Home' Asia Pacific Defence Reporter : APDR November 2010 Contents 50 | Asia Pacific Defence Reporter
from expanding markets in places like Australia, where heroin sales were
stagnant, but where local retailers had an extensive client base and where
these new drugs were seen as ‘fashionable and harmless’ compared
to heroin. So Chinese heroin trafficking groups switched to trafficking
in synthetics, and established links to retail organisations of different
During the 1990s, methamphetamines were manufactured in Asia.
‘Ecstasy’ was mostly produced in Holland. The business synergy was
obvious, as these drugs used the same chemical feedstocks. So transnational
organised criminal businesses developed relationships with European and
Asian producers and suppliers. Chinese transnational organised criminal
groups developed contacts in the countries where the markets were. Inside
Australia, they developed business partnerships with Australian organised
crime groups, outlaw motorcycle gangs and Vietnamese drug distributing
One odd characteristic of Asian methamphetamines markets is that there
is a government involved in producing and marketing ‘ice’, the highest
quality methamphetamine. Large volumes of ‘ice’ are manufactured in
Wonsan by Bureau 39 of the government of Democratic People’s Republic
of North Korea, for the Japanese market. This is part of the DPRK’s ‘parallel
economy’ which finances the political elite in that country.
In recent years, Asian transnational criminal entities have formed
consortia between various organised crime groups. These then established
synthetic drug production “superlabs” in places like Fiji, Malaysia,
Indonesia and the Philippines. In 2003, for example, nine ‘superlabs’ were
found in Metro Manila, the largest being a Chinese facility at Antipolo
City in Barangay Mambugan. Thirty tons of precursors from China and
Taiwan were found at that site. An immense ‘superlab’ was found near
Kuala Lumpur in 2006, along with over a hundred tons of precursors. There
have been many more since. In this case, the criminal business bought the
chemicals from China, the chemical plant from Korea, Taiwan and China.
It was assembled by Koreans and Malaysians, and all of this equipment
was moved through a multi-ethnic supply chain. The chemical experts
were Dutch and Taiwanese and finance was via Hong Kong and Shanghai.
Transnational crime on this scale necessitates transnational policing.
The 2006 Malaysian ‘superlab’ was assessed by Malaysian police to have
a maximum potential retail value output of $750 million US, but took less
than a million dollars to build. Even at ‘wholesale’ rates, the criminals
stood to make a profit of $100-200 million US. This is one reason that Asian
police forces are working so closely with Australian, US and European law
THE PACIFIC REGION: CHANGES AND RESPONSES
The situation in the Pacific in 1990 was, by today’s standards, bucolic.
There was almost no transnational crime, little likelihood of a Pacific state
failing, and local police forces rarely worked together.
Twenty years later the picture is radically different. The failure of the
Solomon Islands is now seen not as an aberration, but as just the first Pacific
failed state. Now in 2010, PNG governance is almost completely corrupted,
and the country well down the path of being a Chinese economic colonial
possession. By 2002 the Australians were forced to establish the Pacific
Transnational Crime Network under the aegis of the Pacific Islands Forum.
By 2004 this network had found the first methamphetamines ‘superlab’ in
Progress in transnational law enforcement in the Pacific since 2002 has
been steady, but the reaction of organised crime has been strong. They
have taken steps to corrupt Pacific police and customs services. In Papua
New Guinea, the force is deeply compromised, up to and including various
Police Commissioners. Why corrupt local police forces? Because it makes
transnational police cooperation nearly impossible.
Similarly, they have been ‘buying’ more Pacific politicians and buying into
legal businesses. Why? Because this buys the advantages already discussed,
opens opportunities for corruption, buys into the local economy and its
lobby groups, and allows transnational organised criminal businesses
to become a local interest group. In this manner, they can argue against
legislation designed to improve transnational cooperation and regulation.
As widely reported by Green groups, the classic example of this is where
powerful companies can capture departments in Pacific governments. The
best known case of this is again in PNG, where the Malaysian timber giant
Rimbunan Hijau controls 80% of PNG’s timber industry, and has captured
the forestry bureaucracy. This is a legal company and there is no suggestion
that it is owned by a transnational organised criminal organisation.
But what if it was purchased by such a group? How could a ‘superlab’
established by the illegal wing of such a business conglomerate inside PNG
even be detected? What effect would the vast resulting cash flows have in
enabling the criminal entity to further buy influence in PNG? And PNG is
a large country. In a much smaller country, the transnational organised
crime business could quite literally take over the state.
The very nature of transnational organised crime in Asia has changed completely since 1990. In doing so, most of the crime cartels which started
as moving one main product through a trust-chain composed of one ethnic group, supported by a hui kan financial system run by a similar
ethnic group have evolved. Now they are structured like a business. They normally have legal and illegal wings and can self-launder a large
percentage of illegal profits. The rest is laundered by specialist money-laundering service providers acting as sub-contractors. Their internal
business structure is more cellular, and is networked across ethnic lines. It is designed to minimise risk while maximising profits.
The old structures were designed to stay underground, to avoid government and law enforcement attention, because they conducted most
of their operations within one jurisdiction. Now, they deliberately operate in legal and illegal business arms across jurisdictions in order to
exploit the weaknesses inherent in jurisdictional interfaces. This forces law enforcement agencies to work cooperatively, something they are not
traditionally good at. These new structures are capable of something the old ones were not. They can attack institutions of governance and the
economy of any state at all levels simultaneously. A well run state with strong institutions and well-paid personnel like Singapore or Australia
can suffer localised damage from such attack. However, a poor, weak state without strong institutions can be literally taken over or destroyed by
this form of attack. To them, the threat is existential, and they are not able to do much about it by themselves.
There is a race going on in the Pacific right now. It is a race between a new form of transnational law enforcement, supported by external
powers, and this new form of transnational organised criminal business. While this race is not fully run now, so far the transnational criminal
organizations are in the lead, the Solomon Islands has already collapsed, and PNG is badly damaged. APDR
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