The Logic of the Organized Crime Business Model

Rather than attacking the mayors who raise their voices, it may be better for Minister Cordero and Undersecretary Monsalve to refine anti-corruption legislation.

In the last week of June, a significant controversy arose after a mayor indicated that there was evidence that some politicians are financed with drug money. Her statement generated heated reactions from ministers and undersecretaries in the Boric government.

The truth is that if I were her, I would have been even more categorical and would have indicated that more than evidence, we are talking about a business model that, to be successful, requires corruption, and that even the United Nations Office on Drugs and Crime states includes the corruption of public officials. The UN definition states: “Organized crime is a continuing criminal enterprise that rationally works to profit from illicit activities that often have a high public demand. Its continued existence is maintained through the

corruption of public officials and the use of intimidation, threats, and force to protect its operations.” Having established that it is a business model that must, among other things,

corrupt public officials , the question to answer is which ones are of interest to them, but first let us examine some obvious characteristics of the model that all stakeholders in the matter should know, including the ministers and undersecretaries of the current government, and certainly, deputies and senators interested in the subject.Organized

• crime is, as its name suggests, organized, that is, rational , andplanned .Organized crime is an economic activity and
• operates with the logic of a business. This was something that Nobel laureate in economics Gary Becker made clear in his essay written in 1968 on the subject, which helps explain how it operates. Organized crime seeks ways to
• maximize its utility , which it achieves when it becomes a monopoly, and if that is not possible, it operates as an oligopoly. They have strategy and structure to shape it.Organized crime, as an economic activity, follows uses and practices found in other types of businesses, one of the most novel being its
• franchising to third parties, the collection of royalties, and the payment of operating rights where they are charged by those who dominate the territory. Organized crime, redundantly,
• is organized just like commercial or profit-oriented enterprises. They have corporate governance, shareholders, a general manager, a treasurer who manages the funds, a purchasing and supplier manager, a collections unit, an operations management that oversees field operations, a human resources unit responsible for recruitment, employee welfare, and career development, a logistics unit that stores and transports, and many others. Organized crime, like any business, seeks to pay dividends to its shareholders or withdraw profits, which

requires the ability to launder its income, achieved by legitimizing the income derived from criminal economic activity. The term money laundering comes from the chain of laundries that Al Capone set up in New York to literally wash or clean the income generated by his illicit activities. To be successful, organized crime not only seeks to eliminate competition, which it does through violent means, but also ensures that authorities and public officials allow them to operate without problems, and those who do not, they eliminate.

Those they seek to corrupt are all those who can make their lives difficult or facilitate the development of their operations. The individuals targeted for their corruption actions are:

Municipal administration: Mayors, councilors, and municipal officials.

• Judicial system: Judges and court officials, and prosecutors from the Public Ministry.
• Police services: Carabineros de Chile, PDI, and the Maritime Police of the Chilean Navy.
• Gendarmerie: Gendarmes in charge of prisons and court custody.
• SII and UAF regarding the control and origin of illicit commercial activities.
• National Customs Service regarding the importation of goods.
• For the peace of mind of Minister Tohá, Minister Cordero, and Undersecretary Monsalve, it is very unlikely that organized crime has any interest in them, as well as in deputies, senators, and other elected positions. They

operate under a commercial logic and do not pay those who do not provide added value, understood as those necessary for developing their businesses, generating income, and transforming it into dividends to be paid or laundered profits to be distributed. The same individuals they seek to corrupt are the ones they

threaten, extort, and intimidate. They understand very well the schemes of punishments and incentives, only that when they use the stick, they extend it to families and friends, which allows them to keep their operations under control. Witnesses to their operations are threatened or outright killed. For them, there are no bribes; they simply silence them, as is the case with three who have already been executed this year. Here,

the way in which the witness protection programs of the Public Ministry operate should be reviewed, otherwise, who will want to collaborate in trials against organized crime?Rather than demanding from those stating the obvious, the authorities of the current government should seek to understand the logic of an organized crime operation, ensuring that actions are not being taken to corrupt or affect their officials. The same applies to the Supreme Court regarding courts, the National Prosecutor for the Public Ministry, and those responsible for overseeing and controlling municipal authorities,

including those that review the legality and origin of financing for mayoral and council elections .Rather than attacking the mayors who raise their voices, it may be better for Minister Cordero and Undersecretary Monsalve to refine anti-corruption legislation and improve the capabilities of the Public Ministry

in this area, as well as those that each of the organizations that are the subject (listed above) have or should have to prevent corruption actions, or to protect their members from the stick used by organized crime when corruption does not work. It is time to focus on their own responsibilities and not be concerned with attacking others .Originally published in July 2024, this column continues to provide a relevant perspective on the issue.

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