Organized Crime in the Netherlands

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ORGANIZED CRIME IN THE NETHERLANDS

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Organized Crime in The Netherlands CYRILLE FIJNAUT Professor of Criminal Law and Criminology, K. U. Leuven, Belgium Professor of Law, Global Law School Program, New York Universitj School of l a w , U.S.A.

FRANK BOVENKERK Professor of Criminology, Universiteit Utrecht. The Netherlands

GERBEN BRUINSMA Professor of Criminology, Universiteit Twente, The Netherlands

and

HENK VAN DE BUNT Professor of Criminology, Vrije Universiteit, The Netherlands Director of the Research and Documentation Centre of the Minishy of Justice, The Netherlands

KLUWER LAW INTERNATIONAL THE HAGUE / LONDON / BOSTON

A C.I.P. Catalogue record for this book is available from the Library of Congress.

ISBN 90-41 1-1027-5

Published by Kluwer Law International, P.O. Box 85889,2508 CN The Hague, The Netherlands. Sold and distributed in North, Central and South America by Kluwer Law International, 675 Massachusetts Avenue, Cambridge, MA 02139, U S A . In all other countries, sold and distributed by Kluwer Law International, Distribution Centre, P.O. Box 322,3300 AH Dordrecht, The Netherlands.

Printed on acid-free paper

All Rights Reserved O 1998 Kluwer Law International

Kluwer Law International incorporates the publishing programmes of Graham & Trotman Ltd, Kluwer Law and Taxation Publishers, and Martinus Nijhoff Publishers.

No part of the material protected by this copyright notice may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the copyright owner. Printed in the Netherlands

TABLE OF CONTENTS Foreword I. I. 1 I. 2

General Introduction Design of the Study Contents of the Chapters

11.

Defining Organized Crime Definition Debate in the Netherlands Refbting a Mafia Underworld Turning Point: The Randstad Initiative Preventing the Criminal Disruption of Society Definition of Organized Crime in the Study Subject of the Definition Contents of the Definition Conclusion

11. 1 11. 1. 1 11. 1. 2 11. 1. 3 11. 2 11. 2. 1 11. 2. 2 11. 3

111. 111. 1 111. 2 111. 3 111. 3. 1 111. 3. 1. 1 111.3. 1 . 2 111. 3. 1. 3 111. 3. 2 111. 3. 2. 1 111. 3. 2. 2 111. 4 111. 4. 1 111. 4. 2

Possibilities and Limitations of Research on Organized Crime Introduction Empirical Research on Organized Crime Design and Implementation of the Study Conducting the Research Complementary Strategy Analytical Framework Confidentiality of the Information The Police as Source of Knowledge Selectivity of Police Data Reliability of Police Data National Studies Dutch, Immigrant and Foreign Criminal Groups Organized Crime in Legitimate Sectors of the Economy

Organized Crime in the Netherlands

111. 4. 3 111. 4. 4 111. 5 111. 5. 1 111. 5. 2 111. 6 IV.

Fraud and Money Laundering Lawyers, Accountants and the Banking System Local Studies Amsterdam Enschede, Nijmegen and Arnhem Conclusion

Contemporary Manifestations of Traditional Organized Crime Introduction IV. 1 The Drug Trade IV. 2 The Dominant Role of the Drug Trade in IV. 2. 1 Organized Crime Organization of the Drug Trade IV 2 . 2 Political Economy of the Drug Trade IV. 2. 2. 1 Impression of the Criminal Groups Involved IV. 2. 2. 2 IV. 2. 2. 2. 1 The Role of Dutch Groups IV. 2. 2. 2. 2 The Role of Foreign Groups IV. 2. 2. 2. 3 The Role of Immigrant Groups Modes of Operation IV. 2. 3 IV. 2. 3. 1 Infrastructure of the Drug Trade Use of Violence IV. 2. 3 . 2 Spending the Proceeds of Criminal Activity IV. 2. 4 IV. 2. 4. 1 Exchanging the Proceeds of Criminal Activity Personal Expenditures IV. 2. 4. 2 Investing in Business and Real Estate IV. 2. 4. 3 IV. 2. 5 Local Variations Trafficking in Women IV. 3 The National Situation IV. 3 . 1 The Local Situation IV. 3. 2 IV. 4 Trafficking in Firearms IV. 5 Car TheR Forms of Fraud IV. 6 Illegal Activities IV. 6. 1 Composition of the Groups IV. 6. 2

Table of Contents

IV. 6. 3 IV. 6 . 4 IV. 7

Modes of Operation and Shielding Damage, Proceeds and Expenses Conclusion Organized Crime in Legitimate Sectors of the Economy: Fact or Fiction? Introduction Hotels, Restaurants, Nightclubs and Pubs Protection, Extortion and Robbery Slot Machines The Situation in Amsterdam and in Arnhem, Nijmegen and Enschede Road, Ocean and Air Transport The National Situation Rotterdam Harbour and Amsterdam Schiphol Airport The Automobile Sector The Construction Industry The Waste Disposal Industry The Garment Industry Conclusion

VI. 1 W. 2 W. 2 . 1 W. 2 . 2 VI. 2 . 3 W. 2 . 4 W. 3

VI. 3 . 1 W. 3 . 2 W. 4

Bridges Between Organized Crime and the Legitimate World Introduction Roles of Specific Professions Lawyers Notaries Public Accountants Function of Disciplinary Measures Channelling Criminal Proceeds into the Legitimate Economy Moving Criminal Proceeds Money Laundering Conclusion

vii


VII. VII. 1 VII. 1. 1 VII. 1. 2 VII. 1. 3 VII. 1. 4 VII. 1. 5 VII. 2. VII. 2. 1 VII. 2. 2 VII. 3

Confronting the Dutch Authorities The National Situation Counter-Surveillance Intimidation Corruption The Media Influential People The Local Situation Amsterdam Arnhem, Nijmegen and Enschede Conclusion

VIII. VIII. 1 VIII. 2 VIII. 3

General Conclusions Seriousness of the Situation Some Worrying Questions Expectations for the Near Future

Appendixes: Analytical Framework of the Study Agreements with Fijnaut Research Team Bibliography

viii

2 19

225 229

FOREWORD Whys and Wherefores of This Book: A Parliamentary Inquiry Committee In December 1993, the Chief Public Prosecutor, the Mayor and the Police Commissioner of Amsterdam decided unilaterally to disband the North Holland 1 Utrecht Inter-Regional Criminal Investigation Team, which had been founded in 1987 by the police departments in the provinces of North Holland and Utrecht to combat organized crime more effectively in this part of the Netherlands. Several months earlier, the Amsterdam police had taken over the operational supervision of the team fiom the Utrecht police. According to the press release at the time, the team was disbanded because it was using investigation methods that were unacceptable in a constitutional democracy. This decision gave rise to widespread incredulity on the part of the media, other police forces and the police trade unions. Prominent commentators felt it was far more probable that Amsterdam police officials were using whatever objections there might be to the investigation methods to settle in its own favour the dispute between "Amsterdam" and "Utrecht" about jurisdiction over the team. Several of them, including the Utrecht Police Commissioner and the Chairman of the Dutch Police Association, even went so far as to openly suggest that corruption at the top echelons of the Amsterdam police was the underlying reason for the decision to disband the Interregional Criminal Investigation Team. Pressured as it was by public opinion, in 1994 the Cabinet felt it had no choice but to appoint a special fact-finding committee to uncover the real reasons why the Inter-Regional Criminal Investigation Team had been disbanded. In its partially confidential report, the committee, which had completed its work by March 1994, came to the conclusion that although the team's investigation methods might have been unconventional, they were not unacceptable and consequently could not have been adequate grounds for its disbandment. According to the committee, the real reason for the disbandment did indeed lie in the


ambition of the Amsterdam police to lead the way in the efforts to combat organized crime in Amsterdam and the surrounding region. This conclusion, which obviously shed an unfavourable light on "Amsterdam", was unable to mitigate the public debate about the disbandment of the team and, accordingly, about the investigation methods the police had used to combat organized crime. In fact quite the opposite was the case, and the debate became even more heated. The discussion in early April 1994 in the Lower Chamber of the Dutch Parliament about the conclusions of the fact-finding committee was consequently fierce and intense. After being sharply criticised for how they had dealt with the disbandment of the team, first the Minister of Justice resigned his post, and then the Minister of the Interior. On 7 April 1994, the majority of the Lower Chamber passed a resolution requesting a parliamentary inquiry into the regulation of the investigation methods in question, the framework in which their use had been supervised and monitored, and the actual utilization of these methods. In order to implement this resolution, on 1 June 1994 the Permanent Judiciary Committee appointed a work group supervised by Member of Parliament Maarten van Traa to conduct a preliminary study on the full facts of the matter. On 2 1 October 1994, the work group presented its report entitled Opsporing gezocht (Inquiry into Criminal Investigation Methods), and its recommendation to Parliament, which was to set up a hll-fledged parliamentary inquiry on the matter. A parliamentary inquiry makes it possible to conduct in-depth research: confidential documents can be consulted, witnesses can be questioned under oath and so forth. On 16 November 1994, Parliament decided to follow the recommendation and on 6 December 1994, the Speaker of the Lower Chamber of Parliament appointed the Inquiry Committee, once again under the supervision of Maarten van Traa. What does all this have to do with this book? A great deal, because the issue of organized crime was certainly referred to in the report Inquiry into Criminal Investigation Methods, and for a number of reasons. First, according to the work group, an accurate description of organized crime is needed if an adequate evaluation is to be made of the need for special investigation methods. Secondly, this kind of description

Foreword

is also called for in connection with the possible desirability of expanding the powers of the police and the judiciary. It should be noted here that no satisfactory depiction of the situation was available. The work group blamed this on the lack of consensus about what organized crime is, and on the problems related to analyses of organized crime conducted up till then. The work group concluded that, in the context of a possible parliamentary inquiry into criminal investigation methods, a "better qualitative picture" would have to be presented of the nature, the seriousness and the scale of organized crime. This conclusion was included in the description of what the Inquiry Committee was asked to do. It was to study:

-

the nature, seriousness and scale of organized crime; the use, legitimacy, reliability and effectiveness of the investigation methods; and the organization, hnctioning and supervision of the investigations.

To obtain information on the first point, in January 1995 the Inquiry Committee appointed an external research team chaired by Cyrille Fijnaut, Professor in Criminology and Criminal Law at Leuven Catholic University in Belgium and Erasmus University Rotterdam. In addition to ProE Fijnaut, the research team consisted of the other authors of this book: Frank Bovenkerk, Professor in Criminology at Utrecht University, Gerben Bruinsma, Professor in Criminology at Twente University, and Henk van de Bunt, Professor in Criminology at the Vrije University Amsterdam and Director of the Research and Documentation Centre of the Ministry of Justice. In particular, they were asked to address three topics: -

-

the problems related to defining organized crime; the possibilities and limitations of research on organized crime; and the nature and scale of organized crime.

In view of the limited manpower and time, the decision was made in the course of February 1995, in conjunction with the Inquiry Committee, not


to conduct separate sub-studies on the first two topics, but to address them in the final report of the research team together with an account of their own research on the nature and scale of organized crime. The research, which was largely conducted in the period from February to August 1995, was thus mainly focused on the last topic, the nature and scale of organized crime in the Netherlands. Lastly, it should be noted that our reports were made public on 1 February 1996, together with the final report and sub-reports of the Inquiry Committee itself. In its final report, the Inquiry Committee was completely in agreement with the findings of this study. "The Inquiry Committee endorses the findings of the Fijnaut research team", it said. "The Inquiry Committee is of the opinion that the Fijnaut research team presented an accurate picture of organized crime in the Netherlands. The combination of research data and the incorporation of confidential police information gives a manifest added value, when compared with the existing analyses. This study presents a comprehensive description of the scale and nature of organized crime. On the basis of this overall view, the Inquiry Committee can arrive at a well-founded evaluation of the seriousness of organized crime in the Netherlands."

Reasons for this English version There are various reasons why we decided to publish this English version of the final report of this study. The first is a very general one. The bulk of the important studies on organized crime are in English. So whoever wants to play a role in the academic debate on this increasingly international phenomenon will have to publish his or her research results in this language. The second reason is closely related to the first. Much of the research literature pertains to countries where certain forms of organized crime have traditionally been in existence - the yakuza in Japan, the triads in China, and the mafia in Italy - or to large countries where these and other forms of organized crime developed later, such as the United States, Canada, Germany and the United Kingdom. In other words, very

xii

Foreword

little literature, if any, is available in English about organized crime in the smaller countries of Europe. Of course, this is not so much due to the language problem as to the fact that so few studies have been conducted in many of these countries on organized crime. In the Netherlands, a certain amount of research has been done in recent years (see below), and some of the results have been published in English. But no comprehensive study has been conducted on organized crime comparable with this one. That is why it seems only logical to fill this gap in international research literature, at least as far as the Netherlands is concerned. In addition to these two mainly academic reasons, there is a more policy-focused one. In recent years, organized crime has become an important political problem throughout Europe. The Council of Europe has taken steps in a number of fields to contain the problem, and so has the European Union at the level of its individual Member States as well as that of its major agencies, such as the European Council, European Commission and European Parliament. One might note in this connection the measures against laundering criminal money, the reinforcement of international police and judicial cooperation in the fi-amework of "Schengen", and the founding of Europol. Many of these steps have been taken without an adequate description of organized crime in the Member States of either the European Union or the Council of Europe. Europol is now making every effort to implement strategic crime analyses in the fields under its jurisdiction, but is seriously hampered by the fact that national analyses of organized crime have yet to be carried out in many of the Member States. This is why the publication of this report should also be viewed as a contribution towards an accurate depiction of organized crime in Europe. The importance of having this description available should not be underestimated. In the future, it is to serve as the foundation for an adequate policy on combatting organized crime. It should be stated most emphatically in this connection that this book is "merely" a translation of the final report we drew up for the Inquiry Committee. We say "merely7' because this report, as will be explained below, is really just a summary of the research results. The

xiii


results of the total of seven sub-studies have been described in detail in seven interim reports. These reports have also been published in Dutch under the auspices of the Inquiry Committee, and are thus available to anyone who wants to know more about this study and the research results. As regards certain topics, these reports contain far more extensive bibliographical references than the final report. The bibliography at the end of this book only contains references to literature actually used in drawing up the final report.

Acknowledgements We would like to close this Foreword by gratefully acknowledging the indispensable help we received in writing this book. First, we would like to thank the researchers who made such a major contribution to the implementation of the study: H. Nelen, Dr E. R. Kleemans, A. Lempens, N. van de Ven and Dr H. Werdmolder. Secondly, we would like to express our gratitude to the police departments, the Prosecutor's Office, and the regulatory agencies that were so cooperative in so many different ways, and to the numerous representatives of the sectors of the economy that were featured in the study: the automobile, construction, transport, garment and waste disposal industries, the hotel, restaurant, nightclub and pub sectors, and the members of the Turkish, Surinamese and Moroccan communities who were willing to speak so openly with us about the crime-related problems with which their sectors and communities are confronted. Thirdly, we would like to thank Sheila Gogol for her skilful translation of the Dutch manuscript of this book into English and her willingness to work with us to solve the translation problems posed by material of this kind. Lastly, we would like to express our gratitude to Lindy Melman, our publisher at Kluwer Law International, for accepting our proposal for this book without fUrther ado and, once the manuscript was finished, for seeing to the production with so much careful precision. It is with the

xiv

Foreword

fullest confidence that we now entrust the distribution of the book to her.

The Hague, summer 1997

Cyrille Fijnaut Frank Bovenkerk Gerben Bruinsma Henk van de Bunt


I. GENERAL INTRODUCTION I. 1 Design of the Study

As noted in the Foreword, the major focus of the research conducted in the period fiom February to August 1995 was the analysis of the nature and scale of organized crime in the Netherlands. It should be noted that the research results are generally of a descriptive nature. They do not provide any explanations or test any theories. Some of the sub-reports do go into the context of certain trends in organized crime. The study is based upon a definition of organized crime that is in keeping with both the questions posed by the Van Traa work group and with international research literature. According to this definition, the legitimacy of which is demonstrated in Chapter 11, one can speak of organized crime if and when groups of individuals join for financial reasons to systematically commit crimes that can adversely affect society, and are capable of relatively effectively shielding these crimes from targeted intervention of the authorities, in particular by way of their willingness to use physical violence or eliminate individuals by means of corruption. The following questions have been formulated in keeping with this definition to answer the Inquiry Committee's query as to the nature, scale and seriousness of organized crime in the Netherlands: What kinds of groups engage in organized crime in this country? What forms of organized crime are committed by these groups? How are these forms of crime committed? How are the proceeds of organized crime spent? In the further design of this study, we took into consideration the fact that organized crime has been traditionally associated with supplying illegal goods and services to illegal markets (prostitution, gambling, drugs). Equally important, however, are the forms of organized crime involving illegal activities in legitimate sectors of the economy (racketeering). Lastly, one should bear in mind that groups or individuals

2


engaged in these forms of crime can also commit other crimes, such as European Union fraud or kidnapping. The fact is not denied that there are still other forms of serious organized crime in the world, for example in the financial field, but they go beyond the scope of this study. Starting from this closer description of the problem, it was obvious what the perspectives should be for the research. It was necessary to discover what criminal groups are committing which forms of organized crime, and which legitimate sectors of the economy, if any, exhibit traces of organized crime as well. After all, as the Van Traa work group noted, it was the anxiety about the underworld becoming linked to the ordinary everyday world that made it necessary to determine whether groups that normally operate in illegal sectors are also acting illegally in legitimate sectors, and to approach from the other side to see whether this is true in specific sectors of the economy. If these fears proved unfounded in either case, then we could rest assured that this linking is not taking place and, vice versa, confirmation from both angles would make it doubly plausible. In the event of a one-sided refutation or confirmation, hrther research would be called for. The groups and sectors of the economy that were the subject of further research are elaborated upon in Chapter 111. From the very start, it was clear that a study of this kind would not only have to be conducted at a national level, but at a local and regional one as well. There are two reasons why. First, because sufllcient information is not always available at the national level to provide a reliable picture. To a certain extent, the second reason has to do with the first. Since the problem of organized crime is not the same in all the cities and regions of the country, it was necessary to include a closer examination at certain locations. The initial intention was to conduct hrther research at five sites. Due, however, to the limited research capacity, ultimately only the situation in Amsterdam and in the towns of Arnhem, Nijmegen and Enschede was studied. Of course, it would have been preferable to extend the study to Germany, Belgium and France, and to other parts of the Dutch Kingdom, such as the Netherlands Antilles, to see what information is available at the central police agencies there about organized crime in the Netherlands. But there was not enough time to expand the study to conduct research abroad.

General Introduction

3

If the study had been implemented solely by using this double complementary design, then a number of topics definitely would have been wholly or partially overlooked that should not be left out of a national study on organized crime in the Netherlands. First and foremost, there is the role of the Dutch gateways to Europe - Rotterdam Harbour and Amsterdam Schiphol Auport - in the illegal commercial activities of criminal groups, whether they involve importing drugs or smuggling people. Secondly, there are the incidents of major fraud committed by individuals or groups who, in various senses, meet with our definition of organized crime. Another reason why the investigation of these acts of fiaud was called for was that it provides another opportunity to examine the extent to which legitimate sectors of the economy have been penetrated by criminal groups that were previously mainly active in illegal sectors. Thirdly, in a study like this, attention should also be focused on the role of professional people - lawyers, notaries public, accountants and the banking system - in organized crime, in actually perpetrating criminal acts as well as in dealing with the revenues they produce. This is why separate sub-studies have been conducted into these three topics. Chapter I11 explains how the sub-studies were conducted, and discusses the methods that were used and the sources that were consulted.

I. 2 Contents of the Chapters In the course of the study, we barely deviated, if at all, from the design presented above. This means that ultimately the following seven substudies were conducted:

C. Fijnaut, The Role of Dutch Criminal Groups E Bovenkerk and C. Fijnaut, Immigrant and Foreign Criminal Groups G. Bruinsma and F. Bovenkerk, Legitimate Sectors of the Economy H. van de Bunt and H. Nelen, Fraud and Money Laundering H. van de Bunt Professionals: Lawyers, Notaries Public and Accountants

4


C. Fijnaut and F. Bovenkerk, An Analysis of the Situation in Amsterdam G. Bruinsma and H. van de Bunt, An Analysis of the Situation in Enschede, Nijmegen and Arnhem The contents of these sub-studies are the foundation upon which this final report is based. The structure of the following chapters is in line with the questions the Van Traa work group posed in its report and those the Inquiry Committee presented to the research team. As noted above, Chapters I1 and I11 address the first two of the three questions that the Inquiry Committee presented to the research team. Chapter I1 pertains to the definition of organized crime. The debate that has taken place in the Netherlands in the past decade is described, and the reasons for the definition used in this study are given, as are the precise stipulations it entails. Chapter I11 centres around the research into organized crime. In general, the possibilities and limitations of this type of research are discussed. Details are also given as to how each sub-study was implemented. Chapters TV to VII give an impression of the results of the studies, and thus constitute the response to the Inquiry Committee's third question. In keeping with the design of the study, Chapter IV discusses the contemporary manifestations of traditional organized crime and the criminal groups involved. More specifically, it focuses on the drug trade, trafficking in women, arms and stolen cars, and fraud. Chapter V contains the findings on whether any of the legitimate sectors of the economy exhibit traces of organized crime and, if so, which ones. The hotel, restaurant, nightclub and pub sectors, and the transport , automobile, garment, waste disposal and construction industries are successively discussed. Chapter V1 pertains to "bridges" between organized crime and society, that is, the role of professionals in organized crime and how criminal proceeds are channelled into legitimate sectors of the economy. Chapter V11 deals with whether organized crime constitutes a threat to the democratic state and if so, to what extent. The counter-strategies that we were able to identify in the course of the seven studies are analysed: counter-surveillance, corruption, intimidation, and using the media and influential people.

General Introduction

5

The Van Traa work group and the Inquiry Committee both repeatedly addressed the question of the "seriousness" of organized crime in the Netherlands. The standpoint of the research team was that the seriousness of this problem is determined by the nature and scale of the crime and by the damage it does. Thus the seriousness of the situation at present is not addressed until Chapter VIII: General Conclusions.


11. DEFINING ORGANIZED CRIME A great deal has been written in recent years about the history of organized crime and the war against it. However, far less attention has been devoted to the history of the debate about this form of crime in general and the definition of it in particular. This is, however, no insimcant matter, as the Van Traa work group rightly observed. After all, the way organized crime is defined not only largely determines the perception of it, but also the policy that is or should be adopted to combat it. Against the background of the debate in the Netherlands on the definition of organized crime, 11. 2 explains what warranted the definition used in this study and examines it in detail.

11. 1 Definition Debate in the Netherlands In the Netherlands, as elsewhere, the history of the debate on the definition of organized crime has yet to be written. Though a number of efforts have been made, the story is still far from complete (Beetstra et al. 1994). Certainly, if an account of this history strives to draw a link between the definition of organized crime and the policy implemented in the fi-amework of this definition, a great deal can be said for stipulating a border line in the winter of 1990, more specifically in the month of October, when the Dutch-American Conference on Organized Crime was held in The Hague. It may be true that the official definition of organized crime was not immediately altered as a result of this conference, but the policy was definitely adjusted accordingly. Up till then, the war against organized crime had been conducted from a repressive, punitive perspective, but from that moment on, the need was also acknowledged for preventive administrative measures to contain the problem. The contributions of the members of the New York State Organized Crime Task Force at the conference emphasized that, in the long run, a one-sided repressive approach was not going to be adequately effective (Fijnaut and Jacobs 1991).

8


11. 1. 1 Refuting a Mafia Underworld

There is no question that in the course of the 1970s, the image of serious crime was totally altered, certainly fi-omthe perspective of the police and the judiciary. The analysis made in the framework of this research project of the situation in Amsterdam is totally conclusive in this respect. The kidnapping of Caransa in 1977 and the hold-ups by the Thinkers, a gang from the Kinkerbuurt, a working class neighbourhood in Amsterdam, indicated that the world of professional crime had become quite a bit tougher, and the trends in the international drug trade, the organization of illegal gambling and trafEcking in women all demonstrated that, as elsewhere, organized crime was mushrooming in the Netherlands. In 1974, Rotterdam Police superintendent Blaauw was the first to put into words the confrontation with this growing problem. He claimed that "the American model of organized crime (in the form of the Cosa Nostra) is non-existent in the Netherlands", although there is no denying that "professional criminal organizations or gangs" were active, particularly in the drug trade, car and lorry theft, robbery and extortion, and illegal gin mills. Blaauw blamed these forms of organized crime on "the powerlessness of the police". Therefore it was obvious what steps had to be taken to solve the problem: the operational investigation departments had to be expanded with intelligence services, surveillance teams and so forth; the national coordination of criminal investigations had to be more effective; investigators had to be given extra training; and there had to be greater cooperation with customs officials and the marechaussee. And indeed, according to later analyses of the development of the Dutch police system, these improvements were put into effect (Nuijten-Edelbroek 1985, Fijnaut l985a). In the discussion on infiltration as a method for combating organized crime, it became clear around 1980 that prominent police officials such as Blaauw had altered their notions of the nature, scale and development of organized crime in the Netherlands. In 1980, Blaauw stated that in the Netherlands, as in other countries, organized crime in general and the drug trade in particular were moving towards the American model. The drug trade "is a form of organized crime that has gradually become comparable to the American mafia structure". Blaauw

Dejning Organized Crime

9

did not say in so many words why, in the course of time, he had adjusted his view of the problem, but it is obvious from the article quoted here that he gradually become more aware of the huge quantity of drugs being bought and sold through the Netherlands, the increasingly sophisticated methods being used by major Dutch and foreign drug dealers to put their drugs on the Dutch and foreign markets, and the significant sums of money being earned in the international drug trade. In 1980, Sietsma, the Police superintendent in Amsterdam, did not go into the problem of organized crime as extensively as Blaauw, but it is clear from the words he used that he shared Blaauw's opinion that, in part, the drug trade in the Netherlands is in the hands of crime syndicates. Whatever the case may be, Blaauw felt the time had come to open the counter-attack, and there was no need to wait until "the opponent gained so much ground it could barely be driven back". Once again, to him this implied a wide range of measures varying from the augmentation of the Opium Law and a financial line of approach to drug dealers, to stricter regional supervision of criminal investigations and the introduction of a national data base on the drug trade. As this list demonstrates, the measures are totally in keeping with his altered conception of organized crime in the Netherlands. It no longer consists of a collection of more or less professional gangs that try their hand at illegal activities, but is composed of real crime syndicates that aim to gain illegal control over entire sectors of society. This police view of the evolution of organized crime in the Netherlands and the policy that should be implemented to combat it did not evoke a great deal of enthusiastic support. On the contrary, neither the media nor the academic world were eager to back it. The debate remained bogged down in the issue of infiltration, which was the most controversial method at the time for countering the international drug trade. Nor was there much of a response from the field of criminology. Despite indications that organized crime could also mushroom in the Netherlands, many criminologists still continued to view it as a predominantly foreign phenomenon (e.g. Fijnaut 1984, 1985b). The study conducted by the Research and Documentation Centre of the Ministry of Justice into various forms of fraud, for example in the construction industry, was the only one to touch upon the problems

10


Blaauw had cited (Berghuis and Paulides 1983, Berghuis, Van D u p e and Essers 1985). This study similarly drew attention to the fact that a number of traditional professional criminals were setting up networks in the financial world that sometimes bore a resemblance to real crime syndicates. Society and Criminality, the policy plan presented in 1985 by F. Korthals Altes, the Dutch Minister of Justice at the time, not only made special note of the sharp rise in petty crime; it also stated that, although the Netherlands had long been exempt from the problem of organized crime, "a large-scale underworld rooted in society" was now threatening to emerge. It was difficult, the report went on, to distinguish between this and other forms of crime, such as large-scale bank fraud and serious environmental offences, but there was one striking difference: organized crime focuses on the drug trade, illegal gambling, prostitution, the arms trade, labour contracting and fraud involving sham companies. So with no theoretical ifs or buts, in this plan, the organized crime to which Blaauw and Sietsma were referring and the fraud Berghuis et al. studied were all classified in one and the same category. However, no effort was made to decide how exactly all this crime was to be defined. The plan merely stated that, unlike the case with petty crime, combatting these forms of organized crime is exclusively the task of the police and the judiciary. Very much in the spirit of Blaauw's ideas, a sizeable arsenal of measures designed for repressive purposes was thus proposed in an effort to avert the imminent danger (Fijnaut 1988, Korthals Altes 1989). Oddly enough, it was the application of crime analysis techniques that demonstrated time after time how shaky the theoretical and empirical basis of the implemented policy was. In the Gonsalves work group - set up in 1987 to decide which methods should be used and under whose responsibility the organization of the police and the judiciary should be adjusted to combat organized crime more effectively - there was a consensus that organized crime exhibits the following characteristics:

-

intrinsically serious forms of crime with commensurately severe sentences, for example, major fraud and environmental cases, largescale import and trade in drugs, organized theft;

Defining Organized Crime

-

II

links between the criminal acts, whether or not they are in different fields of criminal law or are perpetrated at different spots; and perpetrators or groups of perpetrators often acting in a planned manner, and the organizational structure often exhibiting hierarchic features.

However, these specifications proved difficult to put into practice, and there was a great deal of cofision about the concepts behind them. According to the Crime Analysis Project Group, set up in January 1988 to present a national quantitative overview of criminal groups and consisting of representatives from the Police Departments of Amsterdam, Utrecht, The Hague and Rotterdam, the National Police Force and the Central Criminal Information Service, it was necessary to draw a distinction between group criminality and organized crime (Slort 1988). In ideal types, group criminality involves "a group of criminals professionally engaged in committing certain punishable offences in a certain period". A group of this kind has an internal division of labour, though it does not necessarily have a hierarchic structure. It has no internal sanction system, and its continued existence depends on one or more key members. Its aim is monetary gain and it can achieve this without having to compete with other groups, let alone aspire to an economic monopoly. A group of this kind is also characterized by the following features: in principle, it only commits one type of offence, the revenues are solely used to finance a luxurious life style and new similar offences, and it makes every effort to commit its crimes as professionally as possible. As regards the duration, a group of this kind operates on a medium to long-term basis (approximately one year). The project group used the term organized crime to refer to criminal groups that commit various types of offences, exhibit a hierarchic structure, have an internal sanction system, and continue to operate even without one or more of their key members. The aim of these groups is not only monetary gain but economic power as well and, ultimately, to occupy a monopoly position in a certain market so they can compete with rivalling groups or make tacit agreements with them. The instruments they use include intimidation and violence, inside as well as outside the group, and corruption; in addition, efforts are made to infiltrate legitimate sectors

I2


of the economy to set up covers for their illegal activities and acquire influence over politicians and exert control over their decision-making. Lastly, a criminal group engaged in organized crime is always active on a long-term basis, for a period of "quite a few years". These are the definitions that were used in drawing up the first national analysis of organized crime and inter-regional group criminality, with the understanding that group criminality and organized crime were no longer viewed as diagonally opposed, but as closely linked (Organized Crime etc. 1988). In this analysis, it was in fact stated that a group can be referred to as engaged in organized crime if and when it meets with five criteria: hierarchic structure, use of sanctions, investment of criminal proceeds in legitimate activities, intimidation of government officials or personnel at legitimate companies, and perpetration of various offences. For all the groups that were examined (a total of 189 in the end), it was noted to what degree they met with these criteria. It was clear from the findings that three groups met with all five of the criteria, seventeen groups met with four, eighteen with three, fifty-four with two, sixty-one with one, and thirty-six did not meet with any of them. But what did these figures mean? Did they mean that in addition to the three fblly-fledged organized crime groups there were, respectively, seventeen, eighteen, fifty-four and sixty-one groups that should also have been slightly or maybe much more than slightly labelled as engaged in organized crime, or did they mean quite the opposite? This question was not answered in this particular report. Thus, its own confbsing analysis of the collected data only served to perpetuate the confbsion the project group had hoped to avoid by drawing a clear distinction between group criminality and organized crime. In the period when the analysis referred to above was being drawn up, the Research and Documentation Centre of the Ministry of Justice also launched an empirical study on organized crime in the Netherlands. The results were published in 1990 in a report entitled Criminal Enteprises: Entrepreneurial Criminals in the Netherlands (Van Duyne, Kouwenberg and Romeijn 1990). This study covered nineteen narcotics cases and twenty-one cases of entrepreneurial crime. As this distinction indicates, this study apparently worked with a totally different idea of organized crime than the national police analysis. The precise definition


13

the study utilized is not explicitly specified. In fact, at the beginning of the report, the researchers stated that they did not wish to define organized crime. All they wished to do was address the question: "How do enterprising criminals operate by means of criminal enterprises in the markets that are profitable for them?'It can, however, be clearly concluded from the way the study continued that the researchers were implicitly adhering to a specii3c defhition of organized crime, that is, the somewhat tautological definition that organized crime is crime as it is organized by the entrepreneurs or enterprises they investigated. The researchers refused to specifl in the abstract just exactly what is the concrete configuration of this kind of crime or how it differs from other forms of crime. "We shall, however, use this term as an open generic name without making any further reference to a phenomenon with a number of unambiguously stipulated features." Of course this "open" attitude implies that, in particular, the category of entrepreneurial crime can be extended to include any number of offences, including trading in waste material, embezzlement, European Community fraud, VAT (Value Added Tax) fraud, illegal gambling, bank robberies, forgeries and so forth. As a result, the term "organized crime" no longer has any meaning at all, at any rate no specific, distinguishing and thus restrictive meaning. Crime committed by criminal entrepreneurs is organized crime, regardless of the nature of their crime or the nature of their enterprise. The only thing that really counts is that like anyone else, with a view to his profits, the "criminal entrepreneur" has to operate as a rational entrepreneur. In other words, working from his own economic niche, he too has to take into account the evolution of the criminal market in which he is active and adjust to it organizationally. After what has been noted above, it should not come as a surprise that by the end of the 1980s, the confision as to the definition of organized crime had reached at a peak. Apparently, organized crime was a term that could refer to hierarchically-organized groups using violence and corruption to make their way to permanent positions of power in certain economic sectors, as well as to tiny groups of clever swindlers and outright robbers operating as gangs to carry out their daring feats.

14


11. 1. 2 Turning Point: The Randstad Initiative It has been repeatedly noted that in the 1970s and 1980s, the United States played a leading role in the debate on the definition and the nature, scale and development of organized crime and the desirability and feasibility of methods to combat it. Time and again, observers have noted, however, that comparisons with America are not always relevant, since the situation there is presented in too superficial, incomplete or one-sided a fashion. In an effort to alleviate this problem, several experts took the initiative in 1988-1989 to invite a number of members of the New York State Organized Crime Task Force to come to the Netherlands and take part in a discussion with police officials, researchers, and public prosecutors. This led to the Dutch-American Conference on Organized Crime held in October 1990 in the Hague (Fijnaut and Jacobs 1991). Goldstock, the director of the Task Force at the time, stressed that the Cosa Nostra was traditionally viewed as the hard core of organized crime. In an effort to describe the finction of its syndicates, he compared them to governments "providing services, allocating resources and territories, and settling disputes" as regards supplying illegal goods and services, as well as engaging in illegal activities in legitimate sectors of the economy. Other members of the Task Force (Mass, Jacobs) made it clear what this meant. Based on analyses of the role of the Cosa Nostra families in the construction and garment industries, they demonstrated that these syndicates are only able to serve this fbnction because they have built up positions of power in these sectors of the economy and are willing to defend their positions by threatening to use violence or in fact actually using it. Goldstock did, however, add that syndicates are emerging that have not nearly achieved the position of the Cosa Nostra families, such as Chinese tongs, black drugs gangs, motorcycle gangs and Russian groups. Implicitly and explicitly, with this list he was making it clear that in the United States as well, organized crime is an extremely heterogeneous rather than a monolithic phenomenon. To a certain extent, the way Dutch researchers have depicted organized crime in the Netherlands has been in keeping with this last


15

observation. Van Baarle, Bovenkerk and Van Duyne have all expressed the opinion that organized crime in the Netherlands manifests itself in multifarious ways, ranging from hierarchically-structured groups (Van Baarle) through the gangsters of Amsterdam (Bovenkerk), to a wide range of swindlers and smugglers (Van Duyne). Thus, unwittingly, they contributed jointly to the cofision in the continuing debate in the Netherlands about organized crime and how it should be defined. But no matter how dissimilarly these various authors have described the Dutch situation, they have all agreed that on various essential points, it still differs from the American one, at least as regards the hard core of organized crime, the Cosa Nostra. None of them knew of any groups in the Netherlands that bore an organizational resemblance to the notorious families, nor did they defend the notion that criminal groups in the Netherlands have built up positions of power in legitimate sectors of the economy that are in any way comparable to those of the Italian syndicates in New York. They did note, however, that it is not always easy to draw the line between the legal and illegal activities of criminal groups, and that some groups have succeeded in maintaining a position in certain legitimate sectors of the economy for lengthy periods of time. The Conference delegates were nonetheless extremely interested in the American experiences of combatting organized crime. On the one hand, Italian organized crime could in part become so strong in the United States because the repressive action taken against it was traditionally so weak (Jacobs). Thus, when efforts were made in the 1980s to combat it more actively using new methods such as wire tapping and witness protection programmes, they were successfbl, and the organizations of an important number of families were largely destabilized (see also Jacobs 1994). On the other hand, although a great deal could be achieved through criminal prosecution, permanent success was only achieved when this approach was complemented by a comprehensive set of preventive measures. Thacher I1 based this new idea of how to combat organized crime on the example of the inspectorate set up in 1989-1990 in New York to get the school construction industry out of the grip of the Cosa Nostra. Partly as a result of this Conference, at the beginning of 1991 the Police Chiefs of Amsterdam, The Hague and Rotterdam and the director

16


of the Central Criminal Information Service decided to devote hrther attention to the approach to serious organized crime in the Randstad, that is, the urban agglomeration in Western Holland. This led in turn to the formulation of the Randstad Memorandum in March 1991. Its point of departure was that although there were still important differences between organized crime in the United States and the Netherlands, there was still reason to assume that in the Netherlands, a segment of the organized crime would come to bear a steadily closer resemblance to the criminal organizations that had long been operating in the United States and Italy. Vigilance was called for, especially since the lack of insight into the situation led to a tendency to "marginalize7'this kind of crime and "write it off as an overestimation by of the police and the judiciary". One of the fist aims was to gain greater insight into the evolution of this kind of crime by means of intensive criminal investigation and criminological studies. At the same time, it was felt that an adjustment was needed in the attitude to organized crime and to combatting it. First, organized crime cannot be viewed separately from what is called "prevalent" crime (there is a direct connection between drug-related crime and how the large criminal organizations work). This means that the police approach to organized crime is not only a matter for criminal investigation departments, no matter how necessary it might be to revitalize them, but it also needs to be embedded in the basic police programme. Secondly, it is not a good thing for the police and the judiciary to monopolize the battle against organized crime. The administration should also play an important role in this connection by introducing structural preventive measures. In other words, combatting organized crime has to be done in an integral and integrated way. Thirdly, it was noted that for a number of reasons, the role of the Prosecutor's Office in important criminal investigations should be enlarged, especially at their initial stage. The ideas this initiative was based upon were largely adopted in the national policy on organized crime that was formulated in 1992 under pressure from the Lower Chamber of Parliament.

DeJining Organized Crime

II.1. 3 Preventing the Criminal Disruption of Society The Lubbers and Kok Cabinet that came into office in 1989 was initially not particularly focused on combatting organized crime. This lack of interest can best be illustrated by the policy plan Law in Motion (1990), which only marginally touched upon this topic. The plan notes that special financial arrangements had been made for regional teams of detectives and that, to provide greater leeway for "the investigation of group criminality", bills were proposed to introduce the use of modern wiretapping equipment, make preparations for criminal acts also punishable by law, and seize criminal proceeds. In Criminal Law with Discretion (1990), the parallel policy plan of the Prosecutor's Office, the problem was addressed in somewhat greater detail. Working from the assumption that criminal proceeds enable criminal organizations to attain a permanent position of power in one or more sectors of the economy and to thus be in a position to seriously disrupt society, the democratic state was now felt to be faced with the challenge of reversing this menacing development with all the means at its disposal, that is, repressive (the complete utilization of all the existing procedural powers, wider possibilities for intercepting communication, more capacity for criminal investigations, and more highly qualified criminal investigation departments) as well as preventive ones (legislation to combat fraud). The Lower Chamber of Parliament, however, was of the opinion that government policy was still insufficient, and when the 1992 budget for the Ministry of Justice was on the floor, a resolution was proposed to support the formulation of a new policy plan on the approach to organized crime. In implementing this resolution, the Minister of Justice and the Minister of the Interior published a memorandum in September 1992, entitled Organized Crime in the Netherlands: An Impression of its Threat and a Plan of Action. The tone was totally different than in Law in Motion. In the memorandum, the premise was that criminal organizations are a threat to Dutch society and that "due to the farreaching economic and moral implications, they should be taken extremely seriously". Although only a few organizations, the memorandum stated, met all the criteria for "organized crime" - various types of offences, a hierarchic structure, internal sanctions, laundering

18


criminal proceeds, cooperation with financial and legal professionals, corruption-related contact with legitimate banks and government officials - there were also clear indications that, as is the case in other countries, "organizations that generally belong to this category are no longer an exception in the Netherlands". These organizations are active in the drug trade, prostitution, gambling and the arms trade, and engage in fraud, for example, in connection with oil and the environment. But this is not all. In addition to the material and financial damage these organizations do, there is the danger of their gradually becoming embedded in the legitimate world, with all the corrupting influences this entails for Dutch society. It not only means the corruption of government officials and an erosion of the ethics in various professions, but even more so, the re-investment of criminal earnings in sectors that are in themselves legitimate, such as the construction and the waste disposal industries, the hotel, restaurant, nightclub and pub sector, and the automobile sector, so that a menacing symbiosis can develop "between the legitimate world and criminal entrepreneurs (.. .) which can disrupt the market". It is quite easy to trace where this image of organized crime comes from. In essence, it still goes back to the superficial impression in Society and Criminality that was later made more concrete by Van Duyne et al. in 1990 with an "open" definition of organized crime based upon a number of examples. Within this wide definition, there is, however, a very narrow definition of the problem of organized crime. It states very specifically that the problem consists of two basic components: the criminal organizations that meet with the criteria formulated by the Crime Analysis Project Group in 1988, and the positions of power the Organized Crime Task Force of New York feels these organizations can build up in legitimate sectors of the economy. According to the memorandum, it is these organizations that present the greatest threat to society. The influence of the Dutch-American Conference on Organized Crime was, however, also felt in the approach proposed to combat organized crime. It was frankly stated that this type of crime cannot be reduced with criminal justice interventions alone and that, as in the United States - see the example of the construction industry in New


19

York - "an integrated approach by the administration and the criminal justice system to certain forms of organized crime" should be put into effect. This is not the appropriate framework for a list of all the measures and intentions referred to in the policy plan. Many of them have to do with preventive action against organized crime: screening government policies for the unintentional creation of structures that allow for criminal access, analysing vulnerable sectors of the economy, enlarging the defensibility of the public administration, intensifjring efforts to keep criminal organizations out of certain service and goods sectors by not granting them licences, and cooperating with the world of trade and industry and with certain groups of professionals to set limits for contact with criminal organizations. The proposals made in the field of criminal justice to combat organized crime sound a bit more familiar: the intensification of consultations between public prdsecutors and police officials, the formation of regional criminal investigation units, the reinforcement of the exchange of information between regular police forces and regulatory agencies, the improvement of the expertise of public prosecutors and investigating judges, and the expansion of international cooperation. In May 1993 a separate project group was appointed to monitor the implementation of this vast programme, if not actually carry it out (Coordination Structure 1993). There was, however, no conscientious implementation - let alone thorough evaluation - of this policy. In particular, the eruption of the IRT (Inter-Regional Criminal Investigation Team) affair and all the complications that ensued made it unfeasible. Of course, this did not mean that as a result the entire project was abandoned. Plans were nonetheless carried out with six new Inter-Regional Criminal Investigation Teams, contacts were made with the world of trade and industry, and efforts were made in the field of administrative prevention, for example in Amsterdam, to protect the financial means related to the construction of the North-South subway line. Furthermore, in recent years considerable progress has been made in the field of research. Police and Prosecutor's Ofice representatives in the Coordinating Policy Consultation Committee have conducted new national analyses. Researchers have tried to present general pictures of the situation that are more or less up-to-date. Any number of case studies have also been

20


conducted that demonstrate in depth the details of organized crime and the battle against it. For a reconstruction of the debate on the definition of organized crime, it is not necessary to list all the writings. Let it suffice to review the publications where the discussion explicitly took place. Otherwise, the reader is referred to the various sub-studies, where much of the recent literature has been incorporated. Generally speaking, perhaps not that much progress has been made in recent years in this debate, in the sense that the differences in the definitions of organized crime have not disappeared, nor have they even become any smaller. More researchers have become interested in the subject, the police and judiciary have become more convinced of the usefulness of academic support, and a more uniform definition has been propagated. However, the efforts to reach a consensus have all been in vain. There continues to be quite a bit of dissension (Van den Eshof and Wiebrens 1993, Van den Eshof and Vegter 1994, Hoogenboom 1994). The extent to which the opinions differ can best be illustrated by a number of examples. Since the 1988 national police analysis, those conducted in 1991, 1993 and 1995 generally adhered to the same aim, research method and, consequently, the same definition of organized crime that was used in 1988. In other words, repeated efforts have been made through the use of police force surveys to inventory groups engaged to whatever degree in organized crime. There was an awareness that this narrowed the problem of organized crime down to the number, the activities and the level of organization of the groups in question, but in an effort to avoid a senseless definition battle, this was viewed as acceptable (Van der Heijden 1993). The only important change in recent years in this national inventory that is relevant here pertains to the number of criteria. Only five criteria were used in the 1988 analysis to measure the organizational level of the groups and, consequently, their ranking in organized crime, but ever since the 1991 analysis, eight criteria have been used. In addition to the five criteria specified above, the following three have been used: the use of companies as covers, the long-term basis of the criminal activities, and the use of violence against people in criminal circles.


21

As an alternative to this approach, Bovenkerk (1992) suggested not starting fi-om the criminals and the criminal organizations, but fi-om the illegal functions that have to be served in order to keep society and the economy running. There are two functions of this kind: 1) filling society's need for illegal goods and services and 2) providing a temporary solution to the problems overlooked or insufficiently arranged for by the political administration. There have traditionally been any number of examples of l), such as the drug trade, prostitution and gambling. As regards 2), one might think of extortion in the entertainment industry or contracting in market gardening or the illegal garment industry. The advantage of this approach, according to Bovenkerk, is that it makes it more feasible to distinguish between organized and professional crime, which in comparison only fills personal needs. It also provides a more promising perspective than the pure criminal justice method of dealing with individual criminals or groups of criminals. Organized crime can only be combatted more effectively if the underlying needs in society are either reduced or met with in some other way. As noted in Chapter 111, the two approaches are complementary rather than contradictory. That is not the case with the difference between the wide and the narrow definitions of organized crime. The wider or narrower the range of the definition, the larger or smaller the research subject. Several recent writings by Van Duyne and Fijnaut can serve to illustrate what this means in a very concrete sense. In Criminal Enterprises, Van Duyne is reluctant to enter the definition debate, but in his sequel report, The Spectre and the Threat of Oganized Crime, he does not fail to spec@ the definition he is using. It is the same definition the German Federal Criminal OBce uses. Why does he select this definition above all the others? As one reads the report, the reason becomes quite clear: it is the definition that best covers what the author classified as organized crime in his previous book, like the drug trade and various forms of fraud now also referred to as professional crime, and the ordinary offences committed by "gangsters". What does this German definition include? In Van Duyne's translation, "Organized crime is the systematic committing of punishable acts - for reasons of profit or power - which are each separately or


collectively of considerable significance, with two or more persons working together in a division of labour for a lengthy or indefinite period of time and utilizing: a.

companies or company-like structures

b.

violence or other means of intimidation, or the exertion of influence over politics, the media, the public administration, the judiciary or the economy."

It is clear that this definition is an extremely wide description of organized crime, so wide that multifarious forms of crime never before linked to organized crime in either Western Europe or North America now suddenly all fall under this term. It is only logical that organized crime now suddenly constitutes an issue described in any number of German publications as a gigantic problem (Roth and Frey 1992, Leyendecker, Rickelmam and Bonisch 1992, Peters 1994). In the description of the nature and scale of organized crime in the Low Countries that Fijnaut added to the Dutch translation of Roth and Frey's German best-seller Die Verbrecher-Holding: Das vereinte Europa im Griff der Mafia (1992), he clearly dissociates himself from the German approach to the problem (1994). The points of departure for this sketch of the situation are the various forms of organized crime specifically cited in the 1992 policy memorandum, Organized Crime in the Netherlands: An Impression of its Threat and a Plan of Action: the drug trade, trafficking in women, illegal gambling, and the illegal garment industry. When they are discussed, it is repeatedly emphasized they should not all be lumped together in the same category of organized crime. The drug trade cannot always be categorized as organized crime. This label is only appropriate for groups, organizations or families that are relatively permanent, are characterized by strict leadership and allocation of tasks, use outright violence against internal and external opponents, take a variety of protective measures against government intervention, and invest their earnings in the Netherlands or elsewhere in other legitimate enterprises. The same holds true for traficking in women. Although there are numerous cases that definitely cannot be


23

classified as organized crime, there are also gangs that engage in trafficking in women in a way that can. As regards the illegal garment industry, the question can similarly be posed as to what is or is not organized crime. In some senses, the illegal practices in this sector do bear a similarity to organized crime, for example, the fbnctioning of an illegal market and the involvement of legitimate enterprises. With regard to a very decisive point, however, it fails to exhibit one of the most characteristic features of organized crime, that is, that the groups or organizations in question are willing to use corruption and violence to gain or defend a position of power. The definition of organized crime used in this study will be developed step by step. It should now be clear why the Van Traa work group, and in its wake the Inquiry Committee, attached so much signdicance to the matter of defining organized crime. Since it has been defined in such a wide range of ways, the problem it represents can be posed in equally different ways, and it is dificult to determine to what lengths the authorities should be able to go in order to tackle it. This is all the more the case since no systematic research into the nature and scale of the problem has ever been based upon a well-stipulated definition.

11.2 Definition of Organized Crime in the Study

By working together in an organized manner, people are capable of impressive achievements. "Organized means there is concerted, goaldirected action and a rational division of labour. One might even say that without the input of formal and informal organizations, the present level of prosperity would never have been achieved. The concept of "organized crime" aptly expresses how paradoxical it is that this hnctional form of collaboration can also be a threat to society. Society is attacked by precisely the weapons it has so diligently developed. In this sense, it is clear what the concept of organized crime means. As soon as it is subjected to empirical analysis, however, it becomes ambiguous. What does organized crime really mean? In the previous section, it was noted how flexible the concept can be. Some authors

24


define it in such a limited way as to only include the criminal activities of syndicates. The most well-known example is the definition formulated by the American Task Force on Organized Crime (1967), referring to a close-knit, hierarchic organization of Italian origin that has in essence come to constitute a state within the state. According to this definition, organized crime and the mafia are one and the same. Other authors have formulated much wider definitions, such as the one used by the German Federal Criminal Ofice, which includes an extremely wide range of criminal groups and criminal offences, such as tax fraud by legitimate companies, terrorist acts by political movements, and the trade in exotic animals or drugs. We do not feel a definition of this lund, which covers such a wide range of criminal offences with such varied impacts on society, can be used for the scientific analysis of organized crime or the legal regulation of norms for investigation methods in the battle against it. That is why this section works towards a definition of organized crime that includes criminal groups other than the mafia, but is adequately specific and makes it possible to draw adequate distinctions. It is this definition that has served as a ground rule for this study.

11. 2. 1 Subject of the Definition

Taken literally, the concept of organized crime qualifies certain punishable acts as crime committed in an organized way. Some definitions elaborate further by attributing a central position to the nature of this crime and how it is committed. Other definitions contain a mixture of the characteristic features of the perpetrators and their crimes. In surveying the definition arena, one might wonder whether it would not be more sensible to define organized crime in terms of the functions it serves. A number of Dutch authors propagate an approach of this kind, as was noted in reviewing the ideas supported by Bovenkerk. Outside the Netherlands as well, there are researchers - such as Bersten - who prefer this approach. He proposes starting from the illegal functions served by organized crime in the overall hnctioning of the economy and society


25

as a whole. According to Bersten, organized crime can then be defined as "the field of transactions materially connected to the market in illegal goods and services" (1990, p. 55). One might see organized crime as meeting society's needs for illegal goods and services such as drugs or illegal gambling, and as promoting interests that are insufficiently promoted by the police and government authorities. Examples include: demanding protection money from hotels, restaurants, nightclubs and pubs, contracting in the market gardening industry, and fraudulent practices in chemical waste disposal. This defining strategy does justice to the way organized crime is embedded in society, but exaggerates its functional aspects. Even though organized crime does meet certain needs, it also causes damage. Illegal practices in chemical waste disposal might provide a short-term solution for the producers of waste, but in the long run, the illegal conduct of waste processors obstructs the development of a healthy market in this field. In addition to this "fbnctional" organized crime, there is also a great deal of crime that is predominantly parasitic or dysfimctional, such as extortion, subsidy fiaud, and the forced payment of protection money. On the grounds of these considerations, we have come to the conclusion that it would be better not to take the functions of organized crime as the subject of the definition. Of course, this does not mean that no attention at all should be devoted to its functions. At a given moment, a study that takes the perpetrators or the punishable acts they commit as its starting point will irrevocably lead to the question of what needs and interests are served by the illegal activities. And as was emphasized in the previous section, an analysis of organized crime that takes these needs and interests as its point of departure will undoubtedly lead to the question of which groups choose to serve these needs and interests. So, in defining organized crime, it is the criminals themselves we have opted to place in a central position. It is not the nature of the crime that is decisive; not all the trade in drugs is by definition organized crime. Organized crime differs from other forms of crime in the attitude of theperpetrators. In a number of senses, they are willing to go hrther than other criminals. This distinction will be clearly expressed in our definition.

26


II. 2 . 2 Contents of the Definition As noted above, the concept of organized crime aptly expresses the threat it presents to society. Committing criminal acts in an organized way implies a certain extent of goal-orientedness, regularity, rationality in behaviour choices, division of labour and persistence. This inevitably implies that crimes are committed systematically and cause growing damage to society. Organized crime is predominantly associated with supplying illegal goods and services - prostitution, drugs, gambling and the like - to illegal markets. However, the forms of organized crime that involve illegal activities in legitimate sectors of the economy - such as extortion or fraud - are equally .important. Lastly, the fact should not be overlooked that groups can also engage in other forms of crime such as , kidnapping or subsidy fraud. The crimes committed and the damage done can differ enormously. There can also be huge variations in the positions of economic and financial power that the perpetrators of the crimes are able to build up. But the core and the threat of organized crime consist of something other than the nature of the crimes and the scale of the damage they cause. This can be formulated as follow: "Organized social behaviour exhlbits internal complexities and external borderlines. The more closelyknit a criminal collaboration framework is, the better it is able to neutralize the influence of formal social control by police, tax or local government authorities. To an even greater extent than the damage caused by organized crime, it is this capacity to effectively shield itself that can lead in the final instance to the creation of a state within the state that presents such a threat to the democratic quality of a society. Organized crime differs from other kinds of crime on this point. Its perpetrators are willing and able to use extreme means to defend their position, the most conspicuous of which are violence against people in their own circles or against the police and the judiciary. That is why our definition of organized crime can best be formulated as what ensues when groups primarily focused on illegal profits systematically commit crimes that adversely affect society and are capable of effectively shielding their activities, in particular by

Dejining Organized Crime

27

being willing to use physical violence or eliminate individuals by way of corruption. This definition consists of three important components: a) groups that are primarily focused on illegal profits; b) groups that systematically commit crimes that adversely affect society; and c) groups that are capable of effectively shielding their activities. Although these three components are inextricably linked, they will each be addressed separately. For each component, the forms of crime will be specified that cannot be classified as organized crime according to this definition.

Groups that are primarily focused on illegal profits One important diierence between our definition and the one used by the Task Force on Organized Crime (1967) is that it has no strict requirements as to the scale or nature of the frameworks in which the collaboration occurs. The frameworks need not necessarily exhibit the hierarchic structure or meticulous division of labour often attributed to mafia syndicates. Intersections of social networks with a rudimentary division of labour have also been included as groups; in the sub-report on the role of Dutch criminal groups, they are referred to as cliques. As is demonstrated in this sub-report, there can be sizeable differences in the cooperation patterns within these cliques and between the cliques and larger networks of people they work with on an incidental basis. In some cases, the focus of the group is singular, in others it is plural. If the focus is singular, a group concentrates, for example, on running one drug line, and the leader is intensively engaged in planning, carrying out and monitoring the plans. Ifthe focus is plural, people work side by side on a variety of projects and the boss supervises all the activities from a distance. In the analyses of the Dutch and immigrant groups, differences were also observed in the cohesion of the groups. In some cases, the collaboration is based upon a purely commercial foundation. In numerous other ones, family, ethnic or social connections are the most important basis upon which the collaboration and group cohesion are founded.

28


Although the definition allows for a great variety of groups, the extension of this definition component (primarily focused on illegal pro$ts) also contains an important restriction. First, stressing the "profits" excludes politically-inspired crimes or offences solely committed for the purpose of acquiring political power. Political crimes are of a totally different nature and calibre than crimes committed for profit. In itself, this is reason enough to draw a distinction between the definitions of these two kinds of crimes. Furthermore, it has been explicitly stated that, in certain instances, organized crime exhibits certain similarities to the activities of ordinary commercial organizations. In a manner that was perhaps somewhat exaggerated, Potter aptly notes: "Organized crime is simply entrepreneurial activity that happens to be illegal" (1994, p. 124). Secondly, the definition only applies to groups primarily focused on illegal activities. The organized mode of action, the "organization" itself, is instrumental to the illegal earnings. This is different in the event of "organizational crime", that is, if and when members of an otherwise legitimate organization commit crimes in the framework of performing their regular duties (Van de Bunt 1992). One example is forging documents to qualify for larger construction subsidies, thus increasing the margins of profit. In this way, a distinction is drawn between drug gangs and basically legitimate enterprises that do a bit of illegal work on the side. There is a good reason for drawing this distinction. What Potter loosely described as entrepreneurial activity that "happens to be illegal" has enormous implications for how criminal frameworks are set up. Due to the illegal nature of the product, the service and the activities, the very existence of the group as a whole is illegal. Every aspect is permeated by this illegality; no one has a legitimate status, there cannot be any advertising, and conflicts cannot be settled in court. In short, all the ordinary facets of commercial lie are out of the question for criminal entrepreneurs. At every stage, they have to carry out their business transactions in a different way than legitimate entrepreneurs. They have to learn to live with the handicap of illegality, and constantly be on the lookout for the police and the judiciary. Because of these differences in their modes of action, it is very important to distinguish between organized crime and organizational crime. No matter how great this

DeJining Organized Crime

29

distinction might be in an analytic sense, there is no denying that in actual practice, there are some borderline areas. The waste disposal industry might be taken as an example, where entrepreneurs with a totally legitimate past gradually tend towards increasingly illegal activities. In the sub-report on fraud and money laundering, there is an instance of another variant, that is, a legitimate enterprise with a hard core of illegal entrepreneuring. The exclusion of organizational crime does not mean that no attention will be devoted here to crimes typical of the white-collar world. The window they open to the activities of other criminals means that not a single form of crime warrants being excluded in advance. Investment fraud or tax fraud can also be organized crime if the perpetrators, the methods, and the adverse effects meet with the components of our definition. The second component is related.to these adverse effects.

Groups that systematically commit crimes that adversely affect society Serious crimes do not necessarily have an adverse effect on society. The same holds true for crimes that are systematically committed. In other words, kidnapping one person, running a small hashish line, or systematically stealing bicycles are not classified as organized crime. Of course, this borderline is arbitrary and subjective. When do the adverse effects start to be serious? We decided not to specifL the minimum borderline here. This component of the definition only emphasizes that organized crime is not only committed against people, but also against markets or society as a whole. Organized crime can do serious damage to the interests of concrete individuals and organizations, but in many cases, certain categories of individuals or organizations can also benefit from the activities of criminal organizations in certain markets. This holds true for drug addicts or for companies willing to sell electronic equipment under the market price (VAT fraud). It holds true, however, for all the examples cited here, that the market or society as a whole is the victim. Largescale VAT fraud can completely disrupt society, so that a purge occurs,

30


as it were, and only the criminal entrepreneurs survive. In addition to a public health problem, the drug trade creates an economic problem; criminal hnds are channelled into the regular economy, causing unwanted price inflation or undesirable concentrations of power. In essence, organized crime is linked to an unrestrained striving for material gain. In dealing with opponents and victims in the efforts to achieve this aim, there is no respect for hndamental human values. It is typical of organized crime that the people who engage in it are constantly willing and able to use violence and intimidation against whatever rivals stand in their way in the markets where they operate. In the sub-report on the situation in Amsterdam, several instances of trafficking in women are described that clearly illustrate the ruthless exploitation of other people for material gain. Of course, this component of the definition does not apply exclusively to organized crime. Organizational crime can also adversely affect society. The difference is, however, that in the case of organized crime, the three elements play a role simultaneously: illegal profits, adverse effects on society, and effective shielding.

Groups that are capable of effectively shielding their activities Under certain circumstances, organized crime can serve a usehl purpose for individuals and even for entire sectors of the economy. In the subreport on fraud and money laundering, a distinction is drawn between parasitic and symbiotic fraud. Symbiotic fraud, so it appears, provides criminal groups with a certain degree of protection. Their relations with the legitimate economy enable these groups to effectively shield their activities from the police and the judiciary. Thus the position of organized crime can be largely consolidated. In his account of organized crime in the construction industry in New York, Anechiarico makes it clear that, under the given conditions, organized crime does not perpetuate its position by way of bribery, let alone by way of violence, but by way of itsfinction. In New York, organized crime guarantees the effective regulation of market relations (1991, p. 98). But this role of relatively peacehl regulator should not conceal the fact that organized


31

crime only exists by virtue of the absence of effective government authority. As soon as the government or the world of trade and industry take steps to recapture the lost territory, the regulator is sure to show a far grimmer side. The same holds true for the regulation of criminal groups' internal relations as for the conduct of organized crime in various sectors of the economy. Loyal, long-time membership is rewarded; individual members share in the profits, and if they have to serve time in prison, their families are provided for. However, the fact remains that being a member means certain obligations, and the sanctions for failing to hlfil them are very severe indeed. In other words, if the position of the group is threatened either externally or internally, a latent feature comes to the surface, that is, the willingness to use violence or corruption to defend its own interests. In criminology literature, this feature is frequently viewed as being typical of organized crime and as distinguishing it from other forms of crime Pijnaut 1990, p. 90). Abadinsky notes in his book about the differences and similarities between professional and organized crime that professionals rely on their expertise, whereas the success of organized criminals is largely based on their being willing and able to intimidate other people and, if necessary, use physical violence against them (1983, p. 166). Many of the definitions of organized crime speak solely of the internally-directed threat or actual use of violence. A recent British report on organized crime cites, for example, as one of its features: "involving some form of internal discipline amongst the group, including the use of violence and intimidation" (Home Affairs Committee 1995, p. X).This threat of violence against its own members is often a way of shielding the group against the police or the judiciary. Viewed in this light, internal violence is merely a manifestation of a more general feature of organized crime, that is, being willing and able to use drastic methods to shield illegal activities from the authorities. Some of these methods target the groups' own members, others focus more directly on the authorities. In the whole spectrum of methods (referred to below as counter-strategies), the distinction should be drawn between those that are defensive and those that are offensive. Defensive counter-strategies

32


have to do with how groups try to shield their illegal practices from their rivals and from the authorities. The measures they use vary from constantly switching cars in order to make it harder for the police to follow them, to intimidating witnesses or supposed informants. In fact, to some extent every experienced criminal uses one or more of these protective methods. It is, however, characteristic of organized criminals that they are willing and able to use offensive strategies against the authorities. It is no longer a matter of shielding their own practices from the authorities, but of actively cornbatting official intervention. Here, too, a number of forms can be distinguished. First, an effort can be made to undermine the effectiveness of the authorities by using corruption, intimidation or outright violence to keep certain individuals from doing their job. Secondly, influential people - not only lawyers, notaries public and accountants, but social scientists, governments officials and so forth - can be used to counterbalance possible government intervention. In the sub-report on fraud and money laundering, an example is given of a professor who provides favourable information about the methods of a leading suspect from a criminal group who happens to be "a friend of his". Lastly, the media can be manipulated to deliberately discredit certain officials. There is an example of this in the sub-report on the situation in Amsterdam. As noted above, it is this ability of organized crime to effectively shield itself from the authorities that presents the greatest threat to democracy and to the constitutional state. In its most extreme form, organized crime can be so successfbl in making the authorities powerless that, in effect, it constitutes a state within the state.

11. 3 Conclusion In concluding this chapter, the definition of organized crime elaborated upon in the previous section should be placed in its proper perspective in the Dutch debate about this question. One main issue in this debate is whether organized crime should be primarily defined in terms of the hnctions it fulfils and the interests it serves in society, or in terms of the groups that commit this type of crime. It is not only stated that in this

Dejining Organized Crime

33

study, we choose the second option, it is also stated why we do so. Another main issue in the debate is whether organized crime can best be defined in a general, "open" way, or in a specific, more "closed way. We prefer the second approach, since the word "organized otherwise loses too much of its significance and becomes a meaningless term that can be used too easily to refer to all kinds of crime. Certainly with a view to empirical research, it is necessary to determine as specifically as possible what is meant by organized crime. From a policy perspective, this is desirable as well. In view of the negative connotations the term organized crime generally has, an unrestricted application of the term can easily lead to policy developments that are not called for by the actual seriousness of the problem.


m. POSSIBILITIES AND LIMITATIONS OF RESEARCH ON ORGANIZED CRIME

III. 1 Introduction Conducting research on organized crime is a very tricky business. In the previous chapter, the ability to effectively safeguard itself is cited as one of the three features of organized crime. It is thus a far less accessible field for researchers than, say, soccer vandalism or drug use. The traditional sources of information for criminologists, the police and the victims are also generally less accommodating when it comes to organized crime. The police are not eager to give up their "information position" (Reuter and Rubinstein 1978), and victims are often reluctant to say a word. It is easier to interview shopkeepers about shoplifting than hotel, restaurant, nightclub or pub proprietors about what they have to pay for protection. As a result, the methods usually used in criminology to measure the scale of criminality such as self-reporting, victim surveys and the analysis of charges filed with the police cannot be applied to organized crime. From the start, we were aware of how diicult it is to answer the Inquiry Committee's question about the scale of organized crime. As far as possible, every effort has been made in various sub-studies to quantify the size of the problems observed. In both the local studies, for example, the numbers of liquidations have been counted; in the sub-study on the professions, the numbers of lawyers, notaries public and accountants are spectfied who are said to be culpably involved in the activities of criminal groups. However, these figures are little more than general indications of the scale of the problem. Relatively speaking, the question on the nature of organized crime is easier to answer. We have in any case endeavoured in all the substudies to describe various manifestations of organized crime as concretely as possible. When organized crime is addressed and discussed, references are all too oRen made to abstract pictures without much empirical content.

36


This chapter describes exactly how the research was conducted. In III. 3, an effort is made to answer a number of the major questions and address the problems with which we were faced. In 111. 4 and 111. 5, the approach is described that was adhered to in the seven sub-studies. It should be noted here that in the sub-reports, the methods used in each of the sub-studies are elaborated upon in greater detail. First 111. 2 focuses on a number of important criminological studies conducted in the Netherlands and abroad on organized crime.

III.2 Empirical Research on Organized Crime For quite some time, the work of two U.S. Senate Sub-Committees shaped the public picture of organized crime. In 1950, Senator Kefauver's Sub-Committeeto Investigate Interstate Crime held a public inquiry and came to the conclusion that organized crime was a "nationwide Italian syndicate". In 1963, the McLellan Sub-Committee relied strongly on the testimony of Joseph Valachi, a member of the Genovese mafia family who turned state's evidence. It confirmed the picture Kefauver had presented of organized crime. In essence, it was a matter of Italian-American syndicates consisting of divisions led by lieutenants and manned by soldiers. In 1967, a researcher was appointed for the first time in the United States, criminologist Donald Cressey, who was called in by the Federal Task Force on Organized Crime. He was given access to federal police files on what was called the Cosa Nostra. for his report, which was later published as the book Theft of the Nation (1969). Cressey similarly concluded that the world of organized crime consisted of twenty-four Italian-American crime syndicates that coordinated their activities across the whole country. Cressey's work led to a great deal of controversy in the field of criminology. Some authors have criticized him for approaching from too much of a police angle, but there have been others who defended him (Rogovin and Martens 1992, Albini 1993). More importantly, a number of researchers decided to conduct their own independent studies without consulting any police sources. Ianni and Reuss-Ianni (1972) conducted an extremely detailed study of the rise and organization of an Italian '

Possibilities and Limitations

37

mafia family in a neighbourhood in New York. They utilized extensive observations and informants to assess the individuals in the family and their various relations with each other. They did not observe a militarilyorganized syndicate. They went on to propagate a social network approach in the study of organized crime, using informants from the underworld itself as field researchers (Ianni and Reuss-Ianni 1990). Chambliss (1978) conducted field studies, as a participant observer in Seattle, to describe the complex relations between politicians, officials, businessmen and criminals. Although field work has had unmistakable advantages (Potter 1994, pp. 40-41), the question remains as to whether it gives researchers good insight into the important criminal groups and enables them to present a national picture of organized crime. Studies on organized crime, only a few of which are cited here, make it clear that researchers do well not to rely on one method or one source of data. That is why Block (1994) made extensive use of police files and newspaper items alike. Reuter (1983) described illegal markets in New York after using data from police files, observations and informants, as well as public sources. The mixture of sources and methods is determined by whether the emphasis should be on a general inventory of the problems or on answers to specific theoretical or empirical questions. A recent example of an inventory-type study based on an extensive mixture of sources and methods is the one by Arlacchi on criminal groups and their role in illegal markets and money laundering in Italy (Minister0 dellYInterno 1994). However, police files still constitute Arlacchi7smajor source of information. In the annual surveys by the German Federal Criminal Ofice, statistical data as well as police files on current investigations make up the information that has been centrally gathered. These analyses focus far more on individuals than on groups. In the Dutch Coordinating Policy Consultation Committee Survey, the emphasis is more on drawing up an inventory of active criminal groups. At the most recent count (1995), 450 groups have been traced, 100 of which are "highly organized. For the study of more specific problems, such as the relations between criminal groups and companies in legitimate sectors of the economy, a different research plan is called for. Landesco (1929) was

38


the first to systematically conduct empirical research on relations of this kind, and on the basis of his results, he noted that organized crime plays a substantial role in any number of legitimate economic activities. Case studies based upon participant observation, the testimonies of people who turned state's evidence, or local experts, are very suitable for studying topics of this kind. The New York State Organized Crime Task Force (Goldstock et al. 1990) developed a new analysis strategy in this connection. Racketeering is studied in the context of the economic sector itself, in this case the construction industry. This task force also developed various indicators to empirically determine the presence of criminal organizations in the construction industry (see also Edelhertz and Overcast, undated). The fact that police sources can also be used to gain greater insight into the nature and mode of operation of criminal groups is also clear from the studies referred to above by Van Duyne (1990, 1995). They give an impression of the criminal groups that, within their limited options as criminal entrepreneurs, operate rationally in legitimate as well as illegal markets. Due to the restricted number of files that were studied, he was not able to make any statements about the scale of organized crime in the Netherlands.

III. 3 Design and Implementation of the Study

In the study, use is mainly made of information that is available to the police. Of course, this has to do with the role the police play in combatting organized crime. More than any other agency, the police is involved and has the most and - relatively speaking - the best information. It was thus only logical to consult police data sources in the course of this study, which had to be completed in such a short period of time. This does not mean the shortcomings of these sources have not been taken into account, nor does it mean no other sources were consulted. To the extent that it was feasible, other sources were amply used. In 111. 3.2, the value of police sources is discussed. First 111. 3 . 1 goes into the underlying reasons behind several important choices that were made as regards the design of the study.


III. 3. 1 Conducting the Research

III. 3. 1. 1 Complementary Strategy As noted in Chapter I, we have chosen to design the study in such a way that the problem of organized crime can be viewed from complementary perspectives. In the process, the idea has been to examine and describe organized crime as concretely as possible. This means that from the criminal group perspective, the nature and scale of organized crime have been studied, based on the somewhat artificial distinctions between Dutch, immigrant and foreign groups. The problem is also viewed from the perspective of the sectors linked in some way to organized crime. This complementary approach is used at the national as well as the local level. The main reason to zoom in at the local level is that insufficient information is available at the national one to present an accurate picture of the nature and scale of organized crime. The most and the best information is still to be found at the local level. We have chosen this research strategy because it enables us to determine as accurately as possible how much truth there is in the fear so frequently expressed in the debate that society is being disrupted by the growing interconnectedness between the legitimate world and the underworld. If the problem is addressed at two levels (national and local) and from two perspectives (criminal groups and sectors), in principle any of three things can happen: (1) in certain legitimate sectors of the economy, organized crime can be observed from both perspectives, after which the conclusion might be drawn that there is indeed evidence of this connection in the Netherlands; (2) these same sectors can be observed to reveal no evidence of organized crime groups, in which case the conclusion might be drawn that there is little or no organized crime; and (3) evidence of organized crime can be observed in these sectors from one perspective but not from the other, after which the observations and the sources the observations are based upon have to be evaluated for reliability and validity and, if necessary, hrther research should be conducted. So in the end, which groups, sectors and cities have been studied?

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In selecting the groups, we worked from the assumption that by definition, organized crime is not linked to a certain nationality or a certain ethnic minority. The Netherlands has become a multi-cultural melting pot and organized crime has grown into an international phenomenon - two good reasons why distinctions have been drawn between Dutch, immigrant and foreign criminal groups. Some of the groups, such as the Italian and Chinese ones, are interesting because of the long, organized crime traditions in their native countries. Others Moroccan, Turkish, Colombian and Surinamese - are interesting because in one way or another, they have direct or indirect ties with the countries from which drugs come and, according to information from the Netherlands and abroad, they are indeed engaged in the drug trade. The other groups - from Nigeria, Ghana, Russia, former Yugoslavia and so forth - were selected because their criminal behaviour attracted so much attention here in recent years. The sectors were selected on the grounds of their vulnerability to infiltration by criminal groups (the hotel, restaurant, nightclub and pub sector, the construction industry), their position within the logistics of the drug trade (the transport sector), or what we know from foreign sources about their possible relations with organized crime (the automobile and the waste disposal industry). We are well aware that other sectors could have been selected on the basis of the same criteria, such as the dairy or the cigarette industry. However, the limited amount of time available made it necessary to limit the number of sectors we studied. For the local studies, we were quick to select Amsterdam. As is evident from so many news items in recent years, this city has become a focal point for national as well as international organized crime. Many important criminal groups from the south, the middle and the east of the country are also said to be in close contact with related groups in Amsterdam - not to mention the important role Amsterdam plays in the life and work of groups that mainly operate in the Randstad itself. So if we want to gain insight into organized crime in the Netherlands, Amsterdam has to be included. In addition to Amsterdam, a number of other locations were considered that might be interesting, such as other large cities in the


41

Randstad, South Limburg - with the cities of Heerlen and Maastricht, or Brabant - with the cities of Breda, 'S-Hertogenbosch and Nijmegen. In themselves, each of these locations more than warrant closer examination. We opted, however, for the border cities of Enschede, Arnhem and Nijmegen, since their location in the east of the country presents a nice counterbalance with the metropolis in the west. The three cities are of comparable size and have similar geographic links with the Netherlands and Germany, but also exhibit sizeable differences. An additional advantage was that the two researchers had conducted prior criminological research in these three cities and were reasonably familiar with the police forces there. One reason not to select several other regions - Brabant, the Randstad or Groningen - was that they are, in part, discussed in the report on Dutch organized crime. Therefore these regions did not have first priority for the study.

m. 3. 1. 2 Analytical Framework No matter fi-om which perspective we approached - sectors or groups or at which level we conducted research - national or local - in the written and oral sources we still saw groups operating. No matter where we found them, we tried to gather the data about these groups in a structured fashion. This structure served as our guideline in the descriptions of the groups in the sub-studies as well as in this final report. Our use of a comprehensive analytical framework (see Appendix I) kept the perspectives fTom diEering too much and set a certain pattern for the sub-studies. This analytical framework is in keeping with our definition of organized crime and contains four main questions that are repeatedly posed: (1) What kind of groups engage in organized crime in the Netherlands? (2) What forms of organized crime do they engage in? (3) How do they engage in these forms of organized crime? (4) How do they spend the criminal proceeds? The analytical framework consists of the following parts:

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Outline of Analytical Framework I. I. 1 I. 2 I. 3 I. 4 I. 5

Description of the groups Country of origin Internal organization External criminal relations (national and international) Duration Syndicate-like positions of power

11. 11. 1 11. 2

Description of the illegal activities Supplying illegal goods and services Operating illegally in legitimate markets and sectors (racketeering) Other illegal activities Links between activities mentioned in 11. 1-3

11. 3 11. 4

111. 111. 1 111. 2 111. 3 111. 4 111. 5

Description of the modes of operation Use of violence Shielding (against the authorities) Ownership of means of production and distribution Hiring outside experts Connections with influential persons, companies, associations, organizations

IV.

Description of how the earnings are spent

III.3. 1. 3 Confidentiality of the Information The framework in which our research has been conducted was, of course, largely determined by the Parliamentary Inquiry. In our capacity as researchers working for the Inquiry Committee, we have been able to rely on the unconditional cooperation of the police and the judiciary. In keeping with the agreements made before with the Ministers of Justice and the Interior, we had access to all the police information and data files needed for the study (for fk-ther details see Appendix 2).


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There were, however, two important disadvantages to working for the Inquiry Committee. From the start, there was tremendous pressure to complete the study quickly. The draft reports had to be finished by the beginning of September, on the eve of the public hearings, which was only seven months after the study was launched. For reasons of personal safety and the confidentiality of much of the information, the study had to be conducted in special high security rooms (see also Cressey 1967). In addition to practical problems, this need for secrecy also led to other restrictions. Due to the danger of leaks, we were not permitted to exchange experiences or discuss any of the report concepts with colleagues other than the four researchers working on this study. Therefore, throughout the duration of the study, the scientific forum remained confined to four researchers and several staff members. To a certain extent, this lack of opportunity for external critical discussion of the use of sources, the interpretation of certain information, and so forth, was compensated for by incorporating some degree of discussion and monitoring internally. That is the reason why we worked as much as possible in teams of two. At the last stage of the research, the confidentiality restrictions were the most bothersome, in that they made it impossible to present the final versions of the draft reports to people in the field for their comments. The only way to get input from experts was to have them read the draR versions and then for us to consult with them, but they had to give back all the documents after our discussions. There was another side to the virtually unrestricted access to police information that was linked not so much to the work for the Inquiry Committee as to the theme of the study itself. Not all the information to which we had access could actually be published. In particular, nothing could be done that would damage the investigation of criminal offences or infringe upon the privacy of the suspects involved. What is more, our accounts could not include details that would make it possible to recognise speciiic individuals outside their immediate circles. In itself, it is common practice for conditions like these to be applied to scientific publications based upon police information. However, for this particular topic, it did present a problem. It was unfeasible to describe any of the big organized crime bosses without making it possible to identifL specific individuals, many of whom have been referred to by name in the media.

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Exceptions were only been made for more or less "historical" figures. It is true that these restrictions, to which we had to adhere when we wrote our reports, have sometimes made them less readable, but they never led to any actual changes in the contents. We wrote everything we felt had to be written. Lastly, we decided not to specify separately the source for each of the observations and statements in the reports. One exception is the report on the professionals, where it is stated for each case of culpable involvement what kind of source it came from. But in this report as well, we deliberately failed to specify the site of the source, such as the criminal investigation department in Amsterdam, or to add anything that might make it possible to trace the case. In general, we did not specify the sources for two reasons: to guarantee the anonymity of our respondents, and to keep criminal groups from being able to recognise themselves in the descriptions, and thus figure out which department knows what. That it is common practice in international scientific literature on organized crime not to cite the sources of police data also played a role in this connection. However, we realize hlly well that this restricts the scientific verifiability of our study.

III 3 . 2 The Police as Source of Knowledge In conducting scientific research, it is always wise to consult various sources and use various research methods. In studying organized crime, with not much data available or public, it is only logical to use what few sources there are, and methodically make every effort to generate information. We decided in advance not to leave out any source or method whatsoever in our endeavour to gain greater insight into the nature and scale of organized crime. As will be clear from the elaboration on the sub-studies in 111. 4 and 5, we used multifarious sources ranging from disciplinary proceedings, newspapers and expert statements to police records. A large assortment of methods was also used, ranging from case studies, interviews and file analyses to participant observation. But this wide range of sources and methods should not conceal the essential fact that it is mainly police sources that


45

were consulted and the various methods were largely used in the police context. What possibilities and limitations do these police sources have for scientific research on organized crime? And more concretely, which police sources were consulted? The sources can be divided into four categories: 1.

Reports or draft reports on closed and current investigations on criminal groups. These reports were mainly consulted in the time spent with the police forces for the local studies. The research on fiaud and police corruption in Amsterdam also involved consulting police reports.

2.

Written analyses of criminal groups, evaluation reports on closed investigations into organized crime and excerpts from reports. To get a national impression of the closed and current investigations into organized crime, upon our request the 25 regional police forces submitted relevant material. There were a total of 538 files on investigations in the period from 1990 to 1995 into groups that the police officers felt met with our definition of organized crime. The files varied from huge piles of paper, including all the documents that could possibly be of interest, and meticulously structured reports, sometimes accompanied by excellent analyses, to the mere mention of groups that were or still are being investigated.

3.

Police records, such as the data files of the Identification Service, the National and Regional Criminal Intelligence Departments, and the Financial Police Unit of the Central Criminal Information Service. The data files of the Criminal Intelligence Departments mainly contain confidential information. That is why, in principle, we only used this Criminal Intelligence Department data in combination with back-up data from other sources. The Criminal Intelligence Departments use a code to indicate the reliability of the information and its source.

46 4.


Expertise gathered in numerous talks with investigators and personnel at the Prosecutor's Ofice on the unclear points and questions that arose after consulting the written sources. These time-consuming talks greatly enhanced the value of the study. People with practical experience generally know a great deal more than they write down, although interviewers need to bear in mind that they sometimes like to speculate or give the impression they know more than they actually do.

III.3. 2. 1 Selectivity of Police Data The police might have a lot of data on organized crime, but it reveals more about police priorities and preoccupations than about the actual problem ... There is certainly a grain of truth to this objection. In the Netherlands, the police have deployed a great deal of manpower in recent years in their efforts to combat the Turkish heroin trade. As a result of this priority - based upon the observation, and quite an accurate one in itself, that relatively large numbers of Turkish groups are active in the heroin trade in the Netherlands - at the moment the police and whoever use the police as a source of data are well-informed about exactly how Turkish groups operate in this connection. In this sense, this priority means a big advantage for whoever wants to know more about the Turkish heroin trade. In our research in Amsterdam, Arnhem and Nijmegen, the police sources have thus enabled us to present a good picture of the Turkish drug trade. The selectivity of the police sources would have been a major obstacle to anyone investigating these Turkish groups in the heroin trade in relation to the role of Dutch or Chinese groups, since much less is known about them. This illustrates that as long as it is adequately acknowledged, the selectivity of police sources is a given that is not necessarily totally negative. It depends, in part, on what research questions are applied to the sources. In a few cases, the selectivity of police sources obstructed our progress and made for blind spots. There is a lack of information about particular criminal groups, such as Chinese gangs, that are generally so


47

closed to outsiders. There are also sizeable gaps in the knowledge about criminal proceeds and how they are spent in the legitimate economy. In theory, these disadvantages of the selectivity can be overcome by using sources outside police scope. Our complementary approach, examining data on organized crime in various sectors, is an example of this. However, the limited amount of time available and other limitations made it impossible for us to gather data on Chinese groups and on how criminal proceeds are spent from other than police sources. Consequently we do not know much more about these topics than the police. In other respects, the matter of selectivity should not be exaggerated. In many cases, the police operate in a reactive way, that is, they register the charges that are filed or what they themselves observe. No matter how selective the police might be, a double homicide in the closed world of the Chinese certainly reveals some significant information about how these groups operate. To give an example from a very different domain, by making use of data from financial institutions, the Law on Reporting Unusual Transactions has given the police a more comprehensive view of the financial aspects of organized crime. Although the Financial Police Unit files do contain police information, they are not the product of preconceived police notions, but of experiences banks have had in dealing with clients. Lastly, it should be noted that this selectivity is hnctional and inevitable. The selectivity of the police is not the same as that of the social sciences. The police are focused on apprehending criminal groups, not on helping social scientists (Passas 1995, p. xiv). Their reports generally fail to include details on the internal relations in a group or the role of criminal groups in the larger sub-culture of which they are part, all ofwhich might be interesting to the criminologist, but is not relevant fkom a legal viewpoint. Nowadays, though, the orientations of these two professional groups do seem to have a bit more in common. In view of the procedure for hrnishing legal proof of the existence of a criminal organization (Section 140, Criminal Code) and the recently-instituted one for seizing criminal proceeds, the files contain more information on the internal relations in groups and their financial profits than ever before.

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m. 3 . 2 . 2 Reliability of Police Data The second objection to the use of police sources for research purposes is that the police do not have enough reliable information. It will not come as a surprise that the reliability of police sources varies greatly among as well as within the four categories referred to above. As a rule, official reports do contain more reliable information than Criminal Intelligence Department files, but it is striking how large the margins of reliability are within the separate categories. As a result, we have done our best to corroborate information by consulting various sources. It would be too risky to base claims on any single source that either the police themselves or we feel is not all that reliable. The fact still remains, though, that it is not always feasible to check the accuracy of police data. There is no way to verifl the Fiscal Intelligence and Investigation Department's figures on the damages a VAT fraud entails or to know whether what the police claim a certain drug gang is making on a certain trade route is accurate or not. The only way to verifl the information is by crosschecking, questioning investigators, and so forth. So is it acceptable to use information from ongoing investigations, or the statements of detectives, if there is no way of verifiing them? Would it not be much better to wait for the check of the court sentence? And what if someone is acquitted? Can court records on cases where this happens still be used as material for describing crimes? Tappan, an American attorney and criminologist, posed questions of this kind a good fiRy years ago in a debate with Sutherland, who was studying white-collar crime. Tappan was of the opinion that only the court is in a position to decide whether conduct is criminal or whether a person has committed a crime, and that is where the criminologist should collect his material (Tappan 1947). Sutherland felt, however, that criminality could and should be studied as close to the source as possible, and that police sources are very suitable for studying criminality, even if cases do not appear before a criminal court. Otherwise, white-collar crime, which rarely made it to the criminal court at the time, could not be studied at all (Sutherland 1945). Nowadays, it is generally accepted in criminology that figures can be based on the


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number of charges filed with the police and not on the number of court sentences. We would tend to adhere to the same argument Sutherland used five decades ago. If we have to make do with court sentences, much of today's organized crime will remain outside our field of vision. It is obvious, of course, that it does matter whether the court sentences or acquits someone. An acquittal that implies a clearly negative judgement about the evidence disqualifies the police material. This is not the kind of material we could use in the study. In other respects, with the reliability checks referred to above and barring certain exceptions, we took the police data at face value.

m. 4 National Studies Five different studies were carried out at the national level, two from the perspective of Dutch, immigrant and foreign criminal groups, one from the perspective of a number of sectors, one on the involvement of lawyers, accountants and other professionals in organized crime, and one on important forms of fraud and money laundering. The sub-reports elaborate upon how each of the studies were carried out. We confine ourselves here to a general outline.

m. 4. 1 Dutch, Immigrant and Foreign Criminal Groups The study of Dutch groups was initially set up on the basis of data files that were part of the four inventories the Central Criminal Information Service made of criminal groups in 1988, 1991, 1993 and 1995. We were able to see which key group members came up in three or four of the inventories. This was a way of drawing up a list of the individuals who could be seen as the "hard core" of Dutch organized crime in the Netherlands. For each of the individuals, the Dutch groups to which they belonged could be identified according to the inventories. The survey was not done the other way around, by first selecting the groups and

50


then their key members, because one individual can be in various groups and the groups as such can disappear or change their composition. A list was ultimately drawn up of 120 key members, all of whom were male; 93 were Dutch and the others were immigrants, often of Turkish or Moroccan descent. For the 93 men who were Dutch, the groups to which they belonged were reconstructed according to the police information. More concretely, for each individual the names of the other members of the group were collected. We hoped the Central Criminal Information Service would have enough information on these individuals or groups to give a clear impression of important aspects of their criminal activities. However, this did not turn out to be the case. The information available at the Central Criminal Information Service on these 93 men varied widely in a quantitative as well as a qualitative sense. As a result, we had to abandon our original plan to also collect the information available there on the other members of the groups, a total of another 450 individuals, since in principle, six key members were registered for each group. This, then, is the most crucial reason why it is impossible at the moment to present an adequate quantitative description of the top echelons of Dutch organized crime in the Netherlands. A description of this kind requires data that is centrally available, and can be checked and supplemented across the whole country. This was not feasible in the context of the study. Secondly, for this study, many of the files that were consulted were submitted upon our request by the regional police forces. The research team used these reports to depict criminal groups that are active on a national scale and to give an impression of the situation in a number of specific regions, that is, Central and West Brabant, Rotterdam-Rijnmond and Groningen. Thirdly, after what has been noted above about the quality of these reports, it should not come as a surprise that in a number of important cases, further research has been conducted at the police forces where the most information was available about the criminal groups in question. This research generally meant examining the relevant documents and talking to police and judiciary oficials. We used this approach with a view to describing the seven Dutch groups that serve to present a qualitative picture of the top echelons of organized crime in the


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Netherlands. Comprehensive, long-term investigations have been and still are being conducted into these seven groups. These groups were not only selected because there is relatively ample information about them as a result of prior and ongoing investigations, but also because they are viewed - at least by the police and the judiciary - as constituting the real top echelons of Dutch organized crime in the Netherlands. The research into the immigrant and foreign groups focuses on nine different e t h c groups. To answer the four main questions of our analytical framework as well as possible, the following steps were taken. We consulted the literature - books, reports and articles - on these groups. We collected whatever internal surveys the police have about how they are organized and how they operate. At the local as well as the national level (in the collection of 538 files), we consulted the reports on a number of police investigations into certain groups or more specifically into criminal offences committed by them. We talked to police oficers who played a role in drawing up these surveys or carrying out concrete investigations, and to representatives - preferably in key roles - of the immigrant and foreign communities involved. Lastly, with regard to all the groups in question, we consulted numerous items of confidential information held by the Central Criminal Information Service about how they are organized and how they operate.

III. 4. 2 Organized Crime in Legitimate Sectors of the Economy

Although the available research material varies in a quantitative as well as a qualitative sense from one sector to the next, generally speaking, each of the sectors has been studied in much the same way. The first topic to be addressed pertained to the features of these sectors of the economy and the trends in their commercial results. In a way that is sometimes analogous to foreign examples in general and American ones in particular, this enabled us to see where the possible weak spots are that criminal groups can take advantage of Special attention has also been devoted to the various forms of criminality within each sector. Lastly, we examined whether it is really organized crime that is involved.

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We utilized a variety of methods and data sources. We consulted the literature, very little of which has been written in the Netherlands. We talked to people from the sectors themselves and to delegates from organizations of employers and employees. We also consulted numerous open sources and police sources. Lastly, we talked to criminologists and other scientists and to investigators at the regular police forces and regulatory agencies. So, side by side with the police sources, the sectors' own organizations, with all the material they have gathered about criminality (special studies, articles in trade journals, statistical figures on the sector), constitute the most important source of information. Some of the sectors have relatively ample information available about criminality, others have nothing at all, at least nothing the people to whom we spoke are willing or able to discuss. The police material we have to rely on is largely the by-product of reports on 'criminal investigations into concrete groups. Most of the sectors were quite willing to cooperate with the research. In some sectors, the researchers were, nonetheless, confronted with people who reksed to cooperate, who denied the existence of any crirninality at all in their sector - let alone organized crime, trivialized the problem, provided incomplete material, or failed to provide the necessary research data on time. Of course, we also came into contact with sector representatives who really were unaware of what was going on. We also had the impression that some of the investigation agencies were apt to exaggerate the problem because their own prestige and preservation were at stake. It thus became clear in the course of the study that economic and institutional interests can exert a strong influence on research into the nature and scale of organized crime.

III.4 . 3 Fraud and Money Laundering Three methods were used in this study: interviews were conducted, files on criminal cases were reviewed, and literature was consulted. First, there were interviews at four regulatory agencies assumed to be confronted with organized crime: the Fiscal Intelligence and Investigation Department of the Ministry of Finance, the Economic


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Auditing Department of the Ministry of Foreign Affairs, the General Inspection Department of the Ministry of Agriculture, Nature Conservation and Fishing, and the Criminal Investigation Department of the Ministry of Housing, City Planning and the Environment. Secondly, interviews were conducted in the local studies in Amsterdam, and in Enschede, Nijmegen and Arnhem, with investigation officials at Financial Assistance Bureaus of the regular police forces and at special units that deal with cases of large-scale fraud. Lastly, interviews were conducted at the Central Criminal Information Service with representatives of the Financial Police Unit and the Forensic Accountancy Division. In all the interviews, our informants were asked whether they were dealing or had dealt in the past with cases that meet with our definition of organized crime. In the descriptions, information was used from eighteen cases of fraud that were studied on the basis of records and files. Then investigation officials were interviewed a second time in order to fill whatever gaps remained. Several examples are also given of the practice of transferring criminal proceeds into the legitimate economy. The detectives who we interviewed told us about these cases. In addition to the usual scientific literature on fraud, money laundering and so forth, we were gratefbl to be able to use a number of recent publications of the Central Criminal Information Service, in particular of its Financial Police Unit.

m. 4. 4 Lawyers, Accountants and the Banking System The case study approach was used to zoom in on the role of professionals in organized crime. For this purpose, a variety of methods and sources were used. First, interviews were conducted with representatives of the professional groups and with informed outsiders. Secondly, numerous written sources were consulted, such as the disciplinary proceedings of the years 1990-1995, criminal cases that were discovered in the 1995 national Coordinating Policy Consultation Committee Survey ofthe Central Criminal Information Service or in the course of the other sub-studies, and in the data files of the National

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Criminal Intelligence Division. We searched these files for the key words "lawyer" and "notary public". Another important source for this substudy was the file on suspicious financial transactions that is in the charge of the Financial Police Unit at the Central Criminal Information Service. The data for this file is passed by financial agencies to the Unusual Transactions Central Desk, which then passes on information on suspicious transactions to the Financial Police Unit. Thirdly, numerous interviews were conducted with people at the investigation divisions, the Regional Criminal Intelligence Departments, the Financial Police Unit and the Prosecutor's Ofice. These interviews served as independent sources of information and were used to check and supplement the information from the written sources. In addition, scientific publications, brochures and the annual reports of various professional groups were consulted.

m. 5 Local Studies Local studies supplement the national ones. They were conducted from the same two perspectives, that is, criminal groups and sectors. More specifically, the purpose of the local studies was to add a certain depth to the national depiction by demonstrating that the variety of criminal groups, criminal activities, modes of operation and illegal earnings was larger than might have previously been assumed. What was more, they enabled us to study in greater detail the influence of organized crime on a specific town or city.

III. 5. 1 Amsterdam

In principle, the study in Amsterdam was confined to the developments and events that had taken place there since 1990. In order to attribute the proper sigrui?cance to them, however, we put them in the context of the evolution of organized crime, including the background and the reactions of the police since the 1960s.


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The study in Amsterdam started with the Police Department. It is, &er all,the only institution that is incessantly confronted with organized crime at various levels and from different angles. More than any other institution, it is unceasingly actively-focused on all its various facets, from tra£ficking in women to the drug trade. In this study, the eyes and ears of the entire Amsterdam police force were called upon to bring the research subject into focus. However, the study was not confined to consulting police sources or conducting in-depth interviews with people in key positions there. Inspired in part by the questions posed in the study and in part by our own initial findings, we also approached people outside the police force, including representatives of the judiciary, municipal authorities, care providers, certain segments of the population and some sectors of the economy. We mainly discussed with them their impressions of the problem of organized crime in the city. We used the talks to help us determine the extent to which the police's impression of organized crime in Amsterdam on the grounds of their own ideas and experiences is in keeping with the ideas of the above-mentioned people outside the police force. We also spoke to people from the underworld itself. We made every effort to gather additional information about organized crime in Amsterdam at various sites, if possible with no link to any of the relevant activities of the police, the judiciary or the municipal authorities. We gathered information on the size and composition of the immigrant communities, and figures on automobile and lorry thefts. A wide range of matters, but all connected in one way or another to the nature, the scale and the development of certain forms of organized crime in this city. It goes without saying that, lastly, we used whatever research results were already available, and recent news items and articles in newspapers or magazines about organized crime in Amsterdam and the efforts to combat it. It is important to state that, like other police forces in the Netherlands, the Amsterdam police do not have a clearly formulated, general description of organized crime. There is no coherent picture of this problem. The information available at the central level amounts to the following: Analyses of all kinds and sizes have been drawn up of the individuals and groups that for one reason or another have attracted the

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attention of the central criminal investigation department in recent years. There are reports on a vast range of investigations, for instance into the illegal commercial activities of certain individuals or groups, and into the deaths of individuals who can be linked to the world of organized crime (liquidations). There is, of course, also confidential information at the central level, the criminal intelligence department data. In the context of the study, it is these three sources that were widely consulted. To a certain extent, we compensated for the dearth of information at the central level by conducting hrther research at one of the precinct stations in District 11. This district (Warmoes Street precinct) covers the entire centre of the city. In short, there are two sides to this research. We were able to benefit a great deal fiom the probing analyses drawn up by the staff of this district in the past year and a half on a number of economic sectors and social problems in its field of action: the hotel, restaurant, nightclub and pub sector, the sex business, tourism, the drug trade, and the issue of illegal immigrants. We were also able to examine a wide range of background material pertaining to a number of criminal groups that play a dominant role either in general or in specific fields inside and outside the Red Light District.

m. 5 . 2 Enschede, Nijmegen and Arnhem We approached the study of the situation in the towns of Enschede, Nijmegen and Arnhem in much the same way as in Amsterdam. Of course, there was the complication that the research had to be conducted in three separate towns, which led to certain practical problems. Every step in the study had to be taken three times and, if possible, in an identical fashion. We made a special effort to study the three towns on the basis of the same data sources, so that we could draw comparisons. In these towns as well, the police served as the point of departure. This does not, however, mean that we relied solely on what the police told us. Prior to the three town studies, we talked to the head and team leader of the North and East Netherlands Inter-Regional Investigation Team and the head of the East Division of the Central Criminal Information Service. After we studied the written material, we held


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separate group interviews with members of the criminal intelligence department from the three police forces and with members of a wide range of police divisions that have long been active in the towns. We also had supplementary talks with other police officers about certain specific topics. For instance, we talked in depth about embezzlers and how they operate, labour contracting, environmental issues, police and city government corruption, prostitution and Turkish groups. Several crime analysts were also consulted to help explain certain things that were noted in the files. In addition to the oral interviews, for these local studies we used three types of written police material. We consulted analyses of criminal groups that have been active in these towns over the past five years (12 in Enschede, 34 in Nijmegen and 20 in Amhem), records on investigations into organized crime, and whatever confidential information the police had available. These three sources were made avadable to the researchers as extensively and openly as possible, and the police forces regularly drew up supplementary analyses for our use. In the period when the reports were being written, we were able to call regularly upon various police officials to clarifL certain questions. Although the Coordinating Policy Consultation Committee forms were not suitable for the study, we did use them to find out how many corruption cases the police forces had under investigation. Supplemented by other confidential information, this gave us a good picture of its incidence. In addition to the huge amount of information we received from the police, a number of other agencies and organizations provided written information as well, including Addiction Care Centres, Industrial Insurance Administration Offices, the Construction Industry Social Fund, local trade unions, brokers, municipal authorities, Chambers of Commerce, the local branch of the Royal Netherlands Association of Hotel, Restaurant, Nightclub and Pub Proprietors, the Fiscal Intelligence and Investigation Department, and the municipal research agencies.

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m. 6 Conclusion It should be clear ftom the account given above of the research methods that were used, the sources that were consulted, and the interviews that were conducted, that the focus was on describing the nature of organized crime. This does not mean, though, that the sub-reports pertain solely to the nature of organized crime. In as far as it was scientifically sound and feasible, an effort was made to quantifL certain trends, for instance as regards liquidations. We never had the illusion that we would be able to present a complete picture of the nature and scale of organized crime in the Netherlands. Certain important aspects of this phenomenon largely unfold in secret, and even the best investigators cannot gain access to them. There is no way one can present a national picture that is comprehensive and complete in every way in a matter of seven months. We would, however, like to believe that the many-sided research that was conducted, has succeeded in presenting, to quote the Inquiry Committee, a "better qualitative picture" of organized crime in the Netherlands than was hitherto available.

W. CONTEMPORARY MANIFESTATIONS OF TRADITIONAL ORGANIZED CRIME W. 1 Introduction Organized crime has traditionally been predominantly associated with illegal gambling, prostitution, drugs, illegal firearms and extortion, focused not only on people similarly engaged in illegal activities, but in legitimate ones as well, particularly hotel, restaurant, nightclub and pub proprietors. What is more, criminal groups active in these sectors of organized crime are generally assumed to be apt to go in for other kinds of crime as well, such as car theft, bank robbery or fraud. This does not necessarily mean that every thief or gang of thieves or every embezzler or gang of embezzlers can be put in the organized crime category. This distinction is explained at length in Chapter 11. Of course, these forms of traditional organized crime are covered by the definition of organized crime used in this study. In addition, our definition clearly includes forms of modern organized crime. These forms can be referred to collectively as illegal activities in legitimate sectors of the economy, such as the construction and the garment industry, with a view to building up profitable positions of power, as is the case in New York. This chapter, however, solely presents our research findings on traditional organized crime in the Netherlands. Our findings on modern organized crime are addressed in Chapter V. Chapter V11 will discuss the research results on the third important component of the definition, that is, the strategies criminal groups use to try to shield their illegal activities from the authorities. As noted in Chapter 111, not all the forms of traditional organized crime are addressed in depth in this study. The main emphasis is on the drug trade. As to prostitution, the focus is predominantly on trafficking in women. Although there are certainly reasons to devote special attention to illegal gambling, in this study only the trade in slot machines is spotlighted (Van 't Veer et al. 1993). As regards illegal firearms, only very limited information has been revealed. Car theft and certain kinds

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of fraud have been investigated to a greater extent. With the exception of the trade in slot machines, which will be dealt with in Chapter V1 in connection with the catering industry, these manifestations of organized crime are discussed below one by one, starting with the drug trade. To the extent that it is feasible, we discuss the findings as follows. After a general impression of the situation - in response to the questions elaborated upon in the analysis framework following from the definition - we outline which groups engage in what forms of crime and how. Wherever possible, a distinction is drawn between the general national situation and the local situation in Amsterdam and in Arnhem, Nijmegen and Enschede. Of course, only the important differences and similarities between these cities are noted. The fact that differing amounts of attention are devoted to various offences is largely related to the differences in the role they play in organized crime in the Netherlands.

W.2 The Drug Trade W. 2.1 The Dominant Role of the Drug Trade in Organized Crime Starting at the beginning of the 1970s, the development of organized crime in the Netherlands was closely linked to the rise of a vast national and international consumer market in drugs and the introduction of the commercial trade, distribution and sale of narcotics. The drug trade largely pushed other forms of serious crime into the background and worked like a magnet on the underworld and the individuals who earned a living there. Compared with the ordinary obstacles one has to surmount to achieve social and economic success, the path to success in the drug trade is an easy one. No formal diplomas or specialized knowledge are required. There is not much of a risk of getting caught, at least, that was not the case in the 1970s and 1980s, when the police barely exhibited any interest in the import and trade in cannabis. The simple difference between the purchase and sale prices for drugs is still so large that drug dealers can easily survive the loss of a shipment or two. In proportion to the value of the product itself, the replacement value of the seized capital

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goods needed for the production, transport and distribution of drugs is so low that the loss is neghgible. To do well in this business, some rather unconventional traits are called for. Drug dealers have to be "gutsy" and cold-blooded, and if necessary they have to be able to use violence to defend their interests in a market that is totally outside the scope of government regulation and supervision. They do, in any case, have to be able to effectively threaten to use violence, and be sly and cunning enough to brave the constant danger of deception, if not by the competition then by their own partners. Apart from that, it is mainly a question of having enough capital available to finance smuggling in large shipments of drugs. Who has the guts and the guile, and who has the enormous amounts of untaxed capital to finance the wholesale trade in drugs? In a historical sense, the magnetic attraction of the drug trade is evident fiom the enormous changes in the underworld, the break in the careers of so many leading criminals, and the emergence of a new type of criminal. In cities like Amsterdam, some of the old-style gangsters who hitherto confined their activities to the world of prostitution have now switched to the trade in soft and hard drugs. In Brabant, with its long tradition of contraband trade in butter and cigarettes, any number of smugglers have now set their sights on drugs. People with illicit distilleries have sometimes seized the opportunity and started producing synthetic drugs in their amateurishly-equipped laboratories. Even the roughest and toughest segment of the population from the permanent "gypsy" sites have the proper mixture of character traits and resources. The hard-core criminal element of this population, the kampers, as they are referred to by the police, have had experience with the black market and all kinds of shady deals; they have notorious reputations when it comes to using underhand tricks and violence; they have off-the-books money from other criminal enterprises; and they are able to effectively shield themselves fiom the outside world by mainly sticking to their own circles. Even outside the circles of what is generally referred to as the underworld, in the career of many older drug dealers, there was a turning point when they switched from robbing banks, fencing or pimping to dealing drugs. They rarely if ever undid this step, which only goes to show how lucrative the drug trade has been. For younger

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criminals, the drug trade was often where they started. In the 1970s, many of them first came into contact with the whole business as drug users. The notorious career of Amsterdam gangster Klaas Bruinsma (1954-1991) is a good example. This shift in the criminal activities of the underworld is reminiscent of what happened during the era of Prohibition in the United States in the 1920s. At the time, the illegal sectors of prostitution, gambling, and even bank robbing and swindling lost their best talent to the liquor business. In the Netherlands, a comparable transition to the drug trade has taken place over the past few decades, which is part of the rise of a worldwide underworld in the industrialized countries as well as some Third World countries. The reason the underworld has been able to flourish is that using and selling drugs are prohibited by law. For a precise assessment of the importance of the drug trade to organized crime in the Netherlands, we would have liked to have reliable estimates of the size of the world market, the share of Western Europe in the world market and the share of the Netherlands in the Western European market. How large is the Dutch market for various types of drugs in an absolute sense? Unfortunately, all we have are rough estimates or information that is only fiagrnentary. In all the estimates, the Western European consumer market, side by side with the one in North America, is by far the largest. But what role exactly does the Netherlands play? In comparisons of the countries in Europe, the literature always makes explicit mention of Rotterdam and Amsterdam. Rotterdam, because it has the largest harbour in the world, and Amsterdam because of its cosmopolitan atmosphere. But compared to Marseilles, London, Frankfurt, Madrid or Palerrno, how important are these cities to the world of organized crime? To a certain extent, the relative importance of the Netherlands and its cities in the drug trade can be calculated on the basis of figures gathered in the study of five stages in the chain from the producer to the consumer: (a) the production of drugs, (b) the trade routes, (c) the drugs that are seized, particularly at the borders, (d) the consumer markets and (e) the money made in the drug trade. As far as we know, there are no other figures that pertain to these five stages in the drug trade chain.


The Size of Dutch Drug Production The size of the drug production in the Netherlands can be calculated as a certain proportion of the trade in all the drugs produced in the world. Before World War Two, the Netherlands was important as a country where drugs were processed and then exported. Heroin, morphine and cocaine were exported to China and other countries in the Third World. M e r World War Two, these substances began to be imported into the Netherlands. There are also signs that, to a certain extent, production has been re-established. As a result of the export prohibition of the chemicals needed to refine cocaine HCI in Colombia, semi-finished cocaine base is being imported from Colombia. The first cocaine laboratory where it was turned into powder has recently been discovered in the Netherlands. Heroin, however, reaches the Netherlands from the Golden Crescent (Pakistan, Iran, Iraq, Afghanistan), the Golden Triangle in Southeast Asia (Thailand, Burma and Cambodia) and increasingly from South America as well (Colombia). Cocaine chiefly comes in from the Golden Diamond in South America (Venezuela, Bolivia, Peru, Colombia and Brazil). As far as cannabis is concerned, hashish comes in from Morocco, Pakistan, Lebanon, Afghanistan, India, Nepal and several countries in the Middle East and marijuana from Thailand, Colombia, Jamaica, Nigeria and several other countries. Synthetic drugs - ecstasy, amphetamine and designer drugs - are produced in the Netherlands, and marijuana (nederwiet) is grown here. How large is the production? It seems reasonable to assume that the closer to home the production, the more accurate the estimates are apt to be. In 1993, the Central Criminal Information Service estimated the nederwiet crop at twenty metric tons, though Janssen, an independent researcher and cannabis expert, estimated it at forty and private research agencies like Van Dijk, Van Soomeren and Partners and Steinmetz arrived at an annual total of up to a maximum of eighty-four tons (Van Dijk et al. 1995 for all the estimates). If the estimates so close to home vary that widely, what about those for worldwide figures or for countries where calculation methods can be expected to be far less accurate? Figures that have been published regularly for years on the

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production of various kinds of drugs by such agencies as the American Department of Justice, Interpol and Observatoire Geopolitique des Drogues, an independent research centre in Paris, exhibit even greater discrepancies. In essence, it depends on when or where the estimates are calculated. Due to changes in the drug economy itself, and to an even larger extent to the relocations resulting from international political pressure on the drug-producing nations, some production regions decline and others flourish. A classic example is the relocation of the heroin trade from Turkey after American pressure in the mid-1970s, when the "French Connection" was rounded up. For two years, it was extremely difficult to get heroin in the United States and prices skyrocketed. This stimulated dealers in other countries (Mexico, Southeast Asia) to take over the lucrative market. From that moment on, the trade route was less obvious and it was far more difficult for the authorities to trace incoming shipments (Rasmussen and Benson 1994). If it is so difficult to determine drug production figures on a worldwide scale, what can the available statistics reveal about the role ofthe Netherlands? All we can conclude is that nederwiet is on the rise, synthetic drugs are being produced and, as an importing country, the Netherlands has a high position on all the lists of destinations for world production. However, the figures suggest a larger degree of precision than is actually warranted.

The Volume of Trade Flows There is a second possible measuring point at the beginning or end of the various drug routes all across the globe. Korf and Verbraeck (1990 and 1993) describe how heroin is transported over land along the Balkan routes via Turkey and Bulgaria, and through Rumania and Hungary, via Greece and Italy or (more perilously) via the southern former Soviet republics to Western Europe. Heroin is also shipped from export harbours in Southeast Asia, and nowadays in South America as well. Heroin reaches the Netherlands by air with couriers transporting small quantities from the source countries. Cocaine comes in shiploads from South America and goes directly to the harbours of all the countries of

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Western and Southern Europe or via stops in West Africa or Morocco. Hashish mainly comes in from Morocco. It reaches the Netherlands overland in trucks or in the cars of people coming back from vacation, by sea in ships, boats and yachts, and by air on airline flights or small, private aeroplanes. It also comes in on ships of all sizes from Lebanon, Pakistan and India, after first being transported overland from Afghanistan, Nepal and other countries. Marijuana is shipped in from Colombia, Thailand, Jamaica, Nigeria and elsewhere. The routes synthetic drugs take, some of which start in the Netherlands, are less clear. The Netherlands is not only important because of its own consumer market, but to an even greater extent because of the transit trade bound for the United Kingdom, Spain, Germany, Belgium, France, Italy, Scandinavia and countries in Eastern Europe. Narcotics also come into the Netherlands from these other countries. We cannot be certain about the routes these flows take. Based on estimates of the size of these trade flows, is there anything at all we can say about the role of the Netherlands in the international drug trade? For our purposes, it would be nice if the size of the flows could be measured at the starting point, when they leave the exporting country. The amounts of narcotics seized there by police and customs officials would give us some information. However, the volume of the trade flow has rarely been measured in this way, since such large quantities of drugs are seized before the shipments are even addressed. In practice, the volume is usually estimated on the basis of the quantities of drugs seized in the importing country. The countries they come from and the countries they are bound for are known. In itself, this can serve as a good way of measuring the amounts.

fie Quantities of Drugs Seized The only thing we can be sure of is the quantity of drugs seized upon arrival. This leads to the volume figures most commonly referred to in the literature. But we do not know what percentage this absolute minimum represents of the total volume that is imported. It is usually assumed that a fixed percentage is discovered, for instance 10 per cent.

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The estimates of the total volume of imported drugs are merely the result of multiplying the amounts seized by ten. There are also other ways to arrive at estimates. The Customs Information Centre in Rotterdam uses what they feel is such a clever detection method that more shipments are intercepted, that is, they concentrate on anomalies in the origins and destinations of shipments or in the contents and routes on the bills of lading. Cannabis dealers interviewed by Van Dijk, Steinrnetz and others said they work from the assumption that approximately a third of their merchandise will be seized by authorities of one kind or another. In essence, though, these are all totally unveritied estimates. The fluctuations are evident from the figures shown below on the quantities of drugs seized in the Netherlands over the past twenty-two years. With the exception of a few irregularities, these figures do show a general increase, which would be even more marked if the figures were based on progressive averages. But even these figures would not be decisive, since the general increase in the volume of imported drugs that are seized might simply mean there is a greater chance of getting caught. It should be noted that according to the recent memorandum The Dutch Policy on Drugs: Continuity and Change, the Netherlands can certainly measure up to the other countries of Europe as regards the amount of drugs seized there. In 1994, far more kilograms of cocaine, cannabis and amphetamines were seized in the Netherlands than in countries like France, Germany, Belgium or Spain (p. 67).

Contemporary Manifestations

67

The Quantities of Drugs Seized in the Netherlands in Kilograms, 19721994 Source: Annual Surveys on Drugs, Central Criminal Information Service

m-..... p,,.... 2W m

150 - -

,W- . . . 50

-

.

0

,94

,gb

68


The Size of the Consumer Market

To find out how large the market is for Dutch drug dealers, it is not enough just to look at the situation inside the Netherlands. Foreigners come to the Netherlands to buy drugs, and Dutch dealers supply clients abroad. We do not know how large these markets are or to what extent they are supplied by Dutch drug dealers. De Zwart and Mensink (1993) compared the numbers of hard drug addicts in various countries of Europe, and concluded that there were 21 to 25,000 in the Netherlands, 80 to 100,000 in Germany, 15 to 20,000 in Belgium, 120 to 150,000 in France, 100 to 150,000 in Great Britain, 150 to 200,000 in Italy and so forth. The memorandum quoted above cites similar figures (p. 5). However, these figures do not do much to solve our problem; they only show that for Dutch drug dealers, the market is potentially much larger than only the Netherlands.

The Drug Trade Projts

Another way to measure the importance of the drug trade to organized crime is by calculating the turnover, the profits, and the amount of money that is laundered. Here again, various amounts have been cited, but an examination ofthe sources shows that all of them are based upon mere speculation. A report drawn up by McKinsey's office in 1991 for the Society and Police Foundation referred to an estimated 10,000,000,000 Dutch guilders laundered every year. This assessment was based on amounts that happened to come up in conversations with criminologists and other experts, but without going into how they arrived at them. On the grounds of the estimated turnover in 1989, the Working Group on Statistics and Methods of the Financial Action Task Force, which is part of the Organization for Economic Cooperation and Development, estimated the gross turnover of the drug trade in the United States and Europe at $300,000,000,000. The nett heroin profits in Europe were estimated at $2,130,000,000, and the nett cannabis profits at $7,500,000,000. Van Duyne (1993) showed that these estimates were based upon unacceptable assumptions. Another method


69

assumes that 10 per cent of all the money in circulation is contaminated in some way, and that some of this 10 per cent represents organized crime earnings, some of which are earned by drug dealers. The magic figure of 10 per cent and all the assumptions that follow from it are little more than mere assumptions. Besides which, 10 per cent of what? Actual gold bars, or all the money in the bank? The estimates are always of the profits, but how realistic are the assessments of the expenses drug dealers have? The latest profit estimates made by Van Dijk, Steinmetz and Partners (1995) pertain to the Dutch soft drug market. They conclude that the soft drug turnover in the Netherlands represents a value of 800,000,000 Dutch guilders, that the exports represent a value of 1,800,000,000 guilders, that the transit trade through the Netherlands, which does not entail a single transaction in the Netherlands, is worth another 3,900,000,000 guilders, and for the international trade that is organized by Dutch people but does not even enter the country, they arrive at the astronomical sum of 12,500,000,000 guilders per year. These efforts are much to their credit but, in the end, this report similarly fails to provide any definitive figures. In particular, the estimate of the enormous amount of international trade is based on little more than the impression the "godfathers" who were interviewed happened to have, that the estimated annual turnover for hashish and marijuana amount to between 10 and 20 per cent of the total transit trade and international trade. By subtracting an estimate of the transit trade based on information from the Central Criminal Information Service on the soft drugs that have been seized from the total calculated this way, one would arrive at a turnover of 1,450,000 kilograms for international trade. This would amount to 12,500,000,000 guilders a year. In its recent memorandum, the government was apparently only willing to accept some of these figures, in particular the estimate of the soft drug turnover in the Netherlands, including the sale to drug tourists. Our excursion into the world of figures on production, quantities seized, market sizes and criminal profits was an overall disappointment. If one thing is clear, it is that we do not know anything for sure. There is ample evidence that the Netherlands does indeed play a significant role in the world drug trade - mainly soft drugs, but to a certain extent hard

70


drugs as well - although we cannot quote any exact figures. Nor can we specifjl how significant the role of the Netherlands is, compared with other countries in Europe. There is still plenty of leeway for either under or over-estimating the problem.

W. 2 . 2 Organization of the Drug Trade

W. 2.2. 1 Political Economy of the Drug Trade Until now, it has been common practice in the debate on organized drug crime to view it as the sum of all the groups or networks identified by the police or the Prosecutor's Office. The most common topics of conversations are: How many groups are there? How large are they? Are there central leaders? How strictly and hierarchically are the groups organized? Do they shield themselves fiom government intervention? Do they invest in legitimate sectors of the economy? Thinking in terms of concrete and cohesive groups is nicely in keeping with the practice of criminal law. If a group is criminally prosecuted, mention is often made of Section 140 of the Penal Code, which makes it punishable by law to be in an organization with criminal purposes. This is also the definition we used in our analysis, in part because we had no choice, since we had to rely on the reports with which the police provided us on this point. In reality, it is clearly more difficult to specie the borders of these groups than the criminal law system would seem to suggest. They are also less permanent, more apt to change their composition and less strictly organized than the police often assume. This is why we decided not to cite any concrete number of groups, though our conceptual framework still remains based upon the idea of groups, networks, or "fields of perpetrators", as the Germans call the part of the local underworld from which the leaders of criminal groups can draw. As regards many of the Dutch groups or networks in the drug trade led by Dutch bosses, this conception of the situation is easy to defend, since they have their headquarters in the Netherlands and most of the activities and the individuals involved can be observed by the police in the Netherlands. Otherwise, commercial organizations of this kind in the Netherlands


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operate in such isolation from the rest of society that they can be examined as relatively separate structures. This is not the case with drug trade groups that operate transnationally and have their headquarters abroad. The Dutch police can only observe fragments of these groups. They see managers, buyers, and travelling salesmen who constitute cosmopolitan circles operating in the Dutch drug market. Or they observe the smuggling and distribution as the end of a long drug line from the source country. Whether they are part of the established Italian mafia or Turkish criminal drug gangs of more recent origins, they are groups that, as a whole, are larger, much larger, than their Dutch counterparts. They are also groups that have links with the economy, the world of politics and the bureaucracy in the countries where they are active. The size of the largest Dutch hashish trade group is not comparable in any way with that of the Colombian cartels, the Italian mafia, or the Moroccan hashish groups, and their influence on the Dutch economy and Dutch politics is comparatively insignificant as well. In order to comprehend the full extent of the conduct of these drug trade groups in the Netherlands, a different approach is called for. In the footsteps of Italian and French authors (Bandini et al. 1993, particularly the chapter by Santino; Observatoire Geopolitique des Drogues 1994) who preceded us in studying the history of these groups, analysing their economic systems, describing the underlying social reasons for their rise, and examining the social, economic and political links with the centres of power in the countries where they are active, we use the term political economy to refer to this approach. This has certain ramifications for how we want to address organized drug crime by groups that operate internationally. The question is always what role the segments that have become visible in the Netherlands as a result of criminal investigations play in the entirety of the group in question or in the entire sector of the drug trade or drug economy. In answering this question, it is important to see where in Dutch society the people come from who are active in the drug trade. Which socio-economic classes are involved? What regional groups? Which ethnic categories? Which age groups or generations? The answers to these questions might well produce higher, or even much

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higher numbers of people involved in organized crime than can be calculated by just counting the people the police arrest and the Prosecutor's Office prosecutes. Far more people from a certain class or regional or ethnic category are "involved in organized crime" than are ever actually prosecuted. It is still true, though, that the drug trade cannot flourish without all of them, nor can the forms it manifests itself in be comprehended without knowing about them. In certain immigrant communities in the Netherlands, separate drug trade circuits have developed, often with entire families playing a role. Perhaps only one or two of the men in these families actually commit criminal offences of the kind the police are interested in. Women who guard a safe house or children who carry smaller quantities of drugs from one place to another are less interesting to the police. Yet they too play an essential role. This is also true of the people who move the profits from the drug trade into the legitimate economy, for example, by having houses built. This alternative approach explains the discrepancy between how the police and the Prosecutor's Office view organized crime and our own analysis, which - if possible - follows the logic of the political economy. The police in Amsterdam are only interested in prosecuting a few hundred dealers in the Turkish drug scene, who are of real significance when it comes to containing the local heroin trade. If, however, the focus is widened from this alternative angle, then, on the basis of a special Amsterdam police data file, in the period from 1 January 1991 to 18 September 1995, we see the involvement of 1,880 adult males. To what extent does the material available enable us to answer these questions of a wider scope? Criminology literature does sometimes make references to the backgrounds or risk groups that individual drug dealers come from. Mention is made of people who live in trailer camps or in certain old inner-city districts, of circles on the fringes of the bohemian art world, and certain ethnic minorities. There is, however, no study that describes the extent of any of their actual involvement. This is unfortunate, since we would have liked to supplement the information we were given by the police about a number of Dutch groups, with a description of the social world from which they are operating. If we count everyone who is involved down to the level of the street dealers, a group the police data says consists of ten criminals might actually


73

contain a hundred or more. We are somewhat better able to describe the entire circuit of the drug trade when it comes to the immigrant communities that contain people who are in charge of drug groups with their headquarters in the countries from which the various drugs came. In this case, the fact that we know more about them does not have much to do with the selective attention of the police. The police know more about Turkish organized crime because investigating the heroin trade is a top priority, and it is largely - though not exclusively - in the hands of Turkish groups. The heroin trade also has Chinese, Colombian and Dutch components. There is scientific literature on the political and economic conditions in the source countries that make the drug trade possible, and this also holds true for other countries where these groups are active. Based on years of social science research on the social and economic conditions the immigrant communities live under in the Netherlands, we are far better informed about them than about Dutch groups with a poor socio-economic position. There are intellectuals from these minorities who provide us with information about the relatively easily-surveyable world of their ethnic group, and we have several police descriptions that address our scientific question. Although it is easy to reason that ethnic minorities who come from the same countries from which drugs are imported, and that contain a deprived segment that is developing into an underclass, are apt to play a considerable role in this form of organized crime, there is little we can say with certainty about their relative share as long as we do not have the results of similar research into Dutch criminal groups. One striking fact in this connection is, nonetheless, the relatively large numbers of cases of homicide that have been classified by the police as organized crime liquidations, the large majority of which have occurred in the world of the drug trade. For the 3 1 liquidations in 1994,32 perpetrators were apprehended, three of whom were Dutch; the others, mainly from Turkey, Suriname and the Netherlands Antilles, were immigrants (some of the liquidations were carried out by more than one perpetrator, and the cases of 17 liquidations remained unsolved). This is quite a large number, if we bear in mind that, depending on the definition, the ethnic minorities still only constitute between 8 and 12 per cent of the population in the Netherlands.

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N. 2. 2 . 2 Impression of the Criminal Groups Involved

N.2 . 2 . 2 . 1 The Role of Dutch Groups Let us start this section by putting an end to the notion of something shaped like an octopus running the Dutch drug trade. There is no evidence of one big organic entity at the command of one leader with various echelons hnctioning quasi-automatically within it. The world of the Dutch wholesale trade in drugs can better be described as an extensive network where thousands of individuals, often in cliques and groups, are linked by formal or informal relations, or where these relations are easy to establish through "friends of fi-iends" if business so requires. Intersections can be discerned in the network, and individuals and groups with more power than others. Many of the relations are not all that stable. The interests of groups of various sizes can conflict, and the personalities of bosses can clash. People can either avoid each other or settle their conflicts by way of violence. After which, new action sets emerge to get a certain job done (joint financing, temporary use of each other's equipment or personnel) or more long-term coalitions. This is why the termsfission and fusion so aptly suit the structure of the drug trade. In so far as we can now reconstruct the genesis of this huge network, two historical developments would seem to be of prime significance. First, the contact between Dutch seamen and Pakistani hashish dealers off the coast of Dubai in the early 1970s. The Dutch ships were stationed there for some hydraulic engineering projects, and the Pakistanis, with their trade in heroin as well as cannabis, were apparently being left alone by the Americans because revenues from their trade were going towards the battle against communism in Afghanistan. There was the obvious historical parallel with the freedom granted to the heroin trade in the Golden Triangle a decade earlier. Several Dutch kampers hnded large shipments of hashish, and when their supply of capital no longer sufficed, they found Femis Bank willing to take over. In retrospect, it is surprising that the big international crime organizations like the Italian mafia allowed these Dutch adventurers to


75

go about their business. Was this peace at sea based upon special agreements? The second catalyst for the Dutch drug trade was the Amsterdam gang led by Klaas Bruinsma in the 1980s. A great deal has been written and surmised about this group. We counted an inner circle of about ten men. Around them, there were a few dozen others who served specific functions (lawyers Bruinsma consulted, specialists in violence, the owners of clubs and other premises) and were always on call. The secret of the group's success was Bruinsma7s talent for getting things organized and being a leader. If there was one person in the history of Dutch organized crime who aspired to be the equivalent of a stereotype American mafia boss, it was Bruinsma. One might even venture to say it cost him his life. With all his ostentatious swaggering, he was constantly the focus of media attention. The man found guilty of murdering Bruinsma in 1991 was an ex-police officer who associated with a gang from former Yugoslavia. At the top level of organized crime in the Netherlands today, various types of groups can be distinguished. Single-line groups only run one hashish h e fiom Morocco, Lebanon or Pakistan, where a boss sees to the day-to-day management. One of these groups consists of thirty or forty men (including carriers, mechanics and debt collectors), another has meen to twenty. Multi-line groups operate various lines at the same time. The leaders can call upon any number of sub-groups, and they themselves make every effort to keep out of the limelight. One of these groups is led by someone who mainly acts as a go-between for the producers and buyers; he arranges shipments that go from one continent to another without passing through the Netherlands. Another group is in charge of at least three lines, and the hashish that is carried by lorry or in specially-prepared containers by ship is for the Dutch market as well as other markets in Europe, particularly in England. From a distance, the boss directs a convoluted system of sub-groups, and this makes him flexible in everything he does. The circle of companies and individuals around him amount to a total of l00 to 150 people. Between these two extremes, as far as organizational form and leadership are concerned, there are the mixed groups. With a hard core usually consisting of only a few members, they are also extremely enterprising

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when it comes to organizing all lunds of other illegal activities (car theft, gambling). They are particularly good at constantly setting up new lines for various drugs (one to Nigeria, Romania, India and Surinam, another one to Lebanon, Pakistan, Morocco, Colombia and Nigeria). Some of the groups are suspected of dealing cocaine as well. The groups that focus on developing, producing and distributing synthetic drugs (ecstasy, amphetamine and designer drugs) are a bit different and seem to be smaller. The largest one to be rounded up by the former North Holland 1 Utrecht Inter-Regional Investigation Team consisted of twenty men from North Brabant and Belgium. The other groups are much smaller and often consist of no more than two or three people. These groups are, however, linked in some way, and there is a suspicion that they are dependent for the financing and import of raw materials, for example, or for the export of the pills, on people in the top echelons of organized crime. The production of synthetic drugs is also part of the repertoire of the Hell's Angels. Ever since the mid- 1%OS, this worldwide organization has been viewed in the United States as a criminal group with links to the American Cosa Nostra. The Amsterdam chapter of the Hell's Angels is the largest in the Netherlands, and holds a prominent position vis-a-vis the other chapters. They deal in more than synthetic drugs. They are also arms dealers and engage in extortion. To give a more concrete picture of the organization and operation of a Dutch group dealing in hard as well as soft drugs and probably also synthetic drugs, let us take the example of the group called Group F in the sub-report on the role of Dutch groups in organized crime. In the course of the 1980s, the leader of this group earned a reputation as a daredevil and desperado. The man behind any number of hold-ups and robberies in Belgium and the Netherlands, he was also known for ripping off entire shipments of drugs fi-om Dutch and, to an even greater extent, Moroccan groups. In the underworld, he was said to be responsible for numerous liquidations. The clique around him was not particularly large at the time, at most maybe five men, but they were in contact with all the bosses in the Dutch criminal world, certainly those who came from the trailer camps. After the members of this clique were all either arrested or liquidated themselves, the leaders created a new group, this time much larger and active mainly in the drug trade. The possibility should


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not be excluded that they were also engaged in the illegal arms trade and illegal gambling. In this new contiguration, this group was one size larger that some of the other mixed multi-line groups, as was evident from its scale and composition. The leader was assisted on a daily basis by a kind of advisor and manager but, if necessary, he could also rely on the services of an attorney, an accountant, a bank clerk, and someone on the staff at the local Chamber of Commerce. They helped him plan moneylaundering schemes through Luxembourg, and keep all the illegal earnings off the records of his Dutch and other firms. Four or five of his relatives had companies registered in their names, served as money couriers, and were involved in organizing and carrying off drug shipments. Two men who did odd jobs and were clearly on the inside were in charge of the leader's security. Together with other people from the trailer camps and from former Yugoslavia, one of the relatives was also in charge of punishing anyone who made a "mistake". The first and foremost line run by this group was a Moroccan one. Communication was made not only through Moroccan contacts here in the Netherlands; there was also a connection with a Dutchman who had a company in Morocco. He had some financial problems; the boss had helped him out, and in exchange he had to do all kinds ofjobs for the group, like picking up couriers from the Netherlands or storing shipments of cocaine for the "upper ten" of Morocco. The same kind of thing was going on at the Dutch end of the line. There were the owners of a small transport company who got in trouble when a hashish shipment was intercepted and the boss had helped them out. Now they had to keep driving the Morocco route for him. To conceal the real business they were now in, another man, who had similarly been rescued from bankruptcy by the boss, was investing in their company. This company arranged a regular flow of goods to camouflage the flow of drugs. In the end, another company was set up in a totally different part of the Netherlands, but with exactly the same hnction, to conceal the influx of hashish from Morocco. In the period when this infrastructure was being set up, plans were made for expanding the illegal enterprise. Together with some other people who were also indebted to the boss, the group made plans to

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channel cannabis from Nigeria via the group's own ceramics company in Romania to a business in the Randstad. All the details of the circuit were meticulously arranged, but internal conflicts in the group kept it fkom being put into effect. The same method was used though to bring in drugs, especially heroin, fkom India. Through two people in India, one of whom had been serving a sentence at Bijlmer Prison in Amsterdam in 1988 when a few guards helped him escape, first a legal flow of worthless goods was set up to a company in the Netherlands, after which this connection started to be used for bringing in heroin. Then contact was established with various key figures in Suriname, apparently with the intention of gaining control over part of the cocaine trade to Western Europe. A ship was even specially equipped, just so this new line could be run as much as possible under the group's own management. The ship was probably never actually used f o r this purpose, but there is no doubt that in one way or another, the new "line" did move some cocaine in the direction of the Netherlands. Lastly, rumour has it that the group was also involved in importing large quantities of raw materials for the production of synthetic drugs, although the rumour was never actually checked. Similarly, there was no investigation of the rumour about the group's ambition to take over the sale of these drugs throughout the Netherlands, especially at clubs. There is no doubt the group did whatever it could to keep its internal communication secret. They had no car phones registered under their own names, and they made ample use of codes. They kept a close eye on anything and anyone that could put the group at risk. Anyone who ventured to say a word to the police knew the kind of punishment that would be in store for him, everything from beatings and torture to liquidation. One of the members of the group experienced this first hand when he tried to go around the leader and start his own drug line. An interesting point in this connection was that he immediately appointed lawyers to defend the "staff members" who were arrested in the Netherlands or abroad. Not out of the kindness of his heart or because he was so generous, but because "his lawyers" would keep him informed about all the details of the criminal proceedings and the role his people were playing in them. For example, was anyone making any incriminating statements? There was no outright intimidation of any


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police or judiciary officials, but the fact still remained that the ruthless reputation of the leader sometimes unwittingly had an intimidating effect on the investigators. It was striking that he nonetheless managed to develop relations that leaned towards corruption with one person at the Chamber of Commerce and with another at a Consulate in one of the countries mentioned above. He was rumoured to have done the same with a police officer, although this was never more than a rumour. But there was no doubt that one of his bodyguards kept in close touch with police officers in positions that were vital to him, albeit outside his own territory. One of them worked at a criminal intelligence department, the other one was part of a surveillance team. Lastly, we must admit that not much was known about the group's earnings and how they were spent. A large part of the earnings must surely have been spent on building up the in6astructure referred to above. There is also the general impression that some of the money must have been covertly invested in the Netherlands in legitimate companies, particularly in the automobile sector. The authorities are still looking for the rest of the money.

N.2 . 2 . 2 . 2 The Role of Foreign Groups All the foreign or transnational crime groups that have been observed in the Netherlands are active in the drug trade, but their functions differ according the role they play in the whole spectrum of activities between production and consumption. The groups can be subdivided into three categories. There are groups with headquarters in countries where drugs are produced, such as Colombia and other countries in South America, groups centred in countries like Italy where drugs are bought and consumed, and groups solely involved in smuggling that are led from countries where drugs are neither produced nor consumed, such as China, Ghana and Nigeria. There are also transnational groups that have engaged to some extent in the drug trade, although it is not their main activity in the Netherlands, such as the Russian mafia and the gangs from former Yugoslavia. They will be briefly referred to at the end of this section. Here, we would like to address the various groups in the same

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sequence as above. For each of them, we will also address their link with the community from that country resident in the Netherlands. The Colombian cartels produce, process, transport and sell cocaine, marijuana and heroin in bulk. Counting the tens of thousands of people who play a role at the various stages in the source country, they are extremely large organizations. Nonetheless, they should not be depicted as huge, strictly-organized and centrally-coordinated mega-firms. From their offices, the bosses arrange for the purchase of the raw materials, the refining, and the smuggling overseas, and they make sure that the numerous functions are fulfilled, without which the multifarious activities could not take place undisturbed. They attend to the internal discipline, the shielding from the authorities, the money laundering and so forth. But all these processes take place to such an extent autonomously that successful criminal proceedings or even military intervention against any one of them could not essentially affect the hnctioning of the cartels. For the same reason, they spread the risk by setting up branches in nearby countries in South America. This is why cocaine is also coming into the Netherlands via Brazil and Venezuela and, as will be noted below, via Suriname, the Netherlands Antilles and Aruba. The Netherlands is important to the cartels because they transport large shipments into Europe by container, and the harbours of Rotterdam and Amsterdam are well-suited for this purpose. Starting in the mid-1980s, Dutch investigation agencies have been observing Colombian drug dealers who represent four of the eight large cartels operating throughout Europe, especially in Spain and Germany. The Colombian immigrant community in the Netherlands has been small and not socially integrated enough to set up its own commercial infrastructure for the cartels to use for importing drugs. The fact remains, though, that many of the Colombians who live in the Netherlands are involved in some way in the drug trade. The same holds true for other Latin Americans; Argentinians and Chileans play an active role as well. The people who sell the large shipments are the central figures, and they are very interested in finding Dutch companies willing to do regular business with countries in South America or West Africa and set up a smuggling line.


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Representatives have also been observed in the Netherlands of various Italian mafia clans who belong to the camorra from Naples and the surrounding region. Much larger groups of Italian immigrants have settled in Belgium and Germany than in the Netherlands, and to a certain extent, they still live there in colonies from the same regions. This gives members of the mafia ample opportunity to go into hiding there. In the Netherlands, people from the camorra clans do not have a support system in a Neapolitan community, and most of their activities have nothing to do with Italian immigrants. Itahan criminal entrepreneurs who have no close ties with any of the larger mafia groups are also active in the drug trade; they just come to the Netherlands to buy drugs for their own market and for other European consumer markets. In the Netherlands, people from the camorra mainly have good relations with a number of Colombian wholesalers, and they meet at homes and restaurants that they have rented or bought. They have been observed in more than ten cities and towns. Their business is not among the largest in the Netherlands, as is clear from the fact that the police have only caught them with a few kilograms at most. The mafia does not have much power in the Netherlands, as is illustrated by incidents like the following. A few Antilleans ripped off an Italian shipment, some threats were made, but no one followed up on them. Ever since the First World War, the Chinese have been one of the oldest ethnic minorities in the Netherlands. Although individually many of them have assimilated, they continue to constitute a relatively closed community. In part, this has been a result of new waves of immigration. In itself, the inward focus of the Chinese community provides a good opportunity for criminal infiltration to go largely unobserved by the authorities. Of course, there are the notorious triads, huge secret organizations that have been in existence since the 17th century. Organized in a strictly hierarchic way, they have officials with elaborate titles who run special divisions. It is clear from recent descriptions of the triads, not only in Hong Kong and the United States but also in England and France, that they are now largely groups with a core of one or two men and a circle of back-up men. In the Netherlands, groups like these represent the 14 K, the Tai Huen Chai and the Ah Kong and operate from Hong Kong, Bangkok, Malaysia and Singapore. They are mainly

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active in smugghg heroin from the Golden Triangle. Around 1980, the Chinese were ousted from their top position in this market when so many of them were apprehended by the police and the Turkish groups outdid them with a better quality of heroin. This does not mean they were driven off altogether. They still import and distribute heroin, and some of their customers are Dutch dealers. Starting in the mid-1980s, groups of drug smugglers from Nigeria and Ghana have been observed in the Netherlands. They are part of worldwide Ghanaian and Nigerian networks. Groups in these countries purchase heroin in Southeast Asia and cocaine in South America. They also do business in cannabis products. The countries to which they smuggle are in North America and Europe. Their communities in the Netherlands are small, not terribly close-knit, and not integrated enough into Dutch society to take full advantage of opportunities for smuggling in the Netherlands. In Amsterdam they mix to a certain extent with the black Surinamese population. They generally conduct their business transactions at coffee shops, restaurants or hotels. There is a tendency to exaggerate the size and power of these networks in the Netherlands. They consist of small groups of smugglers rather than criminal groups that engage in a wide range of activities. Lastly, there is the Russian mafia from Russia and other republics in the former Soviet Union. It, too, plays a role in a part of the drug economy, especially by supplying the raw materials needed for the production of synthetic drugs. Russian criminals also serve as drug buyers for the Eastern European market, although this is only of secondary importance to them. Gangs fiom former Yugoslavia have also been observed to engage in the drug trade, but in a way that is more parasitic than economic and that revolves around their being so specialized in violence. Neither the gangs from Russia nor former Yugoslavia have roots in Dutch society. There has only been a minimum number of Russian immigrants, and the Yugoslav underworld has little to do with the community of one-time "guest workers" from their homeland. Neither of these groups is particularly relevant to the drug trade, which is why no fbrther reference will be made to them in this chapter.


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N.2 . 2 . 2 . 3 The Role of Immigrant Groups It just so happened that the very countries from which so many people emigrated to the Netherlands in the 1960s and 1970s turned into the leading producers and transit dealers of the major drugs for the European market in the 1980s and 1990s. The bulk of the heroin now comes from Turkey. Suriname, the Netherlands Antilles and Aruba link Colombia and its cocaine to Europe, and Morocco has developed into the leading hashish producer. Large drug gangs have recently emerged in all these countries and the underworld there has shifted its attention to the drug trade. They are just as closely linked to the political and economic centres of power in their countries as the transnational groups have been in Italy or Colombia. The groups in Turkey can be subdivided into three categories. There is a classic mafia-type organization that used to be focused on smugghg, extortion, and providing illegal services at the level between the state and the local urban population. In itself, this classic mafia-type organization has no fixed ties with any political movements, although it does sometimes do certain "dirty work" for them. The groups that are part of it have since switched to processing opium into heroin and smuggling it into Western Europe. There are also drug groups that have clear ties with the right-wing Grey Wolves and the MHP, the ultranationalistic political movement that propagates the ideas of the Grey Wolves. Some drug trade activities have been observed on the part of small left-wing parties, but not the PKK, the large left-wing Kurdish movement that is in a state of armed conflict with the Turkish authorities. The PKK does, however, play an indirect role because of its extortion practices with businessmen, which definitely extend to include rich drug dealers. Kurds also play a large role in the heroin trade because they come from the east and southeast of the country and have ties with the neighbouring countries from which the opium comes. Activities connected with r e b n g and exporting heroin can, however, be observed among virtually all the segments of the population in Turkey. Cocaine smuggling from Suriname started when the sergeants who rose to power after a coup d'etat in 1980 made contact with the drug barons in Colombia. A combination of Hindustani businessmen who

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arranged the financing, military authorities who provided the transport, and a number of new drug barons in Surinamejoined to form a fearsome power complex. People from all the e t h c groups that make up the Surinamese population joined forces: blacks, Hindustanis, Javanese to a lesser extent, and maroons as couriers. The Netherlands Antilles and Amba play a role as meeting place for representatives of the Colombian cartels and bulk importers from Europe. Sizeable quantities of drugs are also smuggled by airline passengers to Schiphol and other airports in Europe. In Morocco, the production of hashish is flourishing. All the activities going on in this area would be inconceivable without the active participation of officials at all levels of the country's patrimonial system of administration. The royal court is also assumed to be directly involved in the export of hashish. In any case, the country has clearly become increasingly dependent on the drug trade revenues; the country has lost a major source of income, now that the former guest workers have been gone so long that they have stopped sending home as much of their savings. For a good understanding of how organized crime has developed among the immigrant communities in the Netherlands, insight into these political and economic connections is indispensable. Many of the immigrants from these countries have created a good life for themselves in the Netherlands, but considerable numbers of them are now in a poor social and economic position and are, culturally, largely outside Dutch society. One of the reasons for this is that some of them have remained economically and culturally focused on their country of origin. Historical studies on what used to be known as organized crime (cf. Egmond 1994 on the prominent role of Jews and gypsies in the 18th century) have shown that the combination of limited social opportunities and a marginal cultural position can mean a high risk of criminal groups. The unemployment rates among people from Suriname, the Netherlands Antilles, Amba, Turkey and Morocco are three to four times as high as the Dutch average. Those who are employed are strongly over-represented in the two lowest job categories. This is less true of the immigrants from the Caribbean, but most of those from Turkey or Morocco live in the worst neighbourhoods of the towns and cities, and in houses of the poorest quality. The schools in these


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neighbourhoods have fewer pupils who go on to complete secondary or higher education. The school achievement levels of some sub-groups of the children and grandchildren of immigrants are quite encouraging but, on average, they are far behind and do not have much of a chance competing with their Dutch peers in the labour market. Furthermore, these social disadvantages have a cumulative effect. These groups have been the major target groups for the official Dutch policies to improve the position of minorities. In a welfare state such as the Netherlands, social disadvantages tend to be mitigated and concealed. There has, however, always been a good chance that an e t h c underclass might develop in these immigrant groups, and the relative poverty and dearth of opportunities would be passed down fiom one generation to the next (Roelandt 1994). There is considerable status competition within the ethnic minorities, with social success being measured by material wealth in the Netherlands, as well as in the country of origin. The second generation compares its chances to those of Dutch youngsters of the same age. Some of the immigrants who are now unemployed or who are new arrivals in the labour market have taken the initiative to get started as entrepreneurs. In all three cases, there are special reasons why immigrants have been able to cross the moral border and enter the drug trade. In the Turkish case, political convictions or coercion could play a role. To a certain extent the anti-colonialist mentality of the people in power has served as an excuse for some of the Surinamese, and many of the Moroccans fail to see why a lucrative export item should not be sold in a country where the use of cannabis is permitted. The absence of a moral threshold has made it possible for criminal groups to gain a foothold in the socio-economic segments of these minorities, whose prospects are generally so unfavourable. Most of the people in the organized crime groups that operate abroad, and certainly the transnational criminal groups described above, are not particularly criminally active. In the established ethnic minority communities in the Netherlands, though, there has been a mushrooming of drug trade circuits that put people to work in a wide variety of roles, as street dealers, financiers, guards for the stashes of drugs, couriers and so forth, and far more people have come to play an active role. Unlike the transnational groups described

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above, these drug trade groups have close ties with the largest established ethnic minorities, which have in part become dependent on them for their income and prosperity. Turkish and Kurdish groups have been observed wherever large groups of immigrants from Turkey settled, with perhaps major clusters in Amsterdam, Rotterdam and Arnhem. Disproportional numbers of people from Suriname and the Netherlands Antilles live in the large cities, and cocaine smuggling is mainly centred around Amsterdam, Rotterdam, The Hague and, to a lesser extent, Eindhoven. Moroccans have been observed in coffee houses all across the country, but here again the business mainly centres around certain points, for instance in the Gooi and Brabant. For the reasons noted above, many investigations have been conducted recently into the Turkish heroin trade. We thus have a reasonably clear impression of how certain families are organized and operate. In Arnhem the drug trade is in the hands of five Kurdish families, that operate partially alone and partially in close conjunction with each other. They import the heroin themselves, directly from Turkey, and distribute it in Amsterdam and Rotterdam, and in Germany, France, Spain, England and Belgium. These enormous families also hire numerous other Turks to do all kinds of jobs. When the Arnhem Police drew up an inventory in 1992, they counted about 900 Kurdish and Turkish people who were directly linked to the heroin trade. Our own research showed that from 1990 to 1995, a total of 524 Turkish men were registered by the Arnhem police for dealing or possessing drugs. At the beginning of the 1990s, a Turkish family was active in Rotterdam that had a few dozen Turkish and Kurdish relatives working for it to distribute the heroin there. A police investigation conducted into the hashish trade in the Gooi at the beginning ofthe 1990s showed that three Moroccan families were in control of the whole business. They were the families of Moroccan workers who had come to work at factories in the region in the 1970s. They were people without much education, in fact most of them were illiterate, and after they were made redundant in the 1970s and 1980s, the large majority of them remained unemployed. The Aliens Department described them as a group that was poorly integrated and had poor prospects for the future. What is more, some of the second


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generation boys had sizeable criminal records. Hilversum was serving as distribution centre for the hashish that Dutch couriers were bringing in 6om Morocco. Dutch and Moroccan customers would come here to buy amounts of up to a thousand kilograms. A customer would park at a certain spot and once the deal was made, he would give his car key to the wholesaler in the coffee house. A courier would drive the car to a secret location, where the hashish would be put in the trunk. Then the car would be driven to a diierent spot, the key returned to the customer and he would be told where to pick up his car. The police were surprised how openly all this was done. They discovered that the organization had a kind of board of directors. The eldest sons ran ten coffee houses, a butcher's shop, a video rental shop, a cafeteria and a snack bar, and members of the family worked there. Other relatives also worked as couriers, including children who would transport hashish by bicycle. Others were paid 25 guilders a kilogram for storing hashish at their house. The police concluded that at least one member of a considerable percentage of all the Moroccan families in the Gooi was either directly active in the hashish business or indirectly profiting from it.

W. 2 . 3 Modes of Operation

IS?2.3. 1 Infrastructure of the Drug Trade Drug dealers cannot fhnction without relying on the existing legitimate infrastructure or setting up one of their own. This costs a great deal of money, and part of the profits go towards this end. For the detectives and accountants who conduct criminal and financial investigations, for example to determine the amount of the criminal assets that can be seized, assessing these expenses is never a simple matter. In this section, we describe our findings on the infrastructure of the drug trade destined for the Netherlands. First, a fiont has to be set up to make the importing look legitimate. In principle, any company can be used that is importing from abroad or is based in the Netherlands to carry out international business. Import and export firms are popular, especially if they evoke confidence because

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they have been doing business for a long time and have established a fixed routine with companies in a country drugs come from. No matter what the products are, Dutch companies that do business with South America have been the focus of special interest to the Colombian cartels. These companies have included seed exporters, lumber importers, and sellers of shoe shine machines and sun-resistant tin foil. Dutch drug dealers also set up their own front stores, as long as they import something that seems plausible. Transporting perishables is particularly popular, since customs officials are sometimes hesitant to do anything that would allow them to spoil. Drug dealers from the ethnic minorities use the shopkeepers who supply their own community with products from their native country, such as tropical vegetables from Suriname, nuts and tea from Turkey, or frozen fish from Morocco. There is no exact information on the size of this widely-varied mock infrastructure. Then there is the transport stage; drugs can be transported by car, truck or train, by yacht or cargo ship and, of course, by aircraft of all sizes. The Netherlands is an attractive country because transport is big business here and there is a great deal of specialized expertise in the field. Drugs still come in by road in the private cars of people who are allegedly or actually coming home from their vacation abroad; that is, the "ants". Trucks are used for larger shipments, with the drugs concealed in whatever goods they are conveying, or in the frame, the sides (which explains the preference for refrigerator vans), the he1 tanks or the spare tires. Dutch drug dealers used to organized shipments of hashish from Morocco from the producer to the buyer, but in recent years their Moroccan counterparts have become more powerfbl and have reduced the Dutch role to just the pure transporting. Anyone who now tries to operate on his own - and there are truck drivers who cannot resist an attractive offer at some large parking lot or roadside restaurant - runs the risk of being double-crossed by the dealer and picked up by customs. According to figures provided by the Teamsters Division of the Federation of Dutch Trade Unions, there are about forty Dutch truck drivers in Moroccan prisons for smuggling hashish. Groups of Turkish heroin smugglers use their own transport companies (a mafia family in Kilis, a rural town in the south of the country, runs a large segment of the road transport system), but to avert suspicion, they often hire Dutch


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or at least Western European drivers. We also concluded from the police material to which we had access that thirty - in themselves legitimate Dutch companies have been smuggling drugs. This figure, however, which also pertains in part to companies that were or still are smuggling hashish fiom Morocco, is defhitely an under-estimate, and based on data that is inconsistent and incomplete. It is most probably small companies new and faced with financial problems - that have been used, although there is no evidence to support this. Lastly, there is no doubt that several Dutch drug groups have an effective information system in the transport world to spot companies that are not doing well. Cocaine and marijuana from South America and hashish from Morocco also come in by ship. In addition to the drugs conveyed by "tourists7', for example on seaworthy yachts, they are smuggled in through regular shipping companies. Large shipments are often packed in containers. Two smuggling methods are used: (a) some other cargo is listed on the bills of lading, a different route is filled in, or the shipment is addressed to the kind of customer that does not give rise to any suspicion, or (b) drugs are concealed in the regular cargo. It is striking how creative smugglers can be in pressing drugs into shapes that can pass Customs unnoticed. There is no evidence that criminal groups have control over the entire processing at Rotterdam harbour, which is clerically quite complex. The trick is to avoid being checked. In part, drugs are smuggled in from Suriname in much the same way. On a far larger scale, Chinese groups smuggle in hundreds of kilograms of heroin at a time on ships from Bangkok. For some time, a Dutch group led by kumpers even had its own small fleet of ships crossing the ocean. This group brought the drugs on land by transferring them, off the coast, onto small motor boats that were quickly moved into specially equipped storage places. Drugs are also smuggled on a large scale by air. There are couriers travelling as passengers, but there are also crew members who smuggle drugs. Drugs can be concealed in cargo or conveyed in private aeroplanes. The Colombian cartels tried to use the same method off the coast of Ireland that had worked so well off the coast of North America, dropping large well-wrapped shipments at sea, but this was unsuccessful. Couriers come in from Suriname, the Netherlands Antilles and Aruba,

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and groups of smugglers operate from Ghana and Nigeria. Chinese smugglers work in much the same way, concealing drugs in shipments of garments or in luggage. The material to which we had access concerning Amsterdam Schiphol Airport showed that the inspection system is far fi-om watertight, which explains why such large quantities can come in. The inspection at this busy airport is quick and superficial, and in recent years any number of "crooked Schiphol employees have been discovered, not only among the people who do the cleaning and catering and deal with the luggage, but also among the marechaussee and customs officials. Once drugs are inside the Netherlands, they have to be covertly stored at safe houses, which are generally on the premises of otherwise legitimate and inconspicuous companies in commercial districts. Warehouses and houseboats are also used on the city outskirts. They are often also the places where synthetic drugs are produced. Private homes are also used, or sheds in back yards. Otherwise, wholesaling takes place at sales offices. In the case of Dutch hashish dealers, these are often in modern buildings in the industrial zones near the city limits. Moroccan and Turkish dealers operate fiom their coffee houses. There they buy a seat by the week and have access to the telephone, so that they can make calls to Turkey. After they are paid, an accomplice may go and hide the drugs in the customer's car, which the customer can then collect from some designated spot. For their distribution, Chinese drug dealers use the infrastructure of their own restaurants, video rental shops, and illegal gambling halls. Surinamese smugglers are apt to use Surinamese shopkeepers. Drug dealers also need places where they can meet and do business. Just like legitimate businessmen, they congregate at pubs, nightclubs, restaurants and hotels, and in the Netherlands sex clubs are popular meeting places as well. We observed that, unwittingly or not, some hotels, restaurants, nightclubs and pubs serve as premises for criminal activities. On the basis of our material, though, it was impossible to estimate their role. According to representatives of the hotel and catering branch itself, it is a considerable problem.

ContemporaryManrfestations

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All things considered, numerous people who work in the legitimate economy must be aware of activities related to the drug trade, or at least must have some suspicion about what is going on right under their noses. This also holds true of people who live in the neighbourhoods where drug dealers operate. In essence, it has always been a weak spot for organized crime that everyone who buys illegal goods and services or is involved in any way in the processing, transporting or financing knows what is going on (Potter 1994). Criminal groups can try to shield themselves by creating safe houses where no one who has not been invited is admitted. This has long been the case with the kampers, who play such a prominent role in the Dutch drug trade, since outsiders rarely set foot in the trailer camps they come from. It is also true of the Hell's Angels, who build their own "bases" and equip them with all kinds of security systems to effectively keep out anyone they do not want to see. In the cities, there are also certain streets or parts of streets that are controlled by criminal gangs. The people who live there are from the same social or ethnic background and anyone who dislikes the situation can either leave or must be subjected to their intimidation. They bear a resemblance to what Americans call no-go areas, but there is a difference. The term no-go areas refers to areas into which the authorities and the civil servants who work for them are afraid to venture unless they have ample armed backup. There are no such no-go areas in the Netherlands. Nor are there ghettos in the sense that an entire district is populated by one ethnic group, or that all the members of an ethnic groups live in that one district. The municipal housing department's authority over how housing is distributed makes this unfeasible.

W. 2 . 3 . 2 Use of Violence Violence and the effective threat of violence are certainly inextricably linked to organized drug crime and serve a wide range of functions (Amir 1995). Violence is used internally to maintain discipline in the groups, or by ambitious individual criminals in their efforts to advance to a higher position in the hierarchy. External violence can be used to

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protect a share in the market that is at risk due to the ambitions of some other group, or to expand the group's own territory in the market. Ever since the 18th century, the level of violence and the number of liquidations have been extremely low in the Netherlands (Spierenburg 1993). In fact, whenever violence is used, the Dutch tend to react with shock (Franke 1991). There has, however, been a gradual rise in homicide rates (Van den Eshof and Weimar 1991, Berghuis and De Jonge 1993), which is clearly related to the mushrooming drug trade. With the introduction of firearms in the 1970s, the nature of the urban underworld changed. Drug baron Klaas Bruinsma symbolized the new gangster. The police suspected him of ordering six assaults on his rivals or ex-partners, three of which were fatal, and he himself was involved in three shootings. The fact should not be overlooked that in the 1950s, smugglers in Brabant were involved in a veritable spiral of violence with the police and customs officials. The kampers also have a tradition of violence. The police estimate the number of liquidations - at least those they know about - at thirty to forty per year. This figure is very low compared with countries where organized crime really plays a significant role. In large cities in Colombia, that number of liquidations take place in a week. There is no way we can be absolutely certain about the Dutch figure, because we do not know how many of the people who disappear have really been murdered. As the figures are calculated the same way every year, there can at least be no doubt that the number of liquidations has risen. In drug circles, people are generally murdered for the same few reasons ... they do not pay their bills, they steal or try to steal someone else's shipment, or they talk to the police. Underlying all these killings, there is the general tendency for rivalry to be settled with violence. In the drug world, violence is always a derivative of the unregulated market conditions under which the illegal dealings have to be conducted. It is not an aim in itself, as is the case in some other forms of organized crime, such as extortion or loan sharking. Groups like the Hell's Angels, that got involved in organized crime through their traditional specialization in violence, and several groups of karnpers, who worked their way up with the money they made stealing from Moroccan gangs or intercepting shipments of drugs from Lebanon or


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Pakistan, are the exceptions to the rule. In general, though, if there is not too much competition, the level of violence in the drug trade is low. This might explain why Dutch drug circles remained so relatively peacehl, at least until the 1980s. There was not much pressure from the authorities because they were not particularly interested in the trade in hashish, and the market was expanding, so there was plenty of room for newcomers without their cramping the established dealers. If this assumption is true, then the increased interest of the police and the Prosecutor's OEce in the trade in cannabis must have contributed towards heightening the level of violence among the dealers. It was noted above how insignificant the role of Dutch groups has been in the liquidations, compared with the immigrant groups. In part this is probably a miscalculation, since the Dutch tend to be very secretive and immigrant gangsters are oRen much more theatrical - there is the Turkish habit of punishing minor violations by humiliating someone and cutting off his ear - and executions have to attract attention if they are to have a deterrent effect. The over-representation of immigrant victims and known perpetrators is, however, so large - three to four times as large as among Dutch criminals - that we feel we can assume it is a problem that plays a more prominent role in their circles. The variation in the violence levels among the various immigrant communities is even more striking. How can this be accounted for? The murders in Chinese drug circles are almost always instances of tough competition in a limited (heroin) market that is under pressure from police intervention, and there is a battle for power among the triads and gangs that goes far beyond the drug trade level. There were Chinese "wars" in Amsterdam in the mid- 1970s, and since 1991 there has been a wave of thirteen attacks so far, with fourteen fatalities and three wounded. The number of liquidations is highest in the Turkish heroin trade. The factors that might account for this include (a) the export of a political battle, as is evident from the role of the Grey Wolves and the PKK, (b) the fact that so many Turkish and Kurdish men - outside as well as inside Turkey - own firearms, and (c) a violent cultural tradition of feuding to avenge questions of honour (Yesilgoz 1995). In this ambience, there has also been evidence of (d) competition for a share of the market. &er intervention from Turkey, the dispute between an

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established criminal family in Rotterdam and newcomers who challenged its position in 1992 cost no fewer than eleven lives. Other immigrant criminal groups exhibit a far lower level of violence. In the case of Italians or Colombians, this is mainly because there are so few of them here in the Netherlands, and they engage solely in particular activities. The same holds true for the Ghanaian and Nigerian criminal groups, whose level of violence is extremely low; they consist of little more than cliques of smugglers who do not obstruct each other's activities. There is more violence in criminal circles of Surinamese, Antillean and Aruban descent, but not nearly as much as among the Chinese or Turks. In view of the total number of people of Moroccan descent in the Netherlands and their considerable role in the hashish trade, it is striking how little violence there is among Moroccan drug dealers. Perhaps this is because firearms are not particularly common in Morocco; the authorities there actively combat arms smuggling in order to prevent a threat to the central government, which is comparable to the case in the neighbouring country of Algeria. It might also have to do with the fact that the collaboration configuration of drug lords and oficial authorities - with the armed forces playing a prominent role - is so all-powefil inside Morocco as well as abroad.

W. 2. 4 Spending the Proceeds of Criminal Activity Financial investigations in the field of criminal justice are relatively new. The asset forfeiture legislation designed to contain entrepreneurial crime by making it possible to seize criminal assets dates back to 1993, but various studies have already produced interesting information about how the drug trade and other forms of organized crime operate. If drug dealing is to continue, the first thing on which earnings have to be spent is new merchandise. As was observed in the past, a number of facilities have to be in place before the selling can start; there are transport, storage and ofice expenses, telephone connections to be made, meeting places to be arranged, and even small enclaves to be created. There are government agencies and officials who work for them who have to be bribed. In Morocco, the bribery fees are sometimes


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included in the purchase price; customers pay for the hashish, "the r o a d and "the harbour". Usually, however, these fees are paid separately. These expense items can never be very high in the drug trade in the Netherlands, since the preferred strategy is evasion and concealment rather than outright corruption. In addition, there are the regular employees, representatives and bodyguards, who cost a great deal, and fiee-lance employees, chauffeurs and debt collectors. They are generally paid extremely well in order to compensate for the risk of being arrested by the police. If a driver picks up a large truckload of hashish in Morocco and brings it back safely, he may get anything from 20,000 or 30,000 guilders up to a maximum of 150,000 guilders. A criminal entrepreneur who treats his personnel well and takes into consideration his own long-term interests, also supports the relatives of anyone who winds up in prison for any length of time. Lastly, there are the expenses for lawyers, notaries public, real estate agents and accountants, who make it possible to invest in the legitimate economy. A certain percentage of what is left goes towards personal expenditure or is invested in other activities. For either of these purposes, assets have to be provided with a bogus legitimate source. The first stage of this metamorphosis can consist of exchanging the money for some other currency.

N.2. 4. 1 Exchanging the Proceeds of Criminal Activity The way Dutch criminal groups launder their money through Dutch and foreign banks will be addressed in Chapter VI. Here, we would like to examine how large sums of money are moved to countries outside Europe, since most of the immigrant or foreign groups virtually only do busiiess in drugs, and convey their money back to their native countries through non-Dutch channels. The first thing that struck us was that most of the countries from which the drug trade groups come do not have any legislation prohibiting money laundering. This is particularly true of Turkey and Morocco, which is where the criminal proceeds are often immediately taken by the couriers. Through group accounts at "rep offices", the

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money can be transferred to Turkish banks. In Morocco there are offshorebanks outside the bounds of official monitoring, to which large sums of money can be transferred without any complications. Sums of money are also brought into Morocco through traditional social frameworks of guilds or pawnbrokers. In shifting drug profits to Suriname, it is common for Hindustanis to use the system of "pontoon banking". The money that goes to Colombia is sometimes sent through exchange offices or sent by Giro through countries where banks still keep their records secret. Money laundering is prohibited in Colombia, but the exchange of criminal money nonetheless takes place through the existing banking system. The Chinese gangs use the banks of Hong Kong as their laundering machine, a practice that is reinforced by the strict banking secrecy and lenient government policy. It is not clear whether Italian mafia money is also exchanged on a large scale in the Netherlands.

N.2. 4. 2 Personal Expenditures After expenses are deducted, much of the profit from the drug trade goes towards a lavish life style. Dutch drug dealers - and the same holds true for Surinamese and Antillean ones, and to a certain extent for the second generation from other immigrant communities - like to buy or build homes and yachts. They drive expensive, leased cars and wear expensive clothes and watches. When they go out "on the town", they are big spenders and big tippers. Drug dealers of all nationalities spend huge amounts of money at legal and illegal casinos and gambling houses. Turkish and Moroccan drug dealers have a far less extravagant spending pattern. They tend to live the kind of simple, austere, frugal life one might expect from former migrant or "guest" workers, and they often even qualifL for some kind of social security benefit. There is nothing about them to attract attention. They send their money back home to their native country, where they live a life of luxury and invest in the legitimate economy. Representatives of transnational groups also make every effort to live inconspicuously. As long as they are in the


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Netherlands, they too lead a simple life. The same holds true for the Chinese, although many of them do have a penchant for gambling.

W. 2. 4 . 3 Investing in Business and Real Estate

In general, we are not well-infonned about just exactly what Dutch drug dealers invest their profits in. It is clear, though, that in the Netherlands they generally invest in real estate and like to buy hotels, restaurants, nightclubs and pubs, even if these are not needed for their service function. We also have the impression that they sometimes buy shares in businesses, for example automobile dealerships or commercial athletic clubs. There is no way for us to know how large these investments are. They also invest in sponsoring all kinds of sports and recreation events. This is a matter of gaining social prestige. In South America, it is called narco-philanthropy. The tendency of gangsters to invest their profits in businesses that enable them to work legally is evident from the history of organized crime in America. In other words, organized crime can sometimes serve as a bizarre ladder for upward social mobility (Bell 1960). People who are successfd in some legitimate sector of the economy are rarely asked awkward questions about their past. We kept an eye out for this kind of thing, but did not find any evidence of it in the Netherlands. Nor could the criminal investigators we spoke to cite any examples of former drug dealers who they know for sure are now businessmen in a totally legitimate line of work. The drug trade probably has not been going on long enough in the Netherlands for this kind of trend to emerge. Viually all the immigrant criminal groups invest far more in their past "at home" than in their future in the Netherlands. Surinamese dealers build beautihl homes in Paramaribo known as "coke bungalows", or open shops or supermarkets there. To a certain extent, Turkish and Moroccan drug dealers continue to adhere to the migrant worker pattern. They build a house, buy land or set up a shop, all in an effort to gain status and save something for their old age, which they intend to spend "at home". Very few members of the first generation ever do actually return home, however, and their children have little

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desire to live under the primitive conditions in the rural regions where their parents build the houses. There might well come a time when they put these houses up for sale, and there is a good chance the real estate market will plummet as a result. More profitable investments are being made in the tourist industry, not only in Turkey and Morocco but in Spain as well. Money is also being deposited at banks in Liechtenstein and Luxembourg. From the Dutch perspective, there is a tendency to view organized crime as solely entailing crime for profit. As noted above, in many countries there are also political interests that play a role. The Moroccan government does its best to get as much as possible of the foreign currency its subjects generate abroad to flow back into the country. It has established favourable conditions for investing in construction or in the tourism industry. It hopes to use the money coming in to finance some of its prospective large-scale infrastructure projects, such as a flood control dam. Drug dealers have been observed who invest in the construction of fundamentalist mosques and this, too, has a political dimension. Some of the more right-wing political movements in Turkey are largely backed by drug money. On the left, the PKK relies in part on the drug income coming in by way of extortion. There are also rich drug dealers in Turkey who invest in athletic teams (soccer). In Suriname, the political movement around Bouterse, the former military leader, actually took part in parliamentary elections; distributing food to the poor, Bouterse acted like a real South American drug lord.

W. 2. 5 Local Variations This section on local variations briefly addresses how the drug trade has spread out over the Netherlands, the extent to which various groups in the Randstad and elsewhere are represented, whether they use the same methods, including violence, in different parts of the country and whether - in addition to the similarities - there are also differences in how they spend their money. Since we devoted special attention to Amsterdam and the three towns of Enschede, Arnhem and Nijmegen, they will serve as our points of reference.


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Is the wholesale market in the Netherlands centralized or not? According to the prevalent American economic theory on organized crime (Schelling 1967), the trade in illegal goods always tends towards concentrations and monopolies. Government officials cannot play a regulatory role in an illegal market, and free enterprise follows its own rules. If this applies to the drug trade in the Netherlands, then one would expect a few large groups to emerge rather than a large number of small ones, and it is only logical to assume that Amsterdam should occupy a dominant position. However, the opposite has proved to be the case. The market is very open, wholesalers and groups of drug dealers operate all across the country, and there is such a fine mesh to the distribution network that consumers in even the tiniest towns have easy access to drugs of all kinds. They do not have to go into the city for them. What is more, the prices of high quality drugs are very reasonable in the Netherlands compared with those in neighbouring countries. This, too, is not indicative of the formation of artificial monopolies, but of a relative normalization of the branch. The only activity that continues to threaten the market is the tendency of dealers to steal each other's shipments, something that regularly occurs in Amsterdam as well as in the towns in the east of the country. Looking at the groups engaged in the drug trade, it is obvious how open the market is. It is true that Amsterdam and Rotterdam do play a central role as intersections in the trade flow, but local dealers also do business directly with merchants abroad. There are Colombian and Dutch dealers in Amsterdam who try to set up drug lines linking Europe to South America. One dealer from Enschede has his own direct link with Colombia. When his shipment of marijuana arrived by container at the harbour in Amsterdam, he would come and pick it up himself and then sell it in Enschede. The same holds true for the drug trade in immigrant communities. All across the Netherlands, the wholesale trade in heroin is largely run by Turkish or Kurdish families. They are very much in evidence at coffee shops in the various neighbourhoods of Amsterdam as well as Arnhem and Nijmegen, and indeed in all the Dutch towns of any size. This trade is also open in another sense; a considerable segment of the local male Turkish population is involved in the heroin trade in one capacity or another in Amsterdam as well as

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the two towns in Gelderland. There is some extent of variation that runs parallel to the pattern immigrants settled in, a pattern created through the mechanism of chain migration. There are many Kurds living in Arnhem, which is why the heroin trade is largely a Kurdish matter there. In Amsterdam there are numerous Turkish dealers whose political ideas are diametrically opposed to those of the left-wing Kurdish movements. Cocaine comes into Amsterdam in smaller quantities through couriers, packages sent by mail, and cargo from Suriname and the Netherlands Antilles. We observed the same thing in Arnhem, where dealers from Suriname have similarly set up a lucrative line. Dutch and Moroccan dealers dominate the cannabis trade in Amsterdam, Rotterdam and other large cities. Exactly the same is true in Enschede, Arnhem and Nijmegen. Here, too, the Moroccan migration pattern plays a role. The hard cores of the hashish trade are sometimes extremely local, and depend on exactly where the immigrants come from in Morocco. Chinese dealers are suspected of still being in the heroin trade, which does indeed coincide with what we observed in Amsterdam and elsewhere. In general, though, the Dutch police do not know a great deal about the Chinese drug trade. It has not been observed in the cities in the east of the country, but that may also mean that the police there do not have much insight into the distribution channels of the Chinese shopkeepers. Representatives of the large transnational criminal groups are mainly concentrated in Amsterdam. Colombians have, however, been observed living quiet and inconspicuous lives in smaller cities. One Italian criminal group is active in Utrecht, and individual Italian criminals have been observed at certain provincial pizza parlours. The Ghanaians and Nigerians seem to operate virtually solely from Amsterdam. There is, however, no evidence at all in Amsterdam of one important category in the Dutch drug trade, the kampers. Of course, they do come to the capital to do business, but they do not live there and their headquarters are at some other spot in the Randstad or elsewhere in the Netherlands. One rather obvious reason for this is that there are no trailer camps in Amsterdam. The kampers do, however, play a prominent role in the three towns we studied in the east of the country. The soft drug dealers are known there for their intimidating behaviour.


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What can be said about the geographical differentiation of the level of violence linked to the drug trade? In Amsterdam, the police know in which communities the twenty-three liquidations occurred within the total of 262 fatalities that might have been cases of homicide in the period from 1989 to 1995; six liquidations took place in Dutch and seventeen in immigrant communities, especially those from Turkey, former Yugoslavia and Colombia. The cities we studied in the east of the country also had their fair share of liquidations. According to extremely cautious police estimates, Turkish families in Arnhem who are closely linked to the heroin trade are thought to have been responsible for approximately seven liquidations in or outside Arnhem in 1989 and 1990. With two Turkish murders and the murder of one Dutchman, which presumably were not real liquidations, Nijmegen did not score that high. It is not particularly interesting to differentiate the methods of the various groups of drug wholesalers according to the regions in the Netherlands in which they operate. The mode of operation is largely the same. There are certain neighbourhoods in Amsterdam that are dominated by local drug dealers. In the Mercator District, for example, the street scene has long been dominated by the heroin trade; by purchasing shops and buildings, Turkish criminal organizations have been able to gain enough of a foothold in the district to somewhat shield their own activities. The Red Light District in Amsterdam is the clearest example of dominance by organized crime; 90 per cent of the commercial and residential premises there are privately owned, which is an extremely high percentage for the Netherlands, and one that has provided relatively easy access for criminal infiltration. The prostitution scene itself is not the problem, since the ownership of the prostitution premises is so very fragmented. According to the police, however, most of the hotels, restaurants, nightclubs and pubs in the Red Light District are owned by sixteen specific criminal groups. The problems on the street are so linked to the property relations that on the grounds of the analysis made by the police at the Warmoes Street precinct, the social problems in the district and the issue of law and order cannot be viewed without examining the role of organized crime, since they are connected in so many ways. It is obvious that the sale of drugs is not the only

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problem organized crime is responsible for; the real estate market has also been put off balance by the unchecked drug trade profits being invested. The same problem exists in the town of Arnhem, albeit to a lesser extent. The Spijker District is where prostitutes sit at the windows, and the whole situation has been the result of a specific government policy. The district is bordered on one side by the homes of the Dutch owners of the prostitution premises. Behind those buildings, however, a totally Turkish hfi-astructure has been built up in the past five years that is run by heroin dealers. Turks generally rent apartments in the poorer neighbourhoods but, according to the police figures, they have purchased anything from fifty to a hundred commercial and residential buildings in that locality. There are Turkish grocery stores, restaurants, coffee and tea houses, cafeterias, snack bars and travel agencies. A Kurdish and Turkish neighbourhood has developed where legal and illegal activities are intertwined, and where the Dutch authorities have little idea about what is going on. It is the kind of enclave that conceals activities like the drug trade from the public eye.

IV. 3 Trafficking in Women

IV. 3. 1 The National Situation TraEcking in women is still the most widespread form of trafficking in people (Advisory Committee on Human Rights 1992). It is generally assumed to pertain to women forced to become prostitutes against their will. Ever since the early 1980s, various policies have been put into effect in the Netherlands to combat trafficking in women, which does not necessarily mean that we now have a clearer picture of the nature and scale of this form of crime (Fijnaut 1993, Van Mens 1992). The main reason for this is that no systematic research has been conducted into the dark number of these offences. The national figures on trafficking in women only pertain to cases that have been reported to some official agency. There is no way of knowing the true extent of


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trafficking in women in the Netherlands. Efforts to shed more light on the dark number did not lie within the scope of our research. In the period from 1988 to 1994, a steadily increasing number of cases of tra£Eicking in women were reported to the Foundation Against Trailicking in Women. In the first years of this period, the annual figure was around 70, but in 1993 it rose to 88 and in 1994 to 168. Since the beginning of the 1990s, increasing numbers of these reports have pertained to victims and perpetrators from Central and Eastern Europe, particularly Russia, the Ukraine, Hungary, the Czech Republic and Poland (International Organization for Migration 1995). In the data provided by the Foundation, the number of reported cases that actually result in charges being filed is not keeping pace with the rise in the number of reported cases as such. A total of 36 charges were filed in 1992, 54 in 1993 and 67 in 1994 (Foundation Against Trafficking in Women 1994). It is clear from the study conducted by De Boer (1994) that not all the charges that are filed, with or without the help of the Foundation, result in actual criminal court cases. De Boer registered twelve criminal court cases in 1988, eight in 1989, two in 1990, three in 1991 and ten in 1992. Trafficking in women is easily equated with organized crime. However, upon closer inspection of the concrete terms, in many cases it is not at all in keeping with the features attributed to organized crime (Fijnaut 1994). Nor can all the cases we examined in this study be classified categorically as manifestations of organized crime. It should be noted first and foremost that we did not come across any investigations on traEcking in women where Dutch individuals or groups play a prominent role. This does not necessarily mean Dutch sex club owners do not play any role at all. They definitely do. But their role is usually restricted to that of customer; they "buy" women who are brought into the country by foreign criminals or criminal groups. Only in a few cases is there close cooperation between Dutch sex club owners and foreigners in the actual organizing of the trafficking. There is no doubt that a number of sex club owners do actively exploit the foreign women who work at their clubs. In so far as we could see, the foreigners are not from Surinam, Turkey, China, Italy or Colombia, though we did observe one case of trafficking in women from Morocco. The

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information to which we had access mainly pertained to individuals and groups from Russia, Poland, the Ukraine, Czechia and former Yugoslavia. These findings were completely in keeping with the general impression the Foundation Against Trafficking in Women has of the situation. A closer examination of the files on the foreigners trafficking in women shows that by no means all of them operate in some type of organized criminal groups. Their level of organization can be roughly classi6ed in four categories. First, it is clear that in some cases, there is no criminal group at all engaged in trafficking in women on a long-term basis, just a motley crew of people from all over Eastern Europe who happen to come into contact with sex club owners in the Netherlands. This was the case, for example, a few years ago in Leeuwarden. It was a different matter, though, in another case in Eindhoven, where the police discovered that one single Russian was operating as middleman between people recruiting women in St. Petersburg and a whole list of sex club owners in the south of the Netherlands, and there was no Russian gang involved at all. In fact, there was no way of knowing whether the man was part of any criminal group in St. Petersburg either. The cases where groups play a role most similar to those referred to in our definition of organized crime often involve people fi-om former Yugoslavia. One might bear in mind the case recently discovered in Rotterdam of a rather loosely organized group of people from former Yugoslavia who - with the help of accomplices in Central Europe - were bringing women fiom there into the Netherlands to work at their own or other people's sex clubs. There was also a case in Groningen, with countless cliques fi-om former Yugoslavia, all trying to gain control over a larger portion of the trafficking in women bound for that town. They were also vying for control ofthe local prostitution business. In the end, these efforts were in vain. In the cases we studied, the way trafficking in women was organised generally coincided with the description of it in the recently published Manual of the Board of Attorneys General. Repeated references were made to deception, exploitation and coercion vis-a-vis the women. It was only under false pretences that they agreed to come to the Netherlands. They had to pay exorbitant amounts for their tickets


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and accommodation in the Netherlands, and got to see little, if any, of the money they earned. Coercion, violence and blackmail were used to get them to work as prostitutes. They had to work under abominable working conditions. Sometimes deliberate efforts were made to prevent official intervention by keeping the women from filing charges. Here again, the customary methods were used, and the women were threatened with violence or told that the police were corrupt anyway. In the few cases where the police do actually make an effort to investigate how much is earned by the people trafficking in women, or how and where they spend this money, very little progress has been made. They never get any further than investigating and sometimes prosecuting the perpetrators.

IV. 3 . 2 The Local Situation A comparison of the situation in Amsterdam with the one in Arnhem, Nijmegen and Enschede makes it very clear that in a number of senses, there are considerable differences. The most striking difference is a quantitative one. In the past five years, any number of people have been arrested in Amsterdam for large-scale trafficking in women, but there has only been one case in Nijmegen (trafficking in Polish women), and in Enschede there has only been an investigation to see whether a local sex club owner had any involvement in trafficking in women, mainly from Brazil. The difference between Amsterdam and Arnhem is even greater. Even though Arnhem is the site of the Spijker District, the second-largest centre of prostitution in the Netherlands, unlike Amsterdam there has, apparently, not been a single case of trafficking in women, at least not as far as the police records indicate. Furthermore, in the annual surveys drawn up by the Foundation Against Trafficking in Women, barely any mention is made of any cases being recorded or any charges being filed in Arnhem. This striking difference requires some explanation, which should perhaps be sought in the quantitative difference between the prostitution business in Amsterdam and in Arnhem. The market in Arnhem is dominated by a small number of people who work in close conjunction with the local police; in

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Amsterdam countless people share the market, and for years the police have failed to exert any strict control over the prostitution business. It should also be noted that the trafficking in women in Amsterdam exhibits all the variations observed in previous years across the whole country, from relatively unorganized small-scale transactions to much larger commercial activities by fixed groups that do undoubtedly have many ofthe features of organized crime. It is striking how violently the Yugoslav gangs operate vis-a-vis "their" women, as well as each other and whatever non-Yugoslav rivals cross their path. For quite some time, there were rumours that one or more of these gangs were or still are engaging in extortion practices in the Red Light District with regard to other people in the sex business. If there is any truth to these rumours, then - in addition to what has been observed in Groningen - it is one more indication that at least some Yugoslav gangs are out to gain a monopoly over a certain sector in a given territory. This is definitely the kind of trend that is characteristic of organized crime.

IV. 4 Trafficking in Firearms At the beginning of the 1990s, various researchers noted that there had been a sizeable rise in the criminal use of firearms in the course of the 1980s from 99 shootings in 1983 and 152 in 1985 to 263 in 1990. The number of fatal (19 in 1983, 7 1 in 1990) and non-fatal casualties (87 in 1985, 170 in 1990) rose accordingly (Kruissink and Wiebrens 1992). Further analysis of fatal shootings from 1985 to 1987 (a total of 169) showed that most of them took place in the underworld. In 17 per cent of the cases (22), they were thought to be liquidations (Van den Eshof and Bergsma 1989). Although these figures seem to indicate a sharp rise in the illegal ownership of firearms in this period, this has not been confirmed by the national figures on firearms that were seized or suspects who were apprehended. A total of 3,198 firearms were seized in 1971 and 6,610 in 1979; this figure fell to 5,059 in 1983, 4,083 in 1986 and 2,574 in 1990. The numbers of suspects who were apprehended roughly coincide with this trend, that is, 3,302 in 1971, 5,158 in 1979, 4,826 in 1983,


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4,194 in 1986 and 2,576 in 1990. Of course, these national figures are not conclusive. In part, the fall could be due to the police forces passing on less information to the Central Criminal Information Service about incidents involving firearms. But this in turn demonstrates how valid the conclusion was of the Criminal Investigation Advisory Committee work group in November 1991, that is, that active efforts to combat armed crime were no longer being made. The police firearms teams had been disbanded as a result of the general trend away from specialization, and dealing with the illegal possession of firearms and the illegal arms trade had no priority at all (Criminal Investigation Advisory Committee 1991, Kruisink and Kouwenberg 1991). This conclusion led to two pilot projects being launched in 1993, one in the Central Gelderland police region and one in the Rotterdam Rijnrnond police region, to see how the rise in armed crime could best be combated. The first results of this project indicate that the illegal possession of firearms was not only widespread, but also that it was largely based on the illegal arms trade. In 1994, no fewer than 830 illegal firearms were registered in Central Gelderland alone, ranging from pistols, revolvers and rifles to hand grenades and machine guns. In Rotterdam, the seizure of one single gun led to the discovery of a whole "line" that had brought approximately 120 heavy calibre pistols and rifles into the criminal circuit in the Rijnrnond region since the beginning of 1993. Apart from this, there is the general impression in police circles that in recent years, firearms have come to be more or less taken for granted in the underworld. In the studies we conducted in the framework of this research project, it was also clear that, certainly among people active in the drug trade, there is no dearth of illegal firearms. In Amsterdam alone, in connection with regular checks, shooting incidents and threats, 703 illegal firearms were seized in 1993 and 733 in 1994. The number of incidents that involved actual shooting ranged from 114 in 1990 and 208 in 1992 to 254 in 1993, but fell in 1994 to 212. As a result of these shootings, there were 21 fatalities in 1990, 26 in 1991, 32 in 1992, 35 in 1993, and 21 in 1994. A total of40 people were wounded in 1990,46 in 1991,66 in 1992, 95 in 1993 and 66 in 1994. Not all the illegal firearms in the Netherlands have been put on the market by illegal firearms dealers. Some of them have been legally or

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illegally purchased by their owners abroad. There is no doubt, however, that illegal arms dealers are operating in the Netherlands who supply the Dutch black market as well as black markets elsewhere in the world. The problem is that, for all the reasons noted above, barely any research has been conducted recently into the illegal firearms trade and very little is thus known about the individuals and groups who engage in it. It is clear from the national police surveys that Turkish and Yugoslavs have been repeatedly suspected of playing a role in the illegal f i r e m s trade, and that various Dutch groups have gone into this line of busiiess as well. Central criminal intelligence department information on the activities of two of these Dutch groups in 1992 to 1994 reveals that they were among the parties responsible for illegally importing a minimum of 18,000 pistols, revolvers, riot guns and machine guns from Belgium in this period. The shipments were sold to criminal groups all over the country, including Amsterdam. Probably not all the firearms were for the Dutch market; certainly, a foreign criminal group was involved in at least one transaction. At various spots in the Netherlands, this information led the police to make certain efforts, although they never launched a full-scale investigation. If successful results are to be achieved, however, a hll-scale investigation is called for, as became clear in 1990 in the Amsterdam region. For almost a year, there was an intensive investigation into the activities of a very big Dutch illegal arms dealer. However, the investigation was all to no avail, because the man and his accomplices conducted their business with so much care. In recent years, the regional Amsterdam Amstelland police force has made no new efforts to combat the illegal firearms trade. In the framework of an "urban project", it has gradually gathered a certain amount of information which shows that from ten to twenty illegal Dutch firearms dealers are active in the city, either running their own lines fiom areas of the world where firearms can be freely purchased or being supplied by international wholesalers. It is also clear that groups from Turkey and former Yugoslavia are involved in the illegal firearms trade in Amsterdam. Lastly, criminal groups from the Mid-East, including one Israeli and one LebaneseISyrian group, have also been observed to be operating in the Amsterdam firearms market.


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It is striking that some of the groups referred to above - whether Dutch, immigrant or foreign - are not only active in the illegal arms trade. Some of them are simultaneously active in the international drug trade, and one of them also deals internationally in stolen cars. In at least one of these cases, the drug trade is assumed to serve, in part, to finance the purchase of firearms. In concluding this section, we would like to note that Dutch as well as foreign and immigrant groups, whose activities can easily be classified as organized crime, are also active in the firearms trade.

N.5 Car Theft In keeping with this last comment, it might be appropriate to start this section on car theft with the reason why we have focused on this particular form of theft. International literature notes repeatedly that car theft is not only committed by groups of professional thieves, but also by criminal groups generally classified under organized crime, such as segments ofthe Italian mafia. It is easy enough to understand why these groups engage in car theft. Cars can easily be stolen and sold on a relatively large scale, the chance of getting caught is extremely small, and even if the perpetrators do get caught, the sentences are generally short. Our sub-study on the automobile sector showed that anywhere from 30,000 to 35,000 cars and lorries are stolen annually in the Netherlands. The police manage to find most of them, but the others - 5,000 to 7,000 cars and maybe 200 lorries - disappear permanently. It is not clear who is responsible, especially since combatting this form of theft is not a high national priority. The data on individual or groups of car thieves is therefore very limited. A national survey on the role of immigrant and foreign groups in organized crime in the Netherlands shows that, although there are Surinamese, Moroccan, and Nigerian or Ghanaian gangs who steal cars or have them stolen and then ship them back to their native countries via Rotterdam or Antwerp, since the fall of the Berlin wall it has mainly been gangs from Russia or former Yugoslavia who are active in this field. Local studies tend to indicate the same thing,

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even though the Amsterdam police have not investigated this field enough to have a clear impression of the activities of these groups. Police investigations have, however, revealed that there are about a dozen groups of Dutch professional car thieves active in the city. The police assume that at least a few of these groups are in contact with foreign dealers in stolen cars, probably Ghanaian, Nigerian or Russian. Most of the information in our research project about car theft is gathered from thirty files on car thee sent to us from all over the country. Most of these files pertain to Dutch groups of car thieves, and a few to groups from Eastern Europe (Russia, Latvia, the Ukraine and former Yugoslavia). They show that the Dutch groups usually only work on a local or regional scale, and steal from ten to fifteen cars per year. On average, the groups consist of four or five individuals and there is a certain division of labour; some are better at stealing or driving cars, others have the skills needed for changing the vehicle identification numbers, switching parts and making the cars unrecognizable, or for forging the registration papers. These groups have no real leader, though they usually do have one central person who owns a garage or a junkyard and is thus in the legitimate car business and is able to delegate the work with some extent of authority and carry out the transactions. The core members of these groups have generally known each other for years, even if only because they are related or grew up in the same neighbourhood or trailer camp. No sanctions, either positive or negative, are thus required to insure full, loyal cooperation in these groups. Most of them do, however, take the usual precautions to shield their illegal activities, such as not doing business over the telephone. Since they have little to fear from the police, there is no need for them to take any fbrther precautions. Often the members of these groups are not only car thieves, they are also burglars and fences. The foreign groups are generally larger. There are from five to eight people at the core, who can call upon other individuals or groups for special tasks. They might, for example, use people from former Yugoslavia who are specialized in stealing cars, or people from their own country to immediately drive the stolen cars over the border or to the harbour in Rotterdam, Amsterdam or Antwerp. Some of these


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groups use officially registered garages or import-export companies as a front for their illegal dealings. A limited number of Dutch groups have presumably adjusted in recent years to the internationalization of the trade in stolen cars. This means that they have had to adapt their modes of operation and organization to new partners, longer distances and larger black markets. This transformation is not only clear from the fact that the groups now have more members, steal more cars, and have more of an infrastructure in the form of work and storage space. It also manifests itself in the introduction of more violence, or at least more of a threat of violence; to keep thieves and couriers in check and keep uncooperative partners from reneging on their obligations. In time, this incorporation of Dutch car theft groups into international criminal networks can be expected to result in their also becoming involved in smuggling other goods; such as drugs, or in smuggling people. Groups that have taken or can be expected to take this route are no longer merely geared towards professional crime, they are gradually entering the world of organized crime.

IV. 6 Forms of Fraud

The definition of organized crime used in this study allows ample room for other crimes besides dealing in drugs, firearms and women. We have examined the extent to which car theft, and in particular the international trade in stolen cars, can be classified as organized crime. Another category of crime that - under certain circumstances - can be viewed as organized crime is fraud, that is, anything from VAT fraud to swindling investors. First an impression is given that evokes trust, and then this trust is abused and the other party is deceptively led to believe that his interests or needs are being adequately met. The eighteen cases we examined are set in legitimate economic markets where legitimate companies operate and o5cial authorities play a regulatory role. In general, the relations of the embezzlers to the other actors in the field can be either parasitic or symbiotic. Parasitic relations are characterized by a zero-sum situation, in which the illegal profits

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mean an outright loss for the legitimate market actors, who are the victims. Creditors are left empty-handed in the event of a bankruptcy fraud, and if financial institutions are swindled, it leaves them with a considerable loss. Symbiotic relations between criminal groups and legitimate market actors are less unambiguous. The legitimate market actors are not solely the victims. There is a more or less culpable involvement of a segment of the legitimate commercial world in the crime that is being committed. The involvement of the legitimate market actors can range fiom being part of the fraud construction or purchasing goods at improbably low prices to taking over a share of the market on their own initiative. Some legitimate market actors consequently have an interest in the emergence and continued existence of criminal groups in their sectors. As will be clarified below, this has certain effects on how the embezzlers shield their own interests from the hostile segments of the outside world. The distinction between parasitic and symbiotic fraud will continue to be used below.

N.6. 1 Illegal Activities Forms of Parasitic Fraud The forms of parasitic fraud include the three elements referred to above - an impression that evokes trust, the abuse of trust, and a belief that interests or needs are being met. Companies or individuals are led to believe they are being helped, but are actually being deceived and double-crossed. Individuals or companies in dire straits are only too eager to accept the services of "crisis managers". The swindlers among them conjure up visions of a triumphant comeback, but in fact they are merely expediting the fall of the company. In one of the cases we examined, the leading suspect - referred to below as A - introduced himself as a trouble shooter or crisis manager to companies that were in trouble. The assets were sold to newly founded companies managed and owned by A's fi-ont men at prices that were far too low. Then A had the real company declare itself bankrupt, leaving enormous unpaid debts to the Tax Department, industrial insurance boards and pension funds. A

Contemporaiy Manifestations

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used various methods, including non-registered options contracts, to acquire the right to buy back shares at the nominal price, so behind the scenes he was thus able to continue to set the policy at the companies of his front men. Individuals and companies in a poor financial state are probably the most willing targets for fraud, but not the most attractive ones. Of course, those with plenty of money are far more interesting. And they too have a problem ... how to invest their money most profitably. In some cases, one of their major aims is to effectively conceal their earnings fiom the Tax Departmyt. In the following example, individual investors were led to believe that their money was being safely invested in the market - in fbtures in Switzerland - in a way that could earn them extremely high profits. A total of about 400 small investors were persuaded to invest in the futures market. The criminal group gave them the impression they were acting according to the principle of insured investing; ifthe profits rose, there was no limit to what they could earn, but if the profits fell, the options were temporarily frozen, so that the losses remained limited. On paper, most of the investors did make a bit of profit at the start, after which they were talked into investing more. Attractive folders, convincing sales pitches and periodical investment overviews designed to gain their confidence were all used in the campaign to deceive the investors. The essence of the fraud was that no money at all was being invested in anything. The investors thought their orders were going to a stockbroker in Switzerland via a German office, but there was no stockbroker in Switzerland. By means of an automatic telephone switch, the orders were going to a back office in the Netherlands. Only a hard core inside the Dutch sales organization and the German office was aware of the fraud. Not only were the investors under the impression that the orders being forwarded to Switzerland were being put into effect there, so was most of the personnel. Banks can also incur enormous financial losses due to fraud. Regular commerce requires that transactions be completed as rapidly and efficiently as possible. In an effort to provide competitive service, they offer their customers a wide range of facilities so as not to waste time or money. In working with cheques, it is not unusual to pre-book an account. This pre-crediting is only done if there is enough confidence

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in the individuals from whom the money is coming and to whom it is going. In one concrete case, a foreign criminal group convinced a high bank official to give what was called a 1A status to the companies affiliated to the group. This meant that as soon as the bank received a cheque, it immediately paid the amount to the payee without waiting for the cheque to be approved by the sender's bank. A veritable cheque carousel was set up to fool the bank; the criminal group convinced him they were doing business with each other by writing out numerous cheques that all went through without a hitch. These elaborate preparations went on for a year and a half. Using cheques that were not. covered, the group then convinced the bank to pay a total of 80,000,000 guilders to a number of "companies". ARer this successful transaction, the criminal group that was behind these companies immediately disappeared from the face of the earth. It is not clear what the.position was of the bank official in question. Within a matter of months, the board of directors at the bank ordered him to terminate the relations with this particular foreign group and he ignored this order and the warnings of various of his staff members. The possibility of corruption cannot be excluded.

Forms of Symbiotic Fraud As noted above, in symbiotic fraud relations, the actors in the legitimate market are not solely the victims; to varying extents, there is also some culpable involvement on their part. Any number of factors shape the positions of market actors vis-a-vis their competitors. In particular, the price and quality of a product or service are major elements. Various types of fi-aud can be committed with regard to the quality of a product or service; on paper, quaky can be either upgraded or downgraded. For example, low-grade meat can be sold as high-grade meat or vice versa. It is also possible to manipulate the quality of a product by adding legally-prohibited substances. And the nature of a specific service can be presented as something other than what it actually is, such as a contractor pretending to be from a labour broker.


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As to prices, people who commit fraud can influence the balance between cost and market prices in such a way as to produce a considerable advantage for certain commercial interests. For the segment of the commercial market that is not receptive to these dealings, these activities can lead to unfair competition and disrupt the market. The authorities who regulate economic t r a s c with a view to maintaining price and quality standards and fair competition are virtually always affected by forms of symbiotic fraud. The clearest examples of this are the cases of VAT fraud and EU fraud. The basic principle of VAT within the borders of the European Union is that whenever a product or service is sold, each of the links in the commercial chain charges the next link VAT. At the end of the chain, the amount of tax charged to the buyer is passed on to the Tax Department. At the same time, he can ask the Tax Department to give him back the amount of VAT he paid to the previous link in the chain. So in essence, the last link, usually the consumer, is the one who has to pay the VAT. The principle that no VAT has to be paid on the export of goods (the 0 per cent rate) is a step in the process that is very open to fraud. It makes it an attractive and lucrative option to pretend to be exporting something abroad, since you do not have to pay any VAT on it (0 per cent), but you can ask for the amount back that was previously paid. Another form of VAT fraud entails not listing goods purchased abroad. Since VAT does have to be paid on goods imported into the Netherlands, individuals or companies who want to commit fraud make every effort to keep the Tax Department from finding out about their foreign purchases. On the VAT carousel, with goods being transferred on paper from one Dutch or foreign "company" to the next, both of the elements often play a role. The carousel we examined in the framework of this study revolved around VAT at the border between the Netherlands and Belgium. There was fraud with garments, consignment goods, and audio and video equipment. The primary activities of this criminal organization consisted of simulating sales within the European Union and not listing purchases within the European Union. The companies in the fraud carousel that did not file their transactions within the European Union were managed by front men, many of whom had initially been approached in public places. The companies did not have

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any assets, so if they were stripped, there was nothing for the Tax Department to seize. At fixed times, the non-filers were removed from the carousel and replaced by other sham companies. In the example described above, there were two sides to the symbiotic relation with the legitimate market. First, a number of legitimate companies came to the fore that served as links in the fraud contiguration. By using sham invoices, they made it look as if they had purchased goods from and then later sold them to legal persons that were in the criminal group. The presence in the chain of legitimate companies that had been known and trusted by the Tax Department for years was designed to obhscate the machinery of the monitoring and investigating agencies. The second symbiotic element was on the side of the consumers. The goods - which never left the warehouse where they were stored, but had earned their owners a fortune thanks to the paper route they had covered in the European Union - were now unloaded on the regular market at special discount prices to buyers that included some very reputable companies. The example given above is based on goods that actually existed. But in the study we also came across cases where fictitious transactions took place with non-existent goods. These examples show that the supra-national monitoring in this field is still far from adequate. Abolishing the border checks inside the European Union has only served to hrther reduce the barriers for this kind of fraud. In addition to VAT fraud, the cases of symbiotic fraud mainly pertain to European Union fraud. The cases we studied show that by evading import duties, circumventing quota regulations, and wrongly q u w g for subsidies, considerable sums of money are extracted from the European treasury. In these types of fraud as well, legitimate market actors seem to have no objections to purchasing "contaminated" products. One should bear in mind that economic factors give any number of companies virtually no choice but to buy thesegoods. Otherwise, the altered competition situation might well put these companies out of business altogether, which only enhances the temptation to benefit from the fraud configuration. The study also illustrates, however, that financial distress or altered competition relations are certainly not always the major reasons for legitimate


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companies to participate; sometimes they simply want to enlarge their own turnover as cheaply as possible, and do not mind having shady businessmen do the dirty work for them. This clearly shows that the groups committing the fraud are catering to a market demand. The same is illustrated as regards growth promoters in the meat industry. A number of meat producers do not object to using growth promoters to increase their production. It has two advantages: calves are fit to slaughter sooner, and the consumer gets meat with much less fat. In the case in question, the illegal substances were produced at the laboratory of a company that was in principle totally legitimate. Within the framework of the company, however, a hard core of criminals had built up a lucrative and illegal business. Veterinarians, who were receiving a commission, worked as middlemen to sell the substances to cattle breeders. In this case of fraud, various actors who otherwise operated in the legitimate market were culpably involved: the veterinarians who were willing to serve as middlemen and the cattle breeders who bought the growth promoters. The use of these substances is often the last resort for stock breeders struggling to survive, so in a market situation this inauspicious, it is obvious how easy it is for criminal groups to find customers for their illegal products. To recapitulate, forms of symbiotic fraud also abuse trust and cater to the needs of the market. The essential difference between symbiotic and parasitic fraud is that here, some legitimate actors are also part of the fraud configuration or profit from it. Forms of symbiotic fraud not only cause enormous direct material damage, they also cause indirect damage by affecting the competition relations. The greatest danger presented by forms of symbiotic fraud is that they upset the market equilibrium and as a reaction to the unfair competition, induce other legitimate companies to take part in the fraud configuration.

N. 6 . 2 Composition of the Groups As is the case with the drug trade, here too it is impossible to make sweeping statements about all the people engaged in fraud. Some of

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them are originally legitimate businessmen who have been confronted with circumstances with which they cannot cope and have turned to a career in crime. Most of the major figures in the cases we studied are, however, blue-collar criminals. The majority of them are Dutch men of the post-war generation; the average age of the 58 main perpetrators is 44. More than three-quarters of the main suspects have been in trouble before; more than a third have been in trouble five times or more. These recidivists have mainly focused on property offences and fraud. In other words, no small number of them are habitual embezzlers. One important conclusion is that barely any combination has been observed of the drug trade and organized fraud. The nature of the cooperation among the persons and groups we observed can best be described as networking. In only a very small number of cases did groups appear to operate totally independently. In most of the cases, combines are merely formed for the duration of the criminal activity, and rarely last any longer. The use of violence to enforce rules or set examples is quite uncommon in the world of fraud. Violence is not only apt to attract the attention of criminal investigation agencies, but also that of the legitimate business world. Many cases were found where personnel had been intimidated and witnesses had been threatened, and the fact that almost a quarter of the main suspects had a criminal record related to violence andfor the possession of illegal firearms only goes to demonstrate how widespread the wdlingness is to use violence. The very attitude and conduct of the leaders often constitutes enough of a threat. Many of the people engaged in fraud exude self-confidence and "nerve" combined with a convincing "gift of the g a b . These are the abilities that not only help them get their way with their victims, but often with their own personnel as well. In addition, positive sanctions, mainly in the form of material compensation, serve to tighten the ties in the group. As a result of the networking, of course, the main suspects in the various groups have ample contact with the other groups. This not only pertains to the Netherlands, but also to other countries in the European Union. There is no doubt that international networks are operating in the


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various fields such as VAT fraud, European Union fraud and contracting. There are also indications that criminal groups from Eastern Europe are trying to gain a dominant position in the European Union in the trade in illegal meat, dairy and other farming products. Large-scale garment frauds and trademark forgeries are being operated from Southeast Asia. For lack of empirical data, we cannot be certain how these international syndicates are organized or how they operate. In the fraud cases we studied, there is no evidence of the involvement of representatives of the Italian mafia.

IV.6 . 3 Modes of Operation and Shielding There is often a link between how a fraud is constructed and the security measures that are taken vis-a-vis the victims as well as criminal investigation agencies. For most forms of fraud, for example, legal persons have to be at hand. At the same time, these same legal bodies are ideal hiding places. By appointing front men as shareholders/directors, the main suspects can remain invisible themselves. In two of the cases we examined, the main suspects engaged in and simultaneously concealed their activities with no fewer than 60 and 100 legal persons, respectively. In addition to legal persons, in virtually all the cases of fraud use is also made of sham or forged documents. They are used to gain the trust of legitimate market actors and create an impression of authenticity. They are also used to keep the fraud from being detected by regulatory bodies or criminal investigation agencies. The people in charge not only have to worry about the reliability and silence of their own personnel, they also have to consider the possibility of weak spots in the outer circle of the organization. In particular, in cases of complex fraud with multifarious branches where there is a symbiosis with the legitimate market, there can, in this sense, be management problems. To be able to commit fraud of this type, it is important to have middlemen who are adequately familiar with the particular market segment and will be trusted by the legitimate business partners there. Intermediaries and their

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networks, which can serve as a bridgehead, as it were, between the criminal organization and the legitimate actors in the market, are not always at hand. Sometimes external personnel have to be hired, which implies the risk that sensitive information could leak out. One case that illustrated all this pertained to the evasion of import duties on powdered milk from Eastern Europe. Powdered milk was being supplied by a commission merchant in Eastern Europe. The people who worked for this agent were aware of the fraud. The Eastern Europeans transported the powdered milk into the Netherlands. At parking lots in the east of the country, the containers were uncoupled from the trucks and the Dutch suspects took over from there. When the powdered milk came into the Netherlands, the drivers had to somehow get around all the formalities pertaining to the T1 documents. They did so by filling in phoney company names on the T l documents and giving the impression that the documents had already been processed. A phoney stamp was added to the green strip on the document, after which it was sent back to the customs official. In addition to the people who answered the telephones, the "respectable faces" of the organization played an important role in all the contacts that were maintained with banks and transport and dairy companies. It was their job to gain and keep the trust of the commercial partners. In the end, it was through them that the criminal investigation agencies found out what they needed to know about the fraud contiguration. One weak point was that the regular market partners wanted to purchase the powdered milk in a totally open way with real bank transactions and real invoices. In this case, tapping the telephones proved to be an extremely effective method, since it was not feasible to communicate with these companies in code. The modes of operation and the defensive shielding methods of the groups engaging in parasitic fiaud diier in a number of ways from those engaging in symbiotic fraud. Transience and flexibility characterize the conduct of the groups who commit parasitic fraud. Their volatility is particularly clear from the limited duration of the fraud configurations, the geographic distance that is maintained between where the criminal activity takes place and where the official company address is, and the fact that the old legal persons and front men are so regularly replaced by new ones.


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The groups engaging in symbiotic fraud consolidate their market position by way of the symbiosis with the legitimate world. Only if the market position of one or more of the legitimate participants is severely endangered as a result of the eaudulent practices or market relations are in danger of being put off balance in a very structural way can complaints be expected to be voiced in the sector. One of the implications of what has been noted here is that the transience that characterizes parasitic fraud is not in evidence in symbiotic fraud. In general, the criminal groups engaged in symbiotic fraud have more time to build up and expand their organization, and remain active longer in a certain segment of the market. Various markets can be explored in advance to assess the chances of profit there. The opportunities for concealment that these markets provide in the event of an emergency are also examined.

N.6 . 4 Damage, Proceeds and Expenses For a variety of reasons, it is not easy to assess the damage that individuals, companies, sectors of the economy or, on the highest level, national or supranational governments incur as a result of fraud. In cases of fraud characterized by a symbiosis with the legitimate market, there are often three parties: the market actors benefiting from the fraud, the direct and the indirect victims. The indirect victims are legitimate businesses whose market position is detrimentally affected as a result of the fraud. For example, one multinational bought up its own products at prices that were considerably reduced as the result of a VAT carousel. The products were ultimately put on the market at a large discount through its own distribution channels. It is difficult, if not impossible, to express this kind of damage in specific amounts of money. Another problem is that many cases of organized fraud are not confined to one country, and thus also affect the world of commerce across borders. Some fraudulent practices that are set up in the Netherlands have greater detrimental effects abroad than here. It is d i c u l t in these cases to know just exactly how much damage is caused in each specific country. Due to the great deficiencies in the statistical

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material on the field of fraud, we have confined ourselves to estimating the direct damage in the cases we studied. There is information to go by in twelve of these cases. The total amount of damage in these cases amounted to 330 million Dutch guilders. In none of the cases was the estimated damage less than 1.5 million guilders. In six cases, the damage even amounted to tens of millions of guilders, and in one case of VAT fraud in the oil sector, the total exceeded a hundred million guilders. Of course, suspects' illegal earnings cannot automatically be equated with the economic damage that is caused. Except in certain forms of parasitic fraud - particularly where a minimum of logistics is required - there are usually sizeable differences between the damage and the profits. The investments that have to be made before any punishable acts can ensue, the personnel expenses and so forth all influence how high the final clear profits are. And then, of course, the profits have to be divided among all the parties involved. No matter how dacult it is to specifi exact figures on the basis of the empirical material that is available, there is no doubt that fraudulent practices are extremely lucrative. A number of the main suspects in the fi-aud cases we studied were multi-millionaires. In combination with the relatively small chance of getting caught - since combating fraud is such a low priority, certainly for the police - there are grounds to assume that fraud will continue to have an undiminished attraction for criminal groups. In principle, it is easier to invest illegal fraud earnings than drug trade profits in the legitimate economy. Drug dealers have to make their way out of the underground economy, but groups engaged in fraud are already working within the legitimate economy. This finding is particularly applicable to criminal groups that operate in a legal as well as an illegal branch of trade or industry. In the three instances of fraud where this is the case, it is clear how simple it is to incorporate illegal earnings into legal ones, although specific skills and contacts are required. Next, the profits have to be invested in a way that is in keeping with the world in which the perpetrators live. White-collar businessmen who engage in forms of organized crime know how to go about investing their proceeds efficiently. Blue-collar workers, less familiar with the business world, are apt to spend their profits financing an

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expensive hobby or extravagant life style, or buying real estate. In our research, we were able to discover exactly how the illegal earnings had been spent in only a limited number of cases.

IV. 7 Conclusion For the reasons referred to in the Introduction, we cannot present a complete picture of the nature and scale of traditional organized crime in the Netherlands. As far as its nature is concerned, one aspect we did not cover was illegal gambling. And as to its scale, even for the drug trade it is not possible to give any definitive figures. The previous sections have thus been mainly devoted to describing various aspects of certain forms of traditional organized crime, that is, the kind of groups that are involved, how they are organized, and how they spend their illegal earnings. The drug trade occupies a prominent position, and not just because the criminal investigation capacity of the police and the Prosecutor's Office is largely focused on combating it. To a certain extent, this intense utilization of the scarce instruments at hand is commensurate with the leading role the drug trade plays in organized crime in the Netherlands. In our analysis of organized crime, we deliberately approach from the perspective of the groups involved. In retrospect, there are a few general conclusions we can draw about these groups. The first aspect that we particularly noticed was how widely varied they are. They range from small offshoots of the classic transnational crime groups through loosely-structured Dutch networks and authoritatively-run families of foreign descent to small cliques in otherwise legitimate businesses. Of course, the widest variety is observed in the drug trade, but variations are also sizeable in other fields, such as trailicking in women or car theft. It is only logical, especially with a view to firther scientific research, that there should be a need for a detailed typology of criminal groups. It is also obvious how international traditional organized crime is now becoming. This is certainly the case with the drug trade: the Netherlands is the crossing-point of the worldwide paths of any number of criminal groups. Other forms of organized crime have similarly expanded to an

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international or at least European scale. This has long been the case as regards trailicking in women or fkearrns, but it is now also evident in the illegal automobile sector and major cases of fraud. Traditional organized crime is thus increasingly becoming international crime. Nevertheless, one should bear in mind that not all the groups referred to in the subreports fit the description of these groups in the definition of organized crime we use here. Some of the Dutch, immigrant and foreign groups do undoubtedly fit this description. There are, however, others - especially those engaged in trafficking in women, car theft or fraud - whose structure and activities should still be classified as professional or white-. collar crime, or who are apparently somewhere in between white-collar crime and organized crime. In theory, the distinction can be drawn relatively easily between these types of crime, but in practice they sometimes bear an extremely close resemblance and there are.all kinds of transitional forms. It should also be emphasized that traditional organized crime is also extremely varied in the Netherlands in a geographical sense. Certainly as regards the variety of criminal groups and their criminal activities, it is clear that in comparison with the three towns in the east of the country, Arnhem, Nijmegen and Enschede, Amsterdam is faced in a much more extensive and intensive way with the problem of organized crime. There are also striking differences between the three towns in the east, particularly as regards the origins of the criminal groups that are active in the drug trade. Our findings show that "organized crime in the Netherlands" is definitely not a matter to be taken lightly. The geographic diierences are apparently sizeable, and probably even larger than this report would tend to indicate. This is, however, something that can only be demonstrated conclusively by conducting research and drawing up qualitative and quantitative analyses in far more towns in the Netherlands. It is obvious that analyses of this kind would not only serve the interests of science. Insight into the geographic differentiation of the problems would also be instrumental in setting the priorities for the overall approach to traditional organized crime. As regards the methods used by criminal groups, our descriptions of various main forms of traditional organized crime make it totally clear how numerous and effective the measures are that they take to conceal


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their illegal activities and thus shield themselves from criminal investigation agencies. Of course, their security measures vary greatly according to the nature of their activities, and not all the groups institute protective measures to the same extent, but it is clear that in traditional organized crime in the Netherlands, shielding from the authorities is essential. Let there be no mistake about this. One should bear in mind, though, that this chapter solely addresses the defensive measures they take. Chapter V11 will go into the offensive measures that a limited number of Dutch and foreign-based groups take - entailing, for example, counter-surveillance, intimidation and corruption. It goes without saying that certainly with a view to answering questions about what investigative powers, capacities and methods are required and permissible, the entire arsenal of countermeasures will have to be examined. Lastly, there is no denying that in general as well as in concrete cases, there is no way for us to accurately assess the profits of traditional organized crime. Nor do we have a clear picture of how they are spent. It is clear that they are spent partly on daily expenses, partly on the purchase of luxury goods, and partly on financing hrther illegal activities. But what about the rest of the profits? As regards the immigrant and foreign criminal groups, it is generally assumed that their profits are still largely invested in businesses and real estate in their native countries. Dutch criminal groups mainly do the same in the Netherlands. However, it should be noted that - since the police and the Prosecutor's Office have only recently begun to focus more on the actual spending of the profits - in neither case do we have an exact picture of the nature and scale of these investments. Whatever the case may be, there are two other points that also deserve attention in this connection. First, it is clear that in the Spijker District in Arnhem, as well as the Red Light District in Amsterdam, criminal groups, particularly those who are active in the drug trade, have been buying up hotels, restaurants, nightclubs and pubs and other real estate and have thus achieved a position of real economic power. Furthermore, by buying up so much of the real estate in these districts, they have taken over an infrastructure that not only serves them well in the drug trade but also in other traditional illegal activities, such as

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traklicking in women and putting them to work as prostitutes, setting up illegal gambling, and engaging in the illegal firearms trade. Secondly, there are no indications that except for the examples given above of real estate investments, criminal groups are investing their illegal profits on a large scale in the Netherlands in businesses in the legitimate sectors of the economy that have been examined in this research project, such as the construction or garment industry. There are occasional accounts in some of the sub-reports of certain criminal groups, some of them Dutch, investing in the Netherlands, but neither on a national nor a local scale is there any clear evidence of it being a trend. Of course, one might say. there are little if any grounds for this conclusion, since there is such limited information available about how illegal earnings are spent. The fact remains, though, that none of the police files we consulted at either the central or the local level contain any mention of criminal groups that, in addition to their traditional illegal activities, invest in any of the sectors of the legitimate economy. We did not even find evidence of criminal groups holding a pos,ition of power in any of the legitimate sectors of the economy. There are, of course, criminal groups that are active in certain specific sectors of the legitimate economy, as is clearly illustrated in the sub-study on fraud. The leader of one of these fraud groups is known to have once invested a few hundred thousand guilders in a hashish transport. Thus, every so often, the fraud groups, who generally constitute a separate category of criminals, do apparently work together with groups active in the traditional illegal markets.

V.

ORGANIZED CRIME IN LEGITIMATE SECTORS OF THE ECONOMY: FACT OR FICTION?

V. 1 Introduction Organized crime is still primarily associated with producing and dealing in illegal goods and services. From this perspective, it has nothing to do with the established, legitimate world of trade and industry. Nevertheless, as noted in the discussion on organized crime in the Netherlands, there is reason to fear that particularly the groups that are or have been involved in traditional forms of organized crime such as the drug trade will try to build up a position of power in legitimate sectors ofthe economy as well. That is why the study also takes this possibility into account and focuses on a number of sectors to see whether there is any evidence of links of this kind. These links can be in place in any number of ways. In line with the distinction between parasitic and symbiotic forms of fiaud, here again we distinguish between two types of relations. Relations between organized crime and the legitimate economy can be parasitic if criminal groups are the only ones who profit and the other parties are solely their victims. They can also be symbiotic if the two parties both profit from working together. The simplest parasitic form is when criminal groups practise extortion and use violence, threats or some other method to disrupt the production process. This can occur as an incident, for example in product extortion, but what we are interested in are systematic criminal activities over a longer period of time. Criminal groups can force businesses that operate in what they view as their territory to regularly pay a special "street tax". The forms of extortion referred to in the United States as racketeering are more complicated: A criminal group generally has control over some vital step in the production or distribution process, and demands exorbitant payment to allow it to go on unirnpeded. There is, for example, the notorious control over cement factories, without which the construction industry cannot hnction, or

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the manipulation of local unions, so that workers fail to show up. The ultimate in racketeering is when organized crime not only has one or several businesses under its domination, but an entire sector. In that case, organized crime expands into a factor of political and economic significance. There are, thus, various gradations of parasitic linking: extortion as an incident, a systematic activity, or a strategic means to gain control over an entire sector of the economy. In the event that the legitimate business world and the underworld are in collusion in a form of symbiosis, whether temporarily or permanently, it can be on the initiative of either party. Companies can decide to cope with acute financial problems by asking for the help of the local mob. After their legitimate credit options are exhausted, they can always get some capital from a loan shark at an exorbitant interest rate. If they want to eliminate the stiff competition, they can turn to an organization to do some industrial espionage or intimidate some key person for them. If they want to boost their profits, they can contact smugghg organizations and make their infrastructure available to them. When organized crime groups ask car rental agencies to give them favourable leasing contracts, then obviously the initiative is coming from the other side. The same is true when they pick out hotels, restaurants, nightclubs or pubs where they want to meet or congregate or sell drugs, and when they find out which hauling companies are in such bad financial shape that they can be persuaded to help smuggle firearms, drugs or people. Companies in trouble are not the only ones to receive an offer they cannot refuse. The same is true of companies that are doing well, but are open to the idea of some extra profit, power or prestige and yield to the temptation. Of course, a symbiotic relation can also degenerate into organized crime gaining complete control over a sector and becoming a real power factor. In principle, symbiotic linking is characterized by the same three gradations as the parasitic counterpart, that is, incidental cooperation, a long-term symbiosis, and the control over an entire sector of the economy. The notion that organized crime played or plays a significant role in the Dutch world of trade and industry or is indeed linked to it in any way is one that has only recently emerged. In the United States, where the term organized crime was coined, a link of this kind has been noted

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to exist for more than a century. There, ever since the turn of the century, the expansion of modem industrial capitalism, unrestrained by government intervention of any sort, gave organized crime an opportunity to earn a great deal of money by adopting a certain market regulating hnction and by entering into alliances with the commercial world. In his book on organized crime, Abadinsky (1990) devotes an entire chapter to the robber barons he views as the predecessors of modern organized crime in America. It is surprising how many captains of industry rose to success with the help of the mob, which helped them achieve monopoly positions by using violence against the competition and emerge victorious at the negotiation table by intimidating the people who worked for them. In this sense, the history of the Dutch world of trade and industry bears no resemblance to the American one (Wennekes 1989, Wennekes 1993). So what grounds do we have to assume this has changed? There is certainly reason to conclude that the commercial world is far more complicated and less transparent than twenty years ago, and that this offers a wide range of opportunities for criminal groups. The Dutch economy has become increasingly integrated into the global one, and business is being conducted with countries where forms of organized crime have crystallized. In addition, the national authorities have passed numerous laws and the business world has come to be subjected to a wide range of international rules and regulations. This not only means more opportunities to violate the rules, it also gives criminal groups more chances to earn money by the violation of these rules. Lastly, the trade in illegal goods and services generates enormous amounts of money that can be laundered and invested. This list of factors is certainly not complete, but it does illustrate the growing extent to which the commercial world is confronted with organized crime. The question we pose is: Which sectors of the economy can we expect to be first affected by the pressure and temptation of organized crime? In a very practical sense, our selection has been determined by items in the media or in criminology writings that indicate that "something is going on". This led to a list that includes the construction, the garment and the waste disposal industry. We deleted a few sectors fiom the list that might be legitimate in a strict sense of the world, but

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are questionable in a moral sense. They are sectors that Americans would immediately associate with organized crime: prostitution, pornography and gambling. This chapter is thus focused on the perfectly legitimate sectors of the economy never associated with organized crime. In itself, this "purge7'still did not produce our final list of sectors. To make our selection, we have consulted the criminology research literature to see which sectors are likely to be the most vulnerable and the most attractive. Criminologically speaking, we are entering well-nigh virgin territory. We can, however, turn to a report drawn up at the end of the 1980s by Wharton Economic Forecasting Associates, Inc. for the President's Commission on Organized Crime (Edelhertz and Overcast, n. d., p. 72). A panel of organized crime experts with experience in the police and judiciary were asked which sectors they expected to be first infiltrated. The sectors they listed included the food and beverage or "catering" industry (cf the hotel, restaurant, nightclub and pub sector in the Netherlands, referred to in Dutch as "horeca"), the construction industry, the legal gambling industry (Las Vegas, horse races), the waste disposal industry, prostitution, the automobile industry, and the garment industry. With the exception of prostitution, these sectors are largely the same ones we selected. Neither prostitution nor the garment industry have been included in our national studies, but they are examined in our local studies on organized crime in Amsterdam and in Enschede, Arnhem and Nijmegen. Edelhertz and Overcast (n. d.) recently repeated this research, and extended the scope to cover the transport sector, the entertainment industry and trade unions as well. Although the selections do approximately coincide, the question remains as to why these sectors have been selected rather than other ones. We worked from the following assumptions: 1.

In most cases, they are sectors of the economy with which members of criminal groups are traditionally relatively familiar. They know h01 he sectors work technically and financially. The construction, the ,,comobile, the catering and the transport sector all meet with this condition and criminals often have personal networks that extend inside businesses that are part of them. They know the


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technical facilities and money laundering possibilities that businesses in these sectors can provide. 2.

In all the cases, the sectors have a low entrance threshold. Either very few diplomas are needed to "set up shop" as an independent entrepreneur or it is not hard to hire someone with the necessary credentials as acting manager or £iont man. Nor is it difficult to find someone to finance launching a business of this kind. Side by side with larger businesses, these sectors usually contain numerous smaller ones in stiff competition with each other. Since they are merely links in a chain of economic activities over which they cannot exert control, their continuity is not always insured. They are often small businesses that can rely on the loyalty of their personnel. These are sectors where a lot of money changes hands. This makes it relatively easy not to record certain activities or incoming money.

4.

They are sometimes sectors where not much has yet been regulated, or where the regulations are complicated, contradictory, or impossible to put into practice. Ineffective regulations can be an isolated factor, but are oRen symptomatic of economic, social and technical problems that have not been solved. This holds true, for example, for the relatively new waste disposal industry. It is still inadequately developed, and in many cases the technical norms are too strictly formulated. It also holds true for the hotel, restaurant, nightclub and pub sector in some downtown areas, where the issue of keeping the peace on the streets is still a problem. This also plays a role in sectors that cannot fbnction without cheap illegal workers, such as parts of the garment industry. Bovenkerk (1992) reasons that organized crime often provides short-term solutions to problems, but obstructs long-term solutions because having the problem continue to exist is more in its interest. Sectors that are poorly regulated can exhibit a tendency to shut themselves off from the outside world to make monitoring more difficult. Moore (1978)

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refers to these sectors, such as the garment industry in New York, as constituting a ''semi-autonomous field. Lastly, some sectors are often the victims of any number of common and serious crimes. This can promote deviant behaviour if the people in charge believe the authorities are not adequately promoting their interests. One simple example: the proprietor of a pub who calls the police whenever things get out of hand there, but to no avail, and is even in danger of losing his licence if this is taken to mean he cannot keep the situation under control, is certainly tempted to hire a few body builders as doormen or a special doorman agency.

V. 2 Hotels, Restaurants, Nightclubs and Pubs In the Netherlands, the hotel, restaurant, nightclub and pub sector is generally a lucrative one, with a lot of money changing hands. The threshold is low, which is one of the reasons there are so many hotels, restaurants, nightclubs and pubs, and why their joint turnover is on the rise. There are a total of almost 40,000 hotels, restaurants, nightclubs and pubs in the Netherlands. It is a financially interesting sector where a lot of money is earned. The sector's lenient entrance requirements attract inexperienced and poorly-educated entrepreneurs unable to cope with the day-to-day reality. For smaller businesses in the large cities in particular, things can get tough and the competition is stiE More than a quarter of the cafeterias are directly competing with five or more rivals, and another 60 per cent of them have one to five rivals (Lenting 1991). The people who patronize these businesses follow unpredictable fashions and trends, and this requires a great deal of insight on the part of the proprietors and capital for new investments. Due to rising costs, some of the small businesses are on the verge of bankruptcy. There are more restrictions on the installation of slot machines, which is a crucial matter for many of them. Proprietors without much capital rarely find the regular banks willing to finance them, and they have to rely on loans from breweries and, to an increasing extent, from slot machine


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companies. Many of them thus come to depend on backers whose financial interests are concentrated in this sector. It is particularly the less successfd businesses that have so little choice in the matter. Why is organized crime so interested in the pubs and clubs trade? Because it can buy up premises and organize or carry out illegal activities there. At night spots that attract large numbers of people, illegal goods and services can be sold. Slot machines can be installed, legally or otherwise, illegal lotteries can be set up, and drugs or stolen goods can be sold. This is where sales outlets are created. Pubs and clubs can serve as meeting places for the members of criminal groups. A group that owns its own place can shield itself more effectively from law enforcement agencies. What is more, organized crime groups can launder money through these establishments. The turnover at restaurants that are not doing well can be artificially boosted, for example, by pouring beer into the sewer and listing beer sales as a legitimate source of income. The pubs and clubs trade is also interesting for organized crime because of the extortion options, forcing proprietors to accept "protection". This can mean they have to hire doorman agencies or pay cash or sign over part of the business. Using their own "doormen7', criminal groups can gain total control over an establishment. Lastly, hotels, restaurants, nightclubs and pubs can serve as a starting point for taking over other real estate in the vicinity step by step, until the entire neighbourhood or district is in their hands. The study Boerman (1994) conducted into "the role of organized crime in the pubs and clubs trade" in a large city shows that, although conclusions should not be drawn too quickly about organized crime in this sector, the problems should not be underestimated either. The study demonstrates that half (53) the 106 leading pub and club proprietors (with at least three establishments in a certain period of time) have criminal records, 18 of which include serious offences such as robbery, assault, kidnapping and the illegal possession of firearms. In many cases, they are working in close conjunction with "very shady characters". Ten of these proprietors are also active in the slot machine business. The group includes individuals of "ill repute", certainly considering their criminal records. In view of earlier experiences with legal and illegal

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gambling, we feel the developments in this sector are very alarming indeed.

V. 2. 1 Protection, Extortion and Robbery Hotels, restaurants, nightclubs and pubs are all open to the public, and whoever wants to can gather there for legitimate and less legitimate purposes. They enable people to gather in relative anonymity, and buyers, fences and dealers can all take advantage of this opportunity. In view of the incessant demand for drugs and cheap merchandise, they can turn these establishments into booming sales outlets. The generally harmonious convergence of supply and demand also has certain negative side effects. Excessive amounts of alcohol and drugs combined with firearms can lead to violent disputes and outright brawls. Dealers settle their differences at the pubs and clubs where they congregate. In a society where the use of firearms and violence has mushroomed, management problems soon emerge. There is a concrete demand for ways to prevent disturbances of the peace, especially since the economic success of these establishments is so contingent on their having a good reputation. To a certain extent, this can be said to promote the need for protection. In this sense, "protection" means using violence to force proprietors to pay for their own protection. Threats or violence make them want to prevent it from recurring. If this situation is created in a systematic way, it can be referred to as a "protection racket". The study Bovenkerk and Derksen (1994) conducted in Utrecht shows that protection practices have also been introduced in the Netherlands. They note in their report that 40 to 60 per cent of the hotels, restaurants, nightclubs and pubs in the downtown area have contact with illegal "guardian angels"; extortionists have paid them a visit. They also note an increasing professionalization of the extortion practices, which now tend towards efficiently run protection firms. The protectors carry pocket telephones and charge fixed fees for every time they are called upon to help and for the regular surveillance services they provide. Six or seven individuals appear to have total control over this protection at the pubs and clubs in downtown Utrecht. They each have


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their own district and they are well organized. The situation has now evolved to the point where there is very little that pub or club proprietors can do but ask these firms for protection. The protection firms do not work only for hotel, restaurant, nightclub and pub proprietors. It appears that a real estate agent and a slot machine company also use their services. Some of the entrepreneurs feel that in the event of an emergency, not only can the protection firms act more rapidly than the police, even more importantly they can act more discretely. This is why there is a growing demand for the product these firms supply. The municipal licensiig department appears to be aware of the activities of these private suppliers of protection and to tolerate them. Preserving the peace is a top priority. The researchers refer to the "pure incapacity" of the police. Further research by a regional criminal investigation team confirmed their findings. The police files gathered centrally in the framework of this study show evidence of other cases of extortion as well. One group that certainly does not shun violence operates in the middle of the country. It is run by a pub proprietor linked to the organized drug trade. Approximately twenty of the group's "employees" are on call, and in addition to the pubs and clubs trade, they are active in the transport sector if anyone needs to be "warned or "reminded that certain payments are due. In addition to violence, threats and extortion, they resort to kidnapping and assault. They cause constant agitation and commotion at pubs or clubs so that, in the end, they can take them over at a cheap price, as has actually happened in a number of cases. At other pubs or clubs, they first demonstrate why the protection is needed by turning the place into a shambles and spraying tear gas; then they come by to pick up the protection money. Several proprietors have managed to avoid paying protection money or having their businesses taken over, and in one case the proprietor of a pub succeeded by using armed resistance. One other entrepreneur is still being threatened because he rehses to hire a doorman from the firm. Similar things happen at other spots in the country; in the south, an establishment has recently been set on fire in connection with extortion efforts. Protection and all the criminal activities related to it not only occur at hotels, restaurants, nightclubs and pubs with Dutch owners. Those

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owned by immigrants are affected to an even greater extent. At the end of 1994, the Amsterdam police rounded up a gang of Kurds afliliated with Dev Sol who were extorting money on a large scale fiom Turkish coffee houses and dealing in drugs. In that same year, it became public knowledge that Chinese gangs were extremely active in extorting money fiom Chinese restaurants. A confidential survey at five hundred Chinese and Chinesehdonesian restaurants (Mertens 1994) showed that one in three of them had been the victim of robberies or extortion, and often both. In the extortion cases, the same restaurant was often approached again and again. The people responsible for the robberies and extortion were almost always Chinese, and usually fiom the same language area as the proprietor. A third of the robberies and extortion cases entailed amounts above 10,000 guilders. According to the survey, in half the cases the crimes were committed at the place of business, and in 30 per cent of the cases at the home of the proprietor. In many cases, violent methods were used; the proprietor or members of his family were tied up, beaten and kicked and sometimes kidnapped. Often the extortion and robberies were not reported to the police because the victims were afraid of reprisals. Other studies showed that many Chinese restaurant proprietors felt the police and courts were in any case too lenient with the people behind the extortion and robberies, which was another reason not to file charges. The perpetrators were out on the street again in no time, and were apt to come and "visit" soon after. Bearing in mind the distinction drawn in the introduction to this chapter between parasitic and symbiotic relations between organized crime and the legitimate economy, we would like to close this section by noting that as regards protection, both types of relations are in evidence to some extent.

V. 2 . 2 Slot Machines Recent media coverage certainly has not done much to improve the sullied reputation of the slot machine sector. Discussions on the nature of organized crime in the Netherlands often allude to the notion that certainly in the large cities, slot machines are wholly or partially under


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the control of criminal groups. As has long been known in America, for various reasons the slot machine sector is not only vulnerable to infiltration by criminal groups, it is extremely attractive to them. Slot machines are lucrative in a direct way and also in an indirect way, since they can be used for laundering money and, until recently, there was ample opportunity to instal them at illegal gambling halls, or to instal illegal slot machines at legitimate locations. The fact that there are opportunities for organized crime still is not indicative of its actual penetration. Police and tax officials are aware that there is "something fishy" going on in the country's slot machine sector, but have no hard evidence to back up their suspicions. In April 1993, the Hotel, Restaurant, Nightclub and Pub Association nonetheless announced that a confidential survey showed that criminal groups were active all across the country, buying one establishment after the other, and frequently at exorbitant prices, so that any legitimate parties that might be interested could not possibly match their offers. The aim of the criminal groups was thought to be to install slot machines at these establishments, which were run by their own front men, and to engage in any number of illegal activities there. There is no certainty as to the exact scale on which all this has been taking place. In September 1993, the Dutch Hotel, Restaurant, Nightclub and Pub Organization estimated, however, that in Rotterdam alone, three hundred establishments were already owned by the underworld. Although worded somewhat differently, this figure coincides with estimates the Rotterdam police formulated in March 1992: a fifth of the people leasing slot machines in the city were affiliated with organizations engaged in the illegal drug trade and other forms of serious crime (Van 't Veer et al. 1993).

V. 2 . 3

The Situation in Amsterdam and in Arnhem, Nijmegen and Enschede

Chapter IV gives a brief impression of the situation in Amsterdam and in Arnhem, Nijmegen and Enschede. A more detailed description of our findings is presented below.

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In Amsterdam, police investigations have revealed how sizeable the problems are. A special police investigation team has noted that many of the proprietors of pubs and coffee shops (a third of a randomly selected group of 335 pubs and 65 coffee shops) have serious criminal records. It has also concluded that at least a fifth of all the 4,000 hotels, restaurants, nightclubs and pubs in Amsterdam are directly or indirectly under the control of five large criminal groups. What is more, at least one of these groups has a sizeable interest in the Amsterdam slot machine sector. In 1993, the Amsterdam police even noted that criminal groups have half the 6,000 slot machines in the city under their control. These groups are also thought to be active in the drug trade, prostitution and the arms trade. They have built up a position of power in the slot machine sector by buying or renting buildings where snack bars, brothels and peep shows are run. As regards the Red Light District, the police have noted that sixteen individuals or groups with serious criminal records or clear criminal connections have acquired a considerable share in the hotel, restaurant, nightclub and pub business and the gambling sector. Seven of them are immigrants and nine are Dutch. They include notorious drug dealers, one slot machine company, the group to which the Heineken kidnappers belonged, and several Egyptians who only seem to be running a nightclub or pub. In general, there is a quantitative difference between the situation in Amsterdam and in Arnhem, Nijmegen and Enschede. Enschede night life centres around a few spots in a small area. No links have been observed with organized crime and there is no evidence of protection. One effort made in 1990 to force pubs to hire doormen was successfidy thwarted in close conjunction with the police. A similar effort failed in Nijmegen, though there are pizza parlours and other restaurants there that are owned by Turkish criminal groups. In the vicinity of the casino, there are Chinese groups who try to interest penniless gamblers in borrowing money from them at exorbitant interest rates. The situation in Arnhem is the only one to bear a resemblance to Amsterdam. Kurd heroin dealers have purchased a great deal of real estate in the Spijker District, including many buildings with coffee shops, tea houses, restaurants, take home pizzerias and snack bars. In none of the three


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towns in the east of the country is there evidence of any link between the exploitation of slot machines and criminal groups.

V. 3 Road, Ocean and Air Transport The geographic location of the Netherlands has played a role in shaping the nature and scale of organized crime here. Excellent transport connections, vital intersections of international trade routes, Rotterdam Harbour and Amsterdam Schiphol Airport help enable international smugglers to move illegal goods in whatever way they want. Contraband, including anything from drugs, firearms and stolen cars to toxic waste or endangered species of plants and animals, is concealed in the mass flows of goods coming into the Netherlands every day by lorry, aeroplane or ship. International organized crime makes very good use of our country's fine infrastructure. The Netherlands has an excellent reputation in the world of European road transport. Haulage, that is, the business of transporting goods by road, is one of the fastest growing sectors in the international market. Most of the haulage companies are family companies, some of which have greatly expanded. They are usually passed down from father to son, and there are often brothers who work for them as well. The fathers started fiom scratch, and the mentality is conservative. For years, official Dutch policy has been to restrict the capacity of lorries. This is why haulage companies are so interested in having more lorries. It is a measure oftheir success. Spirited on by seemingly easy lease contracts, they are - despite the economic developments - now willing to spend every cent they have on expanding their tonnage. Things are not going well with the small Dutch haulage companies. More and more of them are going bankrupt, and on the average they are barely getting by. This is not, however, the case with the large companies, which are doing reasonable or even good business. The problems are concentrated at the bottom of the market, where numerous tiny to medium-size companies are fighting a tough battle to survive. Perhaps there is a simple explanation: there are too many of them. Ever since 1988, there has been a sharp rise in the number of new haulage

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companies. This is mainly because the capacity regulations were abandoned; lenient requirements now make it easy to get started in the transport market. For many of the novices, the European market is the main attraction. Almost all the new haulage companies start with a licence for international transport. The countries of Eastern Europe represent enormous potential markets that attract many of them. Haulage abroad in general, and to these countries in particular, requires experience and expertise that these novices rarely have. It is easy for swindlers, smugglers and outright thieves to take advantage of them. In addition, the recent sharp rise in the number of one-man companies' mainly involves lorry drivers who were previously employed by some company and are now trying to make it on their own. The notion of being fiee, combined with strong feelings about their lorries, makes them eager to be self-employed. They finally own their own lorry and do not have to let anyone "boss them around. What is more, many of the drivers are convinced that even by doing the exact same work, they can make a lot more profit now. They know the side roads, the fastest way to get past Customs, and the spots vthere they can pick up some extra goods. In actual practice, though, owning their own business is no simple matter and many of these drivers are in danger of going bankrupt. On paper, "their own lorry" often still belongs to the bank, the lorry dealer, or their former boss. The monthly payments are often too steep for them to make. The "creative cost price calculations" most of the drivers make have proved untenable. Their own wages are the first item they have to cut down on, so that after paying the premiums, they barely have anything left to live on. They spend their Sundays working on their lorries which, even so, still sometimes need some work done at a garage. Extra goods are no longer "a little something on the side", they are now an absolute necessity. Since there are steadily more one-man companies, competition is getting tougher. The kilometre price has had to be reduced, resulting iinally in a price war at the bottom of the market. This means the end of many of the new companies, and those that are just managing to survive are now charging prices that are barely worth working for. In a situation where there are no legal solutions to help these haulage companies out, they can turn to less legal ones to make a living. Of course, their aim from the start might well be to make a

Organized Crime in Legitimate Sectors ofthe Economy

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dishonest living. In any case, there are numerous kinds of fraud open to them.

V. 3. 1 The National Situation According to one of the analyses with which the police provided us, a Dutch criminal group in the middle of the Netherlands that is involved in the drug trade finds out which legitimate haulage companies are in financial trouble. Then it approaches them with an attractive proposition' to help them pay off all their debts quickly and make a nice profit. According to this analysis, there are seven companies about which the police are sure, and nine drivers are known to have driven for the group. In no time, these companies were in excellent financial shape and witnessed explosive growth. It is not clear whether there are any entrepreneurs who stop dealing with such groups and continue to run their company in a legitimate way. In addition to approaching individual lorry drivers, one-man companies or larger haulage companies, smugglers can also set up special companies to serve as covers. Turkish drug gangs are among the parties buying haulage companies to use for smuggling (Central Criminal Tnformation Service 1994). Of course, a cover company's facade has to be as legitimate as possible, and ordinary shipments are transported so as to attract as little attention as possible. Sham companies are, however, frequently characterized by faulty bookkeeping or incomplete accounting. They often make their payments in cash and have no access to the regular money market. Of course, they try to keep the authorities out of their business, for example by not taking advantage of the facilities provided by law, such as subsidy arrangements. They do not engage in much written communication, if at all, nor do they often advertise or make written agreements. A fraudulent haulage company can often be detected by the illogical route a lorry takes; it makes enormous detours or drives a season-related route at the wrong time of the year. Lorries without a full load also raise suspicions. A certain amount of information is also available on the role of road transport in smugghg hashish from Morocco to the Netherlands. There

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are some sixty Dutch haulage companies, including two very large ones, that drive to and fiom Morocco almost every day. Without hrther investigation, it is impossible to say how many of them are smuggling hashish, but the fact that almost forty Dutch lorry drivers are in prison in Morocco for smugglmg drugs indicates how considerable the problem is. The police files at the Central Criminal Information Service certainly lead to the conclusion that thirty haulage companies are involved in smugghng drugs, but there is no way of knowing how many of them are the same ones as those referred to above. Unfortunately, the material does not enable us to either confirm or rehte the assumption that they are mainly small, new companies. We did come across one or two examples of haulage companies that were being used for other purposes besides smugglmg illegal goods. One of them was transporting powdered milk as part of a European Union fraud. There is, nonetheless, no reason to assume that the sector or even part of the sector is under the control of an organized crime group. The only thing we observed is that a number of haulage companies are being used for illegal activities, and there is every reason to believe that this usage is of a more parasitic than a symbiotic nature.

V. 3 . 2 Rotterdam Airport and Amsterdam Schiphol Airport Rotterdam Harbour is mainly the site of marijuana, hashish and cocaine smuggltng; most of the heroin from Turkey comes into the Netherlands by lorry via the Balkan route. The bulk of the drugs is for transhipment, and is transported on to other countries in Europe or other continents. The drugs mainly come fiom Colombia, Nigeria, Pakistan, Morocco and Lebanon. Most of the drugs are smuggled in large quantities in containers. There is no way of telling how many of the approximately three million containers annually transhipped contain drugs. In the past year, customs officials have found 188,000 kilogrammes of drugs, which indicates the quantities that are being shipped in by container. Thousands of kilogrammes of marijuana and hashish are being smuggled in at a time in containers, as are dozens or hundreds of kilogrammes of cocaine from


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Colombia. The smugglers' modes of operation are becoming increasingly inventive. Drugs are concealed in cover shipments of legal goods in the most creative ways. The containers are processed very rapidly, and it is extremely costly to stop the transhipment process to inspect a container. Although Customs has developed a risk analysis method to trace suspicious containers and ships, the chance of getting caught is still very small. Goods are also stolen at Rotterdam Harbour. It is, however, hard for us to know how oRen this happens, since there is so much reluctance to report it to the police. The companies involved are afraid they would lose their reputation or have to pay duties or other taxes on the goods. Entire containers are stolen by professional thieves. There are also incidents of environmental crime at Rotterdam Harbour, several of which have been of an extremely serious nature. Lastly, it should be noted that there is no information about criminal groups whose illegal activities are specifically focussed on the harbour, let alone any evidence of control by organized crime, as has been noted in some American and Japanese harbours. In addition to the regular activities conducted there, Amsterdam Schiphol Airport is the site of three kinds of smuggling: drugs, people, and endangered species of plants and animals. As regards drug smuggling, it is mainly cocaine and to a lesser extent heroin that are being smuggled into the country by aeroplane. The illegal shipment of cannabis products is on such a small scale that smugglers can be assumed to be bringing them in for their own private use. The drug shipments via Schiphol are smaller than those coming into Rotterdam by ship. This is clear from the fact that in 1994, a total of approximately 600 kilograms brought in by couriers was seized at Schiphol. So the same quantity that is transported in one container to Rotterdam has to be smuggled in by aeroplane in any number of smaller shipments. Almost all the cocaine comes from Colombia, though it sometimes comes in via Surinam or the Netherlands Antilles. The heroin is mainly from Asia. With some help along the way, it is either brought directly from Hong Kong, Singapore or Bangkok or from there via Nigeria, and is smuggled in at Schiphol. There are two ways to smuggle drugs in by aeroplane: via passengers or couriers, or via airport employees at strategic spots. The

I44


couriers are oRen Dutch youngsters or people from Surinam or the Netherlands Antilles, some of whom have Dutch passports. According to the data we studied, most of the criminal groups active at Schiphol are of Surinamese andlor Antillean descent, and only in one case was a criminal group of Ghanaian descent. In a number of cases, cocaine is smuggled in with the help of airport personnel. The vulnerable spots at the airport where people are stationed to help the criminal groups are the cargo handling and baggage handling departments, the cleaning division, the airline companies, the cargo terminals and the security services. Almost all the suspects who have been apprehended are in the lower echelons of the criminal groups, if they are part of them at all. The people in charge of smuggling cocaine stay in the background, far out of the field of vision of the marechaussee. Inside help has also been noted as regards smuggling people. Organized efforts to smuggle in people fiom Eastern Europe, Asia, South America and Afiica have been observed at Schiphol. It is usually with the consent of the people involved, but in a number of cases they were forced against their will to do illegal work or become prostitutes. Some of the people are smuggled into the Netherlands, and some of them are headed for other countries, such as the United States or Canada. Various Schiphol employees have been noted to play a role in this kind of smuggling. In conjunction with the General Inspection Service, customs officials inspect plants and animals being imported into the Netherlands. Sometimes solely based on the documents and sometimes by means of more thorough examinations based on suspicions or tips, the General Inspection Service checks wildlife life cargo coming in at Schiphol for the Dutch market. In 1994 the national nature conservation team made 1183 frontier checks and 1100 checks in the plant and animal wholesaling sector. At these 2283 checks, 197 violations of various types were discovered. The goods seized were mainly mounted animals, animal skins, tortoise shells, cactuses and birds. This means that approximately 10 per cent of all the checks reveal violations of the Convention on International Trade in Endangered Species, often regarding plants and animals that are no longer alive. This percentage is not particularly high compared to the media items about this kind of


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smuggling. The Central Criminal Information Service stated that the inspections at Schiphol are so intensive and so effective that international dealers have moved their smuggling routes to other airports in Europe, and then bring the goods into the Netherlands by car. At Rotterdam Harbour, customs officials have rarely discovered containers of smuggled animals or plants. Although there is no evidence that organized crime has come to occupy a fixed position at the airport, a considerable number of corruption cases have involved personnel at the security services and other departments there in connection with smuggling people and drugs. We can summarize by concluding that criminal groups mainly use the harbour and airport for logistic reasons. Most of the information about their recruiting inside help for illegal practices refers to Schiphol personnel.

V. 4 The Automobile Sector It is attractive for criminal groups who trade on a large scale in stolen cars to work with legitimate companies. The fact that every year between 5,000 and 7,000 cars disappear for good makes it evident that there has to be some manner of collaboration with garages in the Netherlands. In this particular sector, criminal groups have to have access to a very specific kind of expertise. Licence plates are needed and phoney registration papers, new locks have to be fitted, engine numbers have to be changed, and so does the colour of many of the cars. All this requires special skills, and many of these activities cannot be conducted out in the open in hll view of outsiders. That is why the criminal groups need a specialized work site and specialists to do the various jobs. It is hardly worthwhile for criminal groups or other professional criminals to buy a complete garage and hrnish it themselves with equipment and personnel. Besides which, there is a good chance the police would soon find out about a garage without any customers, and it is not easy to camouflage illegal activities with legitimate ones. If a criminal group buys a normal garage, in proportion to the potential profits, it has to spend too much time serving the regular customers and doing the

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bookkeeping. Officials from various regulatory agencies would also be coming by to check on it. In other words, it is not a lucrative project for criminal groups to take over a garage. The limited amount of money that can be laundered through a garage makes this option even less interesting. A group that operates rationally thus benefits much more from effective cooperation with existing legitimate garages and car dealers, which is enough to provide it with a respectable and legitimate facade. The advantage is that investigation agencies such as the police are not as quick to come in and check up, and the risks are reduced for the, criminal group itself and are shifted to the garage. What is more, being generously paid for their cooperation is certainly attractive enough to garage proprietors and owners. It enables them to add a nice sum to their legitimate earnings. Criminal groups usually choose to approach garages are not doing particularly well or are in a financially poor position for whatever reason (poor stock management, bookkeeping or purchasing policies, or maintenance services that are not profitable), or garages that they know are doing some kind of shady business with cars. Criminal groups are thus shifting into the grey area of the automobile sector. They know quite a bit about the illegal practices there, and use this knowledge to facilitate the collaboration. Although the Association of Automobile Dealers and Garage Owners (BOVAG) is unaware of any suspicious garages being at the beck and call of criminal groups or aiding and abetting them, as it were, the police and court reports on car theft do refer to various garages that work or have worked with criminal groups. There is no way of knowing for exactly how many garages in the Netherlands this holds true. The same applies to scrap yards, which are traditionally associated with illegal practices in the automobile sector. None of the criminal investigation agencies have any substantial information in this connection; they would hardly be likely to systematically collect this kind of data except if it were to be needed for a concrete case. On the grounds of the available data, we can nonetheless estimate the number of garages, car dealers and scrap yards that are involved with professional car theft groups. In the files we consulted, for each group at least one garage or scrap yard is mentioned, usually because the


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owner is involved with the group, and at most three. In any case, this means there are a minimum of thirty and a maximum of ninety garages or scrap yards in the Netherlands actively involved in car theft. These figures are, however, lower than the actual ones. The local studies in Enschede, Arnhem and Nijmegen also show a total of twelve car dealers known to have been involved in car theft and in ccnvertlng stolen cars. Adapted to the national situation, even the most cautious interpretation of the figures leads to the assumption that two to three hundred businesses in the automobile sector are somehow linked to car theft activities. These are just the businesses known to the police and other criminal investigation agencies. The actual number must be higher than two or three hundred. Automobiles are not only things that can be stolen and sold - see also IV. 5. They are also part of the criminal groups' logistics. Since automobiles have to be registered in someone's name, they can help the police identlfL a driver or find a suspect. Using phoney licence plates and so forth, criminals have developed any number of methods to prevent this fiom happening, but only in recent years have these methods begun to prove effective. Leasing cars makes it more difficult for them to be traced by the police, since they are registered to the leasing company. This makes criminals better able to shield their illegal activities from the police. Criminal groups also use front men and set up their own leasing companies. This makes it even easier for them to use leased cars in shielding their activities. Criminal groups can also use leased cars to transport illegal goods and individuals. If they are apprehended by the police, their losses are negligible. After all, since the cars are the property of a leasing company, the police cannot seize them. One investigation in the middle of the country showed that a person fiom the automobile sector had especially set up a leasing company from which all the large Dutch soft drug dealers from Amsterdam and the vicinity had been leasing cars for years. A cannabis dealer was operating in the east of the country who deliberately allowed his garage to be used by people similarly active in the hashish trade. However, in most cases where the police observe criminals using leased cars, the leasing companies are not aware of it.

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V. 5 The Construction Industry In the Netherlands, the construction industry is a sector of the economy where a great deal of money changes hands. Racketeering can thus provide criminal groups with a fixed source of income. In any case, the construction industry is extremely sensitive to illegal practices of this kind. It is virtually impossible to standardize complete projects in the construction industry. Construction work has to be done on the spot. What is more, the construction process is extremely labour intensive, so that the costs per production unit are extremely high. Unlike other industries, which can shift their production to countries where labour is cheaper, the construction industry has to have its personnel at the construction site. Its vulnerability is reinforced by stiff competition in the sector. Construction companies always have to work under pressure to get the work done on time. The construction industry is also extremely fragmented and flexible. The numerous construction companies collectively employ a total of more than 330,000 workers. Most of the companies barely employ any personnel on a permanent basis, and many of them are relatively new. Their short duration also has to do with how quickly a new company can be set up. It is quite simple in the Netherlands to join the construction industry with a new company. It is easy to buy or hire personnel, know-how and capital goods. Linked in part to this, the rate of bankruptcy is higher in the construction industry than in other sectors of the economy. According to a recent analysis, 36 per cent of the new companies go bankrupt within three years. The most important reason for this is lack of private capital. It is not clear how many of them are criminal bankruptcies. It is important to bear in mind how dependent construction companies are on the orders they get. To get orders, they oRen have to submit a tender for a contract in a public procedure, which requires an exact calculation ofthe costs. Any discontinuity in the orders it gets can endanger a company's existence, and it is particularly vulnerable in the period between two orders. There is a high dark number as regards employer fraud in the construction industry. This not only makes it difficult to get a complete picture of this kind of criminality, it also keeps the perpetrators outside


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the field of vision of researchers. In the files made available to us by the Construction Industry Social Fund, it is mainly company owners and bookkeepers who are the suspects. The di£Ecultyfor social scientists and criminal investigators alike is, however, that on the basis of this scanty data, it is impossible to see whether criminal groups are behind these cases of fraud and whether the company owners and bookkeepers are merely used as puppets. Virtually all the cases of employer fraud are related, however, to labour costs. Every year, millions of guilders are concealed from national insurance hnds and Tax Department officials by way of fraud with guarantee accounts, the illegal employment of personnel and so forth. Even though labour brokers have reappeared on the scene in recent years, these forms of corporate crime are still more indicative of efforts to stay in business in a market where competition is stlffthan of the illegal activities of criminal groups. Labour brokers are active once again in the east of the country, in Brabant and in Limburg, but they all focus on the German and sometimes the Belgian market. Very few if any labour brokers play a role in the Dutch construction industry. The Law on Ultimate Vicarious Liability for Payment of Taxes and National Insurance Contributions appears to have been an effective instrument against labour brokers. This law made it less attractive in any case for the main labour brokers to accept extremely tempting offers from shady middlemen or smaller labour brokers. This has also prevented undesirable criminal groups from entering the industry. We also used other methods to see whether criminal groups have infiltrated the construction industry. We examined whether contractors have been subject to extortion, arson, bomb scares or bombs that actually went 0% the systematic thee of construction material and tools, physical violence, kidnappings and liquidations. These are all the kind of activities taking place in countries where organized crime has control over the construction industry, but in the Netherlands, there is no evidence of any of this. This conclusion has been confirmed by our analysis of the files of the twenty-five regional police forces, the Construction Industry Social Fund and other police data. Our analysis shows that no foreign or immigrant criminal groups are active either, in the construction industry in the Netherlands. Neither the Italian mafia nor the Chinese triads or Japanese yakuza groups, all of which are

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extremely active in the construction industry in their own countries, have been observed in the Netherlands. We have also failed to observe any evidence of Moroccan, Turkish, Colombian, Surinamese, Antillean, Nigerian, Ghanaian, former Yugoslav or Russian networks or groups in the Dutch construction industry. The studies conducted in Amsterdam and in Enschede, Nijmegen and Arnhem have produced the same results. The problem can also be examined from another angle, that is, of the trade unions. As organizations that promote the workers' interests, in the Netherlands the trade unions have come to occupy an important and legitimate position in society. This position is mainly the result of long-term cooperation with the Dutch authorities and employers, but it has been maintained without them ever losing sight of their own responsibility and their own interests. The trade unions, which are also active in the construction industry, do not have a history of violence. The construction workers' sections of the Federation of Dutch Trade Unions and the Christian National Trade Union are widely organized. More than half the construction workers in the Netherlands are members of these unions. But unlike their colleagues in the United States, Dutch construction workers are not dependent on the trade unions to get a job. Nor are the trade unions in the Netherlands responsible for training skilled workers or supplying skilled workers to employers. American trade unions are organized in a totally different way than those in the Netherlands, which are not organized according to the type of work, and are consequently not fragmented. Unlike the trade unions in the United States, the Dutch ones are subject to strong internal democratic control. Otherwise, they themselves do not have any financial interests in the construction industry. It is nonetheless important to note here that we have not seen any indications that trade union executives or officials on any level are being threatened in the Netherlands by criminal groups. In the past five years, the Dutch trade unions have not witnessed any kidnappings, liquidations, bombings or extortion attempts. Trade union executive are not by definition immune to corruption, but everyone we interviewed in this connection said it is extremely improbable that there are any corrupt trade union executives in the Netherlands.


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On the grounds of the considerations and empirical evidence referred to above, we feel we can conclude that organized crime is not playing a role in the construction industry in the Netherlands. Despite this general conclusion, it is still clear how vulnerable the construction industry can be to criminal groups. The construction industry exhibits numerous features that make it vulnerable to infiltration by organized crime. To a large extent, these features also present openings for corporate crime which, as is noted, occurs more frequently than the official figures indicate.

V. 6 The Waste Disposal Industry Within a relatively short period of time, the waste disposal industry in the Netherlands has developed fiom a marginal activity into a strong sector of the economy. Its turnover is sizeable. There is much to be earned from the left-overs of an affluent society. Waste disposal is a non-elastic good, so that in a certain sense, waste disposal companies can set their own price. The Dutch environmental policy has increased the requirements that apply to waste disposal, but it promotes extensive self-regulation and privatization without an adequate control system having been provided. For years, certain conditions in the waste disposal industry have been able to develop relatively unrestrictedly, so that a structure has emerged that can serve as breeding grounds for serious environmental offences. One such condition is that the numerous official agencies can be played against each other by organizations in the sector and by clever waste disposal companies. In addition, the waste disposal market is in a state of flux. The smaller companies, traditionally family businesses, are now confronted with growing competition from companies with ample capital vying for monopoly positions in the whole chain. The more parts of the chain a company owns, the more profits it can make and the harder it is for the authorities to monitor. Waste disposal is subject to steadily higher environmental requirements, calling for larger investments to build adequate disposal installations. As a result, in the course of time, the larger companies are certain to oust the smaller ones from the market.

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There are sizeable discrepancies in this sector between the quantity of waste and the capacity of the companies. It is a relatively new sector of the economy, and a supply and demand balance has yet to emerge. These discrepancies have led to fEction in the market, which encourages illegal waste disposal, and to larger profits for companies that take advantage of this fiiction. Thus, the waste disposal capacity still does not coincide with the demand for it, so that it is not always feasible to use the most appropriate disposal method. As a result, even larger quantities of waste have to be exported abroad. The opposite is also the case. The capacity for cleaning polluted soil is larger than the supply of polluted soil in the Netherlands. This has led to the import of polluted soil from abroad. As a result of the sizeable price differences between different types of waste, different disposal methods, and diierent countries, illegal waste disposal is extremely lucrative. There are, aRer all, two reasons why environmental offences are committed, to earn money and to "solve" commercial problems. These commercial problems are due to market pressure on the smaller companies, erroneous cost calculations, and stricter requirements stipulated by the authorities. There is still no reliable and valid way to measure the actual extent of serious environmental crime in the Netherlands. Moreover, many of the parties that commit environmental offences are prosecuted for fiaud, forgery and tax evasion, but rarely for environmental offences. The situation in this sector is certainly more serious than can be assumed on the grounds of figures from the Central Statistical OfEice. In this sector toxic waste is still discharged into surface water or illegally mixed with other material before it is dumped, it is still incinerated illegally, and is still misleadingly labelled or illegally shipped abroad. It is highly improbable that criminal groups are operating in the waste disposal industry. Based on interviews with people working in the sector, trade unions, and social scientists, information from eighteen regional police force files, the Central Criminal Information Service and the Environmental Assistance Team, and on the grounds of an investigation into the criminal records of entrepreneurs in the sector, we conclude that organized crime is not active in this sector. Descriptions of the perpetrators show that the companies that commit se~ious


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environmental offences are usually family businesses that expanded in the 1960s and 1970s. The owners are rarely highly-skilled in the field of technology, and run their companies with an iron fist. They do not accept criticism from anyone, and reward loyalty generously. They are aided and abetted by their CO-directors,the company bookkeepers and other personnel. Special attention should be devoted to the entrepreneurs that are able to move waste with virtually no monitoring or supervision whatsoever. They operate more and more frequently on an international scale, which makes it difficult to determine whether and where the waste is ultimately discharged, incinerated, turned into compost or perhaps illegally dumped. Fraudulent waste disposal companies have very little respect for the authorities. Legal sanctions do not seem to be very effective. Fines are not paid on time, if at all. If the authorities increase the sanctions, the companies switch to a different tactic and threaten to leave the waste where it is and not touch it, or move the company to another region or another country. Fraudulent waste disposal companies deliberately look for situations where the authorities are lenient. First, a company submits a request for a minor licence, aRer which it goes on to accept all kinds of waste. Then the licensing agency is pressured into issuing a major licence. By temporarily tolerating undesirable practices, the authorities become accessories, as it were, which makes it all the more difficult for the courts to prosecute the parties involved. Waste disposal companies that commit serious environmental offences make every effort to prevent detection by the police or other agencies. They keep separate books, talk in codes, and train their personnel to say and do certain things in the event of an inspection. They construct special partnerships to shield themselves, hire front men, take all the necessary legal steps against every official decision, no matter how small, and take advantage of all the options for appeals. On the grounds of the data available to us, it is hard to say whether this has been the result of a deliberate strategy, but it certainly has been effective, since it keeps the authorities at various levels very busy indeed. Waste disposal companies are counselled by highly knowledgeable lawyers, expert technicians, media specialists and scientists, to say nothing of government officials who serve as advisors or members of their boards of directors. This has brought about a certain

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entanglement of interests, which can easily degenerate into corruption. Proceeds fiom illegal activities in the waste disposal industry are usually invested in the company. They are also used to finance a luxurious life style, to buy the loyalty of the companies' own personnel, and to supplement the salaries of the owners and managers. In some cases, the profits go towards sponsoring special events. None of the companies that commit the environmental offences referred to above meet completely with the elements of our definition of organized crime. In all the eighteen cases we studied, there was some extent of corporate crime, which can of course cause great damage to the physical environment and public health. They were essentially legitimate companies trying to earn some extra income or save on expenses by using illegal methods. The way they sometimes achieved this demonstrates how close corporate crime can come to organized crime. But one of the features of organized crime is that use is made of internal and external violence if necessary, and of other strategies to shield the group and its activities from official intervention. None of the "crooked waste disposal companies we studied showed any evidence of the use of internal violence. They sometimes exerted a great deal of pressure on their personnel by promising various rewards or threatening to fire them or transfer them to other parts of the company where labour conditions were poorer. Violence and threats were only observed in a few cases, and the purpose was mainly to make it difficult or even impossible for official checks to take place. In addition, the companies frequently thwarted official intervention by placing important people in vital public administration positions in their companies. So there is indeed evidence that in the waste disposal industry, certain forms of corporate crime can border on organized crime. The analyses show that the situations are never black and white, there are sliding scales with certain offences positioned at different points. It was observed in three important cases that, within the companies, illegal activities gradually came to be more important than legitimate ones. A company can thus slip steadily hrther into the world of organized crime. On the grounds of the facts and developments described above, we conclude that there is definitely cause for deep concern as regards the waste disposal industry.

Organized Crime in Legitimate Sectors ofthe Economy

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V. 7 The Garment Industry The garment industry is a "historically suspicious" potential breeding ground for organized crime. In New York, organized crime gained sizeable control over the garment industry by taking over the garment workers' union after some very serious labour conflicts (Block and Chambliss l98 1). In the Netherlands, there has never been any such development. After the decline of the Dutch garment industry in the 1960s and 1970s due to competition from the low-wage countries of Asia, any number of small garment factories were opened in the mid1980s. These small factories emerged as a result of international trends in the garment industry, where flexible and rapid production was called for. The small factories were largely set up by Turkish immigrant entrepreneursin Amsterdam, the Achterhoek region, Brabant, Limburg and Twente. The number of small garment factories mushroomed in the Netherlands from 28 in 1981 to approximately 1,000 in 1993 (Van Vondelen 1993). In the beginning, almost all of them were legitimate, but when prices fell, competition tightened, and the supply of illegal workers in the Netherlands expanded, most of them switched to a partially and then a completely illegal way of doing business. They paid the wages off the books, hired illegal aliens, and used forged invoices, all in an effort to stay in business and make some profit. After some time, the outside world woke up to the fact that the factories were little more than sweat shops, with illegal aliens working under horrific labour conditions, and there were rumours that Turkish organized crime groups were involved. As noted above, we only examined the garment industry at the local level. The Amsterdam authorities estimate that there are about 600 small garment factories employing from 6,000 to 15,000 workers. A team from various criminal investigation agencies (the "garment team") concluded that although there is evidence of various forms of corporate crime and the illegal possession of firearms, there is no reason to assume any involvement of Turkish organized crime groups. Rumours about the Grey Wolves, the PKK and Dev Sol being somehow involved have not been confirmed.

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In Enschede, once the capital of the Dutch garment industry and hard hit by its demise, it is mainly Turks who are stepping in to fill the gap, since they had experience in Turkey with this mode of production. In 1990, 25 illegal garment factories were traced. After strict intervention by local authorities, the factories were moved from Enschede to Almelo, where they are similarly run by Turkish entrepreneurs. An inventory of all the small garment factories in Enschede that the Chamber of Commerce drew up at our request provides the following information. In 1995, there were 72 small garment factories registered with the Chamber of Commerce, most of which were legitimate businesses that had been in existence for an average of 15 years; the oldest one dated back to 1919. They were mainly run by Dutch residents of Enschede who used to work in the garment industry. In early 1995, there were ap&-oximately10 Turkish garment factories in the city. In Nijmegen, there are 29 small garment factories, all of which are registered with the Chamber of Commerce and the Tax Department. A number of them are owned by Chinese or Vietnamese entrepreneurs, and four of them have Turkish owners. The others are owned by Dutch women. There is no way of knowing to what extent they work with fiont men or of estimating the number of illegal garment factories. In the early 1990s, one garment company that was having financial problems was taken over by several swindlers who are referred to in the local study. Within a month, the company's name was changed and every last cent was gone. No further information is available about garment factories in Nijmegen. Lastly, in Arnhem no data is available about the number of small garment factories. Criminal investigation agencies have discovered three illegal Turkish garment factories in mid- 1993, with 10 to 15 illegal aliens working in each of them. The police have no further information about the role of organized crime in the garment industry. Although the joint criminal investigation agencies do still sometimes chance upon a small illegal workshop that can barely be called a factory, they feel the phenomenon has virtually ceased to exist. According to spokesmen from these agencies, there is no evidence of any manner of infiltration or of any relations with the world of organized crime. The


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police sources we consulted do not contain any references to violence, extortion, or anything of the sort in the garment industry. Nor do the police or other criminal investigation agencies have any information that indicates the infiltration of criminal groups in this sector.

V. 8 Conclusion In the debate on organized crime, recurrent references have been made in recent years to the danger of its becoming intertwined with legitimate sectors of the economy. Fears have often been voiced that slowly but surely, the underworld would infiltrate "respectable" society. The Netherlands has even been said to already be the site of "Italian" or "American" conditions. The integrity of Dutch society is thought to be at stake. So it is only logical that the study should examine whether there is any truth to these claims. Certain sectors of the economy are attractive to organized crime because of the systematic and structural profits that can be made there using violence, extortion and protection. Risks are spread in areas where there is less dependence on the uncertain market of illegal goods and services, because they can serve as covers for illegal activities and as a way to launder criminal gains, and because of the economic and political power that having control over a sector of the economy implies. Our general conclusion on the basis of the sub-studies presented in this report is that in the Netherlands, no intertwining to speak of has taken place between organized crime and the legitimate sectors of the economy. Although in our opinion, criminal groups do not have control over these sectors of the economy, there is still evidence of multifarious forms of corporate crime, causing a great deal of financial damage to the administration, the world of trade and industry, and the physical environment. In addition, there is the professional or group criminality aecting certain sectors of the economy. In the Netherlands, there is no criminal control over the construction industry or the harbours comparable to the situation in Italy, the United States or Japan. Three comments should however be made here. First, in sectors that, by virtue of their nature, verge on the drug trade or are in some

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way relevant to its logistics, there are some indications of criminal infiltration. Not only does the transport sector play a role in the transportation of drugs by sea, air and road, so do the country's leading harbour and airport. Criminal groups hire, buy or set up their own haulage companies to smuggle drugs in, and they use the airport and harbour for the same purpose. There is, however, no evidence that criminal groups play a permanent role of any sigruficance in the transport sector, let alone that they have it under their control. Nor is there any evidence in the material we studied of efforts made by those involved in organized crime to take over this sector. It is true that, especially at Amsterdam Schiphol Airport, criminal groups get ample help from insiders, but solely in connection with smuggling drugs. Secondly, the hotel, restaurant, nightclub and pub sector is one of the few fields where an organized crime pattern has been observed that goes beyond facilitating illegal activities. Criminal groups actively engaged in providing "protection" have been observed in Utrecht, the Vecht region, and a number of smaller provincial towns. In Arnhem, Enschede and Nijmegen, the local pubs and clubs collaborated with the police to successfidy suppress efforts to force businesses into paying for outside protection. In some cities, criminal groups control or own many of the hotels, restaurants, nightclubs and pubs in a way that can be termed racketeering. By buying up these establishments, criminal groups are not only creating a certain extent of private territory for themselves, and thus a spot where they are more or less out of the view of official regulatory agencies, it also gives them an infrastructure for other illegal activities, such as selling drugs, laundering money, and installing illegal slot machines. Thirdly, our general conclusions only pertain to the sectors we were able to examine in the short period of time we had for this study. Given this limitation, it has been impossible to study all the sectors of the economy and the links they might have with organized crime. Our selection of certain sectors is based on experiences in this field abroad, and observations made in the Netherlands by the media, researchers, the police and the judiciary. They are sectors that verge on the trade in illegal goods and services, the traditional organized crime fields (transport, harbours, the automobile sector, the hotel, restaurant,


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nightclub and pub sector, and slot machines), and industries that are controlled by organized crime in other countries, such as the construction and the waste disposal industry. We have also devoted attention to the insurance sector, the wildlife sector, and the smuggling of nuclear material. Of course, it is possible that due to this selection, we might have overlooked some dubious developments in other sectors. But in view of the way we selected these sectors, this would not seem very probable. It would nonetheless be a good idea to test this assumption by way of research into the tobacco industry, for example, or the meat and dairy sector. Lastly, we would like to return to the question in the title of this chapter: Is organized crime in the legitimate sectors of the economy fact or fiction? We have observed that it is a fact in certain sectors, but not in the sense that they are partially or wholly controlled by-criminal groups on either a national or a local level. It is only in the hotel, restaurant, nightclub and pub sector that the situation in some cities tends towards racketeering.


W. BRIDGES BETWEEN ORGANIZED CRIME AND THE LEGITIMATE WORLD

VI. 1 Introduction As noted in the previous chapter, organized crime does not operate in a social vacuum. Criminal groups maintain a wide range of parasitic and symbiotic relations with legitimate sectors of the economy. In this sense, the legitimate world is a vital prerequisite for organized crime. In this chapter, attention is similarly devoted to the links between organized crime and conventional society. The emphasis here is on how the legitimate world aids and abets organized crime, not only shielding certain crimes fi-om the police, the judiciary and tax oficials, but. also the resulting criminal proceeds. This chapter addresses two aspects of this collaboration. W. 2 focuses on the role certain professionals play in shielding crimes and criminal proceeds fi-om the authorities. Attention is devoted to lawyers, notaries public and accountants, and more specifically to how they help channel criminal proceeds into the legitimate economy. W. 3 describes how legitimate sectors such as the stock market or the banking system deliberately or unwittingly help channel criminal proceeds into the legitimate economy. The chapter closes with a short conclusion in VI. 4.

W. 2 Roles of Specific Professions Several scandals have recently involved professionals said to be linked to organized crime. This led to growing concern in the professional groups themselves about the threat posed by organized crime to the integrity of their professions. In this framework, lawyers, notaries public and accountants are of particular importance. Regardless of the differences between the work they do, all three are professional groups that, based on the fbnction of their profession in society, are expected to

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bear a certain social responsibility. This fbnction in society is accompanied by special privileges, such as a monopoly on granting certain services, and the privilege of non-disclosure for the lawyer and the notary public. The social status of these professions, particularly the traditional ones of the lawyer and the notary public, manifests itself in an aura of respectabiity and reliability. The fbndamental importance of this good faith to the fbnctioning of society should not be underestimated. The combination of financial and legal knowledge and the aura of reliability makes lawyers, notaries public and accountants attractive potential partners for organized crime. AAer all, they are the ones who can provide the expertise needed to conduct illegal financial transactions and they can then authorize these transactions. They can thus serve as an important link between criminal proceeds and the legitimate sectors of the economy into which the money can be channelled. Members of these professions also provide usefbl possibilities for shielding criminal activities. Their participation in certain transactions can create an impression of legitimacy. What is more, lawyer-client confidentiality can be an important instrument in shielding criminal activities. With all the benefits of their professions - the privilege of nondisclosure, status and so forth, to an even greater extent than the accountant, lawyers and notaries public can presumably provide effective possibilities for shielding criminal offences and criminal proceeds from the authorities. This chapter addresses the culpable involvement of members of these professions in the activities of criminal organizations. Professionals can play a culpable role in a group's punishable acts in two ways. First, a professional can be involved in punishable acts in such a way that he himself can be criminally prosecuted. He can aid and abet the punishable acts of a criminal group, or facilitate them, for example by fencing stolen goods or by obstructing the investigation of criminal activities or of the assets accruing fiom them (Cf. Section 189, Criminal Code). This is culpable involvement in the strictest sense. Secondly, there is culpable involvement in a broader sense if he fails to exercise due care to prevent the misuse of his professional capacity for criminal purposes. This does not necessarily imply conscious and deliberate collaboration resulting in criminal offences, but the reproach

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can be voiced that he could or should have known that his services were being wrongfully used for criminal purposes. It should be clear that the standard of due care goes hrther than what is punishable by criminal law. According to our definition, culpable involvement covers more situations than culpability according to the Criminal Code. The standard of due care is in keeping with the regulations formulated in several recent codes of conduct. The guidelines to prevent members of the legal profession from becoming involved in criminal acts state that, as long as there is no just cause to believe otherwise, in principle a lawyer can rely on the accuracy of information given to him by his client. If there is, however, just cause, the lawyer should examine the identity of the client and the purpose of what he is being asked to do. The guidelines give very specific rules as regards the due care required of a lawyer under conditions of this kind. If he does not comply with the rules, he can be reproached for enabling his services to be misused to commit or shield criminal offences. In a recent ruling of the Amsterdam Court of Appeal, this standard of due care is described in greater detail. According to the Court, a lawyer can be reproached for failing to exercise due care if he is insufficiently aware that information presented by his client is not in keeping with the truth. In the case in question, the concrete circumstances should have led the lawyer to institute a hrther investigation into the source of the money and the information presented by his client. This failure to act with due care could not, according to the Court, be reason to assume recklessness. The lawyer was, however, acquitted (ruling on 20 June, 1995, Amsterdam Court of Appeal).

VI. 2. 1 Lawyers The notion of a lawyer as someone who defends a client's case in court is far too limited. The lawyer's field of work is huge and the services he provides are multifarious. In addition to his courtroom duties, he performs services aimed towards keeping his client from having to go to court in the first place (Klijn et al. 1992, p. 3 1). The relation between a lawyer and a client is a confidential one, protected by a legally-stipulated

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duty to maintain confidentiality and the privilege of non-disclosure to any third parties (including the judge). In addition to representing clients in and out of court and giving legal advice, lawyers engage in activities that go beyond their "proper" duties. A lawyer can manage a company or trust, and can open a bank account or conduct financial transactions on behalf of a client. His confidential position and the privilege of non-disclosure make the lawyer a useful person to ask to perform these duties. The question is, however, whether these activities are among the specific duties of the legal profession, no matter how broad and flexible its definition might be. In the period since World War Two, the number of lawyers in the Netherlands has quadrupled. In 1950 there were approximately 2,000 lawyers, but this figure has since risen to 8,000. It is striking how sharp the rise has been after two decades of declining figures from 1950 to 1970. There has also been a sizeable change in the size of legal offices. In 1960, there was only one lawyer in almost 70 per cent of the offices, which was where 40 per cent of all the country's lawyers were employed. Nowadays, solo offices constitute 46 per cent of the total number, and only 15 per cent of all the country's lawyers work there (Klijn et al. 1992, pp. 25 - 26). To an increasing extent, lawyers, notaries public and tax advisers work together in one and the same office.

Between Autonomy and Partiality

The proper performance of his duties requires a lawyer to maintain his autonomy vis-8-vis the authorities and his client alike. The rules of conduct stipulate that he should avoid in any way endangering his own freedom and autonomy in practising his profession. Entanglements of interests due to financial or personal relationships can endanger the desired autonomy and should be avoided, or so it says in the commentary on this rule in the 1992 Code of Conductfor Lawyers. In addition to autonomy, a second aspect that is equally important is partiality. There is a great deal of emphasis in the legal profession on the value of partiality. The following quotation gives a concrete example of how partiality can determine the attitude of the lawyer. "The way I see


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it, as a lawyer you accept the facts just as a client relates them to you. (. . .) I am the mouthpiece of my client and I present the facts to the judge just as the client has related them to me. And the judge never can or will expect me to have checked these facts" (VN, 8 October, 1994, p. 33). The high priority granted to partiality is also evident from a study conducted by legal sociologist De Groot-Van Leeuwen. When she asked her respondents, who were lawyers, how they coped with discrepancies between the general interest of society and the specific interest of their client, they virtually always chose the side of their client (1995, p. 108). As a result of this choice on their part, lawyers run the risk of disturbing the balance between autonomy and partiality and getting caught in a situation where they are merely the amoral executors of their clients' wishes. This means that in defending their clients, lawyers ignore their own sense of justice and responsibility to the constitutional state. One professional norm designed to safeguard the lawyers' autonomy stipulates that they should refuse to take cases if they conflict with their sense of justice. Concretely, this means that when taking a case, a lawyer should first critically examine who the prospective client is, what the client wants, and why he has been chosen to perform these particular services. Nowadays, this professional norm of autonomy in legal practice would seem to play less of a role. The legal profession is becoming increasingly commercialized. In the fields of advertising and publicity, for example, more and more has come to be admissible. Moreover, there has been a sharp rise in the number of lawyers. The profession is increasingly coming to resemble an ordinary, commercial occupation. This has been strikingly illustrated by the changes in recent decades in the rules of conduct. The private conduct of lawyers was initially part of the core of the rules, but ever since 1992 this has no longer been the case. Nowadays, only the professional conduct of the lawyer falls under the code and is subject to the disciplinary rules, and the emphasis has come to be focused on protecting good relations between the lawyer and his client (De Groot-Van Leeuwen 1995, p. 113). To recapitulate, there is a delicate balance between autonomy and partiality, especially if a lawyer is approached by such shady clients as criminal groups. Is a lawyer able to preserve his autonomy in the face of

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a shady client's clever appeals to his partiality?

Confidentiality and The Privilege of Non-Disclosure

In the 1992 Code of Conduct for Lawyers, the obligation of lawyers to adhere to the rules of confidentiality is dealt with at length. The lawyer is not to divulge any information about the particulars of his cases or clients or the nature of their interests. In the law as well, several stipulations have been included to insure the confidentiality in the relation between the lawyer and the client. Like a physician, priest or notary public, a lawyer has the privilege of non-disclosure. This means he can continue to protect his confidential relation with his client, even vis-A-vis an examining judge or the court. The privilege of non-disclosure is confined to the information, funds and written documents entrusted to him in his capacity as a lawyer. This highlights the importance of drawing clear distinctions between duties specifically related to the legal profession and activities such as trust holding, that are not typically the duties of a lawyer. Up to now, case law has done little to restrict the range of the privilege of non-disclosure in this regard. The prevailing principle is that only in extremely exceptional cases should the privilege of non-disclosure be superseded by the need to arrive at the truth, and the circumstances under which this is applicable have yet to be specified in case law. A person with the privilege of non-disclosure can only have his premises searched and his property seized without his permission if and when the items involved do not fall under this privilege. This pertains to letters or documents that were the object of a penal offence or served in the perpetration of such an offence or documents a lawyer does not have in his possession in his capacity as a lawyer. In principle, the decision as to whether letters or documents of this type are involved is left to the person with the privilege of non-disclosure, so there is certainly the risk of a shady lawyer abusing the privilege. In principle, the items to which confidentiality and the privilege of non-disclosure apply also include the lawyer's office accounts and third party accounts. At the moment, the


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extent to which the funds of third parties that have been entrusted to a lawyer's custody are also subject to the rules of confidentiality is under discussion. It was recently pronounced in interim injunction proceedings that barring certain exceptions, a lawyer's privilege of non-disclosure does not extend to funds entrusted to him by third parties (Rotterdam Court, 23 March, 1995).

Forms of Culpable Involvement

As is explained in Chapter III, in the study we consulted various sources to find examples of culpable involvement of lawyers. A total of 29 cases have been examined, all of which are listed in the sub-report about the profession. The events to which they pertain have occurred in the period since 1990. In 1993, J. Wilzing, the director of the Central Criminal Information Service at the time, inventoried the involvement of lawyers in criminal groups. His inventory, drawn up on the basis of Financial Police Unit reports, contains the names of eleven lawyers. Four of the cases referred to by Wilzing have been included in our inventory. We feel the other cases were too unclear or incomplete to be used. Several of the cases pertain to lawyers who take the notion of "partiality" much too far. One example is a lawyer who defended the interests of a few hashish dealers. A hashish shipment was intercepted abroad, and a number of suspects were apprehended. The Dutch lawyer went to the country where they were being held and asked the French lawyer assigned to the case to give them a signed note saying: "Keep cool, enough has gone wrong already, try and make things right. Otherwise we know where to find you." Lawyers like this have abandoned their professional autonomy to serve as a mailbox or errand boy. In quite a different category, there are the activities on their part that pertain to safely investing criminal proceeds, in other words, in a way that shields them from tax officials and regulatory agencies. One example was the Dutch lawyer who had been promoting the interests of a particular drug dealer for years. The client was arrested and was afraid the authorities would seize his bank accounts in Luxembourg. He authorized his lawyer to empty the account.

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The lawyer hired one of his colleagues in Luxembourg, and asked him how to sever the money trail, that is, the relation between the dealer and the money. The lawyer himself was arrested trying to withdraw the money from the bank. In these cases, the lawyers design ways to impede the fiscal and criminal authorities and conceal the criminal proceeds of their clients. The lawyers frequently perform concrete acts themselves. Incidents of this kind illustrate how the detection of criminal proceeds can be obstructed with the expert help of a civil lawyer and how this money can be channelled into the regular economy. The following examples, which are given in the sub-report, pertain to the abuse of the confidential position of the lawyer. As noted above, the privilege of non-disclosure is an important precondition for confidentiality between a lawyer and his client. Confidentiality can, however, also serve as an excellent cover for illegal activities. The culpable involvement of the lawyer can consist of his using his confidential position or allowing it to be used to shield criminal activities. This can pertain to written documents or funds managed by the lawyer on behalf of his client. In a number of cases, a lawyer or notary public is inserted into a chain of financial transactions. In principle, money deposited into an office account is effectively shielded. In any case, the Law on Reporting Unusual Transactions does not apply to it. There is another aspect to this shielding, that is, misleading the banks, the police and the client's business partners by using the lawyer in his capacity as a respectable professional. The role of the lawyer in a certain kind of construction gives the other parties confidence in the client's good intentions. The examples in the sub-report pertain to the role of the lawyer in executing financial transactions, that is, the lawyer introduces criminal clients at a bank, opens bank accounts himself for a criminal group, and writes and cashes cheques. The examples given up to now pertain to lawyers who allow clients to use their services and professional capacity for criminal purposes. In several cases, the lawyers are not only functionally connected to a criminal group, but commercially and privately as well. They are on a group's payroll, as it were, and regularly and deliberately perform all kinds of services for it. One example is the lawyer who


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managed money for criminals on accounts he was authorized to use, and carried out banking activities for criminals through his third-party account. He devised ways to launder criminal proceeds and accepted large amounts in cash.

VI. 2.2 Notaries Public The notary public is a public official who plays a specific official role in cases where the law requires him to do so. Unlike the incomes of other officials, his is based upon fees he charges for services he performs. In this sense, he is an entrepreneur, but one who operates in a monopoly position in a market without many risks. The most important job of the notary public is to draw up and sign official documents. He has the authority, the duty and the sole right to draw up and execute documents for any number of legal transactions that cannot take place without his so doing. In this connection, the duties of the notary public can include legally transferring real estate deeds, founding legal companies, drawing up or amending wills, dealing with cases of bankruptcy and supervising auctions. In addition, the notary public engages in various activities that do not require his signature to make them "legal". The notary public can draw up documents on certain facts or events, such as an amount of money being donated as a gift, which can then be presented to the Tax Department. A client can also consult a notary public to ask his expert advice. In these non-official activities, the notary public acts in the capacity of an ordinary legal adviser. In mid-1995, there were a total of 1,166 notaries public and approximately 1,400 junior civil law notaries. (Junior civil law notaries work for and on behalf of the notaries public.) A total of 509 of the notaries public had a one-man office, the others were associated with other notaries public, lawyers or tax advisers.

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Between the Obligation to Act and the Duty to Assess From the perspective of a criminal group, the notary public is an indispensable link in the chain of fraudulent activities. Whether it pertains to founding companies for fraudulent purposes or setting up laundering operations involving real estate or legal persons, the role of the notary public is legally stipulated. In this sense, there are a vast number of potential links between notaries public and organized crime. As a public official, however, and a party whose role is legally stipulated, a notary public has much less freedom than a lawyer or accountant to refuse to accept a client or perform a service. In principle, according to the prevailing interpretation of the law, he is under an obligation to perform whatever services are asked of him. An exception can only be made if and when the notary public has good reason to refuse his services. The generally accepted norm is that notaries public are under an obligation to refuse their services if they are requested for acts or transactions that are contrary to the law, or to public order, public decency or accepted rules of conduct. Compared with the lawyer, the notary public has a significant handicap when it comes to refusing his services. His decision cannot be based on vague suspicions and assumptions, there has to be a firm belief on his part that there is good reason to refuse. The problem is that the notary public has so few options when it comes to assessing whether there are grounds for a firm belief of this kind. Who should he consult and how can he verify information? To what extent does the obligation to maintain confidentiality prevent a notary public from turning to the Central Criminal Information Service or the Department of Legal Persons at the Ministry of Justice for information? The concepts of autonomy and impartiality are inextricably linked to the professional capacity of the notary public. Ensuing from the impartial promotion of interests, there is the fact that a notary public cannot perform services passively. According to the generally accepted view, a notary public cannot confine himself to strictly adhering to the formal regulations and otherwise maintain a completely passive stance. The notary public has a duty to assess the situation. In other words, he should adopt an active stance and see to it that none of the interests of


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any of the parties involved are harmed by his own lack of legal expertise or by some other party taking undue advantage. This means the notary public should inform the parties about the legal and financial repercussions the transactions could have. In a number of senses, the principles of impartiality and autonomy limit the notary public's possibilities for becoming an entrepreneur in his own right. The notary public is not allowed, for example, to act as intermediary in the financing or transfer of real estate. His possibilities are also restricted for acting outside the traditional practice of his profession. Although in recent years the Royal Fraternity of Notaries Public has propagated expanding the capacities of the notary public beyond executing documents, the commercial consultancy options are limited. The notary public is obliged to provide his services and is passive in this sense, but he also has a duty to assess the situation, and should do so if and when there is anything dubious about the services he is asked to perform. There is the risk, however, that in view of the confidentiality obligation and the obligation to perform, the notary public might want to stay on the safe side and adopt a passive stance and perform whatever services are asked of him, even in cases about which he has serious doubts.

Confidentiality and the Privilege of Non-Disclosure

When he assumes his duties, a notary public swears to uphold utmost secrecy as regards the contents of documents. Based on his privilege of non-disclosure, this confidentiality can also be preserved in the face of the court. The privilege of non-disclosure extends to include all the information presented at the office of the notary public with respect to his clients, and not solely the information in documents. The possibilities for gathering evidence by searching the office of a notary public and seizing evidence there are extremely restricted. In principle, the premises of a notary public cannot be searched. As a witness or at a search, the notary public himself is the one to judge whether certain information was presented to him in his capacity as notary public, and is thus subject to his privilege of non-disclosure. It is not clear whether

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activities in which a notary public engages outside his professional capacity are also subject to this privilege of non-disclosure. According to Van Domburg, this is only the case if and when the activities pertain to the advice or assistance granted to a person who came to him in need of his professional advice or assistance (Van Domburg 1994, p. 90). The case law is still not totally clear on this point. The privilege of non-disclosure is not absolute. To a certain extent, it is the judge who decides whether a notary public is warranted in exercising this right. If the criminal investigation is related to the abuse of the office of notary public, the judge can decide that the notary public can no longer exercise his privilege of non-disclosure (Udink 1993, p. 88). And if a complaint has been filed against the notary public himself in disciplinary proceedings, he is similarly unable to exercise his privilege of non-disclosure. This safeguarded position has made the notary public an attractive cover for criminal activities. As early as 1983, Sasse, the chairman of the Royal Fraternity of Notaries Public at the time, stated that the relation between a notary public and his client, safeguarded by the confidentiality obligation and the privilege of non-disclosure, could imply a serious risk. The office of the notary public could become a sanctuary for persons and interests that should not be able to lay claim to this kind of safeguarding (Sasse 1983, pp. 620 ff.).


We have used the same sources as for lawyers to trace culpable involvement of notaries public with criminal groups. These sources are listed in Chapter III. A total of thirteen cases were noted. The list Wilzing drew up contains the names of four notaries public, two of whom are also in our inventory. The other two cases have not been included because we feel they were not clear enough. The examples we found of culpable involvement mainly pertained to notaries who helped shield criminal proceeds. In a number of cases, they provided official services in circumstances where there was good reason to refuse to provide them. There was one notary public


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who cooperated in carrying out an A-B-C (-D) transaction designed to launder criminal proceeds. On one day, he executed a deed of transfer three times with respect to the same premises, with the value increasing from seven to fourteen to twenty-one million guilders. The notary public simply performed this official service with no further ado. In another case, a notary public regularly arranged for companies to be founded, although he could have known full well that the formal founders were front men and that the real founder was a dealer in companies. Many of these companies were used in cases of bankruptcy fraud. No matter how widely these incidents differ, they have one aspect in common; the notary public was aware that something was wrong, but felt no responsibility to do anything about it. He provided services under circumstances where he should have refused to do so. Another category of examples had to do with abusing the status of the profession of notary public. In these examples, the aura of incorruptibility exuded by the notary public and his office were abused to inspire confidence in other parties and give them the impression that certain transactions were above board. One example was the notary public who linked his name and account to an advanced fee fraud. In this concrete case, the swindler received advanced fees from investors to the amount of $750,000.00. In another case, an attempt was made to exchange more than 2,000,000 guilders in foreign currency into dollars using the services of a notary public's office. Lastly, there is a case that, second only to the criminal proceedings against the Amsterdam notary public S.-S. in 1983, will undoubtedly go down in history as the cause cklkbre of the 1990s in the world of Dutch notaries public. In the early 1990s, a notary public served as a middleman and granted loans on a large scale on behalf of third parties, mainly to foreigners. To get a loan, they had to deposit 20 per cent of the amount in the account of the notary public's foundation. The foundation received several million dollars this way. The reproach made to the notary public was that he did not adequately verify where this money was coming from. As notary public and trustee, he was the only one with whom these people were dealing, and he was the only one who knew who the third parties were, who were granting the loans. The possibility certainly should not be excluded that the foreigners were

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borrowing from themselves to give their money a legal source. To put it mildly, the notary public in this case had contact with the kind of people a notary public does not generally associate with. These people included the adviser to a well-known mafia family in New York and an extremely wealthy Italian swindler specializing in extortion and in writing bad cheques. This notary public's circle of clients also included several Dutch con men. The notary public has since been barred from any further practice of his profession.

VI. 2.3 Accountants The accountant is the person who determines the reliability of financial information. He can be in a company's employ and audit and examine the company's books (internal accountant), and he can work as an independent accountant and managerial consultant, or as a public accountant for an accountancy office. A registered accountant generally works as a public accountant. In this capacity, he has the exclusive authority to provide a company's annual accounts with a statement that can be presented to third parties. This then serves to guarantee the reliability of the figures, which is why such high demands are made on the autonomy of the public accountant. In addition to the accountant's auditing work, his advisory activities pertain to the fields of taxation, administration and general management. In this position as a company's advisory consultant and auditor, his relation with his employers is a confidential one. The obligation to respect this confidentiality is associated with this relationship, although the accountant does not have a legally recognized privilege of non-disclosure. The primary duty of the internal accountant is to serve the interests of the company that employs him. He plays an auditing or advisory role there and supports company policy. As auditor, he can certify a statement on the annual accounts, but since he is a company employee, this statement cannot be presented to the public. He differs in this important respect from the public accountant. In the course of the 20th century, there has been a sharp rise in


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the number of accountants in the Netherlands, and there are now an estimated 11,000. Growing commercialization has been observed in this profession, and an expansion of the services that are rendered, with accountants working intensively at offices with tax consultants and management advisers. In the 1970s and 1980s, as a result in part of the expansion of the accountant's duties, there was a wave of mergers and further concentration. Nowadays, more than half the registered public accountants are employed by one of the five large accountancy offices that employ more than a hundred registered public accountants (NIVRA Annual Report 199311994, p. 30).

Between Objectivity and Partiality Reliability and objectivity are essential values in accountancy. An accountant who represents a specific interest in his conduct to other parties, for example as company accountant, should always make this fact known. Even so, he should be as objective as possible in the sense that he should not conceal facts that are unfavourable for his employers. The public accountant, in his capacity as such, has to simultaneously preserve his autonomy vis-8-vis the employer and other interested parties. All this is what enables the various parties to place their trust in the reliability of the accountant's statements. There is a tension between the objectivity required of the accountant and the partiality expected of him vis-5-vis his employer or company. In other words, there is a question as to whether the accountant can always be adequately impartial and objective. Emanuels (1995) presented public accountants with eight cases taken from actual practice that confronted them with a professional dilemma. His findings show that these accountants were sensitive to the wishes and demands of their clients. According to Emanuels (1995, p. 160), this mainly pertains to situations where the client exerts a relatively large degree of influence and power over the accountant. He cites in this connection two trends that endanger the autonomy of the public accountant. First, there is greater competition, due to the growing commercialization and increasing number of registered public accountants and independent

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accountants and managerial consultants. Secondly, clients are becoming more assertive. The increased financial know-how in companies and the fact that accountants are adopting more of a stance of consultation partner by serving as advisers and mediators make clients less apt to subject themselves unconditionally to auditing. Emanuels feels these trends require growing efforts on the parts of accountants to maintain their autonomy in their auditing work.


We have noted seven cases of culpable involvement in the sources we consulted. Several of them pertained to making expertise available to criminal groups. One concrete example was an accountancy office that regularly did the bookkeeping for businesses that belonged to a group engaged in the drug trade. The various small businesses served as covers. By way of a trust abroad, the accountancy office was also in charge of numerous businesses the group used there. The other cases illustrated the abuse of the status or aura of the accountancy profession. One example pertained to an accountant who worked for A, a swindler whose annual accounts he had previously audited as public accountant. In his new function, he was confronted with the various fraudulent practices in which A was engaged. To a gradually growing extent, the accountant helped calculate the erroneous balances that made a bank willing to invest in companies that belong to the swindler.

VI. 2.4 Function of Disciplinary Measures We cannot draw any quantitative conclusions as regards the culpable involvement of lawyers, notaries public or accountants. On the basis of the sources we consulted, we can however conclude that most of the cases of culpable involvement pertain to lawyers. There have however been serious cases of culpable involvement in all these professions in recent years. As regards the lawyers and notaries public in particular, the nature and number of cases indicate that their culpable


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involvement bears more than an occasional link to organized crime. This makes us wonder whether the trend in these professional groups towards commercialization might not have increased their chance of becoming culpably involved in matters linked to organized crime. Lawyers have discovered a market for legal services beyond the traditional ones, notaries public now act as advisers, and accountants are becoming increasingly active in financial consultancy. Commercialization and competition are also affecting the internal relations in these professionals. Lawyers, notaries public and accountants still cannot be equated with the providers of commercial services. Their ideology and conduct are still largely shaped by classic professional values, even though these values are increasingly influenced by the developments described above. Another question pertains to the role of disciplinary boards in investigating and taking disciplinary measures against members of these professional groups who violate the rules in their dealings with criminal groups. As far as we can see, relatively few cases of culpable involvement have been brought before disciplinary boards. Almost all the professionals in the cases described in this report are still practising their profession. One explanation for the limited power of disciplinary boards is that as regards lawyers and notary publics, proceedings are generally instituted by parties with a direct interest in the case. Except for complaints filed in an official capacity, the rule is that without aplaintiff, there is no complaint. The plaintiff has to be able to demonstrate an interest in the complaint, otherwise there is a good chance of it being declared inadmissible. Professional organizations can take the initiative themselves to file a complaint in an official capacity, but only very limited use is made of this option. These organizations do not have investigation facilities, nor do they have facilities to monitor the individual conduct of their members. The self-cleansing capacity of the professional organizations by means of disciplinary action is thus extremely limited. What is more, the police and the judiciary are reluctant to prosecute members of these professions in a criminal court for culpable involvement or report them to an disciplinary board. In the

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case of lawyers, there are several procedural obstacles to the access that the Prosecutor's Office has to the disciplinary board. In recent years, the professional organizations have taken the initiative to design new guidelines, bye-laws on fraud, complaint registration points, and ethical codes to prevent their members from becoming linked in any way to organized crime. The measures that have been introduced can certainly have a preventive effect, but are not apt to alter the conduct of anyone who is really out to conduct shady business. It should also be noted that the incidents described in the sub-report about the professions show that in addition to abusing the know-how of these professions, criminal groups also exploit some of their characteristic features, such as lawyer-client confidentiality, the privilege of non-disclosure, the aura of incorruptibility, and the aspect of autonomy. This is why it is so important to stipulate the circumstances under which office accounts, written and oral communication and so forth fall under lawyer-client confidentiality. One crucial point is that the evidence that need not be produced should solely consist of material presented to a lawyer or notary public in their capacity as such. This emphasizes how important it is to draw clear distinctions between the traditional activities specific to these professions, such as trial counselling and rendering official service, and the commercial services members of these professions have come to provide as well.

VI. 3 Channelling Criminal Proceeds into the Legitimate Economy Crime pays. In fact, the profits of organized crime sometimes defL the imagination. Yet in the Netherlands, attention has only recently come to focus on seizing these profits. In general, as noted in Chapter IV, there is very little quantitative or qualitative data on how criminal proceeds are spent. There may have been a growing focus in the 1970s and 1980s on money earned off the books and income concealed from the Tax Department, but without a clear link being drawn with criminal proceeds. Channelling organized crime profits into the legitimate


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economy or money laundering have, however, come to be high on the international political agenda (Van Zoest 1995). Money laundering is the connecting link between the illegal and the legitimate economy. It requires the involvement - culpable or otherwise of persons whose integrity is beyond reproach, such as lawyers or accountants, and of the banking system and the stock market. It is not the criminal activities themselves but the channelling of criminal proceeds into the legitimate economy that make infiltration and permeation possible. Due to the enormous amounts of money circulating in the criminal circuit, money laundering is no longer a symptom of the real problem, which is organized crime. It is now a problem in itself. What does money laundering mean? It is defined in any number of ways in the literature, but in essence, the definitions all amount to the same thing: it means transforming money that cannot be legitimately accounted for into money that can be legitimately accounted for. The definitions differ in their interpretations of "money" - does it also include property? - and of "legitimately accounted for" - is it synonymous to legally earned? There are also differences in the scope of the definitions. Some of them explicitly link money laundering to organized crime. Others refer to the use of financial institutions, such as banks, as a characteristic feature of money laundering (Mu1 1995, pp. 83-88). In this study, money laundering is defined as the entire series of acts needed to provide money from criminal activities with a seemingly legitimate origin. Regardless of the laundering method, the steps in this process can be categorized according to the stages that take place in a certain sequence. We do not venture to estimate the extent of money laundering that is going on. There are too many uncertain factors in the estimates based, for example, on the flow of guilders in and out of the country or on the profits of crime (see also Van Duyne 1993). The national Coordinating Policy Consultation Committee inventory in 1995 showed that 25 1 of the 450 criminal groups registered by the police were engaged in some way in money laundering. The Coordinating Policy Consultation Committee defirution of money laundering is rather wide, however, and includes the various components of money laundering constructions such

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as "regularly exchanging" and "investing in the legitimate economy" (Coordinating Policy Consultation Committee inventory, p. 12). The Centre for Reporting Unusual Transactions has provided some concrete figures on the size of money laundering constructions with which financial agencies are confronted. The Centre's 1994 annual report shows that in the period from 1 February 1994 to 3 1 January 1995, nearly 23,000 transactions were reported. Most of the transactions were reported on the basis of objective indicators: exchange or stock market transactions above 25,000 guilders. The transactions that are important in our fiamework are the unusual ones that have been filtered out by the Centre. The Centre passes on data on suspicious transactions to the Financial Police Unit. In the twelve-month period from 1 February 1994 to 1 February 1995, more than 2,200 suspicious transactions were reported to the Financial Police Unit (1994 Financial Police Unit Annual Report). The transactions amounted to a total of more than 3,000,000,000 guilders, with the American dollar by far the most widelyused currency. Far more information is available on the various forms of money laundering than on how much money is involved or how it is then spent in the legitimate economy. VI. 3. 1 shows that most of the criminal proceeds of foreign or immigrant criminal groups are not laundered at all, but are simply moved to the country they come from. Ordinary banks also play a role in this moving. Based on a number of examples, the actual process of money laundering is described in VI. 3. 2. It is not a process that takes place in a vacuum, it is one that requires the services and cooperation of banks, advisers, legitimate markets and so forth. As an example, the stock market is described in order to illustrate how instrumental intermediaries such as stockbrokers and legal concepts (economic property, foreign legal persons) are in channelling criminal proceeds into the legitimate economy.


VI. 3. 1 Moving Criminal Proceeds Criminal groups want to be able to spend their profits freely. To this end, it is not always necessary to launder the money, in other words to give it a seemingly legitimate origin. In order to spend criminal proceeds in Morocco, Turkey or countries in the Caribbean, the cash merely has to be moved there. These countries do not have adequate laws against making improper use of the banking system or investing criminal proceeds in the economy. So, in a sense, the more measures are taken t o keep criminal proceeds out of the financial sector, the more money will have to be laundered. Methods for moving money have not only been shaped by the need to avoid detection. Practical considerations, such as the nature, amount and weight of the illegally earned money, also determine how it is moved. If criminal proceeds consist, for example, of small bank notes, the route will undoubtedly start at an exchange office or bank. There is a precarious moment for the criminal group when a large sum is presented in cash at a counter. If a criminal group opts for exchange offices or banks in a country where monitoring is less strict, first large amounts of cash have to be moved to this country. Three methods will be described below for moving money, that is, physically moving money in cash or valuables by individuals or by mail, moving money through underground banks, "rep offices", pseudo banks and ordinary banks, and moving it through exchange offices. The descriptions are based in part upon recent examples in the Netherlands.

Physically Moving Money According to the information we obtained from various investigations, money is regularly moved in suitcases or by mail, especially in the drug trade. Heroin and cocaine exported from the Netherlands to the United Kingdom are largely paid for with money earned selling them on the street. This money, which is largely in small bills, is then stuffed into suitcases and taken to the Netherlands by couriers (Van Duyne 1995, p. 167).

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Sometimes just physically moving money is enough to make it possible to use it freely in the local economy. Money is simply transported to a country where no questions are posed about where it comes from. As is clear from many of the investigation reports we consulted, physically moving money can also be the first step in a laundering process. Money is taken from the Netherlands to some country where there is less of a check on its placement, that is, introduction of money into the banking system, and fewer exceptions to banking secrecy. More concretely, the first step towards laundering criminal proceeds is often to deposit the money cash at a bank in Luxembourg. The obvious advantage of physically moving money is that it does not leave a paper trail or require a great deal of expertise. What is more, the person to whom the money belongs can control the entire operation. He does not have to trust his money to an underground bank or hand it over to a legitimate bank that is subject to all kinds of rules and regulations. There are also disadvantages to physically moving money. There is a chance it might be stolen or seized. In addition, the practical problems of transporting large amounts of money should not be underestimated. Large amounts of bills can be quite heavy. A dollar bill weighs about a gram, which means that large sums of money can easily weigh dozens of kilogrammes. The volume of the money can be so sizeable that it cannot fit into suitcases. Exchange ofices can help alleviate these problems by exchanging small bills for larger ones. We have reason to suspect, for example, that the demand for Dutch thousand guilder notes and Swiss thousand franc notes has to do with the desirability of having cash in large notes. These are the two largest bank notes in the world, and their value is stable. The most radical solution to all these moving problems is to exchange currency for valuables such as diamonds. Investments like this considerably reduce all the complications. In fact, a recent investigation has revealed that millions of guilders worth of valuables are being transported from the Netherlands to Canada and from there to Singapore.


Moving Money Through Banks and Pseudo-Banks One way to move money without leaving a paper trail is through underground banks (Robinson 1994, pp. 16-18). Ever since official banks tightened their checks on financial transactions, their underground counterparts have been thriving. Underground banking is a system whereby a person in one country transfers money or valuables to a beneficiary in another country without the authorities in either country knowing anything about it or having any evidence of the transaction. Underground banlung requires total trust, which is why it is usually kept within a family or ethnic network. It should be noted, however, that this central aspect of trust is also based upon a fear of reprisals (Squires 1987, p. 4). The system of underground banking requires an extensive and sometimes global network of "bankers". All kinds of arrangements are often made among these bankers. To keep the physical moves down to a minimum, settling the accounts might have to be postponed for months. The commission the bankers earn can vary from a small percentage like 2 per cent to as much as 20 per cent of the entire sum. The risks and wishes of the client play a decisive role in this respect. Underground banking did not come as an unexpected reaction to the increased scrutiny at the official banks. In the United States, where this kind of surveillance was instituted longer ago than in the Netherlands, there are underground banks all over the country. Enormous sums of money are transferred through these banks to Hong Kong and elsewhere (Gaylord 1990, pp. 26 E.). A "representative office" or "rep office" was originally a kind of branch office for a foreign bank with no oficial office in the Netherlands. "Rep offices" are like advanced bases for the parent bank, and can cater to the bank's clients in the Netherlands. Twenty-five foreign banks have one or more "rep offices" in the Netherlands. "Rep offices" cannot do any actual banking. In a number of cases, we have noted that criminal groups use the collective account of the "rep ofice" of a bank in the Netherlands. It is easy to make fraudulent use of this kind of account, since the names of individuals making a deposit into the account can be concealed. Several investigations have revealed that drug

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dealers of Moroccan and Turkish descent transfer money to Morocco or Turkey through "rep offices". Until recently, there were also various ways to transfer money relatively safely through official banks without leaving a paper trail. All the large banks made or still make it quite easy for their clientele to carry out cash-to-cash transactions. The client buys a bearer cheque in the Netherlands, and the anonymous beneficiary cashes it in some other country. Neither the buyer nor the beneficiary necessarily have to be registered as a client at either of the banks. A brief one-time contact between the client and the bank is enough. Moreover, the transaction barely leaves a paper trail at either of the banks. One particular bank that played a major role in moving money was Femis Bank. Femis Bank was an offshore bank registered as a B licensed bank on the island of Anguilla. The Femis branch in the Netherlands enabled its approximately 500 clients to deposit money in numbered accounts and a telephone code. Femis Bank had a fixed arrangement with a local bank that performed banking activities on its behalf An investigation centred around several major Dutch hashish dealers showed that large amounts of money were transferred through Femis Bank to a trust in Jersey and a person in Singapore. Femis Bank went bankrupt when both the shareholders violated the articles of association and transferred approximately 60,000,000 guilders from the Femis account to their own private accounts in Germany.

Use of Exchange OfBces Until recently, exchange offices were easy to set up. No special training was required. It was also possible for criminal groups to set up their own exchange offices. Of course, exchange offices cannot engage in banking activities; they cannot give credit or open accounts. Exchange offices have, however, proved to play an important role in laundering criminal proceeds. As noted above, it is important for criminal groups to be able to exchange small bills earned on the street selling drugs for larger bills or foreign currency. What the exchange offices do is sometimes referred


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to as the "pre-wash", or the much needed rinsing of sometimes literally dirty street money before the "main wash starts. Apart from this, of course, ordinary banks also exchange money. It is clear from a recent investigation into a Moroccan organization in the hashish trade that ordinary banks changed tens of millions worth of francs, dollars and pounds into Dutch guilders. Two years ago, the Amsterdam police launched an investigation called "The Golden Calf' into exchange offices in the centre of Amsterdam. The findings shed some light on how much turnover these offices made and how they operated. Based on some earlier suspicions, the investigation focused on five exchange offices run by a family from Israel. Accompanied by a great deal of media attention, some twenty suspects were arrested and the premises were searched. The results provided good insight into the size of the illegal transactions that took place at the exchange offices. English and Scottish pounds constituted almost 50 per cent of the total currency that came into the offices. It was then taken to Belgium by a high security transport company, where it was exchanged for Dutch guilders and U.S. dollars, after which it was brought back to Amsterdam. This process generally involved approximately three million guilders a week. In the ten-month period of the investigation, the total turnover was almost 170 million guilders. About 10 per cent of this turnover is thought to have been from exchange transactions with tourists. The other 90 per cent consisted of large currency transactions presumably conducted with drug dealers. Since the exchange ofices failed to keep records of the transactions, there is no more than a serious suspicion that most of the money consisted of criminal proceeds. The criminal and financial investigation showed that the exchange offices earned a total of 3,500,000 guilders with these large transactions.

VI. 3 . 2 Money Laundering It is extremely difficult to get a clear impression of how much money laundering is done with criminal proceeds, and how much money is subsequently invested in the legitimate economy. Police investigations

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tend to focus on the initial criminal facts rather than the later financial consequences, which is precisely why so little quantitative information is available on money laundering. By examining concrete research findings from any number of sources we have, however, managed to gain some insight into the various forms of money laundering. All the examples come down to the same two basic patterns, that is, borrowing money fi-om yourself and inventing fictitious profits. This is how criminal proceeds are presented as "normal earnings" to the police and tax officials. You "honestly" borrowed or earned the money. In the legitimate economy, money can be acquired by way of capital accretion, capital transfer and labour. The techniques of money laundering are in keeping with these three normal ways of acquiring money. The only thing is that the capital accretion, the capital transfer and the income are feigned rather than real. Capital accretion can be feigned in cases where there are assets whose objective value is difficult to assess, such as real estate, antiques and works of art. By pretending to sell assets of this kind at a great profit to a seemingly unrelated third party, the criminal can come into the possession of his own criminal proceeds in a seemingly legitimate fashion. Capital transfer can be feigned by way of supposed gifts or loans, with loans being the more common of the two. The person who wants to launder the money makes it look as if he has borrowed his money from someone else in what is known as the loanback method. Lastly, a number of money laundering methods can be referred to collectively as the artificial creation of income, for example, feigning a high turnover or lucrative transactions. The decisive point is that the police and tax officials accept the income as such. Sectors where large amounts of unmonitored cash circulate, such as the pubs and clubs business or the slot machine sector, are perfectly suited for this money laundering method. In principle, though, transforming criminal proceeds into income means income tax must be paid on it. As examples, two cases of money laundering are discussed below, one in the stock market and one in the real estate business. One reservation is applicable to both of these cases, that is, we cannot


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present any hard facts or unambiguous information here, only some possible interpretations of the data.

A Promising Business or A Sham Stock? In the mid-1980s, a new stock was introduced at the Amsterdam Stock Exchange. After a great start, however, the business plummeted. In only a matter of years, it went bankrupt, leaving a debt of tens of millions of guilders. It was unclear who had supplied the starting capital. The wellknown drug dealer, Klaas Bruinsma, was suspected of having supplied millions of guilders for this purpose, but there was no concrete evidence to back the suspicions. It could be concluded with more certainty though that certain individuals who played a role in founding the business were linked to the drug trade.'

Money Laundering and Investing in Real Estate To an even greater extent than the stock market, the real estate market is a means and an end. It is a final destination for criminal proceeds. Of all the criminal cases we examined in the study , the Amsterdam Ecstasy case is by far the most important example of how criminal proceeds can be invested in real estate. In addition, the Ecstasy case is an excellent illustration of the loanback method. According to the forensic accountant's report, in a ten-month period the Ecstasy group had a turnover of almost 300 million guilders. After the deduction of all kinds of expenses, a minimum of 72 million guilders was lee to be invested. The authorities discovered and seized the sum of 15 million guilders, which was invested in real estate. Since 80 to 90 per cent of the invested sums were often financed by banks, the total amount of the investments was much higher.

*

The rest of the description of this case has been omitted as it forms the subject of a lawsuit.

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One of the most important examples of this was the investment in the construction of a number of industrial premises in Amsterdam. A total of 26 million guilders was involved in this construction project. The financing was organized by Corporation 1, which was owned by a large real estate agent. The investment required 2.5 million guilders of private financing, and the rest was to be financed with mortgages. The construction company received this amount through various routes. Once it was in the group's possession, the amount was divided up, and part of it was exchanged in Belgium - English pounds into Belgian francs - and deposited at a Belgian exchange ofice into the account of a foreign legal person, Incorporated 1. With the help of the exchange office, a certain amount of manoeuvring was then put into motion. A cheque was written out and the money was withdrawn from the account and deposited in the account of another foreign legal person, after which it was credited back to the account of Incorporated 1. The foreign legal person was set up in Panama by a number of lawyers there, who also served as directors. One of the members of the Ecstasy group had been authorized to use the bank account. Thus the involvement of the group formally remained totally out of sight, while in fact, the authorization gave the group total legal competence over the fknds of the legal person. A second portion of the money was exchanged at an ordinary bank in Belgium - pounds into francs - and again a few days later - this time fr-ancsinto guilders - and deposited through a bank into the account of Limited 1, at another bank in Belgium. A third portion of the money was directly deposited into the account of this Limited 1, which transferred both of the amounts to an account of the central link Incorporated 1 at a bank in Luxembourg. Incorporated 1 was founded in Western Samoa. Formally, the Ecstasy group had no link with this legal person. There are, however, clear indications that one of the members of the Ecstasy group was behind this legal person, since he had legal competence over its bank account. Incorporated 1 was channelling money into the legitimate market, at least into the account of Corporation 1, the large real estate agent that was organizing the financing of the project. If this real estate agent can be assumed to be an accessory to the plot (for the time being he is not being prosecuted for involvement with the Ecstasy group), then there is evidence of a loanback construction, with him


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making payments to himself. It remains unclear in this case what the ultimate aim was of the parties involved; the criminal investigation put an end to the Ecstasy group. The legal and economic property constructions enabled the parties to maintain a certain anonymity as to who actually was or would be financing the industrial premises. Was the payment of the 2.5 million guilders a loan to Corporation 1, which was or would be the economic and legal owner? Or was the 2.5 million guilders a payment to the contractor by Incorporated 1 in Western Samoa to purchase the property? Whatever the case may be, behind all the manipulations and manoeuvring, it is clear that the legal owner of the industrial premises was Corporation 1, which was financing the whole project with criminal proceeds.

VI. 4 Conclusion This chapter has focused on the bridges between organized crime and the legitimate world. Criminal proceeds constitute the most important link between the two. In the legitimate world, professionals such as lawyers, notaries public and accountants sometimes give expert advice on how to safely spend criminal proceeds. The aura of honesty and autonomy radiated by their professions and the value they attribute to protecting their confidential relations with their clients make these professionals less likely to be suspected of culpable involvement in shielding criminal proceeds. In addition to these professionals, existing legal and financial constructions, quite legitimate in themselves, are also used to channel criminal proceeds into the legitimate economy. For example, legal and economic property can be divided so as to give criminal proceeds a seemingly legal status. The services of these professionals and the fraudulent use of certain constructions can enable people who commit serious criminal offences to make their way into the legitimate economy. It is not the criminal offences they commit, dealing in drugs or arms or fraud, that help them become embedded in the legitimate economy, but the capital they have illegally accrued. It is noted in Chapter I1 that the term organized crime

I90


aptly expresses the paradox of society being combatted with its own weapons. This chapter illustrates this paradox, since important aspects of society, such as the privileged position of certain professions, are exploited to make crime pay. The question remains as to whether the metaphor of organized crime being embedded in the legitimate economy is a totally valid one. After all, the strategies designed by experts and the existing arrangements can also be focused on avoiding contact with the financial and the legal system. Underground banking, moving money to countries with the least monitoring, and the fraudulent use of economic property are the clearest examples of this. Viewed in this light, these gangplanks to the legitimate economy would seem to have been retracted. What has been described here as bridge-building can also be referred to as taking defensive countermeasures against the controlling authorities. In this sense, this chapter serves as a bridge to the next one, where the offensiveactions of criminal groups against the authorities are described.

VII. CONFRONTING THE DUTCH AUTHORITIES We have noted repeatedly, particularly in Chapter IV, where contemporary manifestations of traditional organized crime are addressed, how many ways there are for criminal groups to safeguard their illegal activities from rival groups or any other criminals with an eye on their assets, and to shield them from the authorities. The measures criminal groups take for this purpose vary from constantly switching cars to make it more difficult for the police to follow them to intimidating fellow criminals to keep them from informing on them. These modes of operation can be referred to collectively as defensive precautions. They are measures taken to keep the authorities from finding out about certain illegal activities. It is typical of organized crime, however, that by definition, it is virtually impossible to keep the activities secret. This is because there comes a point when the goods and services - for example, drugs, women, arms - have to be put on the market. Contrary to what is widely assumed, in a sense organized crime is thus extremely visible. To neutralize the enormous risks this visibility entails, the groups that engage in this kind of crime always have to maximize their security by supplementing defensive precautions with offensive countermeasures, certainly if and when there is more of a chance of the authorities acting effectively against them. Then it is no longer just a matter of keeping their own activities secret from the authorities, but also of taking measures to counteract official intervention. This is one reason why the definition of organized crime used in this study attributes so much importance to these measures, which are referred to as counterstrategies (see Chapter 11). In this study, ample attention is devoted to the following three counter-strategies. First, counter-surveillance, that is, collecting information about the police, the judiciary or other regulatory agencies in order to adjust their tactics accordingly. Secondly, intimidation, that is, threats or violence to keep the authorities from acting. And thirdly, comption, that is, officials accepting or demanding giRs or promises to

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keep the authorities from acting effectively or indeed from acting at all. Two other counter-strategies criminal groups can opt for involve using the media, for example to discredit the authorities or create a favourable image of themselves, and using influential people, other than lawyers or notaries public, to counterbalance possible or imminent official intervention. Of course, there are also other counter-strategies, such as having double informants misinform the police and the Prosecutor's Office, but they have not come up in this study. Before examining the information this study produced about the application of these strategies at the national and local level, it should be noted that in actual practice, it is not always feasible to tell them apart. For example, the suspicion that certain of their colleagues have been corrupted by criminal groups willing to use violence can have an intimidating effect on members of special criminal investigation units. Alternatively, if counter-surveillance entails having informants inside the Police Department, whether they are policemen or clerical or technical personnel, then it can easily coincide with corruption. Because what are corrupt policemen if not people who - in exchange for certain goods or services - leak information about the target of an investigation, the methods being used, the people who put them into effect and so forth? Nor is it always possible to empirically draw a sharp distinction between defensive precautions and offensive counter-strategies. Depending on whether or not the authorities are actively cornbatting a certain criminal group, the intimidation key members of the group can use to keep fellow criminals from betraying them can be of a more offensive or a more defensive nature. Lastly, it should be noted that the following account is confined to counter-strategies used against the Dutch authorities. Findings on corruption affecting the authorities of other countries or their representatives in the Netherlands will not be discussed here.

VII. l The National Situation

Not a single agency in the Netherlands has any way to assess accurately the scale on which criminal groups use counter-strategies. Not even the

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Dutch Secret Service or the Attorney General's Internal Affairs Bureau have enough information for an adequate picture. This is due in part to their position, authority and competence in the public administration, in part to the covert and controversial nature of the strategies themselves, and in part to the interest officials at all levels have in keeping their experiences with these strategies to themselves. Nor do the central authorities or the agencies mentioned above have a complete picture of even the topic that has recently been so openly addressed, that is, police corruption (Fijnaut 1993). In the same breath, we might add that the dearth of official insight has yet to be compensated for by adequate empirical research (Hoetjes 1991, Huberts 1992).

VII. 1. 1 Counter-Surveillance The national studies on the criminal activities of Dutch, immigrant and foreign groups have produced very little information on countersurveillance. But what little data is available shows that, in particular, it is the Dutch criminal groups in the drug trade who use this strategy against the police. The first one to make explicit use of this method was the Bruinsma group. In recent years, other important groups have followed suit. Data from the Central Criminal Information Service on the experiences of special surveillance teams with counter-surveillance shows that these teams repeatedly come up against it. They reported 96 incidents to the Central Criminal Information Service in 1993, 78 in 1994 and 52 in 1995 (prior to 7 August). Since not all the surveillance teams are equally meticulous about reporting their experiences, the number of actual incidents can be assumed to be much higher. The reports came fiom approximately half the regular police forces (26) and pertain to confrontations all across the country, but predominantly in Amsterdam and the Amsterdam vicinity, the Gooi, the Veluwe, and Brabant. A large number of cases involve a group of scanner fi-eaksfrom Amsterdam, some of whom have recently been arrested. The surveillance teams came up against members of this group outside as well as inside Amsterdam.

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VII. 1. 2 Intimidation Intimidation is apparently a strategy used in wider circles than just Dutch criminal groups. Not that these groups do not practice intimidation, and not only vis-a-vis the judiciary and the regular police, but also against regulatory agencies such as the Fiscal Intelligence and Investigation Department. In several instances, the intimidation efforts even go so far that special security measures have to be instituted. Outside the circles of Dutch criminal groups, it is mainly former Yugoslav gangs that repeatedly exhibit a willingness to use violence against police officers. Otherwise, it is striking that in the studies on organized crime in legitimate sectors of the economy and on organized fraud, we have also observed instances of intimidation. In one case, special investigators were intimidated by people who worked for a waste disposal company, and in another case a court oEcial was intimidated by a group of swindlers. /

VII. 1 . 3 Corruption

/

The study shows corruption to be the most widely-used counterstrategy. Not only in the sense that it is used by any number of criminal groups, but also because it is used against so many different regulatory agencies. There is no doubt that numerous Dutch criminal groups used and still use intimidation against the regular police. In a number of cases, there is also evidence of corruption, or at least relations that are tinted or at risk of being tinted by corruption, within other local or national government institutions such as the prison system, the telephone company and a Chamber of Commerce. The corruption at and involving Amsterdam Schiphol Airport is a case in itself. Investigations over the past five years show that at least seven members of the marechaussee and another seven customs officials performed a wide range of services for criminal groups trying to smuggle drugs and other goods into the country through this airport. The study on fraud also shows that certainly in two cases, Dutch customs officials played a suspicious role.


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The oldest items in our research material on the use of corruption by immigrant and foreign groups date back to the 1980s. The corruption pertained to police officers and officials of Surinamese descent all over the country, often in an effort to facilitate the drug trade, and to municipal officials (Registry Office) in connection with Ghanaians and Nigerians trficking in women. Later items referred to several cases of corruption by Turkish, Chinese and Colombian drug dealers. In some cases, it involved regular police officers or personnel, and in some cases prison system employees. Apart fi-omthis, in the study on legitimate sectors of the economy, particularly the construction and the waste disposal industry, we have noted numerous items and rumours about corrupt relations between certain firms and municipal, provincial and national officials. Neither in the files we consulted nor in the interviews with privileged witnesses, did we however come across any police investigations with concrete evidence of corruption or even of relations tinted by corruption. It is clear, though, that officials sometimes maintain extremely hazardous relations with firms in these sectors. There are even cases of officials with a day job monitoring the activities of these firms who are paid in their off duty hours to advise them on how best to circumvent the authorities.

VII. 1 . 4 The Media It virtually goes without saying that only criminal groups that already occupy a certain position of power can use the media to promote their own interests. In other words, by definition only very few groups have access to this strategy. In the national studies, there are two examples of groups using this strategy. One pertains to an important drug wholesale group. The leader was not only assumed to be trying to use the media to eliminate his most important opponents in the government by discrediting them, he was also trying to use reporters with whom he maintained a steady relationship to create as favourable as possible an image of himself His ultimate aim, of course, was to keep himself fi-om eventually quite

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deservedly becoming a butt of critical scrutiny for either the public at large or the police and the judiciary. The second example is not much diierent. One of the groups whose criminal activities were examined in the study on fiaud apparently called in a professor with whom the group was acquainted to give numerous interviews with the media in an effort to legitimate its activities.

VII. 1. 5 Influential People The same holds true for influential people as for the media, in that only criminal groups with a certain power or prestige are in a position to use them. One clear example is the fraud group whose illegal activities were embedded in a legal company. The group called upon its business relations and other prominent individuals to convince the Prosecutor's Ofice that prosecution would cause considerable damage to the economy and was not warranted in view of the negligible seriousness of the crimes that had been committed.

VII. 2 The Local Situation Since there is so little insight at the national level into the use of the counter-strategies in question, we have also examined the situation at the local level.

VII. 2. 1 Amsterdam In recent years, there is no doubt that Dutch criminal groups have been the main ones to use every conceivable counter-strategy in Amsterdam to obstruct official intervention in their illegal activities. Using influential people is the only strategy we found no clear traces of. As regards counter-surveillance, the Amsterdam police and the Prosecutor's Office have had numerous experiences, ranging Erom having criminal groups follow their surveillance teams and special squads


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and intercept their communication, even on their home telephones, to having them plant informants at police stations. These counter-strategies are probably solely carried out by a few predominantly Dutch criminal groups. It is striking, however, that perhaps for a certain fee, their implementation was and still is largely entrusted to scanner freaks, techno-anarchists and the like. A number of them have been recently apprehended. For the reasons elaborated upon in the sub-report on the situation in Amsterdam, it is harder to arrive at a picture of the nature and scale of the use of intimidation than it would seem in the first instance. It is not always clear whether or not a particular telephone call constitutes an intimidation attempt. The clearest forms of intimidation observed in recent years include "taking detectives home", outright threats to police or Prosecutor's Office employees at home or at work, whether it be a police station, a courthouse or a remand prison, breaking into private and public premises, and threatening to kidnap police oficers or storm a police station. The first three forms of intimidation are generally ascribed to Dutch groups, and the last one to gangs of former Yugoslavs. Corruption in Amsterdam is certainly not solely in evidence among the police. This conclusion can be drawn from recent news items on investigations into corruption in the street market sector (NRC Handelsblad, 1 November 1995) and the City Sanitation Department (Lagendijk 1995). In relation to organized crime, however, it is mainly police corruption that is relevant. Of the 34 cases of police corruption investigated from 1992 to 1995, there were certainly 15 that entailed a connection with organized crime. In most of these case, there were corrupt contacts with notorious drug dealers, which sometimes demonstrably led to police officers providing important information or performing actual services in the distribution of drugs or in drug shipments. Several other cases were linked to prostitution or trafficking in women. An "escort service", for example, was getting tips about raids that the police were planning or about "shipments" of women. It should be noted that immigrant police officers (7) were strongly overrepresented in these 15 cases. The explanation for this finding should probably be sought in the loyalty problem these police oficers tend to

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have as regards their own community. So this is all quite different from the suspicions based on investigations conducted by the Attorney General's Internal AfFairs Bureau regarding purposive infiltration of the Amsterdam police force backed by the former military regime in Suriname. Particularly through the Surinamese minority personnel manager, the military leaders are thought to have tried to get no fewer than 16 of their adherents onto the Amsterdam police force. In the study, we have not observed any evidence of corruption in the top echelons of the Amsterdam police. However, the rather abrupt statement made by Police Commissioner Nordholt in October 1993 should not be ignored, which was, that there is a risk of Dutch as well as immigrant criminal groups becoming involved in politics either directly - through their own members - or indirectly - through influential third parties - and of their eventually trying to exploit this involvement for the promotion of their own interests. Various incidents in Amsterdam have also made it clear that certain important Dutch criminal groups are interested in using the media to fkrther their interests, especially by threatening to use violence against reporters. The most striking example pertains to a reporter who agreed to a condition stipulated by members of a criminal group, that is, that they would give him some discs stolen from the police and the Prosecutor's Office if he made a television programme showing them in a favourable light. The reporter accepted this condition, but immediately after the broadcast got into a dispute with them because he had apparently not gone far enough in discrediting the Prosecutor's Office and the police. The argument that ensued ultimately led to outright threats to the reporter.

VII. 2.2 Arnhem, Nijmegen and Enschede The study on the situation in Arnhem, Nijmegen and Enschede shows that, until now, intimidation and corruption are the only counterstrategies that have been used. There is no evidence of manipulating the media or using influential people. Only one case of targeted countersurveillance has been observed. There are, however, three clear cases of


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intimidation. In one instance, a public prosecutor was threatened by suspects who felt he had issued too severe a sanction. In the second instance, a major drug gang announced that the head of the investigation team, the examining judge and the public prosecutor were all on its hit list. The third instance is still going on: police oficers have recently received letters with bullets in them. In terms of corruption, there have been several instances in these three cities of Dutch police officers leaking or being suspected of leaking important lnformation to criminal groups. There are also cases involving prospective immigrant police oficers. A number of trainee police oficers were shown to belong to a Turkish criminal group, a police officer of Turkish descent was pressured by a Turkish criminal group to provide it with information, and Turkish criminals approached three Turkish office workers, appealing to distant family ties and asking them to pass on certain information. In addition, not only have several cases been observed of customs oficials cooperating with drug dealers and deliberately failing to check the contents of certain containers, there are also cases of prison guards playing an active or passive role in bringing drugs into a prison. Lastly, in essence something has happened here that only seemed imminent in Amsterdam in one case, that is, two City Council members, one of Turkish and one of Kurdish descent, both proved to have ties with important Turkish heroine dealers. One of them is known to have used his own home as a secret hiding place for heroin.

W.3 Conclusion The study shows that criminal groups exert various kinds of pressure on the democratic state in the etherl lands, especially its criminal justice system. It is generally difficult to say exactly how sizeable this pressure is in Amsterdam, but it is clear that, in recent years, it has been far greater than in Arnhem, Nijmegen and Enschede. In essence, it can thus only be assessed in relative terms. The fact remains, though, that in Arnhem as well, there have been a number of very serious cases. It should be noted here that the use of counter-strategies is apparently largely confined to executive employees at the official

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agencies most directly involved in combatting organized crime, particularly the general and regular police forces, the marechaussee and Customs. And it is obvious why. They most tangibly embody the risk that a democratic state that takes a stand and defends itself can mean to criminal groups. There is thus no evidence of these criminal groups having used either corruption or intimidation to gain control over any of the important government services, let alone the major official bodies or authorities. Several of the instances in these cities do, nonetheless, indicate that at least at the local level, the borderline between the public administration, in this case the City Council or Sub-City Council, and criminal groups is not an absolute one and should be carehlly guarded.

VIII. GENERAL CONCLUSIONS For years, there has been a public debate in the Netherlands on the nature and scale of organized crime and the damage caused by it, in short, on how serious it is. Some people feel the situation is extremely serious and even hold that society is in danger of - or actually already is being disrupted by it. Others have a much less pessimistic interpretation and assume that traditional gangs are merely manifesting themselves in a new way. The differences of opinion are due in part to the fact that so few systematic and thorough empirical studies have been conducted into organized crime in the Netherlands. This is why so many different claims can be made without being directly or indirectly refbted with facts. In part, there are also differences in opinion because not everyone defines organized crime in the same way. If one takes a broad definition - with organized crime referring to hierarchically-organized groups that use violence and corruption to gain permanent positions of power for themselves in certain legitimate sectors of the economy, as well as to small groups of clever "con" men and burglars, then the problem posed by it in the imagination and in reality is far more serious and far vaster than ifa narrow defhtion is used, confining organized crime to criminal groups that have indeed managed to gain control over one or more legitimate sectors of the economy. In view of this confusing debate, it is no wonder that in Parliament, questions have been repeatedly posed about how serious the problem of organized crime really is. For years, there has been no way to answer this question. It is true that successive inventories have been conducted by Central Criminal Information Service and the Coordinating Policy Consultation Committee, but they have only led to even greater confusion because, for any number of reasons, time and again they have produced totally different quantitative pictures of the situation. A more balanced answer to the question did emerge, however, when it was linked - in the setting of the Parliamentary work group conducting a preliminary inquiry into criminal investigation methods - to the question of standards for these methods. When the Lower Chamber of the Dutch

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Parliament confirmed the appropriateness of this link in its discussion of the work group's report, Inquiry into Criminal Investigation Methoh, it was only logical that the Parliamentary Inquiry Committee on Criminal Investigation Methods that was then appointed should want to have an empirical study conducted into organized crime in the Netherlands. More specifically, the committee asked the research team to focus on three points: -

-

the problems related to defining organized crime the possibilities and limitations of research into organized crime the nature and scale of organized crime.

For reasons elaborated upon in Chapter 11, we have opted for a definition of organized crime that limits it to groups primarily focused on illegal gains, that systematically commit crimes that aversely affect society and relatively effectively shield these crimes, particularly by exhibiting a willingness to use physical violence or corruption. These limitations have kept political crime, corporate crime and professional crime outside the scope of the study . This does not mean, either explicitly or implicitly, that they cannot be serious.

Vm.1 Seriousness of the Situation The question posed by the Inquiry Committee on the nature and scale of organized crime in the Netherlands is, in essence, the same as the question on how serious it is. The fact that "nature and scale" can be equated to "seriousness" is evident from Inquiry into Criminal Investigation Methods, the report drawn up by the Van Traa work group, and from the parliamentary discussion on this report with a view to setting up the Inquiry Committee. There is, however, a certain significance to the reformulation of the question on the "nature and scale" of organized crime in the Netherlands in the question on its "seriousness". Formulated this way, the question takes us closer to the parallel question relevant in this connection: What can and should be done to combat organized crime more effectively and efficiently? After

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all, the more serious a problem is, the more far reaching the criminal investigation methods are that are necessary to combat it (Fijnaut and Marx 1995). American studies similarly conclude that the seriousness of organized crime should not be solely assessed according to its nature and scale, but also according to the damage it causes (Maltz 1990). So ideally, to determine the seriousness of organized crime in a country or city, the damage it causes should be assessed alongside its nature and scale. This is an ideal that has never been hlly achieved anywhere in the world, not in qualitative terms, let alone in quantitative ones. There are no adequate global or national measurements of the "seriousness" of even the form of organized crime that has been the top target of attention, much of it from policy-makers, that is, the international drug trade. The study similarly fails to achieve this ideal. Given the relative value of the most relevant sources of information and the limited scope of the methods that are available and have indeed been used, it is not feasible to assess with any extent of precision either the scale of organized crime in the Netherlands or the damage it causes. The ample research we conducted does, however, give an impression of the nature of organized crime in the Netherlands which, as regards a number of points, is not only more accurate and more concrete than the existing ones. It also settles some burning issues ranging from "Is the Italian mafia active in the Netherlands?'to "What are the links, if any, between legitimate sectors of the economy and organized crime?"

l k e Situation in the Netherlands ... So how serious is organized crime? In light of our definition and in the fi-arneworkof the complementary research strategy we used, in general we can now answer this question by noting that organized crime is still mainly confined to the traditional illegal supply of certain goods and services - the list being headed by drugs followed by arms and women and financial and economic fraud. It is also clear that no criminal groups at either a national or local level have gained control of legitimate

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sectors of the economy by taking over crucial businesses or trade unions there (labour racketeering). This conclusion can be drawn from the studies conducted fiom the perspective of criminal groups as well as the studies conducted from the perspective of various economic sectors. There have, however, been trends in two sectors - the hotel, restaurant, nightclub and pub sector, including real estate, and the transport sector that indicate a certain extent of penetration by criminal groups. In particular, the amount of property they now own in the Red Light District in Amsterdam is a cause for great concern. In addition, corporate crime in the waste disposal industry sometimes bears such a close resemblance to organized crime that it is, similarly, a cause for apprehension. One thing, however, that has not yet really been observed in this sector is the use of offensive counter-strategies to shield illegal activities from oficial intervention. These strategies are still mainly confmed to the major Dutch groups in the drug trade. They are the ones who do not hesitate to use corruption and intimidation or manipulate the media. However, there is no evidence that in the framework of traditional organized crime, criminal groups have gained control in any way over parts of the national, provincial or local governments. They are known, though, for their offensive strategies against the police and the judiciary. This is not surprising, situated as these institutions are in the line of fire between the democratic state and criminal domination. But this conclusion alone does not suffice. In turn, it once again gives rise to the question: "How serious is the situation?' And even more to the point: "Is that really so bad?' Here again, we cannot give an answer. Either in an absolute sense, for lack of universally accepted standards, or in a relative one. Why not? In theory, we can answer this question by comparing the nature of organized crime in the Netherlands at the moment with its nature at any other point in time. In itself, this kind of time-linked comparison would enable us to see whether the situation now is more serious, equally serious or less serious than at any earlier point in time. In reality, however, there is no way to carry out a comparison of this kind, since no large-scale study comparable to this one has ever focused on the subject. In other words, in the time dimension there is no material for comparison. Of course, some could be created, but it would require an

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enormous investment in historical research. At the moment, all we can do is make some general comments about the growing importance of the drug trade and the internationalization of organized crime based on the scarce information we have on the history of organized crime, as has been done in several of the sub-reports, for example, those on the situation in Amsterdam or on the role of Dutch criminal groups. ... Compared with the Situation in Other Countries

The other theoretical possibility for determining the relative seriousness of the present situation consists of drawing a geographic comparison, in other words, between the situation in the Netherlands and in other countries. This would make it possible to indicate whether the situation here as regards the nature of organized is less serious, equally serious or more serious than in one or more other countries. But in reality, for essentially the same reasons as the time comparison, this is barely feasible, if at all. Most other countries have similarly failed to carry out the kind of research that would allow for a comparison of this kind (Martens and Pulley 1984, Martin and Romano 1992). Until now, very little research has been conducted in Belgium on organized crime, although the efforts of the Parliamentary Inquiry Committee on Trafficking in People have led to several studies on the nature and scale of trafficking in women and the police corruption accompanying it (Fijnaut 1993). In France as well, organized crime has not been a topic of any comprehensive scientific research. Several years ago, a Parliamentary Inquiry Committee did conduct a certain extent of research into the activities of the Italian mafia in France and the vicinity, but it did not lead to an in-depth and comprehensive study (Assemblee Nationale 1993). The United Kingdom has not fared much better than Belgium or France in this respect. One brief report was issued by the National Criminal Intelligence Service about the situation there (National Criminal Intelligence Service 1993), and in a recent report on organized crime, the Home M a i n Committee only makes a few general statements about the nature and scale of organized crime in the country, but that is all. It is not nearly enough for a comparison of any significance (Anderson 1993, Levi 1993, Hobbs 1994). A bit fbrther away, in

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Switzerland, the Ministry of Justice took a first step a few years ago and launched some research into the nature and scale of organized crime there, but the empirical results were still not enough to warrant drawing any kind of comparison with the situation in the Netherlands (Pieth and Freiburghaus 1993). The only two countries where a comparison can be drawn within certain conceptual and methodical borders are Italy and Germany. A certain amount of scientific research has been conducted in both these countries in recent years, and usefkl general analyses of the situation there are drawn up every year. It goes beyond the scope of this study to actually implement a full-scale comparison, but perhaps a few comparative comments can be made. In the sub-report on immigrant and foreign criminal groups, a great deal of attention is devoted to the history and social context of the Italian mafia in Italy itself. There is no need to go into it in detail here. If one examines the report compiled by the Ministero Dell'Interno about the situation in 1993, which was published in English in 1994, it is obvious how vast the differences are from the situation in the Netherlands. In Italy, the top organized crime echelons consist of some 500 groups or families divided over the Cosa Nostra, the camorra, the 'Ndrangheta and the Sacra Corona Unita. Despite all the conflicts and disagreements, in recent years they have worked in closer collaboration and have come closer to each other in an organizational sense as well. All these groups have a long history of being extremely involved in all the various forms of traditional organized crime. To varying degrees, in the past few decades they have also built up strong positions of power in various legitimate sectors of the economy, including farming, tourism, and the transport and construction industries. These groups have the money to do so, especially from the drug trade, and what they cannot buy they simply take, using threats and violence all the while. Even in a large city like Rome, this economic takeover has oRen been accompanied by a parallel takeover in the political arena. In Reggio Calabria, the territory of the 'Ndrangheta, for example, more than 400 officials have been accused of being linked to this branch of the mafia since 1991(Paoli 1994). In all the essential aspects, the Dutch situation is a very diierent matter. There is no octopus-like organized crime in the

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Netherlands, none of the legitimate sectors of the economy have been taken over by criminal groups, the use of violence is far less widespread, and the world of crime has not taken over the public administration to even the slightest extent. In short, the Dutch situation is far less serious than the Italian one. Even though there are traces of the Italian mafia in the Netherlands, it is nothing like the situation in Italy itself. Successive studies by and for the German Federal Criminal Office shed quite a bit of light on the nature of organized crime in Germany. However, one ofthe objections to a comparison with the Netherlands is that they work with a much wider definition of organized crime there. Another objection is that the annual Lagebild Organisierte Kriminalitat is only based upon an inventory of the ongoing criminal investigations (see Chapters I1 and 111). Whatever the case may be, in 1988 German Federal Criminal Office investigators stated that organized crime in Germany at that time mainly consisted of loose networks of individuals and independent groups with a certain fixed personnel structure, and only certain foreign groups had a more hierarchic structure; there were no real godfathers to speak of (Rebscher and Vahlenkamp 1988). These groups were mainly active in the "classic" sectors of organized crime, but to a growing extent, they were investing their illegal gains in real estate and businesses run by front men. Less violence was being used in the process than is generally assumed, and there was no evidence of corrupting government officials. Two years later, on the grounds of a new study, mention was made of the increasing professionalization and internationalization of organized crime. However, there were differing opinions as to whether there was any risk that mafia-like structures might soon emerge in certain areas of Germany or in certain segments of organized crime, and of all the ramifications this would entail, such as government corruption, greater influence over the economy and so forth (Dormann et al. 1990). Three years later, the study by U. Sieber and M. Bogel (1993) was published on the logistics of certain forms of organized crime (the illegal automobile business, trafficking in people, prostitution and illegal gambling) in Germany. One of the conclusions was that in all these fields, multifarious criminal groups were active: "Das Spektrum der Straftatergruppen reicht von nur lose bei vereinzelten Taten verbundenen TMern bis zu streng hierarchisch

208


durchstrukturierten Gruppen rnit Angehorigen einer bestimmten Nationalitat" (pp. 373-3 74). A number of these groups seem to go about their business in a very professional way and have managed to gain a considerable position of financial and economic power. There are, however, no true monopolies in these illegal markets, though there are oligopolies. What does this mean in a more concrete sense? That some 400 groups are active in illegal gambling, probably fewer groups in the illegal automobile business, and presumably many more in prostitution. In short, the term oligopolies is used in its very widest sense here. Many of the groups use a wide variety of counter-strategies to shield their illegal activities from the authorities. They not only include defensive strategies but offensive ones as well, such as intimidating potentially incriminating witnesses and bribing police officers and employees at the Prosecutor's Oftice. It is mainly the groups that are involved in the illegal automobile sector that invest their illegal gains in legitimate businesses that have nothing to do with carrying out the ongoing illegal activities. They do not, however, exert control over any legitimate sectors of the economy. Nor do they have control over the public administration. Obviously the German situation bears much more of a resemblance to the Dutch one than the situation in Italy. The resemblance is also evident from the confidential Lagebild Organisierte Krirninalitat 1994. A total of 789 investigations were conducted into organized crime in 1994. The large majority of these investigations focused on drug trade, larceny, crimes of violence, fraud, prostitution and ga bling. More than half the suspects were foreigners, especially from Turkey, former Yugoslavia, Italy, Poland and Vietnam. In thirteen investigations, links were observed with the Sicilian mafia, in twelve with the camorra, in nine with the Russian mafia, in eight with the Cali cartel and in ten with the PKK. More than two-thirds of the investigations focused on groups that operated internationally, and 327 investigations showed that violence and other means, such as arson, were used for intimidation purposes. Official corruption was observed in 28 of the investigations, and excessively close relations were observed between criminals and prison personnel in 55 of them. There was frequent evidence of criminal groups using ordinary companies or companies set up specially as covers

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for conducting their illegal activities more effectively. The analysis did not explicitly state, though, that this meant any actual intertwining between legitimate sectors of the economy and organized crime. Ifwe compare this impression of the situation in Germany with the information we have available about the Netherlands, then, despite all the differences in the definitions and methods and in the size of the two countries, we can still conclude that in a number of senses, there are ample similarities. This is true, for example, as regards the absence of criminal control over legitimate sectors of the economy and the use of defensive and offensive shielding strategies. One important difference is that Vietnamese and Polish criminal groups are active in Germany but not at all in the Netherlands, and that groups from former Yugoslav and Italy are active there to a far greater extent. Lastly, it should be noted that not long before the study , Europol and the European Council both made initial efforts to present a picture of organized crime in the European Union. No matter how meritorious these efforts are in themselves, their results are still too general to serve as a valid and practical European standard for determining the seriousness of organized crime in the Netherlands.

VIII. 2 Some Worrying Questions The fact that it is di£Eicult and in certain senses even impossible for us to accurately assess the general seriousness of the situation does not mean that we cannot comment on certain aspects of organized crime in the Netherlands that we view as causes for concern. Based on the definition we use of organized crime, we feel this is definitely warranted. In essence, what does this definition of organized crime focus on? Ultimately on a peacefbl society, on the integrity of the democratic state, the freedom of the economy and the rights of individual citizens. What we have been able to assess is whether organized crime is developing in a way that can or does threaten these general values. In accordance with the various components of our definition of organized crime, the issues our own research findings have led us to view as causes for concern can be summarized as follows.

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Top Echelons of Dutch Organized Crime Although there is no evidence of an octopus-like criminal syndicate in the Netherlands, in the wake of the Bruinsma group in the 1980s in Amsterdam, groups emerged at the top echelons of Dutch organized crime that have amassed enormous sums of money through the international drug and, to a lesser extent, the arms trade. In addition, they have proved able to shield their illegal trade and criminal proceeds relatively effectively from the authorities by way of defensive and offensive counter-strategies. Some of these criminal groups not only invest their money in maintaining and improving the logistic facilities required to continue or expand their ongoing criminal activities. They also, presumably, invest in real estate in general and pubs and clubs in particular, and consequently in an infrastructure where other new illegal activities can be developed, such as the exploitation of prostitution or the organization of illegal gambling. For any number of reasons, such as the faulty coordination between various local investigations or the inadequate analyses of data at the national level, the authorities do not have sufficient insight into the groups at these top echelons, nor do they know how many groups there are, nor their relationship to each other. In the study, we give seven detailed descriptions of these groups as examples, but they are certainly not all the groups.

The Role of Immigrant Criminal Groups Our national and local studies show that quite a few individuals in the Turkish, Moroccan and Surinamese communities are active in the drug trade. It is not hard to see why. Numerous members of these communities have direct or indirect access to the heroin, hashish and cocaine producers and wholesalers in the source countries. If they occupy a marginal socio-economic position in the Netherlands, it makes them even more apt to be interested in earning some money on the retailing and hrther distribution of the drugs here. Of course, this is something that can be viewed from various angles, but one of the most worrying aspects is that so many of the people in some of the immigrant

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communities are dependent on the drug economy, because it only serves to keep them from integrating into regular Dutch society. Another hazardous aspect is that in the parts of the large cities where criminal groups gain a powerfil position, it has a disruptive effect on the entire neighbourhood. The clearest example of the classic form of disintegration that this can lead to was in the vicinity of Mercatorplein in Amsterdam several years ago, when a Turkish criminal group was in control. The opposite can also be the case, that is, powerfil criminal groups can organize rather than disorganize the local society, albeit in accordance with their own ideas, capacity and rules. There was evidence of this kind of development in recent years in the Kurd section of the Spijker District in Arnhem.

The Role of Foreign Criminal Groups For years, the media have alluded to the fact that foreign criminal groups are expanding their territory to include the Netherlands. So it is not surprising that the study reveals situations that are definitely causes for concern. In a certain sense, one highly worrying aspect is that the information available all across the country about the organization and conduct of these groups has not been systematically collected and analysed at the national level. It has only been done to a certain extent with respect to the Chinese triads and gangs, and the picture that emerges is a very serious one indeed. Many of these groups engage in countless organized crime activities in the Netherlands, be it mainly inside and at the expense of the established Chinese community. The extent to which the Italian mafia is active is not as clear, but there is no doubt that the camorra is or was active in various Dutch cities such as Amsterdam and The Hague. Branches of the camorra mainly view the Netherlands as a market place where they can buy illegal goods, especially drugs, at relatively low prices, but their very presence implies certain dangers to Dutch society. There is evidence that they are as willing to use violence and corruption as counter-strategies here as anywhere else. There is also the very realistic danger of more and more associates of the Italian mafia and other Italian criminals becoming active

21 2


in the pubs and clubs business and other sectors of the Dutch economy, and thus developing into veritable mafia networks with links to Italy. Colombian and other South American drug dealers are less of a threat to Dutch society, because their activities are more or less confined to selling drugs in the Dutch and European market. The activities of a wide range of gangs from former Yugoslavia, which are perhaps still largely uncoordinated but generally extremely violent, have similarly come to constitute a cause for concern. Low Priority of Major Forms of Traditional Organized Crime The form of organized crime to which the police and the Prosecutor's Office devote the bulk of their attention is unmistakably the drug trade. Combating the drug trade is definitely the top priority. As a result, there is far less of a focus on other forms of organized crime or related forms of professional crime, such as the illegal arms trade or the international trade in stolen cars and the accompanying high quality forging of documents. It is distressing that so little attention is focused on combating these offences since, in addition to their significance as separate fields of crime, they are so closely related to the logistics of organized crime in a country, its logistic infrastructure. For the permanent containment of organized crime, it is thus essential to keep these facilities down to a minimum. In other words, it is not a good idea to focus all the available capacity on just investigating the people who use these logistic facilities to commit all kinds of other crimes.

The Situation in the City Centres The results of the study do not demonstrate that criminal groups have built up positions of general economic power in the city centres. This is not the case in either Enschede or Nijmegen, though the situation is a bit different in Arnhem and Amsterdam. Here the police information shows that by buying up real estate, particularly hotels, restaurants, nightclubs and pubs, certain groups have gained positions of power. This is not

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only a cause for concern because they can be assumed to want to maintain their positions using illegal methods as well, but also because they are in a position to develop racketeering activities in the pubs and clubs business and related sectors. Owning a large amount of real estate and businesses also enables them to engage in other illegal activities, such as the drug and arms trade, trafficking in women, and illegal gambling. All these activities mean that in the city centres, organized crime can become intertwined with the petty crime and public nuisance problems. Traditional organized crime is always very concrete, very visible, and even tangible wherever the illegal services and-goods are distributed. So it is only half true that organized crime is invisible crime. Its invisibility might pertain to the producers of the goods and services, but not to the people who distribute them to the consumers. Anyone who strolls through the Red Light District can see what a flourishing business organized crime is doing, especially in the drug trade. There is nothing mysterious about it.

Precarious Trends in Legitimate Sectors of the Economy As noted in Chapter V, there is no evidence at either the national or local level of legitimate sectors of the economy being filly or partly under the control of criminal groups in the Netherlands. However, as is evident from the situation in some of the city centres, this is less reassuring than it might seem. In the hotel, restaurant, nightclub and pub sector as a whole, other problems were observed than those referred to above. In some places, there is the matter of protection being provided by "doorman services". There is also, although not everywhere, the trade in slot machines. Another sector deserving more structural attention in the framework of containing organized crime is the transport sector. As this sector has proved to be essential for the drug trade, it is no wonder this has manifested itself in a number of ways: the use of small haulage companies and the use of sea and air gateways, the most important being Rotterdam Harbour and Amsterdam Schiphol Airport. In view of the major economic interests at stake here for the Netherlands, hrther analyses of the situation are definitely called for. The third sector that

214


should be noted is the waste disposal sector. Not because criminal groups have taken over segments of this sector, since that has not been observed, but because the illegal conduct of some of its companies has recently moved from pure corporate crime towards organized crime.

New Challenges to Lawyers, Notaries Public and Accountants Whether criminal groups want to conceal illegal activities and profits from the authorities, shield themselves from concrete official intervention, or invest their criminal proceeds in the legitimate economy, there comes a moment when they need the services of lawyers, notaries public and accountants. This inevitable association between organized crime and these professions tends to cast suspicion on whoever provides the desired services. For precisely this reason, the fact that the study reveals more than occasional instances of lawyers, and to a lesser extent notaries public, being culpably involved in shielding the illegal activities of criminal groups should be a cause of great concern to members of these professions and to the authorities. In addition, the disciplinary measures these professional groups can institute against their own members have apparently failed to provide adequate guarantees for the detection and elimination of professionals who violate the codes of conduct in their dealings with criminal groups.

Untraceable Criminal Proceeds Based on a number of concrete examples, the study provides ample insight into how criminal groups exchange illegally earned money and set up money laundering operations. It has also been noted, however, that large-scale police investigations frequently fail to reveal where the criminal proceeds ultimately wind up. As to the immigrant and foreign criminal groups, based on wide experience it is generally assumed that except for purchasing certain logistic facilities such as restaurants, they do not invest their criminal proceeds in the Netherlands. Instead, they invest their money in the countries from which they come. It is clear that

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there are exceptions to this rule, such as the Kurd heroin dealers who have invested in real estate in Arnhem. Very little information is available on where the criminal proceeds of the Dutch groups wind up in the end. Of course a great deal of the money is spent on maintaining certain logistic facilities, especially with respect to the drug trade. In a number of cases, there is also evidence of money being spent on other goods and companies in the Netherlands and abroad. But in many cases, there is no way for us to know where the money goes. It is obvious that this is a cause for great concern. In part, these sums of money might be spent on gaining and maintaining positions of economic power, for example in the form of real estate in the city centres. This is why more intensive investigations are called for into the outlets for criminal proceeds and the money launderers who help criminal groups exploit these routes. For years, no targeted efforts have been made to investigate and apprehend the "money dealers" who play such a key role in modern-day organized crime.

Offensive Counter-Strategies There have been confrontations in the past between criminal groups and the authorities in the Netherlands, some of them quite violent, for example in Brabant after World War Two involving smuggling cattle, butter, cigarettes and other goods. So the offensive counter-strategies corruption, intimidation, counter-surveillance, using the media and influential people - mainly used by the major Dutch drug dealers are not unique in Dutch history. But it is still striking that particularly in and near Amsterdam and to a certain extent in Arnhem as well, they are now being used again. Now that the authorities - after years of leniency - are launching sizeable criminal investigations, the position is revealed of the power the criminal groups have, or at least feel they have. To an even greater extent than the counter-strategies themselves, it is precisely this position of power, whether real or imagined, that is a cause for such great concern. It is, after all, the virtually tangible embodiment of the threat criminal groups present to the integrity of a democratic state. Further consideration of how to eliminate this threat is urgently required.

216


It should also be noted in this connection that, in particular, gangs from former Yugoslavia and Turkey sometimes use rather drastic intimidation methods to prevent official interference with their illegal activities. This intimidation can be directed against their victims and former colleagues, but it can also be directed against police officers investigating their activities.

VIII. 3 Expectations for the Near Future The information presented above might well make one wonder how organized crime is apt to develop in the hture in the Netherlands. Obviously this question is easier to pose than to answer. It is methodologically unfeasible to transform the results of a primarily descriptive study into material with any predictive validity. In view of the international nature of organized crime nowadays and the fact that measures of all kinds are being taken all over the world, it is even harder to say what the coming years might bring. There are not even any generalizations that can be made about "organized crime" as such, since there are so many vast differences in the nature of the groups and the illegal activities they organize. Our explanatory insight into past and present transformations in organized crime in Europe is not comprehensive enough to enable us to determine what the various forms of organized crime will be like in the future. From a policy viewpoint, it is nonetheless only reasonable to pose questions about the development of organized crime in the future. So it would not be unreasonable to sketch very roughly a few of our expectations concerning the future development of organized crime globally, at the European level, and in some of the neighbouring countries, based in part on what a few publications have addressed with varying degrees of success (United Nations 1994, Williams 1995, Carter S. d., Joutsen 1993 and Bundeskriminalamt 1995). The internationalization of traditional organized crime is generally expected to continue, enabling criminal groups to operate even more globally. There are large black markets in many parts of the world, not only for drugs, people and arms, but also for food, clothing and cars, and

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there are means oftransportation to cater to these markets. All this will help globalize organized crime. To the extent that they can rely on larger local communities of their own national or ethnic origins in the vicinity of their market segments as, for example, the Chinese groups do, criminal groups active in these markets will be able to follow this trend with their own people. This is not always possible if there is no local community for foreign criminals to become embedded in, or if existing Dutch groups object to the arrival of immigrant or foreign groups. In situations like these, criminal groups fiom all over the world might enter into alliances to insure the shipment and distribution of their goods and services. Colombians, for example, have been known to join forces with Italian criminal groups in the drug trade. Organized crime in the Netherlands will thus increasingly become just one link in a worldwide criminal system. In the near future, the Netherlands will continue to be the home base for a wide variety of Dutch, immigrant and foreign criminal groups. Unless the Dutch authorities and those of numerous other countries are willing and able to work together to use preventive and repressive methods to combat these groups, there is not much that can be done about it. And that is not likely to happen. Even if it does, the way the important criminal groups are organized and work together is so flexible that, in the event of police pressure, their illegal activities can easily be moved, the people with whom they work can easily be replaced, and the routes they use for illegal goods and criminal proceeds can be changed in a heartbeat. These shifts and changes in the problem are virtually the only effects the authorities of any single country can hope to achieve on their own. Not counting, of course, the concrete results of criminal investigations, such as arrests or the seizure of goods. This also holds true for the Netherlands. The manrfestations of modern organized crime that involve criminal groups exerting complete or partial control over legitimate sectors of the economy at either a national or local level are quite a different matter. Acquiring these positions of economic power requires the groups in question to be at home in a society, to reside there permanently, to put money into purchasing companies, and to invest in workable relations

218


with other businesses and with the trade unions and public administration. At a given moment, all this constitutes their strength, but it is also their weak spot, because the established position that criminal groups thus come to occupy in some legitimate sectors of the economy makes them vulnerable to intervention by an honest, incorruptible government. In general, there are no criminal groups in the Netherlands that occupy a position of this kind, either alone or in collaboration with other groups. Only in certain of the city centres has there been a dangerous trend in this sense as regards real estate in general and pubs and clubs in particular. If the national and local authorities work together with the employers' organizations and the trade unions to institute the necessary monitoring and supervision to keep a check on the sectors that are in principle the most vulnerable - the hotel, restaurant, nightclub and pub sector, the transport sector, the construction industry and so forth, then this situation will not be apt to get any worse in the future. Not only does the adequate containment of petty crime require an integrated approach, so does an adequate containment of organized crime. This is the only way the so-widely-feared criminal disruption of society can be combatted.

Appendix l

ANALYTICAL FRAMEWORK OF THE STUDY Studying the nature and the scale of organized crime in the Netherlands means looking for answers to the following four main questions: What kind of groups engage in organized crime in the Netherlands? What forms of organized crime do these groups engage in? How do they engage in these forms of organized crime? How do they spend the criminal proceeds? For each of these main questions, the most important points are listed below that will be addressed in the study.

Description of the groups I. 1

Origins

I. 1. 1

Dutch groups

To start with, attention will be devoted to the ten groups that headed the list in the successive Central Criminal Information Service inventories. Ifit should appear from other source material that certain other groups are equally important, they will come to replace one or more of the groups selected on the basis of the Central Criminal Information Service inventories.


220

I. 1. 2 Immigrant and foreign groups Colombian cartels Turkish groups Moroccan groups Italian Mafia Chinese triads Surinamese and Antillean groups Nigerian networks Ghanaian networks Gangs from former Yugoslavia Russian mafia

I. 2

Internal organization

Scale (number of people playing an active role) Division of labour / specializations Recruiting personnel Disciplining, sanctioning, loyalty of personnel Qualifications of personnel

I. 3

External national and international criminal relations

Personal relations Business relations Joint projects

I. 4

Continuity of the groups

Fixed leadership Criminal background of the members Duration of their membership

Appendix I

221

Shielding fiom intervention by the law enforcement system (including prison sentences)

I. 5

Syndicate-like positions of power that constitute one extreme in the spectrum, with small, loosely organized groups as the other extreme. Do the groups occupy these positions of power in the Netherlands?

Description of the illegal activities 11. 1

The supply of illegal goods and services

Drugs Gambling Prostitution / trafficking in women The arms trade Trafficking in people Lorry and car theft

11. 2

Illegal activities in legitimate markets and sectors of the economy (racketeering)

Hotels, restaurants, nightclubs and pubs Slot machines The transport sector The construction industry The garment industry The waste disposal industry

222

11. 3


Other illegal activities

Fraud (benefits, insurance, subsidies) Robbery Kidnapping

11. 4

How the activities referred to in 11. 1-11, 3 are linked

Description of the modes of operation

111. 1 Use of violence Physical violence Threat of physical violence Other forms of intimidation (burglary, kidnapping) Sabotage Blackmail

111. 2

Shielding against the authorities

No book-keeping records Limited exchange of information Screening of personnel Codes Counter-surveillance Wiretaps Corruption Violence

Appendix 1

111. 3 Possession of means of production and distribution Means of transportation Sites Documents Legal constructions Miscellaneous (depending on the sector)

111.4 Role of professionals

Lawyers Accountants Notaries public Technicians Academics

111. 5 Connections with influential individuals, companies, associations, organizations The police and the judiciary The public administration The banking system Sports clubs (sponsoring)

Spending the proceeds of criminal activity

Luxurious life style Money laundering Expansion of existing share of the market Move to other criminal markets Investment in infrastructure (purchase of real estate)


Appendix 2

AGREEMENTS WITH FIJNAUT RESEARCH TEAM The Parliamentary Inquiry Committee on Criminal Investigation Methods asked four academic researchers, Professor Cyrille Fijnaut (research supervisor), Professor Frank Bovenkerk, Professor Henk van de Bunt and Professor Gerben Bruinsma, to conduct a study on the nature, the seriousness and the scale of organized crime in the Netherlands. For the purposes of this study, the following agreements were made: 1.

The members of the research team are to conduct the research in rooms where special security measures are taken (Central Criminal Information Service, Police Department, Ministry of Justice Research and Documentation Centre and Parliamentary Inquiry Committee premises). They are not to take home any material such as interview reports. They are to exercise the necessary caution so that no one else can gain access to any of the personal data.

2.

In the research reports, none of the personal data will be able to be linked to specific individuals.

3.

The research team will be able to consult all the Criminal Intelligence Department records except the records on informants. If data from Criminal Intelligence Department records are consulted, this will take place at the building of the Central Criminal Information Service. It is definitely not the intention of the research team to check the data they get there with the source, in this case the forms on informants.

4.

The research team is to consult evaluation reports on investigations that have been or are being conducted and written analyses of

226


criminal groups and their activities that have not yet been the focus of investigations. In order to protect informants who might be mentioned in the reports, the following two precautions will be taken: a. The police forces that present the reports to the research supervisor Professor Cyrille Fijnaut will first check to see whether the names of any of the informants are specified in the reports, whether any of the informants presented anonymously can be recognized as specific individuals, or whether the reports contain any information that can lead to life-threatening situations; the police forces will make this information anonymous or code it. b. After consulting with Professor Fijnaut, Prosecutor's Office staff members Van Erve or Van der Kerk will check that the information referred to in a. is anonymous or coded. 5.

The reports are to be sent to the Central Criminal Information Service, where the researcher in question will have a separate room in which to work. Police Department employees will be in charge of bringing the records from the Regional Criminal Intelligence Departments to the Central Criminal Information Service. The researcher in question is to be responsible for the reports and he will take the necessary precautions to safeguard the confidential material in the reports. The other members of the research team are the only ones who will have access to the reports under his responsibility. They are to have access to the reports if and to the extent that it is necessary to carry out the particular part of the research they are working on.

6.

The National Criminal Intelligence Division files at the Central Criminal Information Service are to be consulted by Professor Cyrille Fijnaut. He will give the other members of the research team access if and to the extent that it is necessary for conducting their part of the research.

Appendix 2

7.

22 7

Before it is published, the report of the Fijnaut research team is to be presented to the Minister of Justice.


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