The 2016 ‘presidentiables’: Who will be toughest on drugs and crime?

Among the 2016 presidential candidates, who will be toughest on drugs and crime?

Not Rodrigo Duterte. He may be ‘tough-talking’, but his solutions appear to be focused only on the ‘supply-side,’ saying little about the ‘demand-side’ of the problem. A supply-side approach, even if it succeeds in temporarily bringing the supply of criminals down to zero, is not sustainable: new criminals emerge, or will be created, for as long as there is demand for their services. This ‘iron law’ of demand-and-supply is something that the iron-fisted candidate is yet to address.

More importantly, stand-alone enforcement, or physical elimination, does not work, precedents around the world show. They did just that in the late 1980s to the early 1990s in Latin America, when the United States put bounties on the head of drug lords, pressured governments of the region to destroy drug cartels, and stepped up military and other forms of aid to governments that cooperated. One country at the centre of the drug trade – Panama, through which up to $50 million worth of Colombian cocaine bound for the US passed each day – was invaded. Panama’s drug-dealing dictator Manuel Noriega was deposed, whisked to Florida, and jailed for 40 years on drug charges.  

Noriega’s business partners, the Medellin cartel of Pablo Escobar in neighbouring Colombia, was by then already retaliating to the US-led offensive. Sicarios (assassins) were sent to kill judges and politicians almost daily. Up to 88 car bombs were detonated in major cities – one even brought down an Avianca commercial airliner killing 107 passengers on board. The havoc created was met with more force; Colombia easily became the world’s most violent.

But soon, a split emerged among the Medellin drug lords. Some wanted de-escalation, because too much violence was bad for business.  Quick to exploit the split, authorities succeeded in tracking down the elusive Escobar, who was shot dead by a police sniper in December 1993. The tide turned. By 1995, all the major drug lords have been killed, arrested, or forced into hiding. The drug cartels were dismantled.

Did this result in the demise of the cocaine trade? No. Instead, it merely forced a ‘restructuring.’ The illicit business – sustained by demand – transformed and ironically became much more difficult to uproot. ‘Big men’ like Escobar were simply replaced by smaller, anonymous, dispersed and more ingenious entrepreneurs who began to specialise in a single or more elements of the illicit trade.

Rather than centralised mafia-like structures, scattered independent sub-contractors emerged. Though uncoordinated and without central leadership, and even occasionally in deadly competition with each other, they collectively expanded the business. Some of those in Noriega’s supply chains found new partners and regrouped to Mexico. Some clever ex-cartel leaders negotiated military protection by turning themselves into paramilitary vigilantes against leftist guerrillas, while quietly keeping the business. Not to be outdone, leftist guerrillas too joined the fray and became major drug traffickers on their own. ‘Decentralisation’ became crime’s effective de facto insurance mechanism against law enforcement.

The lesson is quite clear – a stand-alone policy of elimination, without an integrated plan to deal with the demand side, could lead to inadvertent consequences. Could this be a reason too for why, despite the hundreds of criminals purportedly already killed by the likes of Duterte, criminality continues?

Duterte’s proclamation rally in Tondo offered an excellent platform for elaborating root-and-branch solutions to crime. Amidst thousands of informally-settled poor migrants from the Visayas and Mindanao, many of whom have been forced to lead a life of petty crime, he could have raised the question – what is causing this migration? Why are pools of restless, unemployed young men and women being created across the country, from which the foot soldiers of crime are recruited?

The answers are known – those ‘foot soldiers’ have been displaced from land, and have no future in agriculture; some are barely literate with few qualifications; some are internal refugees from on-going conflicts; some have been victims of crime themselves. Duterte promised ‘radical change’, but his central message, sadly, lacked substance. He is a tough guy – ‘hindi supot,’ no doubt about it. He is keen to ride the wave of popular frustration over crime. But it is doubtful if his strategy, simplistic as it is, will succeed.

The changing face of crime

First there was the ‘Bahala Na Gang’, ‘Sigue-Sigue Sputnik’, or ‘Batang City Jail’. Then came the Pentagon Gang, and Kuratong Baleleng. Over time, infamous criminals became famous, even legendary: Nardong Putik (Ramon Revilla); Asiong Salonga (Joseph Estrada); Baby Ama (Rudy Fernandez), or Ongkoy Parojinog (Robin Padilla).

For those of us of a certain age, these names are the public face of crime and criminals. But that needs to change, for the simple reason that the crimes of today – especially those that are most debilitating – are so much different. If we are to deal more effectively with crime, we have to recognize this changing face, identify the new characters involved, and be familiar with their updated ‘business models.’ This is easier said than done, because while it is easy to attribute criminality to the Sigue-Sigues or Ongkoy Parojinogs, it is counter-intuitive to associate criminality to those who have carefully-developed ‘reputations’ to protect.  

To illustrate, late us take for example the world’s local bank – HSBC. It is a reputable bank, and the biggest in Europe, according to industry magazines. It was also investigated by the US Senate in 2011 for laundering $881 million for Mexico’s murderous Sinaloa drug cartel, among others. Many people associate a face to the Sinaloa drug cartel – remember the escaped convict Joaquin ‘El Chapo’ Guzman, interviewed by the Hollywood actor Sean Penn before he was recaptured? Probably yes. But do we remember, or have we even seen, the faces of the HSBC executives who escaped charges in court after the bank paid a record $1.9 billion in settlement to US prosecutors led by Loretta Lynch, now the US Attorney-General? Probably no.

Rolling Stone magazine called them ‘gangster-bankers’ and ‘millionaire greedheads’ whose criminal ingenuity is causing outrage fatigue around the world. Movies will soon be made about El Chapo; not so sure about those bankers. Closer to home, it may be asked: could Robin Padilla ever play the role of a smooth-talking, well-groomed, suit-and-tie-wearing banker, travelling business class weekly to Hong Kong or Singapore to close bank transactions for dodgy clients evading the wrath of Duterte? Unlikely.

Take another case. According to reports published by the International Center for Investigative Journalism, children of former dictators were or are beneficiaries of secretive offshore trusts and corporations registered in tax havens – complex financial vehicles created to hide something. Among the examples mentioned in the year-long investigation are Sintra Trust and ComCentre Corporation, registered in the British Virgin Islands.

Children and grandchildren of former dictators are typically not regarded as criminals. Indeed, why should they take the blame for what their elders did? The children first and firmly are reputable individuals. They may even run for public office, and be the genuine democratic choice of voters. Equally, the lawyers, bankers, and accountants who set up the trusts and corporations for those children are also not regarded as criminals. They are respectable professionals who are just doing their jobs. Registering offshore accounts, after all, is not a crime.

But is there a case to make that these trusts, corporations, and accounts, are simply the deodorized, beautified and smarter reincarnations of the Bahala Na Gangs, or other mafia-like organisations? That the only difference between the men and women behind it is that instead of tattoos, the modern versions today wear designer clothes, get botox treatment, live in five-star accommodation, and move around in chauffeur-driven fancy vehicles?

The point is that it is just so much easier to be tough on criminals of the Bahala Na Gang variety, than on the fragrant criminals who enjoy respect and adoration, but who arguably cause more damage to society. Could it be that the wave of popular frustration over crime is driven by that latent sense of (un)fairness that it is always only the Sigue-Sigues who are jailed, and rarely the lawyers, bankers, and accountants who facilitate crime, or the clients whom they serve? For these power-dressing criminals, perhaps it is useful to maintain the myth that only the Sigue-Sigues are criminals, that only the Tondos are the hotbeds of crime and stomping ground of the Asiong Salongas. Perhaps it is time to do a police ‘zona’ of certain ‘kutas’ or buildings in Makati too, the bastion of respectability and the stomping ground of the elite, and soon-to-be-elite.

Nardong Putik in the age of Twitter

To keep up with the changing face of crime, simply imagine a re-invented Ramon Revilla Jr. in the role of Nardong Putik (@nardongputik) tweeting the hashtag (#mayarawdinkayo) as the police close in on his hideout, which is hidden in plain sight inside a global call center.

This is one key problem. None of the 2016 presidential candidates have so far made any public commitment about cybercrime or cyber-facilitated crime if elected. The fact is the most important crimes today do not involve guns, nor are they confined inside national boundaries. Bank accounts in Switzerland or Singapore, owned by offshore companies with secret (in)famous owners, could now be accessed online, anywhere in the world, whether in Laoag, Taguig, or Davao. In the same way, small and big drug deals could be negotiated through Facebook. Payments are made through pay-as-you-go mobile phone accounts.  Even bullying has become digital.

Crime has globalized. The author Misha Glenny describes this simply as McMafia, drawing parallels to how the food giant McDonalds expanded, using franchises, to practically every corner of the world. He said that criminals, organised and disorganised, are “also good capitalists and entrepreneurs intent on obeying the laws of supply and demand.” As such, they value economies of scale, “just as multinational corporations did, and so sought out overseas partners and markets to develop ‘industries’ that were every bit as cosmopolitan as Shell, Nike, or McDonalds”

This brings us to perhaps the most important point in this discussion of crime – the boundary between what is legal or illegal, or between licit or illicit, is increasingly becoming blurred. In certain sectors, that boundary may have already become non-existent. Some recent cases will illustrate.

In the United Kingdom today, big global companies – e.g. Google, Apple, Starbucks, Amazon – have been investigated by a parliamentary committee for aggressive tax avoidance, facilitated through transfer pricing. For example, an Amazon online sale from a customer, who is physically located in the UK, is digitally ‘located’ in Luxembourg – i.e. the receipt for the transaction is ‘issued’ by an Amazon subsidiary in Luxembourg. Hence, Amazon-UK could claim it is not making any profit on that UK sale, where it is liable to a 20% corporate income tax; the profit is ‘earned’ in Luxembourg, where Amazon pays only a 2% tax. Clever and legal.

There is an urban legend that transfer pricing was a Pinoy invention. The story goes that in the late 1960s, decades before the age of Twitter, transfer pricing was already in practice and being perfected in factories nestled on the hills east of Marikina. It has to do with how taxes on tobacco were transferred and computed across manufacturing and marketing subsidiaries of a certain firm, thus creating a massive ‘fortune’ for its owners.  There is no suggestion that the fortune is illegal, nor were the owners of the fortune engaged in illegal activity. Indeed, local courts themselves have ruled repeatedly that those engaged in transfer pricing were not breaking any law.

Indeed, that may be true. In retrospect, such claims to legality have historical precedents. Over two hundred years ago, there were investors, shipping companies, and insurance firms in Europe and its colonial possessions which similarly claimed legality as they earned enormous profits in the acquisition, transport, and sale of human beings. They were the ‘market leaders’ in the slave trade, which at that time was, of course, a perfectly legal economic enterprise. Though they kidnapped human beings and sold them as property, those companies and their employees were ‘just doing their jobs’. They were not breaking the law, like many global and local brands and professionals today.

The blurring of what is legal and illegal applies only to those with power. For example, a public schoolteacher with three young children, struggling to make ends meet, may want to ask this question to Internal Revenue Commissioner Kim Henares: “Since the trend has become global, could I be allowed to pay the same proportion of taxes on income as the owner of those tobacco companies?” The answer is of course no, because schoolteachers can’t afford the bankers, lawyers, and accountants that make that possible. If the teacher, in frustration, fiddles her tax return, engages in some ‘creative accounting’, and is caught, she becomes the criminal. ‘Pillars of the economy’ could never be criminal.

In other words, crime has become tougher to solve, because the most debilitating criminal activities which cause the most damage to society have become legalized. Boundaries have become blurred because the most predatory of economic activities enjoy the services of an army of respectable professionals, many of whom are even given awards and honorific titles. Relevant laws have been captured to serve them, not the real victims of crime, like the slaves of two hundred years ago. Thus, the most dangerous criminals are, sadly, not criminals. They are so clever that most avoid detection, even if they make our lives miserable from right under our noses.

What could be the solutions then? As already stated, many of the answers are already known – perhaps they just need to be picked up by those who want to become president. For example, there is an effective solution to transfer pricing and the globalization of crime – the secret ownership of companies needs to be eliminated. There is a more technical explanation, but simply it goes like this: when companies are registered, or when they open bank accounts, they have to be compelled to declare their real owners – i.e. the natural persons who own them, identified through a unique passport number or driver’s license number. That information then needs to be posted on a publicly-accessible register.

This solution, it is argued, will put out of business those so-called secrecy service providers, like Switzerland, Singapore, and other tax havens, which ironically are regarded as ‘corruption free’ by global perception surveys. Public registers of real owners of companies and assets, from haciendas to horses, could just be the game changer in the fight against crime, corruption, and conflict.

Curiously, none of the presidential candidates touch upon this solution. Though the first item on Jejomay Binay’s platform is “the elimination of corruption”, he has nothing on the elimination of anonymous ownership of companies. Grace Poe vows a ‘gobyernong may puso’ that will build integrity circles and promote transparency and accountability. Nothing is said so far on dealing with the changing face of crime. Miriam Santiago will fight the war against illegal drugs and corruption at the Bureau of Customs, but not yet the corrupting influence of secret bank accounts. Daang Matuwid looks promising, but its standard bearer Mar Roxas, seems to have not caught up on the issue.

So, who will be toughest on crime? NOTA, or none of the above, so far. – Rappler.com

Eric Gutierrez is currently working on a PhD research entitled ‘Criminals Without Borders’ at the International Institute of Social Studies at Erasmus University in the Netherlands, a comparative study of opium and cocaine commodity chains. He is not related to the Francis Eric Gutierrez who owns the jet planes being used by a candidate in the on-going presidential campaign.