Members of the main opposition force in Mexico are demanding the federal government to take the necessary steps to claim the entirety of assets seized to drug lord Joaquin “El Chapo” Guzman, recently extradited to the United States.
On Wednesday Congressman Jorge Ramos Hernández, from the National Action Party (PAN), claimed Guzman’s fortune amounts to at least $16 billion and must be ceded to Mexico to restore the damages caused by the trafficker’s illicit activities.
Blockbuster is gone. So are Lehman Brothers, Atari, Pan Am, Circuit City and countless others each year. Startups fail, too, with 80% going belly up within the first 18 months. But here’s something to consider in comparison: criminal syndicates don’t go out of business.
The Chinese Triads have been around since the 17th century. For 25 years, Mexico’s Sinaloa Cartel has outmaneuvered vicious competition at home as well as the United States’ $51 billion–annually–“War on Drugs.”
Net margins for criminal organizations shame their legal counterparts; while airlines earn 1.8% and oil companies average 8%, cocaine cartels earn a 93% net margin–for just wholesale. Profit per full-time employee ratios are also off the charts.
Google’s profit per FTE is $270,000 and Apple’s is $460,000, both of which are impressive. But the Sinaloa Cartel’s profit per FTE is estimated at $20 million. The global reach of these organizations is also expanding. Beyond North America, the Sinaloa Cartel is now active in Europe, Asia, and Australia.
All of this money and growth is happening despite the efforts of governments and law enforcement agencies to eradicate them. Imagine if there were federal agents whose sole mission was to put Sears or J.C. Penney out of business? I’m thinking they wouldn’t be around. Or, what if Amazon Prime had to operate in secret? Each year, lots of brands die without any help from the FBI or ATF. And yet criminal syndicates make immense profits mostly in competitive commodities businesses. So how do they do it?
In a word: culture. Criminal syndicates are far superior at creating successful cultures than the vast majority of the Fortune 500. All successful criminal syndicates, across cultures, geographies, and endeavors, are primarily culture-driven brands. Despite their significant differences, these culture-driven brands have three key attributes in common.
The Japanese yakuza identify themselves as “chivalrous organizations” and operate within strict codes of conduct that express very specific organizational values. The Sinaloa Cartel, unlike its competitors, actively cultivates a populist image and claims to adamantly oppose kidnapping and the murder of innocent civilians.
These beliefs govern organizational behavior–who they are, what they do, and what they won’t do. And theses credos are far more actionable and authentic than the “values” posters hung in corporate cafeterias. In place of employee handbooks and other corporate drivel, these organizations have distinctive rituals, symbols, and artifacts to express their credos.
Corporations can over-index on “innovation.” But improvisation is a form of innovation, and just as important. Asstreaming technologies emerged, did Blockbuster improvise and move quickly to shift the way it did business? Not quickly enough. And that’s reflective of mainstream corporate cultures that tend to think of innovation as a “process” rather than a behavior.
Criminal syndicates are different; they think of innovation as an organizational imperative. A drug smuggler who finds a new way across a border knows that customs agents will eventually discover the innovation, so he needs to always think of new ways.
The Sinaloa Cartel was the first to design and construct a tunnel under the U.S.-Mexico border. The cartel also managed to have family members hired as border agents, and even used a catapult to counter a high-tech fence in Arizona.
The yakuza benefit from highly diversified revenue streams, which they’ve systematically grown from traditional gambling and prostitution rackets to modern construction and transportation businesses. Where there is a threat or an opportunity, criminal syndicates improvise.
While too many corporations bury employees within organizational charts that are so big there’s specialized software for creating them, criminal syndicates stick to small teams. With just an estimated 150 members, the Sinaloa Cartel produces revenue equivalent to the GDP of Belize (a country with more than 330,000 people).
And while the Yamaguchi-gumi is the largest yakuza organization with more than 20,000 active members, those members are spread across 2,500 different businesses and 500 sub-groups. The teams are small, but they can pull significant resources from the whole.
Just as importantly, the small team structure nurtures an entrepreneurial zeal and an emphasis on doing. With so much at risk, with everyone empowered, and with everyone aligned through shared values and a unifying sense of purpose, criminal syndicates use small teams to accomplish really big things.
There it is, the underworld model for success: small-but-big teams inside belief-driven cultures improvising continuously. Doesn’t sound so criminal, does it? That’s because it’s a familiar formula for some of the best legal brands in the world, from Apple and Nike to Virgin and Zappos. One of the familiar refrains about criminal syndicates is that they are run “like a legitimate business.”
Another is just a sorrowful question: What if these talented criminals had only used their talents for good? Both of these are missing the point. Legitimate businesses wish they had the cultural clarity and business results of these underworld organizations.
I don’t mean to downplay the harmful, reprehensible activities criminal syndicates deal in. But they could teach legitimate businesses an important organizational strategy: work toward small-but-big teams, create belief-driven cultures, and improvise continuously. Because it works.
WASHINGTON — The Drug Enforcement Administration’s top agent hasn’t really slept since he got word Joaquin “El Chapo” Guzman had sneaked out of maximum-security prison in Mexico though a mile-long tunnel that opened beneath his cell’s shower nearly a week ago.
DEA’s deputy administrator Jack Riley said Thursday that the last week has been a flurry of work speaking with his Mexican counterparts and helping direct U.S. efforts to capture one of the world’s most prolific and violent drug lords for the third time in 15 years.
“This guy caused me one of the best days and worst days of my life in a span of a year,” Riley told The Associated Press. “We are doing everything we can to track him down, much like we did a year or so ago when we hooked him.”
Guzman was arrested in February 2014, more than a decade after his last escape from a Mexican prison in 2001.
Before taking over as DEA’s operations chief in Washington last year, Riley spent four years in Chicago tracking Guzman and continuing to build a growing criminal case against the drug lord.
After Guzman’s arrest in February 2014, authorities in Chicago, including Riley, called for his extradition to the United States to face trial on a litany of drug trafficking and other charges.
The Justice Department had not formally requested Guzman’s transfer before Saturday’s brazen escape, but Mexican government officials made it clear after Guzman’s arrest that he would first be tried in their country.
“That is one of the reasons we pushed for extradition,” Riley said. “We were afraid of this. Not that (Mexican authorities) weren’t capable of keeping him — but he’d escaped before.”
Guzman vanished Saturday night through a sophisticated tunnel that opened in the floor of his cell’s shower. Two Mexican lawmakers said Thursday that at least 18 minutes passed before anyone was alerted.
A surveillance video of Guzman’s cell shows him walking to the shower — where there was a blind spot in the security camera’s view — crouching down and then vanishing.
According to internal DEA documents obtained by the AP, U.S. drug agents learned Guzman and his associates were plotting his escape almost immediately after his arrest. The agency did not have information about the weekend escape plan, the documents show.
The warnings were passed on to Mexican authorities, according to a U.S. government official briefed on the case. The official was not authorized to discuss details of the case publicly and spoke only on the condition of anonymity.
Mexican authorities have denied they received any warning about possible escape plots.
As the work begins anew to find Guzman, Riley said he has every confidence that U.S. and Mexican officials will be able to capture him again.
“I really do think we’ve got him on the run, he’s looking over his shoulder,” Riley said. “We are going to make it as hard on him as possible.”
Mexican authorities have established checkpoints on major highways around the country, distributed 100,000 photos of Guzman to toll booths and put 10,000 agents from various components of the Mexican federal police on high alert since the escape.
DEA and FBI officials have met with officials in Mexico City and Riley said he has been in near daily contact with his direct counterparts since Guzman’s latest dash from custody.
Guzman’s 2014 downfall was more than a decade in the making. First arrested in Guatemala in 1993, he spent nearly a decade in another maximum-security Mexican prison before escaping, reportedly hidden in a laundry basket.
On the run but still growing his drug smuggling empire, Guzman managed to marry a young beauty queen in a lavish celebration and in 2011 became a father again, to twin daughters. What he likely didn’t know at the time was that DEA agents in 2008 had found the first crack in the security network he had spent years building and perfecting.
A wiretap recorded the boss himself, rumored at the time to hiding anywhere from the mountains of his Pacific Coast home state or the rugged jungles of Guatemala, directly negotiating a heroin deal with Chicago twin brothers who had secretly flipped and become government witnesses.
Six years later, after a series of high-profile arrests of associates, more secret wiretaps and other covert surveillance efforts, the DEA, U.S. Immigration and Customs Enforcement, the U.S. Marshal Service and a highly trained and trusted unit of the Mexican Marines tracked Guzman to a series of safe houses in the Mexican city of Culiacan.
After his pursuers missed him in a network of underground tunnels connecting the houses, Guzman was finally found inside a seaside condominium in the resort town of Mazatlan. His wife and young daughters were with him. Not a shot was fired.
Riley said Guzman’s use of cellphones was his undoing in 2014 and likely will be again.
“Clearly that was his Achilles’ heel the first time and I think it can be this time,” Riley said. “This time when we get him, and I tell you we are going to get him, it may have a little different outcome for him.” ALICIA A. CALDWELL, Associated Press
This story has been corrected to show that Jack Riley is the DEA’s top agent and deputy administrator.
Associated Press writers Michael Tarm in Chicago and E. Eduardo Castillo in Mexico City contributed to this report.
BADIRAGUATO, Mexico — People living in the hometown of drug lord Joaquin “El Chapo” Guzman have heard stories of his benevolence: gifts of medicine for the poor, deliveries of drinking water to storm-stricken towns. But finding anyone who’s actually received or even seen such a gift is another matter.
In Badiraguato, the small mountain town that is part of Guzman’s rags-to-crime riches mythology, none of the two dozen people interviewed by The Associated Press could point out evidence of his legendary largesse.
“I don’t see a single building producing jobs, a single piece of public works, a soccer field, a sewer, a school, water systems, a clinic or hospital, not a single one that you can say was built by drug traffickers or their money,” Mayor Mario Valenzuela said.
If Guzman or his cartel had invested in their hometowns, he said, “they’d look different: They would have paved roads or drainage systems, but they don’t.”
Guzman’s escape on July 11 from a prison near Mexico City has focused attention again on Badiraguato, the county seat of a township that includes the hamlet of La Tuna, where El Chapo’s mother still lives.
The roads to La Tuna are still washed-out dirt tracks, and Badiraguato itself has none of the flashy accoutrements of money — luxury car dealerships, palatial mausoleums, acres of fancy, gated communities of new homes, or dozens of street money-changers offering cheap dollars — that are abundant in Culiacan, the state capital, 1 1/2 hours away.
The town’s big projects include a new balcony for the town hall that looks out over the sleepy square dominated by a 19th-century church, where residents seek shade from the punishing Sinaloa sun.
Tucked into the foothills where the coastal stretches of flat corn and tomato fields meet the imposing mountains of the Sierra Madre, Badiraguato remains mired in poverty, Valenzuela acknowledges that many of the township’s residents make a living growing marijuana or opium poppies.
Guzman grew up here, the son of a poor farmer. His rise as a crime boss has been surrounded by mythology, a Hollywood version of an old-school Mafioso — ruthless, but yet honourable. Songs have been written in his honour and some locals extol him as a Robin Hood-type figure who is careful to leave innocents out of his deadly score-settlings.
“Chapo Guzman isn’t violent,” Valenzuela said about a man accused of hundreds of murders. “He doesn’t shoot it out with the government.”
That’s unlike the reputation of the New Generation Jalisco cartel to the south, which is alleged to have brought down a military helicopter May 1 with a rocket-propelled missile.
Or the Zetas, who’ve fueled their notoriety in central Mexico with grisly beheadings and the hanging of bodies across public highways. Or Guerreros Unidos, the cartel alleged to have killed 43 college students last fall.
For many who live in the state that gives name to Guzman’s Sinaloa cartel, he is seen as a lesser evil.
Gabriel, a civil engineer, returned home recently to Culiacan after a year and a half working on road projects in the central state of Zacatecas, which is controlled by Mexico’s bloodiest cartel, the Zetas. There, he said, gunmen pulled him over and demanded he either pay protection money or get out of town.
“They are worse. They are indiscriminate. They’ll kill seven people just to get the one they want,” he said. The Sinaloa cartel, he said, leaves ordinary people alone, “there is a certain respect.”
Still, the man in his 30s wouldn’t give his last name for fear of reprisals.
Badiraguato is not immune to violence. The township of 30,000 regularly reports a homicide rate at least five times the national average. And while Sinaloa’s population is less than that of 13 other states and the federal district, it consistently ranks among the deadliest five or six states in terms of homicides.
So far this year, there are more killings here than in Michoacan or Tamaulipas, two states often in the headlines for warring cartels, vigilante justice, beheadings and daytime shootouts.
Violence, threats and fear in Sinaloa have displaced poor farming families, with hundreds fleeing the mountainous township of Sinaloa de Leyva over the last five years.
Dozens of families left the village of Ocurahui after drug gangs, particularly the Sinaloa cartel, pressured local farmers to plant opium poppies in order to counter falling prices for marijuana. Residents who didn’t want to grow drug crops faced kidnappings or even death.
Many of them are barely hanging on as refugees without homes or jobs, living on the fringes of the Sinaloa cities of Surutato, Guamuchil and Culiacan.
“We came with only what we could grab, or what we wearing,” said Mauro Diaz, 20, an Ocurahui resident who lives as a squatter in one of a half-dozen tiny abandoned cinderblock houses on the outskirts of Guamuchil.
Diaz ekes out a living as an assistant bricklayer, staying with his girlfriend in one bare room with a mattress on the floor and water leaking from the roof. He largely has given up hope of returning to the pine-covered hills of his village.
“Why return if it’s only going to get us into trouble, if in a little while it gets bad again and they exile us again?” Diaz said.
Yet, the mythology surrounding Guzman lives on.
Lucero Uriarte, a high-school student in Badiraguato, said of the drug lord: “He has helped a lot of people — more than anyone else, the poor — because he knows what they’re going through.”
Mexican authorities have launched a manhunt to find drug kingpin Joaquin Guzman, who has broken out of prison again, the country’s National Security Commission said Sunday.
Guards at the Altiplano Federal Prison discovered during a routine check on Saturday that Guzman, known as “El Chapo,” was missing, a statement from the commission said.
Guzman escaped through a hole in his cell that led to a lighted and ventilated tunnel nearly a mile long, Mexico National Security spokesman Monte Alejandro Rubido García confirmed Sunday morning at a press conference in Mexico City.
Guzman is the storied boss of one of the world’s most powerful and deadly drug trafficking operations.
He escaped in 2001 from a high-security prison in a laundry cart and was not apprehended again until 2014, when he was arrested at a Mexican beach resort.
‘The world’s most powerful drug lord’
Guzman heads the Sinaloa Cartel, which the U.S. Justice Department describes as “one of the world’s most prolific, violent and powerful drug cartels.” It says Guzman was “considered the world’s most powerful drug lord until his arrest in Mexico in February 2014.”
“The Sinaloa Cartel moves drugs by land, air, and sea, including cargo aircraft, private aircraft, submarines and other submersible and semi-submersible vessels, container ships, supply vessels, go-fast boats, fishing vessels, buses, rail cars, tractor trailers, trucks, automobiles, and private and commercial interstate and foreign carriers,” the Justice Department said earlier this year.
The trafficking network keeps U.S. drug agents busy. In January, the Justice Department unsealed indictments naming 60 members of the cartel, including Guzman’s son, Ivan Archivaldo Guzman-Salazar, aka “El Chapito.”
The main indictment said the cartel imported cocaine, methamphetamine, marijuana, other drugs and the chemicals necessary to process methamphetamine into Mexico from various countries, the U.S. Attorney for the Southern District of California said in a news release.
The drugs were then smuggled into San Diego for distribution throughout the United States, the statement said, adding that money was then laundered through a variety of means.
In just one phase of the investigation, which the Justice Department said spanned eight countries and a dozen U.S. states, authorities seized more than 1,400 pounds of methamphetamine, almost 3,000 pounds of cocaine, 12.2 tons of marijuana and 5,500 oxycodone pills, along with $14.1 million.
In Mexico, the diminutive Guzman became a larger-than-life figure as he eluded authorities while expanding a drug empire that spanned the world. His life story became the topic of best-selling books and the subject of adoring songs known as narcocorridos.
In the United States, he is wanted on multiple federal drug trafficking and organized crime charges.
His nickname, which means “Shorty,” matches his 5-foot-6-inch frame.
The statement from the National Security Commission said that, at 8:52 p.m. Saturday, surveillance cameras at the Altiplano federal prison saw Guzman approaching a shower area in which prisoners also wash their belongings.
When Guzman was not seen again for some time, officials checked his cell, found it empty, and issued an alert.
Altiplano is a maximum security prison in south central Mexico.
Officials not only launched a manhunt, they also closed Toluca International Airport, a 45-minute drive away.
It has the drugs and distribution system of a traditional cartel – and it has the modern weapons and audacity of an army. After attacking federal forces, downing a military helicopter and shutting down streets in Mexico’s second-largest city this month, New Generation Jalisco cartel is now the main enemy in the country’s fight with drug cartels.
In just a few years, New Generation has grown from being an offshoot of the powerful Sinaloa cartel to one of Mexico’s strongest criminal groups in its own right, according to the US Treasury Department, whose Office of Foreign Assets Control maintains a “black list” of drug trafficking organisations.
Its quick rise reflects a rapidly changing organised-crime landscape in Mexico as the government targets top leaders of established cartels. More than any other criminal group, New Generation has taken advantage of the government’s top-capo strategy, strengthening and grabbing territory from other cartels as they are weakened.
“You’re talking about a powerful, large organisation with grand logistics, well-made structures, a strong group of assassins, and dedicated and qualified people with high-calibre weaponry,” Guillermo Valdes, a security expert and former director of the Mexican intelligence agency, said. “It’s a new cartel, a second generation born in a restructuring process.”
The strategy of hitting the top leadership began in 2006 under President Felipe Calderon and has continued under his successor, Enrique Pena Nieto.
As a result, large organisations have been fragmented, leaving smaller, leaderless groups to fight among themselves over control of local organised crime activities and drug-smuggling routes to the north.
When Calderon was in office, there were five major cartels. Today, the Mexican attorney general lists nine major groups and 43 smaller factions.
New Generation has its origin in that fragmentation.
While it has operated for years, it surged in public notoriety this month after it waged brazen attacks in and around Guadalajara, a major technology and manufacturing hub and the capital of Jalisco state. But the city, about 460km northwest of Mexico City, is also where Mexico’s largest drug cartels were born.
Leaders of the original Guadalajara cartel were captured in the 1980s, provoking a surge in what Valdes calls the first generation of cartels, many of which still exist, including Sinaloa, Beltran Leyva, Gulf, Zetas and Juarez cartels. But hits on their leaders have left all but Sinaloa as just remnants of their former selves.
In little more than a year, the government has arrested Sinaloa’s Joaquin “El Chapo” Guzman, Beltran Leyva’s Hector Beltran Leyva, Juarez’s Vicente Carrillo Fuentes, Knights Templar’s Servando “La Tuta” Gomez, and the Zetas’ Omar Trevino Morales. It killed Knights Templar leader Nazario Moreno.
The strength of New Generation surprised many on May 1 when federal authorities mounted an operation, reportedly targeting New Generation leader Nemesio Oseguera:
The cartel responded almost immediately with roadblocks and arson attacks in Guadalajara and two dozen other cities. It used a rocket-propelled grenade to force down a military helicopter carrying 16 military personnel and two federal police officers, killing eight people.
And unlike the old major cartels, New Generation is willing to wage war on the state and federal government. The younger drug lords like to show off their money and flaunt their power, even if it brings a direct assault from the government.
For that reason, the May 1 clash may be the beginning of the end of New Generation, said Valdes, the former intelligence agency director.
“The drug business is not going away while we have such a large demand in the United States, but that does not give immortality to any particular group,” he said.
New Generation “just bought the ticket to being enemy No 1”.