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This 1952 file photo shows Chilean poet Pablo Neruda in Capri, Italy. (AP/File)

Chile's Pablo Neruda: from Nobel laureate to center of suspected murder plot

By Steven BodzinCorrespondent / 04.08.13

When Pablo Neruda died in 1973, the bookish boy from a sleepy town in southern Chile had already played many roles. He was a Nobel laureate in literature. A diplomat to Spain, France, and Burma (today Myanmar). A senator who fled his homeland on horseback when his Communist Party was banned, and later a presidential candidate. A husband to two women, a father to a daughter.

And now, four decades after his death, Mr. Neruda is at the center of a murder mystery. Was he killed in the early days of Chile’s military dictatorship?

Neruda’s widow, Matilde Urrutia, never accepted the consensus story that he died of heart failure as a result of advanced cancer. But she never came forward with the bombshell dropped a couple years ago by his assistant and driver, Manuel Araya: that Neruda had been in decent shape and was planning to fly into exile – until he was injected with an unknown substance on the day he died.

The BBC interviewed Mr. Araya, who said he remembers that day:

Despite the passage of time, Mr. Araya says he remembers clearly what happened in the days after the military coup.

He says Neruda was admitted to hospital on 19 September 1973, and was due to fly to Mexico on 24 September.

"On the morning of 23 September, Matilde and I went back to Isla Negra to collect some of his belongings," he recalls.

"While we were there we received a phone call from Neruda in the clinic.

"He said 'Come back here quickly! While I was sleeping a doctor came in and gave me an injection in the stomach.'"

Mr. Araya says he and Matilde drove back to Santiago immediately. "Neruda died at around 22:30 that evening," he remembers.

Today, the head of Chile’s forensic medical service is leading a team of 13 experts who supervised the weekend exhumation of Neruda's corpse, nearly 40 years after he was laid to rest. The body is now in Santiago, about 75 miles from its resting place in coastal Isla Negra. The doctors aim to find signs of advanced cancer, signs of poison, or any other clue that could help them prove or disprove Araya’s statements.

The project follows the equally high-profile exhumation of President Salvador Allende two years ago. Mr. Allende died during the coup itself on Sept. 11, 1973. There was always some doubt about whether he killed himself or whether he was shot by soldiers taking over the presidential palace in Santiago. The forensic scientists confirmed that the death was a suicide.

General Augusto Pinochet led Chile’s military dictatorship from the day of the coup until a peaceful handover of power in 1990. In the first days of his rule, thousands of leftists were herded into detention centers, tortured, and at times killed. Neruda, despite being the country’s highest-profile communist after Allende, was still free when he checked into the hospital on Sept. 19.

Chileans have long wondered whether Neruda may have suffered a fate similar to that of former President Eduardo Frei Montalva and Allende’s interior minister, Jose Toha. Both died in the hospital, but judges later ruled that both men were murdered – Mr. Toha by strangulation and Mr. Frei by poisoning.

Following Araya’s allegations, Chile’s Communist Party filed a court case in 2011 to request a judicial order for an exhumation.

The mystery has drawn press attention from around the world, with photographers and TV crews jockeying for a view of the exhumation and competing to interview those who knew the poet. The current president of Chile’s Communist Party, Guillermo Teillier, was at Neruda’s beachfront home and burial place for the excavation and removal.

The tests aren't guaranteed to lead to any conclusive results, and thus the truth may never be known about the end of Neruda’s life. For now, the mystery is a cliffhanger. A wait of at least three months is expected before forensic results are released.

Venezuela's acting President and presidential candidate Nicolas Maduro waves to supporters during a campaign rally in the state of Cojedes Thursday. (Courtesy of Miraflores Palace/Reuters)

Venezuela's interim President Maduro addresses a topic Chávez largely avoided – crime

By Rebecca HansonWOLA / 04.06.13

Rebecca Hanson is a contributor of WOLA’s blog: Venezuelan Politics and Human Rights. The views expressed are the author's own.

Differentiating his campaign from those of his predecessor, Nicolás Maduro has made crime and violence in the country a major talking point so far. Roberto Briceño and others have suggested that the Interim President, unable to hide behind a charismatic personality, has been forced to take on the issue in a way that his predecessor was not. However, these comments are not totally accurate, in that the Hugo Chávez administration, since the mid-2000s, was increasingly engaged in citizen security initiatives, especially in lower-class areas of Caracas

As we have noted in previous blogs, these initiatives relied on both a militarized presence in high crime areas (exemplified by the Bicentennial Citizen Security Presence, or the Dispositivo Bicentenario de Seguridad Ciudadana [DIBISE]) and preventative approaches that advocate for a “decriminalization of poverty” (represented by the National Experimental Security University [UNES] and the General Police Council). While Maduro has been more vocal on the issue, his rhetoric, as we will discuss below, has not diverged drastically from Chávez’s. Rather, he has continued to pull from “social movement” strategies—promoting culture, sports, and arts in popular sectors—and mano dura solutions for those who do not “respond” to these approaches.

Maduro stated early on that he would assume citizen security as a “personal issue,” charging himself with becoming the president that “finishes off” crime in the country. However, in discussing the causes of crime in the country, Maduro has stayed close to Chávez’s discourse.

He has critiqued the media and the culture industry for making a “festival” out of death and celebrating “bullets and blood” in print and on television. He has also held United State’s capitalism and cultural decadence responsible in a number of speeches. This discourse is almost identical to that of Chavez, who also pointed to capitalist driven-inequality, media consumption, and destabilization plots spearheaded by Colombia and the United States as crime’s fountainhead.

Recently, Maduro announced two initiatives to reduce crime in the capital, the construction of “territories of peace” and the “Movement for Peace and Life,” which will link government resources with social movements and cultural activities. These announcements are especially interesting given the strong mobilization capacity the Chavez government has demonstrated in the past as well as the active relationships the government has cultivated with social movement groups and actors in popular sectors since the mid-2000s. 

Speaking in Petare in March, he announced that one of the key components of these “territories” would be the construction of “courts of peace” (canchas de paz) to create spaces for sports, culture, and educational workshops. According to Maduro, these territories of peace “are not an invasive, repressive, authoritarian, capitalist concept.  Rather, the concept is one that looks for the rebirth of humanity from within the community.” 

The Movement for Peace and Life was inspired by a youth collective “El Otro Beta” in Petare, which promotes art, culture, and sports in popular communities.  The collective was widely recognized last year for their campaign “Chavez es Otro Beta” before the presidential elections, which showed a youthful Chávez boxing, riding motorcycles, and rapping [See The Christian Science Monitor's coverage here].

Using this collective as its model, Maduro has said that the movement will bring together artists, youth social networks, and athletes to promote ideas that will encourage the “rebirth of the values of life.” The movement will be officially based out of the National Experimental Security University in Catia but will be spread out among 79 of the most dangerous municipalities in the city. 

The Interim President has said little regarding the role of the police and the military in fighting crime, other than to recognize institutions like UNES and national police reform in general as part of Chávez’s legacy. With his civilian background, one might assume that he will depend less on military ventures like the DIBISE.

Yet, recent comments suggest that he will continue to rely on Chávez’s dichotomous approach to crime (see post here). Emphasizing the need for dialogue in constructing peace, Madro said that he was willing to “go up into the most dangerous barrio in Petare without guns and on foot…without fear, to talk to the youth and tell them to stop the killing…to knock on the doors of the hideouts of the criminals” and engage them in a dialogue of peace.

However, in the same speech Maduro warned that his administration would “tighten the mano dura to protect the decent people (el pueblo decente) that have not been penetrated by the evil of violence. I extend my hand and if [the criminals] do not take it…we will go up [into the barrios] with the police and the National Guard because this has to end.” In another speech Maduro stated “With one hand we will be constructing education, culture, sports, and youth, but with the other hand there must be authority…citizens are guaranteed education [and] work in order to live a healthy life. The state says: For those who step outside of these rules, here is the law, here is authority.” 

Of course, many citizens’ perception of the military is not necessarily negative. And, the role of the military is complicated: They have been heavily involved in efforts like housing construction after natural disasters and, as in many Latin American countries, are viewed by many citizens as capable of “effectively” dealing with crime in the barrios.

Additionally, for some Venezuelans a mano dura approach translates into attempts to control previously chaotic and sporadic approaches to crime that have been confounded by high rates of impunity. In other words, for some mano dura suggests an actual follow-through with a consistent and effective citizen security plan.

Nevertheless, these statements also exhibit what Venezuelan sociologist Veronica Zubillaga has referred to as the “paradox of the Bolivarian Revolution.” As Ms. Zubillaga has pointed out, basic living conditions in popular sectors (especially for women and children) have improved dramatically within the Bolivarian Revolution thanks to the State’s social investment. However, these sectors are still disproportionately affected by violence and police abuse.

And, the Bolivarian government, in attempting to deal with drugs in the barrios, has turned to incarcerating young men from the lower classes in ever increasing numbers. On the ground this paradox means that those who do not “take advantage” of government missions and opportunities leave themselves open to military operatives and a future in a penal system riddled with problems. 

In my next post I will look at what Capriles has said about his plan for security in the country, how Maduro has responded to these statements, and discuss some of the reasons why Maduro might have decided to take up an issue that did not greatly impact Chávez’s popularity.

An indigenous woman of the Ixil region sits on the floor as she attends the trial against former Guatemalan dictator Efrain Rios Montt in the Supreme Court of Justice in Guatemala City Wednesday. The court heard several stories of the sexual violence perpetrated against Ixil women during the scorched earth campaign of the early 1980s. (Jorge Dan Lopez/Reuters)

Guatemala: Rios Montt trial hears testimony on conflict-era sexual violence

By Mike AllisonGuest blogger / 04.04.13

• A version of this post ran on the author's blog, The views expressed are the author's own.

[Yesterday], on the eighth day of the genocide and crimes against humanity trial of Efraín Rios Montt and Jose Mauricio Rodriguez Sánchez, the court heard several stories of the sexual violence perpetrated against Ixil women during the scorched earth campaign of the early 1980s.
The prosecution asked for a closed courtroom so that the women could give their testimony. However the judges denied their request. Instead, they asked that the media and others in the courtroom not identify the women in photos or by name.
The women spoke about the abuse that they and others suffered at the hands of the military and the paramilitaries as well as the individual (physical, emotional, and psychological) and communal trauma of the violence.

Very powerful testimony.
As I mentioned on Monday:

Violence varied from year to year and from department to department which gets obscured when we give an estimated number of deaths over a thirty-six year conflict at the national level. Doing so also obscures many of the other ways in which the people of Guatemala suffered (sexual violence, torture, forced displacement, generalized terror, etc). It also obscures the ways in which individuals and communities still live with the suffering thirty years later. An estimated 100,000 women of all ages were sexually assaulted during the conflict.

See Mary Jo McConahay, Sonia Perez-Diaz at the Associated Press, the Open Society Justice Initiative, and the Network in Solidarity with the People of Guatemala's coverage.Mike Allison is an associate professor in the Political Science Department and a member of the Latin American and Women's Studies Department at the University of Scranton in Pennsylvania.  You can follow his Central American Politics blog here.

Looking for day when Mexico's underworld is violence-free? Try looking back.

By Patrick CorcoranInSight Crime / 04.03.13

InSight Crime researches, analyzes, and investigates organized crime in the Americas. Find all of Patrick Corcoran's research here.

[This article is adapted from a longer research paper appearing in a recent edition of the journal Trends in Organized Crime.]

Mexico’s battles with drug trafficking have been a constant in the country’s modern history, but the activities and organization of the criminal groups operating in the clandestine industry have been in a state of constant flux. That flux, which continues today, lies at the heart of Mexico's violence.

During the 20th century and into the 21st, Mexico’s criminal organizations have grown increasingly sophisticated, globalized, and diversified. Whereas 90 years ago they were largely family organizations shipping marijuana and bootleg liquor to the US, today they traffic any number of products to and from nations in all four corners of the globe.

Over the course of the same period, Mexico’s criminal gangs also underwent a related process of consolidation and growth that peaked in the 1980s. The family operations gave way to steadily larger, wealthier criminal organizations, culminating in the Guadalajara Cartel, run by Miguel Angel Felix Gallardo, that controlled drug trafficking in most of Mexico during the presidency of Miguel de la Madrid. Since then, the trend has been the opposite: a breakup of the larger organizations, and the rise of regional local challengers to their supremacy. The chaos that followed has engulfed a nation.

Premodern groups

Mexico’s smuggling networks have emerged as an unfortunate emblem of the nation only relatively recently, but they have existed for more than a century. Initially, they were not dedicated to methamphetamine and cocaine, two of the drugs that currently offer the highest profit margins, but rather opium, and later marijuana. These groups, which first began to emerge toward the end of the 19th century, were initially not seen as a major public security threat. Indeed, newspaper reports at the time detail the concern for opium users, not bloodshed attached to feeding the market.

These groups were largely family-based. In the case of the opium traffickers, these groups were originally concentrated among the Chinese immigrants populated across Mexico’s northern region, especially northwestern states like Sinaloa. Reports from the era indicate that the marijuana production, on the other hand, was not especially associated with Chinese immigrants, and marijuana traffickers remained largely small-time operations that continued to be built around local family ties. One example of such an organization was that of Maria Dolores Estevez, or Lola la Chata, as she was more commonly known. Lola and her clan trafficked in vice (especially marijuana) in Juarez for some 30 years in the middle of the 20th century, though without ever achieving the wealth or international notoriety of today’s groups.

But if the early groups had a lesser impact on the state of the nation than today’s do, they were still instrumental in setting the stage for the future development of Mexico’s trafficking organizations. The groups that emerged in that period, while far different from their future iteration, spawned certain characteristics that would be vital to their coming growth.

First, they created smuggling networks in and out of the remote Sierra Madre Occidental, which lies along the convergence of drug-producing states Chihuahua, Durango, and Sinaloa. These states have remained home to the most powerful organizations ever since, and have birthed the nation’s most notorious traffickers. The tendency toward familial link in drug trafficking also remains very common today -- see, for instance, the Beltran Leyva Organization -- although the complexity of trafficking today requires any criminal group to branch out beyond blood ties.

The early groups also developed a capacity to slip past the US border, feeding the market for bootleg alcohol (during prohibition), marijuana, and opium. Since the US market for illegal drugs was later to become the most lucrative in the world, this gave Mexican traffickers the most sought-after job skills in the industry.

Furthermore, these early 20th century groups began to develop links to the political system, especially under the Institutional Revolutionary Party (PRI), which emerged from the embers of the Mexican Revolution and dominated the nation’s governance until 2000. For instance, a major Chinese-Mexican trafficker in the 1930s was Antonio Wong Yin, a close friend of the mayor of Torreon (where he was based), the governor of Coahuila (which houses Torreon), and the army general charged with controlling the region. Such political support for traffickers, which are eerily similar to the stories of corruption that periodically emerge in the Mexican media today, was not uncommon.

Because Mexican groups thrive in large part with the support or tolerance of government agents, these early inroads from the forerunners of the political system were priceless, both at the time and as the industry grew.

The internationalization of Mexican crime

The introduction of cocaine to the US drug market in the 1970s and 1980s changed the circumstances dramatically for Mexico’s drug traffickers. Most important, the profit margins exploded; a recent report from the International Crisis Group referred to a 50-fold price discrepancy for a kilo of cocaine in Colombia compared with the same kilo in the US, from $2,400 to $120,000. Today’s substantial divergences were presumably even more yawning four decades ago, as US prices for cocaine have spent most of the meantime in decline.

Nothing like those profits was available from marijuana trafficking. As a consequence, successful Mexican cocaine smugglers were able to accumulate far more wealth than their criminal ancestors. The tendency was furthered as Mexican gangs, in the late 1980s and early 1990s, began to insist on payment not in cash but in product from their South American partners; at that point they were no longer subcontractors but rather wholesalers, with exploding revenues to match. This shift upended the power equilibrium between the traffickers and their government sponsors; the political system had an increasingly difficult time administering unruly gangsters.

The government, however, remained intimately involved, even as it lost some degree of control. Traffickers had deep relations with the political and security apparatus in Mexico; many of the most notorious capos, such as Miguel Angel Felix Gallardo, and Juan Jose Esparragoza, alias "El Azul," were former police officers. A parade of high-ranking government officials, from former Federal Police Commander Guillermo Gonzalez Calderoni, who was reportedly a favorite of President Carlos Salinas in the 1980s and 1990s, to General Jesus Gutierrez Rebollo, the new drug czar who was found to be on the Juarez Cartel payroll in 1997 (and made famous in the movie "Traffic"), have been discovered working for the groups that they are meant to attack. Such arrests, to say nothing of the rumors surrounding officials who are never formally accused, continue to the present day.

Another important shift was toward a more international system. With cocaine the most important substance in the industry, the Mexicans could no longer rely only on their connections within their country and at the border to do business. Ties to cocaine producers in South American nations like Peru, Bolivia, and especially Colombia became essential. This added another several steps to the supply chain, and made feeding the US market a more complex endeavor. A globalized approach became a necessity.

Largely in response to this new environment, Mexican groups themselves grew more sophisticated and more complex, pioneering new methods of airborne and maritime smuggling. They also shifted toward a more hegemonic operational model; the model of a small family firm directing their operation from a marginal Mexico City suburb or barrio in Juarez was no longer viable. Such smaller groups were absorbed or pushed out by new hegemons, which controlled entire regions and coopted public officials on a growing scale. Thus, control of the proverbial "plaza," or trafficking corridor, became a requisite. 

The best example of the new hegemonic model was the Guadalajara Cartel of the aforementioned Felix Gallardo. Originally a police officer and governor’s bodyguard from Sinaloa, Felix Gallardo and his crew moved south to Guadalajara in the 1970s in response to Operation Condor, in which the Mexican army launched a ferocious eradication campaign in the Sierra Madre mountain range. From Guadalajara, he was partnered with Colombian traffickers like Pablo Escobar, and became Escobar's most important Mexico associate. He also came to dominate the underworld in much of his country; Felix Gallardo and his subordinates controlled contraband within most of Mexico’s Pacific Coast and its US border.

The groups of today

The Mexican criminal organizations of today differ from those of Felix Gallardo’s era, and even more so from their predecessors a century ago. The most important factor is that the trend toward consolidation ended with Felix Gallardo. Following his arrest in 1989, the boss reportedly divided up most of Mexico and handed out parcels to his underlings, so as to prevent a breakup of the organization he had built. However, the gambit – which may be apocryphal; Felix Gallardo has told reporters that he had nothing to do with it – essentially failed. What had been the Guadalajara Cartel devolved, broadly speaking, into the Tijuana and Juarez Cartels, which were mortal enemies through the 1990s, despite their shared roots. These groups in turn, spawned a handful of further competing organizations, such as the Sinaloa Cartel, the Beltran Leyva Organization, and, in recent years, the Jalisco Cartel - New Generation.

That is, the splinter groups have given birth to splinter groups. The weakness of the remaining groups have encouraged other upstarts to rise up and challenge the existing bosses, turning the process of atomization, as it is often called, into a vicious cycle. Consequently, no recent group has ever matched Felix Gallardo’s territorial control, nor does it appear likely that any one ever will.

This cycle has been a significant driver of violence. The rivalries between the new gangs are in and of themselves violent contests. Tens of thousands have died thanks to disputes between the Gulf Cartel and the Zetas, for example, and between the Juarez Cartel and the Sinaloa Cartel. The problem is worsened because the fallen capos are often replaced not by businessmen but rather hit men, whose natural inclination is toward violence. Today’s groups also suffer from a greater degree of internal instability; as InSight Crime has reported about the Zetas in recent years, amid a context of constant criminal warfare and uneven cash flows, violent subordinates are often tempted to ignore or challenge their bosses.

Today’s gangs are far more reliant on alternative sources of income, beyond drug trafficking. These include oil theft, extortion, kidnapping, human smuggling, robbery, and pirate merchandising. In all likelihood, the revenues of these crimes collectively amount to no more than a few billion dollars a year, but they impose a greater cost on the society as a whole. A successful international drug deal imposes no direct cost on the community at large, but a kidnapper nearly always targets the most vulnerable. This is also true for extortion, which, if common enough, amounts to a disincentive against success for entrepreneurs.

Finally, the groups today no longer unquestionably subordinate the state. For all his power, Felix Gallardo ultimately answered to the political system. When the federal government decided to bring him down, it had no problem in finding him and incarcerating him for life. (According to accounts of his arrest, when he saw the Police Commander Gonzalez Calderoni just before his arrest, Felix Gallardo greeted him as a friend coming to visit.)

Today, this is no longer the case. The increased revenues from cocaine trafficking, discussed above, has contributed to this, and is an important part of the story, but developments within Mexico’s political system are just as important. Mexico’s criminal organizations are weaker in certain respects, but so is the state. The PRI, the political party that dominated from the 1930s onward, lost power for the first time in 2000, and the federal government has never recovered the near-omnipotence it once enjoyed.

As a consequence, the traffickers no longer exist within a system administered by the federal government. Rather, both the state and organized crime are in a constant power struggle. Given that the PRI was an authoritarian entity, this loss of power is, on balance, a good thing, but one of the unfortunate side effects was the state’s growing incapacity to impose itself on organized crime.

– Insight Crime researches, analyzes, and investigates organized crime in the Americas. Find all of Patrick Corcoran's research here.

Supporters of opposition presidential candidate Henrique Capriles hold up posters of him prior to the start of a march against violence in Caracas, Venezuela, Monday. Venezuelans will vote in the presidential elections on April 14. (Fernando Llano/AP)

Venezuela presidential election: lack of issues becomes the issue

By David SmildeWOLA / 04.02.13

 David Smilde is the moderator of WOLA's blog: Venezuelan Politics and Human Rights. The views expressed are the author's own.

As mentioned before on this blog, the campaign for the April 14 presidential election is shaping up to be largely issue free as Nicolás Maduro, with a comfortable lead, focuses on his connection to the figure of Hugo Chávez, and Henrique Capriles focuses on trying to make clear that “Maduro is not Chávez.”

[Read about some of the issues the next Venezuelan president will have to face here.]

On March 23 the Observatorio Electoral Venezolano, one of the domestic NGOs that has been accredited to observe the election, criticized the lack of content in the campaign in the following terms:

Few ideas are being heard regarding how the difficult task of governance will be assumed over the coming years. Instead, we hear degrading insults of various types that deteriorate the national political climate… an aggressive discourse that obviously does not help political differences, which in any normal electoral debate would be handled through arguments in a pacific manner.

On Sunday March 31, UCV political scientist and pro-government activist Nicmer Evans posted a piece on his blog calling on Maduro to discuss substantive ideas.

I recommend focusing attention on the central themes, such as the role of the communal economy, the construction of the communal state, the role of the private sector in the country’s development, the transformation of state structures, a method for overcoming dependence on oil profits, how to apply the Fatherland Plan that Chávez left (his instruction before dying was for this to be discussed and developed by the bases, something that has not been mentioned again), the method of political collectivization of political decisions, the operationalizion of the formula to resolve inflation and devaluation; we should discuss the price of gasoline, put forward a method to resolve the problem of crime and violence and other problems that anyone who can read could continue to add on to.

Response from the government was swift, with Foreign Minister Elias Jaua responding to Evans with a series of Tweets:

It is surprising that political scientist Nicmer Evans tries to distract @NicolasMaduro, who has the task of directing this battle, with a debate …Who does Evans’ interpolation of @NicolasMaduro help? In the midst of battle, the soldier closes ranks behind he who leads…Let’s go patriots, let no one be distracted from the defense of the popular mandate and legacy of Comandante Chávez. You’re doing well @NicolasMaduro, you’re doing well…Everyone close ranks behind @NicolasMaduro in this battle for the life of the Fatherland. Later there will be time for debate. 

The next day Evans announced on Twitter that managers of the state radio station Radio Nacional de Venezuela had decided not to run his weekly program this Monday, but that he hoped the program would return to the air next week. Later that day he posted a rejoinder stating, among other things, “what is important is to reanimate the political discussion in our country which, in my view, has been banalized by a pragmatic electoral vision."

Today, the first day of the campaign, pollster and political analysis Luis Vicente Leon tweeted a series of messages suggesting that classist, racist, homophobic, and other insults based on social categories were not politically effective.  ”Voters care little about insults. They are interested in a candidate’s capacity (or incapacity) to resolve their daily problems.”

–  David Smilde is the moderator of WOLA's blog: Venezuelan Politics and Human Rights. 

People walk in front of an HSBC branch in Buenos Aires, Argentina, last month. (Victor R. Caivano/AP)

Argentina pushes to prosecute HSBC bankers for money laundering

By Steven DudleyInSight Crime / 04.01.13

InSight Crime researches, analyzes, and investigates organized crime in the Americas. Find all of Steven Dudley's research here.

The accusations from Argentina's tax authority that London-based HSBC laundered over $100 million may pale in comparison to that of the bank's US - Mexico case, but they raise the specter that someone from HSBC could finally go to jail.

The charges, [which were] announced by the head of Argentina's tax collection agency, Ricardo Echegaray, on March 19, include tax evasion and money laundering totaling up to $120 million.

HSBC was in damage control mode prior to the announcement and in a press conference, Mr. Echegaray seemed angered by the company's attempts to persuade him not to proceed with the case. 

"Stop looking for me to lobby me," he said, referring to the bank. "Pay us what you owe us. Then you will go to court, and it will determine what actions to take."

The company can hardly afford another public relations hit. It has spent the last few months trying to shore up its US - Mexico case and its internal anti-money laundering (AML) team.

The company has hired a former a US Deputy Attorney General, Jim Comey as well as Joseph Evans, who, up until a few months ago, was the head of the Drug Enforcement Administration's (DEA) regional office in Mexico City

InSight Crime Analysis

The Argentine government's combative attitude is a stark contrast to the United States government, which decided to fine the bank a record $1.9 billion but did not pursue criminal charges even though the company had been a laundering haven for years.

A 337-page report by the Senate Committee on Homeland Security and Governmental Affairs released to coincide with hearings on the case in July 2012 details just how much worse it was than that of Argentina. (Watch hearings and read report here.)

As money laundering schemes go, this one was pretty simple. Drug traffickers' proceeds from the US were moved, in bulk or in small quantities, back to Mexico where Mexican financial institutions accepted large deposits with less scrutiny and controls, and kept the money in US dollars. The money was then wired back, or hauled back in armored trucks, to the US from exchange houses or Mexico-based banks, including HSBC's Mexico Branch, HBMX.

"From 2007 through 2008, HBMX was the single largest exporter of US dollars to HBUS [HSBC's United States branch], shipping $7 billion in cash to HBUS over two years, outstripping larger Mexican banks and other HSBC affiliates," the report says. "Mexican and US authorities expressed repeated concern that HBMX's bulk cash shipments could reach that volume only if they included illegal drug proceeds."

HSBC plead ignorance in the matter, and bank officials testified that once they understood the gravity, they acted as quickly as possible to shore up the loopholes. However, the timeline and internal communications of the company, also detailed in the committee's report, suggest otherwise.

"From 2000 until 2009, HSBC Group and HBUS gave Mexico their lowest AML risk rating, despite overwhelming information indicating that Mexico was a high risk jurisdiction for drug trafficking and money laundering," the report says.

Indeed, every year, the State Department highlighted this risk in its annual report on money laundering. And every year, HSBC downplayed this risk. Internal documents show that in 2005, HBMX employees falsified documents related to the mitigation of this risk, including fabricating minutes of meetings of the anti-money laundering team that never occurred. The company cannot claim ignorance because a whistle-blower reported the incident that same year.

"In one three-month period from November 2006 to February 2007, HBMX shipped nearly $742 million in U.S. dollars to HBUS," the report says. "At its peak, HBMX exported $4 billion in bulk cash shipments to HBUS over the course of one year, 2008. Until it sharply curtailed its U.S. dollar services in Mexico in January 2009, HBMX shipped more U.S. dollars to HBUS than any other Mexican bank or HSBC affiliate."

In that 2002 - 2009 time span, there were other warnings that seemingly went unheeded. US government agencies, including the Department of Homeland Security, the Federal Bureau of Investigation, and the DEA spoke in Congressional hearings about money laundering in Mexico. 

Other banks, including rival Wachovia, were investigated and sanctioned for moving billions in drug money in the same way as traffickers were using HSBC's bank system.

"In addition to its high risk location, clients, and activities, HMBX had a history of severe AML deficiencies," the report states. "Its AML problems included a widespread lack of Know Your Customer (KYC) information in client files; a dysfunctional monitoring system; bankers who resisted closing accounts despite evidence of suspicious activity; high profile clients involved in drug trafficking; millions of dollars in suspicious bulk travelers cheque transactions; inadequate staffing and resources; and a huge backlog of accounts marked for closure due to suspicious activity, but whose closures were delayed."

One of those clients was Zhenli Ye Gon, a Chinese-Mexican citizen and owner of several Mexico-based pharmaceutical companies. In March 2007, Mexican and US authorities raided several of Ye Gon's properties in Mexico and found $205 million and 17 million Mexican Pesos in cash, as well as weapons and wire transfer records.

Ye Gon was captured in July 2007 in the United States and accused of being a major player in the methamphetamine trade. He has maintained his innocence and the case was thrown out of court in the United States. He remains in custody and faces extradition to Mexico to confront similar charges.

The Senate Committee report, citing Mexican news sources and the Mexican Ministry of Finance, says Ye Gon moved $90 million through four Mexico-based banks, including HSBC.

Despite all this, HSBC maintained its "standard" rating for Mexico's risk until May 2009, when it abruptly changed it to highest warning. Senate Committee members believe that was because the company realized that it was under US and Mexican government scrutiny.

"HBUS' awareness of the increasing US law enforcement and regulatory interest in Mexico may have contributed to its decision to review and, ultimately, in May 2009, to increase its risk rating for Mexico," the report says.

The HSBC case is not limited to Mexico. As Reuters reported, US authorities were able to reconstruct the case using a Colombian middle-man who pleaded guilty and turned state's witness. The Colombian detailed how the groups would use the sale of domestic goods to camouflage their money moving back to that country. 

"In a typical transaction, a middleman in a drug cartel would offer to deliver consumer goods, such as computers or washing machines, to Colombian businesses on favorable terms," the Reuters report says. "Another person in the United States would buy the goods from firms using funds from drug trafficking, and fulfill those orders."

The underworld reputation of the bank was that of a safe haven. Reuters says one drug lord described it as "the place to launder money." The Sinaloa Cartel reportedly used the bank to purchase an airplane

Despite what one top Department of Justice (DOJ) official called "stunning failures of oversight," the DOJ did not prosecute any bank officials, opening up the department to widespread ridicule and scorn. 

"This is corruption," one government investigator who wished to remain anonymous told InSight Crime. "We do corruption on a bigger scale and more efficiently than any banana republic."

Major media quipped that the bank appeared "too big to indict," a play on the notion that many banks were "too big to fail" during the economic meltdown in late 2008.[...]

Argentina, on the other hand, is the perfect candidate to take these bankers to task. The country already lived through a banking meltdown of epic proportions and had an overall dismal couple of decades economically thanks, in part, to bankers' and investors' whims.

The government is "socialist," at least in rhetoric, and there is no such thing as "too big to indict" when your entire banking sector has gone through that type of turmoil and your economy has been turned upside down.

What's more, the bank is British and a recent vote on the Falklands to stay with the Motherland no doubt irked the government. In fact, all this may make the Argentine government more inclined to pursue the banks as a kind of divine retribution.

However, prosecution is unlikely. The financial crimes unit, known by its acronym UIF, has been even more of a joke than that of the United States, and has come under constant scrutiny for being "politicized" and lacking any teeth.

When the unit finally prosecuted someone, titled the article: "The UIF has its first sentence." The news outlet said the condemned man had made "ignominious" history. The unit had been formed in 2000. The irony: the sentenced man was slated to be extradited to the United States.

– Steven Dudley is a director at Insight – Organized Crime in the Americas, which provides research, analysis, and investigation of the criminal world throughout the region. Find all of his research here. Additional reporting provided by Andres Ortiz Sedano.

A photographer takes pictures during a media tour in the Casa Daros at the Casa Daros museum in Rio de Janeiro, Brazil, earlier this month. (Felipe Dana/AP)

Knowing neighbors through art: Rio houses new Latin American art museum

By Taylor BarnesCorrespondent / 03.30.13

Despite making up nearly half of the South American land mass and bordering every country on the continent but two, Brazil has paradoxically long looked further afield to Europe and the United States for its cultural references. While French cinema and all-inclusive trips to New York are commonplace, a carioca, or resident of Rio de Janeiro, is hard-pressed to view the same element of chic attached to other Latin American countries.

But Rio de Janeiro’s newly opened Casa Daros may change the direction upon which a carioca’s cultural compass is fixed.

The art house is the project of Zurich-based collector Ruth Schmidheiny and German curator Hans-Michael Herzog, who acquired more 1160 works from 117 contemporary Latin American artists over the past thirteen years.

“When we – precisely at the start of the new millennium – began assembling a collection of contemporary art from Latin America, hardly anyone from outside the Latin American continent was aware of its powerful intrinsic potentials," the two wrote in a publication marking the museum opening. "The view from outside of the art of Latin America was impaired by ignorance and arrogance."

As the works gained credibility through expositions in Europe, the pair began to look for a permanent exposition space in Latin America itself. They considered locations in Cuba, Venezuela, Colombia, and other Andean countries, but decided against them due to their political situations, violence, or lack of infrastructure. They also considered Buenos Aires and São Paulo, but determined that each already had a vibrant arts scene while Rio had space to grow.

“People [from Rio de Janeiro] do not have access to the culture of Latin America in the same way that they get Europe [and] North America,” says Felipe Mariano, a teacher who visited the museum’s exposition of contemporary Colombian artwork. He says that cariocas’ access to Latin America is often superficial.

“We have a relationship with Argentina because of soccer,” he says. “If you go to Bolivia, someone [from Rio] will say, ‘Are those the guys that play flutes in the downtown?’” Mariano says, referring to Andean immigrants who often sell handicrafts and play instruments in Rio.

The museum will bring in new collections from Zurich about every five months, and the inaugural exposition, “Cantos, Cuentos Colombianos,” (Colombian Songs and Stories) brings works from 10 contemporary Colombian artists. The pieces of work included in the inaugural show are largely preoccupied with the country’s violent history and loss of lives. A series of nude photos show a fit young man in poses reminiscent of Michelangelo's “David.” But rather than having one foot resting behind him, as does David, a closer look reveals that the model is instead an amputee.

Another work asks viewers to blow hot breath on a series of vanity mirrors, where silhouettes of Colombia's disappeared come into view.

“It is a neighboring country that we do not know anything about,” says Claudia Noronha, a publicist at the Casa Daros who was giving enthusiastic guided tours to its new guests. “It is an art that we Brazilians do not know."

Surrounded by history ... and art

In a city bustling with new Olympic, hotel, and condominium construction, the Daros collectors chose to carefully restore a neoclassical Catholic school for orphan girls, built in 1866, instead of housing the work in a flashy new building.

On the more than 118,000 square feet of the Santa Casa de Misericórdia, restoration crews painstakingly removed and retreated each wooden plank in its floor, maintaining 60 percent of the original flooring. They chipped away at ten layers of paint to restore the original walls of the school, discovering that they were made up of an imitation marble created by an Italian technique called escaiola. Marble holy water dispensers still adorn the entrance to the chapel, now the first room of the main exhibit hall. Century-old palm trees 130 feet tall elegantly demarcate the museum in the crowded Botafogo neighborhood that hosts it.

Museum staff say their goal was to engage in a model of historical renovation in Rio, where interest in restoring the dank colonial-era regions of the city is now budding.

Contemporary Brazilian artist Vik Muniz, famous for his use of garbage to produce portraits of trash-pickers in Rio de Janeiro – the subject of the Oscar-nominated documentary "Wasteland" – was invited to the Casa Daros to repurpose the trash from its restoration. 

The statue of the saint Nossa Senhora das Graças atop the entrance of the museum was what caught Mr. Muniz's attention. Under his guidance, the restoration crew reassembled pieces of metal, wood and old furniture to recreate her image on the floor of the artist's hangar. A photo of the resulting image is part of Muniz's exhibition, "Pictures of Junk."

"You come into here and what is the first thing you see? This saint," Muniz said of the work. "So I thought: She is the most obvious thing in this place. The rest is art."

Way beyond weight in Brazil: documentary on child obesity now free online

By Rachel GlickhouseGuest blogger / 03.29.13

• A version of this post ran on the author's blog, Riogringa. The views expressed are the author's own.

Maria Farinha Filmes, the company behind 2012's "Way Beyond Weight" (Muito Além do Peso), released the movie on Vimeo recently, so it's available for worldwide viewing.

The film sheds light on Brazil's child obesity epidemic, ranging from this terrifying statistic about infant soda consumption to the fact that on average, Brazilian kids spend three hours per day in school and five hours per day watching TV. The movie also looks at the fact that obesity in general is a growing problem in Brazil. It points out, for example, that Brazilians consume an average of 112 pounds of sugar a year.

But perhaps what's most interesting about the movie is putting Brazil's obesity epidemic into a global perspective as a result of deepening globalization. While interviewing Brazilians across the country from all levels of the socioeconomic spectrum, the movie also includes foreign voices, including people from the United States, the United Kingdom, China, and Mexico, among others [See The Christian Science Monitor's focus on obesity in Latin America here.]. One Brazilian observer explains her perspective that a country is defined by the food it eats, and that it is not necessarily a good thing to be able to go anywhere in the world and eat the same exact thing. There's also an interesting point that applies to other large growing economies: parents sometimes send unhealthy processed food for children's school meals to show off a new ability to consume, and giving kids products they may not have had access to when they were young. [see original post for link to documentary in Portuguese.]

Rachel Glickhouse is the author of the blog

Venezuela's opposition candidate Henrique Capriles greets supporters during a campaign rally in Cabimas in the western state of Zulia Tuesday. Venezuela will hold presidential elections in April. (Isaac Urrutia/Reuters)

Venezuela's precampaign season off to a roaring start

By Emiliana DuarteGuest blogger / 03.28.13

• A version of this post ran on the author's blog, Caracas Chronicles. The views expressed are the author's own.

Let’s recap of the first seven days of non-campaign campaigning, or in criollo doublespeak: pre-campaña. Technically, you see, the official campaign only starts on April 1 and lasts a mere 10 days. Obviously neither candidate has taken the [electoral commission] CNE campaign schedule particularly seriously.

[Opposition candidate Henrique] Capriles began a nation-wide stump tour, hitting two states per day, holding mass outdoor rallies that follow, more or less, the same format. His Asambleas Populares, as they’re called, kick off with four or five speakers who articulate their grievances – campaign sources confirm the testimonials always center on five key issues: education, people with disabilities, crime, the economy, and justice. These professional gripers then hand off to Mr. Capriles who gives a rousing speech drawing on their themes before circling around to his broader messages (Truth over lies, Nicolás Maduro’s government is inept, Venezuelans don’t deserve all these problems.)

That last bit is the part that you see on TV.

It took some doing to piece together that last paragraph, because this pre-campaign is not nearly as dospuntocero (2.0) as last October’s. Back then, budgets and official rules allowed for a Capriles YouTube channel to be the permanent source for almost real-time, all-inclusive coverage of campaign appearances. That’s not really possible this time around. Maintaining a constant video web presence requires a fully staffed unit exclusively dedicated to filming, recording, and uploading videos, not to mention expensive servers on which to host your data and permanent monitoring and marketing of the material via social networks, which is also not free.

Last year, Capriles’s public addresses were immediately accessible in full, minutes after they happened, indexed and searchable through his website. Today, I tried to find the talking points I’m citing, and all I could find is a blog,, last updated on march 21 – five days [before this blog was written], which is an eternity in a campaign as short as this one. So that right there shows you – if last year’s campaign was run on a shoestring, this year’s is being run on a tatty old cabuya [twine/thread].

[Sunday's] campaign events featured a particularly poignant testimonial. Before Capriles and a large crowd, a father of a dead chavista member of the armed forces, related the grotesque story of how his son’s death was allegedly kept secret due to interests of organ trafficking mafias, allegedly linked to the government, aimed at making a profit off of his son’s death.

I was awestruck by the candor of said speaker, since I cannot conceive of a similar story being told to the public six months ago. That man had way too much to lose, and Capriles would’ve deemed it way too risky to highlight such a controversial example of chavismo turned sour. Which might explain why this clip, and many of the other testimonials, have not been publicized by any campaign, including such Capriles-friendly media outlets as LaPatilla.

On the [interim President] Maduro front, his non-campaign campaign appearances [last] week were framed both as formal State functions, as acting president of the republic, and as strictly electoral events, as candidate for president of the republic: a mass rally to graduate community doctors, broadcast en cadena nacional [where a program is broadcast on all channels], (in which he led the crowd to sing a rousing version of Cuba’s National anthem), a live TV event in Apure to give loans to farmers (while wearing a cool hat), another live TV broadcast to address political allies, a third live TV visit to an oil site in Monagas (oil workers broke out into spontaneous song, musical instruments included). These do not include Sunday night’s TV address to welcome newly-added supporters to the high-profile farandula chavista sphere (he blamed the opposition for the electrical failure), or the spiritual homage to commemorate nine days after Chávez’s farewell ceremony.

Oh, also, he opened a Twitter account and tried to coin a new dance craze. Gangnam Style, watch out.

Substantively, talking points worth mentioning, Maduro-wise, are his defensive stances towards those who criticize him for mentioning Chavez a whole bunch (“I feel guilty, I should mention him a million times.”), insults to Capriles [...], and finally, an interesting focus on crime.

Having acknowledged in several public speeches that crime is a big deal, Maduro based his call to action, around the colloquial “vamos a echarle bolas entre todos” [go all out].   He also founded the Movimiento por la Paz y la Vida yesterday, which will receive, via Twitter, suggestions from the general population so that “artists, athletes, doctors, and anyone willing to participate” may pitch in to help bring down crime and raise moral values to help stop violence.

Maduro has also made a point of pitching the launch of so-called MicroMisiones, social programs aimed at targeting inefficiencies in…other social programs. Part of the baroque turn in late-stage chavismo. Take it away, Nico:

"Cuando se detecte algún tipo de ineficiencia, como por ejemplo en el caso de la dirección de una fábrica o de un hospital, se activará una micro misión conformada por un equipo especialmente entrenado donde están expertos en la materia, donde están cuadros políticos comprometidos con el proyecto, donde está la FAN, y ellos juntos intervienen ese objetivo”

"When we detect some kind of inefficiency, such as in the case of the management of a factory or a hospital, we will activate a micro mission comprising of a specially trained team of experts, committed to the political project, and working together with the armed forces (FAN)."

Of course, this round-up gives a false impression of equivalent access. Readers abroad should not be confused, though: Maduro’s y-que-pre-campaign [and-what-pre-campaign] is a million times more visible than Capriles’s – splashed all over the growing state media behemoth, billboards, the metro, everywhere. Capriles’s campaign, largely shut out of mass media, isn’t even that easy to find on YouTube. Así, as the man said, son las cosas [And that's the way it goes].

- Emiliana Duarte is a writer for Caracas Chronicles, the place for opposition-leaning-but-not-insane analysis of the Venezuelan political scene since 2002.

Report: Declining violence in Juarez, Mexico a win for Calderon administration

By Patrick CorcoranInSight Crime / 03.27.13

- Insight Crime researches, analyzes, and investigates organized crime in the Americas. Find all of Patrick Corcoran's research here.

Prominent conflict analysis NGO International Crisis Group (ICG) issued its first report examining Mexico’s security challenges, providing a broad overview of the shortcomings and the successes of Calderon's government.

ICG has built a reputation for analyzing some of the bloodiest and most intractable political conflicts on the planet, from Colombia and Guatemala, to Syria and Iraq. Now, with a new report, "Peña Nieto's Challenge: Criminal Cartels and Rule of Law in Mexico," the NGO has turned its gaze toward Mexico as well, an implicit acknowledgement of the degree of the decline in the nation’s security.

The 52-page report includes sections that examine the nature of Mexico's criminal groups, the policies of former President Felipe Calderon, and the consequences of Mexico's spike in violence. The report also includes an extended look at the lessons that may be drawn from the drastic decline of Ciudad Juarez, and the city's subsequent rebound.

InSight Crime Analysis

ICG makes it clear why Mexico's transnational criminal organizations, labeled "criminal cartels," are chasing the huge profit margins available from trafficking various illegal substances, especially cocaine:

A kilo brick cost about $2,400 in Colombia, $33,300 when sold wholesale in the U.S. and some $120,000 when sold 'retail' on the streets of U.S. cities. In trafficking and distribution, the parts dominated by Mexican traffickers, the price rose 50-fold.

Popular conceptions of Mexican drug trafficking – such as the mountain-based drug capos celebrated in the "narcocorridos" – revolve around these transnational groups. However, this conception of powerful cartels pulling all the strings of the drug trade is no longer enough to describe the complexity of Mexico's security problems. In recent years, a wide range of other criminal activities, from oil theft to extortion, have displaced drug trafficking as the major money-maker for criminal organizations.

And as InSight Crime has pointed out , the gangs behind much of Mexico's violence are not limited to the so-called "criminal cartels." Smaller regional gangs have steadily eaten away at the absolute control of groups like the Guadalajara Cartel of the 1980s or the Juarez Cartel of the 1990s.

Calderon's response to these shifting security dynamics was based on a heavier use of the military and aggressive manhunts targeting big-name traffickers, or "kingpins." ICG goes on to argue that this approach – regardless of the financial and operational support received from the US–  was insufficient to tamp down on the growing levels of violence linked to drug trafficking when Calderon assumed office. Likewise, the security and justice reforms initiated under Calderon have done little to deal with the immediate threats to Mexican security, although they may have laid the foundations for long-term improvement.

Indeed, rather than limiting the damage, Calderon’s policies seem to have escalated the scale of the fighting. The impact is visible on the streets in a growing number of cities, and is reflected by the corruption of an increasing number of government institutions.

In terms of Calderon's successes, ICG takes a long look at Juarez, the Chihuahua border town that was the nation’s most violent city for most of the president's tenure, topping out at more than 3,000 murders in 2010. This surge in violence was due in part to a long-standing battle between the Sinaloa Cartel, led by Joaquin "El Chapo" Guzman, and the Juarez Cartel for control of the key border crossing.

But, as InSight Crime has reported , it also stems from the presence of hundreds of local street gangs that worked for the two cartels and served to accelerate the intensity of the larger conflict. Since 2010, however, violence has fallen dramatically. Murders in October 2012 were almost 90 percent lower than the corresponding figure from two years prior, making Juarez one of Mexico's undeniable success stories.

Determining the sources of the improvement has proved trickier than explaining the causes of the violence, but the ICG report mentions a small handful. One is the arrest of particularly violent local commanders, such as Jose Antonio Acosta and Noel Salgueiro, who had commanded death squadrons responsible for hundreds, if not thousands, of deaths since the war started in 2008. Another explanation is that Guzman has simply won the fight, and the forces loyal to the Juarez Cartel have lost the capacity to continue fighting.

ICG highlights certain aspects of Calderon's policies which may have helped ease the bloodshed in Juarez. First, the social programs of Todos Somos Juarez (which kicked off in 2010, backed by the Calderon administration), flooded the city with federal cash, giving at-risk youth substantial resources to help them avoid the lure of street gangs. Second, the local police, under the leadership of new boss Julian Leyzaola, took on a much more prominent role, and has been aggressive in implementing something like a zero-tolerance policy toward petty crime. This has not been without its side effects – the number of residents who have passed through city jails has exploded, and there have been accusations of abuse by local police – but Leyzaola’s tenure has coincided almost exactly with the decline in murders.

Insight Crime researches, analyzes, and investigates organized crime in the Americas. Find all of Patrick Corcoran's research here.

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