Mexican Government's Alleged Complicity with the Sinaloa Cartel Shows that Money Fuels Drug War Corruption

by Kristin Bricker

This is a much more detailed version of an article that is running on the Security Sector Reform Resournce Centre's blog.  It contains a lot more statistics about corruption, and explores more problems and possible solutions to the problem.  The thesis is the same: no one wants to look at the finances of drug trafficking, but all anti-corruption strategies are doomed to fail as long as that is the case.  

Last month, NPR published new evidence that supports the prevailing theory amongst Mexicans: that the Felipe Calderón administration favors the Sinaloa drug trafficking organization (DTO) in the war on drugs.  NPR's report includes testimony from Mexican law enforcement officials, politicians, crime reporters, and residents, as well as former and current US counterintelligence and DEA agents.  Nearly all of them were in agreement: the powerful Sinaloa DTO is weathering Mexico's war on drugs far better than its competitors.  NPR also analyzed arrest data for over 2,600 suspected members of major DTOs and found that since the war began in 2006, the largest number of defendants (44%) have come from the Sinaloa DTO's arch nemesis, the Gulf-Zetas organization. The Sinaloa DTO, on the other hand, has suffered surprisingly few arrests (12% of the total) given its relative size and power.

In response to the NPR report, the Mexican government claimed that the Sinaloa organization actually comprises 24% of its overall drug arrests, while only 27% are from the Gulf-Zetas.  Unlike NPR, the Mexican government did not release its methodology.  However, the Mexican government is known for using "fuzzy math" when attempting to justify the drug war.  At a recent drug policy reform conference in Mexico City, Luis Astorga from the National Autonomous University of Mexico’s Institute for Social Investigations demonstrated that the Mexican government consistently feeds the press baseless and contradictory drug war statistics.  Astorga's presentation questioned the veracity of any drug war statistics issued by the Mexican government that aren't accompanied by "a study and a methodology for how they arrived at those numbers.”  

The US government, on the other hand, chose to simply ignore the NPR report.  When reporters questioned a senior White House official about NPR's findings, he reaffirmed President Obama's "long-term commitment to Calderon's struggle against the cartels" and side-stepped the question.

The NPR report is particularly disturbing because of the role corruption has played in Mexico's "rigged" drug war.  The Mexican government officials, reporters, and residents that NPR interviewed almost unanimously pointed to the Sinaloa cartel's impressive ability to bring police and soldiers onto its payroll. 

Mexicans and US officials were well-aware of Mexico's problem even before NPR published its findings: Calderon launched "Operation Clean-up" just as public debate over the Merida Initiative was in full-swing. Operation Clean-up purged allegedly corrupt officials from agencies involved in the war on drugs.  At the same time, Calderon launched a Merida Initiative-funded country-wide screening of all police officers.  In some locales, half or all of the police were fired following screenings.

The problem with these anti-corruption measures is that they ignore the systematic nature of corruption.  Sinaloa Congressman Manuel Clouthier told NPR, "It is like we're trimming the branches of a tree, when we should be tearing it out by the roots." 

The massive police purge trims off the corrupt cops without attacking the root of the problem: DTOs have enough money to buy new cops to replace the old ones.  Even when the government fires entire police forces--as it has been known to do--the DTOs will buy new police because they have a seemingly endless source of money.

Operation Clean-up, rather than permanently rooting out corrupt officials and agents, highlighted the fact that drug cartel corruption goes up to the highest levels.  At least three former Mexican drug tsars are currently in prison; all have been accused of collusion with DTOs.  

Operation Clean-up's high-ranking victims didn't surprise many in Mexico, where narcos have infiltrated every part of the government that is relevant to their business--even the President's office.  In 2005, the DEA caught former President Vicente Fox's tour coordinator, Nahum Acosta Lugo, using Los Pinos telephones to communicate with the Beltran Leyva organization, which at the time still formed part of the Sinaloa organization. Despite the DEA's taped called between the presidential aide and known drug traffickers, Acosta Lugo spent six days in prison before being freed "for lack of evidence." 

Even Raúl Salinas, brother of former President Carlos Salinas, was accused of collaborating with drug kingpins during his brother's administration.  

The US government's efforts to establish teams of incorruptible Mexican police that they can trust with sensitive intelligence information have met fierce resistance from DTOs. The US Embassy has recruited meticulously screened Mexican Federal Police to its Sensitive Investigation Units (SIU).  These police receive Special Forces training from the FBI and DEA in Washington to prepare them for key involvement in police and intelligence work.  However, the frequent polygraph tests that these police must undergo discovered that many of them had been bought by the DTOs.  Those who couldn't be bought appear to be prime targets: over a period of a few months in 2008, drug traffickers assassinated at least twelve high-ranking SIU police who worked closely with the US Embassy.  In some cases, most notably that of Federal Police chief Edgar Millán, it was apparent that the drug traffickers had corrupted members of the officers' security teams in order to obtain intelligence on their movements. 

"It's the Economy, Stupid"

The Calderon adminstration's detention-focused anti-corruption strategy is doomed to fail as long as it ignores the source of DTOs' power: money.  The general consensus amongst drug policy experts is that the Mexican government has not done enough to dismantle the DTOs' vast financial networks.  The International Monetary Fund, for example, points out that between 1989 and mid-2009, the Mexican government obtained about 32 money laundering convictions.  

Edgardo Buscaglia, a professor at the Autonomous Technological Institute of Mexico and an expert in the economics of crime, argues that Mexico hasn't done as much as it could to attack organized crime's financial networks.  "I would recommend to the Federal Secretary of Public Security that instead of worrying about having more helicopters that he get to work strengthening investigations in order to dismantle the underworld's finances," Buscaglia told the Mexican daily El Universal.  Buscaglia recommends that Mexico fully implement the Palermo Convention, a United Nations convention that includes best practices and legislative guides that aim to enhance international cooperation against transnational organized crime.    

Through the Merida Initiative, the United States is providing Mexico with updated technology and training to investigate money laundering, and the two countries will increase intelligence-sharing.    However, the US has not taken any noticeable steps to remedy the shortcomings in its own system for identifying and sanctioning organized crime's front businesses.  The US' notorious black list, which identifies drug kingpins and their assets, includes over two hundred Mexican businesses that the Treasury Department claims are fronts for drug traffickers.  The black list includes business names and locations, but no proof to back up the Treasury Department's claims that they are connected to drug trafficking.  As a result, the Mexican government has taken legal action in very few black list cases.

Mexico and the United States' focus on arrests and their relative lack of action against organized crime's financial structures could reflect the governments' own financial interests.  Estimates of exactly how much money drugs pump into the Mexican and US economies vary widely, and the methodology for how experts arrived at those numbers is almost never explained. However, one thing is clear: drug trafficking is one of Mexico's most important industries, and through money laundering, it comprises a significant percentage of Mexico's gross domestic product (GDP).  This is not just the case in Mexico: the United Nations argues that drug money kept the global banking system afloat during the worst of the financial crisis.  As banks lost over a trillion dollars in toxic assets and bad loans, "Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities," claims Antonio Maria Costa, head of the UN Office on Drugs and Crime. "There were signs that some banks were rescued that way." 

The drug war's financial contradictions have led some governments to re-evaluate their prohibitionist policies. Just as in the 1920s when the United States government decided that the prohibition of alcohol contributed to the creation of wealthy mafias, some local governments are asking themselves if they would have more success regulating and taxing marijuana rather than outright prohibiting it.

In January 2009, in the midst of speculation that Mexico's drug war violence would spill over into the US, the El Paso, Texas, City Council unanimously voted to initiate a debate over the decriminalization of some drugs. 

In 2009, four former presidents of Mexico, Colombia, and Brazil called for legalizing marijuana.  "The focus on prohibition has generated serious human and social problems as violence and corruption increase in the region,” said former Brazilian president Fernando Henrique Cardoso. “A realistic evaluation of these policies shows that there has been no reduction in production nor in the consumption of drugs. We are farther than ever from the announced goal of eradicating illicit drugs.”  Calderon's two immediate predecessors, Ernesto Zedillo and fellow party member Vicente Fox, joined the call for legalization.  

California might put the former presidents' advice into practice: this coming November, voters will decide on a referendum that, if passed, will legalize the possession of up to one ounce of marijuana for personal use.  The chairwoman of California's State Board of Equity, Betty Yee, estimates that taxing marijuana consumption could bring in an additional $1.3 billion per year in taxes for her state.  With his state facing critical budget shortfalls, Gov. Arnold Schwarzenegger told the press, "I think it's time for a debate.  I think of all those ideas of creating extra revenues, I'm always open for a debate on it."  Legalizing marijuana would reduce the burden on California's overflowing prison system, and at the same time would bring in extra revenue in taxes.

California's legalization move would arguably shift production for that state's consumers almost entirely into California. This would cut into Mexican DTOs' profits, who reportedly derive between 50-65% of their profits from marijuana.