PUERTO NUEVO, Colombia
(Reuters) - Rotting wooden planks heave as dozens of barefoot Wayuu
Indians carry washing machines, fans and stereos on their backs from the
hull of a cargo ship docked on the tip of northern Colombia.
Throughout the night, they unload thousands of boxes piled 30 feet high and haul them down the battered ramp to waiting trucks.
By torchlight, customs director Claudia Gaviria
rips open a box at the makeshift wharf at Puerto Nuevo on the La
Guajira peninsula. She counts the number of fans against documents
supplied by the ship.
"If there's more than the paperwork says, we will seize the merchandise and investigate because it could be contraband or even money laundering," said Gaviria, taping the box up and reaching for another. "We found some doctored papers on this ship."
Contraband smuggled into Colombia is part of multi-billion-dollar
money laundering operations that damage legitimate businesses,
undermining Colombia's bid to reinvent itself as a thriving economy
after decades of political and drugs violence.
In complicated schemes, Colombian traffickers receive drug money
from overseas dealers in the form of goods, often shipped along with
legitimate merchandise. Once the goods are sold and a sales receipt
given, the drug money is clean.
The amount of money laundered from the trafficking of drugs, arms
and human beings in Colombia is estimated by experts to be as much as
$17 billion a year - more than 5 percent of the economy's total value
and more than total foreign direct investment last year.
Much of the merchandise unloaded by the Wayuu - the bulk of it
legitimate - will make its way to the desert town of Maicao, a Wild West
type of place that sells cheap designer perfumes and whiskey at half
the retail price, alongside knock offs of Prada and Giorgio Armani label
goods.
"That goods are sold at lower prices than they are produced in the factory says it all," said national tax agency head Juan Ricardo Ortega.
Last year, as much as $128 million worth of contraband was seized by
authorities, less than 10 percent of the amount estimated to come into
Colombia, according to government data.
"It's an impossible task," said Luis Carlos Canas, head of the tax
office in northern Maicao, as he inspects ingots of aluminum on an
18-wheeler crossing the border from Venezuela. "We just don't have the
human resources to check everything."
Exports also are part of the laundering
business. Fake paperwork is created for overseas sales that do not
exist. Once the paperwork is filed at the customs office, cash from
international drug deals can enter without raising suspicion.
Colombia's official annual gold exports are reported to be as much
as 70 tons, Ortega said, although the industry only produces 15 tons.
While there is a considerable amount of artisanal gold that could
account for some of the extra, Ortega suspects the bulk is fictitious
sales.
DISTORTIONS
So while Colombia continues to transform its image from a
violence-plagued nation to an investment magnet with booming oil and
mining industries, the economy is skewed by the money laundering of
traffickers' cocaine sales abroad.
Colombia has for decades struggled to reduce crime linked to the
drug trade, waging a U.S.-backed war against Marxist rebels, right-wing
paramilitary groups and cocaine cartels. But crime gangs have become
more wily in duping authorities.
Back in the days of Colombia's best-known drug lord, Pablo Escobar,
in the 1980s, so much laundered cash simply came in by plane from the
United States that dealers just buried it around their homes. Now things
are far more sophisticated.
There are three main ways the gangs clean their money: smuggling
undeclared physical cash across the border; through the financial
system; and via contraband.
It is not just the proceeds from drug trafficking - about $8.8
billion a year - that gets laundered. Money earned from corruption, gun
running, prostitution, and illegal gold mining also needs to be cleaned.
Once it makes it into Colombia's $330 billion economy, it can inflate economic growth numbers by several basis points, said Luis Edmundo Suarez, head of the UIAF, a government body that looks into suspicious money movements and sends them for investigation.
"The launderer is only interested in injecting the money into the
system," Suarez said at his Bogota office. "It creates suffering,
distorts the economy and alters reference prices as he doesn't care if
he loses money, just that it's cleaned."
Ortega reckons a large range of official data from inflation to real
estate, retail, exports, imports and agricultural output may be
different than reported due to fake or overstated sales from laundering.
The problem for ordinary Colombians, Ortega says, is that laundered
goods are mostly sold at below-market prices, which elbows out and often
shutters competitors.
Conversely, it can create price bubbles in certain sectors when
criminals pay excessive amounts for goods like farms or bill extra
through restaurants and stores.
"For a poor country, the social impact is brutal," Ortega said. "It
limits growth and destroys opportunity for legitimate business."
Cattle ranching, for example, is a common financing vehicle along with drugs for left-wing rebels of the Revolutionary Armed Forces of Colombia, known as FARC, as well as other drug cartels.
CUTTING CATTLE PRICES
They often pay above value for cattle farms and that in turn pushes
up prices for neighboring property. Then they liquidate assets, the
cattle, to receive quick cash, cutting the price of livestock in the
area.
Many agriculture businesses in central Meta province, for example,
are looking to sell off and get out because they cannot compete with the
low livestock prices on offer.
"You can tell from the price of beef in some rural areas when a crime gang is selling its stock of cattle," Suarez said.
Farmers are intimidated into selling their land and offered cash
sums they can't refuse, according to a cattle rancher with land in Meta
who requested anonymity for security reasons.
"It's hard to refuse the drug dealers," the rancher said. "And we
also face herds of cattle coming in illegally from Venezuela as
contraband that slashes the price of the beef."
The government says the FARC is among the biggest owners of cattle -
assets that are easy to turn into cash to buy weapons or food and
clothing for their 8,000-strong fighting force.
Colombia's
financial system, surprisingly, is among the most rigid and successful
in protecting against money launderers. Red flags go up with any unusual
movement of cash.
Banking clients complain about the charges levied each month and the
mountain of paperwork needed to open an account, but Maria Mercedes
Cuellar, head of the Asobancaria banking union, says that is what keeps
the system safe. "Colombia has more controls in its system than most
places in the world, even more than in the U.S," she said.
But that also causes its own set of problems, she says, since it
facilitates a cash-based economy that enables launderers. They simply
work outside the system, she said.
Even so, Interbolsa, one of
Colombia's biggest financial institutions until it was seized by
authorities late last year, is being investigated for alleged money laundering.
While detecting smuggled goods has proved tough, authorities have
turned to accountants to catch the smugglers, just as U.S. authorities
did with legendary gangster Al Capone in the 1930s.
"If we can't pursue them for contraband or laundering, we'll pursue
them for tax evasion," Claudia Rincon, head of the tax office's legal
department, said of the uphill task. One of her agents was assassinated
just weeks ago in connection with her work as a tax investigator.
The attorney general's office says that as the government gets
tougher on launderers, the cases are piling up and the judiciary needs
more personnel to take them to trial.
"Indisputably we need triple the number of lawyers and investigators
dedicated to this crime of money laundering," Attorney General Eduardo
Montealegre told Reuters.
ECONOMIC MORPHINE
It might seem that huge amounts of cash entering the economy - into
luxury cars, real estate, and clothing - would cause the economy to boom
but experts disagree.
"It's like when you inject morphine into a cancer victim," Suarez
said. "At first you feel good and you have less pain but then you die.
There's absolutely no way that you can consider money laundering as
positive for the economy."
The lowly smugglers who do the leg work certainly do not see much of
the profit but they say there are few other ways to make a living.
"How else can we feed our families?" Juancho said after being pulled
from his car by police on a highway in La Guajira province. The police
confiscated plastic jerry cans of fuel, part of a multi-million-dollar
gasoline running business that thrives along the porous border with
Venezuela.
Cheap fuel, at 2 cents a gallon, is smuggled over the border from
Venezuela in cars outfitted with fake tanks, hollowed-out seats and
double paneled doors, and sold at $5 at lucrative pumping stations in
Colombia.
As Juancho was being questioned by police outside the car, his
partner sped off in their red souped-up Renault 18, screeching over
spiked barricades as police trained their rifles at it.
Juancho was later released. He says he earns just $13 for risking
the four-hour race south with the gasoline but he has no intention of
giving up.
