Cocaine Trafficking - Dirty Dollars Inc.

The documentary We know about the oil market, the fruit and vegetable market, and the sugar market. What do they have in common? Buyers and sellers everywhere always look out for their own interests. The economic aspects of organized crime The law of supply and demand controls these exchanges. The crime world is no exception to the rule. All trafficking has an economic reason to exist. A mafia is a criminal enterprise which is first and foremost a business, with its own products to deliver and services to perform. The organized crime market generates around $870 billion a year. Where does this money come from? Trafficking in every form. The more illegal it is, the more profitable it is. Who are the main players in these underground markets? How are they organized? Who benefits from the illegal profits? This is what Dirty Dollars reveals. It's a journey behind the scenes of the criminal economy. Welcome to the extremely active cocaine market, the most luxurious narcotic in the world. It's a very profitable and competitive business too. There's a different dynamic because it's illicit, but a lot of the economic fundamentals are the same. The worldwide demand for cocaine is about 900 tons per year. Supply satisfies demand. It's impossible to knock out these markets, because once there's a demand, there's a supply. Once there's a supply, there's a demand. This is its fundamental economic reality. It's a juicy, profitable market, but for the bad guys. The cocaine market is estimated to bring in $90 billion a year. In truth, no one knows how much traffic there really is. The cocaine business is one of the most secretive branches of the criminal economy. It's a statement shared by Dr. John Collins from the prestigious London School of Economics. This researcher leads a group of analysts who are striving to decipher the way international cocaine trafficking has evolved over the last 30 years. The black market. People don't keep financial records as clearly as in other industries. We can estimate it but fundamentally it's based on a huge amount of assumptions. In the mafia, there's only one thing that's more sacred than family. Silence. The best way to lift the veil on this market, which is as secretive as it is active, is to consider it like any other business in the legal economy. Cocaine is a market. To commercialize it worldwide, you need manufacturing sites to handle production, exporters and transporters to handle the logistics all the way to the consumer market, and a sales force to develop the distribution network. All along the chain, teams of financiers and managers are responsible for maximizing profits. That's business, and the cocaine market is no exception to the rule. To show how it works, let's begin at the beginning, in Latin America, where production takes place. Cocaine is an alkaloid. It's a psychoactive substance that must be extracted from erythromycin coca leaves. This plant can only be found in three countries: Bolivia, Colombia, and Peru. Cocaine is a substance that must be manufactured. It's transformed from these leaves to obtain the white powder that's so dear to consumers' nostrils. It's exported in this form to consumer markets, except if it falls into the hands of the police. That's what happened to this shipment of 300 kilograms of pure cocaine. This cargo was intercepted in Lima in a run-of-the-mill cattle truck. The seized drug is being analyzed and registered by Commander Chilet and her team of forensic police. This is exclusive footage of one of the best seizures of 2017. It's also a great opportunity to learn more about cocaine itself. We weigh everything you see here, one by one. We weigh them brick by brick to be sure of the weight indicated on the report. Once weighed, we take them to the experts, who will take samples and analyze them. How does it go from a leaf to a powder? That's the trick. It's a chemical process that begins in the jungle with the harvest. First, you have to extract the alkaloid. You have to allow the leaves to marinate in kerosene for several days. The mixture is filtered to obtain coca base paste. This coca base paste must be transformed into cocaine base. This step is called purification. It's pure chemistry. After several steps, you get the cocaine base. It looks like average-sized pebbles when it's dry. This raw material will travel to more specialized labs far from the production zone. It's in these hidden labs that the chemists will carry out the third operation, called crystallization. The process of the production and the importance of the manufacturer's mark. This is a crucial step that will determine the product's quality. Finally, you get cocaine hydrochloride. This is the scientific name of coke, C, or the notorious cocaine. At the moment, it's almost pure. To summarize, one ton of coca leaves is needed to produce four kilograms of cocaine base paste. After crystallization, there are only two kilograms of pure cocaine left. The product is almost finished. There is still the step that's indispensable for every luxury product, the manufacturer's mark. Do you see this? There's a cross, like the one in the Crusades. The logos are made with a press. It's to identify the organization and location the drug originates from in order to inform the recipient. It's to say that this is my drug. It's pure and not cut with anything else. It identifies it and says that I made it. This has become an essential step since the end of the big cartels. Producers must stand out in order to be recognized by industry players. In the public's imagination, the white powder is associated with the Cali and Medellin cartels and the most famous drug trafficker in history, Pablo Escobar. However, that was before. The golden age of the great Colombian drug cartels is over. Today, mafias have split into a multitude of hyper-specialized businesses that work together toward a single objective, developing their businesses and reaping the most profit. This is what Peru's Minister of Interior has confirmed. Today's cocaine business is free enterprise haven. This kind of commerce is not organized like a normal business that controls production, transport, and the consumer market. We are up against a complex organization with different economic players at each step of its commercialization for production, transportation, and selling on the market. These organizations function opportunistically. Today, worldwide production of cocaine is estimated to be 1,350 tons a year. It's divided among three countries: Colombia, Bolivia, and Peru. Colombia remains the largest producer in the world, but the situation has changed over the last 30 years. Jaime Garcia Diaz is an international specialist in cocaine trafficking in the Andean region. In the 1990s, the biggest traffickers were Colombians. In the division of labor, Peru only provided the coca leaves. [Spanish spoken audio] Overall, it worked like that from about 1965 until the middle of the 1990s. Today, all of the drug production, the production of chemicals to make cocaine, and the drug trafficking financing, is national. It's in the hands of family clans of small Peruvian cartels. The 300 kilograms seized by the police in Lima is the perfect example. The cocaine is 100% Peruvian. The drug went up in smoke in front of journalists and the country's authorities. This batch was worth around 300,000 euros when it came out of the makeshift lab. In Europe, it could've brought in up to 18 million euros. That's a 3,900% increase. To understand the reason behind this unusual price difference, you must go back to where it was made. We'll look for our answers in Peru's Amazon rainforest. Let's head to the Alto Huayabamba valley. Two men have agreed to tell us about their daily lives as cocaleros at the beginning of the 1990s. At that time, Hilmer and Oswaldo were small farmers living off their crops here in the heart of the rainforest. However, thirty years ago, Colombian drug lords came to the area. The government here abandoned the farmers. We had to fend for ourselves. There were no farming subsidies. That's why so many went over to the illegal side. We knew that it was illegal, but we didn't have other options. Corn and bananas are not profitable, and it's not enough to survive on. We had no alternative. It seemed to us that coca was the only way to survive. To understand the potential alternatives or development prospects for those areas, you need to get on the ground and see what it looks like. I'm sure you've wondered why they didn't just grow coffee. Why can't they grow chocolate or cacao? You see exactly why when you go to these areas. It's a two-hour drive on a dirt road to the end of that road, and it's a two-hour boat ride up the river because there are no roads. The notion that these people will grow a crop that can compete with crops grown in more economically developed areas is nonsensical. These people are rational economic actors. They're not profit-grabbers, innate criminals, or anything like that. These are people who live in difficult circumstances and grow crops that can feed their families. At the beginning, I was skeptical, but I didn't have a choice. If you had lived here, you would've had to do it. Farmers in remote areas turn to growing coca crops as a way to increase their income and support their families. At the start, cocaine is a farm product. From their first harvest, farmers' incomes increased 100 times. Drug lords pay cash. In remote areas, no one could afford to miss out on such an opportunity. In this area of Alto Huayabamba, we all followed the same path. We all did the same thing. Generally, drug traffickers push farmers to produce the coca base paste. It's much easier to transport than tons of leaves, so it has to be produced on site. The farmers who take the risk see their profits multiply. We wanted to learn how to make cocaine. It became profitable for us. We handled the transformation of the harvest from our own fields. We produced the base paste. We could find the best buyers in that way. The farmers who transform the coca into base paste are called cocineros, or cooks. It's because, to create a good base paste, you need the right recipe, the right methods, and especially the right ingredients. This requires chemicals. You need large quantities of around 40 chemicals to make cocaine. It's trafficking inside of trafficking. The problem is that these chemicals are used in traditional industry, so it's a real headache for authorities. General Hector Loayza Arrieta heads DIRANDRO, Peru's anti-drug police. The role of chemicals is fundamental, because they are the raw materials used to make the drug. Only two to three percent are imported. [Spanish spoken audio] To be clear, the chemicals come from Lima through legal merchant companies whose papers are in order. [Spanish spoken audio] When they arrive in the production region, they become illegal. Legal merchandise becomes illegal. Cocaine production requires a network of very specialized suppliers who are able to deliver tons of toxic chemicals to the heart of the jungle. However, it's a black market. The cocaleros pay over-market price for these products. It's an essential cost four times a year for each harvest to make the cocaine base paste. Once the harvest was finished, it took around five to six days to make the base. Today, it's quicker. Technological progress has reduced the manufacturing time considerably, and the cocineros, the cooks, have truly earned their name. Microwaves are used to accelerate the drying process of the base paste. Normally, if it's done the natural way, the process takes around three to four days. With the ovens, they can do it in one day. Once dry, the base paste is sold to the highest bidder. Buyers travel directly to producers. Supply and demand is the golden rule. When a buyer came, he would gesture toward us. Then you knew what he wanted. "How many kilos do you have?" You said a number. Then we negotiate. The cocaine base paste is ready. This merchandise must be transported far from the fields to the drug labs that turn it into cocaine. The easiest way is by air. In 2015, in the VRAEM region in eastern Peru alone, anti-drug police dynamited 275 aerodromes. That gives you an idea of the extent of the drug traffickers' logistical organization. Air traffic is intense during the export season. If the police arrive at that time, all of the harvest and transformation work could be lost. Loading must be done as quickly as possible to avoid being caught. We brought the drug, and they brought the money. Everything happened quickly, very quickly. Amazing footage from the Peruvian police shows how quick the exchanges are. You can see how quickly the airplane finds the area. It lands. This signals the group of couriers to bring the drug to the airplane. The pilot pays for the merchandise. They load up the plane with the drugs, up to 300 kilograms per trip. No one verifies the money or the merchandise. With drug traffickers, trust is indispensable for the business to operate smoothly. The police come to arrest the cocaleros. The operation's result is that the drug and the money are confiscated. The plane is destroyed. Drug traffickers lost hundreds of thousands of dollars. Police enforcement is an additional cost. It's a financial risk that weighs on the cost of manufacturing. In light of this, authorities in producing countries have organized eradication campaigns directly in the fields. Trust is indispensable for the smooth operation of the trafficking business, but eradication campaigns have had limited efficacy in reducing production. Hitting the trafficking economy at its source is their objective. This is what happened 20 years ago in the Alto Huayabamba valley. It was a terrible blow, and it was nearly fatal. Thanks to it, the history of cacao began, but it took time. It was five years or maybe more before we could make a living from cacao beans. In reality, some experts question the efficacy of eradication campaigns. If you saw the price of coca double on the farms in Peru or Colombia, that would have virtually nil impact on what's happening in the streets of New York or Sydney. Those prices are determined by other factors which revolve around trade, commodity, and transit. The production is completely decoupled from these things. Even if you saw huge eradication in Colombia or Peru, which saw a price spike and saw farmers able to charge double what they'd been charging before, it doesn't have any impact. Replacing coca with another crop that's just as profitable requires costly policies that only affect a small part of the population. Drug traffickers know this very well and take advantage of it. In Bolivia, Peru, and Colombia, a large number of ruthlessly exploited workers are waiting for the opportunity to produce coca to escape poverty. North America consumes 41% of the cocaine available on the market. Europe consumes 29%. Cocaine is a niche market, like the luxury market. It's an attractive product for a relatively wealthy clientele. At least, that's what studies from the UNODC, the UN office in charge of collecting worldwide data on organized crime, have shown. We have 17 million people using cocaine at least once in the last year. The bulk of those are recreational users who go to a party and take a little bit of cocaine. They account for only a small proportion of the actual consumption. We have a Pareto distribution, which is typically 20% to 80%. It means 20% of the users account for 80% of consumption. Whatever the case, of the 17 million consumers in the world, 12 million live in Europe and North America. Traffickers seek out this clientele due to their significant buying power. How is the traffic organized to reach consumers who are far from the production areas? This is the job of the criminal groups responsible for transporting the cocaine. The exporters. The logistical organization of cocaine traffickers constantly adapts to avoid getting caught by anti-drug police. However, because of geography, the routes are more or less the same. To reach the different consumer markets, cocaine first travels through transit countries, like Ecuador, Venezuela, Brazil, and Mexico, to reach the American market, and through Brazil, the Caribbean, South Africa, and Western Africa to reach the European market. Criminal organizations must stay off the radar of various anti-drug trafficking authorities. The simplest way is to take advantage of the increased volume of merchandise moving around the world each day. Sylvain Raymond is in charge of the anti-drug trafficking program at the WCO, the World Customs Organization. Today, when you see the explosion that has occurred over the last 30 or 40 years and the globalization of trade, just in terms of putting merchandise in containers and the explosion of trade, you can imagine that the proportion linked to crime has exploded in the same way. It's complicated for us, specifically in port areas, and especially with the increase in foreign trade we've had in the last few years. Generally, they do business with transport companies. They transfer the illegal substance to a collection center or a warehouse. From there, they simulate the export of a product, or they will simply place it in several containers, which means they will hide a certain amount of the drug in a container that contains legal cargo. In Peru, more than 43 million tons of merchandise transit through Lima's port every year. Peru's police only have a single scanner to check suspicious trucks. A lucky break for cocaine exporters, and the consequences are undeniable. Fifty percent of the drugs that leave Peru travel by sea. Cocaine travels mainly surrounded by legal merchandise. Around 500 million containers are handled each year in the world's different ports. That's 16 containers a second. For the agents at Interpol, it's become difficult to monitor exporters' activities. The biggest trend at the moment is called the rip-off, rip-on. Traffickers are using a new method called 'rip-off, rip-on' to transport the product, making it difficult for Interpol to monitor their activities. Before, the traffickers used to conceal the drug inside a particular commodity product. You have bananas, pineapples, coffee, you name it. Now you don't need to do that. You don't need to conceal the cocaine within a large shipment. The traffickers are using duffel bags. They put cocaine in it. Then the containers are opened just when they're transiting a port. They throw the bag in, and then they close it and replace the seals. This is what they call as rip-off. The company that ships the commodity is not involved in the crime. During a seizure, it's unclear who is exactly behind it. You have no trace, and it's harder to investigate. With this method, you're guaranteed more anonymity. If you're caught, you won't be linked to anything, and you can do another one next week. Instead of doing one shipment with one ton, you do several shipments with 200 or 300 kilos. It's safer, easier, and you don't get caught so easily. It's a game of dominoes. What I mean is that, as traffickers become more creative, we're always just a little bit behind. As soon as we discover one modus operandi, they've already started thinking about a second one. So we're constantly racing to outsmart each other. Transporting cocaine is the heart of trafficking. Exporters show unlimited ingenuity to get the drug to consumer markets. For example, to export from Colombia, mafia transport companies offer an undetectable and efficient means of moving the drug to the USA. Tiny submarines. These submarines can transport up to eight tons of cocaine to Florida in one trip. The latest official figures estimate that 30% of the cocaine consumed in the USA arrives in submarines. Moving cocaine is also the job of small and individual companies. A significant amount of cocaine crosses borders in the pockets or bags of normal individuals. They're called mules. The drug smugglers pay between $2,000 and $3,000 for this service. It's an attractive amount, as long as they make it through. More opportunistic, Mexican cartels sometimes use migrants to import the drug to the United States. Crossing the border illegally with the help of a smuggler costs around $2,000. It's a large sum for hopeful immigrants, but with a mafia, they can always work something out. That's what John Doe, a former member of the Tijuana Cartel, explains. There is another way. If the person does not have the amount, but wants to cross and is able to do it, we… No, I won't say we. They are offered to cross illegal drugs. Marijuana, cocaine, and heroin. Crossing one load will be enough to cover their payment to cross. Whatever it takes to supply the market, whatever the cost. The authorities in charge of fighting trafficking take action. We try to anticipate their moves and logic. As a result, there's an impact on the final price, because the cost of customs seizures is included in the final price. We are a part of the traffic in this economic situation. The further you have to travel to reach the end consumer, the higher the risk of falling into the hands of law enforcement. This factor justifies a huge increase in the price of cocaine. While a kilo of cocaine is valued at 2,500 euros per kilo in countries where it's produced, it costs between 35,000 and 40,000 euros in North America and up to 60,000 euros in Europe. You can see that it's the risk that influences the price, because in this kind of business, there are only two possible options. It either makes it through or it doesn't. To avoid discovery, traffickers rely not only on hiding their products, they have also completely transformed the structure of traditional trafficking. Today, in the age of globalization, people are working together and cooperating across borders. It's harder to investigate if you don't have one main structure. You can only get a part of it if you're investigating a big structure. With these people being a part of this big family, you can even get other parts of the groups, but if you have just one little group here, it's going to be isolated for the rest. The others will find another group that will do this type of outsourced work, and then they will continue doing the business. With the number of criminals running around, this business has a guaranteed structure to continue. Before, it was one group doing it. Now, with an increase in their numbers, the groups cooperate with each other. This is a good example of increasing international cooperation among ethnic groups. The cocaine market is now open to all mafias. Twenty years ago, coke meant the Colombians. They bought land and companies in Western Africa to stock the cocaine and to create networks to transport it to Europe. Today, you realize that in the space of ten or 15 years, organized crime that's 100% African goes to Latin America to buy directly. They handle all of the logistics, transport, storage, and sale on the European market. You realize that nothing is set in stone. Africa offers many advantages to cocaine traffickers. Mafias are adept at exploiting the authorities' limited resources and political instability. The market has shifted from being dominated by Colombians to being controlled by African mafias, who now handle all logistics, transport, storage, and sale on the European market in regions with limited security and political instability. I think that drug traffickers need gray zones, where there's a lack of security, in order to cover their tracks. These gray zones that lack security interest traffickers. This is particularly evident in regions like the Sahel, where there's a cluster of activity and everything has gotten muddled. The link between organized crime and the threat of terrorism is becoming more and more obvious. Here we are, the cocaine will enter consumer markets. In Europe, there are many ways for it to enter, but the risk is high for the exporters. The means available to the police, customs officials, and armies are far superior to those of their South American and African colleagues. The owners of this trawler know this all too well. Off the coast of Great Britain, they were chased by a warship, a helicopter, speedboats, a drone, and an infrared camera. These smugglers never had a chance of escaping. The army, backed by experts at the National Crime Agency, intercepted and boarded the trawler in open water, and 3.2 tons of cocaine were seized. Seizure is a kind of customs tax that traffickers pay, except that it represents 100% of their product's value. Regardless, another boat located a bit farther away managed to evade the net. In Spain, the Netherlands, Albania, France, and Italy, tons of cocaine arrive safe and sound. Distributing it works like any legal business. Wholesalers sell the cocaine to semi-wholesalers, who sell it to retailers, who then sell it to consumers. Wladimir is a dealer. He sells around a kilo a year, mainly to finance his personal use. He explains how he gets his cocaine. The first time you go to Rotterdam, they show you the product. They prepare the product that you want. For 500 grams, you pay 13,000 euros. You have 2,000 euros in expenses, and that makes 15,000 euros. It costs 2,100 euros to move 500 grams. It's hidden in a fully loaded truck originating from Holland. It's not just for one customer. When you're in Holland, they tell you where the parking garage is. You pay half, and after 15 days, you send the other half to a person who comes to get the money, and he takes it back. Again, transport and exchange are high-risk operations. Customs officials and police are mobilized everywhere in Europe. It's a fact that in recent years, the number of cocaine seizures has increased. Nearly 50% of all the cocaine produced worldwide was seized in 2017. However, the street price of a gram hasn't gone up. Supply continues to satisfy demand. How? Again, it's like a traditional business. You just have to sell a product of inferior quality. In drug trafficking, it's called adulteration. To understand, let's analyze a gram of cocaine sold on the street. More than 50% of the powder is made up of levamisole, an anti-parasitic drug used by veterinarians, in addition to a bit of acetaminophen, sugar, and talc. In the end, only 25% of it is pure cocaine at best. The adulteration process is almost like a tax. The profits from the adulteration don't go to any one place. It's just that along the way, a bit more adulteration keeps happening until it reaches street level and its purity is heavily degraded. This phenomenon is well known to consumers. Karl was addicted to cocaine for a long time. For nearly ten years, he consumed up to ten grams a week. I know people who went through a lot of it, and I became friends with them. Sometimes they showed me how they cut the original product. I discovered that what they bought wasn't completely pure either. They cut it, leaving less than 30% of the coke in the final product. They made a crazy profit. I completely understood why they did it. Cutting the product ensures a reasonable profit margin from captive consumers. If you want a good product, you have to know the right network, and you have to be ready to pay. In Europe, a gram costs between 30 and 100 euros. It all depends on the distribution channel, just like in a traditional business. Products are cheaper in supermarkets than in high-end boutiques. Contrary to what you might think, when you're a small entrepreneur in the drug trade, The management and constraints of being a small entrepreneur in this trade. you have many constraints. You must have cutters, dealers, and lookouts. There's management in drug trafficking, and that costs a lot. Very often, you have to downgrade your product. The more you cut it, the more profit you make, and the more you can spread out your expenses. There's a small dealer logic that clearly impacts the quality of the product. It's true that if you have clients who are a little sophisticated, they'll ask for a purer product and will pay more for it. I don't cut it. My price is higher. I'm more expensive than the others, but I sell a certain quality. It's like a fine food shop. I sell a gram uncut, but everyone comes back to me. I've had the same customers for almost 15 years. I've met everyone and sold it to judges, doctors, et cetera. Coke really touches everyone, but it's hidden and discreet. What they like about me and my high-end boutique is my discretion. To sell the product, you need to discreetly access customers who may not want to deal directly with criminals in a sketchy area. Dealers found a way around that by using a sales force that could supply demand at its source. Coke isn't sold in neighborhoods. It's in bourgeois circles in the liberal left, with musicians, the media, those who have the means and who have fun taking it. Those drug dealers usually have representatives. They're a little like traveling salesmen with a foot in each world. They've got a foot in the housing projects to find the product in large quantities and as unadulterated as possible. The drug dealer has the power to cut the product the way he wants. He has social skills that a basic thug from the projects doesn't have. That will allow him to approach high-end customers without frightening them. There's another way to reach this skittish clientele. It'd be surprising if drug dealers hadn't tried to take advantage of it. E-commerce. Neil Walsh is the head of cybercrime at UNODC. It's pure magic, premium-quality cocaine. It says that simply put, this uncut cocaine is the best on the darknet, hands down. Why do customers buy drugs from the internet and darknet forums? Do they feel that it's safer? Do they feel that it minimizes their risk? Instead of going down to a dark street corner, maybe increasing the likelihood of arrest, they can do something online? What is it? It's a photo. It's nothing more than a photo. Are you going to take the risk of giving $1,800 to someone you don't know, in a location you don't know, and hope that this thing, that may or may not be what it says it is, is delivered to you? I know a few people who have tried it, and it has rarely worked out very well in terms of quality. That explains why less than one percent of cocaine is sold on the web today. From the growing fields to consumers, the cocaine industry is characterized by a multitude of intermediaries. It has an army of dealers on many different levels. What happens to the money from all these transactions? Who benefits from the crime? The drug trafficking economy garners huge profits, but it's also a business that requires large investments. In other terms, cocaine trafficking is lucrative, but there are substantial and inevitable costs that the mafia has to finance. What is true for the legal economy is even more so for the criminal economy. That's the opinion of Manuel Benavides, project manager for the International Monetary Fund. Drug trafficking is essentially an economic activity. It's an illegal one, but an activity nonetheless. Drug trafficking is like a parent company with branches, but because it's clandestine, you don't know where their boards meet. We know there are technicians, a staff that analyzes projections and then handles the problems they encounter in the areas where they operate. To solve its problems, mafias use techniques that we can easily compare to the business strategies of legal companies. They stray a bit from the concepts taught in business schools. In the same way that legal industries use marketing, drug trafficking, with its own logic, has its own marketing. What is this marketing? It's buying the goodwill of authorities and entrepreneurs who protect them. Spending money to buy the help of all these people can only be called one thing. Corruption. If mafia-style marketing doesn't work well enough, there's always lobbying. It's common practice in traditional business for large groups to try to put pressure on politicians in order to convince them to vote for laws that help their businesses. With dealers, the principle is the same. Corruption and lobbying are common practices in both traditional businesses and cartels. The only thing that changes is the method. Lobbying is the job of sicarios, or hitmen. You have to recognize the reality of organized crime violence in Latin America. It's something Europeans can't fathom at all. Police are decapitated at the drop of a hat as a preventative measure. If you're good at drug trafficking, they'll murder your mother or cause your children to have an accident. The job of a customs agent or an anti-drug agent in Africa or Latin America is a thousand times riskier than that of a European or American agent. In Colombia, the price cartels pay to kill a police officer is around 650 euros. These expenses are included in the cost of every gram of cocaine sold. We now have all the necessary information to see why a kilo of cocaine that's purchased in Lima for 2,500 euros sells for 60,000 euros in Rotterdam. In Peru, the producer's price is 2,500 euros per kilo. It's pure, almost 100% cocaine hydrochloride. This kilo arrives in Europe. The wholesalers have already cut it. Now there are two kilograms of cocaine. It's now 50% pure, with a total wholesale value of 60,000 euros. Retailers cut it again and again. Now there are four kilograms of cocaine, and it's only 25% pure. The total value is 200,000 euros. If you analyze these figures, you can see that the price of a kilo has multiplied 24 times from the producer to the consumer. However, the price only increased three times between the wholesaler and the consumer. What we do know is that it's a skewed distribution, so few people make a lot of money, and a lot of people make little money. Here's the explanation. At the retail level, there are many people involved in selling the drugs, and most of them hardly make any income. There were some studies that showed that the income is below the minimum wage if you would earn a decent income. The people who manage transit make the most money off of this, and the people growing it and the people selling it on the streets in the end-consumer market make little of the overall percentage of the profits. The money is not where it's produced. Many think that the traffickers are there, but the money comes from the final destination. There is a sense of uncertainty. There's a lot of frustration in producer and transit countries. While they're forced to crack down on the actual commodities, the financial centers in other parts of the world enable the trade through the transit of money. Oleksiy Feshchenko heads the worldwide anti-money laundering program for the United Nations Office on Drugs and Crime. There are criminals who invent mechanisms to enjoy the proceeds of crime and all that wealth in such a way that it cannot be attributed to them, thereby rendering governments unable to confiscate it. On average, we can say that around 50% of trafficking profits are laundered. The rest is used to pay for the merchandise, shipping, and expenses. A large part of the profits is spent on a day-to-day basis, especially by small dealers. There's many of them, but these amounts are too small to draw the attention of the authorities. When it comes to laundering millions of euros, mafias turn to what should be called financial crime. Money laundering was a direct part of the enterprise. Pablo Escobar had money launderers who worked for him. They were part of the organization. They still exist, but there are far fewer of them nowadays. There are far more specialists who have nothing to do with drugs, but they're specialists in money laundering, and they offer their services. We just started to collect information about them. What we found looks dangerous, because it's kind of like a parallel financial system and an illegal one. Imagine there are about 200 bank accounts. Every day, from each account, money is transferred to three or four different accounts. It's like a huge tumbler. "Alexi, do you want to transfer money or hide ten million?" Mafias exploit loopholes in the global economy to optimize their profits and launder money. "This is the entry point, send your money to this account," "and then you'll get your money back in several days." Perhaps through several payments to entirely different accounts, or I may not even receive money in my bank account, but I will obtain documents that show I'm the happy owner of the cargo on a vessel somewhere in, say, the Indian Ocean. It may be metal tubes, rice, fertilizer, or some other commodity. Then, immediately, I get the contact details of two companies that are willing to buy this cargo, and they will pay me money. Thus, I just signed a document, sent a fax, and now I'm a happy businessman who just made a great deal. I am clean. This money cannot be associated with the original crime, because they went through a mixer. It's almost impossible to trace it. It's clear that mafias excel in the art of optimizing their profits at every level of the economic chain. They exploit all of the loopholes, the opportunities that the global economy offers them, both in business and finance. The ways of fighting drug trafficking are ever more efficient, but new markets are emerging, offering potentially huge profits for the narcotics industry. I don't expect another massive decline in the United States cocaine market in the foreseeable future, neither in Europe. Maybe a mild decline, as it's probably peaked. Asia and the Middle East may be the new markets. The fundamental truth is that it constantly changes. Similarly, just as production shifts, so does consumption. The organizations fighting against drug trafficking are the main economic constraint on the cocaine market, and they have no choice but to continue tirelessly playing their roles. Considering the logic of this traffic, we're not close to ending the fight against organized crime. Whatever the political and geopolitical evolution in the world concerning the production of these products, you realize there is an enormous quantity of merchandise that generates an enormous amount of money. Perhaps that's the other key. Money. Shouldn't we focus on this as much as logistics? What percentage of illegally laundered money is being seized by authorities? As I told you before, we now have around 50% of the cocaine seized by the authorities. It's a huge amount. Do you know how much is on the money side? Less than one percent. The best estimate was 0.2%. Between the licit and the illicit, there are contact points. One of these contact points in the global economy are the tax havens. In my opinion, tax havens are big launderers. Who installs offices in tax havens? Without exception, there are offices and branches of financial institutions that manage the financial flow of the world's economy. Such jurisdictions and havens exist because there is demand. There are people who want to avoid taxes. There are criminals who want to hide their money. There are husbands who want to hide money from their wives before divorce. This is a segment of the market. It's relatively small, but it exists. There are also companies that are just doing so-called aggressive tax planning or tax minimization. They are not happy with the high taxes that they're paying in their countries, so they're finding different ways to minimize their taxes. If there is a tool available, then everyone will use it, both criminals and non-criminals. I don't believe you can ever win the fight against drug trafficking. I think we've learned that very well over the last few decades. That's what we mean when discussing drug war failures, the idea of more effort being required. "We need to get tougher on it, and that will eventually knock it out." It's nonsense and won't ever work. You're fighting against an economic force, an economic logic. It's self-defeating. The simplest way is to make an agreement to outlaw tax havens. Why don't we make such an agreement? Let's say that human nature is ambiguous, contradictory, and even mysterious. That's a poetic way of saying that money doesn't stink, and that it's not only mafias who profit from the huge amount of money that cocaine trafficking generates. Legal or illegal, business is business.