Tuesday, January 12, 2010

Central European Organized Crime

Central Europe and especially the Czech Republic and Hungary, are used as centers for coordination, communication and conciliation between very powerful international crime syndicates, which have managed to install their HQs of their operations and gain access in the heart of the EU.

Although it has not been a subject of special reporting by the media in Europe, when assessing organized crime activities in Europe, one should take into serious consideration the situation in this region.

Hungary

Hungary has the unique geo-economic advantage of occupying the middle of Europe between the east and the west side of the Continent and in the midst of the important axis of the Danube as well as the Baltic-Aegean one. As an effect, crime syndicates were apt in using this country as a major transit ground for their pan-European operations and as a base for coordinating their cells in other regions.

Similarly, the accumulation of capital in this country as in most former communist countries was made during the '90s, partly due to smuggling and illegal activities, thus the very criminal activity occurred in an institutionalized societal manner along with corrupted practices in the security and the judicial sectors.

The local criminal networks in Hungary and Budapest in particular, are less significant in the hierarchy of than that of the infamous Italian Mafia or the Chinese triangles. They were basically formed by former members of security forces and pre-existing black marketers who maintained contacts with local authorities. The rapid development of the above had as a result the control of up to 20% of local GDP, due to a number of endogenous and exogenous factors.

First, the geo-economic position of the country facilitates to a maximum degree the traffickers to move illicit cargo by road and rail routes. For example from Ukraine tobacco and women are trafficked towards Austria and from Romania illegal immigrants are transferred, whilst from Croatia and Serbia weapons and drugs are being imported.

Hungary has adequate public infrastructure and storage services (Logistics), providing a strong argument for crime syndicates to pursue their activities there. In order for criminal groups to transform themselves into an integrated organized crime structure, there has to be the necessary infrastructure that will enable them to have a continuous and smooth flow of contraband merchandise, which in turn will provide economies of scale for their operations. Under this assumption, Hungary seems as a perfect destination.

Another important factor was the widespread corruption in the local security forces and the coexistence of former and present executives with links to members of the organized crime. The result was poor security controls and in general non-compliance with the law.

Currently Budapest hosts the global epicenters of illegal pornographic material, contraband cigarettes and is also a meeting point and negotiation center between the heads of international crime groups in the sectors of arms, women and drugs trafficking.

Money laundering is also another thriving illegal industry, closely associated with the above.

According to recent information the Hungarian Security Council, a government agency providing guidelines and action against crime in the country, disturbing trends for the foreseeable future, were noted. Indeed confidential reports of the local police, found that the number of criminal organizations has increased considerably after 2007, as well as their, turnover. Also, it is estimated that construction companies and business groups involved in public procurement are now subject of the control of organized crime, and it is also very interesting that groups coming from China and Latin America, have managed to establish their presence there, in order to increase their positions in Western Europe via Budapest.

Furthermore the Hungarian intelligence service (NBH) in a report in 2008, stated that after the accession to the EU in 2004, a great increase was witnessed in the turnover of the organized crime groups, which became more flexible and multifaceted, effectively penetrating more legitimate businesses. Hungarian officials-many of whom have been trained in schools of the FBI in U.S- are actively fighting the flow of black money that tends to lead traces back into, key executives in many respectable businesses, not directly associated with illegal activities.

In general, taking into account that the current global financial crisis creates the need for many legitimate businesses of fresh capital, one can assume that Hungary will have to face more challenges in those issues in the short-term.

So far the security forces of Germany, Italy, Austria, Sweden and USA work very closely with the authorities and has made several successful joint operations.

Czech Republic and Slovakia

The Czech Republic is an economically and socially developed country in Central Europe that has been facing for years serious issues relating with the activities of organized crime. Local security authorities relay in their reports, that they are facing some 100 organized groups in the country with at least 3,000 members. Alongside, other 5,000 people have auxiliary roles in these organizations which are also staffed by accounting, legal and other professional functions.

Of all these criminal groups, 30 are integrated and internationalized, reaching the gold standard of the "International Mafia" with diverse activities in many countries around the world.

Local leaders of criminal networks are nationals of the former Soviet Union and especially Russia, Ukraine, Georgia and Moldova. Also Croats, Serbs, Albanians, Bulgarians, Romanians, Vietnamese and Chinese make up the majority of the groups. There are also groups from Turkey and Greece specialized in money laundering and managing drug loads moving to Germany as well as, illegal prostitution.

Finally, there is definite presence, of the so-called Italian mafia and various groups from Latin America, Lebanon, Iran and Nigeria. The Czech nationals tend not to create their own organizations but to adhere to foreign and not as heads but as support staff, which both demonstrates the prevalence of foreign organized crime in society and also the difficulty for the authorities to collect information on the important criminal echelons.

On the other hand, Czechs arch-criminals have managed to form groups outside the country and particularly in France, Italy, Croatia and Bulgaria. Occasionally there are reports of activity in Greece, Turkey and Cyprus regarding the above.

The Czech Republic because of its extensive borders with Germany, which is considered as the prime market of smuggled goods and drugs in Europe, facilitates trafficking to there and acts as a coordinating center for groups wishing to enter Germany. Moreover, in recent years several cases have been revealed, of coordination and delivery of drugs original source from the Middle East to the U.S. via Prague and Ostrava.

Further in the borders between the Moravian province and Poland, there is widespread tobacco, alcohol and drug contraband mainly being managed by organized groups of Romany and local kingpins.

Regard illegal migration and trafficking, the Czech Republic is infamous as a place of concentration and transit of Ukrainian and Moldovan nationals sent to Germany and the Scandinavian countries.

In Slovakia also the issue of organized crime is high on the news and the police reports. The country "hosts" 50 groups with over 700 regular members. Most of those are foreigners, Kosovo-Albanians, Ukrainians, Russians and Georgians working with local elements.

Slovakia from the late 90s has been informally divided into zones of influence between these groups in order to avoid unnecessary turf wars that had claimed many victims over the past years. The capital Bratislava has a strong Albanian presence, specializing in the illegal prostitution industry with annual turnover that may exceed 50 million Euros.

Further Slovakia has become a center of negotiation between pan-European criminal groups that regularly meet on mountain vacation hotels in the south of the country and agree into wider activities.

According to occasional news and information, the Romanian teams specializing in car theft "divide" their illegal sales when negotiating in the Slovakian territory and representatives of other groups from Germany and the Netherlands divide the market relating to illegal prostitution. Finally, the narcotics contraband provides the opportunity for contacts between different groups from the Netherlands, the Scandinavian countries, Turkey, Albania-Kosovo and Germany that agree on promoting substances in specific locations.

In Slovakia there is an extensive weapons smuggling network, which mainly imports weaponry from Moldova, the Caucasus and the Balkans. At times customers have come even from sub-Saharan Africa and the Middle East looking for explosives and anti-tank rockets and missiles.

Finally one of the fastest growing groups are the Chinese and Vietnamese, who now have formed a well-structured organized crime network that stretches from Athens Greece to Glasgow, Scotland, a development that will most certainly occupy the actions of the European security Authorities in the coming years. The Vietnamese, especially are consider as prime dealers and distributors of contraband cigarettes, clothing and other consumer items.

The Vietnamese network is also specialized in illegal immigration from East Asia to Europe and it is of trans-border nature, since the Vietnamese in Czech (Prague, Brno, Ostrava), are in contact with their fellow compatriots in Germany, Poland and Austria, thus a wider ethnic network emerges that has expanded considerably over the past 15 years.

Lastly, there is a strong trend of "Phony marriages" to be recorded, especially between Vietnamese organized members and locals, in order to facilitate the integration of the former in the society. Similar finding have been found regarding Albania, Russian and nationals from the ex-Yugoslavian countries. Therefore the members of the crime syndicates are able to firmly root themselves in the EU and attain the status of the citizen that protects them from expulsion should their activities become known to the authorities.

In Hungary, Czech Republic and Slovakia, 90% of drugs sold within the territory are being distributed by foreigners. Typically, there is an abundance of hard drugs in Prague and Budapest, and the price of heroin is half than that sold in Berlin and Paris and so are other drugs like ecstasy tablets. This creates what is called "Narco-tourism" which along with "sex tourism" in the same cities creates ideal conditions for the accumulation of large amounts of black capital for the criminal organizations.

It is indicative of the great economic momentum gained by the criminal syndicates that only in Budapest it is roughly be estimated that 1,000 "International escorts" are being illegally employed earning an income of excess of 80 million Euros for organized crime syndicates.

A similar situation occurs in other countries, and if one adds the whole range of illegal sex industry in Central Europe (Clubs, entertainment, movies, brothels, internet-phone appointments, etc), then it could be safely estimated that an annual turnover of over 5 billion Euros is being generated. As it can be seen, the so-called "real economy" is being greatly influenced by the parallel-illegal one, creating a symbiosis that is based in the importation of substantial amounts of capital.

In recent years, Prague has witnessed the establishment of Russian originating criminal groups that have set up perfectly legitimate businesses and in particular hotels, restaurants and real estate companies, in order to launder capital. More than 150 have been made known over the past few year and they also include businesses, mansions and horse riding clubs in the tourist regions of Karlovy Vary and Marianske Lazne.

As far as Karlovy Vary is concerned, it already being named as a "Russian city", due to the sheer amounts of investments made there by Russians, quite a few of those of highly questionable nature.

The ultimate goal of this new strategy is -according to a confidential report by the Czech Ministry of Interior- the penetration by the Mafiosi of the economic and political life of the country and already numerous cases of corruption involving mayors, and local council heads has been recorded

The research on organized crime activities in Central Europe, may gain further notice for the European security architecture, since the countries located in this geographical zone, are being used as stage points for further inclusion of criminal structures in the larger EU countries such as Germany and to a lesser extent France and Italy.

Moreover the European integration process and the lack of border controls, creates a unique opportunity for further empowerment of those criminal networks, that are able to tap into their specialization and acquired experience and further enlarge their illegal activities, as is the case over the past twenty years.

The collapse of Communism in 1989 provided a challenge for the security authorities across the EU that it is becoming vividly clear nowadays and will most certainly be of importance regarding the future of the Continent that has to confront a series of important challenges relating to the security of its citizens.

Thanks to Ioannis Michaletos and Marketa Hanakova.

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