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International Organized Crime Godson & Olson

Part VI Chapter 36. International Organized Crime Godson & Olson. Part 6: Ch. 36. Deviant formal organizations share bond of membership in large-scale, highly-structured associations that extend over time & space

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International Organized Crime Godson & Olson

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  1. Part VI Chapter 36 International Organized CrimeGodson & Olson

  2. Part 6: Ch. 36 Deviant formal organizations share bond of membership in large-scale, highly-structured associations that extend over time & space They entail more highly sophisticated relationships than less-structured or committed crews, where a division of labor exists & members learn specific skills & pursue specialized tasks within the group Since WWII organized crime has carried out a wide range of domestic activities, using violence, extortion, bribery & murder to advance its interest

  3. I. Organized Crime & Business Part 6: Ch. 36

  4. Part 6: Ch. 36 While organized crime is growing, there is no integrated centrally directed criminal conspiracy The first business of criminal organizations is usually business, its protection & promotion Like legitimate enterprises, the activities of separate “corporations” can be cooperative or competitive

  5. A. Criminal Organization Part 6: Ch. 36 • Activities must be criminal; • individuals engaged in such activities must be organized; profit-oriented; use of violence & bribery to advance causes; • Forms of entrepreneurial activity that are classified illegitimate if they do not meet the state’s test for permits, licenses, etc. • These organizations account for significant proportion of all meaningful economic activity • For example, in Italy, Peru, Columbia, Russia, Mexico, etc

  6. B. Family Ties Part 6: Ch. 36 • Most major crime organizations have a family or ethnic base • Operate out of small, tight-knit communities • Rituals, codes of allegiance, ethnic bonds & quasi-religious ceremonies help to engage compliance & loyalty • Involvement places individuals outside of law & subject to arrest helps reinforce ties that bind • Murder is usually the final sanction to ensure loyal silence

  7. C. Three New Characteristics of ICOs Part 6: Ch. 36 • First, the broader, global canvas of traditional criminal activity • Second, the growth of transnational links between criminal organizations & other groups • Third, growing ability & power of international criminal organizations (ICOs) to threaten stability of states, undermine democratic institutions, hinder economic development & undermine alliance relationships

  8. II. The New International Criminal Part 6: Ch. 36

  9. Part 6: Ch. 36 ICOs transnational scale & ability to challenge national & international authority sets them apart from other major criminal organizations Disposing of large quantities of ready cash, diversified into a wide range of activities, & employing a workforce spread around the globe, the ICOs represent a different order of magnitude in criminal operations

  10. EXAMPLE Part 6: Ch. 36 America Mafia or La Cosa Nostra (LCN) Hells Angels motorcycle gang Chinese Triads Columbian cartels Mexican cartels

  11. III. The Future Part 6: Ch. 36

  12. A. Economics of Production Part 6: Ch. 36 • It’s more economical, for example, for a farmer to grow drug-related crops given the profitable nature of these products • Example: Poppy in Afghanistan • Large markets, such as the US & Europe make them the world’s most lucrative markets for illegal as well as legal enterprises

  13. B. International Ungovernability Part 6: Ch. 36 • Growth of international crime parallels global trend of ungovernability – the declining ability of governments to manage or govern a modern state & to provide adequate or effective services • Example: The Andes & Amazon of Latin America, regions in Afghanistan & Pakistan, Burma, Peru, Southern China

  14. IV. Immigration Stream Part 6: Ch. 36

  15. Part 6: Ch. 36 • Ethnic criminal organizations likely to follow immigration patterns – not always but there’s a strong correlation • Economic pressures & ethnic turmoil generate refugees & immigrants from regions where international criminal groups are based • Example: Chinese, Mexicans, Middle-Easterners, Russians, etc

  16. A. Border Porosity Part 6: Ch. 36 US’s long open borders with Mexico & Canada provide ready access for criminals & illegal goods & tens of thousands of miles of coastline The North American Free Trade Agreement (NAFTA) & EC lowers many existing safeguards (However, after 9/11 a lot more scrutiny & security does exist)

  17. B. Trends in Technology Part 6: Ch. 36 Continued advances & international transportation will facilitate growth in ICOs The movement of trillions of dollars in wire transfers make it difficult for law enforcement to track every transaction down (The use of the internet, which cannot be controlled or monitored adequately, reinforces this)

  18. C. Relative Disorganization of Law Enforcement Part 6: Ch. 36 Preventing, disrupting & successfully prosecuting organized crime in most parts of the world is difficult Criminal organizations have survived the onslaught of law enforcement for decades Now, ICOs pose a bigger threat and are more powerful than their predecessors Enforcement of law globally poses jurisdictional issues as well

  19. Review Questions Part 6: Ch. 36 In a post-9/11 world, what challenges do ICOs face that they would otherwise not experience? With a focus on terrorism & terrorists, have ICOs been able to operate under the radar of law enforcement?

  20. Part VI Chapter 37 War Profiteering: Iraq & HalliburtonRothe

  21. Part 6: Ch. 37 Intersection of state & corporate interests during war is basic part of war-making Every capitalist country must rely on private sector production to make weapons With a permanent wartime economy in US after the end of World War II, major providers of weapons and logistical support such as General Electric, Lockheed and Boeing became regular recipients of government contracts

  22. Part 6: Ch. 37 These companies also were at center controversies regarding cost overruns and questionable charges Much of this situation had been described by C. Wright Mills (1956) in Power Elite which also noted the “revolving door” between corporate, military and political organizations as leaders from each move from one to the other

  23. I. The Study Part 6: Ch. 37

  24. Part 6: Ch. 37 • Examines current controversy about former VP Dick Cheney & Halliburton: • Claims that Halliburton was awarded no-bid, cost-plus contracts point to the potential for state-corporate crime and war profiteering becoming a legitimate practice • This study examines the relationship between Halliburton, the Bush administration, the War on Terror, and war profiteering

  25. A. Brief History of Halliburton Part 6: Ch. 37 First established in 1919, Halliburton has had a history since the 1990s and Cheney’s tenure as CEO prior to the 2003 invasion and occupation of Iraq, of what can be classified as corporate crime Many of its actions have come under the scrutiny of the Securities & Exchange Commission (SEC), US General Accountability Office (GAO), and Congress

  26. A. Brief History of Halliburton Part 6: Ch. 37 • These include: • Overcharging the US government for contracted work • Utilizing bribes to attain foreign contracts • Using subsidiaries and foreign joint ventures to bypass US law restricting trade embargoes • In 2001 the Treasury Department began an inquiry into whether Halliburton had used transnational trade loopholes to circumvent sanctions on Iran by doing business with it through foreign subsidiaries

  27. A. Brief History of Halliburton Part 6: Ch. 37 • In another case, Halliburton’s subsidiary Dressler, Inc. did substantial business with Iraq • from 1997 to 2000, $73 million worth of deals with Saddam Hussein • Such business was prohibited by international trade sanctions at the time & carried out under the guise of the UN’s oil-for-food program • In 2004 Halliburton came under investigation by the French government, the US Dept of Justice & SEC for international bribery

  28. A. Brief History of Halliburton Part 6: Ch. 37 For example the DoJ and France conducted a criminal investigation into an alleged $180 million bribe paid by Halliburton & three other companies to Nigerian government in exchange for a $4 billion contract to build a natural gas plant In 1997 the GAO charged Halliburton with billing the US Army for excessive charges related to ” cleaning” the same offices up to four time a day

  29. A. Brief History of Halliburton Part 6: Ch. 37 • A 2000 follow-up GAO report found systematic overcharges via inflated costs • Halliburton paid $2 million in fines to resolve the fraudulent overcharges • Separately the Defense Department inspector general and a federal grand jury investigated charges that Halliburton’s subsidiary KBR defrauded the government millions of dollars through inflated repair prices at Fort Ord in California • Halliburton again paid $2 million in fines to resolve the fraud charges

  30. B. Halliburton – Cheney Connections Part 6: Ch. 37 The relation between Halliburton and Cheney date back to 1990s when Cheney, then Reagan’s secretary of defense, assigned Halliburton the task of conducting a classified survey detailing how private corporations could do logistical support for US military Paid $3.9 million for this work, and another $5 million for a follow-up study, this led to Halliburton receiving a 5 year contract to be the US Army’s on-call private logistics arm

  31. B. Halliburton – Cheney Connections Part 6: Ch. 37 • It held this contract until 1997 when it was beat out by DynCorp in competitive bidding • Dick Cheney, along with David Gribbin his deputy secretary of defense, was hired by Halliburton as its CEO in 1993 providing the company with invaluable level of access to government • The connection paid off: • Between 1995 and 2000 Halliburton doubled the value of its government contracts, obtaining $1 billion in defense contracts in 1999-2000

  32. B. Halliburton – Cheney Connections Part 6: Ch. 37 Cheney himself after becoming Bush’s Vice President continued to directly hold Halliburton stock until 2002 He had a direct financial interest in the company during his first two years as VP A number of Bush family members have direct and indirect financial connections with Halliburton in various roles and capacities

  33. C. Halliburton & CheneyPost-Retirement Part 6: Ch. 37 While serving as VP, Cheney continued to draw income from both the US government and Halliburton Since Cheney returned to government service, Halliburton has paid far less for lobbying for defense contracts while receiving greater, even bigger awards

  34. C. Halliburton & CheneyPost-Retirement Part 6: Ch. 37 For example, in the two years prior to Cheney’s election as VP, Halliburton spent $1.2 million lobbying & attained about $900 million a year In 2001-2002, it spent half the previous amount, $600,000 lobbying; by 2003 it halved that amount again to just $300,000 lobbying for over $6 billion in contracts The VP’s office apparently coordinated in March 2003 some $7 billion of defense contracts for Halliburton in connection with the Iraqi War as well as future options

  35. C. Halliburton & CheneyPost-Retirement Part 6: Ch. 37 Many of these contracts were noncompetitive, cost-plus Essentially blank checks that ensured Halliburton would be reimbursed for whatever it bills for cost, plus its profit As a result, Halliburton’s stock nearly doubled from $12.62 a share in 2002 to $23.90 in 2004 Halliburton’s “insider” advantage for war contracts is further demonstrated by the fact that very few other corporations, domestic or foreign, received government contracts

  36. D. State Facilitation of Corporate Crime Part 6: Ch. 37 Halliburton companies have engaged in systematic, significant overcharging for its Iraq contracts On April 1, 2001, the Bush administration revoked strict regulations(no. 65 FR 80255) that would have made Halliburton et al.’s overcharging as well as other violations a basis for a period of ineligibility for future government contracts

  37. D. State Facilitation of Corporate Crime Part 6: Ch. 37 Some overcharging by Halliburton involved huge amounts of money A Pentagon audit found in 2003 that it had overcharged $61 million for gasoline deliveries to Iraqi citizens Another audit found that it overcharged $67 million for military dining services or 3 times the number of dinners it provided

  38. D. State Facilitation of Corporate Crime Part 6: Ch. 37 The Pentagon warned Halliburton in 2003 of “serious repercussions” for poor food & dining service quality although nothing ever happened In addition Halliburton billed for labor never performed as well as charges for delivery & transportation costs of empty trucks and trailers All of the above clearly fall into the category of state-facilitated corporate crime

  39. Review Questions Part 6: Ch. 37 Why was Halliburton able to get away with its unethical practices even after Dick Cheney left office? What would other government contractors (without such a connection to the White House) experience if they would have implemented the same practices as Halliburton?

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