In December, we told the wild story of drug smugglers who hide tons of cocaine aboard huge container ships bound for Europe from South America. Today, we pick up the saga from there. What happens to all that cocaine once it reaches port?
Bloomberg investigative reporters Lauren Etter and Vernon Silver join this episode to talk about how a sophisticated network of drug cartels and traffickers recruit young people to sneak the cocaine off the ships and coerce dockworkers to look the other way. And how law enforcement is trying to stop cheap cocaine from flooding the streets of Europe–without grinding global trade to a halt.
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There's more cocaine in the world right now than there has ever been before, and all of it is coming from this region in South America. Most of it is being transported on large commercial cargo ships. It's a big take from Bloomberg News. In my Heart Radio, I'm West Pasova today inside the global supply chain for cocaine. In December, we told you the wild story of smugglers who hid twenty tons of cocaine worth a billion dollars aboard am massive containership traveling to Europe from South America, and how the US found out and seize the drugs when the ship made a stop at the port of Philadelphia. That was a huge bus, but it barely made a dent in the global cocaine supply. For every shipment that sees, many many more tons go undetected. My colleagues Lauren Eder in Los Angeles and Vernon Silver in Rome are here with me now to tell the next part of the saga, what happens when all that cocaine reaches port in Europe. Lauren Vernon, thanks for being here, Hey, Thanks glad to be here. Thank you. You and our colleague Patricia lah have written a big investigation for Bloomberg Business Week that details the booming cocaine industry in Europe. And your story begins with a business importing fruit Vernon, maybe i'll start with you. Can you describe what happened? There's been this increasing problem, especially around the ports in Europe, in this case the Netherlands, with these fruit shipments having cocaine in them. In this particular case, in May two thousand nineteen, a warehouse of the group Fresh Group in a small town about an hours away from Rotterdam's port. They're going through their bananas and the employees they're found four hundred kilos of cocaine. That's a street value about thirty million dollars. At this point had already become policy of this company that when they found the cocaine, you know, they've never found this much before, they're just going to call the police and turn it over to the authorities, which is what they did. But within weeks, the unexpected happened. Word had gotten out that this fruit company had found the cocaine and turned it over the cops, and the two brothers whose family for generations had owned this company that had grown into, you know, a huge importer of Bananas started getting threatening messages and someone who was claiming that it was their cocaine that had been turned over to the police said that he wanted compensation for his loss. They threatened the group family, they threatened the employees. They tried to get payment in millions of euros in both bitcoin and cash in handovers. That never happened because the company and the family owned it wouldn't cooperate and wouldn't give into the extortion claims, and that began what turned into a two year reign of terror in this small town the municipalities called Monstril, where there were shootings and fire bombings of the homes of people first connected to the company, its owners, and then just people who had worked there, you know, former employees, current employees. And in one case, in the middle of the night, these two brothers, Henry and Yon villain Seepers, who had both worked in the warehouse, they were to crash through the window and then an explosion, and within minutes they found themselves jumping out the windows and uh, you know, barely came away with their lives and you know, broken owns and their house was burned to the ground. And that was kind of the peak of what, looking back on it was the really the terrorizing of an entire small community at the end point of a global supply chain. Lauren obviously what Vernion describes as a very extreme example of one of the effects of the growing cocaine trade throughout Europe. But this sort of thing where companies are discovering huge amounts of cocaine in shipments say you know nothing about, is not exactly uncommon. That's right. Over the past few years, especially in Northern Europe, as the cocaine trade has shifted from Spain the Iberian Peninsula to the major commercial ports of Northern Europe and the Netherlands and Belgium, the discovery and the interception of cocaine and shipping containers has become really a regular occurrence, so much so that the customs officials and law enforcement authorities in those nations and those ports are really struggling to keep up with the amount of cocaine that's essentially deluging their ports. The amount of cocaine that is flowing into Europe's largest two ports in the Netherlands, uh Rotterdam and Belgium Antwerp, has really skyrocketed over about a five year time period, so it's become a crisis for officials there and they really are tasked with finding what's often described as a needle in a haystack, because the cocaine is hidden in all kinds of consumer goods, whether it's tennis shoes or computer parts or scrap metal. UM. But it's primarily hidden in refrigerated containers that are carrying perishable goods such as fresh produce, vegetables, UM, shrimp, those types of items. And this cocaine is all coming from South America, Is that right? Oh? Yes, it all comes from South America. There are three primary countries that grow coca, and it's largely Colombia, but it's also Bolivia and Peru, and so there has been an explosion in the amount of coca that's being grown in these nations for lots of reasons. UM and a colleague of ours wrote an article describing the production in coca and also cocaine as being actually the golden age of cocaine right now. There's more cocaine in the world right now than there has ever been before, and all of it is coming from this region in South America. Most of it is being transported on large commercial cargo ships, and the vast majority of it is arriving in northern Europe where these large ports are Vernon. There's so much cocaine, as Learned describes coming into Europe that it's actually become kind of cheap. What's incredible is, you know, the U N and also European authorities tracked the street value and prices of cocaine, and what you're seeing is prices program in the US have kept up. You know, we're talking about you know, you can pay a hundred and twenty to two hundred dollars for a graham. But in the areas where this stuff is coming in, primarily Belgium and the Netherlands, you can get a gram of coke for you know, sixty five dollars or less. With that amounts to and you know, I spent two weeks traveling around the Netherlands working on this story. Is you can get you know, for what you pay, let's say for Margarita and Antwerp, you could probably get three or four lines of cocaine. So when people are being frugal and things are costing more in the cost of a dinner out costs uh, you know, more than it was a year ago. The one thing that's gotten cheaper is cocaine, and that has just a lot to do with the complete flooding of the market through the surge of of cocaine that's writing on top of the fruit shipments, and of course cheaper prices means there's even more demand, and more demand means there's going to be more supply, and so it just keeps on growing. One of the really interesting things in this system that you're describing seems to be that the nation's producing all of this cocaine and the drug cartels that want this supply to distribute in Europe were able to do this because of advances in shipping fruit. Yeah. Absolutely, Um, it's really fascinating when you start looking at the numbers when you look at kind of this spike in cocaine UM imports into into Northern Europe, and it's really over kind of a five this five to seven year time period. Um, there was a concurrent spike in the amount of fruit that was exported and other perishable goods from South America. They almost parallel one another. So what's happened is that the drug traffickers have figured out that there is increasing efficiency in the transportation of fresh fruits and vegetables from South America to northern Europe. And there's also been an increase in sort of the infrastructure that's been built up around the international shipment of these goods. The ports in South America have been really improved and lots of private investment has gone into these ports, allowing larger ships to call port there. Um, there has been all along this supply chain, what they call the cold chain, there's been all kinds of innovations. The shipping companies have rolled out new shipping containers that have innovations such as allowing fruit to ripen more slowly on the long voyage across the Atlantic Ocean from South America to Europe, and just a larger number of containers they call them reefers or refrigerated containers that are making that journey. And that's largely because there's growing demand in Western European countries, just like there is in United States and other markets, but for year round access to fresh fruits and vegetables. Products that consumers were only able to get during seasons when they're in season, they can now get them year round because they can you know, they're shifted across the world with increasing efficiency, and the prices have come down all of that. So that's a long story behind the reasons why traffickers realize that there is this increasing amount of just legitimate cargo that's moving from their key part of the world, Latin America, South America to Europe, and they really just piggybacked on that supply chain. They figured out they're all kinds of ways to penetrate that supply chain, whether it's infiltrating the exporter or the importer, or as we wrote about a few weeks ago, infiltrating the crew of major shipping companies to be able to load cocaine in the middle of the ocean as the ship is moving from one continent to another. The traffickers are logistics experts, and they have figured out that if they can piggyback on the increasingly efficient logistics and supply chain of the major shipping companies, that it's been very good business for them and they've been able to move increasingly large volumes and quantities of cocaine. Lawrence hit on a really good point from the European side. One of the you know, the more interesting and surprising things about the reporting from these stories was the data that explained what I was seeing here in Europe. I'm based in Italy, and I gotta say, before, you know, COVID times something like an avocado that was worth eating, or blueberries or you know, mangoes, forget about it. This was like you could go to a specialty market and maybe find one you could buy avocados um that were you know, maybe ripe if you kept them around for a while and they were right for half a day, to the point where like we'd go back to the US and you know, the first thing that our family would get for us if we went to California was you know, a big bowl of avocado so we could make guacamole. Seeing the reporting on this story out of South America, where I saw like, oh gosh, from Peru, exports of fruit to Europe have doubled in the four years through, that explained what I was seeing here, which is, you know, coming out of COVID, I could go to supermarket and it's like, gosh, here's you know, their mangoes. And until seeing the reporting for this story, it didn't click that there were real changes here. Demand has changed. Europe is getting tons more of this stuff and you follow it into the port you're finding then the cocaine. We went through the press releases from the prosecutors in the Netherlands for every press release they had over the past year of drug busts and narrowed them down to busts in the Rotterdam port, and then from there looked at what was in the containers where they were finding this, and a little more than half the time it was fresh fruits and vegetables. So there's like there's a direct correlation between what you're seeing coming out of Latin America right now and what you're seeing on the ground in the markets and in the drug busts in Europe. You know, it's one of these things where it's like it's right in front of you, like that the that the piggybacking was happening, and it all sort of fit together at this aha moment, learning Burning Please stick around. Our conversation continues after the break, Lauren, this coincidence of geography, let's cocaine hit rride on fruit shipments to Europe. Did you write that packing cocaine with fruit gives the drug runners another advantage once the ship reaches port in Europe. Can you describe why that is? Yes, there is this increasing efficiency along this logistics supply chain, along this cold chain. But the other really important factor here is that customs officials are under constant pressure to ensure that the supply chain moves quickly and smoothly and efficiently, and to ensure that the amount of cargo, that the cargo coming into their ports is not being held up unnecessarily. So their customs officials are actually under a lot of pressure to rapidly push through the containers to make sure that they reach their ultimate destination, to not slow down the rhythm of trade, of global trade is essentially because there's a lot of money on the line. There are customers waiting for their items. The shipping companies are very powerful and they really don't want the trade to be slowed down. So what that means is that when you're shipping a product like fresh fruit, there's an even greater sense of urgency to ensure that the product is is move swiftly through customs. And the traffickers know that because bananas can rot, shrimp can go bad, and so they realize that customs officials when they come across a container filled with perishable goods. There's a sense of urgency there that they're going to process it quickly, get it out of the shipyard into the market, and that they're not going to detain that container unnecessarily. What's interesting is that there isn't a no tolerance, zero tolerance view of this stuff getting through that in the customs industry. And remember that, like customs was set up as an idea of centuries ago as a way for countries to collect taxes. This is a this is a revenue business. It's not necessarily a law enforcement business. And I went to a meeting of the World Customs Organization and MASTRIX, and it was all about the technology that can be used to sort of tilt the balance of you know, speeding things through versus catching the contraband. It was about the balance. It wasn't about making sure that nothing made it through. And part of what Lauren found in her reporting was like, it is the cost of doing business for the drug traffickers that they know some of it will get taken by the by the cops, but a lot we'll get through. Lauren Divernon's point, you write that authorities are season more cocaine than ever before, but they can only inspect a small number the thousands and containers that arrive each day, so a lot more is probably getting through, Is that right. Yeah, it's really surprising actually, and it really just goes to show just the immense task that confronts customs officials. But globally, only two percent of containers are inspected by customs officials. So the hundreds of millions of containers that are being shipped around the world going to ports, two percent or less are inspected, are pulled out of the supply chain, the stream of commerce and inspected by customs officials. But in Northern Europe and in Antwerp and in Rotterdam, it's actually much less than two percent. It's around one percent, between one to two percent, and that's partly a function of the just the sheer difficulty of doing this. They first have to target the containers and figure out where is the cocaine. It's this ultimate game of hide and seek, because the traffickers are constantly shifting their methods. You know, once the law enforcement officials are kind of onto them, they come up with a new scheme to evade detection. And they've done this over and over and over again. So the police are always trying to kind of chase them figure it out, but they're also the customs officials are trying to target which containers the cocaine might be in. So the mayor of Rotterdam, he has explained that he would like to see every single container from South America carrying fruit to be inspected by customs officials. And this was seen as kind of a radical proposal because what that means is that if you're a legitimate shipper of bananas from Columbia or Ecuador, you're gonna automatically have your container pulled aside, pulled off the ship, pulled into the scanning facility, and held for hours, if not days. And meanwhile, your your bananas might row, your customers getting upset because they haven't received the product yet, and you may or may not find cocaine in that shipment. So even though customs authorities are inspecting just one to two percent of containers that arrive in their ports, in European Union authorities seized more than two and forty tons of cocaine. It was a record amount. It was triple the amount season. You can imagine that they're seizing this record amount of cocaine, but even more than that is likely getting through Vernion. Once all that cocaine gets to shore, they have to get it off the ships and get it into the hands of the distributors. How do they get it from the port into the streets? Yeah, I mean this is sort of an amazing part of going through the court records of the past a decade and talking to experts was seeing how that this is evolved. They've gone from a system where these container ships would start pulling up towards the port and somewhere in the North Sea, you know, dump bags essentially duffle bags off the back of these big ships and be met by fishing boats to have picked them up at sea, to just having it packed in the containers, which means that the action is now on shore, in the ports themselves and in warehouses on the street level. And city is like Rotterdam. The problem is that you have a lot of young people who are underemployed and who all of a sudden can be paid for one big mission where they get into a port and they get into a container and they somehow, you know, they grabbed the duffel bags full of cocaine and you know all you know and quotes. All they need to do is get it from there into a car and off the grounds of the port and to a distribution center a warehouse where these drugs are being accumulated. So I spoke to the mayor of Rotterdam, Ahmed Abu Taleb, and this was a real pain point for him. He has watched his city kind of transform as a cocaine trade has really kind of swept across Rotterdam. And one of the things that is really heartbreaking for him and also just very problematic in terms of solving, is that there are so many young people who are at risk of being recruited by the rug traffickers to do these jobs. And they appear as kind of simple jobs. Right. You might earn ten thousand euro to climb the fence of the shipyard, go in under the cover of night, sneak into or break into one of these containers that is known to be containing cocaine, snatched the bags out of there, the deffel bags of cocaine, and then jump the fence and runaway and you know, deliver the cocaine to the traffickers. That's just one job that you might be able to earn ten thousand thousand euro as opposed to you know, taking a normal kind of legitimate job as a carpenter or as a plumber, or as working in a shop. And so the mayor feels really up against the traffickers and the organized crime groups in a sense that how can legitimate employers compete with those wages that the traffickers are offering. So he described it really as kind of an undermining of civil society, because it's not overt all the time. It's just of these subtle ways where the criminal organizations kind of undermine legitimate kind of trade and undermine the above board markets, and how that has a trickle down effect and kind of captures these young men or you know boys in some instances who then get really kind of lured into this trade. He actually told me kind of an interesting and a little bit of a chilling story about how the traffickers work and how they kind of get people to cooperate with them. And this was actually involving shipping company employees or port workers. So the way it might work is you work at say a doc and your job is to kind of make sure the containers kind of you know, come in come out on time, and somebody might approach you and say, hey, we have this side job for you. We we just need you for ten tho euro to look the other way, just for five minutes. Step away from your post for five minutes and we'll give you ten thousand euro. And the guy is like, I don't know if I really want to do that. It's a little risky, but he agrees, so he does the job. They say, okay, meet us at this restaurant afterwards and we're going to give you your payment. When he arrives to pick up his payment, sitting there is not only the traffickers who are going to pay him, but one or two other employees at the port who now know that this individual has done something illegal. So in that very subtle way, he's now captured by the organization because he has these other people and he's in on it, and you can't kind of back out of that. So they're very sophisticated in the way that they recruit individuals, the way that they capture them, and kind of once you're in, it's very hard to get out. The ports and the customs officials will actually tell their employees like, please do not wear your uniform if you're going to leave, like say go pump gas or go to a restaurant or anything like that, because you suddenly become a target. And they're constantly being bombarded. There are track for curs that look for them on LinkedIn. They'll send them messages on LinkedIn and say, hey, do you want to earn you know, a little money. On the side, they are being hunted by these organized criminals trying to recruit them into the trade. And it's um, it's a very tricky problem that the city and the ports and the customs officials are facing. We'll be right back, Vernie. We've heard how this sophisticated international operation works, but who's in charge of it? Who are the organizations or cartels behind it all. What they're dealing with is transnational organized crime. There's no one location or one group for exactly. It's not you know, just the Sicilian mafia. It's many of them working together. And from these investigations the European authorities have done, we see connections to Eastern Europe. We see connections where some people from the Netherlands are now based out of the Persian Gulf countries. We see North Africa being involved. And this is partly because of distribution. Uh, this is partly because of you know, how learn in her reporting about the shipping itself has connected uh some of us to cruise from the Balkans. They have found from north to south and east to west through Europe. One connection, which is the cash that they can make off of this new flood of cocaine. And that's why it's been so hard, sort of like you know, a multi headed monster for them to whack it. You know, in in the Netherlands they talk about some kind of Moroccan mafia, but as it doesn't have anything really to do with Morocco. In Italy, where a lot of this stuff is also coming, it's the traditional organized crime groups UM. And then in Eastern Europe you were dealing with organizations that can you know, connect more deeply into Central Asia. It's truly a multinational, all conglomerate and all of this money has effects. You can see it as you write in Rotterdam that there are the effects of drug wealth wherever you go. In Rotterdam, you know, the city officials took me around for a walking tour and the first thing that was interesting was how afraid they were they said they feel safe in their city and all this, but when it came down to using anybody's names were describing their titles, they didn't want to do that for the reasons that Lauren outlined about everyone being a target. If somebody knows what you do, you can be targeted. So in some sort of anonymity, they took me for this walk around what seemed to me to be a really lovely neighborhood. Little by little they pointed out what they were seeing. There were lots of gold and jewelry shops with no customers in them, which to them were signs of potential money laundering. Some of them had changed hands and ownership, you know, two or three times in the last couple of years, another sign of We walked past the restaurant on a co owner that are beautifully rebuilt facade, new pink colored glass, again dinner time, no customers in there, and as they pointed out, they had learned that the person who paid for this stuff was just renting it wasn't even his building. And then we we keep going down this boulevard to a strip of garages with lots of BMW's and outis parked in the driveways, and they said that this is where the drug runners come to get their automobiles fitted out with secret compartments. In these secret compartments is where these duffel bags and bricks of cocaine are stashed to then be driven down, you know, these these big highways that go down into the rest of Europe and all over the place. Has the rise in cocaine trafficking in the Netherlands and other countries in Europe led to an increase in violent crime as well. The nutty thing is that nationwide, the stats showed that violent crime of all types has been decreasing, but that doesn't mean that life is better in some way because of it. There's this permeation and society there of of a sort of fear. Not that they are themselves targets of specific violent crimes, but they could be that someone their family might be targeted that you know, there have been assassinations of a journalist and a lawyer who are working on drug cases. There's sort of a paradox to it. Things have gotten nicer, but they've gotten worse. There are these chilling photographs published this past year when a prosecutor showed how they had found torture chambers when they had a dentist chair in it with straps on it. And fittingly, these torture chambers they found had been found in shipping containers. Is there anything that can be done to actually stem the flow of cocaine given what an enormous challenge it is. It really depends on who you talked to. The shipping companies and UM. Others in the shipping industry will often say like, look, there is a demand there for this product, and there's nothing that we can really do to stop it. I mean, they're all kinds of steps and measures that they could take. UM, But again, it gets to the root of this issue, which is institutions not wanting to disrupt this smooth flow of global trade. So the mayor of Rotterdam has kind of taken on this as a mission and he's really kind of studied the shipping industry and he's like, look, the shipping companies are making record amounts of money right now, and it's true they are because of the supply chain crisis in the week of the pandemic. So he's like, there are things that they could do to spend money to solve this problem. They could transform their fleet of shipping containers into what are called smart containers, which is essentially introducing some sort of technology, a little microchip into the container that would be able to track when a container is opened or shut, um track it's um it's voyage from point A to point B, and just to have a better kind of handle on the voyage or the life cycle of the shipping container. The shipping companies will also say, hey, look, if this is such a big problem, which they all acknowledge that it is, why don't the governments of say Belgium, in the Netherlands and other European government spend more money to hire more customs authorities. But people that I've talked to said that, look, you could hire an army of customs officials and you still would not be able to tackle this problem. Even if people disagree on what is the right solution, almost everybody agrees on one thing. If you're gonna fix this problem, it's going to cost more money. And who's going to end up paying that at the end of the day is the consumer. Your strawberries are going to be a more expensive, your shrimp is going to be more expensive. You're going to end up paying more for Consumer Goods. Lauren Edder, Vernon Silver, thanks so much for talking with me today. Thanks so much. Hey, thanks again. You're gonna read more from Lauren editor and Vernon s Over at Bloomberg dot com. Thanks for listening to us here with The Big Take, the daily podcast from Bloomberg and I Heart Radio. For more shows from my Heart Radio, visit the heart Radio app, Apple Podcasts, or wherever you listen. Read today's story and subscribe to our daily newsletter at Bloomberg dot com. Slash Big Take, and we'd love to hear from you. Email us with questions or comments to Big Take at Bloomberg dot net. The supervising producer of The Big Take is Vicky Erga. Our senior producer is Katherine Fink. Our producers are Mo Barrow and Michael falerro Is our engineer. 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