwissenschaft und Polizeiliche Praxis, 2, 24–30. RISE Project-Investigation. (2012, 2 September). The day in which Clamparu became a criminal (Ziua in care Clamparu a devenit criminal). Retrieved from: http://www.riseproject.ro/articol/ ziua-in-care-clamparu-a-devenit-criminal Salinger, L. (Ed.). (2005). Encyclopedia of white-collar & corporate crime. Canada, Thousand Oaks: Sage Publications. Selih, A., & Zavrznik, A. (Eds.). (2012). Crime and transition in Central and Eastern Europe. New York: Springer. Siegel, D. (2005). Russische Bizniz. Amsterdam: Meulenhoff. Siegel, D. (2006). ‘The criminal import/export between East and West Europe’, presentation, CIROC seminar of 20/12/2006. Amsterdam: Vrije Universiteit. Siegel, D. (2014). Mobile banditry: East and Central European itinerant criminal groups in the Netherlands. The Hague: Eleven International Publishing. Tzvetkova, M. (2008). Aspects of the evolution of extra-legal protection in Bulgaria (1989–1999). Trends in Organized Crime, 11, 326–351. Varese, F. (2001). The Russian mafia. Oxford: Oxford University Press. Varese, F. (2011). Mafias on the move: How organized crime conquers new territories. Princeton, Oxford: Princeton University Press. VerticalNews.ro. (2011, 2 August). ‘Fost şef al Poliţiei Române, Ion Pitulescu: “România este un stat mafiot!”’ (Former Chief of Romanian Police, Ion Pitulescu: ‘Romania is a mafia state!’). Retrieved from: http://verticalnews.ro/fost-sef-al-politiei-romane-ion-pitulescu-%E2%80% 9Cromania-este-un-statmafiot%E2%80%9D/. Volkov, V. (2002). Violent entrepreneurs. The use of force in the making of Russian capitalism. Ithaca, London: Cornell University Press. Warsaw Voice. (2000a, 17 September). No. 38 (621). Witold Zygulski. “Fighting Medusa.” Retrieved from: http://www.warsawvoice.pl/old/v621/News04.html

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Warsaw Voice. (2002b, 29 September). No. 39 (727). Iwona A. Czerwinska. “The Mob on Trial.” Retrieved from: http://www.warsawvoice.pl/old/v727/News01.html World Bank. (2000). Anticorruption in transition: A contribution to the policy debate. Washington, DC: The World Bank. Ziare. (2012, 31 January). The trial of Clamparu begins Tuesday in Madrid. Retrieved from: http:// www.ziare.com/stiri/proces/procesul-lui-clamparu-incepe-marti-la-madrid-1148041

Chapter 7

1% Bikers, the Outlaw Extreme: An Evolving Subculture James F. Quinn

Introduction The one percent motorcycle club (1% MC) is said to be the only form of organized crime exported from the United States (Scaramella et al. 1997). The 1% MC is a globally recognized icon of the American anti-hero, but it is much more than a mere type of organized crime group. These clubs’ claim to be fraternal organizations focused on riding and working on motorcycles also holds much truth and reinforces their consistently gang-like concern for the group’s symbols, honor, and territory. Many members are felons (RCMP 1999) and club membership appears to escalate members’ criminal activities (Christian 2016). This suggests that these clubs are either breeding grounds or umbrella organizations for entrepreneurial criminal syndicates operated by members and associates (Quinn 2001; Barker 2005). The original 1% MCs were made up of white men from working class backgrounds who were given to impulsivity, toughness and hedonism, shared a love of motorcycles, and a disdain for the mainstream (Watson 1982). These early bikers were unpredictable and poorly organized groups given to brawling, instant gratification, and reckless bravado (Quinn and Forsyth 2007). As clubs proliferated across the nation in the 1960s and early ’70s, each group developed internal loyalties and hostility to “outsiders”, i.e., rival groups and mainstream “citizens”. Biker behavior is well predicted by extant theories of psychology and sociology. References to personal pathology seem unnecessary given the hyper masculine, socially isolated context of club life, and lower class focal concerns [autonomy, toughness, street smarts, legal troubles, fate, and excitement (Miller 1958)] typical of bikers. The “Robbers’ Cave” experiments describe the rapidity and intensity of group bonding and group rivalries under somewhat isolated conditions (Sherif et al. 1961). Vold’s group conflict theory asserts that similar groups competing for J.F. Quinn (&) 4184 Co. Rd. 893, Princeton TX 75407, USA e-mail: [email protected] © Springer International Publishing AG 2017 H. Nelen and D. Siegel (eds.), Contemporary Organized Crime, Studies of Organized Crime 16, DOI 10.1007/978-3-319-55973-5_7

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similar resources/members will develop intense animosities (1958: 203–210). Finally, Aronson and Mill demonstrated that the difficulty of joining a group directly predicts members’ subsequent loyalty (1959). Even an agent of the US Bureau of Alcohol, Tobacco, and Firearms (BATF) has described his comradely feelings toward club members during a two-year undercover investigation of the Mongols (Queen 2005: 167, 179, 226, 258–259). These intense and consistent, if irrational, loyalties create constant internecine conflict as clubs jockey for status and power by “patching in” smaller clubs and building new chapters to claim ever larger territory and membership. The costs of that violence led to the growth of rational entrepreneurialism that, in turn, reduced biker impulsivity and countercultural behavior (Quinn and Forsyth 2007). This paper reviews how the fraternal, gang-like, and entrepreneurial aspects of these clubs guided their evolution and activities and how efforts to control these clubs have contributed to their development and suggests new control strategies. A new perspective on these organizations is offered that may extend to other stateless entities on the fringes of society (e.g., white supremacist groups, certain political and religious extremists). The paper, like much of my earlier work, is based on triangulating information from scholarly and journalistic sources with confidential communications with law enforcement, club members, and their associates. These contacts serve to affirm and prioritize information that is thematic in the media and academic literature, but unique insights gleaned from these interactions are used to select the academic and journalistic sources cited. Information acquired through bikers and law enforcement are supported with citations to journalistic sources wherever feasible (See also, Quinn and Forsyth 2007).

A Brief History of the Subculture At least one US club claims to have originated in Chicago in 1935 (Outlaws MC undated), but the subculture of 1% clubs is traditionally dated to the 1947 melees in California from which the subculture and its iconography originated (Thompson 1966: 50–55). However, most clubs, and the subculture itself, really emerged from the car club fad that swept the US between 1955 and 1965 with inspiration from media anti-heroes such as Marlon Brando and James Dean. These early clubs were small local or regional groups with little organizational structure and infighting was common. However, by 1970 clubs had proliferated across the nation, their loyalties became intense and deep animosities between clubs replaced internal squabbles. The social changes of the American Civil Rights movement and the Vietnam-hippie era created the sort of anomie in which 1% clubs could flourish. Vietnam especially proved a boon to membership as some veterans longed for the camaraderie and excitement of the combat unit while resenting the anti-military sentiments popular in the mainstream (Quinn 2001).

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Most of the major modern clubs had emerged by 1970 and a few clubs had clearly come to dominate the subculture as they gained territory, members, and prestige by absorbing smaller clubs. This led to intense turf wars, especially among what was known as the “Big Four” clubs—Bandidos, Hells’ Angels, Outlaws, Pagans.1 These wars created a constant need for money to pay legal fees, strengthen defenses, and buy weapons. Club business demanded increasing amounts of time from members and this drove many to create crime rings, often in the burgeoning drug trade. The methamphetamine market was especially attractive but bikers also dealt in weapons, extortion, and prostitution while some members did various types of contract work for more traditional organized crime groups (Quinn 2001; Quinn and Forsyth 2007). Others owned legitimate businesses or worked as skilled or semi-skilled tradesmen (Jervis 2015; Cook 2015). By the late 1970s, 1% biker networks were firmly entrenched in the drug trade and had significant footholds in a plethora of enterprises across the “Saloon Society” in which they originated (Thompson 1966:15) and beyond. Several clubs had established strong links with like-minded Canadian groups during this period of consolidation. Meanwhile in the US, most small clubs that resisted absorption gave up claim to the 1% denotation and the right to claim territory.2 The Big Four clubs now dominated the subculture and had only a few rivals such as the California-based Vagos and the Mexican-dominated Mongols. The Hells Angels (HAMC) dominated the Northeast and west coast, the Outlaws held much of the Midwest and south, the Pagans claimed the mid-Atlantic and parts of the southeast while the Bandidos spread from Texas to Washington and Montana. Within a decade the Outlaws and Angels began to “patch over” or absorb Canadian clubs and form new chapters in areas contiguous to their US turf. The long standing hatred between these clubs led to warfare that virtually eliminated the Outlaws from Canada. They were soon replaced by the Bandidos who, like the Angels, actively recruited extant clubs in a drive for power and territory (Quinn and Forsyth 2007, 2009). When police broke the Italian Mafia’s hold on the Quebec drug trade, these two clubs quickly tried to take control of this lucrative territory. The Angels were better connected to the Colombian suppliers through their ties to the Italians (Humphreys 2001). The war was fought mainly with explosives which endangered the public and killed a child. This was the bloodiest war in biker history with over 160 deaths, almost all were bikers and club associates (RCMP 1999, 2002). Canadian law enforcement was frantic to stop to the violence. Their strategy, at least implicitly, was to destroy the weaker club—the Bandidos in alliance with

1

The Pagans have since been foto relegated to regional importance while the Mongols, who originated in the mid-1970s, have emerged as a major force in the subculture. 2 Territorial claims are made by use of a “bottom rocker” naming the city, state or region from which the biker hails. Thus the “three piece patch”—club name, insignia, territory—has become the mark of an “outlaw” club according to some. However, the Iron Guard, a law enforcement dominated club involved in the shooting at the 2016 Denver Motorcycle Expo also uses such an insignia as do many other non-1% clubs, so this symbolism should not be used to define the nature of club.

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some local mobsters - to end the war. This strategy is also common in the US (George 2005) and probably evolved as police with limited resources felt pressured to end violence. It ended the Quebec bombings but gave the Angels hegemony in Canada which they retain to this day. (Morselli et al. 2008; Morselli 2009; Sher and Marsden 2003: 22–23). Its results in Florida have been similar, favoring the Outlaws MC (George 2005). Simultaneously these three clubs began to recruit chapters in Western Europe and an Angel–Bandidos war broke out in Scandinavia. The use of explosives and military ordinance, and a shoot out in the Copenhagen Airport parking lot led to intense legal efforts to control the clubs. These legal threats to ban clubs and pressure from “international” (i.e., US) officers led to a truce that has largely held since the early 2000’s. At least in the cases of Quebec and Scandinavia, key leaders were said to be long-standing personal rivals (Lavigne 2000:16–17; Sher and Marsden pp. 22–3, 241; Brown 1999: 39; Stensgaard and Larsen 1999). Currently the Angels dominate Canada, the Bandidos and, to a much lesser extent, the Mongols and Outlaws compete with them in Western Europe although several other clubs claim a presence there, and some clubs are eyeing Eastern Europe as the next area for expansion (e.g., Outlaws undated).

Evolution of the Subculture The iconic image of the impulsive, hedonistic outlaw biker driven by loyalty to his “brothers” and extreme masculine honor is best described as the traditional, conservative (Wolf 1991: 102–103, 272), or purist aspect of the biker value system (Quinn and Forsyth 2007). These norms centered on motorcycling, brotherhood, mechanical skills, hedonism, and toughness. They encourage outraging the mainstream but are disdainful of “citizens” (i.e., non-bikers) and the media unless a biker can enjoy shocking them with his bravado and hedonism. This countercultural orientation still exists in modern clubs but it is increasingly over shadowed by more entrepreneurial norms. In other words, as the bikers learned that the extremes of a counterculture were bad for business, club hierarchies exerted more control over member selection and behavior. Over time the pressures of expansion, warfare and prosecution encouraged entrepreneurial norms to dominate, but not replace, purist ones in the US (Quinn and Forsyth 2007). A shift toward entrepreneurial values was required of the clubs as they sought to survive. Entrepreneurialism has become increasingly powerful since the late 1980s and may have entirely eclipsed purism in some European chapters (Quinn and Forsyth 2007). This trend, and the increasing age of club members, has encouraged the subculture to evolve, albeit subtly, in a somewhat conventional direction. Thus, the 1% club has changed in the manner predicted by Yinger’s discussion of counterculture and subculture. A counter culture inverts aspects of mainstream culture and is in chronic conflict with authorities, making its long term survival unlikely. A subculture selectively over emphasizes certain mainstream values and neglects

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others. To survive in the long term a counterculture must evolve into a subculture (Yinger 1982, pp. 41–43). This shift has manifested in many ways. The 1%ers’ colors—vest with club logo, name, and location—originally were unwashed and adorned with cloth and metal mementos of friends and events. In the last few decades they have taken on a militaristic uniformity (RCMP 1999). They are clean and show only basic club symbols, e.g., the three piece patch, one percent diamond, wearer’s name, and offices he holds. In the 1960s and ’70s, most 1%ers joined their club while in their 20s or early thirties (Serwer et al. 1992). Shocking citizens and the media with outrageous acts and statements was popular with many members and fed the imagery of the 1%er when purist bikers dominated. Sympathy for family concerns was rare in those days and women were often little more than chattel (Quinn 2007; Quinn and Forsyth 2011a). On the other hand, modern recruits are generally over 35 years of age; younger prospects are screened via membership in lesser affiliated or satellite clubs (Jervis 2015; Barker 2005). Early bikers had little respect for women and many saw children as a hindrance that could be used against them by authorities. Modern bikers, on the other hand, accommodate families and encourage raising children in the milieu of the club (Quinn and Forsyth 2007, 2011b). Most have skilled or semi-skilled jobs or own their own businesses (Stutzman 2014; Schiller 2016). Many large clubs now require members to maintain gainful employment. Nonetheless, the club is always the top priority in a 1%er’s life, besting job and family concerns in almost all cases (Stutzman 2014). Clubs spend considerable time and resources cultivating imagery that avoids the violent and criminal aspects of their lives and stresses their occasional pro-social activities. Rank and file bikers were free to speak to the media and scholars in the 1960s and 70s and a few actually did. More recently, however, the larger US clubs have come to forbid members speaking with the media or academics. They now have specified spokesmen, usually high status members, or attorneys on retainer, who handle the press whenever the limelight is directed at the club. Contacts with active bikers still occur but are rarer and more surreptitious, in my experience.

Club Organization Charters from the (inter)national organization allow local chapters to use the club name and insignia, which are copyrighted and defended ferociously by members (Kovaleski 2013). The world or national hierarchy controls the club’s copyright and some of the club’s formal assets (e.g., dues, fees) as well as the right to grant, suspend or revoke local charters. Most chapters claim a city as their territory but multiple chapters are often found in a single metropolitan area. In other cases, a chapter may claim a region (e.g., South Florida). Chapters must have at least six members and most number less than thirty “full patch” members (Davis 1982a).

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The basic set of officers for chapters and larger segments of each club—President, vice president, sergeant-at-arms or enforcer, secretary treasurer, and road captain— has remained stable since the early 1960s. These offices seem a modal form of organization used by a wide variety of groups ranging from bikers to unquestionably charitable fraternal groups. So also does the use of semi-autonomous local chapters united under a singular emblem and ideology or goal overseen to some extent by state officers, with national or international officers assuring some sense of unity. However, the power of internal factions favoring different club policies and that of cliques with specific entrepreneurial goals which has grown with the clubs’ geographical claims is unique to 1% clubs (Quinn and Forsyth 2012). Much like any other large, geographically dispersed organization, each club has a shifting set of factions that form around issues of special concern to members in a specific region, or those with a particular ideology of club life, the role of internecine warfare, or even those supporting or opposing specific club leaders. These factions and cliques have played major roles in several violent events in the US since the millennium although occasionally it is the formal club hierarchy that takes action. Four public incidents in the US illustrate how the clubs’ official hierarchies, cliques, and factions operate in a manner that insulates the club per se from prosecution. In 2002 over 70 Pagans swarmed into a tattoo and bike show held on Long Island, NY. Long Island had long been considered Pagan territory while the Hells’ Angels claimed New York City itself. Later in 2002 a group of Hells’ Angels ambushed a group of Mongols in a casino bar late one night during the “River Run” in Laughlin, Nevada, an event attended by both outlaw clubs and law-abiding cyclists. More recently, a large group of Bandidos were involved in a supposed “shoot out” with a much smaller club, the Cossacks, in Waco, Texas in 2015. Finally, at the 2016 Denver, CO motorcycle expo, an altercation broke out between some Mongols and members of the Iron Guard, a club composed mainly of law enforcement personnel. A member of the Iron Guard shot and killed a Mongol in that public venue. During Laughlin, NV’s 2002 “River Run,” a group of Angels attacked a party of Mongols that was felt to have “trespassed” in a casino bar claimed by the Angels. These attackers appear to have represented a faction of the HAMC acting spontaneously. This is in contrast with the Pagan attack on the “HellRaisers’ Ball” tattoo and bike show earlier that year which was apparently instigated by the Pagan national leadership (Eltman 2002a, b). Both melees arose from territorial conflicts and long standing rivalries. Preliminary information suggests that the violence between the Mongols and Iron Guard MCs in 2016 at the Denver, CO Motorcycle Expo (Associated Press 2016; Paul et al. 2016) and the 2015 Waco, TX Bandidos-Cossacks shootings3 (Madigan and Sullivan 2015; Lyons 2016) were, respectively, spontaneous and planned events. Whether the level of the club 3

It is ironic that the Waco shootings occurred at the site of a confederation of clubs (CoC) meeting. CoC’s were formed to minimize inter-club conflicts by providing a forum for clubs to calmly discuss grievances. Some observers feel that CoC’s have become little more than vehicles by which a 1% club can dominate and tax lesser groups but they have been known to function as peace brokers as well, especially in areas where two or more 1% clubs operate.

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hierarchy responsible for planning the Waco attack occurred at the chapter, regional, or national level remains unclear, however (Schiller 2016). These incidents and many lesser known ones were motivated largely by the clubs’ ferocious sense of honor and territoriality which create chronic tensions between groups. The Hell’s Angels, for example, have such a rivalry with the Outlaws which dates to the 1960s. Although they begin with spontaneous incidents, these chronic feuds are at least tacitly sanctioned by the uppermost levels of the club (Lavigne 1996: 42, 211, 281). Biker entrepreneurialism is the focus of most organized crime prosecutions of club members even though the criminal activities cited are usually the efforts of a clique of club members and their associates (Quinn and Forsyth 2011b, 2012). These cliques are usually composed of a small number of men united by filial and/or entrepreneurial bonds. They are usually based within a single region but may spread across a nation/continent (RCMP 1999; Quinn and Forsyth 2011b, 2012). Club hierarchies turn a blind eye to the economic activities of members unless they create tensions that threaten the solidarity of the club as a whole. Then club officers may act as mediators to keep the peace within the club. The club as a corporate entity and its leaders are thus somewhat insulated from the routine criminality of club members. Club officers, of course, also engage in such activities and may use their position for their own economic advantage, but often keep themselves safely distanced from illegal enterprises (Kelley 1991). The ideology of “One for all, all for one” dates to the earliest days of the subculture and means that any transgression against any club member may be considered an offense against the entire club. Thus, to challenge a 1%er in his personal business is likely to lead to club support with few details being required except how the transgression occurred and who was involved in it. The activities of cliques are also well served by their club’s extensive network and ferocious reputation. One percent clubs are thus better conceptualized as organizations of felons (Abadinsky 2012: 242–244) rather than as organized crime groups per se. The most direct links between a club and criminality occur in interclub warfare but the majority of police attention is directed at the activities of cliques.

Patterns of Operation The behavior of 1%ers follows norms that result from the interaction of clubs’ fraternal, gang-like, and syndicate-like aspects of each group. While these aspects of 1% life are integrated in members’ thinking and the collective’s dynamics, the relative power of each to influence individual and group behavior varies with the person and situation. The fraternal bonds that unite members in dyads, triads, chapters, etc., fuel the emotions of the club’s gang- like aspects which focus on honor and promotion of the group and respect for its members and insignia. Both are largely expressive in nature. The syndicate aspect is sometimes present in the groups’ decisions about inter-club relations, especially warfare, but resides primarily in the crime rings that grow from the club’s social network. Loyalty to the

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club is extreme and absolute. Rival clubs are the main focus of animosity but outsiders are never fully trusted. Subordinate clubs and chapter associates enjoy limited trust and citizens none (Wolf 1991: 37; Barger 2000: 39; Smith 2002). The ethos of winning at any cost guides warfare planning as each plotter attempts to demonstrate the extremity of his loyalty and thus assures escalation of violence unless restrained by entrepreneurial sentiments. Alliances between clubs do occur and are most stable when those clubs share a common enemy but are not in competition for territory, i.e., my enemy’s enemy can be my ally (albeit briefly and in a limited way). Clubs with adjoining or overlapping territories never remain at peace for long periods. Several major clubs have maintained sporadically cordial relations as they claimed distant regions and battled the HAMC. Soon after their territories began to overlap, local tensions flared, and national relations cooled considerably. For example, the Outlaws and Bandidos enjoyed cordial relations for decades, united in part by animosity toward the HAMC. As Outlaws established chapters in Bandidos’ strongholds, those relations are said to have soured somewhat. The same appears true of the Mongols and Outlaws, according to some bikers, when the Mongols began to establish chapters in the eastern US, long considered Outlaw and HAMC territory. So long as the gang and fraternal aspects of these clubs remain potent forces, it is extremely unlikely that any lasting alliance between large clubs will be possible. One Percenters are constantly in a state of actual or anticipated warfare with their rivals. This war mentality builds solidarity within the group but breeds hostility toward outsiders and even those members who appear disloyal (Quinn and Forsyth 2011a, b; Brazil 1995). Avoidance of outsiders and the pressures of warfare and criminal activities create an intense, insulated social environment that amplifies violence and hedonism via hyper-masculine competition. Clubs see themselves as nations and often behave like tribes. Their intense loyalty to the symbols of their club and lifestyle makes minutiae like the use of a “bottom rocker” announcing the wearer’s place of residence worthy of bloodshed. One ethnographer describes this fraternal-gang like aspect of clubs as sect-like (Watson 1982). Just as with actual nations or religious sects at war, this mentality may excuse violations of subcultural norms. Some of the worst cases of biker violence occur within a club as either “cleansings” of problematic members or as a result of factional power struggles. The execution of the Laval HAMC chapter in Lennoxville, Quebec exemplifies a “cleansing,” while the execution of eight Bandidos in Shedden, Ontario resulted from a factional dispute. Mass murders are the best known examples of “cleansings,” but isolated deaths, beatings and robberies are also seen in some cases when a member or recruit is felt to have betrayed the group. In 2007 a Vagos MC member was badly beaten and robbed when he announced he was quitting the club (Mail Tribune 2007). A more heinous case involved two Angels killing an ex-member and his entire family in northern California (Brazil 1995). Most such events are unreported and receive no publicity, however. Intraclub homicides such as these are usually regional matters between factions or cliques. The Quebec murders were planned and executed by provincial officers without the a priori knowledge of the international governing bodies of the HAMC

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(i.e., the club’s east and west coast officers’ councils). Quebec HAMC leaders felt that the North or Laval chapter was financially irresponsible and had perhaps defrauded them. The Laval chapter was invited to a party and executed one by one as they arrived at the Lennoxville (Sherbrooke) clubhouse (Lavigne 1989: 246– 278). The Shedden massacre, in which eight Bandidos’ were lured to another chapter member’s home and executed by that member and his allies from Winnipeg, was a power play between regional factions that resulted from the power lust and ethnic prejudices of the perpetrators (see generally Edwards 2010). Cases of this nature seem to be more common beyond the US and may reflect the weakness of purist values in the expansion franchises (See Quinn and Forsyth 2007) granted by US clubs since the 1980s’ surge of international expansion. Though well investigated and prosecuted, they have not generally been handled as organized crime events.

Biker Crime The American media linked the purist biker counterculture with violence and hedonism in the 1950s and ’60s. Crime was either impulsive (e.g., brawls) or a form of subsistence seeking (e.g., theft, living off prostitution, extortion, thefts, drug sales). Opportunism guided most personal choices of how to find pleasure and earn a living. Early cases of biker extortion arose spontaneously as small groups realized they were feared by shop or tavern keepers and took advantage of the situation. Blackmail grew out of the one percenters’ involvements in prostitution, drugs, and bars in the 1960s and ’70s. During the 1970s their criminal repertoire grew to include sophisticated drug production and distribution, blackmail, arson, loan sharking, forgery, and insurance fraud (Davis 1982a, b; McGuire 1986a, b; Johnson 1981). Serious investments in legitimate construction and mechanical businesses as well as the shadowy ones of saloon society also grew earnestly, especially in the 1980s (RCMP 1999, 2002). By the 1990s white collar crimes and illegal gambling websites were noted by authorities (Howlett 2004; Sher and Marsden 2003: 308– 312; RCMP 2002). Drugs remained a staple enterprise, however. Club members learned to enjoy methamphetamine in the 1960s, in part because it allowed long periods of drinking or alertness for “club business.” The drug’s effects further fueled the paranoia to which they were already prone. The predominance of meth and alcohol distinguished them from the hedonistic aspects of the hippie counterculture. They quickly realized that methamphetamine was relatively easy to manufacture and soon came to dominate the North American meth market, a position they held for the remainder of the twentieth century (US Drug Enforcement Administration 1992).4 Escalating involvement in crime, especially

Legend asserts Methamphetamine is referred to as “crank” because it was initially transported in the crank cases of 1%ers’ bikes.

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drug trafficking, grew as a method of financing the club wars through which the large clubs built their reputations and territory. Warfare led to police attention, however, and clubs usually provided members with legal counsel and other amenities when arrested (Beare and Naylor 1999; Grascia 2004). All these costs were paid through increasing members’ dues and fees. Club membership became an expensive proposition that required a significant, steady income. Fistfights supplemented with knives and chains gave way to drive-by shootings and the use of explosives as clubs began to fortify their clubhouses (Noseworthy 2016; Marusak et al. 2015; Kelley 1991) and members even purchased body armor and similar sophisticated devices (Dulaney 2015; Miller 2015; Kelley 1991). Warfare led club members to spy on rivals and their associates and this aspect of club business grew quite sophisticated with the acquisition of equipment developed for the military, such as infrared scopes (National Gang Intelligence Center 2013). All of this made clubs more effective in their internecine rivalries, but further increased the cost of membership. Thus, a self-perpetuating spiral of crime and costs and more crime was initiated that helped shape the structure of 1% clubs. Legal efforts at controlling clubs and their members add to this spiral.

The Dialectic of Prosecution Law enforcement in the United States was slow to recognize the growing sophistication of 1%ers, and largely dismissed bikers as losers and rowdies until the late 1970s. Their initial efforts at controlling the subculture were almost entirely reactive —bikers posed a crowd control problem when they gathered in public and were known to perpetrate a plethora of street crimes which warranted investigation when they came to light (Davis 1982a). Most biker crimes remained unknown to police because many were consensual acts involving prostitution, drugs, etc., and involved mainly others from saloon society and the criminal underworld. Therefore, victims rarely reported crimes and physical evidence was routinely destroyed or hidden from notice. Early attempts to use what were then the new powers of the US federal code’s Racketeer Influenced and Criminal Organization (RICO) Act led to mixed results. The Hells Angels’ Oakland, CA chapter (the club’s national or corporate command center) and Florida Outlaws were the first to be indicted under this Federal organized crime statute in 1979 (Gorney 1979; Rosenberg 1980). Both initial trials were unsuccessful but retrials led ultimately to convictions of most of those accused. It was alleged that the California mistrial resulted from at least one incident of jury tampering. It is also alleged that the HA’s West Coast Officers Council obtained some key federal data from US attorney’s office (Clawson 1983; Lavigne 1989). Both prosecutions hinged on the testimony of club members and associates turned state’s evidence. These prosecutions rapidly led to significant changes in the ways by which members were chosen and screened in virtually all 1% clubs (Barger 2000: 189–239). Satellite clubs were formed to screen and test

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members and/or new members were recruited from well-established smaller clubs. Fear of betrayal from within also reduced the absolute trust among many members and fed the sense of paranoia about police infiltration. An increase in violence seems to have followed these fears. The war mentality had clearly expanded to include law enforcers in the 1980s when cocaine emerged as a major drug problem and opportunities for new organized crime groups were plentiful. One club even awarded “Deguello” (No Mercy) patches for members who had a verified violent interaction with a police officer. Other clubs allowed members to use stolen police patches to denote similar incidents. Some police officers suggest that fear of undermining federal undercover club penetrations led to decreased police field contacts with bikers in the 1980s and that lack of police contact emboldened members to assault officers (Ayoob 1987). This was a short-lived fad, however, with entrepreneurial members reversing the reactive purists’ violence by the mid-1990s. Deliberate efforts to intimidate police and prosecutors still occur, but more as exceptions than as a subcultural pattern or norm, and violence is rare. Modern 1% bikers are far more likely to undermine the legal system with well-paid lawyers, intimidation of police and witnesses and similar tactics (Prevost 2006). A more recent set of indictments based on an undercover investigation by BATF agent William Queen led to the indictment of over 40 Mongols members and associates. The BATF attempted to seize the club’s name and insignia (Genghis Khan on a chopper) as “the intellectual property” of an organized crime group. The courts ruled against the government, however, finding that the insignia constituted a trademark, which is (1) not subject to seizure and (2) owned by the group as a whole not just the subset of (high ranking) members indicted for RICO violations. Seizure of a club patch will require amendment of the US’s Lanham Act which protects trademarks in the US (Reilly 2009). This attempt nonetheless made bikers all the more guarded in their practices. The 1% MC subculture is relatively small so most bikers know the members of their own club and regional rivals by sight if not personally. They have always devoted extraordinary amounts of time and resources into intelligence gathering against both rivals and law enforcement. Each group’s experience is intensely studied and used by allies and enemies to guard against infiltration and betrayal (RCMP 1999: 6; Lavigne 1996; Valentine 1995:149–151). As RICO prosecutions increased in frequency and quality, clubs widened their surveillance to include members, recruits (probationary members) and associates. They also began to investigate everyone who sought ties to the club or any of its members. Some clubs also encouraged the recruiting of lawyers and other professionals as members (Grascia 2004). Women were more thoroughly sequestered from club life than before and all variety of technological anti-surveillance measures have been employed by clubs (Watkins 2008). Satellite clubs used to screen prospective members increasingly provide a labor force capable of legal research and various kinds of surveillance. Nonetheless, US police have placed several undercover officers in major clubs (Dobyns and Johnson-Shelton 2010; Queen 2005; Leusner 1991). The dramatic increase in the power of entrepreneurial values across the

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subculture seems to have had the side effect of diminishing some members’ loyalties; thus prosecutors can sometimes persuade indicted members to cooperate in exchange for leniency despite the biases inherent in such testimony. Most such informants disappear into the US’s federal witness protection program to avoid retaliation (Lavigne 1996: 1–25; Shatkin 2013). Most accounts of club criminality rely on ex-club members, either directly or via police reports and court records. The use of informants from within clubs is also essential to most prosecutions. These informants (traitors in the clubs’ view) are motivated to depict club hierarchies as rigid and overtly criminal to support their claims of diminished culpability and protect their sense of personal identity (Schmid and Fiedler 1996; Innes 2000; Fitness 2001; Natapoff 2006). Even when a chapter is decimated by prosecutions, the club can direct members from other areas to rebuild the chapter with special attention to whatever the national governing body determines to be the club’s main interest—e.g., quietude with the police, strong responses to rivals, increased entrepreneurialism. It also seems that enterprises grow more robust and larger in scope as police eliminate the less ruthless members and indirectly raise the financial and toughness demands felt by the club. As with most vice enforcement efforts, biker crimes are ultimately driven by the emotions of the perpetrators or the consumers of illegal products and services, so even successful prosecutions have little long term impact on these markets (e.g., Bouchard 2007; Best et al. 2001).

Fallacies in Depictions of 1%ers Despite the amount of attention it receives, the underworld is relatively small. Because the stateless entities drawn to it interact with great frequency, there are only a few, easily bridged, degrees of separation between its players. Major players such as 1%ers, inevitably connect with many other violent stateless groups such as terrorists/revolutionaries, white supremacists, mercenaries and crime families. These entities are also under very similar pressures, and thus organized in somewhat similar ways. However, any organization seeking to unite a set of small local groups into a larger whole will also have local and regional hierarchies, chapters with officers, a common set of symbols, means of regulating entry into the group, relations among members and methods of insulating leadership from prosecution. Biker clubs bear a superficial resemblance to La Cosa Nostra’s hierarchies (McGuire 1986a), the “leaderless resistance” of white supremacists, the loosely knit web of contacts that characterize terrorist cells, and the blind loyalty and exclusivity of religious sects (Watson 1982). However, their modal organizational form and use of informal networks (Quinn and Forsyth 2012) make it hard to distinguish the acts of individuals and cliques from those of the group per se. The boundary between the club and its informal subdivisions is often too murky to make clear distinctions as to what entities or individuals control the behavior of the crime rings originating within 1% clubs.

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Most nations have some form of organized crime statute. RICO in the United States has been a model for many, such as Canada’s C-95 and C-23. Australia has long struggled with 1%er violence and its laws are the most severe in the west, allowing broad police powers over members based solely on membership. Many of these laws (and similar ones under consideration in Europe) make it illegal to be a member of an organization declared to be criminal and makes association with other members, owning weapons and fortifying residences (clubhouses) illegal (Bartels 2010). The number of clubs has been reduced but the dominant clubs remain strong (Daily Telegraph 2016). Bikers keep most of their violence within the underworld and pose little direct threat to the citizenry.5 Many bikers do, however, enjoy the fact that their very presence is intimidating to most people. Many, but not all, 1%ers, are committed to one or more criminal enterprises. As police struggle to identify and apprehend organized crime figures they are often feared to push the legal and moral limits of their authority. Criticisms of the use of RICO hinge on methods of defining an organization (Finckenauer 2005) and excessive reliance on informants from within the groups under investigation for much of their evidence (Morselli and Kazemian 2004) . Undercover stings like the BATF’s uniquely controversial “Operation Black Biscuit” inevitably rely on informants of highly questionable character with clear vested interests or biases. Here, an ex-biker from a small club facing a federal weapons charge helped BATF agents infiltrate the Arizona Hells’ Angels (Dobyns and Johnson-Shelton 2010). According to the US Magistrate hearing the case, one informant was inherently untrustworthy due to chronic methamphetamine use and resulting psychosis, while the second offered his services after committing a grisly murder, lied repeatedly, and used federal money to party for over a year. The informants were convicted of weapons and murder charges, respectively, but were placed in the federal witness protection program. Black Biscuit produced a plethora of racketeering and other indictments, but the jury would only convict some on lesser charges, so most defendants were released or received relatively short sentences (Wagner 2005a, b). The case is somewhat unusual because of the criticisms implicit in coverage of the ATF’s handling of its informants (Mallory 2012: 202; Wagner 2005a, b am) and the litigation between the lead agent (Jay Dobyns) and the US Department of Justice that followed it (Giblin 2015). Legislation against criminal group membership as such is a slippery slope in nations concerned with human rights, diversity, and dignity because it opens the door to abuses and ever widening interpretations of group criminality. These laws tend to use vague definitions of organized crime, grant wide discretionary powers to the judicial or executive branch to deem organizations ‘criminal’, limit or eliminate the appeals process, use civil orders that reduce the level of proof required, and

5

The previously mentioned Canadian and Scandinavian incidents, along with those in Long Island, NY, Laughlin NV, Waco, TX and Denver CO are obvious exceptions as are a few lesser known incidents but injury to citizens remains rare.

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allow “Guilt by association.” Even worse, there is no evidence that these laws have had any impact on 1%er crime networks or internecine violence (Ayling 2011). There is also the issue of the actual severity of the impact of biker crime on the mainstream. The doyen of Australian Biker ethnographies, Arthur Veno, told the Australian Parliament that the “Crime attributable to bikie gangs as a proportion of total crime is extremely low—less than 1%,” (Veno and van den Eynde 2008). Nonetheless, the publicity attracted by these groups is large, as is the revulsion they evoke from law enforcement. The social distance between the moral and behavioral conservatism of most law enforcers (Loftus 2010) and the hedonistic libertarianism of bikers fuels the mutual hatred of bikers and police (Quinn and Forsyth 2007). The nature of the police role forces officers to focus on criminality and thus to neglect the non-criminal aspects of club life. The difficulties of penetrating and prosecuting clubs create frustration and the blatant use of club and subculture symbols is seen as brazen by police as well. Clubs become more insulated with each undercover or informant penetration and police have many demands on their time, of which bikers are only one. It is only natural that agencies often use these difficulties to justify expanded powers. Bikers are a superb image of menacing alien chaos; an iconography that remains irresistible to western media (see generally Reynolds 2000). Club members are no longer willing to give interviews or pose with their bikes and colors, but images of 1%ers are easily located in the public domain. The media, unfortunately, relies almost entirely on the police and ex club members for its information on bikers. People who have betrayed a subculture are unlikely to praise it and most of the disaffected members who give interviews have legal and identity challenges of their own, so invoking a powerful club hierarchy as a sort of Nuremberg defense is irresistible to many ex-members. Thus, clubs receive a more simplistic description than is warranted in many official and media depictions. These depictions serve the goals of those who use them, but are only partial truths that can lead to an ever-expanding net of control that could become a threat to democratic freedoms.

Conclusions One percent clubs are umbrella organizations for a wide variety of syndicated criminal activities, while their fraternal and gang-like aspects create intense rivalries and a hyper-masculine competitiveness that can rapidly escalate planned violence. The sophistication of the clubs and their informal subgroups has grown in response to internecine rivalries and legal pressures. The fraternal aspect creates strong bonds within the group that supercede other ties and socially isolate most members. The clubs’ gang aspect motivates the chronic hostilities amongst them while the syndicate aspects fund those activities and convey money and power to both club and members. Crime planning may take place over the long term of weeks or months within a club or subgroup, or be the spontaneous activity of a chapter, faction, or clique. Likewise,

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motivation ranges from emotional reactivity to calculating premeditation. Their fraternal values and the informal hierarchies of these clubs make them difficult to prosecute in the democracies they inhabit. The internal bonds and learning dynamics of these clubs are extremely powerful because they operate in near isolation. Competitive, hyper-masculine bravado can push groups to extremes of savagery. Historically they have avoided interaction with the mainstream and their violence was largely confined to the underworld. However, as entrepreneurialism, maturation and experience lead them to more conventional attitudes and behavior, their use of venues that expose them to the public has increased as evidenced by the recent public incidents described above. Just as most clubs retreated from using explosives after the Canadian and Scandinavian wars, it is plausible, and perhaps even likely, that club leadership will find ways of keeping order and avoiding violence in public settings, but we have yet to see any definitive indicators of such a change in norms. The threat of further violent public incidents thus exists from bikers as it does for other segments of American society such as gangsta’ rappers, militias, white supremacists, and religious and environmental radicals. Public violence among bikers seems more likely to fade than in other stateless entities because it serves no key purpose for them. The imagery and reputation of the American biker is already well-established. The iconography of the outlaw biker has wide appeal in the western world, as witnessed by the fact that some clubs made up of justice system employees have sprung up and share many symbols and activities with 1% groups. These include attendance at motorcycling events, display of three piece patches, and a tendency to view parallel organizations as rivals. Some politicians and law enforcement officials favor laws criminalizing membership in these and other selected organizations. However, the potential for abuse of such laws in a dynamic political environment that includes extreme groups supporting ethnic, political or religious views opens up the potential to abuses. An alternative perspective suggests that the criminal aspects of these clubs could best be controlled as other quasi-legal organizations by closer regulation of individual and group finances coupled with police observation of group activities. Tax laws can force people and groups to account for their wealth in all its forms. Zoning laws also can keep clubhouses and group gatherings in areas that allow easy surveillance and maximize public safety and convenience. Anti-corruption commissions or similar independent bodies can also play a role in reducing criminal influences on justice system practitioners. They could also advise on tax and financial reporting laws as well as the legal tactics employed in civil and criminal cases. The foundations and precedents for such an approach are available in virtually all nations affected by 1%ers but would require strengthening. Any such changes should take a broader view of the financial and public safety issues involved beyond those unique to bikers. Democratic law needs to serve a broad spectrum of society. Veno and van den Eynde conceptualize control agents’ response to bikers as a “moral panic” (2008) in which unpopular groups are demonized beyond the level of actual threat they pose. This has great popular appeal but is likely to compromise vital aspects of western legal practices and

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tradition (Goode and Nachman 2009: 57–65). Thus, many tax loopholes and problematic accounting practices could be addressed in these changes, because the over-arching issues exposed by the bikers as a shadow side of the mainstream implicates groups from saloon society and the streets to corporations and banks. Such laws would apply equally from Wall Street to saloon society and seem to constitute the biggest threat to criminal enterprises. They will undoubtedly be resisted by many powerful political actors, but may earn widespread popular and ethical support if thoughtfully constructed. The illegal enterprises that take root in these clubs focus on vice and greed which are fed by basic human drives that fit with 1% hedonism and serve the bikers’ insatiable desire for power. History suggests that society will never eliminate hedonistic crimes such as prostitution, drug use, and gambling, or greed centered ones such as theft, extortion, and fraud. Bikers are often less predictable than other groups that challenge legal control of personal behavior. They are, however, considerably easier to identify and track because of their insignia and regular meetings. Further, unlike most other stateless entities, they have no real desire to alter the structure of society, but merely seek to profit from it and support their own social world. Bikers can be counted on to unrelentingly pursue power through territory, wealth, and status. Inter-club animosity is sufficiently strong to assure that no single club will achieve hegemony beyond a particular region or nation for very long. Competition between clubs promotes violence but simultaneously consumes their wealth, and hence their power. These tensions will continue to drift across various locations and arise spontaneously through chance encounters. Law enforcement will likewise struggle to eliminate crime from society despite the virtual impossibility of ultimate success. The conventional morality of police and prosecutors will always be offended by the libertinism and bravado of 1% bikers and their vitriolic rhetoric. All societies have a shadow side, an aspect that takes core values, such as toughness, independence, reckless expansionism, and competitive profit-seeking to abusive and even dangerous levels. Bikers are a shadow of American society and thus provide a valuable reflection of our worst qualities, albeit in exaggerated, even caricatured forms. This is an unpleasant, even frightful view, but it nonetheless deserves study and contemplation to forewarn society of the directions in which the extremes of its core attributes may lead.

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Reilly, T. (2009). Marks of Mayhem & Murder: When a few bad “Mongols” spoil the bunch, should the government seize a motorcycle association’s registered trademark? Buffalo Intellectual Property Law Journal, 7(1), 19–24. Scaramella, G., Brenzinger, M., & Miller, P. (1997). Outlaw motorcycle gangs: Tattoo-Laden misfits or sophisticated criminals? Crime and Justice International, 13(9), 10–13. Schiller, D. (2016, January 6). Feds arrest Bandidos leaders, including Conroe man. Houston Chronicle. Retrieved from: http://www.houstonchronicle.com/news/houston-texas/houston/ article/Feds-arrest-Bandido-leaders-including-Conroe-man-6741873.php Schmid, J., & Fiedler, K. (1996). Language and implicit attributions in the nuremberg trials analyzing prosecutors’ and defense attorneys’ closing speeches. Human Communication Research, 22, 371–398. Sher, J., & Marsden, W. (2003). The road to hell: How biker gangs are conquering Canada. Canada: Random House. Sherif, M., Harvey, O. J., White, B. J., Hood, W. R., & Sherif, C. W. (1961). Intergroup conflict and cooperation: The robbers cave experiment. Norman: University of Oklahoma Book Exchange. Serwer, A. E., Schonfeld, E., & Woods, W. (1992). The Hells Angels’ devilish business. Fortune, 126(12), 118–120. Shatkin, E. (2013, February 12). The cop who infiltrated Southern California’s Most Notorious Biker Gangs. Los Angeles Magazine. Retrieved from: http://www.lamag.com/culturefiles/thecop-who-infiltrated-southern-californias-most-notorious-biker-gangs/ Smith, R. (2002). Dangerous motorcycle gangs: A facet of organized crime in the mid-Atlantic region. Journal of Gang Research, 9(4), 33–44. Stensgaard, J. & Larsen, R. E. (1999). The bikers, rockers and police. Faklen (tr. The Torch), 3(7). Retrieved from: http://www.humanisme.dk/artikler/art05998.php Stutzman, R. (2014, May 26). Biker gangs thrive in Central Florida. Orlando Sentinel. Retrieved from: http://articles.orlandosentinel.com/2014-05-26/news/os-outlaw-biker-gangs-why20140526_1_florida-warlocks-david-maloney-biker-gangs Thompson, H. (1966). Hells Angels: A strange and terrible saga. NY: Ballantine. US Drug Enforcement Administration, 1992. Methamphetamine Situation in the US. Washington, D.C.: US Department of Justice. Retrieved from: http://fas.org/irp/agency/doj/dea/product/ meth/production.htm Valentine, B. (1995). Gang intelligence manual: Identifying and understanding modern-day violent gangs in the United States. Boulder, CO: Paladin Press. Veno, A, & van den Eynde, J. (2008). Parliamentary joint committee on the Australian crime commission inquiry into legislative arrangements to outlaw serious and organized crime groups. Retrieved from: https://www.aph.gov.au/binaries/senate/committee/acc_ctte/laoscg/ report/report.pdf Vold, G. (1958). Theoretical criminology. New Jersey: University of Delaware Press. Wagner, D. (2005a, January 23). Hells Angels: The federal infiltration. The Arizona Republic. Retrieved from: http://archive.azcentral.com/specials/special42/articles/0123hellsangels23.html Watson, J. M. (1982). Righteousness on two wheels: Bikers as a secular sect. Sociological Spectrum. 2(3-4), 333–349. Wagner, D. (2005b, January 23). ‘The world of the rat’: Criminal informers heighten risk for agents, may create obstacles for future prosecution. The Arizona Republic. Retrieved from: http://www.azcentral.com/news/articles/0123hamc-informants23.html Watkins, T. (2008, October 28). Federal agents had to pass polygraph tests to infiltrate Mongols gang. Police One. Retrieved from: https://www.policeone.com/police-products/apparel/ undercover/articles/1749986-Federal-agents-had-to-pass-polygraph-tests-to-infiltrate-Mongolsgang/ Wolf, D. R. (1991). The rebels: A brotherhood of outlaw bikers. Toronto: University of Toronto Press. Yinger, J. M. (1982). Countercultures: The Promise and Peril of a World Turned Upside Down. pp. 41-43

Part IV

Sports and Crime

Chapter 8

Having the Blues: Money Laundering in Professional Football Hans Nelen

Introduction In January 2015, the Dutch football club ADO Den Haag passed into Chinese hands. The sports marketing company United Vansen, headed by wealthy businessman Hui Wang, took over the club’s shares for an estimated amount of €10 million.1 A modest amount, compared to the mega investments in professional football elsewhere in the world, but the club and its supporters were happy as a king.2 The club had been very close to the edge of a financial precipice, but could once again look to the future with optimism. This optimistic outlook quickly withered away, however, as it became clear that the promised investments by Wang were long in coming and the Chinese business empire had implemented several changes in the club’s board and management. A few years earlier, a different Dutch football club, Vitesse Arnhem, passed into foreign hands as well. Before the Russian Aleksandr Chigirinski knocked on the door, it was Georgian businessman Merab Jordania who held sway in Arnhem. This investor is also well-known in the Belgian city of Mechelen, where he tried to take over the local club Racing Mechelen with a number of wealthy fellow-countrymen in the late nineties. This attempt failed at the time, particularly because of the fact that the Georgians were unable to prove that the assets that they wanted to invest in Racing were legitimate.3 They needed this proof, because the Belgian police 1

http://www.nu.nl/sport/3973311/chinese-overname-ado-haag-eindelijk-rond.html. Although Americans tend to call this type of sports “soccer”, the English word “football” will be used throughout this article. 3 http://www.voetbalbelgie.be/nl/article.php?id=35059. 2

H. Nelen (&) Faculty of Law, Maastricht University, P.O. Box 616 6200, Maastricht, The Netherlands e-mail: [email protected] © Springer International Publishing AG 2017 H. Nelen and D. Siegel (eds.), Contemporary Organized Crime, Studies of Organized Crime 16, DOI 10.1007/978-3-319-55973-5_8

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suspected the group of money laundering activities and had started a criminal investigation. Although the investigation did not result in a criminal charge of money laundering, the Georgian group left Belgium and pulled out the investments they had planned. The examples above fit a trend that has been manifesting in Europe for some time now: billionaires sinking large sums of money in football clubs and thereby appropriating a personal plaything. For example, Paris Saint-Germain is led by Sheikh Nasser Al-Khelaïfi. The president of AS Monaco is the Russian billionaire Dmitry Rybolovlev. Amancio Ortega, who made a name for himself with his chain of Zara clothing, is the Maecenas of the Spanish club Deportivo La Coruna, while until July 2016 the Italian AC Milan was run by Silvio Berlusconi, despite previous convictions for fraud and corruption.4 The country that shows the most influence of rich investors in professional football is England. All top football clubs there have fallen into the hands of tycoons, mostly of foreign origin. Roman Abramovich has been the face of Chelsea for years, while Sheikh Mansour Bin Zayed Al Nahyan rules Manchester City. The name of Arsenal’s owner is Alisher Usmanov. The wealthy Indian steel magnate Lakshmi Mittal owns 34% of the shares of Queens Park Rangers and as such has a lot of influence on the club’s policy. In a previous article I expressed my surprise that no one seems to be really bothered by the financial state that professional football is in today and by the huge risks that the sector runs in terms of criminal abuse (Nelen 2015). Despite the financial crisis that hit the economy hard in multiple ways, professional football clubs continue to build their castles in the air without abatement. Two of the absolute top clubs of today, Real Madrid and Barcelona, owe a debt of hundreds of millions of euros, but no one in Spain hits the streets to raise their voice in protest. The strong identification and solidarity of supporters with their club reflect a number of functions that sport fulfils in contemporary society. Apart from the diversion that sport offers, club loyalty also contributes to the construction of identity, something that is desired more than ever in this fragmented and individualised society. Sport also delivers much-needed distraction from the day-to-day worries. As a result, no politician or policy maker is inclined to openly declare malpractices in relation to the financing of professional football as a serious societal problem. Despite indications of serious forms of financial and economic crime, many stakeholders tend to look the other way. Very likely the situation in the football sector can be labelled with what Van de Bunt (2010) identifies as “inaction in the face of knowing”: participants and bystanders know something is wrong but have no interest in taking action. In this contribution, we will first briefly clarify why the professional football sector—or rather football industry—is so appealing to persons and organisations for

4

The names of the presidents of the various clubs were looked up on the website www.welingelichtekringen.nl/sport/79314/lijstje-met-rijkste-clubeigenaren-in-voetbal.html. Silvio Berlusconi recently (July 2016) sold his shares of the club to a Chinese investment group.

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laundering their criminally acquired assets. Then we will examine how these risks have materialised in practice, based on two cases. The first case relates to an ongoing investigation into financial mismanagement within the Dutch football club FC Twente. The focus of this case study is on third-party ownership of football players and the lack of knowledge about the origins of investments. The second case is based on thorough investigative journalism into money laundering activities in the top of English football. This case is centred on the financial adventures of Birmingham FC. In both cases we will not only highlight the malpractices that took place, but we will also look for starting points to raise barriers against financial misconduct and criminal practices. Before focusing on the football sector, however, we must first explain the concept of money laundering.

Money Laundering In the context of this article, money laundering refers to the concealment of the origins of the proceeds of crime.5 In this way, the assets are hidden from judicial and tax authorities to prevent confiscation. The purpose of money laundering is to eventually spend the illegally obtained assets in the mainstream economy. In criminological literature, a distinction is made between a number of steps that must be followed in the money laundering process6: • Placement: this phase marks the introduction of common money (obtained through crime) in the financial system; • Layering: this phase marks a series of sometimes complex financial transactions in order to conceal the origin of the introduced assets. By placing assets in various corporations and mixing legally and illegally obtained funds, the following of the money trail is made considerably more difficult; • Integration: this phase marks the investment of criminally acquired assets, which now appear legitimate in the national and international financial system. Various authors have pointed out that this distinction is somewhat artificial and certainly not applicable to all cases of money laundering.7 As such, we must 5

There are two perspectives on the construct of money laundering. In the criminological literature, the phenomenon is mostly confined to the activities of ‘sanitizing’ criminal proceeds, so that criminals can keep up the appearance that their funds have been obtained legitimately. This approach treats money laundering as a separate activity from predicate crimes generating illicit funds to launder (Van Duyne 2003). The legal construct includes not only legitimizing criminal proceeds, but also any form of hiding or disguising the identity of criminal proceeds. From the perspective of the legal construct, money laundering is thought of as an integral part of certain criminal acts (Levi and Reuter 2011). This broad interpretation can also be found in the Third Money Laundering Directive of the European Union (2005/60/EC). 6 This distinction dates from the nineties of the last century. For example, see Van de Bunt and Nelen (1996) and Pheiffer et al. (1997). 7 For example, see (Van Duyne 2003; Levi and Reuter 2011).

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recognise that the supply of illegal goods and services (such as drugs) by definition takes place in the underground economy. Such transactions take place with common money—or bitcoins in the digital world—which implies that criminals have to take extra steps in order to introduce their assets in the mainstream economy. The placement phase, however, is hardly relevant for illegal actions on legal markets, as is the case with large-scale fraud in a mainstream sector. In this case, the transition between the “underworld” and the “upperworld” is a lot more fluent. Not least because of the fact that for the purpose of money laundering, criminals are able to use constructions—in the way of legal entities and associated account numbers— that were set up before the original fraud offences. Moreover, many fraudsters are in some way also involved in legal business activities. Such constellations allow for fairly easy mixing of illegally acquired funds -with legally obtained operating profit. Money laundering activities in the football sector can take many forms, notably manipulating club accounts by inflating income from ticket sales, buying empty spectator seats, inventing a fake revenue stream and engaging in the development of property near stadiums (Medhi 2016). Money laundering may also be related to marketing and merchandise activities, as well as the international market for transferring players (Nelen 2015).

Crime-Inducing Features of the Market An important vehicle for a money laundering scheme, especially in the layering and integration stage, is the use of tax havens and the ability to use front companies and straw men as owners and share-holders. As the recent debate triggered by the so-called ‘Panama Papers’ confirms, off-shore financial flows are pervasive and are found in every part of economic life, including sports.8 In the British professional football leagues, 34 clubs (25% of all clubs) are owned by off-shore companies (Turner 2016). The ultimate beneficial owners of these (shell) companies can be found everywhere. A report based on the documents from the German newspaper Süddeutsche Zeitung connected Barcelona’s superstar Lionel Messi to a purported shell corporation called Mega Star Enterprises that served as a tax haven for the star’s image deals.9 The reliability of this media report was confirmed on July

8

The Panama Papers is the nickname of a project of a large group of investigative journalists, who, after a giant leak, started digging into more than 11.5 million financial and legal records to reveal malpractices, hidden by secretive offshore companies. On a special website of the International Consortium of Investigative Journalists (ICIJ) more information on this project can be found: https://panamapapers.icij.org/. 9 http://panamapapers.sueddeutsche.de/articles/57021852a1bb8d3c3495b438/.

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6th 2016 when Messi was sentenced by a Barcelona court to 21 months in prison and fined 2 million euros after being found guilty of three counts of tax fraud.10 The court handed the same sentence to the player’s father, Jorge, with a 1.5 million euro fine.11 The court ruled that Messi and his father defrauded the Spanish tax office of almost 4.2 million euros between 2007 and 2009 by using a web of shell companies to evade taxes on income from the player’s image rights. Both defendants have decided to appeal this decision. In the context of money laundering schemes in the football sector, we are most likely dealing with criminal entrepreneurs—fraudsters operating in a mainstream sector—rather than enterprising criminals. So far, there are hardly any examples of persons who have tried investing profits made with drugs and trafficking in women in a professional football club in a Western European context. These types of investments have occasionally been found on a lower level, e.g. amateur or indoor football. The money laundering scheme that was linked to the Amsterdam amateur club Türkyemspor, for example, has been well documented. A contribution by Meijer (2012) shows that this club—which was long portrayed as the figurehead of the multicultural society and in no time skyrocketed as a club from amateur football to premier league—was financed with funds that came from the heroin trade. The Türkyemspor president appeared to be a key figure in this trade. After the president was assassinated in 2007, the club ingloriously ceased to exist as well. In a previous contribution on this topic, professional football was scrutinized from the angle of crime inducing conditions and circumstances (Nelen 2015). One of the conclusions of that analysis was that the market of professional football lends itself very well to an entwining of regular and irregular activities, as market conditions are attractive both for legitimate and illegitimate entrepreneurs. Football is a booming business and attracts large sums of (domestic and foreign) investments. The market is global, consists of networks of various key players, and offers many possibilities to conceal irregularities. Despite the tremendous growth of the industry as a whole, many professional football clubs are financially in bad shape and their financial trouble could urge clubs to accept funds from dubious parties. The inherent financial fragility could be enhanced by the recent global financial crisis, which has made it harder to find sponsors. There is a serious risk that clubs that are in debt will not ask many critical questions when new investors knock on the door. In the upcoming sections these features and vulnerabilities will be illustrated by the cases of FC Twente and Birmingham City FC.

10

Spanish law is such that any sentence under two years for a non-violent crime rarely requires a defendant without previous convictions to serve jail time. A spokeswoman for the court confirmed Messi was unlikely to be imprisoned. 11 www.reuters.com/article/us-soccer-spain-messi-idUSKCN0ZM0Y9.

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Pride and Embarrassment: The Air Castles of FC Twente FC Twente is a Dutch professional football club from the city of Enschede in the east part of the Netherlands. The “Pride of the East”, as the fans tend to call the club, was formed in 1965. Between 1965 and the start of the new millennium, FC Twente belonged to the subtop of the Dutch league. The team finished three times as the runner-up of the league, was runner-up in the 1974–1975 UEFA Cup, and has won the KNVB Cup three times.12 The club’s mother corporation (FC Twente’65) was declared bankrupt in the season 2002–2003, almost leading to the end of the club’s existence. This was the moment that the ambitious businessman Joop Munsterman stepped in.13 Munsterman had started his career as a cleaner at a local newspaper and had managed to climb the ladder to the board of executives of that same newspaper. Later he became the chief executive officer of the large publishing company Wegener Publishers.14 Not only did Munsterman and his staff succeed in (temporarily) solving the club’s financial problems, but they managed to give FC Twente a professional boost, as the club started to perform extremely well in the Dutch professional league. The “Pride of the East” even managed to become Dutch champion in the season 2009–2010. After this peak, the management of the club, and its tireless president Munsterman in particular, put a lot of effort in keeping FC Twente at the top. In hindsight, the combination of blind ambition and lack of resources to realise these ambitions has turned out to be a toxic one. Munsterman and his fellow members of the board came up with new, ‘creative’ forms of financing to attract new talents and top players. One of these players was the Mexican Jesus Corona, who was transferred to FC Twente in 2013. In order to finance this deal, Munsterman made an agreement with a group of Mexican investors, called Represetanciones Internacionales Vijai. They invested 3 million dollars in the club but negotiated that they would receive 60% of future transfer rights in return.15 This was the first case of third party ownership (TPO) in which the club got involved, but, as we shall see, it was definitely not the last. An intriguing aspect of this case was that FC Twente did not have a clue as to who the actual investors were.16 Some media reports refer to leaked contracts that the investors were put forward by the Mexican company Grupo Comercializador Conclave. This company was owned by a businessman who was convicted for money laundering on behalf of the notorious Juárez drug cartel.17

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www.fctwente.nl. https://nl.wikipedia.org/wiki/Joop_Munsterman. 14 Ibid. 15 http://www.volkskrant.nl/sport/de-creatieve-transfers-van-fc-twente*a4273514/. 16 Ibid. 17 The president, Rodolfo David Dávila Córdova, a former banker at the Banco de México, was sentenced to five years imprisonment for money laundering in 2005. http://www.volkskrant.nl/ sport/fc-twente-deed-zaken-met-bedrijf-van-witwasser-mexicaans-drugskartel*a4273526/. 13

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After August 2013 and the first TPO-deal with the Mexican investment company, Twente’s management continued its desperate search for cash to finance its unlimited ambitions. Munsterman’s next step was a deal with Doyen Sports, an investment fund in Malta. The fire sale of Twente’s key players to Doyen Sports was probably urgently needed to cover the club’s short-term deficits. In practice, some of the players concerned (Dusan Tadic and Quincy Promes) were sold only six months after the deal.18 Doyen Sports made a huge profit out of those sales, reaching 300% for Promes’ transfer (Duval 2016). According to Duval (2016), Doyen Sports’s contractual system has been relatively stable since it started operating. The principle is always the same: Doyen Sports provides a lump sum (for various purposes, often the recruitment of the player) and gets a percentage of the economic rights attached to a player in return. However, what it does not do, and that is decisive in making it a rewarding business model, is share with the club the risk that the player fails to become a star or that the player leaves on a free transfer at the end of his contract (Duval 2016). For the latter scenarios, Doyen Sports quickly developed a bulletproof contractual system structured around a number of contractual clauses limiting its exposure. If a profitable transfer of the player fails, Doyen Sports will secure a minimum return on its investment (often the original grant plus 10% interest per year). This minimum return on investment is usually secured with a ‘hard’ warrantee, a pledge on a share of fixed revenue (Duval 2016). This ‘deed of pledge’ (as it was called in Twente’s case) is often attached to the future revenues derived from the broadcasting rights to which the club is entitled as a member of a professional league or its future ticketing proceeds. It is this secured minimum return on investment that makes it a low risk economic endeavour for Doyen Sports. Basically, Doyen Sports’s only risk is that a club would go bankrupt and disappear, but football clubs are a bit like systemic banks, they are too popular to fail and tend to be rescued by public authorities when they face deep financial trouble (Duval 2016). In FC Twente’s case, both relegation to the second league and bankruptcy could be avoided in June 2016, due to the presence of new investors and a new board that made a clean sweep of the financial mess Munsterman and associates had created. Chairman Munsterman himself and his successor Aldo van der Laan had stepped down earlier. FC Twente is considering filing a civil suit against the two former chairmen and demand compensation from them. Third-party ownership (TPO) was officially prohibited by the Fédération Internationale de Football Association (FIFA) in May 2015. However, Doyen Sports and similar investment groups contest the claim that their activities can be labelled as such. Rather, they are inclined to speak about third-party investment (TPI).19 Regardless of the label that can be put on the activities of Doyen Sports, a lack of transparency exists in relation to the ownership of the firm and the identity

18

Tadic is now playing for Southampton. Promes is a player of Spartak Moscow. http://www.bloomberg.com/news/articles/2014-09-29/fifa-investor-ban-hurts-small-teams-soccersdoyen-says.

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of its investors. Doyen Sports has always declined to reveal the names and other details of the individuals and companies that invest a lot of money in the firm. Although there are no indications that the company is used as part of a money laundering scheme or other forms of crime, it can be argued that the company turns a blind eye on crime-related issues. As long as Doyen Sports does not show any willingness to cast a critical eye on the source of the money that is invested in the firm, the rumours about dubious practices will likely persist.

Liaison Dangereuse: The “Blues” and Carson Yeung Like so many football clubs started around the late nineteenth century, Birmingham City’s origins lie in the church. Formed by a group of cricketers from Holy Church in Bordesley Green in 1875 the club was originally known as Small Health Alliance.20 The club turned professional in 1885 striking an agreement with the players whereby they received half of the gate money.21 After years of sporting and financial success, “The Blues”, the popular nickname of the club, started to decline in the eighties of the last century, resulting in a relegation to the English third division in 1989. Although the club made somewhat of a recovery, they never relived their glory days of the sixties and seventies. When businessman Carson Yeung Ka Sing (whose name is mostly abbreviated to Carson Yeung) from Hong Kong made his entrance to the club with a roll of drums in 2009, fans had high hopes. Perhaps a few hefty financial injections from this Maecenas could restore the club’s golden age. At first, Yeung was a relatively unknown figure in English professional football. His CV shows that he worked his way up from hairdresser to businessman. He was the head of Grandtop International Holding, which was later renamed Birmingham International Holdings Ltd. This legal entity, with a registered office on the Cayman Islands, bought the club for £81 million in 2009. Yeung immediately announced to invest over £50 million in new players.22 Yeung appeared in the English newspaper the Guardian in 2007, when he already showed interest in a takeover. The article raised critical questions about the origin of his wealth.23 Any criticism was dismissed at the time, but a few years and a number of lawsuits later, it became clear

20

BCFC club history, available at http://www.bcfc.com/news/article/bcfc-club-history-453059. aspx. 21 Ibid. 22 Criminal Litigation, The Soccer Boss Saga, Carson Yeung and Money Laundering, Newsletter November 2013, available at http://www.onc.hk/pub/oncfile/publication/criminal/1311_EN_The_ Soccer_Boss_Saga_Carson_Yeung_and_Money-laundering.pdf. 23 David Conn, The fall of Carson Yeung: future remains unclear for Birmingham City, The Guardian, 7th March 2014, available at http://www.theguardian.com/football/2014/mar/07/carsonyeung-birmingham-city-money-laundering.

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that Yeung should not be regarded as a respected businessman, but rather as the driving force behind a vast money laundering machine. Yeung’s reputation began to crumble in July 2010, one year after the takeover, when he was sentenced by a court in Hong Kong after failing to provide sufficient clarity on the shareholding composition of a Hong Kong-based company.24 Less than a year later, on 29 June 2011, he was arrested on suspicion of laundering illegally obtained assets.25 In March 2014, Carson Yeung was found guilty by the court in Hong Kong to five charges relating to money laundering. All cases concerned large sums (totalling over 94 million dollars) deposited into company accounts connected with him or his father. There was no valid financial reason for the majority of these deposits, of which 400 were made in cash. On the same day, these funds were funnelled into different accounts. One person in Yeung’s financial network who drew a great deal of attention was Cheung Chi-tai, the owner of a casino in Macau who was suspected by the Hong Kong police of being involved in organized crime (See Footnote 23). Yeung’s defence that he acquired a significant part of his wealth through exploiting and selling fancy hair salons visited by rich businessmen and film stars was deemed disingenuous and disregarded by the court. More so when investigations by forensic auditors brought to light that Yeung had artificially increased the turnover of those salons. Yeung’s incoherent and implausible statements about his successful involvement in share trading made little impression on the judges. Nor was he able to convincingly explain to the court why so many transactions were settled in cash. He was eventually sentenced to six years of imprisonment.26 An interesting fact is that Carson Yeung continued to run Birmingham City FC during the investigation and the court hearing from 2011 to 2014. It was only in February 2014 that he stepped down as president of the club and Birmingham International Holdings Ltd. That does not mean, however, that he is no longer involved in the club. One only needs to look at the composition of management to see that his son-in-law Shui Cheong Ma is still part of the board of management of Birmingham FC. Yeung’s son Ryan could stay on as a member of the same board until the summer of 2015. His long term business associate from Hong Kong, Peter Pannu, resigned from the club’s board on December 2014, but for a while he stayed on as the director of Birmingham International Holdings Ltd (See Footnote 23). The involvement of Pannu in particular caused a great deal of controversy. The financial investigation into the money laundering activities also showed that Carson Yeung

24

David Conn, Carson Yeung had previous conviction before Birmingham takeover, 13th March 2014, The Guardian, available at http://www.theguardian.com/football/2014/mar/13/carsonyeung-offences-birmingham-city-fit-and-proper-test. 25 Ibid. 26 Criminal Litigation, The Soccer Boss Saga, Carson Yeung and Money Laundering, Newsletter November 2013, available at http://www.onc.hk/pub/oncfile/publication/criminal/1311_EN_The_ Soccer_Boss_Saga_Carson_Yeung_and_Money-laundering.pdf. Yeung was released from prison on bail in August 2015 (http://www.birminghammail.co.uk/sport/football/football-news/ birmingham-city-shock-carson-yeung-9858204).

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and Peter Pannu had entered into a secret agreement worth 2 million dollars.27 The scope of this agreement—which incidentally was entered into without any knowledge of the rest of the board of Birmingham International Holdings Ltd—was that Birmingham International Holdings Ltd. would transfer a monthly tax-free amount of $33,000 to Pannu’s company for his management duties.28 When the court seized the holding’s assets, Yeung had Pannu put on the payroll of Birmingham City FC for $86,000 per month.29 Again, the board of Birmingham International Holdings Ltd was not informed.30 Peter Pannu was removed as director of Birmingham International Holdings Ltd—together with seven other confidants of Carson Yeung. This decision was taken by the receivers Ernst and Young in March 2015.31 The receivers had taken over the management and financial control of Birmingham International Holdings Ltd at the request of the board.

Curbing Money Laundering in the Football Sector The English Football Association has taken a number of measures to increase awareness with club presidents about the risks of money laundering, and protect the sport from (financial) malpractices as much as possible. Clubs are urged to critically examine their internal monitoring and supervision mechanisms once more and take additional measures if necessary, such as extra training in the context of fraud and money laundering and including a special compliance officer in the management. Clubs should also attempt to better ascertain the identity of a potential investor, his/her background and the origin of assets (Medhi 2016). An important part of the English Football Association’s policy in the fight against fraud, corruption and money laundering is the so-called Fit and Proper Persons Test, also called the “Owners and Directors Test”. This test focuses on increasing transparency in English football. It is a form of pre-employment screening which should serve as the basis for determining whether someone is suitable to lead a club, financially or otherwise (Medhi 2016). These measures look promising on paper but they are not always systematically applied in practice. How else can we explain how Carson Yeung passed the Football Association’s (FA) Fit and Proper Persons Test? After all, suspicions of money laundering against him had been piling up since 2011, but he stepped down

Jeanette Oldham, Special investigation: Birmingham City chief Peter Pannu’s ‘secret’ £1.5 m pay deal, available at http://www.birminghammail.co.uk/news/local-news/special-investigationbirmingham-city-chief-3156172. 28 Ibid. 29 Ibid. 30 Ibid. 31 https://www.theguardian.com/football/2015/mar/10/peter-pannu-birmingham-holding-company. 27

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only in 2014, and of his own volition. Furthermore, Birmingham City FC was still in the range of Yeung’s influence through his three confidants on the board. The problem for the football association in the English setting is that only in the case of a criminal conviction they can intervene to steer the club in a different direction, i.e. the regulations state that someone with a criminal record is not allowed to be president of a professional football organisation. So as long as there only suspicions and no convictions, the association is largely unable to do anything. Largely, because the FA could instigate an investigation if there is evidence that someone is acting as a “shadow director” or is acting in concert with other shareholders to take them over 30 per cent ownership of a club.32 Given the role and activities of Pannu and Yeung’s two relatives at the “Blues”, such an investigation could certainly have been possible, but it is unclear why the association decided not to investigate. Strikingly, besides Yeung several other owners and directors who are alleged to have committed fraud and corruption have passed the Fit and Proper Persons Test. So far, only three persons are known to have failed the test (Medhi 2016). Football associations generally do not employ investigators or forensic accountants and therefore lack the expertise to trace and understand malicious activities. Given the international nature of most transactions and the fact that the flows of money are often funnelled through financial havens, even a private organisation would have trouble determining the possibly criminal origins of the assets invested in a club. Additionally, associations do not have the specific authority to request relevant information from other agencies in case of doubt. A national association may consider organising a face-to-face-meeting with potential club owners. The Dutch association KNVB arranged such a meeting in the past with the aforementioned Georgian businessman Merab Jordania, but found no conclusive evidence to exclude him from taking over control of Vitesse Arnhem. The reflex of many commentators is to look for a solution to the money laundering problem in strengthening external supervision and increasing actions with a view to criminal prosecution. In this respect, a lot is expected of the Financial Fair Play regulations of the European Football Association UEFA. The measures taken by UEFA include an obligation for clubs, over a period of time, to balance their books or break even. Under this concept, clubs cannot repeatedly spend more than their generated revenues, and clubs will be obliged to meet all their transfer and employee payment commitments at all times. Higher-risk clubs that fail certain indicators will also be required to provide budgets detailing their strategic plans. These measures reveal that the efforts of UEFA are primarily directed at assessing the level of corporate stability, rather than corporate integrity (Nelen 2015). The containment of financial risks predominates, but UEFA seems to have little, if any, interest in the origins of the investments in European professional football. Thus, the hope that this system can help attain a comprehensive insight into the financial flows in order to avoid an anonymous laundering machine looming behind a club

32

Ibid.

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seems to be unrealistic. Financial Fair Play is definitely not a magic cure to stop money laundering activities once and for all. This conclusion does not alter the fact that national and international football associations could put more effort into enforcing their own rules, at least with regard to combating money laundering and corruption. In the settlement of disciplinary proceedings by the associations—both on a national and international level —there are hardly any cases that rise to the surface that relate to financial malpractice, such as fraud and money laundering. This betrays a rather passive attitude by the national sports associations, the UEFA and the FIFA. The outlined lack of capacity, expertise and competence is often put forward as an excuse to not have to follow up on signs of fraud. The case of Birmingham City FC as discussed in this article is a good example of that. In the case of FC Twente, the Dutch association KNVB can’t be blamed for looking the other way, despite the fact that it took some time before the association started putting pressure on the board management—by threats to revoke the license—in order to “clean up the mess”. Because transfers of players are prone to money laundering it is an interesting idea to enhance the supervision of players’ agents, as they play a key role in transfers. There is a growing body of opinion proposing a system that regulates and registers the activities of players’ agents. Introducing a compulsory, official licence for agents would be a welcome addition to the existing means of enforcement, especially in tandem with a screening mechanism so that fraudulent agents can be excluded. In that respect, it is painful to see that in the Netherlands the envelope has recently been pushed in the opposite direction, as the agent’s licence was abolished on 1 April 2015 and practically anyone is now allowed to act for a player.33 Although the response of strengthening external supervision of the football sector would be the most noticeable for outsiders, it would be unwise to put all the eggs in this basket. The forces necessary to curb the money laundering problem in professional football are most likely to have to come from within the closed bastion of the football world rather than from the outside. The secret relations that exist between the persons involved in football financing have to be weakened from within. By making the integrity dilemmas within the sector a subject of discussion, designing and implementing adequate whistle-blowing schemes and convincing those involved of the necessity of full disclosure of business activities, we can counter the organisational structure and culture based on secret arrangements, cover-ups and censorship. Or, to once more refer to the case of Birmingham City FC: based on the evidence of abuses present at the time, the former board, the supervisory board and the Football Association should have demanded full

33

Every intermediary will have to register with the Royal Dutch Football Association (KNVB) in order to be able to act as intermediary for a player or club. By being obliged to register, these intermediaries will fall under the disciplinary rules of the KNVB. In addition to the minimum requirements imposed by the FIFA, other matters that have been included in the new regulations are the submitting of a Certificate of Conduct (VOG) and making public the names of and payments to intermediaries. See http://www.fbo.nl/fbo09321602/einde-licentie-spelersmakelaarsin-zicht.html.

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disclosure from Carson Yeung in 2009 and, in the case of an unsatisfactory result, denied him access to the club. What is more is that the English Football Association should have seized upon this case to engage other clubs regarding similar situations and how to act on them.

Conclusion In this contribution we explored the financing of professional football and looked for risk factors, examples of money laundering and possibilities for curbing the dangers of money laundering. This brief overview underlines the fact that the entwinement of criminal and business activities mostly takes place in receptive market environments. The large assets that circulate in professional football, the ability to conceal the origin of these assets, the closed culture and the lack of structural monitoring of financial flows are circumstances that can promote investments by criminal entrepreneurs. This is not to say that the football sector only attracts dubious entrepreneurs, but rather that in many cases it is unclear with what resources—whether obtained legally or illegally—these entrepreneurs finance their transactions and how they obtain their profits. The world of professional football matches the profile of what in criminology is called a crime-facilitative system in more than one way (Needleman and Needleman 1979). In the decision-making process that is characteristic of such a system, rule violations are seen as unwished-for, but also as a necessary part of doing business. For the individual, a crime-facilitative system contains structural and cultural incentives that significantly decrease the threshold for involvement in unsavoury business practices (Needleman and Needleman 1979). Given the fact that the chances of being caught are low and that in professional football, and sports in general, little attention is paid to financial malpractices, it is the perfect breeding ground for money laundering activities. The case of Birmingham City FC shows what can happen if the gate for wealthy benefactors such as Carson Yeung is flung wide open. It also shows that the possibilities and willingness of a football association—in this case the English one—to clamp down on questionable flows of money are none too great. The football association in the Netherlands also has not been very active on this front, although the Dutch association KNVB has used the malpractices of FC Twente as a showcase in order to prevent other clubs from getting involved in irresponsible ventures. There are still plenty of challenges for further academic research, which should first shed more light on the nature and extent of financial malpractices in the football sector. In this respect, multidisciplinary collaboration, e.g. between criminologists and economists, seems like an obvious strategy. Furthermore, more insight should be obtained into the effectiveness of the approach taken to combat and curb crime in

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the football sector. It is widely believed that strengthening external supervision is the point of action, but this article shows that an awareness strategy would yield as many, if not more, results. A more comprehensive approach would be to combine various enforcement strategies in such a way that a balance can be achieved between the vast economic interests that are at stake in the football sector and the interest in curbing financial malpractices.

References Duval, A. (2016). Unpacking Doyen sports’s TPO-deals: The final whistle. Retrieved from: http:// www.asser.nl/SportsLaw/Blog/post/unpacking-doyen-s-tpo-deals-the-final-whistle Levi, M., & Reuter, P. (2011). Money laundering. In M. Tonry (Ed.), Handbook on crime and public policy, Chapter 14 (pp. 356–380). New York: Oxford University Press. Medhi, A. (2016). Unfit, improper ownership in UK football clubs. In Transparency international, Global Corruption Report: Sport (pp. 109–113). Abingdon/New York: Routledge. Meijer, W. (2012). Terugblik op Türkiyemspor. Crimelink, 5(2), 12–15. Needleman, L., & Needleman, C. (1979). Organizational crime: Two models of criminogenesis. The Sociological Quarterly, 20(4), 517–528. Nelen, H. (2015). Professional football and crime: Exploring terra incognita in studies on white-collar crime. In J. van Erp, W. Huisman, & G. Vander Walle (Eds.), Routledge handbook of white-collar and corporate crime in Europe (pp. 292–303). Oxford/New York: Routledge. Pheiffer, M., Kuijl, J. G., van Dijk, A. T. H., & Bakker, G. J. C. M. (1997). Financieel Rechercheren: Theorie en praktijk. Deventer: Kluwer. Turner, G. (2016). Measuring the United Kingdom’s ‘offshore game’. In Transparency International, Global Corruption Report: Sport (pp. 105–108). Abingdon/New York: Routledge. Van de Bunt, H. G. (2010). Walls of secrecy and silence: The Madoff case and cartels in the construction industry. Criminology & Public Policy, 9(3), 435–453. Van de Bunt, H. G., & Nelen, H. (1996). Fraude en witwassen. In: Enquêtecommissie Opsporingsmethoden. Inzake Opsporing. Tweede Kamer, 1995–1996, 24072, nr. 19. van Duyne, P. C. (2003). Money laundering policy: Fears and facts. In P. C. van Duyne, K. von Lampe, & J. L. Newell (Eds.), Criminal finance and organizing crime in Europe (pp. 67–104). Wolf Legal: Nijmegen.

Chapter 9

Match-Fixing Toine Spapens

Introduction Manipulation of the outcome of sports games for financial gain or to obtain an advantage in a tournament or competition is nothing new. Even the ancient Greeks allegedly fixed matches during their Olympic games (Pausanias and Ormerod 1918). Another early example is the 1919 ‘Black Sox Scandal’ in American baseball. In the mid-1990s, the introduction of online gambling and sports betting effectively globalised match-fixing. For example, it now became possible to rig matches in one part of the world and bet on them in another. Since the mid-2000s, match-fixing has increasingly started to attract attention as scandals came to light in many countries and in different sports. Investigative journalist Declan Hill’s book ‘The Fix’ substantially increased awareness of the scope of the problem after its publication in 2008 (Hill 2008). In 2009, the German ‘Bochum case’ sent out shockwaves across Europe. It was the starting point of a joint investigation by Germany, Finland, Hungary, Austria, Slovenia and Europol. The still ongoing investigation so far includes over 380 potentially rigged football matches in 13 countries and involves 425 suspects (Europol 2013). Although comparative data are lacking, match-fixing appears to be a widespread problem. In 2012, a survey on match-fixing in Eastern European countries organized by the football players association FIFPro revealed that about 24% of the interviewed players thought that match-fixing had occurred in their national competition and 12% had been approached to take part in manipulation (FIFPro 2012). In 2014, Laurent Vidal, Chairman of the Sorbonne-ICSS Sport Integrity Program, stated at a conference that 300–700 cases of manipulation have been reported annually since 2010 and that the number is increasing (Vidal 2014). T. Spapens (&) Department of Criminal Law, Tilburg University, P.O. Box 90153, 5000 LE Tilburg, The Netherlands e-mail: [email protected] © Springer International Publishing AG 2017 H. Nelen and D. Siegel (eds.), Contemporary Organized Crime, Studies of Organized Crime 16, DOI 10.1007/978-3-319-55973-5_9

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Obviously, the manipulation of sports games can severely damage clubs or even entire competitions because spectators and sponsors may lose interest if they no longer trust the results. Match-fixing is currently high on the agenda of sports associations, the gambling industry, Interpol and Europol, and institutions such as the Council of Europe (CoE) and the European Union (EU). In September 2014, the CoE opened the ‘Convention on the manipulation of sports results’ for signing and the EU decided to adopt it as its main instrument to prevent and combat manipulation in sports. Corruption in sports and gambling has also started to attract the attention of academics, although there is still a serious lack of empirical research, particularly on the scope of the problem and on developments in the match-fixing market (Spapens and Olfers 2015). In this paper, I will address two issues that seem to have developed into axioms in the debate about match-fixing. The first is that the rigging is mainly the work of ‘outsiders’, including, in particular, organized criminals, who ruthlessly target ‘insiders’ (players, officials, clubs and even sports associations) for financial gain. Second, match-fixing is usually linked to the highly elusive world of Asian illegal gambling operators. Both ‘frames’ can be challenged and here I will argue on the one hand that the organized crime perspective is too narrow, as ‘insiders’ are equally capable of fixing matches, and on the other hand show that the illegal Asian gambling market is much less independent from the online gambling industry than one might think. In this chapter, match-fixing is defined as ‘an intentional arrangement, act or omission aimed at an improper alteration of the result or the course of a sports competition in order to remove all or part of the unpredictable nature of the aforementioned sports competition with a view to obtaining an undue advantage for oneself or for others’ (CoE 2014). I also define two roles. The first is the ‘fixer’ who organizes the rigging of one or more matches. The second is the ‘manipulator’ who manufactures an intended outcome of the match or a specific occurrence during the game. In practice, the roles of fixer and manipulator may be combined in one person. As mentioned above, I also differentiate between ‘outsiders’ and ‘insiders’, the first being individuals who have no involvement in the sport and the second being athletes, referees, sponsors, officials and others who do have a direct or indirect interest regarding an individual player, a club or a sports association.

Match-Fixing Involving ‘Outsiders’ Over the past years, officials from law enforcement agencies and sports associations as well as politicians have explicitly placed sports manipulation in the context of organized crime. Former Interpol Secretary General Ron Noble regularly did this in his speeches. Ralf Mutschke, FIFA’s director of security, titled his contribution to a recent book on match-fixing ‘Match manipulation by organized crime groups’ (Mutschke 2013). Emine Bozkurt stated in a report she drew up for the European Parliament that match-fixing ‘is a form of crime with high revenues and excessively

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low sentences and detection rates, and thus used as a tool by criminal organisations to make and launder money from criminal activities such as human and drug trafficking’ (Bozkurt 2012). Next, I will explore four (potential) links between match-fixing and organized crime. To begin with, the business process of match-fixing may qualify as organized. The United Nations Convention on Transnational Organized Crime defines an organized criminal group as ‘a structured group of three or more persons, existing for a period of time and acting in concert with the aim of committing one or more serious crimes or offences established in accordance with this convention, in order to obtain, directly or indirectly, a financial or other material benefit’ (United Nations 2004).1 By this definition, any act of match-fixing involving at least three persons would indeed qualify as the work of an organized crime group. However, it is also easy to find examples in which two persons (the outsider and the manipulator) suffice, such as in individual sports. Even in a team sport such as football, a single insider (the referee or the goalkeeper, for example) may be able to manipulate the outcome of a match. This certainly applies to the rigging of specific events during a game (spot-fixing). Secondly, match-fixing may involve organized crime groups that qualify as such based on their other illegal activities. In Italy, for instance, the Camorra was linked to the Scommessopoli scandal (Boeri and Severgnini 2013). In the Netherlands, Kris J. was convicted of match-fixing and drug trafficking in the same court case. The athletes themselves may also have personal connections with members of criminal groups. In a Norwegian case of manipulation in football, the player who had bribed his teammates to throw games belonged to an Albanian criminal family of which the members committed all sorts of serious offences. Friendships between athletes and known criminals can be viewed as a risk factor for match-fixing (Spapens and Olfers 2013). Organized crime groups may also infiltrate a club by sponsoring it financially or even buying it and appointing their figureheads as manager or president. Thirdly, manipulation of sports games may require ‘mafia methods’ such as coercion or threats of violence. In practice, such threats mostly seem to occur when the manipulators fail to deliver the desired outcome, or do not want to continue manipulating matches. In the German Bochum case, Dutchman Paul Rooij allegedly threatened German football player Rene Schnitzler to have him tied to a pole in the Elbe River and wait for high tide because the player cashed bribes but did not produce the promised results (Löer and Schäfer 2011). In the Belgian Zheyun Ye case (see below), several players claimed to have been severely threatened for the

1

A serious crime is a conduct constituting an offence punishable by a maximum deprivation of liberty of at least 4 years or a more serious penalty.

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same reason. However, although there has been no systematic research on athletes or their relatives who have been victims of physical violence, such cases seem to be rare. Athletes often attract a lot of public and media attention and it would be difficult to conceal unexplained injuries. Instead of using threats as an instrument, it seems far more effective to create a situation of dependency. In practice, financial problems, specifically debts due to a gambling addiction, represent a particular risk, not in the least because case examples show that most fixers who operate in the context of organized crime are (or once were) heavily involved in gambling, either as legal or illegal operators or as professional gamblers. One example is Paul Rooij (already mentioned above). He bribed René Schnitzler, who was at the time heavily addicted to gambling and needed the money to pay off his debts (Löer and Schäfer 2011). Rooij himself was a professional gambler who wagered large sums with Asian online betting operators on behalf of people who wished to remain anonymous. In the Zheyun Ye case, Gilbert Bodart, the coach of the second division football club La Louvière, who allegedly received money from Ye, was a gambling addict. A few years later Bodart even committed an armed robbery to settle his gambling debts (Sportwereld 2008). A Dutch survey shows that athletes are more prone to gambling than the general population (Spapens and Olfers 2013). In the twelve months prior to the survey, 35% visited a casino at least once, 34% betted on sports or played poker online and 19% played poker or betted on sports offline. By comparison, a 2009 gambling study showed that at the time only 5.1% of the Dutch population played online (Homburg and Oranje 2009). The interviewed athletes stated that their colleagues sometimes gambled heavily. ‘We are not allowed to smoke or drink, so gambling is one of the few legal alternatives’, as a tennis player put it (Spapens and Olfers 2015). A recent Danish study also revealed that athletes are vulnerable to compulsive gambling (Nicolaisen 2014). Finally, illegal gambling operators may also be ‘outsiders’ with an interest in manipulating the outcome of certain games, specifically to reduce the risk of having to pay out large wins if a particular outcome has attracted a substantial number of bettors. Allegedly, this happened in 1988, when the Camorra run Totonero had taken too many bets on the local team Napoli winning a match against AC Milan. In order to avoid a huge financial loss the mafia ‘convinced’ Napoli players to lose the match (Delpierre 2012). Theoretically, such schemes may also involve licensed gambling corporations. Ante Sapina, one of the main suspects in the Bochum case, made a peculiar statement in court claiming that he had fixed matches for gambling company Samvo Entertainment Limited (Der Spiegel 2011). Samvo, based in London but owned by Hong Kong businessman and politician Shung Fai Chan, strongly denied Sapina’s story and no proof to substantiate it could be found. It did transpire, however, that one of Samvo’s employees had noticed the predictive value of Sapina’s bets and started to copy them for his personal benefit (Spapens 2012).

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Match-Fixing by ‘Insiders’ Although ‘outsiders’ do play a role in many case examples, instances of manipulation initiated by ‘insiders’ seem to be at least as common. According to a survey in Cyprus, a footballer in that country had a 34% chance of being approached by a stranger and a 23% chance of being approached by an official from his club (Anastasiou 2015). In around 70% of the match-fixing cases listed as ‘under investigation’ in Interpol’s weekly media recaps over 2015, there is no mention of ‘outsider’ involvement.2

Match-Fixing Involving Club Officials To begin with, ‘outsiders’ have no interest in manipulating a game for the benefit of the club, the player or the sports association, but for club officials the story may be different. Many examples of sports-related match-fixing involve ensuring promotion to a higher division or avoiding relegation to a lower one, as well as avoiding stronger opponents in the next stage of a tournament. Of course, if those involved are aware of the assured outcome, they may also take the opportunity to bet on it. As in any working relationship, players depend on club officials who may use their power over, for example, salaries, contracts and selection to persuade athletes to underperform (Nilsson et al. 2015). Italy saw its Calciopoli scandal in which in the 2004–2005 season 78 out of 380 matches in the first league had been manipulated (Boeri and Severgnini 2013). The main aim was to ensure the championship of Juventus but other clubs also benefited. In this case, the fixers were the club owners whereas the manipulators were the referees. The fixers were able to ensure that corrupt referees were assigned to crucial matches. The Italian judiciary started an investigation because of the large number of arbitral mistakes. Juventus goalkeeper Gianluigi Buffon was accused of betting on the fixed matches, but, at the time, the football association’s disciplinary code did not forbid players to bet on their own matches. More recently, the Greek authorities charged Evangelos Marinakis, the Olympiacos owner and president, in a similar case. Marinakis was initially charged alongside three referees, three other officials from the Hellenic Football Federation, two members of its Central Refereeing Committee and a fellow Super League club chairman (Scott 2015). The number of defendants later rose to 85 persons, including dozens of players. The investigation centred on alleged fixing of matches between 2011 and 2013 with relevance to relegation and promotion battles, but suspects also betted on the games. Charges include membership of a criminal organisation, bribery, manipulation of results, illegal betting, defrauding the then

The ‘Integrity in sport weekly media recap’ newsletter is available at www.interpol.int.

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state-controlled gaming company OPAP of millions of euros from 2008 to 2011, and money laundering (Ekathimerini 2015).

Match-Fixing Involving Individual Athletes and Officials Apart from corporate match-fixing, players and referees may also act on their own initiative. Former English international Paul Gascoigne admitted that he had once kicked the ball out immediately after the start of the game, because he had bet on the first team to throw in (van Lieshout 2006). In the Netherlands, footballer Danny Buijs did the same in 2006, but he never spoke out on whether this action had been gambling related. Kicking the ball out on purpose is of course easy to spot and if it happens only once, one could probably see it as a practical joke rather than outright corruption. However, the athletes or referees may also engage in manipulation that is more serious. In professional sports, only a very small number of athletes earn a high income. In the Netherlands, in 2012, the average salary of a football player in the second division was €42,500 before taxes (KNVB 2012). Only a few Dutch tennis players earn enough to make a decent living without having to do other work, such as giving tennis lessons (Spapens and Olfers 2013). The public, however, often expect professional athletes and football players in particular to show their success, for instance by driving expensive cars, and friends expect them to be ‘generous’ when they go out together (Spapens and Olfers 2015). From a rational choice perspective, many players could substantially increase their annual income by manipulating just a few matches per year. Furthermore, it may not even be necessary to harm one’s ranking (in an individual sport) or the team’s position in the competition. For example, in tennis it is possible to bet on the outcome of a single set. This allows the fixer to deliberately lose a set against a weaker opponent and still have plenty of opportunity to win the match. Spread betting equally provides opportunities to bet on a specific outcome without the necessity of losing. In this type of gambling, players or teams receive a handicap according to their expected strength. In football, the stronger team must win on the field with a certain goal difference in order to also ‘win’ in gambling terms. Winning but deliberately failing to make the spread is known as ‘point shaving’. A final option is to lose against far better opponents, because in those matches no one expects the weaker side to win anyway. Feelings of loyalty may help the fixer to rationalise his behaviour. Many African players, for example, support their entire extended family and may therefore experience additional financial pressure, whereas from a cultural perspective they may not perceive actions to the benefit of the clan as corruption (Boniface et al. 2012, p. 19). In the Netherlands, there have been several accusations of ‘insider’ match-fixing although none of these were proven. One example involved a football referee who was frowned upon because in one game he handed out the first yellow card—an occurrence that some operators allow their customers to bet on—for no obvious

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reason. As it turned out later, the booked player was one of the referee’s closest friends. Police officers looking at a potential match-fixing case noticed this several years later but did not investigate further. In another case, the alleged plot involved three footballers who once played for the same team and had become friends. Here, the ex-girlfriend of one of the players accused them of having manipulated matches. Initially, both the club and the police dismissed the accusations as unrealistic but when Voetbal International (the most widely read football magazine in the Netherlands) broke the story, the authorities had little choice but to take action. The police investigation did not produce evidence of manipulation and revealed that none of the players possessed anything of value that they were unable to account for. Understandably, the case never went to court. One explanation might be that the three friends did indeed discuss in detail how they could go about fixing matches but never put their ideas into practice. A final potential case example concerns tennis. In 2014, two Dutch players who were close friends attracted attention because punters betted an unusually large amount of money on a match they played in a challenger tournament. This immediately led to accusations of match-fixing, but again nothing could be proven. A tennis game at the challenger level usually attracts bets in the order of no more than €400–€4000 so it does not require a large sum to change the odds substantially (Misset and Van der Weij 2014). Professional gamblers (as well as betting fraud detection systems) monitor such changes closely because they assume they indicate that someone knows something relevant to the outcome of the game. One of the players might be ill, for example, but the outcome may also be fixed. A sudden change in the odds can thus provoke ‘professionals’ to hop on the bandwagon and create a snowball effect. Even rumours about a player’s physical condition may suffice to increase the betting volume substantially while the athletes themselves are unaware of all this. Both gambling operators and high rollers continuously search for information relevant to odds setting. A Norwegian police officer, who was also the coach of a professional albeit low ranking football team, told the present author in an interview that gamblers called him almost every week, even though he never provided information. However, coaches and players are obviously not the only targets. These also include groundsmen, members of the medical team, catering personnel, the bus driver or even the cleaners. Everyone who is in day-to-day contact with an individual athlete or a club may possess information that can be valuable to gambling operators and professional gamblers, and for which they are willing to pay. The examples underline that it is very difficult to detect and prove insider manipulation if the athletes manage to avoid a financial trail, for example by not using a bank account that traces back to them. The primary weak spot is that a successful scheme requires another person to place the bets, perhaps a close friend or a relative. If such a relationship goes sour, the accomplice might decide to go public. Even though the manipulation as such would still be very difficult to prove, it would have a negative impact on the player’s reputation.

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The Asian Connection Match-fixing is clearly a serious problem in Asian sports competitions. Over the past decades, numerous scandals have come to light in sports such as football, baseball, cricket and sumo wrestling. According to some, at the end of the 1990s, corruption in Chinese football in particular was so endemic that punters no longer trusted the outcomes of matches (Ostrov 2009). Online gambling allowed them to switch to European competitions, and apparently, some of the Chinese and Singaporean fixers responded with the manipulation of European games. However, Asian fixers may also have been looking for ways to expand their business regardless. For example, match-fixer Eswaramoorthy Pillay, an Indian national living in Singapore, appeared in Europe as early as the mid-1990s (Invisible Dog 2012). The first well-documented case of an Asian match-fixer operating in Europe was the Zheyun Ye case, which came to light in 2006.

Zheyun Ye Zheyun Ye is the name of a Chinese national—it is unclear whether this is an alias— who made his appearance in Belgium in 2004. He posed as a wealthy businessman seeking sponsoring opportunities with football clubs to advertise his trade in fur clothing. This was obviously just a cover story and not a very good one (Humo 2006). Ye offered low ranking Belgian football clubs €250,000–€500,000 to become their shirt sponsor and a lot more money if they gave him full control over the clubs. The club officials were highly interested in the money but handing over control was a bridge too far. One club did some background checking and sent a representative to a Chinese company that Ye claimed to own, which turned out to be an empty room in a shabby office tower (Humo 2006). In the end, only the club Lierse SK accepted €370,000 from Ye. The fixer was more successful in Finland, where he acquired the football club Allianssi. He immediately bought five new players and under the new management, Allianssi lost one of its first games by 8–0. The Finnish police immediately started an investigation but could not prove match-fixing (Hill 2008, p. 95). Besides football clubs, Zheyun Ye also approached individual players and coaches. Three players of Germinal Beerschot Antwerp admitted that Ye had offered them €25,000 to lose a match (Spapens 2012). Six Lierse SK players and coach Paul Put confessed that they had manipulated games for bribes ranging from €5000 to €10,000 (Eeckhaut 2006). Things took a bad turn for Zheyun Ye in February 2006. First, Belgian television aired a documentary in which fourteen persons and five football clubs were accused of fixing at least seven games. Second, the Belgian police arrested Ye for assaulting a young woman, and she mentioned to the police that he had also bragged about rigging matches. As a result, the police brought Zheyun Ye in for questioning, as well as two other men who happened to

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be in his hotel room when they arrived: Ye’s personal assistant Olivier Suray and player’s agent Pietro Allatta. However, the investigation did not produce enough immediate evidence to keep the three men in custody for an extended period and they were released within days. Zheyun Ye immediately left Belgium and returned to China. Pietro Allatta was an interesting figure. He was no stranger to the criminal underworld and had been convicted to a 4-year prison term in 2000 for tax fraud and illegally supplying labour for construction work. He was also part of the entourage of Carmelo Bongiorno, who was alleged to be a member of the Belgian– Italian mafia. Bongiorno had been convicted for murdering a journalist who wrote about his activities (Hill 2008, p. 91). It was Allatta who brought Ye into contact with clubs and players but it remains a mystery how the criminal relationship between the two men was established. The Belgian police finished their enquiries in 2008 but it took the public prosecution service until 2014 to take the case to court. Zheyun Ye received a 5-year prison sentence (in absence), and Pietro Allatta was given a 30 months term, whereas Paul Put received a 2 year probationary prison sentence. The court of appeal raised this to an effective 2-year prison term for Put and it increased Allatta’s sentence to 8 years. Whether Ye had been acting on his own initiative or as the representative of a Chinese crime syndicate is unknown.

Wilson Raj Perumal A second example of Asian match-fixers operating in Europe is the case of Wilson Raj Perumal. He was arrested in 2011 and chose to cooperate with the authorities. Perumal, a Singaporean national, claimed to have worked for Tan Seet Eng, better known as Dan Tan, who had allegedly taken over Pillay’s European match-fixing activities in 2008 after the latter had built up large gambling debts and had no choice but to leave the continent to avoid his creditors (Invisible Dog 2012). Tan had been convicted in Singapore for illegal bookmaking in the early 1990s. In 2010, he was suspected of rigging a match of the Italian third division football club Cremonese. The manipulator in this case was goalkeeper Marco Paolini, who could settle a gambling debt by throwing a game. Unable to find accomplices, Paolini drugged his teammates with a heavy tranquilizer during the half-time break and this led to a police investigation (Delpierre 2012). It revealed that Tan collaborated with gangs originating from Eastern Europe and the Balkans (Buncombe 2013). Perumal, too, had been a professional gambler and was convicted for match-fixing in Singapore as early as 1995. In 2000, he was sentenced for attacking football player Ivica Raguz with a hockey stick. Perumal had betted heavily on Raguz’s team to lose the next game and saw injuring the player to keep him out of the match as the only way to ensure this result. Next, Perumal attempted credit card fraud, for which he was sent to prison once again. After his release, he started

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collaborating with Tan and in 2009 they established a ‘sports management’ company named Football 4U. They approached football associations around the world with the offer to organize friendly exhibition matches, but their hidden aim was to rig the games for betting purposes. Perumal, among others, targeted African players and football associations who were financially vulnerable and susceptible to corruption. In 2010, Perumal allegedly mounted an entirely fake Togolese national team that played (and deliberately lost) a friendly match against Bahrain. In February 2011, the Finnish police arrested the Singaporean in a case of manipulation involving the football club Roveniemi. He was convicted for match-fixing together with nine players, seven of whom were Zambian nationals he had ‘parked’ at the Finnish club. Perumal claimed to be part of a global gambling and match-fixing syndicate with operators in Singapore, Croatia, Bulgaria, Slovenia and Hungary. The ring had manipulated dozens of matches in a period of 3 years. However, this would only have earned them about €5–€6 million, which seems an incredibly modest sum. Perumal pointed at Dan Tan as his ‘boss’ and mastermind of the fixing activities, an accusation that Tan strongly denied. In 2015, Perumal was also linked to a case in the Netherlands involving Sierra Leonean midfielder Ibrahim Kargbo. The manipulation took place when Kargbo played for the premier division football club Willem II in 2009. He was thought to have been vulnerable because of heavy financial obligations in his home country (van Dongen and Feenstra 2015). Kargbo also played for the national team of Sierra Leone where he allegedly took part in the manipulation of matches fixed by Perumal, and the two kept in contact for several years. The Singaporean negotiated via e-mail about the manipulation of matches in the Dutch competition. In 2016, the ethical commission of the Dutch football association KNVB concluded that Kargbo had indeed been guilty of rigging at least one match. According to the e-mails, Kargbo had demanded €200,000 for the manipulation and claimed that two of his teammates were willing to cooperate (KNVB 2016). Perumal, however, did not want to pay the three players more than €25,000. Much remains unclear, however, as Kargbo vehemently denied manipulation. The KNVB was unable find proof of other players being involved and of payments. So far, it cannot be ruled out that Kargbo tried to cheat Perumal by taking the money without attempting to produce the intended outcomes. In any case, the fixer quickly lost interest because the agreed scores failed to materialise.

Fixing in Europe, Betting in Asia? Although the match-fixing activities of Ye and Perumal have been landmark cases, the extent to which Asian fixers are still active in Europe is unclear. We also know very little about other Asian manipulators because the instances that came to light are almost exclusively linked to Perumal. It seems safe to assume that their work has become increasingly difficult as awareness of match-fixing and media attention has increased substantially in the past several years. However, it is still assumed that

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most of the betting on fixed matches takes place in Asia (cf. Hill 2008). This supposedly applies not only to the Asian fixers but also to their European counterparts. The question is with which Asian gambling operators the match-fixers place their bets. There is surprisingly little empirical information available. Next, I will first look into the world of illegal gambling in Asia and then address the question as to why it would be attractive for match-fixers to bet with Asian bookmakers.

Illegal Gambling in Asia Clearly, large underground gambling operations do exist in Asia. In 2007, Interpol coordinated its first operation SOGA (‘Soccer and Gambling’) against illegal gambling dens in mainland China, Hong Kong, Macau, Malaysia, Singapore, Thailand and Vietnam, which resulted in the arrest of 430 suspects and the closure of 272 premises. Interpol estimated the illegal turnover at USD 680 million. In 2014, the fifth SOGA operation resulted in the arrest of 1400 persons and the closure of around 1000 illegal gambling dens of which the estimated turnover was USD 2.2 billion (Interpol 2014). However, how ‘illegal’ are these ‘illegal gambling dens’? Technically, the answer to this question is rather straightforward: offering the opportunity to bet on sports games is illegal in most Asian countries. The answer is less clear when it comes to criminal groups setting up their own underground gambling rings. This would require a rather complex organisation because the days when illegal sports betting took place with the help of forms listing a small number of games based on fixed odds are long gone. Asian gambling dens nowadays offer the games online, because otherwise it would be impossible to attract customers with a large number of matches against continuously changing odds. According to the South Korean police, crime rings indeed operate many gambling websites. However, one might question why they would employ tens or even hundreds of personnel to calculate the odds and operate the gaming software while being forced to hide everything from the authorities, if they can also piggyback on what legitimate companies are offering. A criminal group could for instance organize a parallel betting ring that mirrors the odds offered by licensed online or offline operators, whereby the punters place the bets in cash at the gambling den instead of with the legitimate company. A representative of the illegal operator also pays out the winnings in cash. These days, this requires a rather complex setup. On the one hand, one needs volume to be able to pay out big wins. On the other hand, the bookmaker must ensure that the staff selling the tickets do not cheat. In the pre-Internet days, this was relatively easy: once a week the ‘runners’ delivered the tickets and the money to the bookmaker, who then administered everything and paid out the winners. Nowadays, however, punters want to gamble on a 24-h basis on matches in different sports

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played in every corner of the globe. Thus, the illegal operator also needs the Internet to show the games on offer and keep track of his business. In the Netherlands, such a modern system of parallel illegal betting operates in bars and coffee houses frequented by customers of Turkish descent (Spapens and Bruinsma 2015). Punters can pick their matches and place their bets via an electronic device—a desktop computer, laptop, tablet or smartphone—to provide them with a variety of matches and to place the bets. The device connects to a printer that produces a ticket, which shows the details of the bet. The punter then pays the money to an accomplice of the bookmaker who works at the venue. Software installed on the devices ‘reports’ back to the bookmaker, allowing him to monitor what is going on in the different venues. However, the operation has a weak spot in the fact that legitimate companies such as the Austrian-based Computer Betting Company GmbH (CBCX) supply the software as well as the content (matches and odds). To be able to operate like this the criminals use a loophole in the regulatory system. CBCX may accept anyone as a customer who produces a valid gambling license. However, in some jurisdictions it is not at all difficult to acquire such a license. Next, the license holder buys the right to use the software on, for example, 100 devices and then ‘sub-leases’ his rights to criminal groups (Spapens and Bruinsma 2015).3 The latter is of course illegal, but so far it remains unclear whether the supplier is obliged to terminate the contract if sub-leasing is discovered. Although, theoretically, such an operation would also work in Asia—powerful criminal groups might even be able to circumvent suppliers of gambling software and develop their own varieties—it is unclear whether this occurs in practice. For illegal operators, a far simpler albeit less profitable method of piggybacking is to place the bets with a licensed operator on behalf of their customers and be satisfied with taking a cut of the winnings. In Asian countries that do not allow sports betting, punters are able to access betting websites by circumventing blockades of IP-addresses and to wager money via, for instance, debit cards and receive pay-outs in their bank accounts.4 Popular online gambling operators have licenses in for instance the Philippines, such as Sbobet, Dafabet and Bodog88, but also in Europe, such as Bet365. However, many gamblers may not want the prize money coming from foreign gambling operators to be traceable to their bank accounts, or they prefer the social setting of playing together with friends at a gambling den to sitting at home behind their computer (if they have one). Case examples show that illegal Asian gambling operators indeed mainly work as intermediaries. In 2015, for example, the Vietnamese authorities arrested a criminal group operating gambling dens that placed the bets with m88.com, an online operator licensed in the Cagayan Economic Zone in the Philippines. 3

Theoretically, such an operation could be shut down by forcing a company such as CBCX to annul the contract with a license holder when it is discovered that illegal bookmakers are using the software, and have the license revoked in the jurisdiction where it was issued. 4 See for example www.sbo.net for detailed instructions on how inhabitants of Asian countries can play online.

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The criminals had opened as many as 12,000 different accounts (Ggrasia.com 2015). In India, it was discovered that illegal bookmakers used sophisticated masking software to place bets on legal gambling websites in the UK (Hoult 2015).

Why Would Match-Fixers Place Their Bets in Asia? How would match-fixers benefit from placing their bets with illegal Asian bookmakers? Betting with an independent illegal operator as described above, would obviously be useful because it allows fixers to avoid the fraud detection systems that monitor regular betting websites and prevent the creation of a ‘paper trail’. However, there are also serious disadvantages. To begin with, match-fixing will cost the independent illegal bookmaker money, sometimes a lot of it. Not only may he refuse to pay out a big ‘suspicious’ win, he may also initiate violent retribution if he finds out what really happened. Second, money won with an illegal bookmaker must be laundered, whereas, for example in the Netherlands, winnings with a licensed operator are accepted as legitimate. If one places bets with licensed companies via illegal intermediaries, the story is different. This method also allows the fixer to stay in the dark and the intermediary bookmaker does not lose any money. In fact, he can make an extra profit if he is cut into the deal. The main problem for the match-fixer is to find a bookmaker he can trust to pay out the winnings. Of course, the fixer also runs the risk that a fraud detection system marks the betting pattern as suspicious, but as long as the legitimate operator sees no reason to cancel the bets, this is not a problem. In any case, if this happens the fixer would still get back the money he wagered on the game. Betting with licensed companies favoured in Asia reduces the risk of detection, because the volume wagered on individual matches is usually large and chances are less that wagering a substantial sum on a specific outcome causes the odds to fluctuate and trigger a fraud detection system. In practice, match-fixers seem to favour placing their bets with licensed operators via ‘intermediaries’. They may be able to circumvent the blockades of websites, or work with accomplices in jurisdictions where sports betting is legal. Clearly, suspects such as Dan Tan and Wilson Perumal would have had access to such illegal bookmakers. European match-fixers might not even need to go to Asia. Paul Rooij, for example, also worked as an intermediary and used a computer program to automatically create player accounts with different operators favoured by Asian customers.

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Conclusion When we look at the different examples presented above, it becomes clear that by viewing match-fixing solely as a problem dominated by ‘outsiders’, criminal or otherwise, we are not seeing the complete picture. There are clear indications that match-fixing initiated by ‘insiders’ is quite common and might even be the bigger problem, as match rigging by individual players and officials may be more difficult to detect. Framing match-fixing as organized crime has its advantages in terms of criminal policy: the problem thus becomes the responsibility of law enforcement agencies, whereas ‘insider’ match-fixing and non-gambling related manipulation may be primarily perceived as the responsibility of sports associations and requiring a disciplinary rather than a criminal justice approach. Consequently, the latter type may attract less attention even though the adverse effects on sports competitions may be similar. In addition, regardless of the reason behind the fixing any rigged match may encourage those involved to place a few bets as well. With regard to gambling related match-fixing, the online gambling industry has a particular interest in pointing at ‘illegal Asian bookmakers’ as the ones who accept the big bets on rigged games. The online gambling industry fears that initiatives to prevent manipulation might lead to stricter regulatory control. Claiming that the problem lies with illegal Asian bookmakers would underpin that such restrictions are not very helpful. There are strong indications that match-fixers do indeed use illegal Asian betting operators, but also that they act as intermediaries and place the bets with companies that have a license in at least one jurisdiction, including countries and self-governing territories in Europe. This raises the question whether the online gambling industry is not in a far better position to detect match-fixing than external fraud detection systems. It also raises the question whether the companies are victims or deliberately keep the ‘high rollers’ on board as long as this is profitable. For example, an intermediary who places bets on behalf of match-fixers as well as ‘genuine’ punters will probably still be a valuable asset from the gambling operator’s perspective. From a criminological viewpoint, it is clear that match-fixing and related legal or illegal gambling operations require empirical research not only to acquire a better understanding of these phenomena but also to help develop effective countermeasures. This is indeed a challenge, because the crime problem is international in scope and the worlds of sports and gambling are highly sensitive areas with massive financial and cultural interests.

References Anastasiou, A. (2015, February 18). Cyprus footballers have high chance of being approached to fix matches. Cyprus mail. Retrieved from: http://cyprus-mail.com/2015/02/18/cyprusfootballers-have-high-chance-of-being-approached-to-fix-matches/

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Boeri, T., & Severgnini, B. (2013). Match rigging in Italian professional soccer: The economic determinants of corruption. In M. Haberfeld & D. Sheehan (Eds.), Match-fixing in international sports (pp. 101–112). Cham: Springer. Boniface, P., Lacarriere, S., & Verschuuren, P. (2012). Sports betting and corruption. Paris: IRIS. Bozkurt, E. (2012). Match fixing and fraud in sport: Putting the pieces together. Brussels: European Parliament. Available at http://www.europarl.europa.eu/document/activities/cont/ 201209/20120925ATT52303/20120925ATT52303EN.pdf. Accessed 24 April 2016. Buncombe, A. (2013, March 29). Dan Tan: The man who fixed football. The Independent. Retrieved from: http://www.independent.co.uk/news/world/asia/dan-tan-the-man-who-fixedfootball-8554751.html Council of Europe. (2014). Convention on the manipulation of sports competitions. Available at www.coe.int. Accessed 24 April 2016. Delpierre, M. (2012). It’s a bet (documentary film). Available online at: http://sales.arte.tv/fiche/ 2727/PARIS_SPORTIFS_EN_LIGNE. Accessed 24 April 2016. Der Spiegel. (2011, May 16). Betrug im Fussball: Wettpate Sapina entgeht der Festnahme.|Der Spiegel. Retrieved from: http://www.spiegel.de/sport/fussball/betrug-im-fussball-wettpatesapina-entgeht-der-festnahme-a-762883.html. Accessed 24 April 2016. Eeckhaut, M. (2006, February 18). Paul Put verkocht twee wedstrijden aan gokmaffia. De Standaard. Retrieved from: http://www.standaard.be/cnt/g9goe9i3 Ekathimerini. (2015, July 30). Volos Mayor Beos among 85 to face trial over match-fixing. Ekathimerini English Edition. Retrieved from: www.ekathimerini.com/200099/article/ ekathimerini/news/volos-mayor-beos-among-85-to-face-trial-over-match-fixing. Accessed 31 May 2016. Europol. (2013). Update results from the largest football match-fixing investigation in Europe. The Hague: Europol. FIFPro. (2012). FIFPro Blackbook Eastern Europe. FIFPro Services BV. Ggrasia.com. (2015, May 13). Suspected USD 92 Million gambling ring tried in Vietnam. GGrasia. Retrieved from: http://www.ggrasia.com/suspected-us92-mln-gambling-ring-triedin-vietnam/. Accessed 24 April 2016. Hill, D. (2008). The fix. Soccer and organized crime. Toronto: McLelland and Stewart. Homburg, G., & Oranje, E. (2009). Aard en omvang van illegale kansspelen in Nederland. Amsterdam: Regioplan. Hoult, N. (2015, May 22). IPL rocked by new match-fixing allegations. The Telegraph. Retrieved from: http://www.telegraph.co.uk/sport/cricket/twenty20/ipl/11626396/IPL-rocked-by-newmatch-fixing-allegations.html Humo. (2006, January 3). De gokchinees. Humo. Retrieved from: http://www.humo.be/humodossiers/21802/de-gokchinees Interpol. (2014, July 16) Illegal gambling networks across Asia targeted in INTERPOL-led operation. (Press release). Invisible Dog. (2012, July 7). Interview with the Keelong King: Wilson Raj Perumal. Invisible Dog. Retrieved from: www.invisible-dog.com/interview_wilson_eng.html. Accessed 24 April 2015. KNVB Expertise. (2012). Het seizoen in cijfers 2011/2012. Zeist. KNVB. (2016, February 7). Matchfixing voor het eerst in Nederland officieel vastgesteld. (Press release). Löer, W., & Schäfer, R. (2011). Zocker Liga. Gütersloh: Gütersloher Verlagshaus. Misset, R., & van der Weij, K. (2014, September 6). Game, set en gefixt. De Volkskrant. Mutschke, R. (2013). Match manipulation by organised crime groups. In M. Haberfeld & D. Sheehan (Eds.), Match-fixing in international sports (pp. 9–12). Cham: Springer. Nicolaisen, I. (2014, November 14). The development of gambling in Denmark and the effects of compulsive sports related gambling. Paper presented at the seminar “Facts and fiction: the Gambling Market”, Amsterdam. Nilsson, E., Lekhamo, M., Vesterhav, D., & Korsell, L. (2015). Matchfixning manipulation av matcher och spelmarknad. Stockholm: Brå.

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Ostrov, B. (2009). Corruption in Chinese sports culture. In S. Eicher (Ed.), Corruption in international business (pp. 91–98). Burlington: Gower. Pausanias, J. W., & Ormerod, H. (1918). Pausanias description of Greece. London: William Heinemann. Scott, M. (2015, April 28), Greek corruption: Olympiacos owner charged in match-fixing ring round-up. Inside World Football. Retrieved from: www.insideworldfootball.com/worldfootball/europe/16904-greek-corruption-olympiacos-owner-charged-in-match-fixing-ringround-up. Accessed 31 May 2016. Spapens, T. (2012). Prijs!. The Hague: Boom Lemma uitgevers. Spapens, T., & Olfers, M. (2015). Match-fixing: The current discussion in Europe and the case of the Netherlands. European Journal of Crime, Criminal Law and Criminal Justice, 23, 333–358. Spapens, T., Olfers, M., & EY. (2013). Matchfixing in Nederland. De aard en reikwijdte van het probleem, de risico’s en de aanpak. Tilburg/Amsterdam: Tilburg University/VU University &EY. Spapens, T., & Bruinsma, M. (2015). Fenomeenonderzoek gokzuilen. The Hague: Boom Lemma uitgevers. Sportwereld. (2008, August 23). Schulden verleiden Gilbert Bodart tot klungelige overval. Nieuwsblad België. Retrieved from: http://www.nieuwsblad.be/cnt/ge11vjfbo United Nations. (2004). United Nations Convention against transnational organized crime and the protocols thereto. New York: United Nations. van Dongen, M., & Feenstra W. (2015, January 17). De toneelstukjes van Willem II tegen Ajax. De Volkskrant. Retrieved from: http://www.volkskrant.nl/sport/de-toneelstukjes-van-willem-iitegen-ajax-en-feyenoord*a3831572/ van Lieshout, M. (2006, May 22). Gokken op voetbal: telkens wat nieuws. De Volkskrant. Retrieved from: http://www.volkskrant.nl/binnenland/gokken-op-voetbal-telkens-wat-nieuws* a770049/ Vidal, L. (2014, November 14). The facts from the Sorbonne study. Paper presented at the seminar “Facts and fiction: The Gambling Market”, Amsterdam.

Part V

Procurement, Corruption and Risk Assessment

Chapter 10

Criminal Infiltration of the Public Sector Paolo Canonico, Stefano Consiglio, Ernesto De Nito and Gianluigi Mangia

Introduction Recently, the issue of the relationship between criminal organizations and the legal economy has received the attention of various scholars (Vander Beken and Van Daele 2008; Duplat et al. 2012; Riccardi 2014; Barone and Narciso 2015; Sliter 2006). Criminal organizations consider the legal business sector as a means to launder money, but also as an opportunity to enter (and to be legitimized by) the conventional economic environment and to make further profits. This is due in particular to the strong ties characterizing criminal organizations and legitimate players. Actually, this kind of relationship is something peculiar to criminal organizations and the Italian mafia1 in particular (Sales 2015). The reason why the Italian mafia has been operating for 200 years lies not only in its use of violence, but also in its capacity to be part of the legitimate world. During these two centuries, the mafia has been accepted and often used by political and economic powers. Public works are a typical area in which criminal organizations meet legitimate players, penetrating the lawful economy through controlled firms, thanks to the technical and political mediation ensured by a number of intermediaries that play a role in awarding public tenders. Such actors, defined as the “mafia bourgeoisie” (Santino 2006), represent the essential network necessary to create consensus, influence public choices and provide technical support (Canonico et al. 2010). 1

With the term Italian Mafia we refer mainly to the three principal mafia organizations in Italy (Sicilian Mafia, ‘Ndrangheta and Camorra).

P. Canonico (&)
S. Consiglio
G. Mangia University of Napoli Federico II, Naples, Italy e-mail: [email protected] E. De Nito University “Magna Graecia” of Catanzaro, Catanzaro, Italy © Springer International Publishing AG 2017 H. Nelen and D. Siegel (eds.), Contemporary Organized Crime, Studies of Organized Crime 16, DOI 10.1007/978-3-319-55973-5_10

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In this chapter, we will examine this phenomenon by focusing on the connections between criminal organizations and the world represented by civil servants, politicians, managers and different kind of consultants. We will investigate the area represented by the border between the legal and illegal economy in the public sector by analyzing how different players behave in this context. We illustrate and support our argument through three case studies located in Italy. According to the European Commission (2014), Italy is one of the European countries where there is a higher perception of corruption in public works. The paper is organized as follows. Section 2 outlines the relationships between firms and criminal organizations. Section 3 explains the context of public procurement in Italy. Section 4 presents our methodology, and Sect. 5 is devoted to case studies. In the last two sections we discuss the analysis of the empirical material and present some final remarks.

The Relationship Between Firms and Criminal Organizations in Public Procurement It is now broadly acknowledged that legitimate economic activities represent an appealing environment for organized crime (Verfaillie and Vander Beken 2008). As stated by Lamberti in 1992 (Brancaccio 2012: 229), referring to the Camorra (the Neapolitan mafia): “Camorra should never be considered only as a criminal organization, active in controlling illegal business. Its main goal (opposite to what is usually believed) is not the accumulation of capital and financial resources, but power itself, i.e. the possibility of ruling on a given territory and controlling all economic activities” (our translation). As stated by many scholars (Sciarrone 2011; Very and Wilson 2012; van Duyne 2005) the grey area may represent the possible link between crime and the legitimate economy. As Vander Beken and Van Daele (2008: 740) argue, “legal and illegal activities do not operate on parallel and distinct levels, but rather they are connected and interdependent. Following this reasoning, the next step is to acknowledge that there is a point where the two businesses, legal and illegal, necessarily meet. This point is profit, which is the main driver of the activities of both”. This trading zone is what many scholars define as the grey area, a concept that refers to exchanges between different types of players requiring reciprocal recognition, and mutual favours assuming the same profit-making objective. It is an area where the borders are difficult to define and where a plurality of categories of players participate with different roles and powers (Sciarrone 2011). While money laundering has been investigated by the managerial literature since the 1990s (Mitchell et al. 1998), with a few of exceptions (such as Duplat et al. 2012; Caneppele and Martocchia 2014), far less study has been devoted to the strategies designed to enter the lawful business world (and the public procurement sector in particular) undertaken by firms acting in legitimate industries that are direct or indirect extensions of criminal organizations.

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As mentioned in the Transcrime Project Ariel’s report on ‘Organized Crime Infiltration of Legitimate Businesses in Europe’, “there is little understanding of infiltration by organized crime groups in legal businesses, i.e. the drivers of infiltration, the locations and business sectors of the businesses targeted, the process of infiltration, and the strategies used to control and manage infiltrated businesses” (Savona and Berlusconi 2015: 18). As stated by Paoli and Fijnaut (2006: 318): “organized crime’s infiltration of the legitimate economy, civil society and politics has been investigated and studied much less than its illegal markets activities, so much so that in many European countries it is impossible to go beyond guess-estimates and speculation”. Our approach does not consider the sociological or political side of the phenomenon, but is focused on the strategic alternatives implemented by criminal firms in the public procurement business. We refer to criminal firms as a concept used in different situations and forms of behaviour. An analysis of the literature reveals a complex world in which ‘mafia firm’ is a label used to describe a range of different situations that have led scholars to create a sort of taxonomy. In particular, the analyses have focused on three different aspects: the type of aim that leads to the creation of a mafia firm; the type of behaviour adopted to compete; the type of ownership of the mafia firm. As already stated (Canonico et al. 2012: 151) we define a criminal firm as a subject “that provides services and/or goods in legitimate industries, deploying both legal and illegal tools to achieve economic and social benefits (managerial and professional competences, corruption, money laundering, violence, collusion, etc.). Such firms are controlled (whether directly or indirectly) by a criminal organization. This control may be exercised via the relationship between the criminal organization and the entrepreneur that manages the firm. In some cases the criminal organization directly creates or acquires a firm; in other circumstances, firms and criminal organizations collaborate through specific relationships in order to gain a reciprocal advantage”. As we will show in the empirical section, the criminal firm plays a central role in defining the grey area and adopting different tools with which to operate. Traditionally, the most common method used by criminal organizations to infiltrate the legal economy was to impose protection fees on firms operating in a specific area. Our empirical results show how new and different techniques are adopted to enter the legal economy in the public procurement business. As Caneppele et al. (2009: 154) state, “the evolution of infiltration in public procurement has most recently shifted towards more subtle and sophisticated forms of infiltration, which now require complex knowledge on how to participate in public procurement, how to submit a bid, and how to run a company. This entails direct control over one or more companies, which in return provide powerful means to launder dirty money and exert social control over the local economic system. [Criminal organizations have] thus enlarged their traditional area of action, concealing criminal activities behind a veil of legitimization”. We believe that it is important to observe the relationships between firms and criminal organizations in order to analyze if and how they are changing and what the new business models are. In line with other scholars (Sales 2015; Brancaccio

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and Martone 2014), we believe that the idea of infiltration is not sufficient to explain what happens in the public procurement business. ‘Infiltration’ seems to suggest that there is a clear separation between the two worlds, but we will show that this is not the case in public procurement. As stated by Paoli and Fijnaut (2006; 319): “These white-collar criminals have no need to ‘infiltrate’ into the legitimate economy as they are already an established part of it, and the revenues of their ‘dirty’ activities are barely distinguishable from the flows of ‘clean’ and ‘hot’ money that are traded incessantly around the world”. Other terms, such as collusion or hybridisation, could perhaps be more useful to describe this process (Roberti 2008).

The Public Procurement Context in Italy Public works in Italy are especially at risk when it comes to criminal infiltration. One piece of data is particularly significant in this respect: in 2010, the amount of negotiated procedures (without public competition) was 14% of the total value of contracts, against the EU average of 6%. This surely represents a higher risk in terms of fraudulent behaviour, especially when we consider the importance of public expenditure in Italy. In 2014, the value of all public investment procedures above the threshold of 40,000 euros exceeded 101 billion euros (ANAC, Italian National Authority against Corruption 2015: 72). Public procurement represents a good example where the logic described by Fantò (1999: 58) applies: the tripartite relationship between politicians, entrepreneurs and criminal actors as an interdependence mechanism in which each pursues particular goals. Politicians are interested in electoral consensus and in being recognized as unavoidable mediators; entrepreneurs were initially separated from the criminal actors but then started to transfer work to criminal firms; criminal actors aim at participating in public works through subcontracting mechanisms. The traditional separation described by Fantò is temporally located in the past, as he writes about the functioning of the system in the 1980s. Nowadays, while it still makes sense to refer to different roles with particular interests in the game, there is an increasing overlap between the actors playing these roles. For instance, entrepreneurs running legitimate business entities may actually be members of criminal organizations. Likewise, politicians may be covertly affiliated to criminal clans. The role of actors with political influence is especially relevant in industry sectors related to public demand (public works, the provision of public services). Politics represent the trait d’union between entrepreneurs and public servants. As we will show in the examples below, they mediate the relationships with criminal firms, thereby enabling the collusion between legal and illegal. In particular, we will examine three case studies in public procurement in order to explore (a) which tools criminal firms use to run their business and (b) which models emerge from our analysis in terms of roles and strategies employed by criminal firms.

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Methodology and Selection of Case Studies We adopted a multiple case study approach to examine the different tools and methods criminal firms adopt to enter the legal business world. In order to select the cases to be covered in our empirical analysis, we consulted a panel of leading figures in Italian society (magistrates, military officers, public officials). In particular, we obtained the full support of three prominent figures among Italy’s Anti-Mafia magistrates: Franco Roberti, Gianfranco Donadio and Michele Di Lecce (Anti-Mafia public prosecutors involved in many trials and investigations concerning the Camorra and the ‘Ndrangheta)2. Interviews with members of the panel helped us to identify relevant judicial cases in which criminal organizations had penetrated legal businesses in Italy over the last 20 years. The interviews took place between January 2009 and July 2009 and between December 2013 and February 2014. We adopted an informal, conversational style of interviewing without pre-set questions to remain as flexible and open as possible to the interviewee’s opinions and conceptual framing and just ‘go with the flow’. The personal interview method has obvious limitations in terms of generalization and its results depend to a large extent on the theoretical perspective adopted (Qu and Dumay 2011; Fontana and Frey 1998), but our main aim was to gain an understanding of the general context and collect suggestions about representative examples of relationships between firms and criminal organizations. In this respect, our interviews were instrumental in identifying cases deserving of further analysis by means of other research techniques, such as document analysis, thereby minimizing the potential distortion of data collection resulting from less objective patterns of analysis. Finally, we selected three cases covering different geographical areas and industries. In order to delve deeper into these three cases we studied official documents such as police reports and judiciary acts, which played a fundamental role in our investigation of the facts and our understanding of the general environment. The following cases were selected: • The Milan to Venice high-speed train line; • The Casalesi/Eco4-affair (concerning waste collection and removal in the Caserta province); • The case of Gino Mamone, a well-known entrepreneur in the Liguria region. Some of the empirical data underlying this research were used earlier in another project (Canonico et al. 2012), in which the authors applied the Resource Dependence Theory to investigate which mechanisms adopted by criminal firms enabled them to thrive in the business of public works. We added a new case study located in the city of Genoa in the Liguria region, where the presence of criminal organizations (in particular ‘Ndrangheta) has been well known since the 1990s.

The Camorra and ‘Ndrangheta are two of the most important criminal organizations in Italy.

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The first case study focuses on the construction industry. Over the last 20 years, ‘Ndrangheta families have tightened their grip on large areas of northern Italy and are aiming for more control over the economy of this relatively rich region. According to the unit in charge of investigating mafia activities, “criminal clans from Calabria have become a real entrepreneurial mafia, aiming at procuring private contracts and public works (via apparently clean firms attributed to people not recorded as criminals, in order to evade the strict anti-mafia legislation)”. (DDA Annual Report 2009: 4). We analyzed the enquiry into the Paparo criminal clan, which operates in the Milan and Bergamo areas in the public works sector, adopting typical mafia methods in alliance with other ‘Ndrangheta clans coordinated by Pasquale Barbaro. In the situation under study, a company named P&P carried out earthmoving works on the Milan–Venice high-speed rail segment on behalf of a firm by the name of Locatelli s.p.a., a subcontractor working for the contractors De Lieto s.p.a. and Italferr s.p.a. In order to circumvent the strict anti-mafia legislation on subcontracting,3 the contract signed between Locatelli and P&P concealed the presence of the Paparo brothers clan in the works on the subsegment Pioltello–Pozzuolo Martesana, as evidenced by the text of the official enquiry (Court of Justice of Milan arrest warrant n. 41849/07 R.G.N.R., N. 8183/07 R.G.G.I.P del 26.10.2009 at page 71). This situation epitomizes the way in which ‘Ndrangheta families penetrate public procurement in northern Italy. The second case is taken from the Italian waste collection and removal industry, which is worth €8 billion a year and employs around 83,000 people nationwide. In contrast to various other countries, the majority of firms involved are state-owned and the presence of multinational operators is still rare. In order to encourage more private operators, while at the same time preserving public oversight, Italian law stipulates that this public service should be managed by public-private partnerships, 51% owned by public institutions (municipality, province, local consortium or region) with the participation of a private operator endowed with the technical and managerial competences needed to run the service. The business of waste collection and removal traditionally attracts criminal organizations for a variety of reasons: strong and concentrated public demand (which makes it possible to use intimidation and corruption); a very localized service (which facilitates exploitation of the military control of territories achieved by clans); a low added value business (which favours the modest entrepreneurial abilities of criminal organizations); an industrial context in which local service providers may exert strong pressure on politicians and institutions, and, finally, waste is a product with an inelastic price, and thus an attractive target for organized crime (Van Daele et al. 2007: 35). To shed light on the way criminal organizations have penetrated this industry, we decided to focus on the case of the Eco4 public-private partnership,

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Companies operating within the Public Contracts Code shall obtain the anti-mafia documentation (anti-mafia communication and anti-mafia information) before entering in, approving or authorizing either contracts or subcontracts relevant to public works, services and supplies.

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which operates across a wide area of Caserta province. We analyzed the process that led to the selection of the private partner, and also the way in which the consortium succeeded in widening its territorial area of operation. In order to select the private partner, the Caserta consortium used a public tendering procedure: the procedure was awarded to a temporary association of enterprises (ATI) named Flora Ambiente, owned by two local entrepreneurs (Sergio and Michele Orsi) and later recognized by magistrates as being connected with criminal clans. The third case deals with the entrepreneur Gino Mamone, the main player in a context in which politicians, public servants and businessmen were under accusation. Gino Mamone belongs to a family that has been mentioned in DIA investigations (Anti-Mafia Investigation Department) since 2000 (DIA report II semester 2002: 101). Mamone’s family moved from Calabria to Genoa, where Gino runs a thriving company which has been awarded numerous public works. Our choice was to analyze several criminal trials stemming from a broader enquiry into the awarding of public works contracts in the city of Genoa. The enquiry investigated a variety of prominent figures in the city and has shed some light on a world characterized by unclear distinctions between the legal and the illegal world.

Case Description The Inquiry into the Milano–Venezia High-Speed Train Line The case of the high-speed trains infrastructure shows that the firm P&P, under the control of the Papalia family and affiliated to the ‘Ndrangheta clan Barbaro Papalia, managed to carry out earthmoving activities as part of the works on the Milano– Venezia railway segment. They were able to do so thanks to their cooperation with the Locatelli company (a subcontractor of the De Lieto firm). In this case the mechanism through which criminal firms entered the business was subcontracting. Criminal organizations are not interested in influencing the tendering procedure; they intervene later, during the executive steps. Locatelli, the firm that had legally acquired the right to carry out earthmoving works on a specific segment of the whole high-speed network being built by De Lieto, then decided to further subcontract part of the activities to a smaller firm, P&P, under the direct control of a ‘Ndrangheta clan, thus breaking the law that prohibits such business practices. But how was Locatelli (a well-known firm) able to elude strict subcontracting legislation in favour of P&P? And why did this happen? Basically, this took place through an agreement on operated rental equipment that also involved the lease of the driver for a certain amount of time. This is legally considered as subcontracting only when the value of the contract exceeds 2% of the overall value of the work and, in all cases, the nominal value of 100,000 euros. By means of altered

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documentation, which simulated a higher value of total work awarded to Locatelli in different excavation sites and consequently a proportionally lower amount of work attributed to P&P, the subcontracting legislation was eluded and P&P received the work without being formally subject to restrictions in subcontracting.4 This was basically done because ‘ndrangheta clans control the earthmoving works in Lombardy and guarantee smooth operations if the firms they propose are awarded such works. Apart from Locatelli, P&P needed no other intermediaries in order to enter the business of earthmoving. In particular, there were no links with civil servants, banking institutions or other firms: the only actors who had to be contacted were the other criminal firms active in the same business. In this case, the strategy of the criminal firm consisted in focusing attention on the execution of the works, attempting to alter choices related to the procurement of materials and subcontracting and neglecting the initial steps of the tendering procedure. The power of criminal organizations is related to the role criminal firms play in the business of earthmoving. As stated by Bruti Liberati (chief prosecutor in Milan) at a public hearing in front of the Anti-mafia Commission (2012): In Lombardy we should not only refer to mafia infiltration, but instead criminal organizations are now deeply rooted in the very social fabric of the region, especially ‘ndrangheta; in particular, in the earth moving industry ‘ndrangheta is a de facto monopolist (our translation in English).

The strength of criminal firms derives directly from their ability to control economic activities at the local level and from military control of the territory.

The Inquiry into the Casalesi/Eco4 Affair A completely different situation arose in the Eco4 case. Here, the criminal organization decided to infiltrate the waste collection market by participating directly in the tendering procedure to select a private partner. This case epitomizes the situation in which there is a direct partnership between the public sector (the Eco4 consortium) and criminal affiliates (the Casalesi clan). As mentioned in the declarations provided to the prosecutor by Giuseppe Vassallo, a white-collar member of the Casalesi clan (Bidognetti branch): “I acted on behalf of the Bidognetti family as 4

The legislation on public works had made subcontracting of subcontracting illegal through the D. Lgs. 163/2006 which assimilated a number of other contracts to mere subcontracting: among these contracts, there is the operated rental equipment with driver (called nolo a caldo in Italian), which is subject to the same restrictions on subcontracting as cases in which the amount of the contract exceeds 2% of the overall value of the work and, in all cases, the nominal value of 100,000 euros. From the official inquiry it emerged that the actual work awarded by Locatelli to P&P exceeded 2%, and managers of the two companies were charged with illicit subcontracting and violation of anti-mafia legislation.

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their trustee in controlling the Eco4 company managed by the Orsi brothers. As a matter of fact I was their associate since I was requested to do so by Massimiliano Miele, charged by Francesco Bidognetti. Bidognetti himself reported these circumstances in an official transcript”. In the Eco4 case, criminal organizations participated directly in the waste collection and removal sector by means of the firm Flora Ambiente, partially owned by the Casalesi clan, which was responsible for several municipalities in Caserta province. As judiciary acts and witnesses have pointed out, Flora Ambiente needed to exert a strong influence on a number of steps in the tendering process managed by the Eco4 consortium in order to win the contract (from the drawing up of the book of specifications, to the management of the competitive procedure, to the collection of the bids). The Eco4 consortium, once established, used intimidation and corruption in order to be awarded the service of waste collection and removal by the municipalities involved in the consortium. As stated in the declaration rendered by Sergio Orsi, managing director and hidden associate of Flora Ambiente, in the arrest warrant of Mr Tribunale di Napoli O.C. n. 36856/01, 2009: “I have to say that I obtained the contract thanks to the support that I received from Giuseppe Valente (managing director of the CE4 consortium). One day, before the tendering procedure was published, I met Valente. […] In the end we agreed that: I had paid to him 100 million lire; he would have inserted this requisite in the call for participation of the tendering procedure, allowing me to win. I spoke of this agreement to my brother Michele. I acted under cover and managed to take all by surprise, winning the procedure over competitors such as Ecocampania, which was clearly more powerful than Flora Ambiente”. In order to be awarded the tender and become the chosen private partner, the Orsi brothers needed to set up a special purpose entity5 involving several local and national entrepreneurs. The choice of these entrepreneurs was made by a private consultant, Vassallo, acting for the Eco4 consortium, and a white-collar representative of the Bidognetti clan. The entrepreneurs in the ATI made sure that the Orsi brothers benefited from a series of advantages, in particular the possibility of having the requisites needed to participate in the tendering procedure called by the Consortium. On their side, the Orsi brothers provided the entrepreneurs with a share in Flora Ambiente and contracts for their respective businesses. The Eco4 story was strongly affected by the relationship between the Orsi brothers and Valente (lawyers), a public manager and president of the CE4 consortium. Valente played a key role in choosing the private partner in the public-private partnership, clearly favouring Orsi both in the definition of the book of specifications and also during the later steps of the tendering procedure. The Orsi brothers maintained close relationships with local politicians, members of the Italian parliament and mayors of the municipalities involved in the Eco4 consortium. Another reason for the success of the ATI deployed by the Orsi brothers was the

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In Italian the acronym is ATI.

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professionals involved, especially the lawyers (Valente) and an officer of the Commissioner for the waste removal emergency, contacted by Valente itself. This officer provided technical competence, relationships with entrepreneurs active in the same business (such as Brignoli) and contacts with those in charge of drawing up the specifications of the tendering procedure. In exchange, the Orsi brothers carried out construction works at a house owned by a friend of the officer, according to a declaration by Orsi himself. In the Eco4 case we find a plurality of criminal clans. At the beginning, the most relevant is the Bidognetti clan, who provided several services to the Orsi brothers: technical skills and machines owned by a white-collar clan member (Giuseppe Vassallo), bank guarantees (again thanks to Vassallo), physical intimidation,6 mediation with other clans active in the area, particularly the La Torre clan, and finally control over personnel and limitation of the trade union’s role. The physical intimidation needed to control the awarding step of the procedure was carried out by the strictly criminal part of the clan. It was also applied to obtain contracts from the municipalities. In exchange, the Orsi brothers gave the Bidognetti clan €1500 per month, 50% of the profits and 50 jobs—plus more working contracts with companies directly owned by the clan (for instance, La Nota and Oleodinamica). As it emerges from our analysis, the Eco4 case shows how criminal organizations combine different tools to control the market. In addition to traditional violence and control of the territory, they adopt corruption in order to acquire services from different stakeholders. The role of the entrepreneur is different and more sophisticated compared to the Locatelli case. The Orsi brothers wanted to control all the different steps of the tendering process (the book of specifications, the political choice to define the tendering model). In this case the know-how needed to run a business was a fundamental asset. Entrepreneurs have major influence and power in that respect and that is why their relationship with criminal organizations is continuously evolving.

Gino Mamone’s Business In recent years, the Liguria region has often been in the news due to a strong criminal presence in towns like Bordighera and Ventimiglia, which had city councils terminated before the end of term due to ‘ndrangheta infiltration. A report issued in 2001 by the Direzione Nazionale Antimafia (Italian Antimafia Agency) stated that ‘ndrangheta presence is massive in the region, and their activities range from money laundering to infiltration of public works. In this case study we are focused on the figure of Gino Mamone, an entrepreneur involved in several criminal inquiries.

6

In order to avoid a possible complaint from a competitor who participated in the tender, Michele Orsi asked for a clan intervention. As stated by a member of the Bidognetti clan: “Ferraro’s brothers were threatened by Alessandro Cirillo who put a gun to their heads”.

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Mamone belongs to a family rooted in Calabria and under observation of the Direzione Nazionale Antimafia since the early 2000s, operating in Liguria with a company named “F.lli Mamone and C. di Mamome Luigi”. In this case, a public-private partnership called Sviluppo Genova, involved in the refurbishment of the Ilva-Italsider area in Genova Cornigliano, played a central role. According to the inquiry, Mamone, together with corrupt public administrators, was able to orchestrate which other companies could participate in the works. He appeared to be at the centre of an intricate net of informal agreements which enabled him to influence the behaviour of other actors. Through wiretap recordings, magistrates were able to observe that when public works were to be awarded by Sviluppo Genova, Mamone was always the central figure, even when his own firm was not participating in the tender. Two types of actors are involved in this case: the firms that formed part of the “cartel” controlled by Mamone and the awarding entity (Sviluppo Genova). In the background, there is a more complex scenario at work, involving Mamone’s connections with local politicians, professionals and public servants. Mamone often resorted to corruption as an instrument to obtain favours and desired behaviour. Mamone embodied strong leadership and was able to alter the choices of other firms and centrally allocate the contribution of each player to a given tendering procedure. His organizational ability was evident, not only during the first phase of the tendering procedure but throughout the execution of the works, and he also proved to be highly competent in terms of technical and relational tasks. The involvement of other firms was crucial to his criminal plan: Mamone had struck mutually beneficial agreements with 16 other companies. Within this context, it is relevant to quote from the Pandora inquiry in which magistrates state that “comparing conversations among Mamone, Lamberti (a technical consultant) and several entrepreneurs […] has made it possible to collect convincing evidence of firms joining the cartel led by Mamone, either for economic advantage or as a result of being forced into illegal practices”. The relationship between these companies is so strong that it requires a continuous exchange of information, and the same person (I. Gazzetti) working for both Ecoge (Mamone’s company) and Baraldi (a different firm active in the environmental industry) in a leading position. This created a situation of interlocking directorates, a coordination mechanism common in business networks. Transcripts of wiretap recordings have revealed a situation in which agreements were clearly in place before the start of the bidding procedure in order to designate the firm to be awarded the tender.

Main Findings and Discussion Our case studies show that criminal firms use different techniques to penetrate the public works business. In all cases the ability of criminal organizations to penetrate the public procurement process is strongly related to their capacity to influence the behaviour of other actors who play a critical role.

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In the high-speed train case, P&P made use of intimidation, criminal reputations and entrepreneurial abilities. According to magistrates investigating the case, in firms such as Locatelli, links were established with criminal clans as firms resigned themselves to the workings of the “system”, following forms of environmental intimidation (Court of Justice of Milan). The need to do business with firms connected to criminal clans appears to be an unwritten rule that is strictly obeyed in certain areas as a result of the clans’ powerful reputation. Magistrates call this method the “‘Ndrangheta system”. As stated in the official document of the Court of Justice of Milan: “A centralized management system of public procurement processes is at the heart of the relationship between the ‘Ndrangheta system and the entrepreneurial world. When clans form a whole system, any infringement of the agreements in such businesses becomes a violation of the ‘Ndrangheta system, which no one can do with impunity”. The case study also demonstrates that legitimate firms receive benefits when sourcing services from criminal firms that may appear to be more efficient or offer lower prices. In the official document of the Court of Justice of Milan, a magistrate states that “the goal of the Locatelli firm is not to favour the Paparo clan, but rather to cover themselves while continuing to take part in the economy via the illicit system”. In the Eco4 case, more numerous resources were mobilized to alter the behaviour of the actors involved. Flora Ambiente, through the Bidognetti clan (a “sleeping partner” in the company) intimidated not only competitors such as Ecocampania (its sole rival in the tendering procedure), but also smaller companies that had received waste collection contracts in the consortium’s municipalities. Only two bids for the role of private-sector partner in Eco4 were submitted. Judicial documents provide no clear evidence that potential competitors were prevented from participating, which makes it all the more surprising that no national or international firm tried to win this significant and lucrative contract. One possible explanation is that, faced with a context where competitors are using intimidation, blackmail or corruption as competitive weapons, many legitimate firms may simply decide not to compete and exit the market. In such circumstances, criminal firms drive competitors away by exploiting their criminal reputation. It therefore did not come as a surprise when a separate magistrates’ inquiry revealed that the only competitor in the Eco4 tender was another criminal firm. Another method used by Flora Ambiente to prevail in the Eco4 procurement was to leverage its ability to provide market access to other firms. By involving other entrepreneurs driven by the desire to obtain new contracts, the firm was able to meet the tender’s technical requirements. Flora Ambiente also used corruption to achieve a competitive advantage. They paid 100 million lire to the president of the CE4 consortium, plus large sums to politicians and civil servants. They also offered politicians the opportunity to distribute a large number of jobs, to be assigned on the basis of their recommendations.

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From judiciary acts it also emerges that, in some cases, criminal firms had their paths cleared by white-collar criminals within local government (such as Mr. Conte, the former mayor of Mondragone, and Mr. Vassallo, another local politician). In some cases, rather than corrupting or bribing public officials, criminal clans prefer to have their own affiliates elected and appointed to office (a strategy termed “infiltration”). In the case of Mamone (Genoa), the core elements of the criminal strategy are twofold: corruption and the opportunity for all actors to achieve mutual advantages from the illicit behaviour. Corruption is therefore the tool adopted to distribute money to the involved stakeholders. Magistrates have claimed that local politicians have acted as mediators in business transactions set up by Ecoge (Mamone’s company). When we compare the different case studies, it appears that criminals’ ability to influence the procurement process increases significantly as they move from racketeering to an active business presence. The analysis of case studies shows that the potential to penetrate legitimate businesses increases when criminal organizations are able to influence more than one step of the procurement process. When criminal organizations have a direct business presence they can extend their influence to the early steps of procurement (definition of the book of specifications, management of the procedure, etc.). When criminal firms choose to intervene directly, as in Eco4, clans need to avail themselves of more relational resources to alter the behaviour of different types of actors (entrepreneurs, politicians, public managers, civil servants, professionals). Therefore, the ability of criminal firms to enter the legitimate business world depends on their relational capacity and on the number and types of actors with whom they can forge links. Comparing the case studies, we see that the number and type of tools adopted to alter the behaviour of external actors varies greatly from one case to another. The more that criminal firms are able to penetrate the economic system through the control of procurement processes, the more tools they tend to use—and the less they rely on traditional criminal tools such as violence or intimidation. The need to deploy a variety of tools is consistent with the need to influence the behaviour of actors belonging to different typologies and characterized by different dimensions. Our empirical evidence shows that three different models may be depicted. In the first model (the high-speed train line), which we call the “predatory” model, criminal organizations control the later phases of procurement processes. They tend to have fewer actors under their control and to use more traditional criminal levers (intimidation, environmental pressure). Their presence is more peripheral and they are able to exert less effective control of the economic activities involved. Hence their sphere of influence is restricted to marginal, low-value-added activities (for instance, subcontracting in earthmoving works) that are often used to cover the transfer of black-market funds and to pay bribes. The predatory model is characterized by a dual relationship between criminal clans and a firm that receives the right to carry out public works through competitive tendering procedures or the opportunity to manage a public good or service. In the case studies analyzed,

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the relationship between these two typologies of actors developed as a tacit agreement due to a mutual interest. Of course, the criminal reputation of clans also plays a vital role. In this model, criminal clans do not try to alter public procurement processes, but rather aim to develop a relationship with the firm that is awarded the tender. This implies that the relational ability of the criminal clans only influences the winning firm. In this kind of situation, the main levers adopted by clans are criminal reputation, intimidation and corruption. In the second model (Eco 4), which we term the “entrepreneurial” model, criminal organizations enter directly into the business system and control more actors and resources directly. Traditional criminal levers (such as violence or physical intimidation) play a more marginal role. The entrepreneurial model opens up more potential outcomes to criminal organizations, since it may increase their ability to penetrate the legal economy or control jobs and electoral votes. It may also increase their options for infiltrating public administrations and altering the market access enjoyed by competing businesses. The entrepreneurial model is also self-reinforcing, since the ability to play a direct role in the business system supports control over economic activities within the territories in the criminal clans’ domain. This, in turn, improves the availability of critical resources required to maintain dominance in the criminal scene (money, jobs and votes). At the same time, criminal firms have many possibilities to influence mainstream political debate, forcing politicians to adopt measures and provisions that suit their aims. This perspective helps to show why public procurement processes are particularly relevant: influencing them gives criminal firms the opportunity to increase their territorial control and to display a show of strength. The third model is identified as “hidden regulation” (Genoa), whereby criminal firms use corruption tactics and intimidating behaviour on public servants, politicians and entrepreneurs to emerge as “regulators” of public works, deciding the outcomes of tendering procedures in advance. This seems to be a variant of the well-known “tavolino” (little table) method (also defined as the Siino method). Hidden regulation allows criminal firms to rule the market together with colluding operators. The role of the criminal clans seems to be fading gradually because the weapons adopted to ensure that the system works properly are corruption and— more generally—the economic advantage which accrues to all participants. It is a positive sum game that reinforces silence and collusion among all players involved.

Conclusions This paper examines typical settings in which criminal firms interact with their legitimate counterparts in order to penetrate economic activities awarded by means of public procurement processes. We present three different models that represent an ideal type, and even if they refer to a different temporal slot we do not want to speak about an evolution or change in the criminal organizations’ strategies. We think that these three different

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models can coexist, even within the same criminal organization. At the same time, we want to point out how criminal organizations are adopting new strategies and techniques. Typically, the Mafia is considered as a subject that offers protection to economic players, but this involves more than a merely passive role: mafia organizations also play a regulatory role in the sense that they guarantee the success of a deal (Gambetta 1992; Milhaupt and West 2000). Therefore, criminal clans can no longer be considered as parasites, as their services allow the actors involved to benefit from economic activities and contractual agreements that would otherwise have been made impossible by the high transaction costs. Our empirical results show how criminal firms can now transcend this role to act as an economic player. They are not just mediators, but instead adopt a proactive role. They do not simply interfere in other people’s businesses: they run their own business, they influence— or even make—political and economic choices. The hidden regulation model is better equipped to represent the complexity of this phenomenon and the disappearing borders between traditionally separate spheres of influence (economy, politics and crime).

Appendix 1: Official Judiciary Documents for the Three Cases Analyzed Enquiry on Milano–Venezia Segment of High Speed Main Line Train Services Tribunale di Milano Ordinanza Cautelare n. 10354/05 RGNR, N. 2810/05 RGGIP del 3.03.2009, giudice dott.ssa Caterina Interlandi Tribunale di Milano, Ordinanza Cautelare n. 41849/07 R.G.N.R., N. 8183/07 R. G.G.I.P del 26.10.2009 (GIP Giuseppe Gennari) Tribunale di Milano, Direzione nazionale antimafia “Relazione Annuale – dicembre 2009” Relazione del consi. Roberto Pennisi del Distretto di Milano Procura della Repubblica presso il Tribunale ordinario di Milano – Direzione distrettuale Antimafia “Al sig. Procuratore della commissione parlamentare di inchiesta sul fenomeno della criminalità organizzata mafiosa o similare” n. 3503/07 13-1 Prot. D.D.A. Casalesi/Eco 4 Enquiry Tribunale di Napoli - Ordinanza Cautelare n. 215 del 22.3.2007 (GIP Alessandro Buccino Grimaldi); Tribunale di Napoli - Ordinanza Cautelare n. 707 del 29.10.2007 (GIP Alessandro Buccino Grimaldi); Tribunale di Napoli - Ordinanza Cautelare la n. 472 del 7.7.2009 (GIP Alessandro Buccino Grimaldi);

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Tribunale di Napoli - Ordinanza Cautelare n. 45 del 26.1.2009 (GIP Alessandro Buccino Grimaldi); Tribunale di Napoli - Ordinanza Cautelare n. 36856/01 R.G.N.R. del 7.11.2009 (GIP Raffaele Piccirillo); Tribunale di Napoli - Sentenza (Rito Abbreviato) primo grado. Giudice Campoli 23.03.2009; Commissione Parlamentare d’Inchiesta sul ciclo dei rifiuti e sulle attività illecite ad esso connesse “Relazione territoriale stralcio sulla Campania” relatori Roberto Barbieri e Donato Piglionica approvata nella seduta del 13 giugno 2007; Camera dei Deputati della Repubblica Italiana “Domanda di Autorizzazione ad eseguire la misura cautelare della custodia in carcere nei confronti del deputato Cosentino” 10 novembre 2009.

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Fontana, A., Frey, J. H. (1998). Interviewing: The Art of Science. In N. K. Denzin, & Y. S. Lincoln (Eds.), Collecting and interpreting qualitative materials (pp. 47–78). Thousand Oaks, CA: Sage Publications, Inc. Gambetta, D. (1992). La mafia siciliana. Un’industria della protezione privata. Torino: Einaudi. Milhaupt, C. J., & West, M. D. (2000). The dark side of private ordering: An institutional and empirical analysis of organized crime. The University of Chicago Law Review, 67(1), 41–98. Mitchell, A., Sikka, P., & Willmott, H. (1998). Sweeping it under the carpet: The role of accountancy firms in moneylaundering. Accounting, Organizations and Society, 23(5–6), 589– 607. Paoli, L., & Fijnaut, C. (2006). Organised crime and its control policies in Europe. European Journal of Crime, Criminal Law and Criminal Justice, 14(3), 307–327. Qu, Q. S., & Dumay, J. (2011). The qualitative research interview. Qualitative Research in Accounting and Management, 8(3), 238–264. Riccardi, M. (2014). When criminals invest in businesses: Are we looking in the right direction? An exploratory analysis of companies controlled by Mafias. In S. Caneppele & F. Calderoni (Eds.), Organized crime, corruption and crime prevention (pp. 197–206). New York, NY: Springer. Roberti, F. (2008). Organized crime in Italy: The Neapolitan Camorra today. Policing, 2(1), 43–49. Sales, I. (2015). Storia dell’Italia mafiosa. Perché le mafie hanno avuto successo. Soveria mannelli: Rubbettino. Santino, U. (2006). Dalla mafia alle mafie. Soveria Mannelli: Rubbettino. Savona, E. U. & Berlusconi, G. (Eds.) (2015). Organized crime infiltration of legitimate businesses in Europe: A pilot project in five European Countries. Final Report of Project ARIEL Assessing the Risk of the Infiltration of Organized Crime in EU MSs Legitimate Economies: A Pilot Project in 5 EU Countries (www.ariel-project.eu). Trento: Transcrime, Università degli Studi di Trento. Sciarrone, R. (Ed.). (2011). Alleanze nell’ombra. Mafie ed economie locali in Sicilia e nel Mezzogiorno. Rome: Donzelli. Sliter, J. (2006). Organized crime in business. Journal of Financial Crime, 13(4), 383–386. Van Daele, S., Vander Beken, T., & Dorn, N. (2007). Waste management and crime. Environmental Policy and Law, 37(1), 34–38. Van Duyne, P. C. (2005). Crime and commercial activity: An introduction to two half-brothers. In P. C. van Duyne, K. von Lampe, M. van Dijck, & J. L. Newel (Eds.), The organised crime economy: Managing crime markets in Europe (pp. 1–17). Nijmegen: Wolf Legal Publishers. Vander Beken, T., & Van Daele, S. (2008). Legitimate businesses and crime vulnerabilities. International Journal of Social Economics, 35(10), 739. Verfaillie, K., & Vander Beken, T. (2008). Interesting times: European criminal markets in 2015. Futures, 40, 438–450. Very, P., & Wilson, D. (2012). Forgotten economic actors. How pirates, mafias and other illegitimate firms shape economic systems and competition. M@n@gement, 15(3), 245–252.

Chapter 11

The Awarding of Public Contracts and Safeguarding Integrity Stefano Caneppele

Introduction Safeguarding the integrity of public contracts is not a new topic. Public spending has always been on the radar of (white collar) criminals and criminal organizations. The reason is clear if we consider that procurement spending accounts for, on average, between ‘13 and 20% of gross domestic product’ (Transparency International 2014). Although instances of corruption in public procurement occur wherever specific criminal organizations are operating, the integrity of public procurement is under a greater threat. Mafia groups in southern Italy have exploited public contracts as a constant flow of revenue for their organization. Historically, this exploitation happened because mafia groups were able to corrupt people in the public administration, to exert territorial control, to intimidate legitimate competitors and to avoid (weak) controls in public procurement (Calderoni and Caneppele 2009; Caneppele et al. 2009; Caneppele and Martocchia 2014; Caneppele 2014). At the beginning of the 1980s, the Italian Government started to seriously tackle organized crime (OC) groups. Since then, efforts to combat Cosa Nostra, Camorra, ‘Ndrangheta and Sacra Corona Unita (the most influent criminal organizations in Italy) have continued to grow, despite some ups and downs. Especially in the last 15 years, law enforcement has focused its attention on the assets and investments of Italian OC groups. The National Security Programme (Pon Sicurezza 2000–2006 and 2007–2013), supported by the European Commission, funded many initiatives. Within this framework, the Italian Government decided in 2006 to fund a study called Implementazione analisi criminale (Criminal Analysis Implementation). The study aimed at analyzing the risk of OC groups infiltrating in public procurement in the South of Italy. Transcrime (www.transcrime.it) carried out the study in S. Caneppele (&) School of Criminal Justice, University of Lausanne, UNIL-Batochime, 1015 Lausanne-Dorigny, Switzerland e-mail: [email protected] © Springer International Publishing AG 2017 H. Nelen and D. Siegel (eds.), Contemporary Organized Crime, Studies of Organized Crime 16, DOI 10.1007/978-3-319-55973-5_11

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collaboration with the Italian Ministry of the Interior. The study led to the development of a risk assessment model to highlight public contracts which, according to various criteria, showed a higher risk of infiltration by OC. The model was called Risico (Rischio Infiltrazione Criminalità Organizzata, Risk Infiltration Organized Crime). This contribution presents how the study developed, its strengths and weaknesses and the lessons learnt from this experience.

Defining Infiltration by Organized Crime in Public Contracts The first problem encountered was the definition of OC infiltration of public contracts. Given the lack of previous literature in the field, the chosen definition was intentionally broad. There is infiltration “when a natural person or a legal entity, belonging to or linked to a mafia-type organization, or with a view to facilitate a mafia-type organization, affects a public contract in order to obtain an unfair advantage” (Calderoni and Caneppele 2009: 9). This definition highlights five points. First, the field of research was limited only to public contracts. Behaviors like extorting shop owners or investing dirty money in legitimate activities (e.g., pubs, restaurants, shops) were outside the scope of this research. Second, the infiltration can be perpetrated by a person (e.g., extorting companies that are working on a public contract) or a legal entity (e.g., a company which obtains public contracts thanks to mafia groups). Third, the infiltration can be perpetrated not only by mafia members but also by outsiders who want to facilitate mafia groups. Fourth, very different behaviors can fall into the definition: from the basic (e.g., extortion) to the more sophisticated (e.g., corruption in public administration; mafia companies’ cartels distorting competition). Fifth, the infiltration is a purposive behavior. Perpetrators obtain advantages (e.g., money or the award of a public contract) which they could not have obtained in a legitimate way.

How to Map the Infiltration? The second problem that the research team had to face dealt with measuring the infiltration of OC in public contracts at regional and provincial level. The challenge was to select proxy variables capable of detecting a phenomenon that is barely visible. A literature review and expert interviews supported the selection of the variables. The aim was to develop a methodology based on quantitative data collected on a regular basis and at regional/provincial level. Regularity of data collection allowed the team to update the proxy indicator. The update provided a constant monitor of the situation. After this preliminary scrutiny,1 the research team

1

For a full methodological description see Calderoni (2011).

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identified four proxy variables for measuring the presence of mafia-type organizations (mafia murders; mafia-type associations; city councils dissolved due to mafia infiltration; assets confiscated from OC). With reference to crimes in public procurement, a composite indicator collected six offences/variables (serious fraud to obtain public funds, truffa aggravata per il conseguimento di erogazioni pubbliche, art. 640-bis Italian penal code (c.p.); embezzlement against the State, malversazione a danno dello Stato, art. 316-bis c.p.; misappropriation of funds from the State, indebita percezione di erogazioni a danno dello Stato, art. 316-ter c.p.; manipulation of public procedures for procurement contracts, turbata libertà degli incanti, art. 353 c.p.; breach of public supply contracts, inadempimento di contratti di pubbliche forniture, art. 355 c.p.; illicit trafficking in toxic or radioactive waste, traffico illecito di rifiuti anche tossici o radioattivi, art. 53-bis D. lgs. 22/1997). The aggregated index was called Criminal Context Index (CCI). It ranged from a minimum of 4.1 points to a maximum of 78.2. It was the first attempt to map systematically the presence of OC in public contracts (Fig. 11.1). As a first attempt, the CCI had some limitations due to data availability. Some promising proxy variables on public procurement integrity had to be excluded. The database, which contained the variables, was still under construction in 2007. Then, the National Authority for the Supervision of public contracts (Autorità per la vigilanza sui contratti pubblici di lavori, servizi e furniture), the owner of the information, was not able to provide any data.2 Data from law enforcement activity suffered from classification problems,3 implementation problems4 and underreporting problems.5 Nevertheless, the CCI represented an innovative tool for understanding and analyzing OC in Italy. It is not surprising then that CCI became the father of the most successful mafia index (MI) (Calderoni 2011) able to depict the presence of OC in Italy. 2

The variables excluded were designed to detect collusion among business companies. Specifically: limited price markdowns (less than 2% of reduction from the initial price) or an exceptional number of participants (more than 100) may suggest a preventive collusive agreement among business companies. Lack of or insufficient advertising of public procurement may indicate collusive mechanisms in the public contracts between the public administration and private companies. Excessive price markdowns (more than 35% reduction from the initial price) may indicate that a business has adopted an illicit strategy to cut costs (e.g., using dirty money, using black work, evading taxes, avoiding safety compliance, using poor quality materials). Companies ‘blacklisted’ may indicate both the influence of organized groups and the capacity of law enforcement to stop infiltration attempts. 3 The interviews indicated that in different provinces the judicial authorities adopted different strategies to investigate crimes in public procurement. This may lead to different crime classifications (and limited territorial comparability). 4 For example, the data on confiscated assets were remarkably present in Sicily because law enforcement adopted and implemented the confiscation strategy faster than in other regions. 5 Dark numbers exist for many crimes. One assumes it is relevant especially when victims are constantly under threat. In our case, business companies may not report to the police to avoid retaliation from organized crime. Many factors affect the propensity to report and it is difficult to say how much it varies across regions.

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Fig. 11.1 Criminal context index (CCI). South of Italy Provinces. Source Calderoni and Caneppele (2009)

From Mapping the Phenomenon to Drafting a Risk Model Constructing a proxy index for the infiltration of OC in public procurement was a first step towards a risk model. The geographical dimension was one aspect to investigate. Indeed, the research team collected information through several sources: a review of the literature, law enforcement reports, meetings at regional level with local stakeholders (local representatives of the Government, police investigators, prosecutors, representatives of associations of entrepreneurs and the unions), interviews with experts, national prosecutors and national investigative police units. The aim was to extrapolate those attributes (variables) which, with specific modalities, could indicate the presence of mafia groups in public procurement. These proxy variables were named ‘mafia markers’. Mafia markers were divided into three groups (Caneppele et al. 2009): (a) markers related to the nature of the public contract; (b) markers related to the business profile; (c) markers related to the profile of the businesses’ legal representatives and/or the businesses’ employees involved in the public contracts. Tab. 1 lists the variables. This contribution does not provide a detailed description for each variable (see Caneppele et al. 2009). However, the hypothesis formulated by the research team was simple.

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Each variable has two or more modalities. Each modality can increase or reduce the probability of infiltration by OC groups. The more modalities suggesting the presence of mafia groups, the higher the probability of mafia presence in public contracts. To give a simple example: if the business owner has a previous criminal record this is one marker of mafia presence. One marker is a weak indicator of mafia presence. The combination of this marker with others (e.g., the absence of an antimafia certificate and/or a public contract with a low value and therefore fewer preventive controls) may increase the risk/probability of mafia groups in public contracts (Table 11.1). To summarize, the idea was to develop a combined risk model. Four dimensions had to be considered: geographical level, public procurement (type of), business (type of), and business representatives (type of). The decision about the model structure and the relevant attributes for each dimension was important. However, two other problems had to be solved. First, how to calculate the risk level inside each dimension. Combining the results of the risk assessment relating to different attributes raised several methodological questions. For example, should each attribute weigh equally (e.g., 25% of the overall risk assessment)? Should an attribute weigh more than others and if so, how to calculate its weight? The second problem raised similar methodological questions. The issue was how to calculate the overall risk assessment: as a sum of different dimensions or with a different approach. To deal with these problems, the first idea was to exploit a specific algorithm capable of maximizing the experts’ opinions. This was the first version of Risico. Table 11.1 Variables to monitor as risk indicators of a public contract Area 1—Contract profile

Area 2—Business profile

Area 3—Legal representatives and employees profile

(a) Type of work/ service/supply (b) Contract value

(a) Location of the business’s head office (b) Multiple head office

(c) Contracting administration (d) Tender

(c) Size of the business

(e) Awarding procedure (f) Number of subcontract (g) Extended urgent contract

(e) Business balance sheet

(a) Age of the business’s legal representative (b) Educational qualifications of the business’s legal representative (c) Sex of the business’s legal representative (d) Representative of several businesses (e) Relationships with organized criminal groups (f) Previous criminal and police record (g) Personnel related with organized criminal groups

(d) Age of the business

(f) Number of public contracts awarded in the past 12 months (g) Antimafia certificate

(h) Violations of workplace safety laws or tax and/or other fiscal violations Source Adapted from Caneppele et al. (2009)

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The First Version of Risico and Its Limitations Risico wanted to capitalize on the knowledge of public procurement experts. The research team looked for a methodology that limited arbitrary decisions in determining the weight of different dimensions. In a first attempt, the model used a General Regression Neural Network (Grnn). Grnn (Specht 1991) is a type of probabilistic neural network. Based on a set of known information (provided by experts) the algorithm would have evaluated the risk of new cases based on previous information. The advantage of Grnn was its ability to learn and to readjust its assessment according to the new data entered in the dataset. The risk model structure was simplified in two parts: (1) contextual risk, which measures the risk of infiltration associated with one or more geographical areas (provinces/regions); (2) business risk, which measures the risk of infiltration associated with specific businesses (attributes of the businesses and of its representatives) under specific public contracts. Then, to provide the Grnn with pieces of information, the research team generated many fictitious cases combining the geographic location of public contracts with specific business characteristics. For each case, the respondent (experts in public procurement) had to rank on a scale of 0 (minimum) to 10 (maximum) the risk of infiltration by OC. Thanks to the responses provided by the experts, the algorithm provided an estimate of risk (contextual risk and business risk) associated with the case under consideration. This approach was promising because of its self-learning skills. Through the new entries and the feedback provided by the users, the Grnn system was potentially capable of improving its prediction skills. Unfortunately, its implementation was weak.6 Sometimes, the risk assessment exercise revealed to be inconsistent and contradictory. The algorithm, although promising in the long run, had a limited applicability in the short run.

From Machine Learning to a Weighted Model: Risico 2.0 After the experience of Risico 1.0, the research group decided to develop a different methodology. The issue of consistency was crucial for the implementation of the model. The risk assessment approach was considered with some skepticism and in Italy there was no previous experience in the field. Presenting odd results in the risk analysis would have prevented further applications. Then, Risico 2.0 was born. 6

Several hypotheses may explain the weakness of the GRNN solution. The algorithm may have had implementation problems because experts did not strongly discriminate among cases. Instead of using the scale 1–10, they may have tended to avoid extreme scores (1 or 2; 9 or 10) and to concentrate on intermediate scores (4, 5, 6). Therefore, the number of questionnaires collected (with more than 100 simulated cases) may have been insufficient for an effective training of the network. Further, in some cases, experts may have provided contradictory opinions about the risk level.

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Compared to the previous version, the new model abandoned the machine-learning approach. It still relied on the expert and research experiences but the risk assumptions were predetermined and based on the study conducted by Transcrime for the Ministry of the Interior. The assessment of OC infiltration in public procurement was made according to four different dimensions: • Geographical this dimension focused on environmental risk. It relied on the composite proxy indicator presented in the previous paragraph (CCI). It provided a value between 0 and 100 (where 100 stands for the highest risk); • Public contract characteristics this dimension focused on the public contract. It identified some attributes that can increase (or decrease) the risk. It provided a value between 0 and 100 (where 100 stands for the highest risk). For example, public contracts involving low business skills (e.g., maintenance works, transport services, cleaning services or surveillance services) scored higher risks compared to other contracts (e.g., IT services, railway construction) since they have low barriers to market entry. Public contracts with a low budget (below 150,000 Euro) scored higher risks because they avoided most public controls (compared to contracts with a higher budget), thus facilitating infiltration by OC groups. • Business characteristics this dimension focused on businesses’ activities. It identified some attributes that can increase (or decrease) the risk. It provided a value between 0 and 100 (where 100 stands for the highest risk). For example, the system scored high when the head office of the company shared the same address with many others, since this may indicate a fictitious company. Still, the risk also scored high when a newly founded company was able to obtain more than three public contracts in its first year or when its balance sheet was negative for at least three consecutive years. • Business representatives’ characteristics This dimension focused on the business structure/composition (people in management, business partners, and employees). It identified some attributes that can increase (or decrease) the risk. It provided a value between 0 and 100 (where 100 stands for the highest risk). For example, representatives with a previous criminal or police record scored higher risk than representatives with no such record. Similarly, representatives with direct, familial or business relationships with members of an OC group scored higher risk. Representatives with no/low level of education scored higher risk when they were particularly young (70 years old), especially if they appeared as representatives of many companies. In this case, the risk model scored high since it indicated the presence of a strawman. In addition to the above, the risk model set some combinations of variables that boosted the risk level to the top, regardless of all the other variables. For example, businesses that had not been awarded an anti-mafia certificate indicated a maximum risk independent from other elements. The presence of business representatives linked to mafia groups led immediately to maximum risk.

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Fig. 11.2 Risico 2.0 Fast, standard and in depth analysis. Source Caneppele (2015)

The risk assessment process was entirely computerized in a software programme. The procedure allowed conducting three types of risk analysis, moving from the simplest to the most accurate (Fig. 11.2). The idea was to cover a large set of public contracts with a fast analysis (FA) in order to identify contracts deserving further scrutiny. Under the FA, the assessment was based on a combination of the geographic and the public contract characteristics. Under the standard analysis, the assessment was based on a combination of the geographic, the public contract and the business company characteristics. The in-depth analysis (IDA) was the most accurate. IDA took all the risk model dimensions into consideration, thereby providing a full risk assessment of a public contract. IDA allowed a full screening but required more time to be completed. For this reason, IDA could be used only when the first two analyses revealed a higher risk of infiltration by OC. Risico 2.0 paid more attention to usability and the issue of resource optimization. It was clearly stated that this tool served as a support to identify public contracts most at risk. It was not meant to substitute the experts but to help them. The scrutiny required a medium-low level of expertise. Its application could be useful in two ways. First, it would have allowed the most expert officers to focus only on the cases most at risk. Second, it would have allowed the public authority to increase the number of public contracts under scrutiny. Nevertheless, Risico 2.0 shared the same destiny as Risico 1.0. Neither of them was given the opportunity to be tested in a real scenario. The next paragraph discusses the issue of applicability.

Risico 2.0: Applicability and Limitations The previous paragraph mentioned the attention paid to the development of a usable tool. The concept of usability involves at least three attributes: the capability of being effective in identifying the risk of OC presence in public contracts; the ease of use; the ability to perform the same task in less time. Risico 2.0 took all of these elements into account. However, usability is a necessary but not a sufficient condition for the implementation of innovation. The receivers (in this case the public administration) must also be prepared. They need to invest economic and human resources in testing and developing the prototype. The public authority has to rethink its processes and organization in order to incorporate and standardize new

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procedures. It has to overcome cultural resistance to new perspectives on dealing with problems. It has to accept the idea that innovation takes time and may fail. Risico 2.0 did not enter a pilot phase for all these reasons. The lack of economic resources for testing was perhaps the main concern. Culturally, the perception that the old ways were ‘good enough’, that the new tool would have been ‘deterministic’ and that a systematic implementation would have required a long time, were other elements that played against the testing phase. It is also true that the software discounted limitations, which the validation phase would have had to address. Risico 2.0 was a tool designed by researchers for the public administration. To be implemented, this tool needed a further step: a shared redesign. Researchers and users would need to work together to validate and improve the software. There were attempts, conference calls and meetings, but nothing came of it. One idea was to computerize part of the assessment through an automatic extraction from different databases of the Ministry of the Interior. This would have further saved time and better integrated the risk assessment model and generate a new dataset accessible at the national level. Despite its good intentions, the initiative got stuck and was then abandoned. Clearly, Risico was not successful in the short term, as the software was never implemented. However, its legacy has contributed to the development of further knowledge and new cultural approaches in analyzing and tackling OC.

The Legacy of Risico: Research and (Maybe) Policy The legacy of Risico has been particularly important in terms of research. Transcrime researchers developed their interests and projects into two directions: (a) the development of quantitative methodologies for measuring criminal phenomena through indexes and (b) the study of OC and the reinvestment of dirty money in the legitimate economy. With reference to the quantitative indexes, the development of a Criminal Context Indicator was useful to contend the general claim that ‘the mafia was everywhere’. Further, Calderoni (2011) developed a MI, which provided an estimate of the presence of Italian mafia-type associations at the provincial level. The MI clearly indicated clusters of mafia groups and, most importantly, showed the benefits of measuring criminal phenomena. The measurement of revenues from illicit markets (illicit cigarettes, illicit firearms, drugs, prostitution, illicit waste and extortion, counterfeiting, usury) in Italy (Transcrime 2013) was also part of this philosophy. A similar attempt was made at the European level in 2015 with the project Organized Crime Portfolio (www.ocportfolio.eu). Its findings raised the issue of the ‘mythical numbers’, which lack any scientific basis but are popular in the media and the political arena because of their sensationalism (Calderoni 2014). Along the same lines, an effort was made to develop meso-level

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estimations about the prevalence of illicit cigarettes in Europe (Transcrime 2015). On the other hand, OC groups and their strategies of reinvestment in the legitimate economy were also widely studied. Researchers focused their attention both on the opportunities for reinvestments in the legitimate economy and on developing a methodology to assess the risk of infiltration of the legitimate economy. For example, Caneppele et al. (2013) analyzed how regulation in the wind sector created opportunities for OC. Through the project ‘Organized Crime Portfolio’ (Savona and Riccardi 2015), Transcrime made the first systematic attempt to collect information through open sources on the investments of OC groups (not just mafia-type associations) at the European level. Another project, Ariel (Assessing the risk of infiltration into the legitimate economy), attempted to develop a common risk assessment mechanism for detecting the presence of OC (Savona and Berlusconi 2015). These contributions demonstrated the possibilities and current limitations of comparative analyses but were all directed at the development of transparent methodologies. These methodologies have their limitations, but they also provide numbers whose reliability is known and can be enhanced. Compared to 10 years ago, our understanding of criminal organizations in Italy and beyond has improved considerably. Studies following the Risico project definitely contributed to this accomplishment. On the other hand, the Risico legacy has been less clear from a policy perspective. It is true that, nowadays, policymakers are talking more and more of risk assessment and risk management, but Risico probably arrived too early in the debate. Nevertheless, the tool was part of a crime management vision that has now been adopted at both the European and the national level. In Italy, for example, the recent reforms against corruption (passed by the Italian Parliament in 2012 and 2014) have brought a major change. The new laws abolished the National Authority for the Supervision of public contracts (Autorità per la vigilanza sui contratti pubblici di lavori, servizi e furniture) and created the National Authority against Corruption (Autorità Nazionale Anticorruzione, ANAC). ANAC is in charge of monitoring the implementation of the National Anticorruption plan, which incorporates risk management as a key strategy against corruption. In 2016, the same authority signed an agreement with the National Institute of Statistics. Among its aims are the study of corruption and ‘the analysis of the causes and factors of corruption, through initiatives and structured surveys on its perception, and the development of indicators, also in view of better international benchmarking’ (ANAC and ISTAT 2016, Art. 2.4). These are just some examples of how risk management and risk analysis have gained prominence in national and European crime prevention policies. Ten years on, the Risico approach still looks promising. Maybe 10 years from now, the evolved software Risico 3.0 will actually be able to assess the risk of corruption and/or OC infiltration of public contracts.

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References ANAC and ISTAT (2016). Protocollo d’Intesa in materia di integrità, trasparenza e analisi del fenomeno della corruzione. Retrieved from: http://www.anticorruzione.it/portal/rest/jcr/ repository/collaboration/Digital%20Assets/anacdocs/Attivita/ProtocolliIntesa/prot.anac.istat. 22.03.16.pdf Calderoni, F. (2011). Where is the mafia in Italy? Measuring the presence of the mafia across Italian provinces. Global Crime, 12(1), 41–69. Calderoni, F. (2014). Mythical numbers and the proceeds of organised crime: Estimating mafia proceeds in Italy. Global Crime, 15(1–2), 138–163. Calderoni, F., & Caneppele, S. (Eds.). (2009). La geografia criminale degli appalti: le infiltrazioni della criminalità organizzata negli appalti pubblici nel Sud Italia. Milano: Franco Angeli. Caneppele, S. (Ed.). (2014). Le mafie dentro gli appalti: casi studio e modelli preventivi. Milano: Franco Angeli. Caneppele S. (2015). Awarding public contracts and safeguarding integrity: The Italian experience. CIROC Seminar on Integrity in Public Tendering Procedures, Utrecht, 29 September 2014. http://www.ciroc.nl/uploads/ciroc/2014_ciroc_pdf/2014_ciroc_integriteit_ openbare_aanbestedingen_caneppele_20141001_2.pdf Caneppele, S., Calderoni, F., & Martocchia, S. (2009). Not only banks: Criminological models on the infiltration of public contracts by Italian organized crime. Journal of Money Laundering Control, 12(2), 151–172. Caneppele, S., & Martocchia, S. (2014). Italian mafias, public procurement and public works in southern Italy. In S. Caneppele & F. Calderoni (Eds.), Organised crime, corruption and crime prevention (pp. 293–299). New York: Springer. Caneppele, S., Riccardi, M., & Standridge, P. (2013). Green energy and black economy: Mafia investments in the wind power sector in Italy. Crime, Law and Social Change, 59(3), 319–339. doi:10.1007/s10611-013-9418-1. Savona, E.U., & Berlusconi G. (Eds.). (2015). Organized crime infiltration of legitimate businesses in Europe: A pilot project in five European countries. Final report of project ARIEL —Assessing the risk of the infiltration of organized crime in EU MSs legitimate economies: A pilot project in 5 EU countries. Trento: Transcrime–Università degli Studi di Trento. Savona, E. U. & Riccardi M. (Eds.). (2015). From illegal markets to legitimate businesses: The portfolio of organized crime in Europe. Final report of project OCP—Organised crime Portfolio (www.ocportfolio.eu). Trento: Transcrime–Università degli Studi di Trento. Specht, D. F. (1991). A general regression neural network. IEEE Transactions on Neural Networks, 2(6), 568–576. Transcrime. (2013). Progetto PON sicurezza 2007–2013—Gli investimenti delle mafie. Retrieved from: http://www.transcrime.it/wp-content/uploads/2014/02/PON-Gli_investimenti_delle_mafie_ ridotto.pdf Transcrime. (2015). European Outlook on the Illicit Trade in Tobacco Products. Trento: Transcrime–Università degli Studi di Trento. Transparency International. (2014). Curbing corruption in public procurement: A practical guide. Retrieved from: http://www.transparency.org/whatwedo/publication/curbing_corruption_in_ public_procurement_a_practical_guide

Part VI

Criminal Law Enforcement

Chapter 12

Combating Organized Crime Aussie-Style: From Law Enforcement to Prevention Julie Ayling

Introduction A growing recognition of the threats posed by organized criminal activity at both domestic and international levels and of the need to work collaboratively to meet them has seen an escalation in Australian policy and legislation on organized crime in recent years. At the national level, the Australian Crime Commission has produced biannual organized crime assessments, and the Australian government has developed a National Organized Crime Response Plan (2015–2018) that includes multi-agency initiatives to share information and establish infrastructure for police from all jurisdictions to conduct joint operations. Police powers in many Australian jurisdictions have also been expanded (for example, through the introduction of unexplained wealth laws).1 However, the most prominent and contentious development has been at the state and territory level in the form of ‘tough on crime’ policies and legislation aimed at exerting strong control over association between members of criminal organisations. Since the South Australian government introduced an anti-association approach in 2008 to deal with outlaw motorcycle gangs (OMCGs), this approach has cascaded across most of Australia’s state and territories, evolving into new and

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Unexplained wealth laws place the onus on individuals whose total wealth appears to be greater than the income they can have lawfully acquired to establish that their wealth has been obtained legally. Police applying for an unexplained wealth declaration need not prove that the person has engaged in serious criminal activity. Forfeiture of assets occurs when their owner cannot discharge the onus and the court makes a declaration.

J. Ayling (&) School of Regulation and Global Governance (RegNet), College of Asia and the Pacific, Australian National University, Coombs Extension, Building 8, Canberra, ACT 2601, Australia e-mail: [email protected] © Springer International Publishing AG 2017 H. Nelen and D. Siegel (eds.), Contemporary Organized Crime, Studies of Organized Crime 16, DOI 10.1007/978-3-319-55973-5_12

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occasionally extreme forms, and becoming normalised as part of a ‘war on bikies’ (Ananian-Welsh and Williams 2014). The anti-association approach has been justified as a crime prevention approach. Imposing restrictions on association between members of criminal organisations, it is argued, will ‘tear apart bikie gangs and put an end to their violence and organized crime’, preventing them planning, engaging in, supporting and facilitating criminal activities.2 There are three main forms of anti-association laws: a control order regime, consorting laws and proscriptions on participants in criminal organisations gathering in public. Over time a messy legal patchwork has developed across the country as different jurisdictions have adopted (or not adopted) these laws in different forms. But their significance has been unequivocal and unidirectional—a ratcheting up of punitiveness. While Australian governments are preoccupied with the anti-association approach, there remain areas of organized crime prevention into which policy and law have hardly penetrated. Thwarting organized crime infiltration of legitimate businesses, particularly its exploitation of official administrative privileges such as licences, permits and subsidies, has received relatively little attention. This is in clear contrast to the situation in Europe where prevention of organized crime through administrative measures has been a developing field (Spapens et al. 2015). In particular, Australia’s position contrasts with the approach of the Netherlands where the ‘administrative approach’, as it is known, plays an important role. The administrative approach has been explained in detail elsewhere (see, for example, Peters and Spapens 2015; Kleemans and Huisman 2015; Ayling 2014; Nelen 2010; Nelen and Huisman 2008; Huisman and Koemans 2008; Huisman and Nelen 2007) and will not be detailed here. Suffice it to say, the approach targets the supporting activities for organized crime rather than its core business, taking a situational crime prevention approach that enrols agencies across government in combating organized crime. In seeking to ensure that criminals do not gain economic power through licences, permits, government contracts and other administrative privileges, the approach establishes a system of multi-source information sharing and cooperation between these agencies. It complements and meshes with traditional criminal justice measures, constituting a ‘dual track’ response in which both are given equal weight (at least theoretically). In 2003 the Council of Europe enthused that the Dutch approach constitutes ‘a systematic, considered analytical framework, whose preconditions are administrative integrity, good data protection, and the willingness of parties to include information in databases and act co-operatively’ (Council of Europe 2003). The aim of this chapter is to provide an overview of the Australian organized crime response landscape, with a particular focus on preventive measures. It explains the anti-association approach that has been taken, as well as the rather ad hoc regulatory measures that currently deal with organized crime infiltration of legitimate businesses. It outlines new efforts being made, and obstructions that need

2

Tony Kelly, Parliament of New South Wales Legislative Council, 2 September 2009.

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to be overcome, to move towards a preventive administrative approach that might constitute an Australian take on the fêted Dutch model. Tonry (2015) suggests that the aims of cross-national research on criminal justice systems include a better understanding of what differences national policies and practices make to national patterns of crime and punishment and of the extent to which and conditions under which one country might successfully import ideas from another. These are exactly the questions that national leaders need to ask in order to improve on current law enforcement models, learn from other jurisdictions’ experiences and manage to prevent, rather than just deal with the aftermath of, organized crime. I have elsewhere looked in detail at the comparative political and socio-economic characteristics of the Netherlands and Australia and the similarities and differences between their organized crime scenes (Ayling 2014). Here I will begin by briefly setting out some relevant facts about Australia that help make sense of its current approach to organized crime, before turning to a more detailed consideration of the legislative landscape.

Political Arrangements Like the Netherlands, Australia is a liberal parliamentary democracy with an excellent standard of living (ranking high on the United Nations Development Programme’s Human Development Index) and a relatively low level of corruption (see Transparency International’s Corruption Perceptions Index),3 making it an attractive destination for the peoples of neighbouring regions. It is a multi-cultural country that is generally regarded as being fairly successful in integrating immigrants into its economy and its social and cultural life. Unlike the Netherlands, modern Australia began its life as a penal colony more than 200 years ago. The English government sent its convicts to the other side of the world, out of sight and largely out of mind, moving offshore the risks of further criminal activities. It is tempting to say that nothing much has changed in terms of official attitudes. Two and a quarter centuries later, controlling people perceived as dangerous is still a priority. One of the areas in which this is most apparent is in relation to organized criminal activity, in particular, the priority given and the approach taken to tackling the problem of OMCGs. Law and order issues play a large role in political rhetoric in Australia, especially in the course of electioneering, as there are nine separate jurisdictions (six states, two territories and the federal or Commonwealth jurisdiction). Under the Australian constitution, the states and territories are principally responsible for criminal law, In 2015, Australia was in the top five of the UNDP’s Human Development Index (as was the Netherlands). On the TI Corruption Perceptions Index, Australia has fallen in ranking from 7th in 2012 to 13th in 2015 (whereas, in the same period, the Netherlands has climbed from 9th to 5th rank).

3

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rather that the Commonwealth. In addition, each state and territory has its own police force. It is quite common, therefore, for each jurisdiction to promulgate laws about the same criminal subject matter (offences, police powers, strategies, etc.) which are a little, or even a lot, different from other jurisdictions’ laws. This is further complicated by the fact that some jurisdictions are common law jurisdictions (New South Wales, Victoria, South Australia), in which most criminal law springs from court judgments, whilst others are code jurisdictions (Queensland, Western Australia, Tasmania, the Northern Territory, the Australian Capital Territory and the Commonwealth itself) in which the criminal law is completely codified. Cooperation to bring about a common or national approach to organized crime has met with some resistance as a dilution of jurisdictional sovereignty,4 although more recently there are signs of increasing collaboration between jurisdictions.

Human Rights While Australia has a written Constitution, it provides very little explicit protection for rights,5 instead concerning itself mostly with division of responsibilities between the jurisdictions and arms of government. Furthermore, Australia does not have a national bill of rights, or any equivalent to the European Convention on Human Rights. At state level, Victoria and the Australian Capital Territory have adopted their own rights charters, but there is little appetite for a federal bill of rights.6 The implications of this arrangement for criminal justice matters and the application of the rule of law is that whether rights exist and to whom they apply

4

For example, at the Council of Australian Governments’ meeting in April 2013, the states resisted the Commonwealth’s suggestion that they refer to it their powers to deal with gangs and organized crime: McKenna (2013). The then Queensland Attorney-General characterised the Commonwealth Government’s actions as ‘just another attack by the Federal Government on the state's rights to manage and deal with these things appropriately in Queensland like unexplained wealth laws, which we're doing’ (Kirk 2013). 5 The limited rights provisions in the Constitution relate to the right to trial by jury in certain cases (s.80), freedom of religion (s.116) and protection from discrimination on the basis of residence (s.117). In addition, the High Court has interpreted the Constitution as providing some implied rights, including freedom of communication on political matters. Some other rights are protected in separate statutes, such as rights not to be discriminated against on the basis of gender, race, age and disability. Other rights, such as the right to freedom of association, have explicitly been judged by the High Court as not included in the Constitution: see Tajjour v State of New South Wales; Hawthorne v State of New South Wales; Forster v State of New South Wales [2014] HCA 35 (10 June 2014). Ananian-Welsh and Williams (2014: 406) point out that ‘[w]ithout explicit protections for liberty or fairness in the Constitution, judges must rely on implications arising from the separation of judicial power (itself an implied doctrine) to preserve fundamental liberties and values. … the separation of powers is a far from perfect tool in the protection of basic rights’. 6 The reasons are complex. For a partial history of the debate see ‘Parliament and the protection of human rights’, retrieved from http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/ Parliamentary_Library/pubs/BriefingBook43p/humanrightsprotection.

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must generally be sorted out in the courts, something described as ‘an ineffective and expensive means of protecting rights’ (Benedict Coyne, spokesperson for Australian Lawyers for Human Rights, cited in Nelson 2014). So while Australia is attached to the idea of the applying the rule of law to criminal justice issues and processes, in practical terms this has sometimes turned out to have a more fluid meaning than many lawyers schooled in human rights would have hoped.7

Organized Crime Australia’s strong socio-economic status and highly urbanised population ensure a strong demand for illicit goods and services, and because of its multicultural nature, transnational links often already exist for, or are easily acquired by, organized criminal groups. Those groups include Australian crime families, outlaw motorcycle gangs and ethnic groups such as the Calabrian ‘Ndrangheta, Chinese triads, Mexican, Vietnamese, Eastern European and Middle Eastern gangs. As in the Netherlands, there has been a movement away from strongly hierarchical crime groups with their roots in ethnicity, place, or activity toward more flexible, entrepreneurial groups that are open to collaborating across ethnic and jurisdictional lines and to operating in numerous criminal markets. The production, importation and trafficking of drugs is the main organized criminal activity. High street prices for illicit drugs, as compared to North America and Europe, reflect the small market. Australia also has its share of other forms of organized crime, such as people trafficking, money laundering, fraud, cybercrime and wildlife trafficking. Because of Australia’s geography, generally goods smuggled into the country stay in the country, rather than being moved on. For the last 6 years or so, Australian governments have been particularly focused on dealing with the problem of OMCGs or, as they are termed colloquially, ‘bikies’. Nationwide, bikies have been presented as a serious problem, often as the most serious problem relating to organized crime. The numbers of participants is increasing in number, with a 34% increase in the years 2012–2015 (Goldsworthy 2016, citing Australian Crime Commission statistics). There is evidence of their involvement in the trade in many types of illegal drugs including amphetamines and steroids, in the illegal firearms trade, and in fraud, extortion and violence, both public and private. The Australian Crime Commission has admitted that it is difficult to know exactly what proportion of organized crime offences bikies are responsible for (Australian Crime Commission 2013). The Queensland Taskforce 7

This is certainly the case with respect to organized crime laws in Australia, about which the Rule of Law Institute in Australia has commented: ‘Diminishing the presumption of innocence through anti-association laws and modifying the right to silence, as well as removing procedural fairness and transparency by using closed hearings are issues of concern from a rule of law perspective’ (emphasis in original): see http://www.ruleoflaw.org.au/education/case-studies/ organised-crime-australia/.

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on Organized Crime Legislation (hereafter the Queensland Taskforce) that reported in April 2016, after examining the evidence from the 2015 Report of the Queensland Commission of Inquiry into Organized Crime, academic studies, court statistics and police data, concluded that ‘[o]n any view of all the statistics, OMCGs account for a very small proportion of the overall reported crime in Queensland— definitively, less than 1%’ (Queensland Taskforce 2016: 89).8 It is likely that these statistics would be mirrored in other states. Despite this, the political obsession with OMCGs has played out in a policing focus on bikies both legislatively and practically, with special anti-bikie taskforces and operations set up in several jurisdictions.9

Policing and Preventing Organized Crime in Australia Police in Australia have a wide array of powers for detecting and deterring criminal behaviour and enforcing criminal laws including wiretapping, search warrants, infiltration, civil and criminal forfeiture laws, sentence enhancement and unexplained wealth laws. There is no lack of tools in the police toolbox, and those tools have been regularly and successfully used. While some of these may have a deterrent effect (such as sentence enhancement for crimes committed as part of a group), or could prevent crime by removing the assets of criminals (such as forfeiture laws), the primary preventive response adopted across Australia has been anti-association laws. These have been supplemented here and there with regulatory measures that aim to prevent criminal activity in certain occupations or industries, but in no jurisdiction does this comprise a ‘system’ or come anywhere near to the scale or prominence of the Dutch administrative approach. Elsewhere (Ayling 2014) I have termed the Australian approach the criminal law plus approach, because the emphasis has primarily been on policing and the enforcement of criminal laws, and regulatory measures (the ‘plus’) have played a secondary role. There is beginning to be more interest in regulatory approaches (see the section below on Administrative measures—New developments). In general, however, where multi-agency or ‘whole-of-government’ approaches to serious and organized

8

The Queensland Taskforce (2016) acknowledged that there may be OMCG-related unreported crime, just as there is unreported crime of other types, but was of the view that it was not possible to quantify the gap between reported and unreported crime. 9 Some examples include Strike Force Raptor, established in NSW after the Sydney domestic airport murder in 2009; Taskforce Maxima in Queensland established in October 2013, after a brawl among bikies at Broadbeach on the Gold Coast, to disrupt, dismantle and eliminate criminal motorcycle gangs; and in Victoria, Taskforce Echo, an anti-bikie squad set up in February 2011 which merged in 2014 with the Santiago Taskforce established to investigate violent Middle Eastern crime gangs when synergies between the two taskforces’ investigations became apparent.

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crime have been adopted, these are often led by or largely comprised of law enforcement bodies.10

Three Types of Anti-association Laws There are three main types of anti-association laws now in force in Australia: control orders, consorting laws and proscriptions on participants in criminal organisations gathering in public places. The laws all purport to deal with organized crime in general. However, each type of law has over the last 8 or so years been enacted with OMCGs specifically in the authorities’ sights, and has been designed to maximise the impact on these groups. I will briefly deal with each of these types of laws in turn in order to illustrate the legal patchwork that has resulted.

Control Order Laws In 2007, after an incident at an Adelaide nightclub in which four bikies were shot, the South Australian premier stated his view that bikies should be regarded as ‘terrorists within our community’ (then Premier Mike Rann, quoted in Akerman 2007) and that no regard should be paid to their civil liberties in dealing with them. Soon afterwards, the South Australian government introduced legislation that drew on Australia’s anti-terrorism laws for inspiration. Like other western nations, Australia had had anti-terrorism legislation since just after 9/11.11 A list of proscribed suspected terrorist organisations was issued, and following the Bali bombing in October 2002 (in which 88 of the 202 casualties were Australians) and the London bombings in July 2005, the Australian government also introduced civil preventive orders called control orders for those suspected of involvement in terrorism.12 These measures were regarded as special measures for special times (Ananian-Welsh and Williams 2014). Following a High Court challenge to those laws in which the court decided that control orders were in keeping with constitutional values,13 politicians saw the potential to use them not only for ‘would-be’ terrorists but also for ‘would-be’ criminals, particularly bikies, who, being highly visible, are often a public nuisance as well as an organized crime 10

For example, the Australian Cyber Security Centre brings together cyber security capacity from the Attorney-General’s Department, the Australian Security Intelligence Organisation, the Australian Federal Police, the Australian Crime Commission and the Defence sector: see https:// www.acsc.gov.au/. 11 Criminal Code Act 1995 (Cth) s 102.1(2)(a)–(b). 12 Anti-Terrorism Act (No 2) 2005 (Cth). This statute also included provision for preventive detention orders. 13 Thomas v Mowbray (2007) 233 CLR 307 (August 2007).

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threat. So began the migration of extraordinary measures from the terrorism context into the organized crime context. Within one year of the High Court’s validation of control orders as constitutionally acceptable, the South Australian government passed the Serious and Organized Crime (Control) Act 2008 (SOCCA). SOCCA introduced a two-tier model for dealing with OMCGs. The first tier involves a court14 declaring an organisation, where its members associate for the purpose of organising, planning, facilitating, supporting or engaging in serious criminal activity and pose a risk to public safety. Such a declaration does not of itself ‘outlaw’ the organisation, but instead serves as a basis for control orders (the second tier) to be judicially imposed on members of declared organisations. Control orders can be imposed to prevent members of a declared organisation associating with other members of that organisation or another declared organisation, engaging in certain activities or being in certain places. A control order is a civil instrument, but breach is a criminal offence punishable by imprisonment. The idea behind the laws was to attack the structure of OMCGs so they were unable to engage in criminal activity. Despite some initial uncertainty at federal level about the feasibility and ethics of the strategies embodied in SOCCA,15 the model nevertheless cascaded rapidly through the country. A bikie brawl in the departure area of Sydney domestic airport in March 2009 that ended in a brutal murder in front of passers-by, together with a spate of retaliatory bikie shootings in the following days and the resulting media attention, catalysed an uptake of the model by the NSW government. Only 10 days after the airport incident, the NSW government both introduced and passed the Crimes (Criminal Organisations Control) Act 2009, cutting short the usual process of parliamentary scrutiny on the grounds of urgency. The legislation then came into force the next day. In October 2009, the Northern Territory enacted its version of the model,16 and this was followed in December of that year by Queensland

14

In the 2008 legislation, the Attorney-General made the declaration. However, after the 2010 High Court decision in South Australia v Totani [2010] HCA 39 (the Totani case), the legislation was amended to replace the Attorney-General with an eligible judge of the South Australian Supreme Court. 15 The (Commonwealth) Parliamentary Joint Committee on the Australian Crime Commission reported in August on its inquiry into the legislative arrangements to outlaw serious and organized crime groups. One impetus for that inquiry was the South Australian government's introduction of the SOCCA Bill in February 2008. The Committee’s report states that ‘while the Commonwealth has no jurisdiction over state and territory law enforcement, the committee felt that it would be useful to consider any potential implications of this new approach’ (p. 3). The SA model had already been adopted in NSW before the Committee reported. The Committee’s conclusion that ‘the committee's view is that, after examining all of the evidence presented to it during this inquiry, there may be less complex ways of targeting and dismantling serious and organized crime than by the implementation of far-reaching anti-association laws’ (p. 94) indicates that it was not convinced of the appropriateness or effectiveness of the South Australian model. 16 Serious Crime Control Act 2009 (NT).

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enacting an evolved version of the model.17 The model was also subsequently adopted in Western Australia and Victoria in 2012.18 Each of the relevant state laws is different although there is some provision for mutual recognition of control orders between jurisdictions. As can be seen in Table 12.1, which sets out the unfolding legislation, legal challenges taken by bikies against the laws drove further amendments and fresh legislation. States sought to overcome judicially identified legislative problems or to bring their statutes into harmony with other states’ laws that had been upheld by the High Court. An example of the latter occurred in 2013 in the Pompano case,19 when the Queensland legislation was held constitutionally valid. This resulted in amendments being made to the legislation of both NSW and South Australia. At the time of writing, only the Australian Capital Territory and Tasmania do not have the control order type of anti-association laws. In early 2016 NSW introduced a bill that proposes a new type of control order model.20 This should not be confused with the SOCCA model. Unlike that model, it involves introducing a post-conviction form of control order, inspired by the UK’s Serious Crime Prevention Orders regime. The Queensland Taskforce (2016) suggested in its report that a post-conviction control order regime such as proposed in the NSW bill should also be introduced as part of a new set of laws to replace the controversial suite of laws in place in Queensland, which are discussed separately below (see Gatherings in Public Places laws).

Implementation The legislative rejigging that resulted from the various legal challenges to control order anti-association laws stalled their implementation for some time.21 Even since

17

Criminal Organisation Act 2009 (Qld), The Queensland legislation was different in a number of respects from the preceding SA and NSW Acts. For example, outlaw motorcycle clubs were not just to be declared, but were to be declared criminal organisations. There was also an attempt to meet criticisms that bikies’ human rights were being breached because, as defendants against whom a control order was sought, they were unable to know the case against them since much of that information was classified as confidential ‘criminal intelligence’. Under the Queensland Act, a Criminal Organisation Public Interest Monitor (COPIM) could be appointed by the Governor to test and make submissions to the court about the appropriateness and validity of applications, including applications to declare information to be criminal intelligence. 18 Criminal Organisations Control Act 2012 (WA); Criminal Organisations Control Act 2012 (VIC). 19 See Assist. Comm. Condon v Pompano P/L [2013] HCA 7. 20 Crimes (Serious Crime Prevention Orders) Bill 2016. 21 In NSW for example, the Crimes (Criminal Organisations Control) Act 2009 was held invalid by the High Court in Wainohu v NSW [2011] HCA 24 (23 June 2011) (the Wainohu case), and was then reinstigated in a somewhat different form in the Crimes (Criminal Organisations Control) Act 2012, which was then amended again following the Pompano case. Only one attempt to declare an organisation under this legislation has been made.

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Table 12.1 Control order laws Jurisdictiona

Key legislation (new and amended)

Date

Additional information

SA

Serious and Organized Crime (Control) Act

2008

NSW

Crimes (Criminal Organisations Control) Act

2009

Partial invalidation by the High Court: South Australia v Totani [2010] HCA 39 (11 Nov 2010) Invalidated by the High Court: Wainohu v NSW [2011] HCA 24 (23 June 2011). Repealed 22 March 2012

NT Qld

Serious Crime Control Act Criminal Organisation Act

2009 2009

NT

Serious Crime Control Amendment Act

2011

NSW

Crimes (Criminal Organisations Control) Act

2012

SA

Serious and Organized Crime (Control) (Miscellaneous) Amendment Act

2012

WA

Criminal Organisations Control Act Criminal Organisations Control Act Crimes (Criminal Organisations Control) Amendment Act 2013

2012

Vic NSW

Upheld by the High Court: Assist. Comm. Condon v Pompano P/L [2013] HCA 7 (14 March 2013) Amended the Serious Crime Control Act 2009 to ensure constitutional compatibility following Wainohu case (NSW) Replaced the repealed Crimes (Criminal Organisations Control) Act 2009 Amended the Serious and Organized Crime (Control) Act 2008 to ensure constitutional compatibility following Totani (SA) and Wainohu (NSW) cases Assent November 2012; came into force November 2013

2012 2013

Amended the Crimes (Criminal Organisations Control) Act 2012 following the Pompano (Qld) case SA Serious and Organized Crime 2013 Amended the Serious and Organized (Control) (Declared Crime (Control) Act 2008 following Organisations) Amendment Act the Pompano (Qld) case Vic Criminal Organisations Control 2014 Amended the Criminal and Other Acts Amendment Act Organisations Control Act 2012 to strengthen and broaden its application a ACT Australian Capital Territory, Qld Queensland, NSW New South Wales, NT Northern Territory, Tas Tasmania, Vic Victoria, WA Western Australia

then, their use has been rare. Only one abortive attempt to declare an organisation under this legislation has been made in each of NSW and Queensland, and none at all in Western Australia, the Northern Territory and Victoria. South Australian police have explained the absence of prosecutions under their control order provisions by citing their complexity and the drain they make on police resources, and

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have said that, accordingly, the use of traditional policing legislation has been more effective (Queensland Taskforce 2016: 32).

Consorting Laws The second type of anti-association laws is consorting laws. Consorting laws have a long history in Australia and are common across all jurisdictions except the ACT. The consorting laws that emerged in early twentieth century Australian jurisdictions have their origins in nineteenth century British vagrancy laws brought to the colonies to deal with the swelling numbers of former convicts and convicts who had escaped and become bushrangers (McLeod 2013). The early twentieth century laws generally provided that it was an offence to associate with certain classes of person, such as reputed criminals, prostitutes or habitual offenders. These laws gradually fell into disuse (NSW Ombudsman 2013). However, since the turn of the century, consorting laws have been revived, as a response to a growing concern about organized criminal activities (McLeod 2013). So, for example, when the South Australian government legislated to introduce the control order model in 2008, it repealed its then rarely used consorting provisions and introduced a new provision (s.35 of SOCCA) criminalising consorting six or more times within a 12-month period with a person who is a member of a declared organisation or subject to a control order, or between persons with prescribed criminal convictions. These offences attract a penalty of up to 5 years in prison. Consorting does not need to be for a criminal purpose. However, it is necessary for the person to know of or be reckless as to the status of the person with whom they consort. There are some exceptions for particular types of association (for example, association with close family members, work colleagues, etc.). Table 12.2 sets out Australian consorting provisions enacted since 2005 that have organized crime as a particular focus. The laws introduced in NSW in 2012 were highly publicised and controversial. The new law replaced a summary offence that had rarely been used. The NSW provisions make it a criminal offence to associate (either in person or by other forms of communication) with at least two convicted offenders, on two occasions. The police must first give an oral or written warning that those persons are convicted offenders, and that it is an offence to consort with them. The police need not show that the purpose of the consorting is to engage in or plan criminal activities, which distinguishes it from the control order regime which, in NSW at least, requires that the police convince the Supreme Court, before an organisational declaration can be made or control orders imposed, that association between members revolves around serious criminal activity (NSW Ombudsman 2013). The NSW offence of consorting

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Table 12.2 Consorting laws Jurisdiction*

Key Legislation (new and amended) Vagrancy (Repeal) and Summary Offences (Amendment) Ac

Date

History/rationale

2005

NT

Justice Legislation Amendment (Group Criminal Activities) Act

2006

SA

Serious and Organized Crime (Control) Act s.35

2008

NSW

Crimes Amendment (Consorting and Organized Crime) Act

2012

SA

Statutes Amendment (Serious And Organized Crime) Act

2012

Amended the Summary Offences Act 1966 to make it an offence to habitually consort with a person who has been found guilty of, or who is reasonably suspected of having committed, an organized crime offence. Punishable by up to 2 years’ imprisonment Inserted s.55A Summary Offences Act. It is an offence punishable by 2 years’ imprisonment to consort with a person specified in a notice given by the Police Commissioner where the notified person and the specified person have each been found guilty of a prescribed offence (one punishable by 10 years’ imprisonment). Designed to prevent organized high-level criminal group behaviour (Department of the Attorney-General and Justice NT, 2013) Associating with a member of a declared organisation or a person who is the subject of a control order six or more times in a twelve month period is an offence punishable by up to five years imprisonment Inserted ss. 93X & 93Y into the Crimes Act 1900. Habitually consorting with at least two convicted offenders, on at least two occasions, after receiving a police warning, is an offence punishable by up to 3 years’ imprisonment or a $16,500 fine. Upheld by the High Court in Tajjour, Hawthorne and Forster v New South Wales [2014] HCA 35 (10 June 2014). Court affirmed that no separate implied freedom of association exists under the Australian Constitution Amended Summary Offences Act 1953 to insert s.13 prohibiting habitually consorting with a prescribed person—a person who has been found guilty of, or who is reasonably suspected of having committed, a serious and organized crime offence. Also inserted part 14A concerning consorting prohibition notices (continued)

Vic

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Table 12.2 (continued) Vic

Criminal Organisations Control Amendment (Unlawful Associations) Act

2015

Repealed the offence of consorting in the Summary Offences Act 1966 and inserted into the Criminal Organisations Control Act 2012 Part 5A to prohibit individuals associating with individuals convicted of serious criminal offences, as specified in an unlawful association notice issued by police, on 3 or more occasions in a 3 month period or on 6 or more occasions in a 12 month period. Penalty is up to 3 years’ imprisonment or a heavy fine SA Statutes Amendment (Serious 2015 Amended Summary Offences Act 1953 And Organized Crime) Act by replacing s.13 with similar prohibition to that in NSW, as upheld in the Tajjour case. Consorting is punishable by imprisonment for up to 2 years *ACT—Australian Capital Territory; Qld—Queensland; NSW—New South Wales; NT— Northern Territory; Tas—Tasmania; Vic—Victoria; WA—Western Australia

carries a maximum penalty of 3 years in prison and/or a substantial fine. The intention behind the provision was, to quote the then Premier of NSW, to ‘make it harder for criminal gangs to engage in planned criminal activity’ and ‘to prevent people strengthening their ties with underworld gangs’.22 The NSW consorting law was found valid by the High Court in 2014 in a constitutional challenge taken by two bikies and a young intellectually disabled man who had been the subject of the first charge under the laws.23 The case is notable because the Court made clear that no implied freedom of association exists in the Australian Constitution. The Queensland Taskforce has proposed that the state government adopt consorting provisions of the type in force in NSW to replace the anti-association provisions in the 2013 suite of Queensland laws (discussed in the section on Gatherings in Public Places below).

22 The Hon. Barry O’Farrell MP (Premier of NSW), New Laws to Tackle Drive-by Shootings, media release, NSW Government, 13 February. http://www.premier.nsw.gov.au/sites/default/files/ 120213%20-%20NewLaws.pdf. 23 The Tajjour case, ibid. footnote 8.

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Implementation When the first 12 months of the operation of the NSW consorting provisions was reviewed by the NSW Ombudsman in mid-2014, it was found that Aboriginal people accounted for 38% of all people who were issued an official warning, despite indigenous people being only 2.5% of the total population of NSW. In addition, only a small minority of those warned (both indigenous and non-indigenous) had a conviction for a serious criminal offence. This cast doubts on whether the law’s implementation was serving its stated purpose of combating gang activity. In March 2016, however, it was reported that there had been an escalation in warnings and a threefold increase in charges under the provisions over the last four years, and that the police claimed that the law was being implemented carefully, in order to break up criminal networks, particularly OMCGs. While warning numbers were high in 2012–2015 (2500), conviction numbers for the same period were low (23 in total) (Wakatama 2016). There has been little use of consorting laws in other states, although South Australia is beginning to use its new consorting laws (i.e. the 2015 provisions) more extensively (Queensland Taskforce 2016).

Gatherings in Public Places Laws Anti-association laws which prohibit gatherings in public are similar to consorting laws. However, the publicness of the association matters, the offence neither requires a police warning about continuing association nor needs to be committed more than once, and the laws apply only to participants in criminal organisations. In 2012, a bikie brawl outside a restaurant on the Gold Coast in Queensland sparked the then newly elected conservative government to declare that more had to be done about bikies. The bikies in question, the Bandidos, did little to win public sympathy, some making inflammatory comments to the tabloid newspapers along the lines of ‘We run this town’ and ‘Nothing will make us leave’ (Westthorp 2013). As a result, 2013 saw the enactment of several new pieces of legislation in that state, which have come to be known as the Queensland ‘2013 suite’ (Queensland Taskforce 2016: 3). These included the Vicious Lawless Association Disestablishment Act (VLAD Act), the Criminal Law (Criminal Organisations Disruption) Amendment Act (CODA Act), and a number of other statutes and amending provisions. The main focus of the CODA Act is an anti-association provision that criminalises a participant in a criminal organisation being knowingly present in a public place with two or more other persons who are also participants in a criminal organisation. This offence attracts a penalty of at least 6 months to a maximum of 3 years’ imprisonment, which is to be served wholly in a corrective services facility. Its application is very broad; for example, ‘participant’ includes any person who in any way claims membership of the criminal organisation or seeks in any way to be a member of or associated with the organisation.

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The legislation also allowed the responsible government minister, rather than the courts or individual judges, to decide and prescribe in a regulation which organisations are ‘criminal’ for this purpose. All 26 of the entities prescribed are OMCGs. The gathering in public places prohibition was augmented by a new provision in the CODA Act prohibiting a participant in a criminal organisation from entering or attempting to enter a prescribed place, or attending or attempting to attend a prescribed event. An offender need not have knowledge of the prescription of the place or event. This provision was dubbed the ‘clubhouse offence’ by the Queensland Taskforce (2016: 82) as it had the effect of preventing the use of clubhouses by bikies. Like the gathering in public places offence, this offence carries a mandatory minimum penalty of 6 months’ imprisonment to be served wholly in a corrective services facility, with a maximum penalty of three years’ imprisonment. Together with other provisions of the laws, these prohibitions constitute a very harsh regime.24 In early 2016, South Australia introduced its own version of these laws, including provisions that make offences of gathering in public places and entering or attempting to enter prescribed places.25 The laws vary from the Queensland laws in having no mandatory minimum sentence and in a somewhat different definition of ‘criminal organisation’.

Implementation Enforcement of Queensland’s gathering in public places anti-association law has seen bikies arrested, for example, for standing together in a hotel foyer to pay their accommodation bill (the Palazzo Versace bikies); for buying ice creams together during a family holiday (the Icecream bikies); and for gathering to drink beer and eat pizza at a local hotel (the Yandina Seven) (Queensland Taskforce 2016). In none of the cases were the offenders wearing bikie colours. Charges against the Palazzo Versace bikies were withdrawn. In the case of the Icecream bikies the charges were dropped but not before the five men involved had spent several weeks in prison, some of it in solitary confinement. The Yandina Seven case is ongoing.

24

The Queensland government claimed it to be the toughest in Australia (Toscano 2013). Other key provisions required the imposition of mandatory sentences on participants in criminal organisations who commit certain offences, those sentences—of 15 years for a participant or 25 years for an office bearer in a criminal organisation—to be served in addition to the sentence for the offence imposed by the court, with no eligibility for parole (see sections 7 and 8 VLAD Act). The Queensland Taskforce (2016: 240) described these mandatory sentences as ‘excessively harsh, rendering the regime grossly disproportionate to what is tolerable in a civilised democratic society like Queensland’. 25 See ss.83GC and 83GD, Criminal Law Consolidation Act 1935 (SA).

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Administrative Measures: The ‘Plus’ The plus of the Australian criminal law plus approach is made up of the regulatory constraints that supplement criminal law measures, imposed through both legislative and policy instruments. Some of these measures are specific to participants in criminal organisations. These include restrictions on the form of construction of OMCG clubhouses (through planning and fortification removal laws), the application by regulatory agencies of liquor licensing, safety and fire regulations to clubhouses, and restrictions on the wearing of bikie ‘colours’ in certain public places (through both statutory prohibitions and liquor licensing conditions). ‘Fit and proper’ person requirements that apply to applications for new and renewed licences and permits for particular occupations and industries are common in Australia. The requirements vary from industry to industry and state to state, but often a person’s involvement or suspected involvement in criminal activity is one pertinent issue that licensing bodies need to consider. Relevant criminal intelligence generally comes from the Commissioner of Police in the particular state. In some jurisdictions or industry sectors the licensing agency is legally bound to consult the Commissioner before making a decision on an application. Sometimes licensing regimes have been put in place specifically relating to organized crime or bikies. The 2009 NSW control order legislation includes provisions banning the holding, by a person the subject of a control order, of licences and permits for several activities (such as selling liquor or possessing firearms) and occupational categories (tow-truck operator, pawn broker, casino operator, motor dealer or repairer, etc.).26 The Queensland 2013 suite included new legislation to prevent participants in criminal organisations from working in certain trades, including electrical work, bookmaking, second-hand goods dealing, providing security and running a tow-truck business.27 NSW, Queensland and South Australia have all legislated to restrict the licensing of tattoo businesses and those who work in them, with the aim of breaking the strong connection between OMCGs and those businesses.28 All of these laws have met with considerable criticism, mainly allegations that they are overly broad and unfair in their application.

26

See Crimes (Criminal Organisations Control) Act 2012 (NSW), s.27. See Criminal Law (Criminal Organisations Disruption) and Other Legislation Amendment Bill 2013 (QLD). 28 Tattoo Parlours Act 2012 (NSW); Tattoo Parlours Act 2013 (Queensland); Tattooing Industry Control Act 2015 (SA). 27

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New Developments Australian governments are increasingly recognising the potential of regulatory measures as a tool to combat organized crime, particularly its proclivity to infiltrate or corrupt legitimate businesses to further its own objectives. In Queensland, the new government that came to power in February 2015 almost immediately instigated an inquiry into organized crime in that state, signifying an intention to acquire a comprehensive evidence base for future organized crime prevention and enforcement legislation.29 The new government also commenced a review, headed by a former Supreme Court judge, of the 2013 suite of organized crime laws put in place by the previous government, which included a requirement to look at the necessity of the laws relating to occupational licensing requirements (commenced, not yet commenced and repealed), and their level of impact.30 In so doing, the Queensland Taskforce was required to have regard to the new government’s view that ‘it is desirable to have a consistent multi-industry ‘fit and proper person’ test that facilitates the prevention of industries being manipulated for criminal purposes, but at the same time ensures individuals are not prohibited from holding a licence on the basis of mere association’ (term of reference 4). The Queensland Taskforce (2016: Chap. 21) recommended that, while a person’s current or past involvement in criminal activity should remain a relevant consideration in deciding whether a person is a ‘fit and proper’ person to hold a licence, a person should not be refused a licence or have a licence cancelled solely on the basis that they are alleged to be a participant in a criminal organisation. Only evidence showing that the specific individual (not just his or her associates) is not suitable to hold a licence should be determinative. What constitutes a ‘fit and proper person’ may differ significantly from industry to industry. The Commissioner of Police should be able to refer relevant information about a person to a licensing authority, but should not have to be consulted on every application (with the exception of weapons licence applications). Around the time that Queensland was conducting its inquiries, the Victorian government asked the Law Reform Commission (VLRC) to inquire into the potential of regulatory arrangements to prevent organized crime infiltration, following concerns over such infiltration in areas like debt collection and the building and construction industry in Victoria.31 The VLRC was required to consider, among other things, existing laws and the experience of implementing them in

29

The report of the Queensland Organized Crime Commission of Inquiry was delivered on 30 October 2015 and is available at https://www.organisedcrimeinquiry.qld.gov.au/. 30 See terms of reference 3, 4 and 5 at http://www.justice.qld.gov.au/taskforce-into-organisedcrime/terms-of-reference. 31 http://www.lawreform.vic.gov.au/all-projects/regulatory-regimes-preventing-infiltration-organisedcrime-lawful-occupations-and.

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Victoria and other jurisdictions, the costs and benefits of regulatory options to assist in preventing organized crime infiltration, how a new regime might be structured and an appropriate framework of principles for assessing the risks of infiltration and crafting a suitable response. The VLRC reported at the end of February 2016. Its report will become public once tabled in Parliament. If the consultation paper published in June 2015 is any indication, the VLRC is likely to propose a detailed model for assessing the likelihood of infiltration and to consider closely the key tools, methods and actors that would be appropriate for a regulatory response.

The Punitiveness Ratchet, the Preemptive Outcome The anti-association model of declarations and control orders to deal with bikies originated as a hastily crafted solution to perceived crises (spates of public violence in several states). Often these laws were ill-thought through; hence the success of several legal challenges. The anti-association model quickly gained a firm grip among state and territory governments, regardless of their political leanings. Furthermore, each new instalment of laws seems to have ratcheted up the punitiveness level. Responsible ministers in different states often proudly proclaimed that their new legislation was the toughest in Australia or even the world. Perhaps the zenith of punitiveness was the Queensland 2013 suite, which the new state government is planning to replace (although still declaring that the replacement laws will be the strongest most robust laws in Australia). The Australian anti-association approach has attracted considerable criticism. Not all of these criticisms can be discussed individually here. The Queensland Task Force summed up as follows: [T}he ‘participant in a criminal organisation’ approach—i.e., one which focuses primarily upon organisations, and not individual offenders—… despite many serious attempts and a great deal of legislative verbiage, cannot be described as successful anywhere. Where it has not proved disproportionately expensive and time-consuming, it has inevitably involved some infringement upon rule of law principles and approached (or surpassed) the margins of constitutional validity (p. 59).

Other commentators have argued that the laws are unnecessary, human rights infringing, over-inclusive, disproportionate, discriminatory and open to abuse (Cowdery 2009; Gray 2009; Loughnan 2009; Bronitt and McSherry 2010; Ayling 2011; Fitzgerald 2013). One interesting critique is that the anti-association laws are ‘pre-emptive’ (Ayling 2011; McCulloch and Wilson 2016). Put simply, preemptive strategies target criminal activity at a very early stage, well before the preparatory activities that constitute inchoate offences (attempt, solicitation, conspiracy, etc.) have taken place; in fact, at a stage when a crime has not been committed and is not

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even imminent. Yet that a crime will occur is treated as a foregone conclusion (McCulloch and Wilson 2016).32 Preemptive strategies aim to eradicate the threat of anticipated crimes. The strategic focus is on the embodiment of the threat, a person or group perceived as ‘dangerous’, such as OMCGS, and the strategic response is coercive. Given that there has been no crime, mens rea is not an issue. So, for instance, it is irrelevant whether bikies are planning a crime when meeting in groups for a beer; this is still a breach of the Queensland gathering in public places laws. Likewise, the absence of intention to commit serious crime has little bearing on a court’s decision about whether to impose a control order. Membership of a declared organisation is regarded as a proxy for an unacceptable level of risk of the commission of serious offences, and so is taken to justify early intervention in the form of control orders. While preemptive strategies are in a sense preventive, they attract the ire of lawyers and civil libertarians because they involve ‘status offences’—penalising a person because of his or her identity, rather than his or her actions. This is regarded as violating the traditional criminal justice concept that punishment should only be imposed where there is evidence of the commission of a crime.

Effectiveness It is difficult to judge the effectiveness of the anti-association laws in preventing organized criminal activity since they have had comparatively little use. The Queensland Taskforce’s observation (2016: 89) that ‘The law enforcement and legislative approach to criminal organisation offending which underpins the 2013 suite has … placed considerable focus on an objectively small part of the criminal community with, in proportion, a relatively small number of charges and a very small number of convictions’ is apposite to the broader Australian response. Of course, enforcement and effectiveness are not the same thing. The very existence of harsh laws may be a deterrent. However, there are signs that the deterrent effect of the anti-association approach has been marginal. In Queensland, some OMCG members have handed in their colours and resigned their memberships. There are also fewer bikies reportedly engaged in activities that the general public regards as intimidating. Yet it appears that the 2013 suite has had little effect on OMCG membership or general crime trends (Goldsworthy 2016). No discernible impact on organized crime groups other than OMCGs has been apparent,33

Others have termed these strategies ‘pre-crime’ (Zedner 2007; McCulloch and Wilson 2016), after the science fiction story The Minority Report by Philip K Dick in which authorities strive for a crime-free society by identifying and eliminating people who will commit crimes in the future. 33 In fact, the Queensland Organized Crime Commission of Inquiry found that the government had directed a disproportionate amount of resources at tackling OMCGs since 2013, resulting in the neglect of other areas like child exploitation, illicit drugs and financial crimes. 32

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despite the purported application of the anti-association laws to organized crime generally. In the meantime, police have continued to successfully use traditional policing techniques to police OMCGs. For example, in the 5 years beginning 2009, Strike Force Raptor in NSW, which was set up specifically to tackle OMCGs after the Sydney airport murder, arrested almost 2500 people, and charged them with more than 5500 offences. It also seized 636 firearms, more than 46,000 rounds of ammunition, more than $15 million worth of illicit drugs, and close to $4 million worth of cash and assets from gang members and their associates. All this occurred without any recourse to the NSW control order or consorting laws.

Future Directions The organized crime response scene in Australia has been dynamic in the years since the anti-association approach was first adopted. Change remains the norm. As the resource intensiveness and difficulty of enforcement, unpopularity and sometimes doubtful validity of the declarations/control order laws have become apparent, consorting offences appear to be increasingly taking over as the dominant anti-association approach. State responses continue to evolve. For instance, the Queensland Taskforce report, if implemented, will represent a turning point in the legislative landscape, as it recommends a move away from the narrow emphasis on OMCGs that has dominated both discourse and lawmaking towards a more general concern with organized criminal activity, and from a criminal group membership focus back to a more traditional focus on the activities of individual offenders. In addition, both Victoria and Queensland are working on utilising the potential of a whole-of-government approach to deal with the problem of organized crime infiltration into industries and occupations in a fair and effective way.

Comparing Australian and Dutch Approaches It is a fitting time to be considering cross-national approaches to organized crime, and particularly to OMCGs. In the Netherlands, the biker presence has dramatically increased over the last few years, with the two largest clubs, the Hells Angels and Satudarah, being supplemented by chapters of the Bandidos and No Surrender. Dutch OMCGs have also begun to spread beyond Europe’s borders. For example, Saturdarah has established a chapter in South Australia and is actively recruiting in other Australian jurisdictions (Hunt 2015). The Dutch government’s 2012 Plan of approach for combating 1% motorcycle clubs, brought more focus on policing OMCGs, with a large increase in investigations into their activities, including human trafficking, arms’ and drugs’

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trafficking, and protection activities in hospitality venues (Savona and Berlusconi 2015; Government of the Netherlands 2012). In addition, the administrative approach has proved useful in tackling OMCGs. For example, administrative measures to combat OMCG-related crime are the subject of cross-border cooperation between the Netherlands, Belgium and Germany in the Meuse–Rhine region (European Council 2016). In contrast to the Dutch whole-of-government approach, with its use of multiple sources of information, Australia’s approach remains dominated by criminal justice agencies and by criminal law, and by police information and intelligence, and this applies even with respect to decision-making by regulatory agencies about occupational licensing matters. Whereas Dutch organized crime prevention focuses on hindering the operations of organized crime through non-facilitation, has a broad application to all applicants for administrative privileges and establishes a dedicated infrastructure for this purpose, the Australian approach has concentrated on identifying ‘dangerous’ groups and individuals and implementing a regime of punishment and incapacitation to stem the threat they present. This has been done in a somewhat reactive and ad hoc fashion, resulting in a messy legal patchwork of laws and policies, in contrast to the planned and systematic response in the Netherlands.

Conclusion The importation of whole policies from one jurisdiction into another is rarely appropriate, given the diversity of legal systems and political arrangements, as well as social and cultural differences. As the eighteenth century French social commentator de Montesquieu noted, it is a ‘great chance’ if policies from one jurisdiction that are adapted to its people are suitable for another jurisdiction (Montesquieu 1748a). Yet as Kleemans and Huisman (2015) observe, sometimes ‘policy windows’ do emerge for a different approach to crime problems. When that happens, it is essential that authorities are open to considering the approaches of other jurisdictions in order to glean ideas and provide the basis for experimentation. Of course, that which eventually emerges may well be entirely different from the models they consider, and better suited to local circumstances. Some policy windows are opening in Australia at the moment, with changes in the political complexions of some state governments (such as in Queensland) and a new willingness in some jurisdictions to go beyond a criminal law centred approach and consider a more whole-ofgovernment approach that also encompasses administrative measures. However, Australia has a range of obstacles to tackle before something like the Dutch model could be implemented. Its multiple jurisdictions present plenty of legal and practical hurdles, not least with respect to information sharing. A more equitable and better designed occupational licensing system aimed at tackling organized crime might also present bureaucratic burdens and costs for business that are unacceptable to governments intent on abolishing ‘red tape’ as part of a ‘better regulation’ agenda.

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Most importantly there is a still a very strong allegiance to the anti-association model among state governments, despite little evidence of its effectiveness. Although ‘useless laws weaken the necessary laws’ (Montesquieu 1748b), it is doubtful that governments will agree to eliminate anti-association laws into which they have heavily invested political capital unless this can be done quietly or in a way that provides a positive political payoff. Nevertheless, the Queensland Taskforce’s report may help to make a change of approach more palatable in other jurisdictions, given its strong statements about the ineffectiveness and improper targeting of the current approach and the preferability of alternative responses. The benefits of adopting a dual administrative/criminal law approach are clear. It provides a systematic approach to prevention that has the potential to effectively address infiltration and corruption of the legitimate sphere by organized crime. It is likely to have a broader application to organized crime than Australia’s current anti-association approach because designation of organized crime groups, one of the more controversial aspects of anti-association laws, is not required. The introduction of an administrative approach alongside traditional criminal law responses would encourage broader agency collaboration that is much more likely to bear fruit in tackling organized crime than policing agencies trying to go it alone. Above all, it would be less punitive, more deliberative and sit more comfortably within a system like Australia’s that professes to value the rule of law.

References Akerman, P. (2007). Rann targets bikie ‘terror’. The Australian. Retrieved from http://www. theaustralian.com.au/news/nation/rann-targets-bikie-terror/story-e6frg6nf-1111113680188 Ananian-Welsh, R., & Williams, G. (2014). The New Terrorists: The normalisation and spread of anti-terror laws in Australia. Melbourne University Law Review, 38(2), 362–408. Australian Crime Commission. (2013). Crime Profile Series—Outlaw Motorcycle Gangs. July. Commonwealth of Australia. Ayling, J. (2011). Pre-emptive strike: How Australia is tackling outlaw motorcycle gangs. American Journal of Criminal Justice, 36, 250–264. Ayling, J. (2014). Going Dutch? Comparing approaches to preventing organised crime in Australia and the Netherlands. European Review of Organised Crime, 1(1), 78–107. Bronitt, S., & McSherry, B. (2010). Principles of criminal law (3rd ed.). Rozelle, NSW: Thomson Reuters. Council of Europe. (2003). Preventive Legal Measures against Organised Crime: Best Practice Survey No. 9, Organised Crime. PC-S-CO (2003) 3 E (provisional). Strasbourg. Retrieved from http://www.coe.int/t/dghl/cooperation/economiccrime/organisedcrime/BestPractice9E.pdf Cowdery, N. (2009). Comments on Organisation/Association Legislation—‘Bikie Gangs’. May, updated November. Retrieved from http://www.odpp.nsw.gov.au/docs/default-source/speeches-bynicholas-cowdery/comments-on-organisation-association-legislation—bikie-gangs.pdf?sfvrsn=2 de Montesquieu, C. (1748a). De l’Esprit des Lois. Book I, Chapter 3. English edition: de Montesquieu, C. (1949). The spirit of the laws (Nugent, T., Trans.). New York: MacMillan. de Montesquieu, C. (1748b). De l’Esprit des Lois. Book XXIX, Chapter 16. English edition: de Montesquieu, C. (1949). The spirit of the laws (Nugent, T., Trans.). New York: MacMillan, 1949.

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European Council. (2016). Benelux leads European fight against outlaw motorcycle gangs. Retrieved from http://neweurope.eu/press-release/benelux-leads-european-fight-againstoutlaw-motorcycle-gangs/ Fitzgerald, T. (2013). Opinion: Tony Fitzgerald’s verdict on the tough Newman Government law and order crackdown. The Courier-Mail. Retrieved from https://article.wn.com/view/2013/10/ 28/OPINION_Tony_Fitzgeralds_verdict_on_the_tough_Newman_Governm/ Goldsworthy, T. (2016). Criminalising conversations: Australia’s damaging love affair with consorting laws. The Conversation. Retrieved from https://theconversation.com/criminalising-conversationsaustralias-damaging-love-affair-with-consorting-laws-53633, https://theconversation.com/crimin alising-conversations-australias-damaging-love-affair-with-consorting-laws-53633 Government of the Netherlands. (2012). Increase in the number of criminal investigations into outlaw bikers. Retrieved from https://www.government.nl/latest/news/2012/08/21/increase-inthe-number-of-criminal-investigations-into-outlaw-bikers Gray, A. (2009). Australian ‘Bikie’ laws in the absence of an express bill of rights. Journal of International Commercial Law and Technology, 4(4), 274–286. Huisman, W., & Koemans, M. (2008). Administrative measures in crime control. Erasmus Law Review, 1(5), 121–143. Huisman, W., & Nelen, H. (2007). Gotham unbound Dutch style: The administrative approach to organized crime in Amsterdam. Crime, Law and Social Change, 48, 87–103. Hunt, N. (2015). Outlawed Satudarah bikie gang from the Netherlands starts SA chapter. The Advertiser, Retrieved from http://www.adelaidenow.com.au/news/south-australia/outlawedsatudarah-bikie-gang-from-the-netherlands-starts-sa-chapter/news-story/8b1302f64bc6f718ca04 ef69ed0180f2 Kirk, A. (2013). States baulk at Gillard’s national anti-gang legislation bid. The World Today. Retrieved from http://www.abc.net.au/worldtoday/content/2013/s3708325.htm Kleemans, E., & Huisman, W. (2015). Multi-agency approaches in ‘criminogenic’ settings: The case of the Amsterdam Red Light District. Crime, Law and Social Change, 64, 247–261. Loughnan, A. (2009). The legislation we had to have? The Crimes (Criminal Organisations Control) Act 2009 (NSW). Current Issues in Criminal Justice, 20(3), 457–465. McCulloch, J., & Wilson, D. (2016). Pre-crime: Preemption, precaution and the future. London and New York: Routledge. McKenna, M. (2013). Showdown between federal and state governments looms over tough bikie laws. The Australian. Retrieved from http://www.theaustralian.com.au/national-affairs/state-politics/ showdown-between-federal-and-state-governments-looms-over-tough-bikie-laws/story-e6frgczx1226735060628#sthash.er9flpxd.dpuf. McLeod, A. (2013). On the origins of consorting laws. Melbourne University Law Review, 37, 103–142. Nelen, H. (2010). Situational organised crime prevention in Amsterdam: The administrative approach. In K. Bullock, R. V. Clarke, & N. Tilley (Eds.), Situational prevention of organised crimes (pp. 93–110). Cullompton Devon: Willan Publishing. Nelen, H., & Huisman, W. (2008). Breaking the power of organised crime? The administrative approach in Amsterdam. In D. Siegal, & H. Nelen (Eds.), Organized crime: Culture, markets and policies (pp. 207–218). New York: Springer. Nelson, F. (2014). High Court’s anti-bikie law decision prompts calls for a Charter of Rights, Lawyers Weekly. Retrieved from http://www.lawyersweekly.com.au/news/high-court-s-antibikie-law-decision-prompts-calls NSW Ombudsman. (2013). Consorting Issues Paper: Review of the use of the consorting provisions by the NSW Police Force. Retrieved from http://www.ombo.nsw.gov.au/news-and-publications/ publications/fact-sheets/legislative-reviews/review-of-the-new-consorting-provisions-November2013 Peters, M., & Spapens, A. C. M. (2015). The administrative approach in the Netherlands. In A. C. M. Spapens, M. Peters, & D. van Daele (Eds.), Administrative approaches to prevent and tackle crime: Legal possibilities and practical application in EU Member States (pp. 265–306). The Hague: Eleven International Publishing.

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Queensland Taskforce. (2016). Taskforce on organised crime legislation. Brisbane: Department of Justice and Attorney-General. Savona, E. U., & Berlusconi, G. (Eds.) (2015). Organized crime infiltration of legitimate businesses in Europe: A pilot project in five European countries. Final Report of Project ARIEL—Assessing the Risk of the Infiltration of Organized Crime in EU MSs Legitimate Economies: A Pilot Project in 5 EU Countries (www.arielproject.eu). Trento: Transcrime— Università degli Studi di Trento. Spapens, A. C. M., Peters, M., & Van Daele, D. (Eds.). (2015). Administrative approaches to prevent and tackle crime: Legal possibilities and practical application in EU member states. The Hague: Eleven International Publishing. Tonry, M. (2015). Is cross-national and comparative research on the criminal justice system useful? European Journal of Criminology, 12(4), 505–516. Toscano, N. (2013). Victoria seeks to follow Queensland on bikie laws. The Age. Retrieved from http://www.theage.com.au/victoria/victoria-seeks-to-follow-queensland-on-bikie-laws-201310 21-2vxlo.html Wakatama, G. (2016). Gangs squad chief says consorting data shows anti-bikie laws working. ABC News. Retrieved from http://www.abc.net.au/news/2016-03-10/gangs-squad-saysconsorting-data-shows-anti-bikie-laws-working/7233840 Westthorp, T. (2013). Gold Coast bikies laugh off gang ‘crackdown’, tell police: ‘We run this town’. Gold Coast Bulletin. http://www.goldcoastbulletin.com.au/news/gold-coast/gold-coast-bikies-laugh-offgang-crackdown-tell-police-we-run-this-town/news-story/3c510b23b91469b0d637841607ed4266 Zedner, L. (2007). Pre-crime and post-criminology? Theoretical Criminology, 11(2), 261–281.

Chapter 13

Uneasy Truths; Criminal-Informants, Witness Protection, Trust and Legitimacy in the Policing of Organized Crime James Sheptycki

Introduction Organized crime remains a policy area of considerable concern for most European countries and, indeed, globally (Sheptycki 2014). Within the literature on organized crime, the topic of ‘witness protection’ involving ‘accomplice testimony’ is a small but important sub-theme (Bakowski 2013; Dandurand and Farr 2010; Fyfe and Sheptycki 2006). The social institution of trust is one important consideration in coming to terms with these practices. As one journalistic ‘insider account’ of the WitSec Program in the United States put it: “For decades no law enforcement program has been as cloaked in controversy and mystery as the Federal Witness Protection Program” Calling it “one of the most effective and controversial weapons in the war against organized crime”, this book documents the “lies, secrecy, and loss” of former organized crime participants and their family members from inside the program (Early and Schur 2009).1 Evidence provided by witnesses is vital to the effective investigation of crime and facilitating witness cooperation in organized crime cases is therefore considered important. A key question, how to measure the success and effectiveness of witness protection programs, has not been adequately answered and scholars have concluded that “the evidence-base on which to judge efficacy is weak” (Fyfe and Sheptycki 2006, p. 350). There has been very little research on the effectiveness of 1

Quotes taken from the back cover. This book is written by Pete Early, an investigative journalist and true crime author whose previous works include ‘Family of Spies’, ‘The Hot House’, ‘Super Casino’ and ‘Circumstantial Evidence’ and is based on the first hand account provided by Gerald Schur, a retired legal council who worked for the US Department of Justice’s Organized Crime and Racketeering Section, whose claim to fame is as founder and longtime head of WITSEC, the first ever witness protection program.

J. Sheptycki (&) Faculty of Liberal Arts and Professional Studies, York University, Toronto, Canada e-mail: [email protected] © Springer International Publishing AG 2017 H. Nelen and D. Siegel (eds.), Contemporary Organized Crime, Studies of Organized Crime 16, DOI 10.1007/978-3-319-55973-5_13

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these programs (Dandurand and Farr 2010, p. 77). There is, however, a perception that they are effective. This perception is based on largely anecdotal accounts of successful prosecutions and some evidence suggesting that “not a single participant or relative of a protected witness has been victim of an attack by the source of the threat” (ibid. p. 77). In other words, the segmented evidence that does exist suggests that protected witnesses gain successful prosecutions and evidently do not themselves become victimized by those against whom they have borne witness. Clearly there is a need for further empirical research to verify claims of efficacy, but this has been hampered by the covert nature of the programs themselves. As Dandurand and Farr (2010, pp. 76–77) put it: Because of the secrecy that must surround these activities, there sometimes seems to be very little room left for proper accountability or oversight mechanisms. Even the financial accountability of the police-based programs tends to be problematic as it is hard to obtain information on the cost of the programs, the amount spent on particular cases and the compensation offered to informants and witnesses … Several countries require their programs to publish a report on their activities. However, none of these arrangements is completely satisfying from the point of view of public accountability. This paper is not really concerned with the narrow ‘what works’ policy agenda and instead takes the covert and secretive nature of criminal informant and participating witness handling as its starting point in order to ask questions about ‘truth finding as a commodity’ in organized crime cases. At issue are the moral hazards and ethical issues surrounding the use of offenders-turned-informants in the context of covert policing against organized crime targets. The really big question is: what happens to social institutions built on trust when secretive deals are made between law-enforcers and lawbreakers in the field of organized crime?

The Truth of Trust Criminologists and law enforcement practitioners think about truth in a limited and pragmatic way. Philosophers have developed a variety of theories concerning the nature of Truth, and the conditions of Truth, which need not detain us here (e.g. Scruton 2002, pp. 36; 194; 260–62). For criminologists, truth usually boils down to the consideration that some specific proposition, fact, relation, etc., is sufficiently verifiable so as to be believable and, perhaps more importantly, can withstand cross-examination in a court of law. Trust is a sociological concept that signifies the all-purpose social glue, without it truth is socially unachievable. In terms developed by game theorists, ‘trust’ implies that A does not check B’s behavior as a sign of respect and B responds by behaving in a manner worthy of A’s respect by being trustworthy. Trust and cooperation interact. It is not merely relevant whether A decides to trust B, since the opposite is equally the case. Cooperation can fail because A decides not to trust B to cooperate or, alternatively A can refrain from acting cooperatively because A believes that B does not trust A. The converse is

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also true. To achieve cooperation between free agents, trust must be mutual. In conditions of secretiveness where lack of transparency is a significant factor, distrust can easily intensify or deteriorate into a mutual protection racket where A has no choice but to mimic trust in B because failure to do so may result in dire consequence for A. It follows that if B does not similarly mimic trust, the feared dire consequence may result anyway. For mutual trust between two free agents to work it must be believable by both sides. In complex societies agents cannot monitor each other’s actions and motivations effortlessly. If agents had perfect information about each other, trust would not be at issue. Where there is a lack of transparency in social relations the complexity of truth in trust grows exponentially, but this does not necessarily lead to unconditional distrust since cooperation does not necessarily depend on high levels of trust and successful cooperation can positively influence levels of trust. In other words, the quality of sociality determines levels of trust, not the other way around. Trust can grow because people act trustfully and do not merely distrustfully and contingently mimic trust. Trust needs to be believed and believable in order to be true. In the end, levels of trust increase because people behave as if trust was warranted and trusting creates its own truth. Sociality and mutual cooperation may generate trust, but it remains fragile and hazardous for dependent parties who, as socially free agents, are by definition never under the control of those with whom they interact (Gambetta 1988). Honest dealing is the bedrock of trust, covert dealing and deception is the acid that undermines it (Frankel 2008).

Trust in the Organization of Crime The question of trust is the organization of crime is by no means a simple one. Klaus Von Lampe and Per Ole Johansen illustrate the dilemma with quotes from two notorious individuals of American organized crime history (2004, p. 159). First, there is Joseph Bonanno, one of the most famous figures in mid-twentieth century American mafia history, who is quoted as saying “our entire system of cooperation and connections depended on trust”. Then there is Meyer Lansky, the ‘mob’s accountant’ and a participant in the same ‘national crime syndicate’ that Bonnano was a part of, who is quoted as saying “they were so honorable that no one in the Mafia ever trusted anyone else”. Frank Bovenkerk’s provocative essay on the ‘personology of organized crime’ (2000) quotes Raffaele Cutolo, the notorious boss of the Neapolitan Camorra to wit: “I am a divinity, for me no laws exist, because I am greater than a judge” (p. 238). Bovenkerk concludes his essay by observing that the personality type of successful organized criminals is characteristic of the narcissistic-antisocial, aggressive, mixed personality who typically takes liberties with facts and often lies to redeem self-illusions. At the level of personality, Bovenkerk argues, successful organized criminals need to exhibit megalomania and a carefully controlled impulsiveness, along with a sense of adventure and

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a feeling they are above everyone else. The archetypal organized criminal trusts no one but himself. In the final analysis, Von Lampe and Johansen (2004) conclude that the ‘truism’ that the organization of crime is held together by bonds of trust is too simplistic. Instead, the notion of trust is a multifaceted phenomenon that gets in the way of understanding how crime gets organized. While some of the time, some actors within criminal networks act with a degree of trust (perhaps on the basis of family connections or shared ethnicity), criminal cooperation also takes place in the absence of trust. Never forget Jack Katz’s phenomenology of crime, which insists that the ‘seductions of crime’ are sensual and contain important elements of fatalism and thrill seeking (Katz 1988). It is not that organized criminals lack rationality, including the inclination to calculate ‘trustability’ in some instances.2 It is that the seductions of criminality exist at an emotional level in important measure. The satisfactions of ‘getting away with it’, of ‘putting one over on the dupes’, of asserting ones will in circumstances of great challenge, all of these and more are significant aspects of the life-world where crime is organized. In the perspective of the criminological ‘life course’ what is important are the social opportunity structures that enable choices to organize to commit crime (Kleemans and De Poot 2008) and the key to success is not trustworthiness, but rather reputation, specifically the reputation for violence (Pearson and Hobbs 2003). It is trust in violence that defines the organization of crime (Varese 2010) and it is the cultivation of a reputation to be able to act with violence that sets the organization of crime apart from legitimate capitalist enterprise (cf. Bovenkerk 2000). As Pearson and Hobbs observe, it is the case that rational business principles are quite predominant for participants in illicit markets and this includes rational calculations about the trustability of other participants in organized criminal enterprise, but only up to a point. The reputation for violence, and the ability to follow through on that reputation when called for, makes it possible that ‘violence avoidance’ is the more general rule. But violence is only avoided because ‘it is bad for business’ (because it attracts the attention of authorities). In a world where lying, secrecy, deviousness and one-upmanship are endemic, it is trust in the use of instrumental violence (to enforce contracts and organizational relations) that is the important lubricant that makes the organization of crime possible.

Note the use of the word ‘trustability’ and not the more usual term ‘trustworthiness’. The latter implies that trust is a moral quality that can be justly earned. The former merely suggests that trust can be statistically inferred on the basis of past experience and calculated as a risk. In other words, whereas the latter suggests that there is actually such a thing as ‘trust’, the former suggests that trust is merely performative. Trustworthy is to trustability as truth is to truthiness. On the concept of truthiness see: http://itre.cis.upenn.edu/*myl/languagelog/archives/002586.html.

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The ‘Witness Protection’ Paradigm The paradigm of ‘witness protection’ is benign on the face of it. In almost every criminal case witness testimony is a crucial aspect of “the case for the prosecution” (McConville et al. 1991). In cases involving organized criminality this is said to cause particular problems because witnesses suffer from threats and intimidation. So too do victim/witnesses in cases of so-called domestic violence, but as the previous discussion makes clear, the witness protection programs that have sprung up in various jurisdictions in North America and Europe have been evolved with a view to ‘organized crime’.3 Academic consideration of witness protection programs has tended to focus narrowly on specific features that concern the relocation of witnesses and the provision of new identities. The US WITSEC program is the paradigmatic example (Fyfe and Sheptycki 2006), but everywhere the form is quite similar in that they “normally involve the relocation of a witness and his or her close family, the possibility of formally changing their identity, and help with social and economic assimilation in the communities to which they are moved” (p. 323). Evaluation of the effectiveness of such programs is thereby conceived of involving two main criteria. First is the extent to which successful prosecutions are obtained and second is the extent to which protected witnesses are actually protected from harm. Only scant attention is thereby paid to another important feature of these programs. In cases of ‘organized crime’ (unlike cases of domestic violence) the protected witnesses are not only ‘collaborators with justice’, they are also co-collaborators in criminal conspiracies (Bakowski 2013, p. 2). As Bakowski puts it: The testimony of persons engaged in a criminal activity and closely connected to the offender may have crucial value in the prosecution of organized crime. This explains why these so-called ‘collaborators with justice’ or ‘pentiti’ are a sizeable part, if not the majority, of persons admitted to WPPs … in many jurisdictions pentiti are also subjected to specific regulation concerning inter alia benefits granted in exchange for information (p. 2).

The paradigm of witness protection is practically intertwined with the business of plea bargaining and witness immunity from prosecution and these tactics in structuring a case for the prosecution are pre-determined by a set of undercover police tactics, involving the cultivation of criminal-informants for intelligence purposes. The granting of protected witness status comes at the end of a complex form of police work, whereby some criminal actors are framed as ‘collaborators with justice’ and given promises about the future handling of any criminal proceedings against them in exchange for formal witness testimony, which often entails a high degree of secrecy. One consequence of this secrecy is that it makes it

3

Note that victim support programs in cases of domestic violence have a rather different rationale than do witness protection programs in the context of organized crime, even though the threat of intimidation is no less plausible for these victim-witnesses than are threats to criminal-informants. For instance, support programs of victims do not offer to pay victim-witnesses for testimony and it is often difficult for victims of domestic violence to obtain financial compensation through formal victim support programs (Danis 2003).

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very difficult for external observers (such as criminologists and policy makers) to evaluate the overall nature and impact of these techniques. There are some obvious differences, for example, in Germany the use of ‘state witnesses’ (Staatszeugen) or ‘crown witnesses’ (Kronzeuge) has been highly circumscribed (Fyfe and Sheptycki 2006, p. 342), whereas the pentiti strategy in Italy is evidently broadly accepted by the judiciary and public due to the urgency of the Mafia problem (Tak 1997, p. 19) and therefore is rather less so. Nonetheless, evaluation of the paradigmatic witness protection program is usually narrowly defined and practically difficult due to official secrecy surrounding such practices.

Definitions In this literature there are several concepts that are inter-related and it is important to define them. There is the term ‘protected witness’ who is also considered a ‘collaborator with justice’ and then there is the more shadowy figure of the ‘police informant’. A ‘protected witness’ “could mean any witness who is offered some form of protection against intimidation” (Dandurand and Farr 2010, p. 7). This discourse concerning protected witnesses is pervaded by other related terms: ‘witness at risk’, or ‘endangered witness’, or ‘threatened witness’, or ‘reporting persons’. The discourse tends to imply that the person concerned is in danger because they are cooperating with authorities and an inference can be drawn that such witnesses are ‘on the side of right’. For example, the Council of Europe (2006a, b) refers to ‘witness intimidation’ as “any direct or indirect threat carried out or likely to be carried out to a witness or collaborator of justice, which may lead to interference with his/her willingness to give testimony free from undue interference” (quoted in Dandurand and Farr 2010, p. 8)—this could apply to victims of domestic violence but does not. The Council of Europe defines a ‘collaborator of justice’ as “any person who faces criminal charges or has been convicted of taking part in a criminal association of any kind, or in offences of organized crime, but who agrees to cooperate with criminal justice authorities, particularly by giving testimony about criminal association or organization, or about any offences connected with organized crime or other serious crimes” (Council of Europe 2006b, emphasis added, JS). As Dandurand and Farr (2010, p. 6) note, this category includes informants and other agents who collaborate with authorities but “the use of such informants and agents is often as essential to successful criminal investigations as it is problematic”. Importantly, informants only occasionally become protected witnesses or collaborators with justice and their knowledge thereby translated into formal evidence. More usually, their knowledge remains secret ‘police intelligence’ and such covert knowledge remains hidden from the scrutiny of formal court processes. Many aspects of the knowledge-base about organized crime that are important and may be held in the hands of authorities remains largely hidden from view, even from policy

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analysts and scientific experts. So who are the protected witnesses? According to Dandurand and Farr, “witness protection programs are most frequently used to protect individuals who have acted as agents or informants for the police” (p. 28). Police agencies argue that all aspects of covert policing need to proceed under conditions of rigorous secrecy and this is often taken to include much of what happens at the ‘tail end’ as such operations, which includes ‘witness protection’. The need for blanket secrecy has been challenged, especially with regard to witness protection programs. For example, enquires in Australia have observed that accurate general information about witness protection programs needs to be publically available if such programs are to be evaluated for effectiveness and that the need to keep aspects of covert policing secret need not be in conflict with such accountability requirements (Brouwer 2005). However, there remains a general lack of transparency about the practical workings of witness protection (Fyfe and Sheptycki 2006). The complex relationship between police and criminal-informants is somewhat disguised in the literature concerning ‘witness protection’ per se. The witness protection literature tends to focus narrowly on the criteria for selection into such programs (i.e. seriousness of offence; importance of evidence in securing convictions; level of risk to witness) and evidence of successful convictions (Fyfe and Sheptycki 2006). There are, as yet, no generally accepted standards for evaluating best practice in the use of ‘protected witnesses’ (Dandurand and Farr 2010) and there is very little research on the effectiveness of such programs (Brouwer 2005), so the general perception that such programs have been successful in obtaining criminal-informants’ collaboration with justice and thus in securing convictions has served as the primary justification for the internationalization of such practices (Fyfe and Sheptycki 2006).

Internationalization The discourse concerning the policing of organized crime is an international one (Edwards and Gill 2003; Sheptycki 2007). The United Nations, the Council of Europe and other international and multi-lateral organizations have increasingly focused attention on the transnational nature of many serious crimes. States have thereby been pressurized into harmonizing and standardizing legislation and criminal justice practices so as to enhance the ability to cooperate transnationally. Many conventions and treaties have been ratified that reflect this trend. International cooperation with respect to the identification and use of informants and witnesses, the sharing of intelligence and evidence and the protection of witnesses are important facets of this. For example, Article 19 of the United Nations Convention against Transnational Organized Crime requires States Parties to at least consider concluding bilateral and multilateral agreements whereby, in relation to matters that are the subject of investigations, prosecutions or judicial proceedings in one or more States, the competent authorities concerned may establish joint investigative bodies.

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Illicit markets are intertwined with transnational commodity chains that are ‘local at all points’ (Hobbs 1998). Thus, the international nature of illicit commodity chains has provided the justification for the transnationalization of local police and criminal justice practice (Bowling and Sheptycki 2012). One noteworthy example cited in the literature on witness cooperation concerns the European police liaison network coordinated by Europol. This network of police officials has focused on specialist witness protection programs, among other things, is a purported effort to “create a useful, common platform for future cooperation and to give those Member States in which the implementation of witness protection is still underway the great chance to avoid waste of time and ‘reinventing the wheel’ again” (Fyfe and Sheptycki 2006, p. 331). The internationalization of witness protection is gaining momentum because police authorities believe it to be an effective tool. This logic underlies the development of UN initiatives concerning organized crime, most notably, in the context of this review, through the publication of Good Practices for the Protection of Witnesses in Criminal Proceedings involving Organized Crime (UNODC 2008). With few exceptions these developments have taken place in a knowledge vacuum, since there is relatively little empirical research evaluating the full workings of witness protection programs. Transnationally, there are increasing efforts to provide a legal basis for judicial cooperation in criminal matters involving police officers acting covertly, the use of criminal-informants, and witness protection. In Europe there has been an effort to develop legal and practical measures for different categories of witnesses, victims, collaborators of justice and police criminal-informants (Council of Europe 2006a, b). The objective has been to develop a legal frame that strikes an acceptable balance between such protection measures and the human rights and fundamental freedoms of all parties involved. The European Court of Human Rights has sometimes agreed to the legality of the use of criminal-informants, even acting anonymously, during preliminary investigations, but has emphasized that the use of such information presents a problem at the trail stage with respect to fairness (Council of Europe 2004, p. 20). Although it is difficult to generalize, in Europe, even where it is permitted by law, the use of criminal-informant testimony (especially where it is kept anonymous) tends to be rarely used in criminal trials because of perceived difficulties with fairness and the rights of the accused. In the absence of robust evidence concerning the efficacy of witness protection programs as part of the continuum of policing against organized and serious crime, the international trend is towards further development and elaboration of these techniques.

Research on the Utility of ‘Witness Protection’ The international adoption of the strategy of protecting witnesses who are collaborators with justice but who also tend to be criminal-informants raises questions about how the efficacy of such programs should be measured. As already

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mentioned, the tendency is to evaluate the utility of witness protection programs by reference to a narrow range of factors, mostly having to do with the production of numbers of successful prosecutions. As mentioned in the previous section, the UN Convention against organized crime calls for the development of witness protection measures and for greater collaboration in witness protection. However, there are no internationally accepted formal standards by which to evaluate witness protection programs (Dandurand and Farr 2010, p. 77). There is a general lack of empirical evidence on the effectiveness of these programs and the cost–benefit analyses that have been conducted are very weak (ibid. p. 11–12). Because witness protection programs are practically intertwined with covert policing methods, the very nature of the programs has largely been considered beyond public scrutiny and academic research. Some witness protection programs publish annual reports, but the data they provide is “often quite sketchy” (Dandurand and Farr 2010, p. 13). As many of the decisions regarding witness protection and the use of informants are left to the discretion of the police or prosecuting authorities, it is important to balance such discretionary decision-making with adequate legal safeguards, but in order to do so an adequate research basis is required. Assessing the cost-effectiveness of witness protection programs tends to be problematic because it is hard to obtain information on the cost of the programs, the amount spent on individual cases, and compensation offered to informants who become protected witnesses. Countries vary in terms of the accounting measures used and while many require such programs to publish figures and report on activities none have been found to be very satisfying from the point of view of public accountability (Brouwer 2005; Fyfe and Sheptycki 2006, p. 33; Dandurand and Farr 2010, p. 77). In other words, “reported program costs are nothing more than best guesses” (Dandurand and Farr 2010, p. 52). It is even difficult to obtain exact figures on the number of successful convictions brought about on the basis of criminal informant testimony. Figures concerning protected witness testimony were not made available in any of the European countries studied for a Council of Europe report which cautiously concluded that “successes in the combating of organized crime should not be attributed to witness protection measures alone” (Council of Europe 2004, p. 40). In a study which included interviews with fourteen protected witnesses—the only one of its kind, to this author’s knowledge—it was observed that the signal witness protection through re-location sends to participants in organized crime is ambiguous at best. Indeed, such programs may in fact “reinforced the problem of intimidation by demonstrating the power of intimidators to ‘purify’ communities [in which they operate] of those viewed as ‘grasses’” (Fyfe and Mckay 2000, p. 298). In other words, witness protection programs may end up abetting the goal of serious criminals to rid their operating environment of those who are most likely risks for exposing details of illicit activities to authorities. Reviewing the existing literature it is possible to conclude that, in spite of the claims made by police practitioners and prosecuting authorities about the cost-effectiveness of witness protection programs and the use of criminal-informants in criminal investigations and prosecutions, there is little

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verifiable evidence that supports them. Anecdotal evidence of expediency should not be confused with demonstrations of cost-effectiveness. Furthermore the potential negative effects of the use of criminal-informants on the legitimacy of the criminal justice process should be taken into account when the benefits of these practices are being weighed (Fyfe and Sheptycki 2006, p. 29).

Truth Finding in Illicit Markets, What Is the Price? The cultivation of police informants in the context of illicit markets is fraught with difficulty (Billingsley 2009). Yet the literature on witness protection does not integrate these insights. In nearly all witness protection programs consideration for inclusion is standardized around several typical factors which include: (i) the seriousness of the offences; (ii) the importance of the evidence the witness can offer; (iii) whether the prospective witness can offer credible testimony that can withstand cross-examination in court; (iv) the level of risk to the witness. Absent these considerations are the practicalities of the interface between police work and the organization of crime in which all parties are practicing deception. The relationship between police informant-handlers and criminal-informants has been described as “a unique association between opposites” (Billingsley 2009, p. xvi). Formally speaking, the handling of covert human intelligence sources is often highly regulated and circumscribed, and rightly so. But as candid (anonymous) police sources have sometimes admitted “It is impossible to stick to the restrictive guidelines” and while there are times where formal rules are strictly adhered to this is not always the case (O’Reilly 2015a, b). The rules are most strictly adhered to when formal court processes—such as a request for a search warrant, arrest warrant, or a warrant for permission to undertake intrusive surveillance—are invoked. This is because disclosure rules will inevitably be invoked should a case come to trial. In order to form part of a criminal case, information from criminal-informants must take place under regulatory means. However, the most low visibility decision in the criminal justice process is the decision not to invoke the criminal process (Goldstein 1960). Since the focus in the witness protection literature is chiefly limited to considerations of credibility and persuasiveness during court testimony and the risk-likelihood to the cooperating witness evaluated in terms of costs and convictions, important aspects of decision-making at the investigatory stage and information or intelligence-gathering stage are left out. It is only by integrating what is known and understood about ‘undercover police methods’ with our thinking about ‘witness protection programs’ that a full picture of the ‘price of truth’ can be assessed. The literature on undercover police methods is well developed (Marx 1988; Fijnaut and Marx 1995). As Manning and Redlinger (1976) notes the policing of illicit markets expose police agents to an ‘invitational edge’ to corrupt practices. Briefly put, the structural constraints of illicit markets are such that, in order for market participants to obtain some element of effective control they must find ways to engage and neutralize enforcement agents. In the event that arrest is unavoidable

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(an eventual probability) organized criminals must seek opportunities to influence enforcement agents. This structural relation does not explain why specific individual enforcement officials become corrupted nor does it mean that all enforcement is corrupt or that a sizeable number of agents are corrupt. However, the structural conditions of policing in illicit markets (particularly the low-level visibility of much decision-making) tends to focus pressure and tension on agents, antecedent to the sorts of decisions made in the context of providing witness protection. Echoing Manning’s analysis, different agencies in different countries, drawing on different legal traditions make varying adjustments to these conditions. In some places there may be cognizance of these pressures, and a subsequent high demand for agency accountability, and thus relative immunity to the influence from participants in illicit markets; or, individual agents within specific institutions may be either ‘clean’, ‘on the take’ or ‘bent for the job’ and the problem is isolatable to individuals. In some places legitimate enforcement and regulatory institutions can be involved in aiding seller control of an illicit market and police agencies themselves can be drawn into market participation resulting in interpenetration of seller and regulator. With this in mind, it becomes possible to better appreciate the moral hazards associated with offering witness protection to criminal collaborators in the pursuit of constructing the case for the prosecution (Schreiber 2001; Zimmerman 1994). Schreiber notes that the anonymity of confidential informants and the covert nature of the informant handling relationship are problematic. Zimmerman cites cases where a multitude of benefits (monetary payments, immunity from prosecution and anonymity provided by witness protection) is productive of ‘moral hazard’ and offers suggestions on how to improve the legal framework surrounding informants and witness protection in an effort to force law enforcement agencies to take responsibility for the actions of informants. As observed in the section concerning ‘trust in organized crime’ (see above), within the milieu where the organization of criminality takes place, that is in the context of illicit markets, there is very little trust and a great deal of deception and the actual guarantor of social and economic relations is the reputation for and threat of violence. Police agents acting covertly and or ‘running informants’ in such milieu operate at the invitational edge of police corruption and thus the moral hazard implicit in witness protection programs is encountered at investigative stages considerably prior to the usual concerns that crop up in evaluations of witness protection programs. The structural relation Manning observes, and the resultant moral hazards associated with protecting cooperating witnesses who are also criminal collaborators, creates a substantial set of possibilities that can bring the criminal justice process into disrepute. One reason why practitioners advocating for the utility of witness protection programs also advocate for continuing secrecy about their operation may be a (perhaps unconscious) recognition of the potential for de-legitimation. I gleaned some new insights regarding these moral hazards while undertaking research on intelligence-led policing in Toronto (Sheptycki, forthcoming). Some sense of these issues can be found in news reports concerning ‘Project Pharaoh’, an operation undertaken by the Toronto Police Service in 2015 which aimed at a street

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gang known as the ‘Monstarz’. This gang had come to police attention as a result of a considerable number of shooting incidents, some of which resulted in fatalities. An undercover operation was mounted which involved the use of intrusive surveillance methods, mobile surveillance and considerable police resources. As a result of this operation an officer from a neighbouring police department ended up under arrest. Detective Constable Craig Ruthowsky had a reputation in his own force for being the best and most successful officer running police informants. As a result of tip offs that Ruthowsky brought to detectives in his force, many arrests had been made, considerable quantities of drugs—mostly cocaine—and firearms had been seized and his work had been widely touted as an exemplar of covert policing and the intelligence value of cultivating criminal-informants. At the time of his arrest, he had been on suspension (with pay) for three years after being charged criminally with obstruction of justice and breach of trust for allegedly leaking confidential information to an informant. Before his suspension, Ruthowsky was regarded as a highly effective gang enforcement officer, described by police sources not authorized to speak on the record as the ‘best gang cop’ in the history of his police service who was responsible for seizing more guns and putting away more criminals than anyone else. It was because of an independent investigation by the neighbouring Toronto Police Service, that his true connections to organized crime in the region came to light. The Ruthowsky example is a vivid account of the corrupting influence of operating at the ‘invitational edge’ that Peter Manning theorized more than four decades ago. The case of Margaret Stack, a resident of Whitby Ontario, offers an interesting contrast to the widely touted need for maintaining the secrecy of people who provide useful information to police (Mehta 2015; Taddese 2015). In this instance, the informant was a middle-class housewife who provided information to police about a residential burglary. The burglary involved the theft of a number of firearms and the two young males who stole them were using them to frighten other students at their local high school. Ms. Stack informed officers of the local constabulary, who evidently took a lackadaisical attitude towards the crime. Eventually, charges were brought, but the identity of Ms. Stack was made known to the family who were greatly affronted by the arrest of their young sons, leading to a campaign of harassment. At one point the father of the thieves apparently tried to run Ms. Stack over with his pickup truck. Officers handling the case had promised to keep her identity secret, but obviously failed to do so. The judge in the case found that police had promised Margaret Stack that her identity would not be disclosed and they “did not qualify that promise in any way”. The judge’s opinion went on to state that “both expressly and by implication Ms. Stack became entitled to informer privilege, that is, she was entitled to have her anonymity preserved”. The judge agreed that “central to the justice system is people assisting police by providing information, because without them we would not have information to investigate and prosecute crimes”. Although this is only one instance, it suggests that, absent the context of covert police operations, police agents can be rather cavalier with secrecy provisions in cases involving the presumption of the need to provide witness protection through anonymity. This suggests a certain irony that, when cases involve citizens

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not themselves involved in criminal activity, the perceived need to provide the cover of secrecy is not so acute as when it witness protection is negotiated on the morally hazardous grounds where police acting covertly and criminal-informants meet. Although these two stories are themselves merely anecdotal, they do suggest that the impressions surrounding the operational needs for official secrecy in cases involving vulnerable witnesses and covert policing are less prosaic than the advocates of witness protection programs in the context of serious organized crime investigations might have it (cf. Early and Schur 2009). In their review of the literature on witness protection programs, Dandurand and Farr observe that their secretive nature obscures the ability of independent academic assessment of their utility which shapes media portrayals (2010, pp. 68–72). They observe that media reports in countries with strong rule of law traditions—they mention the United States, the United Kingdom, Australia, New Zealand and Ireland—“tend to focus on criticizing program failures” (p. 69). In other countries “media coverage has been more concerned with highlighting the need for such programs in order to cope with growing organized crime” and on bolstering the programs which were recently put in place “in order to strengthen their respective criminal justice systems” (ibid.). They identify several recurring themes which emerge in media coverage: (i) the ethical dilemmas associated with using taxpayers money to protect witnesses who are criminal; (ii) the problem of protecting criminal-informants at the expense of public safety; (iii) the lack of public accountability for the functioning of such programs; and (iv) concern about how well such programs actually function. As manning’s early work established, and my own field observations largely confirm, the covert nature of this kind of police work is an invitational edge that opens up morally hazardous operational ground. The price of using criminal-informants and providing them with financial recompense and witness protection may be too high in that it continually risks bringing the criminal justice system into disrepute. For example, an article in the UK-based Sunday Telegraph stated that, “increasingly it is not witnesses who are benefitting from receiving new identities, paid for by the public purse, but murderers and those convicted of serious crimes”.4 In Canada, editorials in the Globe and Mail have repeatedly criticized the secrecy surrounding witness protection programs after an RCMP criminal-informant under witness protection committed homicide.5 In that case, the secrecy guaranteed protected witnesses meant that the new identity of the informant would be protected for life, even from the family of the homicide victim. The newspaper criticized the RCMP argument that more transparency would ‘bring the program down’ by destroying the confidence of potential informants and insisting that the Canadian Witness Protection Program Act actually ‘forces’ police to hide problem cases. The analysis of media coverage concerning witness Craig, O. (2009) ‘The criminals new lives that cost us millions’ The Sunday Telegraph, Aug. 16, 2009, p. 18). 5 ‘The excessive secrecy of witness protection’ The Globe and Mail, 7 April 2007, p. A20; ‘Coming clean on witness protection’ The Globe and Mail, 5 June 2007, http://www. theglobeandmail.com/news/national/coming-clean-on-witness-protection/article687212/. 4

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protection programs provides enough evidence that moral hazard and the perceptions that arise, are corrosive to the legitimacy of policing and criminal justice more generally. Although witness protection programs appear, on the face of it, to be both efficacious and essential in the policing of organized crime, more nuanced consideration suggests that such programs and the underlying logic they entail may contribute to undermining public trust in the criminal justice system.

Governance of Witness Protection—Truth Finding About Witness Protection Programs What we do know is that witness protection programs are most frequently used to protect individuals who have acted as agents or informants for the police and that many of these people are collaborators in criminal conspiracies. The covert nature of these programs ensures that the potential of such programs to corrupt criminal justice systems, or create the appearance of corrupt criminal justice systems, is palpable. Reviews of the literature reveal that the number of cases globally is already quite high and that there have been substantial increases in these numbers each year as police investigations begin to rely more heavily on the use of criminal-informants as collaborators of justice (Brouwer 2005; Dandurand and Farr 2010, p. 55; Fyfe and Sheptycki 2006). The literature reveals continuing difficulties in situations involving police agents infiltrating criminal organizations, cultivating criminal-informants and making both explicit and implicit promises in order to ‘turn’ or ‘flip’ individuals into informants—sometimes with the promise of protected witness status. For this reason, it is important not to separate consideration of witness protection programs, from consideration of police investigation practices and prosecution practices and to research all of these topics as part of a continuum of (largely covert) criminal justice practice. Reviews of the literature on witness protection often take a narrow view. The worst excesses may come about when police agents have the most discretion. For example, in Ireland the witness protection program is administered by the Garda Síochána Crime and Security Branch, under the auspices of the Garda Síochána Special Detective unit, in other words, it is not only a matter of police discretion, it is a matter of the special discretion of police detectives who operate behind a veil of near total secrecy. An Irish Times editorial observed that The protection program operates in secret. It was never put on a statutory footing. It is effectively a fund of money operated by senior Garda management for the best protection possible of those people whose testimony will be, or has been, used to convict serious criminals.6

Conor Lally (2009) ‘Evidence that puts lives at risk’ The Irish Times, 18 April 2009, p. 3.

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In Ireland there have been repeated calls for the government to place the witness protection program on a statutory footing, but police there have argued that such would limit its flexibility and undermine its effectiveness. Similarly, in New Zealand (which also is lacking in legal accountability mechanisms for the operation of witness protection practice) media accounts strongly suggest that the majority of persons in the program are associated with organized crime and are criminals themselves. In many countries policies and regulations have been introduced to control the way criminal-informants are used in the criminal justice process and to limit the way in which offers of witness protection are used as inducements. There is concern with the way the witness protection paradigm allows for criminalinformants to be cultivated in exchange for financial incentives, protection and leniency. Policy makers in some jurisdictions have therefore set about creating bureaucratic rules and regulatory frameworks that enable these practices (Greer 2001), on the premise that regulation will be productive of legitimation. However, evidence suggests that, in order to compensate for the resulting weakening of practitioner discretion, police officers have developed new deceptive tactics and ‘work arounds’ for informant handling (Turcotte 2008). In short, regulation and bureaucratization may create perverse incentives for police informant-handlers to act ‘off the books’, thereby displacing the problem of lack of accountability that bureaucratization is intended to fix to even more subterranean levels. This is why guidelines and practical measures to govern witness protection and informant handling practices are, themselves, insufficient. There needs to be greater research access and purview by disinterested policy analysts in order to assess the real workings of police operations (i.e. criminal-informant handling) in the context of illicit markets and the organization of crime. Guidelines concerning these practices are important and careful monitoring of these all too often obscure practices is essential. Notwithstanding the plausibility of criminal justice practitioners’ arguments regarding the legitimacy of these practices on the grounds of public safety and security and the need for confidentiality and concerns to promote the covert nature of these programs, it is imperative that some greater transparency be created by thorough-going research with respect to the practices of witness protection and informant handling. There is a need to promote accountability with regard to the granting of witness protection, the denial of such protection in certain cases, as well as the general use of criminal-informants as collaborators of justice.

Discussion and Some Conclusions The use of criminal-informants and the provision of witness protection are part of a continuum of police practice in organized crime suppression. These practices involve obvious moral hazards and raise serious questions about trust and legitimacy in the policing of organized crime. Should criminal-informants be paid for the information they convey and their help in achieving convictions? How valuable is the information they provide? In relation to this kind of information, how do we

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gauge success and what is a positive outcome? Connectedly, concerning the legitimacy of criminal justice institutions, what can be the outcome of covert policing and secretive deals between law-enforcers and lawbreakers in pursuit of criminal convictions? It is important to recall the observations of criminologists who study serious and organized criminals who draw attention to the point that the financial rewards of crime are not the only motivating factor for participation in illicit market activity. The satisfactions of crime include both the perceived glamour in infamy and hedonistic lifestyles that participation in illicit markets may afford but also includes the satisfactions of ‘getting away with it’, ‘putting one over on the dupes’ and asserting one’s will when the risks are high. In that regard, the participation of criminal-informants might just be regarded as one more move in the game of serious and organized crime, perhaps akin to the move of Castling in a game of Chess or bluffing in a game of poker. The lack of accountability and transparency that surround witness protection programs and the attendant covert policing practices makes other questions moot. Does the kind of information that is forthcoming from criminal-informants help to create accurate pictures of illicit market participation? Does this information guide useful analysis of organized crime phenomena? The answers to these questions are partial at best. What seems clear however is that, the more that is known about the covert practices of policing against serious and organized crime, the more evident the moral hazards of undercover policing become. It is not surprising that the criminological study of the organized crime milieux demonstrates that honesty is in short support and that trust is largely reducible to the cultivation for the reputation of violence which is far more important to criminal practitioners. The violence endemic in the crimes of the illicit market is, or perhaps ought to be, the central concern. Perhaps, rather than making secret deals with criminal-informants in pursuit of successful criminal prosecutions, more attention could be paid to regulatory strategies that minimize the scope for organized violence, reduce the possibilities for extortion and diminish the range and extent of social harm associated with illicit gain.

References Bakowski, P. (2013). Witness protection programmes: EU experiences in the international context. Library of the European Parliament: Briefing 28/01/2013 130408REV2. Billingsley, R. (2009). Covert human intelligence sources: The ‘unlovely’ face of police work. Hampshire: Waterside Press. Bovenkerk, F. (2000). Wanted: Mafia Boss—Essay on the personology of organized crime. Crime, Law and Social Change, 33(3), 225–242. Bowling, B., & Sheptycki, J. (2012). Global policing. London: Sage. Brouwer, G. E. (2005). Review of the Victoria police witness protection program, report of the director of the office of police integrity. Melbourne: Victorian Government Print Office POP. No. 145/2005. Council of Europe. (2004). Combatting organised crime: Best practices survey of the Council of Europe. Strasbourg: Council of Europe Publishing.

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Council of Europe. (2006a). Protecting witnesses of serious crime—Training manual for law enforcement and judiciary. Strasbourg: Council of Europe Publishing. Council of Europe. (2006b). Terrorism: Protection of witnesses and collaborators of justice. Strasbourg: Council of Europe Publishing. Dandurand, Y., & Farr, K. (2010). Review of selected witness protection programs. Ottawa: Research and National Coordination, Organized Crime Division, Law Enforcement Policy Branch, Public Safety Canada, Report No. 001/2010. Danis, F. S. (2003). Domestic violence and crime victim compensation. Violence Against Women, 9(3), 374–390. Early, P., & Schur, G. (2009). Witsec: Inside the federal witness protection program. New York: Random House. Edwards, A., & Gill, P. (2003). Transnational organized crime; perspectives on global security. London: Routledge. Fijnaut, C., & Marx, G. (1995). Undercover in comparative perspective. The Hague: Kluwer. Frankel, T. (2008). Trust and honesty. Oxford: Oxford University Press. Fyfe, N., & McKay, H. (2000). Making is safe to speak? A study of witness intimidation and protection in Strathclyde. Scottish Office: Crime and Justice Research Findings No. 26. Fyfe, N., & Sheptycki, J. (2006). International trends in the facilitation of witness co-operation in organized crime. European Journal of Criminology, 3(3), 319–355. Gambetta, D. (Ed.). (1988). Trust: Making and breaking co-operative relations. Oxford: Blackwell. Goldstein, J. (1960). Police discretion not to invoke the criminal process: Low-visibility decisions in the administration of justice. Yale Law Journal, 60(4), 543–594. Greer, S. (2001). Where the grass in greeener? Supergrasses in comparative perspective. In R. Billingsley, T. Nemitz, & P. Bean (Eds.), Informers: Policing, policy and practice (pp. 123– 140). Cullompton: Willan Press. Hobbs, D. (1998). Going down the glocal: The local context of organized crime. The Howard Journal, 37(4), 407–422. Katz, J. (1988). Seductions of crime; moral and sensual attractions in doing evil. New York: Basic Books. Kleemans, E. R., & De Poot, C. J. (2008). Criminal careers in organized crime and social opportunity structure. European Journal of Criminology, 5(1), 69–97. Manning, P. K., & Redlinger, J. (1976). Invitational edges of corruption: Some consequences of narcotic law enforcement. In P. Rock (Ed.), Politics and drugs (pp. 279–310). New York: Dutton/Society Books. Marx, G. (1988). Undercover; police surveillance in America. Berkeley: University of California Press. McConville, M., Sanders, A., & Leng, R. (1991). The case for the prosecution, police suspects and the construction of criminality. London: Routledge. Mehta, D. (2015, March 20). Police ordered to pay $345 K after revealing Ontario woman as confidential informant. The National Post. Retrieved from: http://news.nationalpost.com/news/ canada/police-confidential-informant-identity-leaked O’Reilly, N. (2015a, September 1). The insiders: The rules and pitfalls of police informants. The Hamilton Spectator. Retrieved from: http://www.thespec.com/news-story/5822578-theinsiders-the-rules-and-pitfalls-of-police-informants/ O’Reilly, N. (2015b, June 6). Suspended Hamilton cop nabbed in Toronto police gang raids. The Hamilton Spectator. Retrieved from: http://www.thespec.com/news-story/5663100-suspendedhamilton-cop-nabbed-in-toronto-gang-raids/ Pearson, G., & Hobbs, D. (2003). King pin? A case study of a middle-market drug broker. The Howard Journal, 42(4), 335–347. Schreiber, A. J. (2001). Dealing with the devil: An examination of the FBIs troubled relationship with its confidential informants. Columbia Journal of Law and Social Problems, 34(4), 301– 368.

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Scruton, R. (2002). A short history of modern philosophy. London and New York: Routledge Classics. Sheptycki, J. (2007). Criminology and the transnational condition: A contribution to international political sociology. International Political Sociology, 1(4), 391–406. Sheptycki, J. (2014). Transnational organized crime, four volumes (Vol. 1 Definitions and Theories; Vol. 2 Critical and Constructivist Analysis; Vol. 3 Realist Perspectives; Vol. 4 Bringing the State Back In). London: Sage Library of Criminology. Sheptycki, J. (forthcoming). In there like a dirty shirt; reflections on fieldwork in the police organization. In G. A. Antonopoulos (Ed.), Illegal entrepreneurship, ‘organised crime’ and social control: Essays in honour of professor Dick Hobbs. The Hague: Springer. Taddese, Y. (2015, March 16). Police liable for breaching informer confidentiality. Law Times. Retrieved from: http://www.lawtimesnews.com/201503164542/headline-news/police-liablefor-breaching-informer-confidentiality Tak, P. J. P. (1997). Deals with criminals: Supergrasses, crown witnesses and pentiti. European Journal of Crime, Criminal Law and Criminal Justice, 5, 2–26. Turcotte, M. (2008). Shifts in police-informant management. Global Crime, 9(4), 291–305. UNODC. (2008). Good practices for the protection of witnesses in criminal proceedings involving organized crime. New York: United Nations. Varese, F. (Ed.). (2010). Organized crime: Critical concepts in criminology. London: Routledge. Von Lampe, K., & Johansen, P. O. (2004). Organized crime and trust: On the conceptualization and empirical relevance of trust in the context of criminal networks. Global Crime, 6(2), 159– 184. Zimmerman, C. S. (1994). Toward a new vision of informants: A history of abuses and suggestions for reform. Hastings Constitutional Law Quarterly, 22(1), 81–178.

Author Biography James Sheptycki Authoring this paper was made possible by Social Sciences and Humanities Research Council of Canada Insight Grant (No. 435-2013-1283) for research concerning the intelligence practices of police organizations.

Chapter 14

Undercover Populism Jacqueline E. Ross

Introduction In both the United States and Europe, undercover tactics are a favored tool for the investigation of organized crime, including the infiltration of criminal networks that traffic in narcotics, arms, counterfeit currency, stolen goods—and, increasingly, in human beings. Undercover investigations often encompass a range of related offenses, including prostitution and financial crimes, such as money laundering and the violation of customs and excise laws. However, these surface similarities should not conceal profound trans-Atlantic differences between the ways investigators use undercover tactics, between the sorts of targets against whom they are willing to array such tactics, and between the purposes for which investigators choose to deploy them. What sets American uses of undercover tactics apart from their French, Italian, and German counterparts is the willingness of American law enforcement agencies to use such tactics against a much wider range of offenders and offenses. This range includes high-status offenders, whom American undercover tactics regularly implicate in public corruption and complex financial crimes. And in the realm of organized crime itself, this range includes participants in the ecology of organized crime who are not themselves members of criminal organizations. This chapter will contrast the targeting decisions of American and European law enforcement agencies in their design of undercover operations and will contend in Section “The Impact of Subject Matter Restrictions on How Undercover Operations Are Targeted” that the lack of subject matter restrictions on American undercover operations makes it easier for American law enforcement agencies to use such investigations to target elites who are not themselves members of criminal J.E. Ross (&) College of Law, University of Illinois, 504 E. Pennsylvania Avenue, Champaign, IL 61820, USA e-mail: [email protected] © Springer International Publishing AG 2017 H. Nelen and D. Siegel (eds.), Contemporary Organized Crime, Studies of Organized Crime 16, DOI 10.1007/978-3-319-55973-5_14

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organizations as well as ordinary consumers whose demand for illegal commodities fuels the supply of illicit commodities. American commentators defend such undercover operations on egalitarian grounds, while European law enforcement agencies eschew such investigations because they do not target the membership of criminal organizations. Sections “Historical Underpinnings of American Practices: Urban Vice Enforcement in the Progressive Era and Beyond” and “Undercover Tactics Among Sociologists, Journalists, and Other Moral Entrepreneurs” suggest that the use of undercover tactics against broad sectors of society has a long history in the United States among progressive social reformers, social scientists, private detectives, and law enforcement, even before the advent of Prohibition—and that this tradition habituated the American public to the populist use of undercover tactics to expose the experiences of underprivileged sectors of society, as well as the corruption of local elites. Section “Undercover Populism and the Fight Against Organized Crime: The Case of Reverse Sting Operations in German and American Counterpoint” in turn compares the willingness of German and American law enforcement agencies to offer criminal goods or services in so-called “reverse undercover stings.” Such operations have been criticized, in Europe, for targeting people on the basis of their ability to pay, that is to say, based only on their predisposition to purchase illegal goods or services, rather than on their membership in illegal organizations that are themselves in the business of selling such commodities. The research draws on interviews with law enforcement agencies in the United States and Germany. Despite the frequently made claim that European law enforcement agencies will not conduct such undercover operations at all, my empirical study of such investigations concludes that law enforcement agencies in both countries display some willingness to use to operations against organized crime targets, although the study suggests that German approaches to this question can be divided into a “crime avoidance,” “harm avoidance,” and “balance of evils” approaches, which correspond to different degrees of willingness to deploy such tactics against members of criminal organizations. By contrast, American law enforcement agencies are far more willing than their German counterparts to use such tactics in a variety of ways that originate criminal opportunities without closely mimicking the context in which such opportunities arise in their targets’ day-to-day environment. However, the greatest difference between American and German approaches to reverse sting operations resides in the categorical unwillingness of German law enforcement agencies to offer illegal goods and services to retail customers or opportunistic offenders, who are not themselves members of organized crime. By contrast, the use of undercover operations to target drug users, men who solicit prostitutes, or opportunistic thieves is a mainstay of local American sting operations.

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The Impact of Subject Matter Restrictions on How Undercover Operations Are Targeted A number of systemic differences account for these disparities between the types of offenders and offenses that investigators are willing to target undercover. First and foremost among these structural preconditions is the lack of subject matter limitations on American undercover tactics—which is itself due to the absence of any constitutional warrant requirement for interactive human intelligence. The U.S. Supreme Court has held that undercover operations do not amount to a search or seizure within the meaning of those terms under the Fourth Amendment to the U.S. Constitution.1 In particular, the U.S. Supreme Court takes the position that people assume the risk of betrayal by those in whom they confide.2 Targets of undercover investigations therefore lack a protected privacy interest in the information they impart to informants or undercover agents, or in the places to which they willingly admit such government agents, or in the crimes which they allow such agents to witness. Accordingly, the state does not invade a constitutionally protected privacy interest when it uses undercover agents or informants to elicit incriminating statements from their targets, or to observe or assist their targets in committing a crime. By contrast, the U.S. Supreme Court treats electronic eavesdropping as an invasion of privacy requiring advance judicial authorization3; and constitutional protection against electronic eavesdropping resulted in the enactment of federal legislation that sets out a mandatory warrant procedure and limits electronic eavesdropping to the investigation of serious offenses, which the statute explicitly enumerates.4 Unlike the U.S. Supreme Court, the European Court of Human Rights does not afford interactive and electronic surveillance separate treatment. The European Court of Human Rights holds both infiltration and electronic surveillance to burden protected privacy interests protected under the European Convention of Human Rights, Article 8. For that reason, the Court requires member states that wish to authorize such investigations to do so by statute, which must not only create a warrant requirement but which must spell out the crimes against which such tactics may be used.5 Because the European Convention on Human Rights requires proportionality between the invasiveness of investigative tactics and the seriousness of the crimes against which they are deployed—and because both interactive and electronic surveillance are treated as significantly invasive—national legislation may permit undercover tactics to be used only against serious criminal offenses. Accordingly, France, Italy, and Germany statutorily restrict such tactics to the

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United States v. White, 401 U.S. 745 (1971). Id. 3 Katz v. United States, 389 U.S. 347 (1967). 4 Title III Omnibus Crime Control Act & Safe Streets Act, 18 U.S.C. 2510–2520. 5 Huvig v. France, 12 EHRR 528, 24 April 1990. 2

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investigation of offenses associated with terrorism or organized crime (even if, in actual practice, allow certain undercover tactics such as undercover drug purchases, to be used against many relatively petty drug trafficking offenses that take place outside any significant organizational structure). Spikes in public concern about other types of offenses (such as the distribution of child pornography, theft of valuable masterpieces and historical artifacts, arms trafficking, and human trafficking) have added new subject matters to that list. But many of these offenses are associated with organized crime, so that much of this expansion simply fleshes out the category of offenses for which undercover operations have already been legitimated, if not always explicitly authorized. No such subject matter restrictions burden American uses of undercover tactics. In the absence of statutory constraints, American law enforcement agencies make varied use of such operations against consensual and conspiratorial offenses that are not (only) committed by Mafia-like organizations. Targeted offenses include bribery, price-fixing, insider trading, and other forms of dishonesty committed by high-status offenders in elite institutions, including lawyers, Congressmen, judges, law enforcement officers, bankers, commodities traders, and corporate boards. By contrast, France, Germany, and Italy make much less use of undercover tactics against their own elites, focusing as they do on local red light districts and on international trafficking networks (Ross 2004, 2007). In particular, the absence of subject matter limitations means that American investigators may use undercover operations against financial crimes and forms of public corruption that have no link to organized crime. Examples of such investigations include the undercover price-fixing investigation of ADM; the “Greylord” undercover investigation of Cook County judges, bailiffs, and defense attorneys for fixing the outcomes of criminal cases in exchange for the payment of bribes; the ABSCAM corruption investigation of U.S. Congressmen; and the undercover investigation of Chicago commodities traders. American crime-fighting tactics, and drug interdiction in particular, have frequently been criticized for their disparately harsh impact on minority communities, and American incarceration rates remain much higher than their European counterparts (see for example, Alexander 2010). At the same time, however, in what may be a manifestation of what James Whitman calls the American tendency to “level down” their treatment of high-status offenders to strip them of their privileges, including that of relative insulation from police scrutiny (Whitman 2003), American law enforcement displays a greater willingness to deploy undercover tactics against corrupt elites outside the realm of organized crime—and also against the relatively large ecology of actors who benefit from organized crime but whom Europeans rarely charge because these targets are not themselves members of criminal organizations. This broader range of offenders includes retail drug customers, clients of prostitutes, and the corrupt cops, lawyers, and judges who assist them. Scholarly commentators like Tracey Meares have argued that sting operations that target the middle-class suburban drug clients of inner-city drug dealers have the [egalitarian] virtue of subjecting relatively affluent, suburban drug users to the same investigative tactics that are commonplace against the less privileged dealers in

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predominantly poor, inner-city neighborhoods, which she defends in light of the symbiotic relationship between supply and demand (Meares 1998).6 Similar arguments underlie decoy operations in which undercover police officers posing as prostitutes target the customer base of prostitutes, rather than prostitutes themselves. In the United States, this broadly speaking “populist” use of undercover tactics— targeting consumers of vice as well as the corrupt elites who act as enablers— coexists with the more usual deployment of such tactics against more marginalized members of society. By contrast, French, German, and Italian statutes that regulate undercover tactics focus more narrowly on offenses associated with organized crime. Italy’s legislature has not accorded prosecutors the power to use infiltration as a tool against public corruption (except that the prosecutors may deploy undercover agents to investigate crimes of extortion and usury, which may include some forms of public corruption, Ross 2004). This limitation seems not to have impeded the “mani puliti” investigations which, in the 1990s, laid bare corrupt financing arrangements between political parties and businessmen, leading to an abrupt change of governments. Though the unavailability of infiltration may serve Parliamentarians’ own interests, it also protects prosecutors from one kind of social cost. The unavailability of undercover techniques for such investigations may have helped secure prosecutors from the charge of having manipulated or involved themselves in the many shady political relationships they exposed during the course of those highly controversial investigations. Preserving the integrity of the judiciary from taint by the corrupt activities they investigate may be paramount at a time when the judiciary’s activism against members of the political elite receives its primary warrant from a public perception that the judiciary remains relatively free from the corruption rampant in other sectors of the government. Italy allows extortion to be investigated undercover, but primarily uses such tactics against established criminal organizations, rather than against corrupt politicians (Ross 2004). France allows the use of undercover tactics against bribery but has never yet prosecuted a case in which it publicly acknowledged the use of undercover tactics against corrupt elites. Germany, too, very rarely targets corrupt elites for undercover operations, though undercover operations against organized crime sometimes yield collateral evidence against corrupt officials who assist established criminal organizations. Under the U. S. RICO statute, however, even largely legitimate companies, such as construction companies doing business with the U.S. Department of Defense, or an “association-in-fact” between corrupt commodities traders, can be deemed a racketeering enterprise, if they engage in a pattern of racketeering activity. European subject matter limitations also constrain less lofty undercover operations of men who frequent prostitutes or purchase retail quantities of narcotics for 6

Interdisciplinary Program Series Transcript, The New Chicago School: Myth or Reality? 5 U. Chi. L. Sch. Roundtable 1, 10 (1998) (quoting Tracey L. Meares) (“Reverse stings ensure that residents remain in the community. Not only that, reverse stings redistribute the consequences of law enforcement racially because it turns out that people who buy drugs are much more demographically varied than those who sell them”).

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their own use. Such offenses are not serious enough to justify the use of undercover tactics under the relevant statutes. Worse, such operations expose their operatives to allegations of entrapment, by which French, Italian, and German jurisprudence refers to operations which put the government at the origin of a criminal opportunity, instead of restricting undercover operatives to the role of logistical support staff or passive middlemen (Ross 2007). Similar constraints prohibit the use of bait cars to set traps for car thieves, or the voluntary offer or payment of bribes (as distinguished from the coerced payment of bribes by victims of extortion).

Historical Underpinnings of American Practices: Urban Vice Enforcement in the Progressive Era and Beyond American willingness to target corrupt elites as well as ordinary people who create the demand for the services provided by organized crime can be traced to the history of American vice policing, particularly in large urban centers, where crackdowns on saloons, dancing halls, brothels, and gambling parlors were pursued by religious activists and undercover entrepreneurs hired by progressive reformers in the late nineteenth and early twentieth centuries, often against the wishes of the police, whose corruption undercover tactics had a tendency to expose (Fronc 2009; Zacks 2012). But the agenda of undercover reformers was not limited to cracking down on vice. The bigger aim was to change the social conditions that underlay prostitution— and to keep an eye on the leisure habits of recent immigrants. In New York, prominent social reformers like Lillian Wald and Jacob Riis supported organizations like the Tenement House Committee and the Committee of Fifteen solicited recommendations from organizations like the Central Federation of Churches and Christian Workers and the Church Association for the Advancement of the Interests of Labor for “insider investigators” who were familiar with the neighborhoods and languages of recent immigrants and could serve as undercover investigators of prostitution in tenement housing. Undercover investigators operated in teams of two, paying tenement house prostitutes for their services and then filling out pre-formatted reports that were signed by a notary public and that could serve as sworn testimony admissible in a court of law, with the aim of suggesting reforms to housing conditions that would decrease the incidence of prostitution. Undercover agents would pay the prostitutes in the presence of their investigating partner, and the reports were used not only against the women but against the owners of tenement houses who allowed their buildings to be used by prostitutes; not incidentally, these investigations exposed the graft, complicity, and corruption of the local police department which tolerated the presence of “disorderly houses” in immigrant neighborhoods. Similar undercover operations targeted saloons and gambling halls in immigrant neighborhoods, as well as dance halls where White and Black New Yorkers

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mingled. Fronc (2009) has documented the extent to which these operations— undertaken by social reform organizations like the Committee of Fourteen and a variety of anti-saloon activists such as the Anthony Comstock Society for the Suppression of Vice—represented efforts by “nativist” reformers committed to racial segregation and suspicious of recent immigrants to police the sexual and leisure habits of immigrants and racial minorities. Many of these reform societies hired not only volunteers from these communities to serve as undercover agents but private detectives who had been trained by the National Pinkerton Detective Agency to gather evidence about saloons that were selling liquor outside of approved hours, with the aim of shutting down such establishments. But moral entrepreneurs like Anthony Comstock also used undercover tactics to investigate the Art Students’ League in New York for selling catalogs that featured artistic representations of nudes. The Committee of Fourteen would engineer interracial encounters in saloons and dance halls that welcomed both black and white customers, and would then document that liquor was being served to women under the age of 18, as a pretext for shutting down such establishments—even though New York state had passed strong anti-discrimination laws in 1895, 1905, and 1909. (Fronc at 103.) Fronc described the Committee of Fourteen’s undercover tactics as an effort “to protect[] the morality of white women..[who] were portrayed as ‘victims’—of alcohol or seduction, or of their own bad judgment,” gathering evidence of “intoxicated white women in black-owned establishments as justifications for sanctioning black proprietors.” Fronc at 100. Social reformers were able to use undercover tactics successfully, Fronc shows, because they were allowed to conduct their own raids, make their own arrests, and use their sworn affidavits and reports as evidence, pursuing primarily a strategy of attacking the liquor licenses of the establishments they targeted, alongside criminal sanctions against individual purveyors of vice. This not only kept a state monopoly of undercover tactics from taking root; it also meant that moral entrepreneurs could circumvent an unwilling police, while exposing the corruption and complicity of urban police departments. These private actors often ignored the public police, though they sometimes served or competed with its local representatives and sometimes deployed undercover tactics against the police, by exposing police corruption in cities dominated by powerful political bosses. In New York City, for example, during the Progressive era, prosecutors who wanted to fight prostitution hired Pinkerton undercover agents, in the face of a recalcitrant and complicit police department that tolerated brothels in exchange for bribes. Periodic scandals and reform commissions brought Theodore Roosevelt to power as a New York police commissioner in 1892, with what Roosevelt took to be a mandate to eliminate brothels and to strictly enforce liquor regulations, including, most controversially, those that prohibited the sale of liquor on Sundays. In the face of resistance from the police rank and file, Theodore Roosevelt allied himself with social reformers like the Reverend Parkhurst, who himself had gone undercover, with other social reformers, to document many brothels that the New York police had claimed not to know about. Roosevelt came to be celebrated in the press for going undercover himself, on midnight rambles with the social reformer, journalist,

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and photographer Jacob Riis and with others, to investigate and surprise police officers who slept or frequented saloons and brothels while on duty (Zacks 2012). In sum, American undercover tactics were a form of social control that supplanted or supplemented the exercise of police power in many spaces that were under-policed and where the law enforcement presence was often ineffective, corrupt, or both. Sometimes the private and public sector worked together, as Morn (1982) has shown; sometimes in parallel; sometimes one used the other, and sometimes there was conflict between them; but they were always in dialogue. In continental Europe, by contrast, undercover tactics were largely the preserve of the state, in both its local and centralized incarnations.

Undercover Tactics Among Sociologists, Journalists, and Other Moral Entrepreneurs U.S. law enforcement agencies are thus more willing than their European counterparts to use undercover tactics against providers and consumers of illegal commodities alike, and to use undercover agents to infiltrate elite milieus. This features of American policing must be situated in a broader cultural context in which cultural elites appropriate undercover tactics for a variety of purposes, many of which are unrelated to the search for evidence or to criminal prosecution. In particular, the undercover method appealed to a voyeuristic strain in American sociology and journalism, as practiced by the so-called “down and outers,” most famously Stephen Crane, Hutchins Hapgood, Jack London, and Nelly Bly who “adopted the sartorial style of tramps, waitresses, and factory operators to investigate and subsequently educate the reading public about the burgeoning underclass…. Undercover journalists posed as sweat shop workers, harried waitresses and inmates in insane asylum, writing about their experiences in these and other “sentimental roles with which the public could easily sympathize.” (Fronc 2009 at 13.) As chronicled by Pittenger (2012), social scientists, writers, and reformers frequently went undercover across porous class lines and even across variously configured racial divides—from the late nineteenth century through the 1950s—to develop vivid accounts of the lives and struggles of workers, tramps, the unemployed, and of ethnic, religious, and racial minorities. Such accounts were themselves strategies for breaking down social barriers, as female sociologists in the late nineteenth and early twentieth centuries used undercover tactics to gain entry to male-dominated fields like academia. According to Fronc, “the undercover technique allowed them to do the work for which they were trained in graduate school. [These women] succeeded in authoring and publishing important articles that appeared in leading professional journals, and they preceded what is known as the Chicago School of Sociology by a decade.” Examples of undercover work that came to be characterized as “participant observation” included the work of Annie MacLean, who published “Two Weeks in

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Department Stores” in the American Journal of Sociology in 1899, after a stint as a shopgirl in a Chicago department store. The privileged first-person perspective allowed MacLean to “illuminate some of the difficulties employees faced, such as the unexpected rudeness of customers and the discomfort in not being able to sit down all day…[and] the many indignities that women in these positions suffered” (Fronc at 15). Undercover tactics eventually became mainstream in academia, until they were eventually rejected as “unscientific.” In the 1950s, the Chicago School of sociology became known for pioneering new immersion methods of urban ethnography and interpretive sociology, through the work of Everett Hughes, Lloyd Warner, and Herbert Blumer, who championed the now-classic methods of urban ethnography and interpretive sociology. Martin Bulmer, who has chronicled the development of these new research methods by the Chicago school (Bulmer 1984), has also written about the methodological debate within the field of sociology about the ethics of using undercover methods to investigate social groups in their natural settings (Bulmer 1980). From the 1950s onwards, American sociologists went undercover to observe gay sexual mores in public bathrooms (Humphreys 1970); to infiltrate Pentecostal churches to document the practice of speaking in tongues (Homan 1978, 1980); and to infiltrate millennial cults (Festinger et al. 1956). Once conceived of as a form of participant observation—known as “complete participation”—the undercover method fell from grace from the late 1950s on, though deep immersion methods—without the use of deception or disguise—have been used, more recently, by sociologist Venkatesh (2008), who has written about what it is like to be a gang-leader, while sociologist Goffman (2014) has written ethnographically about what it is like to be on the run from the police in the high-crime inner-city neighborhoods of Philadelphia. In the United States, deep immersion and participant observation continue to be used widely both in journalistic and ethnographic investigations of inner-city life, along with administrative enforcement of anti-discrimination norms through undercover discrimination testers and the use of undercover “field experiments” by psychologists to study the prevalence of cheating (Ariely 2008). Modern-day American restaurant critics don elaborate disguises to simulate the experience of ordinary restaurant customers, or, in the case of former New York Times restaurant critic Frank Bruni, go undercover as waiters, in order to tell the public about what it is like to work in a restaurant. Secret shoppers, TV programs like “undercover boss,” and private anti-crime initiatives, like the TV show “To Catch a Predator” use undercover tactics either to mimic the experience of ordinary members of the public; to reveal to the powerful what the workplace looks like to their employees; or to respond in an entrepreneurial manner to moral panics about sex offenders who prey on gullible children on the Internet. In Germany, undercover tactics are far less commonplace either in sociology or in journalism than in the United States, though Pittenger (2012) notes early German examples from the nineteenth century. In the second half of the twentieth century, German journalist Guenther Wallraff became famous, in Germany, for taking a job with the Bild magazine in Germany, to expose its muckraking tactics; it was his

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unheard use of undercover tactics that made him an overnight sensation and that became the basis for his fame as he continued to infiltrate a variety of different social settings to investigate, for example, the working conditions of Turkish migrant workers (Wallraff 1966, 1985a, b). Far from being the exclusive preserve of the state, accordingly, American undercover tactics are an established technique for obtaining and revealing the “insider’s view” of a variety of social milieus. They can be used by cultural elites to make the experiences of the underprivileged, the unsophisticated, or the ordinary accessible to others and to invite identification and empathy across ethnic, geographic, cultural, and class lines in a highly heterogeneous society. If Europeans view undercover tactics as quintessentially a form of state surveillance—as a form of trickery practiced by the powerful against the weak—Americans view undercover tactics as an epistemological strategy across all sectors of society, with the state struggling to keep pace with private variants of similar methodologies.

Undercover Populism and the Fight Against Organized Crime: The Case of Reverse Sting Operations in German and American Counterpoint Differences Between American and German Targeting Decisions In the United States, there is thus a long-standing populist tradition of appropriating undercover methods as a widespread epistemological strategy to expose the sins of the powerful and the sufferings of the downtrodden. In the realm of policing, this translates into a willingness to use undercover tactics broadly, to target not only organized crime but the fuller ecology of actors who supported criminal networks— including both corrupt enablers and ordinary consumers. The fragmented nature of American policing, coupled with the federal structure of governance, makes it possible for criminal investigators to use such tactics against those who facilitate and benefit from organized crime without themselves being members. Marx (1988) has chronicled the way in which federal agencies developed the skills and expertise to deploy undercover tactics against corrupt local police, and against other elite enclaves, both in business and in government. But criminal organizations not only benefit from corrupt enablers from above but also from popular demand below. If federal investigators are politically independent enough to target corrupt elites for undercover operations, state and local law enforcement agencies frequently target consumers of vice, including the customer bases of gambling, prostitution, and narcotics operations. Undercover operations known as “reverse sting operations” deploy undercover agents to offer illicit commodities for sale instead of buying them. The very different approaches that American and German law enforcement agencies take to

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such operations reveal the much greater willingness of American investigators to disrupt organized crime holistically, by investigating the social and economic context in which criminal organizations are embedded. The targets of such operations may not be political, social, or economic elites, though such elites are sometimes captured along with more ordinary consumers of illicit goods and services. What such investigations challenge, however, is the notion, so central to the legitimation of undercover tactics in Europe, that criminal organizations are sufficiently distinct from the rest of society that infiltration as an investigative tactic need not spill over into the lives of the general public, that is to say, of people who are not themselves professional criminals. How then do American and German policing systems differ in their regulation of reverse undercover stings? In American investigations of organized crime, as in the investigation of terrorism, a populist strain of undercover policing manifests itself in the American willingness to use undercover tactics against individuals who are not themselves members of such organizations but who belong to the ecosystem—the ecology of actors—in which organized crime operates. By contrast, German undercover operations largely target membership in an established criminal organization. U.S. law enforcement displays a greater willingness than its German counterpart to police dispositions, through anti-terror stings, bait cars, prostitution decoys, sex predator stings, child porn stings. All such operations position undercover agents as providers rather than as consumers of criminal opportunities. At the same time, however, differences between American and German tactics against targets who are members of criminal organizations are not as categorical as some commentators have suggested, especially with regard to the use of reverse sting operations. And in both the United States and Europe, undercover tactics serve as a tool of moral panics. But in the United States, these can sometimes encompass elites who are relatively insulated from moralizing scrutiny in Europe. The very different ways in which German and American investigators regard so-called “reverse sting operations” illustrate the greater American willingness to use undercover tactics against the ecology of actors who support organized crime without exposing themselves to the perils of membership. Evidence for these differences comes from 250 open-ended qualitative interviews I conducted with American and German undercover agents, police supervisors, and prosecutors from 2001 to the present, to learn more about the ways in which regulatory constraints translate into undercover practices. Based upon these interviews, as further detailed below, I have found that American law enforcement readily simulates the supply of illegal goods and services in order to target opportunistic offenders who create the demand or who assist and benefit from organized crime indirectly, without membership in the organizations whose crimes they enable or conceal. In the literature on undercover policing (Marx 1988), German police and prosecutors are said to reject reverse sting operations on principle, which, indeed, many indicated that they did. The reasons many German supervisors of undercover operations gave were that reverse operations do not reveal anything about the targets’ criminal activities, about the

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location of their contraband, or about whether and how they conduct their illegal business, since the targets supply only the money for the illegal goods or services— not the distribution network, the contraband itself, or intelligence about their operations. A number of German prosecutors and covert policing specialists also claimed that reverse stings reveal nothing but the pure willingness to commit a crime. Police and prosecutors worried that they were instigating criminal activity, rather than simply inserting themselves into an existing chain of distribution. They also worried about incurring criminal liability for committing a crime (since Germany has enacted no immunities for undercover agents who participate in criminal offenses) or that defendants’ would receive discounted sentences on grounds of entrapment, if the government originated a criminal opportunity.

Reverse Sting Operations in Germany: Crime Avoidance, Harm Avoidance, and the Balance of Evils In many interviews, however, German police and prosecutors indicated that they did sometimes allow undercover agents to offer illegal goods or services to their targets—and, sometimes, not only to offer but actually to relinquish illegal commodities. I will contrast the considerations that guide German police and prosecutors with those that guide American law enforcement agents and prosecutors, arguing that both sides are willing to conduct reverse stings under certain conditions, but that the relevant considerations differ substantially. The biggest difference between German and American approaches to reverse sting operations, I contend, is that German police and prosecutors, unlike their American counterparts, will not supply or offer to supply illegal goods and services to targets who are not themselves dealers in such commodities. In the United States, by contrast, reverse operations that target the demand for illegal commodities—including gambling, prostitution, and drugs—respond to the perceived class bias inherent in targeting primarily the impoverished providers of illegal goods and services that cater to a (comparatively) more affluent and privileged clientele. Reverse sting operations remain rare and highly controversial in Germany. From the perspective of many police officers, prosecutors, and judges who addressed such tactics during interviews, reverse stings are problematic because a tactic that calls for undercover agents to offer illegal goods or services to their targets puts the government itself in the position of acting like a criminal organization, while targeting customers primarily on the basis of their willingness to pay. Nonetheless, a number of police officials and prosecutors expressed a willingness to use such tactics when their targets were themselves providers of similar goods and services (such as drugs or sex-for-pay). In fact, German police officials and prosecutors take one of three competing views of such undercover investigations. I will call these the “crime avoidance,” the “harm avoidance,” and the “balance of evils” approaches.

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Officials who took the “crime avoidance” approach focused on the risk that offering illegal goods and services for sale may expose undercover agents to criminal liability for the very trafficking offenses that they are investigating and/or for instigating others to commit a crime; they also worried that such operations might be treated as a form of entrapment, because they actively originate a criminal opportunity, instead of merely enabling the undercover agent to witness the offense without playing a principal causal role in its occurrence. A police officer echoed assertions of many other respondents when he reported that “it would be considered a form of instigation for us even to offer drugs for sale.” For this reason, many police officers and prosecutors reported that they rejected reverse operations altogether. This prohibition is understood not just based on the risk of losing control of dangerous substances, which is not unique to the sale of narcotics. A German defense lawyer who had previously been both a police officer and a prosecutor recalled an undercover operation in which prosecutors vetoed a plan by the police to allow the undercover agent to sell stolen watches. Prosecutors were not concerned about losing control of the watches or about provoking the commission of an impossible offense, for that matter, as the watches really were stolen. German prosecutors considered the scheme a form of instigation to traffic in stolen property and thus both a form of illegal activity and entrapment. The criminal opportunity would have originated with the police instead of the target; the undercover agent would not merely have been a fungible player in a transaction that would have occurred without him. And the prosecutors believed that the sale would not have been likely to yield evidence of the target’s involvement in other, similar activity. Other German prosecutors and police officials did worry more about harm avoidance or entrapment. These prosecutors and officers reared relinquishing narcotics (or other contraband) to users or others who would potentially release them into the market. Focusing on risk of harm to others, a number of police officers and prosecutors viewed reverse operations as acceptable if the undercover agent merely showed the target narcotics without relinquishing possession, or if the undercover agent assisted one target in selling drugs to another, provided that he secured the drugs in the end (and that he had no role in supplying them.). Most prosecutors who tolerated reverse operations agreed that reverse stings were only acceptable if the drugs were seized at the time of transaction. One prosecutor was willing to envisage reverse operations noted that “a reverse may be a more effective tool against drug dealers, because the loss of a shipment of cocaine may not be a big deal for them, while losing their cash leaves a gaping hole in their operations.” “In principle,” a covert policing supervisor explained, “we could offer drugs for sale and then arrest the buyer at the time of the transaction, making sure not to lose control over the drugs.” Some prosecutors thought that an undercover agent could pretend to sell drugs to a target, so long as he never brought any real drugs to the transactions. One police officer recalled having offered to sell someone as much as a kilogram of cocaine, defending the stratagem on the grounds that “we never brought the drugs to the transaction but just arrested the defendants when they showed up with the money.”

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A number of prosecutors noted that reverse operations have sometimes been conducted for stolen goods, forged passports, and counterfeit currency as well as narcotics. In some such operations, the police did bring the contraband to the final meeting. Claiming that Poland allows the police to release drugs into circulation, a police official claimed that, “we don’t, because the stink of illegality attaches to this tactic.” The transaction could be justified, a prosecutor explained, “so long as the undercover agent doesn’t himself become part of the market for drugs; he can’t sell drugs or hand them over to someone who’s not under surveillance, without making an immediate seizure and arrest.” One reason police and prosecutors were so hesitant to offer real drugs for sale was simply the risk of losing control of the merchandise and inadvertently contributing to the market for drugs. A prosecutor recalled one reverse operation in which the undercover agent showed the target 17 kg of cocaine. “The target paid him, and just then the transmitter failed, and the target got away with all 17 kg of cocaine. The whole incident was investigated,” but although the undercover agent had consummated a prohibited sale of narcotics, no charges were brought against him. Other police officials and prosecutors took a “balance of evils” approach to such tactics. Some prosecutors reported that they had allowed drug samples to be relinquished in the hope of setting up a bigger transaction. A number of other prosecutors reported permitting swaps of one kind of drug for another, or exchanging precursor substances for the final product. In this way, they never actually distributed drugs or risked having them stolen. The balance of evils approach is not to be confused with the necessity defense, which is unavailable to one who intentionally manufactures the need for criminal conduct. That the analysis of undercover lawbreaking has moved beyond the application of the necessity defense to focus on investigative utility and a comparison of societal costs with investigative benefits is suggested by a prosecutor’s decision to permit undercover agents to relinquish precursor substances whenever equivalent or greater amounts can be withdrawn from the market. “An undercover agent held himself out as a supplier of precursor chemicals for the production of ecstasy,” the prosecutor recalled. “Selling precursor chemicals is a crime, and could lead to the production of about 1000 tablets of ecstasy, and there was the risk that he would never hear from the target again,” that is, that the target would never come up with the finished product for the undercover agent. “So I said, ask the target for 1000 ecstasy tablets in exchange for the precursor chemicals. That way, we will have withdrawn ecstasy from the market in roughly the equivalent amount that the undercover agent was enabling him to produce. Then the target ordered 1000 L of the precursor chemical, which we produced by adulterating the precursor chemical with a roughly similar substance, and we got roughly 200,000 ecstasy tablets and 100,000 Euros from him in exchange,” with the aim of following the precursor substance to its intended destination in the Netherlands. Likewise, covert policing supervisors who were unwilling to conduct reverse operations using narcotics were more willing to provide their targets with precursor chemicals, “because many of these substances are legally obtainable, just not in

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these quantities.” More cautious prosecutors indicated that they only authorize the police to provide targets with precursor chemicals when the quantity provided was insufficient to permit the manufacture of illegal substances. More aggressive prosecutors were willing to allow undercover agents to supply precursor chemicals to a laboratory, if the building could be surveilled and the final product seized at the end of the investigation. A number of prosecutors reported authorizing exchanges of heroin for cocaine, to avoid the usual ban on selling narcotics outright. Some prosecutors went further and authorized the exchange of drugs against counterfeit currency or weapons, dispensing with the justification that exchanges of drugs cancel each other out because of the fungibility of social harms, though they still insisted on the immediate seizure of drugs following the transaction. These of course, were not cases in which the request to relinquish a drug sample developed as an unexpected incident to an undercover buy, so that the necessity defense would not have been applicable. The ecstasy transaction had been structured from the outset as a sale of a precursor substance, for the purpose of later buying a larger quantity of the finished product, and the heroin for cocaine transaction simply substituted a barter for a sale. These undercover transactions were thus a departure from the usual prohibition against reverse buys, or sales of contraband, but in the case of the ecstasy investigation, the prosecutor authorized the sale of the sample to facilitate the subsequent exchange of a diluted precursor product for the finished product, on the understanding that the quantity sold would eventually be recovered. As the prosecutor explained, “relinquishing narcotics becomes possible either when it makes the later deal possible, or when the transaction has been structured from the outset as a swap of one drug for another. What we still can’t do is simply sell the drugs outright, except if the aim is to follow and seize the drugs eventually,” as is typical of controlled deliveries. And while a reverse sting operation usually results in the seizure of funds and the arrest of the targets at the time of the transaction, trading one type of drug for another does release drugs into the marketplace. For the latter group of police officials and prosecutors, the dilemma about reverse sting operations shifted from whether to abide by the deontological prohibition of selling or relinquishing contraband to the instrumental balancing of investigative costs and benefits. Instead of evaluating the offer of contraband as a the possible violation of a general norm that applies to police and civilians alike, this approach evaluates reverse stings according to police-specific norms that weigh investigative costs against investigative benefits. On this view, offering drugs for sale undercover is no longer a quasi-criminal form of conduct but an investigative activity that must be judged by its effectiveness at crime control, which, for those German officials in favor of reverse stings, depends on the net reduction of available contraband. Similar cost-benefit considerations apply outside of the narcotics context. When informants help a criminal organization to forge vehicle titles, it is normally illegal to relinquish possession of the forged documents and vehicles, but some German prosecutors will allow undercover agents to do so in order to discover evidence of a more serious crime. Nor did prosecutors always insist on a simultaneous exchange

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of equivalent quantities of contraband. As in the narcotics context, a German prosecutor decided that the investigative utility of allowing a crime to be committed in the present could be weighed against the social harm of future offenses that could be proved if the forged documents and stolen vehicles were relinquished, so that the criminal conduct must now be evaluated as an investigative act, in terms of its investigative utility, not as ordinary prohibited conduct. What comes to be elaborated, in this way, is a set of investigative norms to replace the general norms of the criminal law which would apply to the undercover operative in the same way as it does to any ordinary citizen and which would code investigative conduct as ordinary criminal activity whose ulterior purpose is largely immaterial to the question of guilt or innocence. Notions of investigative expediency thus replace the weighing of harms under the substantive criminal law of necessity. Despite this flexibility in outlook, German prosecutors remain loath to abandon the nominal prohibition against undercover participation in criminal activity. “The necessity defense should be enough to protect the police from criminal liability,” a prosecutor opined. Echoing a sentiment voiced almost unanimously by police and prosecutors alike, he stated, “taking part in a crime may be unavoidable, and the undercover agent should be exonerated after the fact if he has to do it, but criminal activity should never be sanctioned in advance.” Police and prosecutors worried that explicit immunities would upset the tacit tactical accommodations that police and prosecutors have worked out over time, attracting critical scrutiny to those working arrangements and creating uncertainty about what was acceptable. Many German critics thus see reverse undercover stings as at best lazy a substitute for seizing drugs directly and learning about the structure of existing distribution networks, while those who employ such tactics use them as an alternative means of investigating criminal organizations. None of the police officers or prosecutors interviewed was willing to offer drugs, guns, false passports, or other contraband to retail end-users, and none approved of the use of undercover decoys posing as prostitutes to arrest the demand for such services.

Reverse Sting Operations in the United States American law enforcement agencies tend to use reverse operations in two very different ways. One approach, favored by Drug Enforcement Administration, treats reverse stings as part of an integrated approach to drug interdiction targeting those participants in the drug business who make volume purchases for the organization without handling the distribution end of the business. DEA agents reported that reverse stings are also useful for targeting dealers when the market is either so flooded with narcotics that suppliers hold back on drug shipments to drive prices up, or when successful interdiction efforts have made it difficult for dealers to obtain large quantities of drugs for resale. A former DEA supervisor recalled, “When we couldn’t get targets to come up with significant drugs to sell us, we’d sell them drugs ourselves, or tell them where they could find cocaine to steal, and we’d offer

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to help them steal it, and then we’d learn who they were gonna sell to, and their pricing.” In a separate investigation, a former DEA agent recalled targeting a drug dealer who agreed to purchase five kilograms of cocaine from an informant when his supply chain was temporarily disrupted. “When the guy showed up, he didn’t even have the money to pay for the drugs, but he said he would get the money to pay for the drugs,” and this proved sufficient probable cause to effectuate an arrest for attempted possession of cocaine. Reverse stings are popular with American investigators in part because such operations allow the police to conduct a large transaction without having to build up to it by making multiple smaller buys—a costly technique, as the police have to relinquish the buy money, with little chance of recovering it later. American law enforcement officers also like reverse stings because the target can be sentenced for the full amount he wished to purchase, even if the police never produce it, and even if he never comes up with the full amount of the purchase money. A former narcotics investigator for a small police department recalled organizing a reverse sting with Colombian drug dealers. “We did the reverse because their source had dried up and we offered to sell them 700 kg on consignment. They came up with $200,000 as the downstroke [downpayment]. We gave them five or ten kilograms in exchange and took them down,” as the police did not want to relinquish the drugs. Such investigations are useful, a former DEA agent explained, because they allow investigators to conduct surveillance that leads them to the assets used to purchase narcotics and to members of the organization who are responsible for managing the group’s financial resources. Though such investigations rarely yield seizures of narcotics, to corroborate the targets’ criminal intent, a skilled undercover agent will draw the target out through conversations designed to make it clear that the target knows he is negotiating for the purchase of drugs. “We will hold several meetings with these targets, and we’ll have the agent mention coke at one of the earlier meetings.” Federal agents and drug task force officers also like to use reverse stings when the investigators have already focused their efforts on a particular individual based on accumulated intelligence. A former DEA supervisor recalled, “the municipal police, the US Attorney’s Office and the different federal agencies all met regularly to compile a list of top twenty narcotics violators, and we had come to target a particular drug dealer because his name appeared on the list. We checked his phone and prison records and identified his associates that way, and his top lieutenant, in particular. We then identified the lieutenant’s right-hand man and did an undercover buy from this particular associate of the lieutenant. After we arrested the associate, he cooperated and did an undercover buy from the lieutenant and he then identified a time and place when the lieutenant would be sitting on 15 kg of heroin. We then arrested the lieutenant and the lieutenant cooperated as well.” The lieutenant agreed to assist the DEA in a reverse undercover sting targeting the drug trafficker whose name appeared on the list of top twenty narcotics violators. The cooperator introduced an undercover agent to the target as a flight attendant who regularly imported heroin using his privileged position as a member of a flight crew. “We knew there was a shortage of heroin at the time, and the target was actively looking for a

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source, so this created the opportunity.” The target agreed to purchase heroin from the supposed flight attendant. The intelligence that the DEA had acquired prior to the reverse sting disposed of any concerns about whether the investigators had sufficient predication to offer the target this criminal opportunity, and, since the target was at the top of the organization’s hierarchy and the investigators had already made cases on his closest associates, they could afford to use an undercover technique such as a reverse that would not generate the further investigative leads that usually flow from buying (as opposed to selling) drugs undercover. Though reverse stings are often criticized in isolation, they can be used in tandem against different branches of the same organization to target different operations. Undercover buys and reverse stings can be two prongs of a three-pronged approach that targeted distribution cells, resupply and storage personnel, and those members of drug trafficking organizations who handled drug proceeds. In particular, reverse sting operations can also serve as means of identifying and tracing illegal activity, rather as a spur to government-instigated crime. A former DEA supervisor recalled opening storefront chemical plants that sold hydroponic equipment for marijuana or precursor chemicals for methamphetamine. “Our aim was to trace what the targets do with it. We’d put beepers in the containers [they bought]. Same with the lighting we sold them for growing hydroponic plants.” A former undercover agent for the FBI reported that he preferred using reverse stings as sources of intelligence rather than evidence. To draw out the investigation without having to produce drugs, “I’d meet with target and say I saw a lot of cops around, let’s delay things. In the meantime, I’d learn more about their networks and whom they’d call after our meeting.” Reverse stings are also popular with American law enforcement because they can be enormously lucrative. A former undercover agent for a state narcotics task force recalled putting out the word, through informants, that he had a large shipment of marijuana coming in from Mexico. He had selected a time when the supply of drugs in his area was relatively low. Then he waited for interested buyers to approach him. Eventually, he agreed to sell large quantities of marijuana to two separate buyers, for $100,000 and $500,000, respectively. In another reverse sting operation, the target gave him titles for several cars in the car dealership that they owned, as security for the drugs he had advanced to them for resale. “[The targets] were gonna take the titles back when they sold the drugs and had gotten me my money, but that didn’t happen, so the task force got to keep the cars that we now had titles to.” Such stings are unappealing to many European investigators, in part, because the undercover agent originates the opportunity rather than positioning himself as an intermediary between an incoming shipment of narcotics and an established set of customers. But they are also impractical for law enforcement agencies that are not permitted to put seized assets and seized drug shipments at the disposal of other undercover investigations and that cannot draw on a large infrastructure of seized assets to make themselves seem authentic. The negotiations for $500,000 worth of marijuana required an undercover agent to show the target the shipment. The former undercover agent recalled, “we brought up an especially good batch of marijuana

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from a seizure in Texas, and we showed the targets the dope in a trap car” with secret compartments. We drove them to a town where a big house had been seized from another case, and we used it four our meeting with the targets. We brought the dope there, too, and the target smelled it, touched it, and smoked it. Then he gave me $500,000, his friend gave me $100,000 and we took them down.” If German undercover agents have less recourse to seized assets to shore up their image as high-flying gangsters, the willingness of some police and prosecutors to show and sometimes even trade or relinquish contraband suggest that practical problems could be overcome when legal scruples could be surmounted. The biggest difference between American and German approaches to reverse sting operations turned out to concern the use of such tactics to target customers, rather than dealers looking to resupply their operations. This type of operation is the second major subtype of reverse operation. It is favored by local law enforcement, who use reverse operations to shut down open air drug markets, by targeting demand as well as supply. Thus American police sometimes use undercover buy-busts and reverse stings sequentially, setting up the reverse by making buys at a particular location and then replacing the regular street dealers with undercover officers who sell to unwitting customers before word of the buy-bust could reach the regular clientele. Similar tactics are used when police raid gambling parlors and then take bookmaking calls from customers, whom they subsequently arrest, or when police decoys pose as prostitutes to arrest customers who solicit sex for pay. American law enforcement treats demand as an integral part of the ecology of actors that enables organized crime to prosper. Tracey Meares has defended reverse operations on essentially egalitarian grounds, arguing that such investigations tend to lead to the arrest of affluent suburban drug users to balance out the undercover buy-bust operations that disproportionately target suppliers in under-served inner-city neighborhoods. Similar fairness arguments are used to justify the use of prostitution decoys against men who solicit sex from prostitutes, since vice squads historically targeted prostitutes. From a German (or French, or Italian) perspective, however, such undercover operations were unthinkable. They did not target members of criminal organizations. They investigated offenses that were not serious enough to justify the use of undercover tactics under statutory warrant procedures, or even the use of short-term “shallow cover agents,” who could be used without judicial authorization; even such relatively less invasive undercover investigations were only deployed against the sellers, not the buyers, of illegal products or services. And since retail customers are buying contraband to use it, there is no prospect of swapping precursor chemicals for equivalent amounts of the end-product, or of setting up a larger purchase of drugs at a future date. This is only possible when the target of the reverse sting operation is himself a dealer, or when the illegal commodity—fake passports, or counterfeit currency—is supplied as part of an investigation that targets the commission of some other offense associated with organized crime, not the purchase itself of the proffered commodity. To be sure, reverse undercover stings that target retail customers run afoul of German unwillingness to play a crucial causal role in the commission of an offense,

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e.g., by originating a criminal opportunity. Yet this objection is never made against the more typical German undercover operations by which German police offer their targets logistical support in transporting or storing their contraband, or in laundering the proceeds of illegal activities. The most significant impediment to reverse stings against retail customers, from the German perspective, is that such operations do not target members of organized crime, casting their net widely, as they do, to indict the broader social context in which organized crime prospers, and those who benefit from illegal goods and services, whether indirectly, in the case of corrupt enablers from legitimate walks of life, or directly, in the case of the retail customers whose demand supports the supply of illegal commodities.

Conclusion It is a defining characteristic of populist undercover tactics like those that have traditionally prospered both inside and outside of American law enforcement that they target all realms of society, and that no-one is immune from undercover scrutiny. This is part of the tactic’s democratic appeal to Americans. And it is the source of revulsion in European societies that associate such potentially unlimited scrutiny with the suppression of individual liberties. France, Germany, and Italy limit such tactics to the investigation of organized crime, while American law enforcement agencies use undercover operations to investigate corrupt elites who are not themselves members of criminal organizations. Even when they investigate offenses associated with organized crime, however, American and German law enforcement agencies differ with regard to their willingness to supply illegal goods and services in so-called reverse sting operations (to distinguish them from the more typical undercover purchase of illegal goods and commodities that are offered for sale by criminal organizations). An empirical investigation of German and American use of reverse stings suggests that German police and prosecutors are hesitant to use such tactics due to their concern about putting the state at the origin of criminal opportunities and due to the risk of exposing third parties to harm, while American law enforcement agencies embrace reverse stings as an alternative means of targeting criminal organizations, along with the consumers who create the demand to which such organizations cater. At the same time, however, both American and German law enforcement agencies are willing, to some extent, to conduct reverse undercover stings when their targets are members of organized crime. Differences in approach are greatest with regard to reverse operations that target the customer base of organized crime; while German law enforcement refuses to use undercover tactics to target the demand for vice, egalitarian concerns about undercover tactics that unfairly single out stigmatized groups, such as prostitutes and inner-city drug retailers, in preference to their more privilege clientele, are used to legitimate reverse undercover stings that target the demand for illegal goods and services along with the supply.

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References Alexander, M. (2010). The new jim crow: Mass incarceration in the age of colorblindness. Ariely, D. (2008). https://hbr.org/2008/01/how-honest-people-cheat. Bulmer, M. (1980). Comment on the ethics of covert methods. British Journal of Sociology, 31, 59–65. Bulmer, M. (1984). The Chicago School of Sociology: Institutionalization, diversity and the rise of sociological research. Chicago: University of Chicago Press. Festinger, L., Riecken, H., & Schachter, S. (1956). When prophecy fails: A social and psychological study of a modern group that predicted the deconstruction of the world. New York, NY: Harper-Torchbooks. Fronc, J. (2009). New York undercover: Private surveillance in the progressive era. Chicago: University of Chicago Press. Goffman, A. (2014). On the run: The fugitive life in an American city. Chicago: University of Chicago Press. Homan, R. (1978). Interpersonal communication in pentecostal meetings. Journal of Sociology, 26 (3), 499–518. Homan, R. (1980). The ethics of covert methods. British Journal of Sociology, 31, 46–59. Humphreys, L. (1970). Tearoom trade: Impersonal sex in public places. In W. Feigelman (Ed.), Sociology full circle: Contemporary readings on society. Dumfries, NC: Holt McDougal Publishing. Marx, G. T. (1988). Undercover: Police surveillance in America. California: The University of California Press. Meares, T. L. (1998). Social organization and drug law enforcement. American Criminal Law, 35 (191), 223–224. Morn, F. (1982). The eye that never sleeps: A history of the pinkerton national detective agency. Indiana: Indiana University Press. Pittenger, M. (2012). Class unknown: Undercover investigations of American work and poverty from the progressive era to the present. New York: New York University Press. Ross, J. E. (2004). Impediments to cooperation in transnational policing: A comperative study of the United States and Germany. American Journal of Comperative Law, 52(3), 569–623. Ross, J. E. (2007). The place of covert surveillance in democratic societies: A comperative study of the United States and Germany. American Journal of Comperative Law, 55(3), 493–579. Venkatesh, S. (2008). Gang leader for a day: A rogue sociologist takes to the streets. London: Penguin Press. Wallraff, G. (1966). Wir brauchen dich. Als Arbeiter in deutschen Industriebetrieben. Frankfurt: Rütten & Loening. Wallraff, G. (1985a). Bild-Störung. Ein Handbuch. Köln: Kiepenheuer & Witsch. Wallraff, G. (1985b). Ganz unten: Beschreibung des Schicksals von illegal eingeschleusten Arbeitern. München: C.H. Beck. Whitman, J. Q. (2003). Harsh justice: Criminal punishment and the widening divide between American and Europe. Oxford: Oxford University Press. Zacks, R. (2012). Island of vice: Theodore Roosevelt’s quest to clean up sin-loving New York. New York: Anchor Books.

Chapter 15

When Other Methods Fail… Infiltrating Organized Crime Groups in the Netherlands Edwin W. Kruisbergen

Introduction The rise of organized crime caused a shift from reactive to proactive policing. Proactive methods of investigation such as telephone tapping, electronic surveillance and undercover operations share their covert nature as a common feature. Subjects are unaware of their deployment, as opposed to methods such as arrests, house searches and interrogations, which cannot be used without subjects knowing it. However, whereas telephone tapping and electronic surveillance are non-deceptive methods, undercover policing does involve deception. An undercover agent, for example, poses as a ‘friend’ or ‘fellow criminal’, who tries to gain the trust of the suspect and uses his cover to gather evidence or other information. Another distinctive feature of undercover operations relates to the fact that, in some cases, police officers participate in the very crimes they are investigating (Roberts 2007: 99; Maguire and John 1996: 316–18; Ross 2008: 239; Kruisbergen et al. 2011: 394). In many countries, the use of undercover operations has been the subject of heated debate (see Section “Undercover Policing”). Furthermore, it has served as a driving force behind the growing attention for police governance and accountability (Walsh and Conway 2011: 61). However, empirical research into undercover

Part of this chapter has previously been published as a journal article: Kruisbergen E.W. (2013), Infiltrating organized crime groups: Theory, regulation and results of a last resort method of investigation, Cahier Politiestudies, 3 (28), 109–136. Furthermore, use has been made of the author’s Ph.D. thesis: Kruisbergen E.W. (2017), Combating organized crime, A study on undercover policing and the follow-the-money strategy, Den Haag: E.W. Kruisbergen. E.W. Kruisbergen (&) Ministerie van Veiligheid en Justitie, Wetenschappelijk Onderzoek- en Documentatiecentrum (WODC), Postbus 20301, 2500 EH Den Hague, The Netherlands e-mail: [email protected] © Springer International Publishing AG 2017 H. Nelen and D. Siegel (eds.), Contemporary Organized Crime, Studies of Organized Crime 16, DOI 10.1007/978-3-319-55973-5_15

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policing is scarce (Smith et al. 2009; Brown et al. 2012: 1; Brodeur 1992: 108; Giacomantonio 2011: 453; Loftus and Goold 2011: 276–277, 286).1,2 One reason for this might be the simple fact that criminal investigation is just not a main point of interest within the criminological society. Another reason is the reluctance of authorities to open up to scientists and give them access to police files, for example, especially when a sensitive subject such as undercover operations is concerned (De Poot 2010: 102; Grabosky 2010: 364; Marx 1995: 329; see also Kleemans 2014). Because of this criminological gap very little is known about the results that undercover operations yield for criminal investigations. Also, there is little knowledge of the outcomes regulatory procedures produce in the investigative practice. As a consequence, debates on police powers lack empirical evidence. In this chapter, the results of one of the few empirical studies into undercover policing in The Netherlands are presented. It focuses on one specific undercover power, infiltration. Infiltration is the most serious undercover power in the Dutch code of criminal procedure and is mainly used against organized crime. Besides conditions regarding proportionality and subsidiarity, an investigation team that wants to deploy infiltration has to comply with strict authorization procedures; infiltration requires the approval of the highest level of authorization within the Public Prosecution Service. This chapter provides empirical insight into the numbers, course and results of infiltration operations as well as into the practical implementation of the regulatory requirements. In Section “Counter Strategies to Organized Crime”, I elaborate on undercover policing as a counter strategy to organized crime. The legislative debate regarding undercover policing in The Netherlands is discussed in the same section. In Section “Empirical Data”, the empirical data are explained. Section “Infiltration Operations in The Netherlands” provides empirical insight into the deployment of infiltration: the numbers, course and results of infiltration operations in The Netherlands in the 2000–2005 period. Section “Analysis: Unpredictability and Regulation of Undercover Operations” looks more in depth into the investigative practice of infiltration operations. It provides an analysis of the unpredictable course of infiltration operations, as well as an analysis of the possible outcomes that regulatory procedures may produce. In Section “Recent Developments”, I explore some more recent developments in the field of infiltration. In Section “Discussion”, I will summarize the findings and discuss some implications. 1

An important part of the literature looks upon the subject from a judicial and/or normative, critical point of view (Ross 2008: 240). Many studies focus on the issue of entrapment in buy-bust and sting operations. Basically, entrapment concerns the question whether an undercover operation actually tackles real criminals or whether such an operation incites individuals to commit a crime who did not have any criminal intent to begin with (e.g. Allen et al. 1999; Ashworth 2002; Colquitt 2004; Dillof 2004). 2 A number of American studies provide information on the results of specific types of sting operations, such as anti-fencing operations (Bowers and McCullough 1982; Langworthy 1989) and operations targeting the spread of firearms from the legal arms trade into the underworld (Webster et al. 2006). Yet, very little is known about the practice and results of undercover operations as an investigative instrument in general.

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Counter Strategies to Organized Crime Roughly from the 1960s onwards, drug trafficking gave a powerful impulse to organized crime activities around the world. The popularity of cannabis, heroin, cocaine and synthetic drugs have fostered a trade in drugs and stimulated the rise of distribution networks on a national as well as an international level. It brought lucrative chances for those who are capable of bridging the distance between regions where these drugs are produced and regions where consumer markets are located (Paoli and Fijnaut 2006: 315; Van Duyne and Levi 2005).3 The rise of organized crime confronted authorities with challenges that were met with ‘new’ strategies in crime control. First, a shift took place within the approach which was and probably still is the most dominant where fighting crime is concerned: the criminal justice approach. Traditional, reactive policing methods were in part replaced by proactive methods (see below). Second, growing concern with regard to the money made by offenders and the effects ‘dirty money’ could have on society as a whole, gave birth to a financial approach (Gallant 2005: 11).4 Third, some authorities introduced a so-called administrative approach, which involves local governments and other partners in fighting and preventing organized crime.5 This chapter focuses on a specific method within the criminal justice approach, the infiltration of organized crime groups by undercover police officers [for a review of the financial approach see, for example, Kilchling (2014); Kruisbergen (2017); for a review of the administrative approach see Nelen (2010); Van de Bunt and Van der Schoot (2003)].

Undercover Policing Because of the consensual nature of several types of organized crime, traditional, reactive policing methods became less adequate. People involved in drug trafficking, for example, (often) participate with mutual consent. The wholesale drug

For a historical overview of ‘organized crime’, such as banditry in seventeenth- and eighteenthcentury Northwestern Europe, see Fijnaut (2014). For a history of the concept of organized crime, see Paoli and Fijnaut (2004a). 4 As a result, an array of anti-money laundering policies and confiscation laws were introduced worldwide (Gallant 2005: 11). 5 This approach, inspired by initiatives of New York authorities in the 1990s, is now a widely accepted and acclaimed counter strategy to organized crime in the Netherlands. On a national level, the approach was manifested in 2003, when the Bibob Act came into effect. Bibob stands for the Wet bevordering integriteitsbeoordelingen door het openbaar bestuur, which translates as the Public administration probity in decision-making Act. The act provides a legal basis for authorities to refuse or withdraw permits, licenses, grants and subsidies in case of a serious threat of criminal abuse (Kleemans 2007, 2014; Van de Bunt and Van der Schoot 2003; Ayling 2014; Beare and Woodiwiss 2014: 565; Paoli and Fijnaut 2006: 326). 3

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trafficker, the truck driver who transports the drugs from a port to a stash, the street-level drug dealer and his customers, and the money mule who moves ‘dirty’ cash; they all benefit from their participation.6 Therefore, unlike traditional crimes such as burglary, robbery or rape, for that matter, organized crime does not generate victim reports. This means that reactive policing is becoming increasingly inadequate, as it is primarily instigated by victim reports, and criminal events and behaviour in the past. For this reason, policing organized crime (also) requires the use of proactive investigative methods. Proactive policing focuses on gathering evidence about the current and future behaviour of offenders. It includes methods of investigation such as wiretapping, surveillance, the use of informers and undercover policing (Harfield 2008: 64; Roberts 2007: 99; Maguire and John 1996: 316–318; Fyfe and Sheptycki 2006: 319–320; Paoli and Fijnaut 2004b: 1043).7/8 As was explained in the introduction, undercover operations have a combination of features that distinguishes them from other methods of criminal investigation: they are covert, they involve deception, and in some undercover operations the police participates in criminal activities. The latter is often the case in infiltration operations, when for example an undercover agent joins a criminal organization involved in drug trafficking. These features bring with them certain investigative opportunities as well as certain risks. They are probably also an important reason why undercover policing is one of the most controversial methods of criminal investigation and has been the subject of heated legislative debate.9 Undercover methods are certainly not a twentieth-century invention. Undercover tactics, in different manifestations and with different purposes, have been used for centuries (see Fijnaut and Marx (1995a) for a historical overview). However, their deployment became more prominent when, in the 1960s, the fight against drug trafficking rose on the agenda. Law enforcement agencies in the United States deployed undercover operations on a large scale. As the ‘war on drugs’ became part of U.S. foreign policy, the American Drugs Enforcement Administration

Some people might be forced to cooperate. However, due to the opportunity to earn ‘quick money’ (or, as is the case for customers, the opportunity to satisfy the need for drugs), there are many willing perpetrators. 7 These methods of investigation are also applied in reactive criminal investigations. Undercover operations, for example, have been used to elicit confessions from suspects in investigations regarding murder and missing people, among other crimes (Kruisbergen et al. 2011). 8 Strictly speaking, the use of the phrase ‘proactive’ is incorrect since, in many cases of proactive investigations, there is information indicating that crimes already have been committed. However, in a proactive investigation, the police (also) focus on criminal activities that are still ongoing or still have to be committed, for instance on offenders who have probably participated in drug trafficking operations in the past and are expected to continue these crimes (see also Tweede Kamer 1996–1997, 25 403, no. 3: 4). 9 Historical, social or cultural characteristics of a country may also result in a critical attitude towards undercover operations. In post-war Europe, for example, undercover methods were initially discredited, due to the intensive use the national-socialist Third Reich and the communist Soviet Union had been making of government espionage against their own populations (Marx 1988: 22–32). 6

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(DEA) exported these operations to Western Europe (Ross 2008: 241; Fijnaut and Marx 1995b: 15–16; Van Duyne and Levi 2005: 19). Accompanying the rise of organized crime on the political agenda, institutional reforms were implemented in many countries. These reforms concerned setting up new police units and the regulation of methods of investigation such as undercover policing (Paoli 2014: 2; Paoli and Fijnaut 2006: 325–326; Van der Tak 2000: 1). On the one hand, these changes were introduced to facilitate the fight against organized crime. On the other hand, they are meant to enhance the control of police activities, as policing is increasingly being subjected to formal statutory regulation (Newburn et al. 2007: 547–548; Roberts 2007: 97–102; Groenhuijsen and Kooijmans 2011: 62). Specific criminal cases, incidents and outright scandals often served as driving forces behind the legislative debate on investigative powers. The course of the legislative debate in The Netherlands was defined by the IRT affair.10 Undercover operations gave cause for this affair, which in turn ultimately resulted in a major legal reform with regard to investigative powers. Interregional investigation squads (IRTs), joint investigation teams put together from several regional police forces, were established in response to growing concerns about organized crime in the 1990s. The IRTs deployed ‘experimental’ investigative methods against criminal groups involved in large-scale international drug trafficking. Informers imported several tons of drugs under the supervision of the police. The informers, themselves criminals, were assisted by the police and customs to pose as trustworthy and successful criminal entrepreneurs, in the hope that they would move to the top of criminal organizations. Internal disputes, however, led to the sudden dismantling of the Amsterdam-Utrecht IRT in 1993. This ‘IRT affair’ resulted in a full-fledged Parliamentary Inquiry Committee on Criminal Investigation Methods [in Dutch: Parlementaire Enquêtecommissie Opsporingsmethoden (PEO)]. The committee concluded that some of the new policing methods were unacceptable. It questioned whether the police were running the informers or vice versa. Furthermore, the committee concluded that there was a legal vacuum regarding methods of investigation such as undercover policing and surveillance (PEO 1996, Eindrapport). In The Netherlands, until 2000, the code of criminal procedure lacked specific sections that covered such intrusive techniques. Another major conclusion of the committee was that the command and control of criminal investigations should be improved. The committee’s report provided the foundation for the new Act on Special Investigative Police Powers [in Dutch: Wet bijzondere opsporingsbevoegdheden (BOB Act)], effective as from 2000.11 The BOB Act regulates several investigative powers, strengthens the authority of the Public 10

In the United Kingdom, the Khan case played an important role in the regulation of police powers [R.v. Khan (1996) 3 All ER 289], while in Belgium, undercover policing became discredited as a result of the so-called François scandal, (Fijnaut 1983: 93; Van Oss 1994: 1–2), and in the United States a controversy emerged around the Abdul Scam (Gershman 1982: 1585–1586). 11 Act on Special Investigative Police Powers (Wet bijzondere opsporingsbevoegdheden, complete reference in Dutch: Wet van 27 mei 1999 tot wijziging van het Wetboek van Strafvordering in

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Prosecution Service in criminal investigations, and requires accountability at trial for the deployment of investigative powers (Kleemans 2007: 164–165). Since the BOB Act came into effect, it is, in principle, not allowed to ‘supervise’ the importation of drugs, as the IRT did. Illegal goods or substances that constitute a risk to public health or public safety, such as drugs or weapons, have to be confiscated.12 Furthermore, participation in criminal activities by police officers or by civilians working under police supervision has to comply with laws and regulations (Beijer et al. 2004: 278). With regard to undercover operations, the Dutch legislator chose to distinguish between three powers in the BOB Act: systematic intelligence gathering, the purchase of illegal goods or substances or the rendering of illegal services (undercover buys), and infiltration.13 Infiltration is assumed to involve more risks than the deployment of an undercover buy does, which in turn is assumed to be more risky than the use of systematic intelligence gathering. During an infiltration operation, the undercover agent actually becomes a member of a criminal group. Joining a criminal organization is a crime. Furthermore, as the legislator argues, it entails the risk of moral contamination of the police officer by the criminal environment, as well as risks concerning the physical safety of the undercover agent and his relatives. During an undercover buy, an undercover agent buys illegal goods or substances from a suspect, such as weapons, child pornography or drugs.14 When an undercover agent buys such goods or substances, he also participates in a crime. However, according to the legislator, that criminal participation is less far-reaching and less sustained than is the case with infiltration. Systematic intelligence gathering is assumed to involve fewer risks than the other two undercover powers, because the undercover agent ‘only’ collects information and does not participate in any crimes. The legal requirements for the deployment of undercover powers correspond to the assumed level of risk attached to them. Infiltration is only allowed in investigations targeting the most severe crimes (proportionality) and only if other policing methods have proven (or are expected to be) ineffective (subsidiarity). Undercover buys and systematic intelligence gathering, however, may be deployed against a (much) broader category of crimes and without an exhaustive exploration of alternative methods of investigation. In addition, where infiltration is concerned, further authorization requirements have to be met. After deliberation with the regional chief public prosecutor, a public prosecutor who wants to deploy an infiltration operation has to submit a substantiated proposal to the Central Assessment Committee [in Dutch: Centrale (Footnote 11 continued) verband met de regeling van enige bijzondere bevoegdheden tot opsporing en wijziging van enige andere bepalingen (bijzondere opsporingsbevoegdheden), Stb. 1999, no. 245). 12 Under certain conditions, seizure may be delayed. 13 Infiltration operations may involve one or several undercover buys. 14 Instead of buying illegal goods or substances from a suspect, an undercover agent may also render services to a suspect, such as when he provides transportation for a drug trafficking operation.

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Toetsingscommissie (CTC)]. The CTC tests the proposed operation for proportionality and subsidiarity, among other factors. If the CTC considers the operation permissible, the proposal goes to the Board of Procurators General, where the ultimate decision is made whether the infiltration operation is allowed or not. If an infiltration operation is allowed, continuation of the infiltration operation requires the prosecutor to submit a plan for continuation on a three months’ basis. Undercover operations are not often used in The Netherlands. In 2004, an undercover operation was deployed in 34 criminal investigations, as turned out as the result of a comprehensive study into undercover policing by the Research and Documentation Centre (WODC) of the Dutch Ministry of Security and Justice (Kruisbergen and De Jong 2010). By way of comparison: in 2008, 26,425 Dutch telephone numbers were tapped (Tweede Kamer 2008–2009, 30 517, no. 13). The undercover operations in the 34 cases just mentioned all concerned systematic intelligence gathering and/or undercover buys; none of them concerned infiltration. For infiltration, the WODC gathered information over a longer period of time, from 2000 to 2005. During the 2000–2005 period, permission for the use of infiltration was requested with regard to 23 criminal investigations. In 14 of those 23 cases an infiltration operation was actually deployed. Undercover operations are deployed in criminal investigations targeting various crimes. They are used against drug trafficking and illegal arms trade, for example, but, especially since the 1990s, also in murder and property crime investigations, among others (Kruisbergen et al. 2011).15 Infiltration, however, the most serious kind of undercover police power in the Dutch code of criminal procedure, is mainly used against organized crime.16

15 To solve murder cases and other violent crimes, so-called ‘befriending’ operations are used. In such an operation, an undercover agent tries to build up such a relationship with a suspect that the latter confides his guilt to his ‘friend’ (Kruisbergen et al. 2011; see also Maguire and John 1996: 316–318; Choo and Mellors 1995; Smith et al. 2009: 169–170). For a review of a specific type of befriending operation, the so-called ‘Mr. Big’ technique, see Smith et al. 2009: 169–170; Puddister and Riddell 2012: 386; Stuesser 2008). 16 Civilians may be used in undercover operations. However, in undercover buys and infiltration operations, civilians may only be used if police officers are incapable of deploying the operation. In the case of infiltration, the use of civilians who are themselves criminals was initially forbidden [The BOB Act itself did not specifically forbid the use of criminal civilians in infiltration operations, but such a prohibition could be inferred from the legislative debate (Beijer et al. 2004: 277–278)]. Later on, in the aftermath of 9/11, the ban on criminal civilian infiltrators was slightly loosened when the Dutch Minister of Justice deemed the use of criminal civilians permissible in terrorism investigations (Tweede Kamer 2002–2003, 27 834, no. 28). In 2013, the ban was loosened still a bit further. In ‘very exceptional cases’ of organized crime, and only if police officers and non-criminal civilians cannot be used, criminal civilians may be used in an infiltration operation (Tweede Kamer 2012–2013, 29 911, no. 83: 4). This chapter focuses on the use of undercover police officers in infiltration operations.

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Empirical Data The empirical data used in this chapter were gathered in the WODC study mentioned above (Kruisbergen and De Jong 2010). The data cover all 23 Dutch criminal cases during the 2000–2005 period in which a proposal for an infiltration operation was submitted to the CTC.17 For all of these 23 criminal investigations, the files of the CTC were analysed. When analysing these files, we made use of a checklist and collected information on (among other things) the grounds on which the public prosecutor wanted to deploy an infiltration operation and the decision of the CTC and the Board of Procurators General regarding the requested approval. Subsequently, for 19 cases we analysed the actual police files at the public prosecutor’s offices. For three cases, none of which went to trial, these files could not be traced. With regard to one case the public prosecutor requested the exclusion of the police file.18 The police files include sources of information such as testimonies of undercover agents and reports of wiretaps, police observations and interrogations of offenders and witnesses. The files were analysed by means of a checklist that mainly focused on the strategy and tactics of the infiltration operation, the course and results of the operation, and the course and results of other investigative methods. In addition, we conducted face-to-face interviews with 35 people, of which 20 were involved in the cases we studied. The other 15 respondents were selected on grounds of their direct or indirect involvement in other cases in which undercover operations were used. The respondents consisted of the (former) heads of the special police undercover units (8), detectives of the National Crime Squad (6), detectives of regional crime squads (5), public prosecutors (11), staff members of the CTC (2), a procurator general (1), and other specialist members of the police (1) and Public Prosecution Service (1).

Infiltration Operations in The Netherlands First, I will elaborate on the assessment of proposed infiltration operations by the CTC and the Board of Procurators General. Subsequently, information is provided on the grounds on which public prosecutors opt for an infiltration operation and the

17

During the 2000–2005 period, authorization for an infiltration operation was requested in 24 Dutch criminal investigations. However, as in one case the infiltration operation was still ongoing at the time the research was conducted, that specific case was not included. Furthermore, the research only considers Dutch criminal investigations. Infiltration operations within the context of international legal assistance (for which approval was requested in seven cases during the 2000–2005 period) were not included. 18 Information on this case was gathered by conducting an interview with detectives who were involved in the investigation, and by analysing the CTC file.

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types of criminal offences that are targeted by these (proposed) operations. In the third subsection, I will look into the course and results of infiltration operations.

The Assessment of Proposed Infiltration Operations by the Central Assessment Committee (CTC) and the Board of Procurators General During the 2000–2005 period, approval to deploy an infiltration operation was requested in 23 Dutch criminal investigations. In those cases, the public prosecutor submitted a substantiated proposal to the CTC. The CTC considered 16 of those 23 proposed operations permissible and subsequently brought those 16 proposals before the Board of Prosecutors General. In all those 16 cases, the Board followed the advice of the CTC and approved the deployment of infiltration. In seven cases, the CTC assessed the use of an infiltration operation not admissible. For three of those cases (cases A1, B53 and B54) the reason for this negative decision lies in the fact that, according to the CTC, the undercover operation as described in the proposal should not be labelled as infiltration but rather as systematic intelligence gathering and/or (an) undercover buy(s). The fourth proposal (case B50) that was declined involved an operation targeting the sexual exploitation of minors. The operational goal of the infiltration operation came down to establishing contact with the subject and getting him to offer the sexual services of a minor. Although actual sexual activities were not to take place, the plan was judged to be ethically and politically unacceptable. A fifth and sixth proposal (cases B56 and B58) were declined because the CTC was of the opinion that, considering the course the criminal investigation was taking, it was too early to deploy an infiltration operation. In the seventh case (case B57), infiltration was not allowed since the CTC concluded that the case lacked sufficient suspicion of organized crime being committed or planned.

In Which Cases and on What Grounds Does a Public Prosecutor Opt for an Infiltration Operation? Of the 23 cases in which the public prosecutor proposed an infiltration operation, 17 involved drug trafficking investigations, four of which also targeted another criminal offence, such as illegal arms trade. The six remaining cases concerned investigations targeting terrorism (one), violence (one), illegal arms trade (one), child pornography (one), sexual abuse/exploitation (one) and human smuggling (one). For 18 cases, the reason why the public prosecutor wanted to deploy an infiltration operation lay in the fact that other methods of investigation had proven (seventeen cases) or were assumed (one case) to be ineffective. This inadequacy of

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other policing methods particularly related to the high level of concealment maintained by the suspects; they frequently change cars, for instance, mainly have criminal meetings in person instead of ‘doing business’ by phone, and use concealed language. For five cases, it was impossible to point out one specific reason, for example because a combination of reasons was involved or the reason was unknown.

Course and Results of Infiltration Operations To determine the results, or success, of an infiltration operation, we assessed the contribution an operation has made to the investigation and/or trial. A first and most direct contribution is made when an infiltration operation generates evidence that is used to get a suspect convicted. Second, some operations may not generate evidence but do produce information that contributes in a more indirect manner. This may be steering information, i.e. information that played a part (in a minor of major way) in the course of the investigation, such as intelligence on the composition or activities of a criminal organization or information regarding the means of communication the criminals used. It may also be rest information, i.e. information concerning suspects or criminal activities that was not used in the investigation on behalf of which it was collected, but was passed on to and used by another investigation team.

Results Figure 15.1 summarizes the deployment and results of infiltration operations in The Netherlands during the 2000–2005 period. The course and results of infiltration operations will be exemplified with cases below. In two of the sixteen cases in which an infiltration operation was approved, the operation was abandoned even before the start. In both cases the direct goals of the criminal investigation, the arrest and trial of the main suspects, were achieved by other policing methods prior to the start of the infiltration (see Section “Implementation of Regulatory Procedures in the Investigative Practice”). Thus, during the 2000–2005 period, 14 infiltration operations have actually been carried out in The Netherlands. In six cases the infiltration operation generated evidence, (partly) on the basis of which suspects were convicted. Five of these six operations not only contributed to the trial but also contributed, by producing steering information, to the investigation. For the other case this is unknown. One of these six criminal investigations (B59), for example, focused on the production and trafficking of XTC. In this operation undercover agents had dozens of contacts with the suspects, whether in person or by telephone. Meetings in person took place in catering establishments, among other places. The undercover agents and suspects engaged in leisure activities but only on a limited scale, since

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Infiltration operation proposed: 23

is

Infiltration operation allowed: 16

is

Infiltration operation is not allowed: 7

Infiltration operation implemented: 14

is

Infiltration operation is not implemented: 2

Undercover agent makes contact with target: 13

Undercover agent makes no contact with target: 1

Infiltration operation delivers contribution to investigation and/or trial: 10 -

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evidence used for conviction of suspect: 6 steering and/or rest information: 4

Infiltration operation delivers no contribution to investigation and/or trial: 4

Fig. 15.1 Implementation and results of infiltration operation in The Netherlands, 2000–2005. Year in which a proposal for an infiltration operation is submitted before the Central Assessment Committee (CTC). During the period 2000–2005 authorization for an infiltration operation was requested in 24 Dutch criminal investigations. However, as in one case the infiltration operation was still ongoing at the time the research was conducted, that specific case was not included

conversations soon turned to criminal activities. A first undercover buy was executed successfully. A second attempted ‘deal’ failed. A third undercover buy again succeeded when the suspects sold several hundreds of thousands of XTC pills, although this only amounted to slightly more than half the quantity that had been agreed upon. The two successfully completed undercover buys served as evidence, on the (partial) basis of which the main suspects, as well as other offenders, were convicted. Moreover, the infiltration operation yielded insight into the criminal activities of the main suspects. In two other cases, the focus of criminal investigation shifted from the illegal arms trade to drug trafficking. In one of these cases (B43), the infiltration operation did produce some information regarding the illegal arms trade, but the storage

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location remained unknown and an attempt to buy weapons (undercover buy) failed. The undercover agents did succeed, however, in demonstrating the suspect’s involvement in drug trafficking. Two undercover buys resulted in several kilos of heroin. An undercover buy involving a much larger quantity did not take place because the undercover agent and the suspect could not reach an agreed price. The earlier undercover buys as well as the undercover agents’ statements served as evidence in the criminal trial against the main suspects. Furthermore, in yet another case (B52), the criminal investigation targeted a group of people suspected of trafficking in precursor chemicals. Several undercover buys were executed in this operation. Yet, some of the samples of precursor chemicals bought by the undercover agent turned out to contain a fake substance. An intended undercover buy in which tens of litres of PMK (a precursor for the manufacture of XTC) would be acquired, eventually never took place because the suspects were unable to deliver. Nevertheless, the operation generated evidence. That evidence consisted of the undercover buys that did take place and statements made by undercover agents regarding their interaction with the suspects. Besides evidence, the operation also produced valuable steering information. As a result of the infiltration operation, an intermediary dealing in precursor chemicals was identified. Moreover, when the suspects and the undercover agent(s) had a meeting, the frequency of the telephone calls among the suspects increased as soon as the meeting was over. The taps on these telephone calls produced useful information (as well as evidence), but they also put the police on the track of a store for other illegal goods. Four operations did not generate evidence but ‘only’ produced steering and/or rest information. Although these four operations did contribute to the investigation, their level of success, generally speaking, was lower than that of the six operations that yielded evidence. That is, for all infiltration operations that have been carried out, gathering evidence was one or the main objective—an objective that was not met in these four operations. One of these cases (B51) concerns a criminal investigation into an illegal arms trade. At first, the infiltration operation went very well. Earlier than expected, the undercover agent established a good contact with the main suspect. Despite these contacts, the main suspect was unable or unwilling to deliver weapons, as a result of which an intended undercover buy did not take place. Because of a lack of evidence, the investigation ended without any arrests, let alone convictions. Yet, the infiltration operation did produce information regarding (among other things): the specific criminal activities of an emerging ethnic group; and other criminal offences in which the main suspect appeared to be involved, which in part led to a new criminal investigation (rest information). A criminal investigation into large-scale XTC trafficking provides another example (B42). In this investigation, the police deployed two separate infiltration operations. One of these targeted the main suspect, a very experienced and suspicious criminal. The second operation targeted one of the main suspect’s fellow criminals. In the latter, an undercover agent got rather close with his target and became part of his social life, whereas the undercover agent who targeted the main

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suspect only established contact on a superficial level. The investigation’s strategy included buying drugs from the main suspect. However, the intended undercover buys never took place, although negotiations were in an advanced state. Before those negotiations succeeded, several suspects were arrested, the main suspect among them. The arrests were a direct result of other methods of investigation (see Section “Implementation of Regulatory Procedures in the Investigative Practice”). These methods produced sufficient evidence to support the conviction of the main suspect as well as other suspects. The main suspect was convicted of trafficking many hundreds of thousands of XTC pills and leading a criminal organization, among other offences. The two infiltration operations did not produce any evidence. They did generate some information regarding the criminal organization, but it seems that this did not play a significant role in this or any other investigation. Finally, four operations did not contribute to the investigation or trial at all. One of these cases was the only case in which the undercover agents entirely failed to penetrate their targets’ social network; they could not make contact (B40). The criminal investigation ended without any arrests. Another case concerned an investigation into terrorism in which the police found out that the suspect was trying to obtain weapons (B39). That information gave rise to a plan for a rather extraordinary infiltration operation: an undercover agent was to deliver weapons to the main suspect—who was to be arrested immediately after the delivery.19 The undercover agent and the suspect planned to meet each other to discuss conditions regarding the delivery. However, the suspect, who perhaps grew suspicious, did not show up. In spite of this lack of success of the infiltration operation—which did not contribute to the investigation or to the trial—several suspects were arrested and subsequently convicted. A third example clearly shows that even operations during which undercover buys are ‘successfully’ executed, may not contribute to the trial or criminal investigation (B48). The investigation targeted drug trafficking and focused on a main suspect who was supposed to be a key player ‘behind the scenes’. This man proved very hard to make contact with. He had a very limited social life and only participated in criminal activity with people whom he knew well. Furthermore, according to a police report, he was fully aware of the fact that he might be under police surveillance. During the undercover operation, which ran for a very long time, undercover agents did establish good contact with people in the main suspect’s entourage, but they met the man himself only once. The undercover agents even succeeded in buying tens of thousands of XTC pills. However, the drug deals could not be linked to the (supposed) ‘key player’ or other main suspects. These undercover buys as well as the infiltration operation and the criminal investigation as a whole, were closed without any arrests being made. Thus, the infiltration operation did not contribute to the trial, and since it did not produce any significant information, it did not contribute to the investigation either.

19

The Dutch code of criminal procedure does not provide for an undercover sell.

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One of the reasons why some infiltration operations did not produce any results (four cases) or did not generate evidence (four cases), is the unpredictability of the interaction between the undercover agent(s) and the suspect(s), especially when it comes to undercover buys.

Analysis: Unpredictability and Regulation of Undercover Operations In this section, I will look more in depth into the investigative practice of infiltration operations in The Netherlands. The first subsection explores a characterizing feature that emerges from the empirical data on infiltration operations; the unpredictability of the meetings between the undercover agent and the suspect. The fundamental unpredictability of criminal investigations targeting organized crime has consequences for the practical implementation of (some) regulatory procedures. The implementation of regulatory procedures is the subject of the second subsection.

Unpredictability, the Consequence of Participating in Illegal Markets An undercover agent has to penetrate an offender’s social network. In infiltration operations deployed against criminals who are trafficking in illegal goods, this often means that an undercover agent poses as a criminal entrepreneur, a drug dealer for instance, who is interested in doing business. The purpose of such an operation is to display (suggest) enough capability and trustworthiness to allow the suspect to think that it is profitable and safe to make his ‘fellow criminal’ an offer to buy drugs. However, since the undercover agent poses as a criminal entrepreneur, he is confronted with the unpredictable behaviour common to illegal markets. Kruisbergen et al. (2011) described the unpredictable course of undercover operations, especially those focusing on bringing about one or more undercover buys. Their study focused on all undercover operations in The Netherlands executed in one year, 2004. In that specific year, all undercover operations consisted of the undercover powers of systematic intelligence gathering and/or undercover buys. Infiltration was not used in 2004. The course of (intended) undercover buys that are part of infiltration operations proves to be even more erratic than the 2004 cases. In the 2000–2005 period, infiltration was used in 14 criminal investigations. In one of these operations, the undercover agent did not establish contact with the target. Of the remaining 13 operations, 12 focused on bringing about one or more undercover buys, among other things. Of these 12 operations, none worked out as planned. Some undercover buys do not take place at all. One reason may be that an undercover agent, although he did make contact with the initial subject, failed to

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establish sufficient contact with the key player within a criminal organization. Case B47 provides an example. In this case, undercover agents made contact with several members of a criminal organization (allegedly) involved in cocaine trafficking and money laundering. On several occasions an undercover agent travelled abroad to meet the ‘big man’. Yet, although they met several family members of the ‘big man’, in the end the key player himself never showed up. That is presumably the reason why the undercover agents never effectuated an actual drug deal (undercover buy), even though suspects promised they could deliver hundreds of kilos and discussed details and prices. The reason why the ‘big man’ never showed up is unknown. Perhaps, in the end, the undercover agents were not deemed capable and/or trustworthy enough. The reason, however, might also have little to do with the undercover agents’ performance. As is clear from other examples, it is not easy to ‘do business’ with criminals efficiently; often commitments are not kept and/or expectations are not met. Another reason why undercover buys do not take place may be that the suspect(s) is (are) unable to deliver. One example concerns an investigation into the illegal arms trade (B43). An undercover agent established contact with the suspects, who were found willing to do business. However, since their supplier in Eastern Europe had been arrested, they could not keep their promise to deliver a large quantity of weapons. During a conversation, one of the suspects offered several automatic weapons to be delivered that same evening. When later on the suspect could not be reached by the undercover agent, the suspect explained this on a later occasion by saying he was ‘hot’ (under police surveillance). Case B51 also concerned the illegal arms trade. In this case, undercover agents managed to establish a good contact with the main suspect relatively quickly. However, the main suspect turned out to be incapable of or unwilling to sell weapons, which was a possible consequence of (perceived) intensified security measures in the aftermath of 9/11. In some cases, a suspect turns out to be unable to deliver simply because he lacks the required resources or capability to live up to his promises. Still another reason is cautiousness on behalf of a suspect to do business with people he has met only recently. In these cases the suspect’s unwillingness may also be caused by the fact that the undercover agent does not play his role convincingly enough. Finally, the undercover agent himself may cancel an undercover buy. In case B41, for example, an undercover agent cancelled a deal on tens of thousands of XTC pills because he had reason to believe that the delivery would probably originate from offenders outside their scope of interest. Other undercover buys do take place but do not work out as planned. In some cases the goods that are bought from a suspect may not be what the undercover agent thought they would be, like in case B52, where samples of ‘precursor chemicals’ proved to contain a fake substance. Case B46 concerned a criminal investigation into child pornography. An undercover agent managed to buy several CD-ROMs from a suspect. Although the CD-ROMs did contain pictures, they did not contain child pornography. Cases B43 (see Section “Course and Results of Infiltration Operations”) and B49 provide examples of investigations that initially focused on the illegal arms

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trade but, after an attempt to buy weapons failed, switched to drug trafficking when drug deliveries did prove to be possible. Sometimes an undercover buy does not live up to initial expectations in another sense, like when, for instance, tens of thousands of XTC pills were bought, but the deliveries could not be linked to the main suspects (B48). In several cases, an undercover buy took place, but only after earlier intended undercover buys failed. Furthermore, in some cases the quantity of delivered goods turned out to be (much) smaller than agreed, like in case B59 (see Section “Course and Results of Infiltration Operations”). The fact that an undercover operation does not work out as planned, does not automatically mean that the operation does not contribute to the investigation and/or trial. However, in general, unexpected developments such as described above do cause undercover operations to last longer or remain without the intended results.

Implementation of Regulatory Procedures in the Investigative Practice Since the BOB Act came into effect, (most) methods of criminal investigation are covered by specific sections in the code of criminal procedure. Besides filling the legal vacuum, the BOB Act certainly has improved transparency of the use of methods of investigation. The BOB Act requires that a report is made of the methods of investigation used. Furthermore, when the police use a special investigative police power, its deployment, in principle, will be accounted for at trial (Beijer et al. 2004: 277–278). Before the introduction of the BOB Act, judges often were not even informed about the simple fact that an undercover operation had been deployed (Van Traa 1997: 16). An evaluation of the BOB Act showed that Dutch judges have gained more insight into the deployment of special methods of criminal investigation (Beijer et al. 2004: 282). The importance of transparency and accountability in court, and the fact that judges seem satisfied with the reporting of and insight given into the use of investigative methods, also shows when examining court decisions regarding undercover operations (Kruisbergen et al. 2011). However, as the following subsections will show, regulatory requirements not always entirely work out as planned.

Testing for Subsidiarity How meetings between an undercover agent and a suspect will work out is very unpredictable, as was shown in Section “Analysis: Unpredictability and Regulation of Undercover Operations”. However, it is not the undercover operation alone that ‘suffers’ from this unpredictability. Because of the relative large number of suspects

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in an average organized crime investigation, the erratic behaviour of these suspects, and the fact that different policing methods are usually deployed simultaneously, investigating a phenomenon such as organized crime is unpredictable in itself. Because of this fundamental unpredictability, authorization procedures may not always fit the investigative practice. For one thing, it makes it harder to test prospectively for subsidiarity. In most cases, the reason why a public prosecutor wants to deploy infiltration lies in the fact that other methods of investigation have proven to be ineffective (Section “In Which Cases and on What Grounds Does a Public Prosecutor Opt for an Infiltration Operation?”). When testing a proposed infiltration operation for subsidiarity, the CTC and the Board of Prosecutors General have to judge whether it is likely that the goals of the criminal investigation can be achieved by deploying other policing methods. This test has a retrospective as well as a prospective element. The retrospective judgement encompasses the policing methods that already have been used in a criminal investigation. The prospective judgement means assessing the probability that other methods than infiltration will produce any decisive results in the weeks and months to come. In several cases in which the Board of Prosecutors General authorized an infiltration operation, it turned out that other methods of investigation did in fact generate decisive results, although they were deemed ineffective. Two of these cases concerned investigations into the production/trafficking of synthetic drugs. According to the proposal for infiltration, in case B45 other methods of investigation did generate sufficient information regarding the production of XTC, but they failed to produce results in determining who was responsible for exporting the drugs. In order to fill this gap, the public prosecutor proposed infiltration, and the proposal was subsequently authorized by the Board of Prosecutors General. Yet, before the infiltration unit started its operation, wiretapping, among other methods, did reveal which players were involved in exporting the XTC. Ultimately, several suspects were convicted, the main suspects included, mainly on the grounds of information generated by wiretapping, bugging (face-to-face conversations) and statements. Case B55 showed a similar course of events. In this case, the investigation team was unable to gather evidence regarding the production of XTC and could not locate the XTC lab. Yet, only a few days after the infiltration operation was approved, the two main suspects, i.e. the owner of the XTC lab and the chemical technician, were arrested. Both were convicted. Here also, the evidence was collected by means of wiretapping, bugging and statements, among other methods. In three other cases, the infiltration operation was executed, but the convictions that followed in these cases were achieved without any major contribution from the undercover operation. One of these cases concerned an investigation targeting cannabis trafficking (B44). Although several special investigative methods were used, the investigation team failed to gather concrete evidence against the main suspects. The public prosecutor therefore proposed an infiltration operation. The plan was approved. Several undercover agents were deployed in this operation and they managed to make contact with the main suspect as well as with people in his

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entourage. Part of the operation’s strategy was to perform an undercover buy. Yet, an undercover buy never took place, since other methods of investigation produced sufficient evidence to arrest and subsequently convict several suspects. These other methods of investigation were, among others: wiretapping, observation (visual surveillance), bugging, and a house search.20 Case B42 concerned the aforementioned criminal investigation into large-scale XTC trafficking (Section “Course and Results of Infiltration Operations”). Here also, infiltration was proposed because other policing methods did not generate decisive results. Furthermore, as the proposal mentioned, the investigation targeted a highly experienced criminal who acted very cautiously and was fully aware of possible police attention. He used concealed language when talking on the phone, used different prepaid cell phones, adjusted his driving behaviour to render surveillance more difficult, and travelled under a false name. As the results of wiretapping clearly showed, however, other suspects were certainly not as disciplined as the main suspect was. Some of those other suspects, for instance, relatively openly discussed with each other their frustrations about the main suspect’s behaviour towards them. The infiltration operations did not generate any evidence, nor did they produce any information that played a significant role in this or any other investigation. Sufficient evidence to arrest and subsequently convict several suspects, the main suspect included, was produced by other methods of investigation. Those other methods were bugging, wiretapping, statements made by suspects and witnesses, observations, covertly entering the suspect’s premises (in Dutch: ‘inkijkoperatie’), and using a surveillance beacon.21 When testing prospectively for subsidiarity, the CTC and the Board of Prosecutors General have to assess the likely development of a criminal investigation. The aforementioned cases show that this procedure presupposes a level of predictability that contradicts the complex and unpredictable nature of investigations into organized crime.

Unintended Effects of Authorization Procedures: ‘Interference Aversion’ If a public prosecutor wants to deploy an infiltration operation, he has to comply with several authorization requirements (as described earlier in Section “Undercover Policing”). Ultimately, he has to get approval of the highest level of 20

The infiltration operation did in fact produce relevant information. Thanks to the operation, a formerly unknown member of the criminal collaboration came into the picture. For tactical reasons, however, this information was not used in this case and was passed on as rest information. It actually led to police activity targeting this specific suspect, but the results of these activities are unknown. 21 Finally, an investigation into terrorism led to the arrest and conviction of the main suspect without any contribution being made by the infiltration operation that was deployed (case B39, see Section “Course and Results of Infiltration Operations”).

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authorization within the Public Prosecution Service, the Board of Prosecutors General. When a proposed infiltration operation is approved, a public prosecutor has to obtain renewed approval of the Board of Prosecutors General on a regular basis. In the investigative practice, this centralized decision-making process may produce unintended effects. Some public prosecutors may fear that they will lose control if they choose to use infiltration, and therefore might avoid this investigative method. A head of an undercover police unit phrases it as follows: That is disadvantageous to opting for an infiltration operation in an early stage. You will have to deal with the interference of the Board of Prosecutors General.

As two members of the Central Assessment Committee (CTC) mention: We notice that public prosecutors want to avoid having to put a substantiated proposal before the CTC. They don’t appreciate the interference. As soon as a public prosecutor has to deal with the CTC, his operation is forced into a ‘straitjacket’ of periodic review.

This fear of losing control, or ‘interference aversion’, may constitute one of the reasons why undercover operations, especially infiltration, are so scarcely used in The Netherlands; during the 2000–2005 period, infiltration was proposed in 23 Dutch criminal investigations, 16 of which were approved, and 14 of which were actually executed.22 Earlier research among public prosecutors (and police officials) has shown that, besides avoidance of undercover operations, interference aversion may produce another outcome as well (Beijer et al. 2004: 109). When deploying an undercover operation, different undercover powers, such as systematic intelligence gathering and undercover buys, may be combined in one operation. For a public prosecutor, it might not always be clear which (combination of) undercover power(s), i.e. which legal label, is applicable to an intended undercover operation. Yet, the difference with regard to authorization requirements is very clear: infiltration requires the highest level of authorization, whereas systematic intelligence gathering and undercover buys do not. Therefore, in cases in which public prosecutors doubt whether an intended undercover operation should be labelled as infiltration or as a combination of systematic intelligence gathering and undercover buys, some may be inclined to choose the latter.

22

In the years 2006, 2007 and 2008, according to the Annual Report 2008 of the CTC, infiltration was proposed in one, two and one cases, respectively (CTC 2009: 13). These numbers may include proposals within the context of international legal assistance.

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Recent Developments The cases we studied concern either 2004 or the 2000–2005 period. Has the investigative practice changed since then? Institutional changes did take place. In 2005, there were five active, specialized undercover units within the Dutch police— one national and four regional teams. As the result of a reorganization that took place in 2008, the various undercover teams have been joined into one centrally controlled unit: the Working Undercover (WOD) unit. This ‘new’ unit aimed, among other things, at the diversification of undercover agents, in terms of expertise and background, as well as the type of cases in which undercover operations are deployed.23 Whether these institutional developments actually changed the investigative practice cannot be determined, simply because there is no recent study with which to compare our results.24

Infiltrating Criminal Groups Online The Internet offers a lot of possibilities, for ‘regular citizens’, for criminals, as well as for law enforcement agencies. The Internet offers offenders possibilities, for example, to reach customers, co-offenders or victims who might remain out of reach in the offline world. Likewise, police officers can exploit the possibilities to set up online cover identities and front stores. The WODC study on undercover policing that provided the data for this chapter, did include some cases, for example, in which an undercover agent tried to buy illegal or stolen goods being on offer on the Internet. Since 2005, being the last year that was covered in our data, the use of the Internet might have become more important, for criminal networks as well as for the police. Although the massive use of the Internet for communication purposes dates back to the 1990s, the emergence of (successful) large-scale anonymous online marketplaces is a relatively recent development. Silk Road, the most successful among those marketplaces, became active in 2011 (Christin 2012: 3;

23

The undercover unit WOD consists of highly specialized police officers. In 2009, internal police guidelines (Brancherichtlijn Pseudokoopbasis, which translates as Sector Guideline regarding the Undercover Buy Basis) were created for the deployment of regular police officers (i.e. not working in the WOD unit) for small, ‘simple’ undercover buys, such as the purchase of stolen property being on offer on the Internet. These police officers still have to be trained, but their training is far less intensive than the training required for members of the WOD unit. 24 There is some information indicating that the use of undercover operations in general, so not infiltration specifically, has increased. In 2016, a newspaper published information indicating that the use of undercover operations has increased. In 2011, 2012 and 2013, according to the published information, the specialized undercover police unit (WOD) deployed operations in 55, 82 and 68 cases, respectively (Voskuil 2016). The newspaper acquired this information as a result of a successful appeal to the Wet openbaarheid van bestuur (WOB), which translates as the Freedom of Information Act.

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Soska and Christin 2015: 33). Silk Road, which was shut down in October 2013, and other online marketplaces operating as so-called TOR hidden services, provide an infrastructure for sellers and buyers to conduct transactions anonymously in an online environment.25 In 2015 several offenders, involved in online drug trading, were convicted by the appeal court, as a result of the first Dutch criminal investigating targeting these type of offenders as well as the online infrastructure itself. In 2013, the police and the public prosecution service start a criminal investigation into the online trade in illegal goods and/or substances. One or more suspects who are targeted are involved as moderator of an online marketplace that facilitates anonymous drug transactions. One or more suspects are also involved in developing such a marketplace. The police use an infiltration operation during which several undercover agents are deployed. They succeed in making contact with the suspect(s) online as well as offline. Several undercover buys take place, online as well as offline, during which XTC and cocaine (among other things) are bought. Several suspects are arrested and subsequently convicted by the district court, after which the case goes to the appeal court. Both courts find suspects guilty of facilitation of and participation in drug trafficking.

Online undercover operations may be less laborious than offline operations are. If so, does this result in a rise of the total number of undercover operations? Furthermore, as mentioned above, the Internet, at least in theory, offers offenders possibilities to reach markets, fellow criminals or victims who might remain out of reach in the offline world. But the Internet might also provide undercover agents new opportunities to set up cover identities or to target certain offenders. Online undercover operations relate to issues concerning transparency as well, since online interactions between an undercover agent and his target can, at least in principle, be logged with relative ease. These logs can be used in court to evaluate the undercover agent’s behaviour. How are these possibilities used in practice, does the dynamic of online interactions differ fundamentally from offline interactions between undercover agents and their targets, and are there any specific risks involved in online undercover operations? Since the Internet is becoming more and more integrated into everyday life, questions such as these should be on the research agenda. Unfortunately, criminal investigation is not a very popular research theme (see the following section).

Discussion In this chapter, I have provided empirical insight into the deployment and results of infiltration operations in The Netherlands. Moreover, I have looked into some outcomes of regulatory procedures with regard to infiltration operations. I will summarize the most important findings and discuss some implications. 25

Whether a transaction remains entirely anonymous depends on the behaviour of the people involved, among other things. TOR stands for The Onion Router. People using a TOR network can communicate with each other while maintaining their IP addresses unknown (in principle).

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First, in the 2000–2005 period, the Board of Prosecutors General authorized the use of deployment in sixteen cases, fourteen of which were actually deployed. In six cases the infiltration operation contributed to the trial, i.e. it produced evidence on the (partial) basis of which suspects were convicted. Four operations ‘only’ produced steering and/or rest information, while four operations did not contribute to the investigation or trial at all. Second, the research showed that the course of infiltration operations is very unpredictable. This unpredictability especially holds for operations that include (intended) undercover buys. In those operations, an undercover agent often poses as a fellow criminal who may want to do ‘business’. Thus, he participates in a criminal market and is therefore confronted with the unreliability and unpredictability that is so typical of criminal markets. Of the thirteen infiltration operations in which the undercover agent(s) established contact, twelve operations involved one or more (intended) undercover buys. None of these twelve operations worked out as planned. Third, the empirical results provided insight into the implementation of regulatory procedures in the investigative practice. A criminal investigation, especially when it focuses on organized crime and perhaps even more so when it involves undercover operations, is a very complex, ‘unruly’ process (cf. Neyroud and Disley 2007: 553). The potential invasiveness of policing methods justifies attempts to rationalize and control this process. Criminal investigations are, in fact, increasingly subjected to laws and procedures. As we argued in Section “Implementation of Regulatory Procedures in the Investigative Practice”, the introduction of the BOB Act certainly improved transparency, and therefore the accountability, of the use of investigative instruments in criminal cases. However, laws and authorization procedures may not always completely work out as planned. The intention to restrict the use of invasive policing methods (or methods that are regarded as such) to cases that really require their deployment, is rational and legitimate. Yet, testing prospectively for subsidiarity clashes to a certain extent with the fundamental unpredictability that characterizes investigations into organized crime. Likewise, centralized authorization procedures intend to assure a well-considered use of potentially risky methods of investigation. Yet, they may also produce ‘interference aversion’ and thereby result in unwanted outcomes. Criminal investigation is a relatively neglected field of research for criminologists. In part, this may be the consequence of the choices made by criminologists. It is also caused, however, by the reluctance of authorities to open up to social scientists or to provide information on police activities, such as the number, let alone the types and results, of undercover operations. Especially in Europe, there is very little empirical knowledge on undercover policing (Grabosky 2010: 364; De Poot 2010: 102; Marx 1995: 329). Because of the sensitive nature of policing, let alone policing methods that are deployed against organized crime, the investigative process can never be fully transparent (Walsh and Conway 2011: 71). It is very well feasible, however, to conduct research on investigative methods without jeopardizing any specific criminal investigation or disclosing operational tactics. It is not only feasible, but it

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might also be very useful and even necessary. As Bean—when referring to informers and witness protection schemes—puts it: no strategy should remain so secretive as to remain without critical evaluation (Bean 2001: 161; Fyfe and Sheptycki 2006: 350–351). Besides filling the existing scientific, criminological gap, empirical research on methods of criminal investigation may serve three goals. First, a greater knowledge base may help the Public Prosecution Service to exercise the authority in criminal investigations. Second, a greater transparency of investigative practice may serve the legislative debate. Methods of investigation that are used against organized crime were and still are the subject of, sometimes heated, debate. Debates regarding the invasiveness, necessity and risks of methods of investigation, can be improved when information is available on the number and kind of cases in which these methods are deployed and on the results they produce. Third, empirical insight into the practical outcomes of formal, regulatory requirements may serve to improve regulatory quality (cf. Ayling 2013: 15).

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Index

A Abduction, 74 AC Milan, 126, 142 Administrative approach to combat organized crime, 190, 191 Administrative law, 6 ADO Den Haag, 125 Agurkas (Agurkiniai), 95 Alien Act, 70, 72, 75n18 Al-Khelaïfi, Sheikh Nasser, 126 Allatta, Pietro, 147 Al Nahyan, Sheikh Mansour Bin Zayed, 126 American Civil Rights movement, 104 Amphetamine, 91, 96 Anthony Comstock Society for the Suppression of Vice, 237 Anti-association laws, 189–190 consorting laws, 199–202 control order laws, 195–199 gathering in public places laws, 202–203 Ares, 87 Ariel (Assessing the risk of infiltration into the legitimate economy), 184 Arsenal, 126 Art Students’ League, 237 Association of Women Lawyers, 59 Athletes, match-fixing by, 144–145 Australia Australian Crime Commission, 189, 193 Australian Cyber Security Centre, 195n10 biker crime, 115 Crimes (Criminal Organisations Control) Act 2009, 197n21, 198 Crimes (Criminal Organisations Control) Act 2012, 197n21, 198 Crimes (Criminal Organisations Control) Amendment Act 2013, 198

Crimes Amendment (Consorting and Organized Crime) Act 2012, 200 Criminal Law (Criminal Organisations Disruption) Amendment Act (CODA Act), 202, 203 Criminal Organisation Act 2009, 197n17, 198 Criminal Organisations Control Act 2012, 198 Criminal Organisations Control Amendment (Unlawful Associations) Act 2015, 201 Criminal Organisations Control and Other Acts Amendment Act 2014, 198 human rights, 192–193 Justice Legislation Amendment (Group Criminal Activities) Act 2006, 200 Law Reform Commission (VLRC), 205–206 legal prostitution systems, 48 mobility crimes, 4 National Organized Crime Response Plan (2015–2018), 189 organized crime, combating, 189–210 compared with Dutch approach, 208–209 consorting laws, 199–202 control order laws, 195–199 criminal law plus approach, 194, 204 effectiveness, 207–208 future directions, 208 gathering in public places laws, 202–203 new developments, 205–206 policing and preventing, 194–195 preemptive outcome, 206–207 political arrangements, 191–192

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280 Australia (cont.) Queensland Organized Crime Commission of Inquiry, 207n33 Queensland Taskforce on Organized Crime Legislation, 193–194, 197, 201, 205–208, 210 Serious and Organized Crime (Control) Act 2008, 196, 198–200 Serious and Organized Crime (Control) (Declared Organisations) Amendment Act 2913, 198 Serious and Organized Crime (Control) (Miscellaneous) Amendment Act 2012, 198 Serious Crime Control Act 2009, 198 Serious Crime Control Amendment Act 2011, 198 Statutes Amendment (Serious And Organized Crime) Act 2012, 200 Statutes Amendment (Serious And Organized Crime) Act 2015, 201 Vagrancy (Repeal) and Summary Offences (Amendment) Act 2005, 200 Vicious Lawless Association Disestablishment Act (VLAD Act), 202, 203n24 Autorità Nazionale Anticorruzione (ANAC), 184 B “Balance of evils” approach, 232, 244 Bali bombing (2002), 195 Bandidos, 105, 110, 208 Bandit state, 84 Bankruptcy of Dutch cannabis policy, 11–22 Barcelona, 126, 128–129 Beglikas (Beglikiai), 95 Belgium drug-related issues, 3 performance and image enhancing drugs, 26–41 Berlusconi, Silvio, 126 Bet365, 150 Betting, 151 Bibob Act 2003, 255n5 Bidognetti, Francesco, 165 Biker behavior, 103–104 Biker crime, 111–112 Biker entrepreneurialism, 109 Birmingham City FC, 127, 129, 133, 135–137 Birmingham International Holdings Ltd., 132–134 Blackmailers, 84 ‘Black Sox Scandal’ 1919, 139

Index The Blues money laundering, 132–134 Blumer, Herbert, 239 Bly, Nelly, 238 BMK (benzyl methyl ketone), 96 BOB Act, 257–258, 268 Bodog88, 150 Bongiorno, Carmelo, 147 Bozkurt, Emine, 140–141 Brando, Marlon, 104 Bruni, Frank, 239 Buduliai, 95 Buffon, Gianluigi, 143 Buijs, Danny, 144 Bulgaria Bulgarian Center for the Study of Democracy, 86 Bulgarian Communist Security Services, 87 Ministry of the Interior, 88 mobility crimes, 4 mobility of organized crime, 96 organized crime groups, categories of, 87–88 Bureau of Alcohol, Tobacco, and Firearms (BATF), 104, 113 Operation Black Biscuit, 115 C Calciopoli scandal, 143 Camorra, 158, 161 Canada biker crime, 115 Canadian Witness Protection Program Act, 225 drug-related issues, 3 Cannabis, 2–3 policy, bankruptcy of (the Netherlands), 11–22 Captured state, 84 Casalesi/Eco4-affair, 161–166, 168, 169, 171–172 Central Federation of Churches and Christian Workers, 236 Central Refereeing Committee, 143 Centre for Information and Research on Organized Crime (CIROC), 1 mission of, 2 on mobility crimes, 4 on sports and crime, 4–5 on criminal law enforcement, 6–7 Centurioni, 93 Chan, Shung Fai, 142 Checkpoint, 20–21 Chelsea, 126

Index Chigirinski, Aleksandr, 125 China Chinese Triads, 91 legal prostitution systems, 48 Chiornyi, Michael, 88 Church Association for the Advancement of the Interests of Labor, 236 Cirillo, Alessandro, 166n6 Clămparu, Ioan, 90 Club 777, 87 Club officials, match-fixing by, 143–144 Coercion, 52, 141 Collaborator of justice, 218 CoMensha, 51 Committee Baan, 13n4 Committee of Fifteen, 236 Committee of Fourteen, 237 Computer Betting Company GmbH (CBCX), 150 Consorting laws, 199–202 Control order laws, 195–199 Corona, Jesus, 130 Corruption, 5–6, 37, 86, 234 Corruption Perceptions Index, 191 Council of Europe (CoE), 65–67, 71, 74, 140, 190, 218, 219, 221 Counter strategies to organized crime, 255–259 Crane, Stephen, 238 Cremonese, 147 Crime(s) avoidance, 232, 243 biker, 111–112 mobility, 4, 83–98 organized, 1, 5 and sports, relationship between, 4–5 Crime-facilitative system, 137 Crimes (Criminal Organisations Control) Act 2009, 196, 197n21, 198 Crimes (Criminal Organisations Control) Act 2012, 197n21, 198 Crimes (Criminal Organisations Control) Amendment Act 2013, 198 Crimes Amendment (Consorting and Organized Crime) Act 2012, 200 Criminal Context Index (CCI), 176, 177 Criminal Context Indicator, 183 Criminal entrepreneurs, 129 Criminal exploitation, 51 Criminal groups online, infiltrating, 272–273 Criminal infiltration, of public sector, 157–172 case studies, methodology and selection of, 161–163 firms–criminal organizations relationship, in public procurement, 158–160

281 inquiry into Casalesi/Eco4 affair, 164–166 inquiry into Milano–Venezia high-speed train line, 163–164 public procurement in Italy, 160 Criminal-informants, 219, 227, 228 Criminal Law (Criminal Organisations Disruption) Amendment Act (CODA Act), 202, 203 Criminal law enforcement, 6–7 Criminal law plus approach, 194, 204 Criminal Organisation Act 2009, 197n17, 198 Criminal Organisation Public Interest Monitor (COPIM), 197n17 Criminal Organisations Control Act 2012, 198 Criminal Organisations Control Amendment (Unlawful Associations) Act 2015, 201 Criminal Organisations Control and Other Acts Amendment Act 2014, 198 ‘Crown witnesses’ (Kronzeuge), 218 D Dafabet, 150 Daktarai, 93, 94 Daktaras, Henrikas, 94, 95 Danielak, Leszek, 92 Dan Tan, 147, 151 Dashkiniai, 94 Dean, James, 104 Dekanidze, Boris, 94 De Lieto, 163 Deportivo La Coruna, 126 Desantininkai, 95 Deutsche AIDS-Hilfe, 59 Diazepam, 25 Di Lecce, Michele, 161 Dimitrov, Konstantin, 88 2,4-Dinitrophenol (DNP), 25 Direzione Nazionale Antimafia (Italian Antimafia Agency), 166 DITO-Veliko Turnovo, 87 Donadio, Gianfranco, 161 Doping substances, 25 Doyen Sports, 131–132 Dragon, the, 90 Drug Enforcement Administration (DEA), 246–248, 256–257 Drug-related issues, 2–3 Drug trafficking, 14, 15, 88, 89, 95, 96, 112, 141, 234, 248, 255–257, 259, 261, 263–265, 268 Drug use, and prostitution, 69 Dutch cannabis policy, bankruptcy of See also Netherlands, the, 11–22. increase in cannabis and heroin use, 13–14

282 Dutch cannabis policy, bankruptcy of See also Netherlands, the (cont.) separation of markets, 14–16 no normalization, 16–17 cultivation and trade, expansion of, 18–19 policy on condoning, 11, 14, 16n8, 20–21 historical perspective of, 12–13 E Endangered witness, 218 English Football Association, 134, 137 Enterprising criminals, 129 Europe diabolical troika, 84 legal prostitution systems in, 47–62 mobility crimes, 4 European Commission, 175 European Convention of Human Rights, 192 Article 8, 233 European Court of Human Rights, 220, 233 European Union (EU), 140 enlargement of, 85–86 Europol, 140, 220 F FC Twente, 127, 129, 136, 137 air castles of, 130–132 “Pride of the East,” 130 Federal Witness Protection Program, 213 Fédération Internationale de Football Association (FIFA), 131, 136 FIFPro, 139 Financial Fair Play, 135–136 Finland prostitution and human trafficking policies, linking, 66 Firms–criminal organizations relationship, in public procurement, 158–160 First Private Militia, 87 Fiscale Inlichtingen-en Opsporingsdienst (FIOD) (Fiscal Information and Intelligence Service), 27 Fiscal law, 6 Fit and Proper Persons Test, 134–135 Flora Ambiente, 163, 165, 168 Forced services, 51 Force entrepreneurs (silovi grupirovki), 87 Fourth Amendment of U.S. Constitution, 233 France legal prostitution systems, 48 G Gambling, 142 illegal, in Asia, 149–151

Index Gascoigne, Paul, 144 Gathering in public places laws, 202–203 Gedogen, 12 General Regression Neural Network (Grnn), 180 Gentrification, 55 Germany criminal law enforcement, 6 German and American targeting decisions, differences between, 240–242 human trafficking, 53 legal prostitution systems, 48, 52 politicized versus evidence-based policy, 57–59 prostitution, 3, 53 reverse sting operations, 242–246 witness protection, 218 Germinal Beerschot Antwerp, 146 Global Network of Sex Work Projects (NSWP), 66 Good Practices for the Protection of Witnesses in Criminal Proceedings involving Organized Crime, 220 Governance of witness protection, 226–227 Grandtop International Holding. See Birmingham International Holdings Ltd. Group conflict theory, 103 Grupo Comercializador Conclave, 130 H Hapgood, Hutchins, 238 Harm avoidance, 232, 243–244 Hellenic Football Federation, 143 Hells’ Angels (HAMC), 105, 108, 110–111, 115, 208 West Coast Officers Council, 112 Heroin, 14 High risk entrepreneurs (ekstremnoriskovi predpriemachi), 87 Hughes, Everett, 239 Human Development Index, 191 Human enhancement drugs (HEDs), 25 Human rights, in Australia, 192–193 Human trafficking, 3–4, 47, 52, 53 and prostitution, relationship between, 67–69, 73–75 in Romania, 90 in Sweden, 71–73 I Illicit markets, truth finding in, 222–226 Implementazione analisi criminale (Criminal Analysis Implementation), 175 Infiltration of public contracts

Index defined, 176 mapping, 176–177 Risico 1.0, 180 Risico 2.0, 180–184 Risico 3.0, 184 risk model, drafting, 178–179 Infiltration operations, 253–275 assessment, 261 course and results, 262–266 criminal groups online, infiltrating, 272–273 empirical data, 260 interference aversion, 270–271 participating in illegal markets, consequence of, 266–268 public prosecutor investigation, 261–262 regulatory procedures in investigative practice, implementation of, 268–271 testing for subsidiarity, 268–270 Insiders, match-fixing by, 143–145 Inspectie voor de Gezondheidzorg (IGZ) (Health Care Inspectorate), 27 Interference aversion, 270–271 Intergroup, 88 Interlop, 89, 90 Internationalization of organized crime, 219–220 International Labour Organization (ILO), 50 Interpol, 140, 149 Interregional investigation squads (IRTs), 257 Iron Guard, 105n2, 108 Iskandarani, Zaher, 90 Italy Ministry of the Interior, 176 pentiti strategy, 218 public procurement, 5–6, 160 corruption, 5–6 risk assessment, 5, 6 J Jordania, Merab, 125 Journalists, undercover tactics among, 238–240 Justice Legislation Amendment (Group Criminal Activities) Act 2006, 200 Juventus, 143 K Kargbo, Ibrahim, 148 Kauliniai, 94 KNVB (Royal Dutch Football Association), 135–137, 148 Kolikowski, Andrzej, 92 Krysha, 93

283 L Labor exploitation, 51 Lakshmi Mittal, 126 Lanham Act, 113 Law Reform Commission (VLRC), 205–206 Legal prostitution systems, in Europe, 47–62 flawed multinational comparisons, 49–54 politicized versus evidence-based policy, 54–59 public opinion, 59–61 state policy and, 48–49 Lithuania Lithuanian Boxing Federation, 94 Lithuanian Chicago, 93 mobility crimes, 4 mobility of organized crime, 96–97 organized crime groups, categories of, 93–95 Locatelli, 163, 164 London, Jack, 238 M Ma, Shui Cheong, 133 MacLean, Annie, 238–239 Mafia index (MI), 177, 183 Mamone, Gino, 161, 163, 166–167 Manchester City, 126 Marginalisation, and prostitution, 69 Marinakis, Evangelos, 143 Match-fixing See also Sports, 5, 26, 139–152. Asian connection betting, 151 illegal gambling, 149–151 Perumal, Wilson Raj, 147–148 Ye, Zheyun, 146–147 by insiders, 143–145 athletes, 144–145 club officials, 143–144 officials, 144–145 by outsiders, 140–142 Mega Star Enterprises, 128 Melanotan II, 25 Mens rea, 207 Messi, Lionel, 128–129 Methamphetamine, 105, 111 Methylphenidate, 25 Miele, Massimiliano, 165 Milano–Venezia high-speed train line, 163–164, 171 Miliai, 95 Mirchiov, Nikolay, 88 Mobility crimes, 4, 83–98 transition period of, 84–85

284 Money laundering, 127–128, 158 integration, 127 layering, 127 placement, 127 in professional football See also Sports, 125–138. crime-inducing features of, 128–129 Curbing, 134–137 FC Twente, air castles of, 130–132 The Blues, 132–134 Moral entrepreneurs, undercover tactics among, 238–240 Multigroup, 87, 88 Munsterman, Joop, 130, 131 Mutri, 87 Mutschke, Ralf, 140 N National Authority for the Supervision public contracts, 176 National Pinkerton Detective Agency, 237 Ndrangheta, 161–163 Nederwiet production, 18 Netherlands, the Board of Procurators General, 259, 261 BOB Act, 257–258, 268 Central Assessment Committee (Centrale Toetsingscommissie [CTC]), 258–259, 261 Central Bureau for Mental Health, 13n3 Committee Baan, 13n4 criminal law enforcement, 7 drug-related issues, 3 Dutch cannabis policy, bankruptcy of, 11–22 increase in cannabis and heroin use, 13–14 separation of markets, 14–16 no normalization, 16–17 cultivation and trade, expansion of, 18–19 policy on condoning, 11, 14, 16n8, 20–21 historical perspective of, 12–13 infiltration operations, 253–275 assessment, 261 course and results, 262–266 criminal groups online, infiltrating, 272–273 empirical data, 260 interference aversion, 270–271 participating in illegal markets, consequence of, 266–268

Index public prosecutor investigation, 261–262 regulatory procedures in investigative practice, implementation of, 268–271 testing for subsidiarity, 268–270 KNVB (Royal Dutch Football Association), 135–137, 148 legal prostitution systems, 48, 51, 52 match-fixing, 144–145 Ministry of Justice, 52 Netherlands Association of Sports Medicine, 33 Netherlands Institute for Social Research (SCP), 16 Opium Act 1928, 12 Opium Act 1976, 14, 15 Opium Act 2016, 16 organized crime, combating compared with Australian approach, 208–209 Parliamentary Inquiry Committee on Criminal Investigation Methods, 257 performance and image enhancing drugs, 26–41 Plan of approach for combating 1% motorcycle clubs 2012, 208 politicized versus evidence-based policy, 55–57 prostitution, 3 Public Prosecutor’s Office (OM), 12, 13, 15–17, 20 risk assessment, 5 VNG (Association of Netherlands Municipalities), 19 Wet op de Economische delicten (WED) (Economic Offences Act), 33n3 Wet op de Geneesmiddelenvoorziening (WOG) (Dutch provision of Medicine Act), 33n3 New psychoactive substances (NPS), 2 New Zealand legal prostitution systems in, 48 Noble, Ron, 140 O Officials, match-fixing by, 144–145 One percent motorcycle club (1% MC), 103–118 brief history of, 104–106 dialectic of prosecution, 112–114 evolution of, 106–107 fallacies in depictions, 114–116

Index organization of, 107–109 patterns of organization, 109–111 OPAP, 144 Operation Black Biscuit, 115 Opium Act 1928, 12 Opium Act 1976, 14, 15 Opium Act 2016, 16 Organized criminal group, 141 Organized crime, 1, 5 combating, 189–210 counter strategies to, 255–259 groups, categories of, 86–95 internationalization of, 219–220 mobility of, 96–97 and performance and image enhancing drugs, 36–39 Organized Crime Portfolio, 183, 184 Orsi, Sergio, 165 Outlaw motorcycle gangs (OMCGs), 189, 191, 193–196, 202–204, 207–209 Outlaws, 105, 106, 110, 112 Outsiders, match-fixing by, 140–142 Owners and Directors Test. See Fit and Proper Persons Test P Pagans, 105, 108 Palermo Protocol, 68, 71 Panama Papers, 128–129 P&P, 163, 164, 168 Pannu, Peter, 134 Paolini, Marco, 147 Paris Saint-Germain, 126 Pavlov, Iliya, 88 Pentiti strategy, 218 Performance and image enhancing drugs (PIEDs), 25–41 drivers and motivations of, 35–36 market, development of, 29–32 organized crime and, 36–39 sports and, 36–39 suppliers, general characteristics of, 32–35 Perumal, Wilson Raj, 147–148, 151 Pillay, Eswaramoorthy, 146 Point shaving, 144 Poland mobility crimes, 4 mobility of organized crime, 96 organized crime groups, categories of, 91–92 Policing, 6, 194–195 undercover, 255–259 Political arrangements, in Australia, 191–192 Pompano case, 197

285 Poverty, and prostitution, 69 Princai, 93 Privatisation, 84 Privatized state, 84 Procurement, 5–6 Procuring/pimping, 54 Professional football, money laundering in See also Sports, 125–138. Project Pharaoh, 223–224 Promes, Quincy, 131 Prostitution, 3–4 and prostitution, relationship between, 67–69 systems, in Europe, 47–62 in Sweden, 69–71 Protected witness, 218 Proud, 56 Pruszków, 92 Public contracts, 175–184 Public opinion, on prostitution, 59–61 Public procurement firms–criminal organizations relationship in, 158–160 in Italy, 160 Public sector, criminal infiltration of, 157–172 Q Quasi-privatisation, 84 Queen, William, 113 Queensland Organized Crime Commission of Inquiry, 207n33 Queensland Taskforce on Organized Crime Legislation, 193–194, 197, 201, 205–208, 210 Queens Park Rangers, 126 R Racketeer Influenced and Criminal Organization (RICO) Act, 112, 115, 235 Raguz, Ivica, 147 Raketi, 90 Rann, Mike, 195 Real Madrid, 126 Red-light district (RLD), 56–58 Red Thread, 56 Represetanciones Internacionales Vijai, 130 Resource Dependence Theory, 161 Reverse sting operations, 240 in Germany, 242–246 in United States, 246–250 Riis, Jacob, 236, 238 Risico 1.0, 180 Risico 2.0, 180–184 applicability of, 182–183

286 Risico 2.0 (cont.) in-depth analysis (IDA), 182 infiltration assessment, dimension of, 181 legacy of, 183–184 limitations of, 182–183 Risico 3.0, 184 Risk assessment, 5–6 River Run, 108 Roberti, Franco, 161 Romania mobility crimes, 4 mobility of organized crime, 96 organized crime groups, categories of, 88–90 Rooij, Paul, 141, 142 Roosevelt, Theodore, 237 ‘Ruimte in het drugbeleid’ (Space in Drug Policies), 13 Ruthowsky, Craig, 224 Rybolovlev, Dmitry, 126 S Safeguarding integrity, 175–184 Saloon Society, 105 Samvo Entertainment Limited, 142 Sapina, Ante, 142 Satudarah, 208 Sbobet, 150 Scommessopoli scandal, 141 Seductions of crime, 216 Senamiestis, 94 Separation of markets, 14–16 Serious and Organized Crime (Control) (Declared Organisations) Amendment Act 2913, 198 Serious and Organized Crime (Control) (Miscellaneous) Amendment Act 2012, 198 Serious and Organized Crime (Control) Act 2008 (SOCCA), 196, 198–200 Serious Crime Control Act 2009, 198 Serious Crime Control Amendment Act 2011, 198 Service for Information, Coordination and Analysis (SKIAD), 87 Sex Purchase Act, 65–67, 69, 70 Sex trafficking, 3, 49, 50, 52, 68 Sexual exploitation, 51 Shedden massacre, 111 SIK, 87, 88 Sildenafil, 25 Silk Road, 272–273 Small Health Alliance. See The Blues Šmikiniai, 95

Index Sociologists, undercover tactics among, 238–240 Sofia, 87 SOGA (‘Soccer and Gambling’), 149 Solntsevskaya, 92 Spain drug-related issues, 3 Spoitoru, Fane, 90 Sports and crime, relationship between, 4–5 match-fixing, 5, 26, 139–152 money laundering in professional football, 125–138 and performance and image enhancing drugs, 36–39 Stack, Margaret, 224 ‘State witnesses’ (Staatszeugen), 218 Statutes Amendment (Serious And Organized Crime) Act 2012, 200 Statutes Amendment (Serious And Organized Crime) Act 2015, 201 Steroids, 25, 26, 28–31 Stogas, 93 Strike Force Raptor, 194n9 Subject matter restrictions on undercover operations, impact of, 233–236 Subsidiarity, testing for, 268–270 Suray, Olivier, 147 Sviluppo Genova, 167 Švinius (Gutauskas), 95 Sweden Alien Act, 70, 72, 75n18 human trafficking, 4, 65–66 policies, 71–73 legal prostitution systems, 48, 54 Migration Board, 72–73 National Criminal Investigation Department, 66, 67 National Police Board, 74 National Rapporteur on Trafficking, 72 prostitution, 4, 65–66 policies, 69–71 Swedish National Council for Crime Prevention, 70n12 Swedish National Police Board, 72 Swedish Sex Purchase Act, 65–67, 69, 70 Trafficking Act 2002, 71 Synthetic drugs, 2 T Tadic, Dusan, 131 Tan Seet Eng. See Dan Tan Targeting decisions Americans versus Germans, 240–242

Index Taskforce Echo, 194n9 Tenement House Committee, 236 Third-party investment (TPI), 130, 131 Third-party ownership (TPO), 130, 131 Threatened witness, 218 TIM, 87, 88 “To Catch a Predator,” 239 Toronto Police Service Project Pharaoh, 223–224 Trafficking human, 3–4, 47, 52, 65–77 XTC, 262–265, 267, 268 sex, 3, 49, 50, 52, 68 drug, 14, 15, 88, 89, 95, 96, 112, 141, 234, 248, 255–257, 259, 261, 263–265, 268 Trafficking Act 2002, 71 Trafficking in human beings (THB), 52 Transcrime, 6, 175–176, 181 Project Ariel, 159 Transparency International Corruption Perceptions Index, 191 Trudeau, Justin, 3 Trust in organization of crime, 215–216 truth of, 214–215 Tulpinai, 93 Türkyemspor, 129 U UEFA, 135, 136 Undercover operations, 231–250 American and German targeting decisions, differences between, 240–242 American practices, 236–238 among journalists, 238–240 among moral entrepreneurs, 238–240 among sociologists, 238–240 subject matter restrictions, impact of, 233–236 Undercover policing, 255–259 Underground labs (UGLs), 27, 30, 31, 39 United Nations (UN), 219 Convention for the Suppression of the Traffic in Persons and of the Exploitation of the Prostitution of Others (1949), 68 Good Practices for the Protection of Witnesses in Criminal Proceedings involving Organized Crime, 220 Office on Drugs and Crime (UNODC), 49 United Nations Convention against Transnational Organized Crime, Article 19, 219

287 United Nations Convention on Transnational Organized Crime, 141 United Nations Development Programme Human Development Index, 191 United States American and German targeting decisions, differences between, 240–242 criminal law enforcement, 6 Department of Defense, 235 Drug Enforcement Administration (DEA), 246–248, 256–257 drug-related issues, 2–3 Fourth Amendment of U.S. Constitution, 233 Lanham Act, 113 legal prostitution systems, 48 reverse sting operations, 246–250 RICO Act, 112, 115, 235 State Department, 50–51 undercover operations, 236–238 United Vansen, 125 Uruguay drug-related issues, 3 Usmanov, Alisher, 126 US WITSEC program, 217 V Vagrancy (Repeal) and Summary Offences (Amendment) Act 2005, 200 VAI Holdings, 88 van der Laan, Aldo, 131 Van Traa Committee, 86 Vassallo, Giuseppe, 164 Veletchka, Saulius (Agurkas), 97 Vicious Lawless Association Disestablishment Act (VLAD Act), 202, 203n24 Vidal, Laurent, 139 Vilniusskaya Brigada, 93 Violence, 37 avoidance, 216 threats of, 141 Violent entrepreneurs, 84 VIS, 87, 88 VIS-1, 87, 88 Vitesse Arnhem, 125 VNG (Association of Netherlands Municipalities), 19 Voetbal International, 145 W Wald, Lillian, 236 Wang, Hui, 125 Warner, Lloyd, 239

288 War on doping, 41 War on drugs, 2, 41 Wegener Publishers, 130 Wet op de Economische delicten (WED) (Economic Offences Act), 33n3 Wet op de Geneesmiddelenvoorziening (WOG) (Dutch provision of Medicine Act), 33n3 Willem II, 148 Witness at risk, 218 Witness intimidation, 218 Witness protection, 213 governance of, 226–227 paradigm, 217–218 truth finding in illicit markets, 222–226 utility of, 220–222 Wolomin, 92

Index Women’s Council, 59 Working Group, 13 World Anti-Doping Agency (WADA), 26 Y Yeung, Carson, 137 Football Association’s (FA) Fit and Proper Persons Test?, 134–135 The Blues and, 132–134 Yeung, Ryan, 133 Ye, Zheyun, 141, 142, 146–147 Z Žemaičiai, 95 Zemaitukai, 93 Zhaliakalnis, 94