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Enterprise Crime targets nation's Economy

The image of organised crime etched deep in the public mind by continuous projection in the media is of graphic and gratitude violence. The response to this macabre challenge, quite naturally, is predominantly conceived of in terms of glamourised "encounters" between the armed might of the state and the irregular armies of crime. These images, no doubt, have a sound basis in fact. To the extent, however, that they exhaust or dominate our entire vision of organised crime today, they are both false and misleading. The emergence of global financial and trading systems, and the progressive dismantling of trade barriers and, internal restrictions on businesses within the country over the past decade, has fundamentally changed the context in which criminal organisations operate. Capitalising on increased cross-border flows of goods, money and people, criminal organisations have expanded their territorial reach and augmented their wealth and power relative to national governments, introducing new uncertainties into the political environment. To their traditional spheres of activity, such as prostitution and murder for hire, organised crime syndicates have now added terrorism, money laundering, transportation of illegal immigrants, and a wide variety of dubious financial transactions. But these are only a list of their manifestly criminal activities.

An overwhelming proportion of organised crime, today, is not predatory but collusive based on a continuing and symbiotic relationship of acquiescence between criminal enterprises on the one hand and, on the other, Government agencies, officials and enterprises whose primary businesses lie within the ambit of the law. "Enterprise Crime" now engages in a mixture of cooperation and competition both with governments and the larger business community. Their growing power is based on their capacity to exploit (rather than disrupt) legitimate business and financial activities, and their ability to corrupt Government and law enforcement agencies. As Boutros Boutros Ghali, the then Secretary General of the United Nations, declared in 1994, "The danger is the more pernicious because organised crime does not always confront the State directly. It becomes enmeshed in the institutional machinery. It infiltrates the State apparatus, so as to gain the indirect complicity of government officials… (it) poisons the business climate, corrupts political leaders and undermines human rights."

This contemporary blend of Corporate and criminal cultures is not susceptible to the solutions of the past. The "encounter'' may be highly gratifying as spectacle, but it targets only low level—and easily replaceable-operatives. We also find that our criminal Justice system fails consistently to incarcerate or incapacitate those who are arrested for any significant length of time—and even these, once again, are only lower or middle level operatives.

The fact is, crime syndicates have now gone transnational. The primary organisations have established themselves in safe havens abroad; in India's case, these are provided by nations distinctly inimical to our interests, or whose sympathies remain ambiguous. These transnational criminal organisations (TCOs) operate through a variety of franchise alliances and subsidiary groupings that are strengthened immeasurably by the financial clout and subversive affiliations of their principals. National enforcement agencies ordinarily confront only the numberless retailers of crime. The "prime movers" have remained fully out of their reach. As a nation, moreover, we appear to lack the willingness or ability (or perhaps both) to carry out covert operations to "decapitate" major crime conglomerates abroad. In any event, even if this were done, replacement tends to be easier than was previously the case with the predatory monoliths of the past. With the "corporatisation" of organised crime, the elimination of a leader would cause only temporary disruption.

We must correctly define the nature and functions of organised crime syndicates in the contemporary world if we are to devise effective strategies of confrontation. One of the critical elements to be understood is that these syndicates provide a wide network of connections and access to Government and help evade Government controls; in the absence of stringent commercial codes and a viable judicial system, mobsters provide protection to businesses and a mechanism for regulation of disputes; they also provide a range of services including the systematic evasion of taxes, the transfer of money across borders, the collection of outstanding loans, possession of disputed properties, control of recalcitrant labour unions, and outright violence to intimidate or eliminate business rivals; TCOs are also an apparently limitless source of finance for a wide range of otherwise legitimate enterprises. In many ways, they progressively supplant the failing State in these areas, guaranteeing a consistency of outcome in activities and disputes that is otherwise elusive. Crime cartels now provide a modicum of "justice" and stability, a set of rules that are more or less inflexibly implemented to protect their own. This order, within the growing anarchy and uncertainty of outcome that attends the processes of official agencies, makes them increasingly acceptable.

Under the circumstances, directing enforcement operations and legislation exclusively against the visible operatives of criminal networks will prove both frustrating and futile. It is necessary, now, to "criminalise"—that is, to attach severe criminal penalties to—all agencies and activities that cooperate with and benefit from crime. There has to be a logical escalation in the legal means used to combat the increasing scope and power of organised criminal activity, and this will have to be directed primarily at stripping criminals and their associates of their assets and blocking their penetration into the legal economy. Existing systems of documenting economic activity and our criminal records system are simply too primitive to cope with this challenge and will have to be enormously upgraded. The continuous blurring of lines between legitimate and criminal enterprises—not only in the more obvious instances such as the "bumping off" of rivals or of union leaders, but in less visible day to day transactions—has to be made relatively impossible. The pathways of untraced profits from criminal and quasi-criminal enterprises must be disrupted by a rigorous system of mandatory documentation and increasing transparency in all legal financial transactions, and the clear and definite identification of all agents in such transactions through a comprehensive system of identity numbers (the Income Tax Department's system of PAN numbers could constitute the basis of such an identification system, but its present and projected coverage is woefully inadequate). This must be backed by the imposition of severe criminal penalties, including harsh terms of incarceration and seizure of all assets disproportionate to known sources of income, for tax fraud, and for concealment.

The nexus between criminals, "convenient" Government servants and politicians has been discussed to death. But the nexus with unscrupulous lawyers and other professional advisors needs equal attention. Where evidence of collusion, of deliberate suppression of evidence and calculated distortion by defence attorneys exists, the latter should be made criminally liable as well.

The one element that is not replaceable in the criminal enterprise—as in legitimate enterprises—is profit. Systems that facilitate the identification and seizure of assets and capital originating in crime—even where they have been transferred or laundered to flow into legitimate activities—would eventually destroy the super-normal profits that create overwhelming incentives for the penetration of organised criminal activity in the nation's economy.

(Edited version published in Pioneer, January 1, 1999.)





Copyright © 2001 SATP. All rights reserved.