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The International Crooks Now in Power

One evening in the winter of 2004, while working as Newsweek‘s Jerusalem bureau chief, I found myself in a dark parking lot outside a banquet hall in suburban Tel Aviv, waiting for Israel’s most powerful gangster, Ze’ev Rosenstein, alias the “Fat Man.” The son of Romanian Jewish immigrants, born in Jaffa, just south of Tel Aviv, Rosenstein controlled one of the world’s largest international drug trafficking rings, and had survived seven assassination attempts, including an aborted guided missile attack on his convoy a few months earlier.

I had spent weeks trying to arrange a meeting with him, and was staking him out at his eldest son’s wedding. Rosenstein pulled up to the banquet hall’s marble-columned entrance in his armored Mercedes, followed by a koda full of bodyguards. He emerged from the back—a short, compact man, nicely dressed in a charcoal suit—with three young sons. I called out his name, and Rosenstein froze, looking nervously between me and four security men. They quickly formed a cordon around him. “Private party, bud,” the burliest of the bunch told me in a New York accent, semiautomatic M-16 dangling from a shoulder strap. I never got to talk with Rosenstein.

So I was interested to find the Fat Man showing up in Misha Glenny’s McMafia: A Journey Through the Global Criminal Underworld, his engrossing and disturbing survey of international organized crime in the post–cold war era. A long-standing expert on the Balkans and a former correspondent for the BBC, Glenny is also the author of The Fall of Yugoslavia (1992), the definitive account of the violent breakup of that country under Slobodan Milosevic, and he is intimately familiar with the ways that Serbia, Montenegro, Croatia, and other Balkan countries became mafia states during the sectarian wars of the 1990s. Here he shows how organized crime syndicates throughout the world have become increasingly interconnected and interdependent, in a crooked form of globalization.

Ze’ev Rosenstein is a typical felon of the global age. His rise from petty jewel thief to international drug dealer coincided with Israel’s emergence as a transit point of criminal routes stretching from Moldova to Dubai to Miami Beach. In the 1990s, together with software and information technology, organized crime was beginning to have a major part in the Israeli economy. The mass migration of Russian Jews to Israel in the post-Soviet era brought with it underworld criminals who recreated their syndicates in Israeli cities. These Russian mobsters in turn transformed Israel into a principal link in the global sex trade: Glenny found that Bedouin gangs working with the Russians have smuggled thousands of young women from Moldova, Russia, and other Eastern European countries into Israel across the Sinai Desert to work as prostitutes. (Many were held as sex slaves.) Meanwhile, loosening restrictions on money flow and the rise of financial safe havens such as Dubai made it easier for criminal organizations in Israel and elsewhere to expand their operations around the world.

For Israeli gangsters such as Rosenstein—who ran homegrown syndicates that competed with the Russians—the opportunities grew larger. Rosenstein rose to power in Tel Aviv running illegal casinos near the central bus station, but he later earned tens of millions of dollars moving large supplies of ecstasy and other drugs from Belgium and the Netherlands to Australia and the United States. In 2003, Glenny writes, the US State Department claimed in a report that

Israeli drug-trafficking organizations are the main source of distribution of the drug to groups in the US, using express mail services, commercial airlines, and recently also using air cargo services.

(One Hasidic Jewish New Yorker, indicted in 2003, allegedly laundered more than $40 million in profits for Rosenstein’s gang.)

As the stakes rose, so did the violence: during the early part of this decade, when I was based in Israel, it was often said that parts of Tel Aviv had come to resemble Chicago in the 1920s. Hoodlums were dying at an alarming rate in feuds between Russian, Yemeni, and other Israeli crime families for control of the gambling and drug rackets; civilians were sometimes killed in the crossfire. A bomb blast outside a Tel Aviv money-exchange shop in December 2003 that killed three passersby and wounded two dozen was at first blamed on Palestinian militants. Within hours, however, police realized that the target had been Rosenstein, who had escaped the blast with a slightly injured hand and shredded clothes. “Are they completely insane? What have we come to? Jews blowing up Jews?” one survivor told the local press.

As Glenny tells it at the start of his book, two related events marked the beginnings of this deadly new age of international crime. The 1991 collapse of the Soviet Union unleashed the pent-up energy of millions of former citizens of the Communist empire. Ilya Pavlov, a Bulgarian wrestler turned secret policeman, exploited his connections to members of Bulgaria’s former Communist hierarchy, looting the state’s assets and channeling the money into a variety of illegal transnational enterprises. His corporation Multigroup, staffed by other former Bulgarian athletes and secret policemen cast adrift in the post-Soviet era, cornered the international market in car theft by using long- standing Balkan trade routes—expensive cars would be stolen from Western European cities and smuggled to Eastern Europe and the Balkans, where they could be easily resold.

The disintegration of Yugoslavia during the 1990s gave Pavlov and other Balkan criminals a huge financial windfall. When Milosevic ordered Serb nationalist forces in 1991 to “ethnically cleanse” Bosnia and Croatia, the West imposed economic sanctions. War profiteers, including Pavlov and Milosevic’s son, Marko, then smuggled vital goods—ranging from cars to cigarettes to oil—into Serbia, where they could be sold for large profits. “The Balkans…was…transformed into a smuggling and criminal machine that had few if any parallels in history,” Glenny writes.

The Balkan mafias started putting aside their ethnic differences to engage in a breathtaking criminal collaboration. This would in turn reach out to counterparts across the globe, bringing together the mafias of Colombia, Russia, and the Golden Triangle [an opium-producing region in Southeast Asia], to name but the most influential.

Glenny describes how these criminal networks quickly expanded across Eastern Europe and beyond. Once hermetically sealed Albania, for example, turned overnight into a paradise for the sellers of cheap stolen vehicles:

Cars were banned in Communist Albania except for official use; the roads were designed to accommodate a few trucks a day, and nobody except the small band of state chauffeurs learned how to drive. In the chaos of collapsing Communism, the floodgates opened and anyone able to get his hands on a (stolen) car hit the public highways with Mediterranean gusto despite never having sat behind a wheel. Mayhem! The country was transformed into a huge and deadly dodgem ride, while any vehicle was fair game for thieves…. The cars that didn’t stay in Albania were sold in Macedonia, Bulgaria, Russia, the Middle East, the Caucasus, and former Soviet Central Asia.

(Glenny’s account reminded me that in April 1999, while traveling with the Kosovo Liberation Army in remote Bajram Curri, Albania, the Toyota 4x4 I was riding in, stuffed with the laptop computers and satellite phones of half a dozen correspondents, was seized at gunpoint by members of the local mafia. The car was halfway to Montenegro before the mob leader realized that it had been under the protection of a KLA chieftain, and radioed his underlings; we got the Toyota back an hour later.)

Perhaps no figure epitomized the anything-goes atmosphere of the Balkans during that era, the blurring line between politics and crime, more than Milo Djukanovi´c. A former pro basketball player, Djukanovi´c had been a protégé of Slobodan Milosevic, supporting Serbia in the Balkan wars as prime minister of the Yugoslav republic of Montenegro. (Only later did he openly criticize Milosevic for engineering a bloody ethnic-cleansing campaign, in which Montenegro had also taken part.) By the mid-1990s he was earning tens of millions of dollars a year from cigarette smuggling. This business is particularly lucrative because cigarettes are heavily taxed in the European Union, and many Europeans are prepared to buy them off the street from smugglers. Glenny describes how cigarettes from US factories made their way via the free trade zones of the European Union to Montenegro, where they were loaded onto speedboats and smuggled back across the Adriatic to Italy—to be sold across the European Union at prices roughly 10 percent of what cigarettes would normally cost.

Djukanovi´c took a percentage of the sales of every case of cigarettes that passed through Montenegro. The money helped to keep Montenegro solvent at a time when its political status remained in doubt and Western governments, eager to embrace Djukanovi´c following his break with Milosevic in 1997, did not show much concern for the business dealings of his regime. By the time Milosevic fell from power in Serbia in October 2000, and the US government stopped turning a blind eye to Djukanovi´c’s activities, organized crime had penetrated nearly every corner of the Balkans:

With no wars left to fight, former paramilitaries became engaged full-time in the transit of heroin, cigarettes, labor migrants, and women into Western Europe. The Keystone Cops regime of the UN and NATO in Kosovo had no resources to combat the Albanian fighters from the Kosovo Liberation Army who had consolidated Kosovo as a new center for the distribution of heroin from Turkey to the European Union. Elsewhere, Bosnia and Hercegovina were mired in an early scandal involving UN peacekeepers and trafficked women and as the local money-laundering center. Macedonia was about to dissolve into a civil war that was provoked almost exclusively by a dispute between mafia groups over control of the illegal cigarette routes through the country.

As for Montenegro, it voted for independence from the federation with Serbia in May 2006 and Milo Djukanovic´ became its first prime minister.

Starting out from the Balkan badlands and the streets of Tel Aviv, Glenny begins an ambitious tour of international organized crime. He writes about marijuana growers and smugglers in British Columbia, showing how strict US drug laws have kept US pot prices particularly high and transformed western Canada, where much of the cannabis supplied to the US is grown, into “the largest per capita concentration of organized criminal syndicates in the world.” Much of the profits of these gangs would disappear if there were a legal market for marijuana, and Glenny makes a persuasive argument for the decriminalization of soft drugs.

He traces the chilling story of Dawood Ibrahim, a Bombay street thug and observant Muslim who built a global empire on heroin and the sedative mandrax. Seething over the murders of hundreds of Muslims by extremist Hindu mobs in Bombay in December 1992 and January 1993, Dawood obtained eight tons of explosives from the Pakistan military, which he used to mastermind the March 1993 bombings at multiple locations in the city, in which hundreds died.

Glenny also shows how Nigeria’s culture of corruption—the most tangible result of its oil wealth—gave rise to a scam that he calls “one of the most exuberantly mischievous examples of crime in history.” Using fax machines (which later gave way to e-mail), a shadow army of con men posing as Nigerian Central Bank officials and the widows of African dictators would write polite letters to private citizens in Western countries requesting assistance to remove tens of millions of dollars from the country. In exchange for paying up front the “fees” required to execute the transaction—perhaps $10,000 or more—the respondent was promised a share of the assets. This ruse emptied the bank accounts of thousands of gullible, greed-driven Westerners who hoped for high returns on investments and then learned that they were turning over money to impostors.

Glenny also penetrates the sordid reality behind the façade of Dubai, which has positioned itself in recent years as a major Middle East trade and financial center. If you have any money, he writes,

few if any questions are asked about how you came upon it or what you want to do with it. Dubai’s discreet attitude to cash has enabled the city to attract leading figures from industries beyond sports and showbiz over the past decade. The Russian arms dealer Viktor Bout, renowned as the Merchant of Death, used to park his planes in Sharjah, Dubai’s neighboring emirate ten miles away, while he received his checks for services rendered to warring factions through the Western banks there. The largest cigarette smuggler in the Balkans established his offices in the Burj al-Arab, the sail-shaped Arab Tower, the world’s first-ever seven-star hotel (with seven-star prices starting at $1,500 a night).

Glenny can be funny about his own adventures in the organized crime world. He recalls his regular patronage of black-market cigarette dealers during his days covering the Balkan wars, and wryly recounts his experience with sellers of pirated DVDs in Fuzhou, China:

I picked up a copy of Night at the Museum with dialogue only in Russian or Ukrainian (good practice for me, but a huge disappointment to my nine-year-old son), and Volver, the English subtitles of which bore no relation to Pedro Almodóvar’s heartwarming story about a single mother but instead a preposterous B-movie spy story.

The spread of organized crime and the violence and degradation of civil society that go with it, he makes clear, are caused as much by the voracious appetites of consumers as by the amorality and greed of the crooks. “Organized crime is such a rewarding industry in the Balkans,” he writes in an early chapter,

because ordinary West Europeans spend an ever-burgeoning amount of their spare time and money sleeping with prostitutes; smoking untaxed cigarettes; snorting coke through fifty-euro notes up their noses; employing illegal untaxed immigrant labor on subsistence wages; stuffing their gullets with caviar; admiring ivory and sitting on teak; and purchasing the liver and kidneys of the desperately poor in the developing world.

The greatest strength of McMafia is also, however, its biggest weakness. Glenny traveled many thousands of miles and interviewed some three hundred people; he has mastered such little-understood matters as the mechanics of money laundering and the management techniques of Colombian drug cartels. Yet Glenny’s ambitious efforts to give his subject global heft can become dizzying. I sometimes found myself confused by many dozens of unfamiliar foreign names, while straining after the links between the various organized crime organizations he talks about. Characters appear, then disappear; most of the low-level criminals themselves blur together as a group of cocaine-snorting, muscular lowlifes. Indeed, the book often seems a sequence of separate articles or research studies, each one rich with observation and analysis, but lacking the larger analysis that could tie them together. Still, Glenny has done the hard and sometimes dangerous work of identifying the criminal syndicates that he estimates account for some 15 percent of world GDP. Whether there is any hope of controlling them or breaking their connections with one another remains a question beyond the scope of his book.

On March 6, 2008, Viktor Bout, the international arms dealer cited in McMafia, was arrested in Bangkok, Thailand, during a sting operation set up by the US Drug Enforcement Administration. He had been under a US indictment for supplying weapons to Colombia’s FARC rebels, labeled a terrorist organization in 2001 by the State Department. Bout’s story is recounted in Douglas Farah and Stephen Braun’s Merchant of Death: Money, Guns, Planes, and the Man Who Makes War Possible, which was published a few months before Bout’s capture. Farah, a former West African bureau chief for The Washington Post, and Braun, a Pulitzer Prize–winning Los Angeles Times reporter, have assembled a careful, at times fascinating account of Bout’s career as a peripatetic opportunist who—through a network of business partnerships in many different countries—supplied weapons for conflicts in third-world countries and for nearly twenty years eluded the efforts of Western governments to arrest him.

Little is known about Bout’s early life. He was born in 1967 either in the city of Dushanbe, in the Central Asian Soviet Republic of Tajikistan; or in Ashgabat, near the Caspian Sea, in Turkmenistan. (He has claimed both as his birthplace.) He graduated from a military college in Moscow with degrees in foreign languages and economics, served in a military aviation regiment in Mozambique, may have done a tour with the KGB (Bout has denied it), and appears to have worked as a translator for Soviet peacekeepers in Angola in the late 1980s. Like many of the characters whom Glenny writes about in McMafia, Bout was able to make a fortune by selling the arms and other assets left behind by the breakup of the Soviet Union. According to Farah and Braun:

The bloated Soviet aviation fleet was suddenly on life support, and its massive assets—its planes—were up for grabs. Thousands of pilots and crewmen were suddenly unemployed. Funding for maintenance and fuel had evaporated. Hundreds of lumbering old Antonov and Ilyushin cargo planes sat abandoned at airports and military bases from St. Petersburg to Vladivostok, their tires frayed and their worn frames patched with sheet metal and duct tape.

In 1991, using military connections he had made in Mozambique and Angola, Bout began buying these planes to fly weapons—mostly from Soviet arms dumps—to former client states in Africa. Bout’s transactions often violated UN arms embargoes, but he masked his activities by creating shell companies and registering his planes in countries with lax or nonexistent regulations such as Liberia. Bout earned tens of millions of dollars from his arms dealing, which he spent on expensive cars and “a far-flung real estate portfolio that included high-priced apartments in Moscow and St. Petersburg and gated estates on the Belgian coast, in Johannesburg, and in a secluded enclave in Sharjah.”

In Sharjah—a city in the Arab Emirates with a large Russian expatriate community—his transport business became the center of an expanding operation that sold and delivered guns, ammunition, and spare military parts to Taliban-controlled Afghanistan and a dozen conflict-torn countries in Africa. In 1997 he moved his operation to South Africa, where his Russian wife opened a clothing business and he attempted for a while to live as a legitimate businessman. But they were forced to leave after an attack on his heavily guarded Johannesburg mansion by Russian rivals using grenades.

Bout thrived by applying basic business school principles to his venture, never, for instance, flying home empty. Farah and Braun write:

Like Milo Minderbinder, the cheerily infernal war profiteer in Joseph Heller’s World War II novel Catch-22, who filled returning bomber planes with shipments of fresh eggs and Egyptian cotton, Bout often scheduled lucrative cargo pickups wherever his planes dropped off weapons shipments…. If an Ilyushin Il-76 was bringing helicopter gunship parts into Goma, it might leave with a consignment of coltan [a metallic ore], mining equipment, or blood diamonds. On a run of Kalashnikovs and MiG fighter jet tires into Kandahar, a load of lumber or carpets might be waiting for a flight out. RPGs or gladiolas, diamonds or frozen chickens, it made little difference as long as there was a profit to be made from one destination to the next.

Farah and Braun are painstaking reporters, and they’ve pieced together their account of Bout’s skullduggery from United Nations documents, the research of a handful of European and US investigators, and interviews with scores of Bout’s accomplices. They show how the arms dealer sold weapons to several dictators and rebels—including Liberia’s Charles Taylor, Angola’s Jonas Savimbi, and the limb-chopping thugs of Sierra Leone’s Revolutionary United Front. Some of Bout’s weapons probably wound up in the hands of al-Qaeda in Afghanistan; his planes also appear to have been used as a kind of EasyJet for jihadis shuttling between Taliban territory and the Persian Gulf.

Neither politics nor ideology seems to have mattered to Bout. He sold guns both to the Taliban and to their mortal enemy, the Afghan Tajik warlord Ahmad Shah Massoud. He propped up the regime of Mobutu Sese Seko in the Congo and the Rwanda-backed Tutsi rebels led by Laurent Kabila. (In one memorable scene, Bout dispatches an old Antonov aircraft to Mobutu’s palace at Gbadolite to spirit away the terminally ill dictator as the rebels close in. Mobutu’s bodyguards, abandoned on the runway, fire a hail of bullets at the departing plane, failing to puncture the armored fuselage. “We were lucky it was a Russian plane,” Mobutu’s son later remarks. “If it had been a Boeing it would have exploded.”) Thanks to his incessant, indiscriminate deal-making, the authors write, “Victor Bout had begun to alter the landscape of modern war.”

It’s a fascinating account; but it rarely rises above the level of an extended piece of newspaper journalism. Farah and Braun tend to delineate most of their characters with a couple of familiar adjectives. (There’s a “rumpled, cheerfully profane diplomat,” his “blunt, aggressive” colleague, and a “studious, bearded” CIA analyst.) Bout himself—a “stout, flint-eyed world traveler”—remains a cipher. The authors (who never managed to interview him) patch together a portrait of a sullen, overweight, and brusque figure who surrounded himself with Russian bodyguards and who burst in on ministers and presidents without an invitation, demanding immediate attention. Sometimes generous—lending planes to arms business competitors and even underwriting the charity work of a globetrotting Russian cyclist he met in Sharjah—he could also be “a hot-tempered control freak.” But we have little sense of his motives aside from his apparent love of money:

How do you describe Bout? He was a man with a big belly and a big mustache,” said one associate. “He was very friendly. He was quiet, he didn’t say a lot. He loved to hunt, to be outdoors. He is hard to describe. He was very smart. He had a real gift for languages. He was always everyone’s friend.”

One problem that Farah and Braun run into with Merchant of Death is similar to the one that Glenny encounters. It can be fascinating to watch rogues like Bout and his associates jet around the world and indulge their appetites for tastelessly decorated mansions and fast cars. But spending time with such unsavory characters soon grows tiresome, as do the continuous accounts of narrow escapes, shootouts, and offloading of grenades and antitank weapons at various third-world airstrips.

Farah and Braun describe how the US government closely tracked Bout’s movements. (By 2000, they write, the US had identified Bout as “the highest-ranking international target other than Osama bin Laden and his top tier of terrorist leaders.”) Richard Clarke, the official in charge of counterterrorism, considered arranging for Bout to be arrested in Uganda or South Africa and put on trial abroad. But after the September 11 attacks, the US and even European countries did not give his capture a high priority.

In fact, Bout was a direct beneficiary of the post–September 11 wars. Merchant of Death ‘s final chapters, the best in the book, chronicle in minute detail how shell companies owned by Bout, who was now living mostly in Russia, were hired by big US Department of Defense contractors in Iraq to fly in cargo to Baghdad International Airport for everybody from the US Army to DHL to Kellogg, Brown & Root. “The once-promising US campaign to scuttle the Viktor Bout network had devolved into bureaucratic schizophrenia,” the authors write.

While the State Department remained committed at least in principle to shutting down Bout’s global air transport operation, the Defense Department was enriching it with government contracts and American taxpayer funds.

Displaying the arrogance that became so characteristic of the disastrous US conflict in Iraq, Deputy Secretary of Defense Paul Wolfowitz and his Pentagon underlings avoided answering queries about Bout from outraged senators and other government officials for months.

Following revelations of Bout’s subcontracts to fly supplies into Baghdad, the US Air Force withdrew refueling privileges from Irbis, Bout’s Sharjah air firm, making it impossible for his planes to gas up at Baghdad International Airport. FedEx then quickly terminated its contract with Irbis; but Braun and Farah report that Bout continued shipping some supplies into Baghdad through 2005. Meanwhile, other US departments, including the State Department, the DEA, and the Office of Foreign Assets Control, became more aggressive, pressuring authorities in other countries to arrest Bout; this culminated in his being seized in Thailand earlier this year. So far as I know, he is still there.

In the end, Farah and Braun conclude:

Institutional blindness, incompetence, corruption, and lack of sustained efforts often paved the rise of Bout’s global network. From the rapacious greed of the Eastern bloc’s newly liberated armaments industry to the flimsy contracting methods of the US military, officials had consistently looked the other way, either unwittingly or purposely, allowing Bout’s planes to keep on delivering their long, green crates. The shortsighted official paralysis that some cynics described as “superpower attention deficit disorder” seemed sadly fitting in a world that had made scant progress in instituting clear, strongly enforced international standards governing the global movement of weapons.

Neither Merchant of Death nor McMafia offers prescriptions for how to deal with Bout and people like him. As long as countries go to war and people have appetites for drugs, illicit sex, and other vices, the international criminal networks will flourish. Still, one of the most troubling examples of this booming international contraband trade, mentioned in Ron Suskind’s best-selling new book, The Way of the World,* was a recent scheme to smuggle three kilograms of enriched uranium from Russia into the virtually lawless Georgian enclave of South Ossetia—a marketplace for contraband ranging from duty-free cigarettes to counterfeit $100 bills. (Fifteen kilograms of enriched uranium is considered the minimum needed for a nuclear device.)

The smuggling scheme was broken thanks to a sting operation run by Georgian paramilitaries and Interior Ministry agents, who recovered 100 grams of highly enriched uranium and captured Oleg Khintsagov, the Russian smuggler, and three Georgian co-conspirators. The United States and Russia have put into place a nuclear-material detection center along Russia’s borders to prevent exactly this kind of scenario from taking place. In view of the recent hostilities, the future of that arrangement is now in question. But the episode underscored how a few rogue insiders—the material was undoubtedly provided by highranking Russian officials—exploiting instability in enclaves such as South Ossetia can undermine such serious efforts.

Governments are not entirely impotent. They can exchange information and scrutinize and restrict movements of currency. They can crack down on safe havens such as the Canary Islands, Lichtenstein, and Luxembourg, making it more difficult for syndicates to shuttle their assets around the globe. And when law enforcement agencies coordinate their operations, the results can be spectacular.

In late 2005, after a concerted effort between Israeli and US lawmen to pool resources and information, Ze’ev Rosenstein was extradited to Miami, tried, convicted, and sentenced to twelve years in prison for conspiracy to smuggle 700,000 ecstasy pills into the United States. Last year, after his transfer to an Israeli prison, he pleaded guilty in a Tel Aviv court to conspiring to murder two gangland rivals in 2001. He is serving his twelve-year sentence for this conspiracy concurrently with his twelve-year sentence for drug smuggling. In the world of increasing linkages and transnational alliances described by Misha Glenny, we shouldn’t be surprised to learn that the hit men whom Rosenstein hired for the job were Colombians.

  1. *

    Harper, 2008.

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