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The World's Biggest Illicit Industries

The World’s Biggest Illicit Industries
http://www.forbes.com/2010/06/04/biggest-illegal-businesses-business-crime_print.html

Nathan Vardi, 06.04.10, 12:02 PM ET
The $125 million theft of five paintings by artists like Picasso and Matisse from the Museum of Modern Art in Paris in May caught the attention of the world. But compared with the total annual trade in illicit goods, the heist was small change.

According to estimates from the Federal Bureau of Investigation, the business of buying and selling stolen art is about a $6 billion racket worldwide. Trade in illegal drugs, by contrast, is estimated to be in the neighborhood of maybe $300 billion, making it the world’s biggest illicit activity. The trafficking of cocaine, marijuana, heroin and other drugs has continued to frustrate the efforts of governments around the world. It has created a massive industry and political problem, financing violent groups like the Taliban and drug cartels that currently threaten the stability of important countries like Afghanistan and Mexico. The destabilizing effects of battling the drug trade can be seen most recently in Jamaica, where an entire nation has been swept up in violence as the government tried to seize drug lord Christopher Coke.

Full List: The World’s Biggest Illicit Industries

But it’s not the only criminal enterprise raking in billions of dollars a year. The world’s biggest illicit industries continue to grow by circumventing national laws and regulations, and taking advantage of new international networks and technologies. This dark side of globalization has generated huge profits and political instability. The exact size of these industries can be estimated only vaguely, but their scope and impact cannot be denied.

Counterfeiting

The Organization for Economic Cooperation and Development in 2009 said the international trade in counterfeit and pirated goods increased to more than U.S. $250 billion, almost 2% of world trade, up from US$200 billion in 2007. The world is awash in fakes–from trademarks like Nike to copyrighted music and high-tech invention like pharmaceuticals or computer chips. The World Customs Organization guesses that counterfeiting accounts for 5% to 7% of global merchandise trade.

Oil Smuggling

Shell last year estimated that as much as 100,000 barrels of oil are smuggled out of Nigeria each day–at the time some $1.6 billion annually. In Mexico, Pemex estimates it loses $700 million annually to petro thieves who tap into its pipelines. Texas oil men have pleaded guilty to conspiring to sell stolen Mexican oil. Most of the pirate attacks off the coast of Somalia or in the Malacca Strait involve oil tankers that are ransomed. A Council on Foreign Relations report suggests such piracy costs between $1 billion and $16 billion.

Cigarettes

There are some 600 billion cigarettes smuggled worldwide each year, a $30 billion illicit industry, according to the United Nations Office on Drugs and Crime. Cigarettes are the world’s most smuggled legal product. Much of this activity is a result of the vice taxes nations use to control the spread of addictive drugs that are legal. High taxation generates shadow markets in places ranging from Latin America to New York state.

Human Trafficking

Interpol says human trafficking and illicit migration is a $28 billion enterprise. This sad business, broadly speaking, can take the form of modern slavery, sexual exploitation, or organ harvesting, destroying the lives of its victims and enriching brutal criminal groups. The victims are often trapped and forced to work as prostitutes or migrant workers. This illegal trade in human beings is one of the fastest growing criminal activities globally, U.N. Special Rapporteur Joy Ngozi Ezeilo said recently.

Cargo Theft

Cargo theft is as much as a $30 billion problem annually, according the Federal Bureau of Investigation, which points out it can include anything moved by truck or plane–tailored suits, frozen shrimp, computer chips, toilet paper. These are often non-violent thefts of goods in transit, but they can include sophisticated methods that often involve surveillance. The U.S., Mexico, Brazil, South Africa, Russia, India and the U.K. are the countries most at risk for cargo theft globally, according to FreightWatch International.

Still, while the size and reach of global illicit industries can seem overwhelming, there are signs of hope. Law enforcement groups from around the world are learning to cooperate in the battle against international crime. Just this week seven people were arrested in Liberia in connection with a conspiracy to distribute more than $100 million of South American cocaine in Europe after the son of the president of Liberia worked undercover with U.S. drug agents.

New technologies and regulatory procedures are being employed to crack down on all sorts of crime: Software that tracks money laundering, product tags that are used to identify stolen products, surveillance devices that spot bad guys. “There is a major role the private sector can play,” says David Shillingford, founder of CargoNet and National Equipment Register, units of Verisk Analytics that build information databases of cargo and heavy equipment to solve and deter incidents of theft. “There is a recognition from private industry that they need to help themselves.”

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