Cocaine brokers revealed

Their job is to deliver cocaine, tons of it. They work for trans-national organized crime syndicates and South American cartels. Thanks to them, people can buy cheap cocaine at some hidden corner in any city, fuelling a market that in 2009 the UN estimated at $85 billion annually.

They are cocaine brokers, using cargo ships and planes to deliver the white powder from South America to Europe and United States. They link Mexican and Colombian drug cartels with organized crime syndicates in Europe for the illicit retail market.

El Viejo (the Old Man) is a former cocaine broker who knows exactly how it was done in the 1980s, before he was convicted of drug trafficking and sentenced to jail.

Just released after a 17-year sentence in high-security prisons all over Italy, the gray-haired ex-con looks younger than 69.

At the time, it just seemed like good business—an investment that offered staggering returns.

“I was in charge of logistics only,” he says, meaning he had to solve the knotty problems posed by shipping tons of illegal material thousands of miles while evading law enforcement on two continents. He says he was good enough at it to help in cocaine’s transformation from a fringe drug favored by a wealthy few into a major cultural phenomenon.

The profits were impressive. “My boss used to (move) about 20 tons every year. With a purchase of $20 million at the source, he would make between $80 million and $90 million net a year.” El Viejo would not identify his boss or say anything about him, other than that he is now retired.

When El Viejo started, heroin dominated the market, both in the US and Europe. But with the rise of HIV in the 1980s, effective anti-AIDS campaigns focused attention on how intravenous drug use can spread HIV. The heroin market started to dry up and, he says, cocaine brokers were keen to step into that vacuum.

Another early cocaine broker was Roberto “The Baby” Pannunzi, who was arrested in Colombia and deported to Italy last July. It was the third arrest for Pannunzi in the past 20 years; the first two times, he managed to escape from custody.

He moved to Canada as a youngster where he met former crime boss Antonio Macrì. Police say Macrì was affiliated with an Italian crime organization called ‘Ndrangheta, a Mafia-style group that originated in Calabria that, as former chairman of the Italian Antimafia Commission Francesco Forgione writes, “rose to become the most powerful and most modern organized crime group in Italy today.”

According to a book by Roberto Saviano, Macrì took Pannunzi under his wing and introduced him to the underworld. In 1975, Macrì was assassinated, and Pannunzi, by then an experienced manager, took over Macrì’s drug trafficking. He optimized the existing network being managed by ‘Ndrangheta and improved collaboration with Sicily’s La Cosa Nostra.

Pannunzi was unusual in that he was not affiliated with any one syndicate, which became his strength.

Using Macrì’s contacts in many of the world’s main harbors, he collaborated with the Marseille mafia to set up a heroin refinery in Palermo. The Northern Hemisphere shift from heroin to cocaine likely began right there, El Viejo thinks.

As he recalls: “The act of genius was to start trading heroin for cocaine. Heroin was not (readily available) in South America and the cartels were hungry for it. We would provide heroin to them, they would give us cocaine in exchange.”

With the heroin market dominated by La Cosa Nostra, it was easy for Pannunzi to provide the cartels as much as they wanted, and they were willing to pay. “For one kilo of heroin you could get 25 kilos of pure cocaine,” writes Saviano2.

And so cocaine began its speedy, steady rise. ‘Ndrangheta quickly concentrated all its efforts on cocaine and in a few years outperformed La Cosa Nostra in the drug trade, police and prosecutors say.

Cocaine brokers like Pannunzi turned the drug business upside down, made it more reliable for crime syndicates, harder to tackle for police forces, designed more efficient distribution chains and offered a cheaper product to consumers.

Prosecutors say Pannunzi simply professionalized what had historically been a more hit-and-miss proposition of getting the drugs into Europe. “He was the only one who could organize the shipment of cocaine cargos of more than three tons,” says Nicola Gratteri, the Italian prosecutor who coordinated the operation that arrested Pannunzi. With such supply potentials, cocaine was suddenly available to the large European market.

For a broker to succeed, he needs a good logistics player, like El Viejo, who says, “My boss would buy directly at production sites. I would then take care of the transportation. Then he would sell everything to his business partner, a man based in the Netherlands. This guy had deals with crime syndicates and used to sell his stuff to the Italians. It was them who had the control of the drug trade for Southern Europe. First it was La Cosa Nostra, today it is ‘Ndrangheta.”

Secrecy was the key to success, El Viejo believes.  “A successful cocaine broker is the one who runs this business in a very hidden way, without letting anything reach the outside world”, he explains. “Most of the seizures are made by complete chance, or because someone speaks out. Just like with me, I was caught because my collaborator told the authorities, otherwise they didn’t even know I existed.”

He says the drug trade is deliberately organized in a way to limit the impact of informants. “I had to deal with one person and one only, my boss. I would collect the cocaine that he bought and deliver it to his partner in the Netherlands. I never met this guy. Everything was organized in a way that each of us had to deal with one person, each of us was a cell sort of sealed from the rest of the chain.”

By keeping crime syndicates at arms’ length, brokers can avoid problems. “Brokers know that it is better to keep away from the use of violence. What they want is simply to place the white powder and to do so they need big money and good contacts,” writes Saviano3. And while syndicates like ‘Ndrangheta and La Cosa Nostra may be deadly rivals, they give brokers the freedom to transact business independently.

“Brokers were never affiliated with any mafia,” confirms El Viejo. “They must be independent. I have never worked for ‘Ndrangheta, I always worked for my boss and him only.”

Prosecutor Gratteri writes that Pannunzi also appreciated the importance of independence. “Pannunzi was able to deal in an authoritative way with Colombian and Venezuelan cartels to decide the price at the source and establish the ways for transportation. He would function as the front-man for La Cosa Nostra and ‘Ndrangheta who would give Pannunzi their capital and he would dispose it the best he could.”

That independence meant brokers were free to act as they saw fit. As Matteo Tacconi writes on the Huffington Post, Pannunzi made use of a small plane fleet between 1991 and 1997 to deliver cocaine to his ‘Ndrangheta partners in Perugia, Italy4. He also purchased a cargo ship for $400,000, anticipating the payment with his own money in cash, as Gratteri’s report reads.

By contrast, El Viejo says, “Our big deliveries were all made by cargo ships.” Routes changed over the years as authorities moved in and plans had to be abandoned. “Once we used to deliver our cocaine mostly in the harbors in the Netherlands, Spain or Italy… These were all big harbors where, due to the amount of daily cargos, all containers are impossible to check…Now routes have shifted a bit, they mostly go to Western Africa and from there they dispatch the cocaine throughout Southern Europe.”

He says transporting tons of cocaine is a risky job, the hardest in the cocaine trade, while deceiving customs and police agents was a constant challenge. El Viejo’s cocaine traveled hidden inside all sort of goods stuffed into containers to cross the ocean.

He says he invented a technique that made him “one of the best in the business” that he called blind delivery. “I used big, well-known international companies’ cargos to stuff my cocaine in. Big names. Custom officials would not check them, they knew they were reliable companies.”

“No custom official would ever believe there is a ton or more of cocaine in the containers (of such reputable companies). And the company’s employees were unaware too, of course,” says El Viejo.

It was important to choose the right product to hide the cocaine in, he says. “We would use shipments of marble, tractors parts, industrial cables…as long as the product had a market in Europe…because if a customs agent sees a cargo of, say, tiles from Chile, of course, he would be very suspicious.”

El Viejo says it was crucial to choose the right country of origin for the cargo. “There were hot countries and cold countries. A cargo from Colombia, Venezuela or Ecuador would be checked 100 percent.” Better choices, he says, were “Chile, Paraguay, Uruguay…”

While El Viejo was spending 17 years behind bars, the cocaine trade continued. He sees no reason to think it will change any time soon.

“It won’t be defeated, at least not in South America”, he says. He believes some governments turn a blind eye because “the immense profits made with the cocaine trade are invested in Western countries.”

And this, for El Viejo, is a good enough motive for the institutions that have declared a “war on drugs” not to tackle it properly.

“No drug trafficker would ever invest his money in developing countries, where cocaine is produced. They invest them where profits are guaranteed, in the Western world.” A key role in the financial circuit in which drug money is laundered is played by banks.

“Of course the connection between big bank groups and drug trafficking has always been very strong. Look at California…it has (profited from) this for years, the drug money flow from Mexico has never ceased. Or take Florida…the main port of entry of South American cocaine into US.” He believes drug money plays a significant role in the Florida economy.

Tax havens also enable the drug money to flow into the mainstream economy: “Despite what politicians say, nobody has a real interest in eliminating tax havens. You can deposit millions of dollars in them and with a 10 percent fee they circulate the money again,” adds El Viejo.

The drug trade is tempting for those who have the money and the right skills: few other products generate such profits. “Back in my day, my boss would pay $800 for one kilogram and sell the same amount at the gross market for $20,000”, says El Viejo. “Then it’s up to the retailers to cut it.”

Today, “they buy one kilogram for about €3,000… add €6-7,000 more for transportation and all costs. At the gross market, I am told, they sell it for €40-50,000 and they would then cut it 4-5 times,” (increasing the volume by adding sugar or similar cheaper substances).

While the quantity of the drug skyrocketed over the past two decades, quality took a dive, he says.

“We would cut it no more than twice”, he says. “Today cocaine with 18 percent alkaloid (the psychoactive component) is considered good quality whereas in my days it was no less than 90 percent. It is harmful not because it’s cocaine but because they cut it with all sort of rubbish. If you pay €10-20 for one gram then for sure you are sniffing crap.”

El Viejo is now retired and says he enjoys life working for a charity organization. Unlike Pannunzi, who will soon face accusations of international drug trafficking, he has already paid the price of his criminal offences.

And yet he says he dreams of living the rest of his life on some quiet pearl-white shore. Is he resentful? Is he at peace? It is hard to be sure.

“I know a lot of people, many friends… They live happily and quietly in all European capitals. They are respected…and they have made their fortune with cocaine,” he says with a sneer.

But this quiet and educated man, who earned two undergraduate degrees, one master’s degree and converses in six languages, says he thinks every day of the consequences of his past actions.

“I have always thought of the damage I brought about, of the slavery into which I must have sent a lot of young people. But the money I made and alcohol kept me going,” says El Viejo. “Now I have paid the price that the state says is congruous with what I did. But I believe I will never pay enough for it.

“No punishment will ever change that.”

This article was published on OCCRP website on September 23, 2013.