Police forces across the globe last month took part in an Interpol-backed operation that resulted in the seizure of 500 tonnes of illicit pharmaceuticals. Law enforcement agencies from more than 100 countries participated in the effort, intercepting and inspecting nearly one million packages. Among other bogus medicines and pharmaceutical products, they discovered fake anti-inflammatory medication, painkillers, erectile dysfunction pills, anabolic steroids, slimming pills and medicines for treating HIV, Parkinson’s and diabetes. Commenting on the operation, Interpol Secretary General Jürgen Stock said its success was a sign that past efforts to crack down on the problem had achieved their goal. Stock noted that while more packages were intercepted during the most recent week of action, the quantity of illicit pharmaceuticals discovered was lower than was seen during previous campaigns.
But while this might suggest the organised crime networks behind the illicit pharmaceuticals trade have changed their tactics, it certainly does not mean they have gone away. The fact that fewer drugs were seized from more packages by officers taking part in Interpol’s last operation merely suggests those who sell illicit pharmaceuticals are sending out smaller batches of their illegal products through fear of them being intercepted.
Thanks largely to the rise of illicit online pharmacies on both the surface and dark web, it is now estimated by the World Health Organisation that 1% of medicines and pharmaceutical products in developed nations are either counterfeit or have been illegally diverted from official supply chains. In the developing world, it is thought that number could be as high as 10%. The consequences of this are not only negative for those who end up taking fake or smuggled medicines, but also for drug companies that plough some of their profits back into research. While some fake medicines contain toxic levels of an official drug’s active ingredient, which in and of itself can prove fatal in some cases, many are made up of harmful ingredients such as paint, rat poison, arsenic or floor wax, which obviously pose their own health risks.
Other bogus pharmaceuticals might only contain fairly benign ingredients such as corn starch, but can be equally as harmful if taken by a person who believes them to be the real deal. Patients taking medication for serious condition such as diabetes, schizophrenia, HIV/AIDS or cancer could suffer deadly consequences if fake medication does not contain the right levels of the active ingredient they need, no matter how harmless the substances that actually make them up may be.
The potential to do harm of genuine drugs diverted from official supply chains by criminals involved in the illicit pharmaceuticals trade can be equally as high. Back in January, Britain’s Medicines and Healthcare products Regulatory Agency (MHRA) revealed that organised crime gangs had been bribing pharmacists and wholesalers to supply them with prescription drugs illegally. The agency said it had made 40 arrests linked to the diversion of legitimate pharmaceutical products last year, including five pharmacists, who were suspended from practice. While some might question whether buying genuine drugs diverted from official supply chains has the potential to do as much harm as purchasing fake medicine, it is important to bear in mind that drugs are offered on a prescription-only basis for a reason.
In many cases, pharmaceutical medicines can be incredibly potent, and can bring about dangerous side effects in people who might be allergic to them, take other medication or suffer from conditions that could make the consumption of certain treatments ill-advised of even deadly. Aside from this, concerns have also been raised that organised criminals involved in diverting genuine drugs from official supply chains sell medicine that has passed its use-by date, after which time active ingredients might not be effective.
In Western nations, illicit online pharmacies that offer easy access to cheap medication that would typically only be available through a doctor for a higher price can be appealing to anybody who wants to save money or avoid having to see a medical professional. But more often than not, the medicine supplied by illicit pharmaceutical traders will be either counterfeit or diverted from official supply chains. As well potentially doing great harm to themselves, by buying drugs in this manner, illicit pharmacy customers are also taking profits away from drug firms. While many might argue this is no bad thing, it only results in big pharma increasing the price of existing products, and reducing the amount it invests in searching for new treatments that could help tackle some of the world’s most deadly diseases.
Risking your health taking illegal recreational drugs is one thing, but playing Russian roulette by buying illicit pharmaceuticals online when you might well be able to get the genuine treatment from your doctor is quite literally taking your life in your hands for little or no reason.
Western governments have a responsibility to prevent paedophiles abusing children in countries such as the Philippines
Relatively speaking, western law enforcement agencies have made great progress when it comes to targeting paedophiles in recent years. While the example of “Asian” street grooming gangs avoiding punishment for decades in countries such as the UK might suggest otherwise, along with the seemingly never-ending abuse scandal in the Catholic Church, on the whole, police in western nations now take the issue of child sexual exploitation a lot more seriously than they did as recently as 10 years ago. As a consequence, paedophiles living in the west who wish to act on their sexual interest in children must now do so with a great deal more caution than they once did. For those unwilling to seek treatment to stop them from acting on their urges, the answer to this problem often involves turning to nations where child protection laws are not as effective as those in their home countries.
Unfortunately, it has long been the case that western paedophiles have sought to abuse children in poorer parts of the world such as Southeast Asia, but with the widening availability of low-cost air travel and high-speed internet access, doing so has become easier than ever, either in person or remotely over the internet. This has led to a burgeoning child sexual exploitation industry in countries such as the Philippines that has continued to grow as western law enforcement agencies have sought to do more to target paedophiles both on and offline domestically. As a result, an illicit trade has emerged that involves impoverished Filipino families accepting money from organised criminal gangs in exchange for allowing their children to be abused in front of webcams to satisfy the desires of western paedophiles, many of whom have become wise to the threat of being arrested by police in the countries in which they live.
In an attempt to clamp down on the growing problem, a coalition of law enforcement agencies last week opened a new centre in the Philippines designed to help local investigators better deal with the online sexual exploitation of children across the Southeast Asian country. Launched partly in response to local gangs livestreaming bespoke sex shows featuring local children over apps such as Skype, the Philippine Internet Crimes Against Children Centre (PICACC) is intended to equip local law enforcement agencies with the skills and technology they require to locate and bring to justice the gangs behind these types of crimes. Official government figures demonstrate the scale of the problem, showing that in 2017 alone there were almost 45,700 reported incidents of child online sexual exploitation in the Philippines, with around half of victims rescued by investigators aged 12 or younger. The true number of incidents is almost certain to be much higher, with anecdotal evidence suggesting the Philippines remains a mecca for western paedophiles.
At the end of February, a female member of a Filipino child-snatching gang explained from behind bars how she and her associates kidnapped minors from the streets to sell onto paedophiles from the west. Speaking from her prison cell after being caught by police attempting to abduct a 10-year-old girl in Paranaque City, Lilibeth Bustamante told reporters how she was paid the equivalent of just $20 to carry out the kidnapping, and that the children she and other gangs members procured would be sold on for as little as $3,550. She said: “I only take them, they sell. They only give me one thousand pesos. I send it to my family in Mindoro. We have a quota of two children per week. Our target age is 10-years-old and above.” Bustamante’s evidence suggests there remains a high demand for children in the Philippines from western paedophiles such as Australian Peter Gerard Scully, who was sentenced to life in the country last year after being dubbed one the world’s most depraved child rapists, and Briton Douglas Slade, who is being sued while in a UK jail by his alleged Filipino victims.
It is encouraging that that the likes of the UK National Crime Agency (NCA) and the Australian Federal Police (AFP) are helping authorities in the Philippines target the organised criminal gangs that are profiting from procuring and exploiting children for western paedophiles, but the establishment of the PICACC should form the basis of a wider effort to tackle the issue. Western governments have a responsibility to ensure that paedophiles from their countries are not able to harm children in poorer nations. As well as funding more initiatives such as the PICACC, this means taking greater steps to prevent child abusers from travelling to these countries, as well as limiting their access to the internet to make sure they are unable to pay to view children being abused in developing nations.
“Legal and illegal trade in tobacco products are often intertwined”
Illicit Trade News Networks has interviewed Benoît Gomis, research associate at the Global Tobacco Control Research Programme at Simon Fraser University who has recently published a study on the illicit trade in South America. From the beginning of the illegal trade seeded by British American Tobacco and Philip Morris International to the ongoing trade organised by Tabesa, Benoît Gomis gives a clear picture of how legal and illegal are intertwined as long as tobacco products are involved.
Illicit Trade News Network: You recently published a study on illicit tobacco trafficking in South America and more specifically in Paraguay. Can you go back over the figures from this study in a few words?
In the first paper, we demonstrate how the trade was originally seeded by British American Tobacco (BAT) and Philip Morris International (PMI), who from the 1960s onwards used Paraguay as a transit hub to smuggle their cigarettes to the then protected markets of Argentina and Brazil. Two developments later led to a boom in Paraguayan production: 1) the transnational tobacco companies (TTCs)’ switch from high-end to cheap smuggled brands in the late 1980s and early 1990s – products with which local manufacturers could now compete, and 2) Brazil’s introduction of a 150% export tax to end the TTC scheme – by which cigarettes were sent to Paraguay and then re-smuggled to Brazil. Based on our estimates, between 1989 and 1994, Paraguayan cigarette production was below the annual domestic consumption of three billion cigarettes. It grew to 12 billion sticks by 1998 and 27 billion by 2003 despite stagnating consumption.
In the second paper, we document how Tabacalera del Este (most commonly known as Tabesa) capitalized on the conditions created by BAT and PMI and a permitting regulatory environment. Created in 1994, Tabesa is now one of Paraguay’s largest companies. It was founded and is still owned by Horacio Cartes who was President of Paraguay between 2013 and 2018. Based on data on the company’s imports of cigarette components, we estimate that Tabesa imports enough to produce 25-36 billion cigarette sticks per year. Given domestic consumption and legal export figures, this means that between 19-30 billion cigarettes produced by Tabesa annually end up on the illicit market. An estimated 70% of that is smuggled to Brazil, and our research finds that Tabesa has been exploring other international markets.
Tabesa executives notably told Paraguayan journalists that the company legally exports to a number of countries, including Bulgaria, Curaćao, the Netherlands Antilles and the Netherlands. However, our analysis of UN Comtrade data shows significant discrepancies, suggesting illicit trade. For instance, between 2001 and 2016, there were no cigarette exports reported by Paraguay to Bulgaria, nor any cigarette imports reported by Bulgaria from Paraguay. In that same period, Paraguay reported exports of 1.4 billion cigarettes to Curaçao, 481.2 million cigarettes to the Netherlands Antilles, and 111.4 million cigarettes to the Netherlands, yet none of those countries reported any cigarette imports from Paraguay. In total, between 2001 and 2016, 5.7 billion cigarettes officially shipped by Paraguay to 10 markets where Tabesa exported to were unaccounted for.
What are the major findings of your study on the modus operandi of tobacco trafficking?
Our findings suggest that the legal and illegal trade in tobacco products are often intertwined. BAT, PMI, and Tabesa have all had legal sales and legal exports, and yet have also used the illicit trade – in particular through free trade zones (FTZs) and other areas of weak governance – to enter new markets and increase their revenue. We also argue that Tabesa has used its legal exports to the US as a defence against smuggling accusations. More broadly, these papers – and other research we have conducted – suggest that the illicit tobacco trade is changing its nature. There are still signs of TTC complicity in the illicit trade, but other non-TTC actors are increasingly involved as well. Meanwhile, TTCs are attempting to recast themselves as responsible partners to governments by providing intelligence, training, equipment, financial resources and even influencing budget decisions in various countries across Latin America, while also commissioning and funding studies on the illicit trade and framing the issue in the media. It is of course in their interest to do so. Through these activities, TTCs aim to undermine competitors and fight against tobacco control measures that have been effective in reducing smoking rates (e.g. higher taxes, plain packaging).
In your study, you mention tactics allegedly used by Tabesa, PMI and BAT tactics in terms of illicit tobacco trafficking. What are these tactics?
These include: 1) creating new brands, manufacturing them domestically, exporting them illegally, using the revenue to reinvest in product development and production facilities to produce more cigarettes to a higher standard and thus compete for new markets overseas; 2) using free trade zones as transit hubs for smuggling; and 3) selling to a large number of domestic distributors and later arguing that subsequent illicit exports are not their responsibility.
What measures could countries plagued by illicit tobacco trafficking take at the national level?
The first measure is to tackle industry interference with policy making. TTCs are attempting to circumvent international guidelines to reclaim influence in tobacco control by supporting governments to tackle the illicit tobacco trade. But as the WHO warns, “There is a fundamental and irreconcilable conflict between the tobacco industry’s interests and public health policy interests.”
Second, governments would do well to increase resources dedicated to relevant law enforcement and customs departments – including adequate training independent of the tobacco industry.
Third, more data should be collected and analyzed independently of the tobacco industry. Very often there is much we do not know about the illicit tobacco trade in any said country, meaning that policy responses often rely on potentially misleading seizure figures and industry-funded data.
More broadly speaking, the more fundamental issues of weak governance, institutional capacity, political will, transparency, accountability, and corruption need to be tackled for any substantial progress to be made.
What measures could be taken at the international level and in terms of traceability?
Governments should fully implement the WHO Framework Convention on Tobacco Control and its Protocol to Eliminate Illicit Trade in Tobacco Products.
Our research played an important role in the Paraguayan government’s decision to sign the Protocol, a step in the right direction. The Protocol features a number of useful action points, including Article 10.1.b which notes that Parties shall “take the necessary measures” so that companies “[supply] tobacco products or manufacturing equipment in amounts commensurate with the demand for such products within the intended market of retail sale or use”.
Article 8 on Tracking and Tracing is perhaps the most central one, however. It notes that “the Parties agree to establish within five years of entry into force of this Protocol a global tracking and tracing regime”. Under the traceability system of the Protocol, detailed information on the entirety of the tobacco supply chain is for instance required, including “the name, invoice, order number and payment records of the first customer not affiliated to the manufacturer”, “the intended market of retail sale”, “any warehousing and shipping”, “the identity of any known subsequent purchaser”, and “the intended shipment route, the shipment date, shipment destination, point of departure and consignee” (Article 8.4.1). This system is intended to “further [secure] the supply chain and to assist in the investigation of illicit trade in tobacco products”. However, it is currently at risk of being controlled by the tobacco industry. Further research on this development and caution from governments are required to ensure that the track and trace measures put in place across the world effectively mitigate the illicit tobacco trade, rather than promote the commercial interests of TTCs at the expense of public health and good governance.
Social media firms and app developers are failing to prevent criminals from finding new ways of exploiting their products
Technology site the Verge recently revealed that poorly-paid Facebook moderators employed by third-party firms to wade through huge amounts of illegal and disturbing content are developing the same type of post-traumatic stress disorder symptoms that doctors are more used to seeing in soldiers returning from war zones. While the unforgiving demands that are made of these workers is most likely to be the primary cause of the poor mental health many of them appear to suffer from, the nature of the material they have to process during the course of their working day must undoubtedly take its toll. For its part, Facebook claims that its rapid growth left it with little choice but to turn to outsourcers to help it police its networks, and that it does all it can to ensure the moderators it employs through third parties enjoy decent working conditions.
Like Facebook, other social media platforms have sought to up their game in recent years when it comes to taking down hate speech, violent crime and extreme pornography. While many have made progress as far as removing offensive material is concerned, they generally appear to be less successful at preventing their networks from being used by organised criminals, who are increasingly using these platforms to facilitate illegal activity.
Organised criminal gangs have been exploring ways in which they can use social media platforms and encrypted smartphone apps for some time now, partly as a result of the shutdown of a number of leading dark web marketplaces over the course of the past year or so. A recent report from online security firm Bromium revealed that cyber criminals are making more than $3 billion a year from spreading malware and selling hacking tools on social media platforms. The study found that incidents of cyber crime involving social media grew more than 300-fold between 2015 and 2017 in the US alone.
At the same time, criminals involved in more traditional forms of illegal activity have been finding new ways in which to use social media platforms to target victims and reach new customers. Experts fear that the advent of 5G connectivity will only make it easier for criminals to exploit online resources, which begs the question why social media networks are not doing more to crack down on their platforms being used for illegal activity now. While the likes of Facebook and Twitter spend a great deal of time and resources removing content that might be considered offensive, they appear to be doing little to combat rising levels of crime on their platforms, as can be evidenced by almost daily reports of new ways in which bad actors are exploiting their networks in fresh and often ingenious ways.
A recent report from digital risk protection firm Dark Shadows revealed that criminal gangs operating online are offering salaries of up to $360,000 a year to individuals who can help them identify and target high-worth individuals in sextortion scams. For accomplices with programming skills, these can salaries rise to more than $768,000 per year, the cyber security firm found. The company’s research reveals how an extortion method that is invariably carried out over social media and messaging apps has become so easy and profitable that the organised gangs behind it can now afford to pay executive salaries to anybody who can help them find high-worth individuals to target.
Separately, the UK’s Independent last month revealed that criminals were using the popular video game Fortnite to launder the proceeds of their illegal activities. An investigation conducted by the website found that criminals had been using stolen credit card details to purchase the game’s virtual currency before selling it on at a discount, effectively “cleaning” their ill-gotten gains. More recently, a number of brands last week withdrew their advertising from YouTube after video blogger Matt Watson revealed that the Google-owned platform’s algorithms were helping paedophiles locate soft porn-type material and share links to explicit content featuring children.
Social media firms have made much lately of their determination to take down offensive and illegal content, but seem less interested in preventing real crime from taking place on their networks. Sadly, this has more to do with PR and profit margin than it does about keeping people safe online. It is telling that YouTube moved quickly to appease advertisers by taking down potentially offensive material after Matt Watson’s revelations were made public, while other types of criminality that might not have such an impact on these companies’ bottom lines is largely ignored. The takeaway here appears to be that if an illegal activity does not hit their profits, social media companies and app developers will most likely remain quite relaxed about it.
- Counterfeit goods rise to account for 3.3% of all global trade, OECD report reveals
- EU prepares for WannaCry-style hacking attempts ahead of European Parliament elections in May
- British government releases £100 million to help police battle UK’s spiralling knife crime epidemic
- New taskforce targeting counterfeit and smuggled goods in Detroit seizes contraband worth $1 million
- Methamphetamine production hits record high across East and Southeast Asian countries, UNODC cautions
9 February 2018
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