International Organizations United States. Congress. House. Committee on Forei.

The threat of international organized crime : hearing before the Subcommittee on International Security, International Organizations, and Human Rights of the Committee on Foreign Affairs, House of Representatives, One Hundred Third Congress, first session, November 4, 1993 online

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THE THREAT OF INTERNATIONAL ORGANIZED

CRIME



Y 4.F76/1:C 86/3

The Threat of International Drganiz...

BEFORE THE

SUBCOMMITTEE ON

INTERNATIONAL SECURITY, INTERNATIONAL

ORGANIZATIONS AND HUMAN RIGHTS

OF THE

COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES

ONE HUNDRED THIRD CONGRESS

FIRST sp:ssion



NOVEMBER 4, 1993



Printed for the use of the Committee on Foreign AfTairs




'""•"^s^^as^.






U.S. GOVERNMENT PRINTING OFFICE
78-114 CC WASHINGTON : 1994

For sale by the U.S. Government Printing Ol'tlce
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-044455-1



\ / THE THREAT OF INTERNATIONAL ORGANIZED
S* CRIME



4.F76/1;C 86/3



e Threat of International Drganiz...

±iiL*i-vKlJNCjr

BEFORE THE

SUBCOMMITTEE ON

INTERNATIONAL SECURITY, INTERNATIONAL

ORGANIZATIONS AND HUMAN RIGHTS

OF THE

COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES

ONE HUNDRED THIRD CONGRESS

FIRST SESSION



NOVEMBER 4, 1993



Printed for the use of the Committee on Foreign Affairs



/'**%







U.S. GOVERNMENT PRINTING OFFICE
78-114 CC WASHINGTON : 1994

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-044455-1



COMMITTEE ON FOREIGN AFFAIRS
LEE H. HAMILTON, Indiana, Chairman



SAM GEJDENSON, Connecticut

TOM LANTOS, California

ROBERT G. TORRICELLI, New Jersey

HOWARD L. HERMAN, California

GARY L. ACKERMAN, New York

HARRY JOHNSTON, Florida

ELIOT L. ENGEL, New York

ENI F.H. FALEOMAVAEGA, American

Samoa
JAMES L. OBERSTAR, MinnesoU
CHARLES E. SCHUMER, New York
MATTHEW G. MARTINEZ, California
ROBERT A. BORSKI, Pennsylvania
DONALD M. PAYNE, New Jersey
ROBERT E. ANDREWS, New Jersey
ROBERT MENENDEZ, New Jersey
SHERROD BROWN, Ohio
CYNTHIA A. MCKINNEY, Georgia
MARIA CANTWELL, Washington
ALCEE L. HASTINGS, Florida
ERIC FINGERHUT, Ohio
PETER DEUTSCH, Florida
ALBERT RUSSELL WYNN, Maryland
DON EDWARDS, California
FRANK MCCLOSKEY, Indiana
THOMAS C. SAWYER, Ohio

(Vacancy)

Michael H. Van Dusen, Chief of Staff

Jo Weber, Staff Associate



BENJAMIN A. GILMAN, New York
WILLIAM F. GOODLING, Pennsylvania
JAMES A. LEACH, Iowa
TOBY ROTH, Wisconsin
OLYMPIA J. SNOWE, Maine
HENRY J. HYDE, Ilhnois
DOUG BEREUTER, Nebraska
CHRISTOPHER H. SMITH, New Jersey
DAN BURTON, Indiana
JAN MEYERS, Kansas
ELTON GALLEGLY, California
ILEANA ROS-LEHTINEN, Florida
CASS BALLENGER, North Carolina
DANA ROHRABACHER, California
DAVID A. LEVY, New York
DONALD A. MANZULLO, Illinois
LINCOLN DIAZ-BALART, Florida
EDWARD R. ROYCE, California



International Security, International Organization and Human Rights

TOM LANTOS, California, Chairman

HOWARD L. BERMAN, California DOUG BEREUTER, Nebraska

GARY L. ACKERMAN, New York OLYMPIA J. SNOWE, Maine

MATTHEW G. MARTINEZ, California CHRISTOPHER H. SMITH, New Jersey

FRANK MCCLOSKEY, Indiana DAN BURTON, Indiana

THOMAS C. SAWYER, Ohio

Robert Kjng, Staff Director

Michael ENNIS, Republican Professional Staff Member

Theodore H. HiRSCH, Professional Staff Member

Beni L. POISSON, Professional Staff Member



(II)



CONTENTS



Page

WITNESSES

William J. Olson, senior fellow, The National Strategy Information Center 4

Amaud de Borchgrave, senior advisor, Center for Strategic and International

Studies 9

Rensellaer Lee III, president. Global Advisory Services 12

Willard H. Myers III, director, The Center for the Study of Asian Organized

Crime 14

APPENDIX

Prepared statements:

William J. Olson 29

Arnaud de Borchgrave 43

Rensellaer Lee III 48

Willard H. Myers III 54



(III)



THE THREAT OF INTERNATIONAL
ORGANIZED CRIME



THURSDAY, NOVEMBER 4, 1993

House of Representatives,
Committee on Foreign Affadis,
Subcommittee on International Security,
International Organizations and Human Rights,

Washington, DC.

The subcommittee met, pursuant to call, at 10 a.m., in room
2200, Rayburn House Office Building, Hon. Tom Lantos (chairman
of the Subcommittee on International Security, In'ternational Orga-
nizations and Human Rights) presiding.

Mr. Lantos. The Subcommittee on International Security, Inter-
national Organizations and Human Rights will come to order.

Today, our hearing will focus on international criminal organiza-
tions and the implications of their illegal activities for U.S. foreign
policy. The subcommittee will be examining this issue from the
point of view of what our Nation's response should be in coordinat-
ing our international law enforcement efforts against these groups.

This subcommittee has dealt with this issue in a number of other
hearings that are closely related to this problem — hearings on our
own Nation's counter-narcotics policies, our fight against terrorism,
and our efforts to promote democracy. Yesterday, the subcommittee
had a very important hearing with Dr. Lee P. Brown, Director of
the Office of National Drug Control Policy, which focused on the
international aspects of the President's drug control strategy.

Today, we will focus on criminal organizations, terrorist groups,
narcotics cartels, and illegitimate businesses and the serious grow-
ing threat they pose to the international community and, of course,
the United States. The growth in communications among and joint
activities between these criminal organizations raises very serious
concerns for our Nation.

Democratic institutions and the democratic process are under-
mined when international criminal organizations corrupt legitimate
democratic governments both at the local level and at the national
level. We have seen this most dramatically with governments in
Latin America, but it is an increasing threat in the independent
Republics of the former Soviet Union, where organized criminal ac-
tivity is on the increase.

International criminal organizations undermine the economies of
the countries where they operate. Illegal trafficking in narcotics di-
verts resources from legitimate economic activity, as has been the
case in many areas in Latin America. Illegal exports of precious
metals and other raw materials, primarily from the states of the

(1)



former Soviet Union, undermines legitimate business channels and
results in the loss of badly needed government resources.

International criminal activity represents a potential security
threat to the United States. Illegal trafficking in sophisticated con-
ventional weapons has been reported, and links between inter-
national criminal organizations and rogue regimes represent a seri-
ous threat to regional stability. There are reported links between
criminal organizations and sub-national terrorist groups such as
the IRA and Islamic fundamentalists. Thus far, we have no evi-
dence of the theft of nuclear weapons or nuclear materials, such as
plutonium or enriched uranium; but this, nonetheless, is a distinct
threat.

The activities of international criminal organizations contribute
to serious human rights abuses. The smuggling of Chinese illegal
immigrants to the United States and elsewhere and accounts of
prostitution rings from the former Yugoslavia and Eastern and
Central Europe indicate the potential for serious human rights
abuses against individuals by these criminal organizations.

Now, before introducing our very distinguished panel, the Chair
would like to make a few observations about some of these specific
organizations.

First, a word about the Russian Mafias. The growth of organized
crime represents perhaps the most serious threat to economic re-
form and, potentially, to democratic government in Russia and
other Republics of the former Soviet Union. Criminal organizations,
called Mafia by Russian citizens, are an all too familiar feature of
contemporary Russia. There are indications that former Soviet in-
telligence officers have become involved in criminal enterprises.
Such individuals have extensive training, access to technology that
contributes to their criminal success, and many links to individuals
and groups involved in the widespread black market that flour-
ished under the Soviet Government, which was involved in the ille-
gal exchange of rubles into hard currency and narcotics.

One extremely disturbing trend is the indications of growing
links between the Russian organized crime groups and other inter-
national crime organizations. Luciano Violonta, Chairman of Italy's
Parliamentary Committee of Inquiry into the Mafia, told Italian
radio recently that the Russian Mafia held two summits with the
three main Italian crime organizations — the Sicilian Mafia, the
Neopolitan Camorra, and the Calabrian Ndrangheta — to discuss
drug money laundering, the narcotics trade, and the selling of nu-
clear weapons. Violonta also made reference to a report by a mem-
ber of Russia's Academy of Sciences that link the KGB to Italian
crime organizations.

The Republics of the former Soviet Union and the former Com-
munist countries of Central and Eastern Europe represent a par-
ticularly attractive target of opportunity for criminal organizations.
There is a lack of effective border control. The privatization process
has opened the market for the laundering of drug money. The
struggling economies in these countries provide criminal organiza-
tions wide open opportunities in many fields. In the drug trade,
growing conditions are excellent for illegal drugs, particularly
opium.



There are some specific indications of these general issues that
I am talking about. Vitos — the distinguished Lithuanian journal-
ist — was recently assassinated, apparently because he attempted to
publish an article exposing Russian and Baltic criminal organiza-
tions. According to the Russian newspaper Komsomolskaya Pravda,
opium cultivation has been made legal in Kazakhstan. Until re-
cently, it was also legal in Kyrgyzstan.

According to Moscow's main Internal Affairs Administration, the
trafficking of drugs in Moscow has risen by over 200 percent in the
last half year. The number of drug users in the former Soviet
Union, which was just over 1 million 3 years ago, is close to 8 mil-
lion today. Criminal groups in Russia and other Republics of the
former Soviet Union have transferred over $7 billion to Germany
in 1992 alone. Police officials report that there are links between
Russia's criminal Mafia organizations and Russian-speaking immi-
grant populations in the United States in locations such as Brigh-
ton Beach and other parts of New York and the East coast.

Let me say a word about Asian organized crime. The most influ-
ential of all the Asian crime syndicates in the United States are
the Chinese triads. Arriving in the late 1800's, they have links with
triads in Hong Kong, People's Republic of China, and Taiwan. A re-
cent report prepared by the Royal Hong Kong police force indicates
an alliance between influential leaders in the Hong Kong triads
and officials in the Government of the People's Republic of China.

The most prominent triads operating in the United States in-
clude the Wo Group, which consists of 10 triads, the largest of
which is the Wo Hop To triad, based in my district in San Fran-
cisco. Other triads include Hong-Kong-based Sun Yee On, the 14K
Triad, the Luen Group, the Big Circle Gang, and the Taiwanese-
based United Bamboo and Four Seas Gang. Unlike other criminal
organizations, the Chinese triads do not compete with one another
for their market share, except at the very lowest levels.

Although these Chinese triads are involved in various traditional
criminal activities, such as illegal gambling, extortion, bribery and
assassination, it is the international smuggling of aliens and heroin
that are a particular threat to our Nation. Acting cooperatively,
they have been able to create a highly sophisticated global trans-
portation network. This transportation network has forged inter-
national smuggling groups capable of transporting both illegal
aliens and heroin with an extremely high degree of success. Recent
reports indicate that smuggling of Chinese aliens alone generates
annual profits in excess of $3 billion every single year.

Let me say a word about the Colombian drug cartel. The main
Colombian cartels are centered around various tight-knit families
in Medellin. Due to recent Colombian law enforcement measures,
including the effort to capture Pueblo Escobar, the Cali cartel has
been able to capture most of what was previously the Medellin car-
tel's market in cocaine trafficking.

The Cali cartel is a complex framework of compartmentalized
cells which are insulated from each other so that law enforcement
actions directed against one cell will not affect the others. It con-
trols nearly 270,000 hectares of land throughout the Andes and a
network of laboratories and production facilities that produce about
900 metric tons of cocaine every year. Like the Chinese triads, the



Call cartel possesses a superior global distribution network capable
of successfully moving raw materials and finished products. The
Cali cartel is the largest supplier of cocaine to the United States
and Europe.

There is also evidence that the Cali cartel has extensive ties with
other criminal organizations. For example, Operation Green Ice, a
major money-laundering sting operation, documented large-scale
sales of cocaine between the Cali cartel and the Sicilian Mafia.
Since the collapse of the Soviet Union and the end of Cuban sup-
port, Sendero Luminoso — the Shining Path guerrillas in Peru — and
the Revolutionary Armed Forces of Colombia, both of which adhere
to Marxist ideology, have formed closer ties to the cartels.

These are just vignettes of what we are up against; and I think
it is a remarkable indication of misplaced priorities that an issue
of such enormous importance has received infinitely less attention
in the media than the Packwood diaries, for instance, in recent
days. There is no doubt in my mind that the relevance of these is-
sues for our national security is of far greater consequence.

Today, I am delighted to welcome and introduce a very distin-
guished panel of internationally recognized experts. Dr. William J.
Olson is Senior Fellow at the National Strategy Information Center
in Washington, D.C., co-author of "International Organized Crime:
Emerging Threat to U.S. Security"; Mr. Arnaud de Borchgrave,
Senior Advisor at the Center for Strategic and International Stud-
ies, former editor-in-chief of the Washington Times, and former
chief foreign correspondent of Newsweek, and a man whose con-
tributions to fighting terrorism and international crime are well-
known throughout the world; Dr. Rensselaer Lee, president of
Global Advisory Services, scholar at the Foreign Policy Research
Institute in Philadelphia, and a specialist on the problems of nar-
cotics and crime; and Mr. Willard Myers III, practicing attorney
with 26 years of experience in the fields of criminal, immigration
and nationality law.

I would like to suggest to our distinguished witnesses their pre-
pared statements will be entered in the record in their entirety,
and we may proceed in a more informal fashion. We will begin with
you, Mr. Olson.

STATEMENT OF WILLIAM J. OLSON, SENIOR FELLOW, THE
NATIONAL STRATEGY INFORMATION CENTER

Mr. Ol^ON. Thank you, Mr. Chairman. I want to thank you also
on behalf of

Mr. Lantos. Forgive me for interrupting you for a second. I for-
got to mention the names of my outstanding staff who have worked
on this hearing: Beth Ford, Dr. Bob King, Josephine Weber, Mike
Ennis, and I want to make special recognition of our outstanding
intern, Frank Cilluffo, who played an extraordinary role in prepar-
ing this hearing, as well as interns Jon Peterson and James Peter-
son. Dr. Olson.

Mr. Olson. Thank you, Mr. Chairman. I also want to thank you
on behalf of Dr. Roy Godson, who could not be here today, who is
the president of the National Strategy Information Center. I want
to thank you and the committee for holding this hearing. You are



performing a valuable service and we appreciate, very much, the
seriousness of this effort.

Mr. Lantos. Could you pull the mike closer?

Mr. Olson. Yes. I have a formal statement, which I would like
to submit for the record.

Mr. Lantos. Without objection.

Mr. Oi^ON. And I will summarize our key observations.

We have, in the last several years, conducted wide research, and
based on our own practical experience, we have discussed issues
with the U.S. and foreign experts, police, intelligence analysts,
scholars and others from most of the regions that we will be talk-
ing about today. The concern that they have expressed to us is re-
flected in the study that I think that you mentioned on inter-
national organized crime.

Based on these interviews and our personal experiences, we be-
lieve that we face a major threat to United States, international
and domestic interests. Our conclusion is that international orga-
nized crime represents a new and serious challenge to the interests
of this country at home and abroad. We believe that the extent of
this threat is largely underestimated. It is our argument that only
a consistent effort, sustained over time, can hope to meet this new
and fundamental challenge to our values and our way of life.

I think all of us are aware daily that no society is untouched by
crime. Crime is a constant, regardless of time and place. In most
cases, societies are able to cope with crime and its consequences,
tolerating certain levels of it. But under some circumstances, crime
can break its bounds, causing great harm. Crime cripples and kills.
It robs people of their lives and their livelihoods, their peace of
mind, the security of their homes, and their neighborhoods.

While a major concern at any time, what alarms us is what we
see as the increasing organization, professionalization, and inter-
nationalization of criminal activities at a time when the mecha-
nisms for controlling them are in disrepair. In many states, the
mechanisms are nonexistent, and basic capabilities to deal with
large, well-equipped organizations is deteriorating.

When crime is organized and carried out on a massive scale of
transnationality, when it can render local law enforcement efforts
largely meaningless, and defy the ability of sovereign states to con-
trol them, then we truly have a problem of significant proportions.
It makes our global village a dangerous neighborhood.

That is the situation that we believe we see in the making. It is
not our view that we are not doing anything to respond to this
threat. But it is our feeling that the threat is more serious than
we are collectively aware of, and consequently, it is more serious
than our present level of effort would suggest.

With that preamble, I would like to make three major points.
First, I would like to note what we consider the characteristics of
organized crime as apart from just criminal activity. We think it
has four major characteristics. First, it is organized in the sense
that it has a structure, a leadership, in many cases, a hierarchical
system and that it operates over time. It is not ephemeral; it is a
structure that operates year end and year out.

There is an important corollary to that, in that it gives such an
organization the capability of learning from its mistakes of adjust-



ing to new situations. This means that organized criminal organi-
zations are able to respond to what law enforcement efforts are
taking against them; and because of that, they can survive. And
that is why it is extremely important to sustain efforts; one shot
efforts will not work.

Secondly, they are hierarchical, in that they have an organiza-
tional structure with divisions of responsibilities. They are en-
gaged, obviously, in criminal activities in the societies, and inter-
nationally of what we are familiar with, and they are prepared to
use violence and corruption to achieve their means.

We are also talking about international organized crime, and
that also has certain characteristics. First, large-scale operations
that operate across international boundaries at will, with a well-de-
veloped infrastructure that is able to generate staggering amounts
of money, and also to develop great flexibility in their systems and
diversity in their operations that also help protect them against
law enforcement efforts. The difference between domestic organized
crime and international organized crime might be summed up as
the difference between a messenger service here in Washington,
D.C. and Federal Express.

There are three major groups, as you noted, Congressman, cur-
rently that are at the top of the pecking order of organized crime:
the Colombians, the Chinese triads, and the Sicilian Mafias. The
Colombians and all of these groups tend to specialize, or have spe-
cialized in the past, in various areas of activity. But one of the phe-
nomena now is they are beginning to diversify into other areas and
into other kinds of activities to help protect their financial holdings
and to evade law enforcement efforts.

One of the clear examples of this diversification is the move by
the Colombians, for example, into the production and sale of her-
oin. You mentioned 200 and some thousand hectares devoted to
coca cultivation. They now have somewhere in the neighborhood of
20,000 hectares of opium poppies cultivated in Colombia alone,
with rumors that similar amounts may be growing as well in other
parts of the Andes.

These three groups are, as I said, at the top of the pecking order.
There are many others. And one of the features of organized crime
is that over time, they tend to become larger and better organized
if they are not dealt with, and that is one of the things that con-
cerns us the most. They learn by doing.

The second major point that I would like to make is the feature
of the present environment and what we see is happening in inter-
national organized crime. First, greater mobility in these groups,
and mobility of money, assets and people; not only the people who
work in the organized criminal organizations and their ability to
move worldwide to carry out their activities or to evade local law
enforcement, but also their ability to move people worldwide, the
move into the modern form of slavery, the beginning of movement
of people through alien smuggling operations.

We are familiar in this country with the Mafia moving people
around to evade law enforcement. That is now beginning to happen
on a global scale. We are also seeing in these organizations greater
sophistication in their methods and in their capabilities; greater
firepower — in some cases, they can outgun governments; greater



interconnectedness between these groups, and among them exploi-
tation of better telecommunications technologies. And we are con-
cerned, for example, that in the future, the exploitation of such
technologies will render law enforcement efforts to monitor their
activities increasingly difficult.

They are also engaged in a wide range of activities: from alien
smuggling, to arms, to the exchange of technical information and,
as noted, the possibility of engaging in the transport of nuclear ma-
terials. In effect, there is a degree in which a parallel international
system is beginning to emerge in which terrorist groups, inter-
national criminal organizations, and guerrillas operating in sort of
a quasi-world are beginning to develop interconnections among
them to increase their effectiveness and their information base.

The third major point I would like to talk about is the con-
sequences of these operations. Among these are the development of
a system of corruption around the world, the ability of these orga-
nizations to buy off significant portions of governments, including
legislators, in some cases, police departments, judiciaries. And
when they cannot do that, then they resort to violence to intimi-
date these organizations into inactivity. But they are also in the
process of corrupting social institutions in many of these countries,
including undermining the very fabric of democratic processes.

You can see these kinds of things happening in the Caribbean.
Some of the Caribbean states, the microstates, which, until re-
cently, did not experience great levels of criminal activity on the
part of organized crime, have, with the arrival of the drug organi-
zations, seen an explosion of corruption and spread of domestic vio-
lence in some of these countries that is completely atypical.

Also, as part of this, you are seeing the spread of illegal activities
of various types, with deepening effects on fragile democratic insti-


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Online LibraryInternational Organizations United States. Congress. House. Committee on ForeiThe threat of international organized crime : hearing before the Subcommittee on International Security, International Organizations, and Human Rights of the Committee on Foreign Affairs, House of Representatives, One Hundred Third Congress, first session, November 4, 1993 → online text (page 1 of 8)