Cocaine Confidential Page 2

  Before long the American manufacturer Parke-Davis was selling cocaine in numerous incarnations, including cigarettes, powder, and even a cocaine mixture that could be injected directly into the user’s veins with a needle supplied with the drug. The drug was marketed as a product that would ‘supply the place of food, make the coward brave, the silent eloquent and render the sufferer insensitive to pain’. Its use grew exponentially – largely because it was increasingly viewed as a general stimulant rather than just as a medicinal good.

  By the turn of the century, cocaine’s addictive qualities had helped it acquire a somewhat darker reputation. The subject of hysterical and lurid stories in the press, it was increasingly associated with prostitution and crime and became the repository for many of Middle America’s fears about its black population.

  An increasingly hostile legal climate saw the banning of sales of the drug outright in many states as well as the implementation of various items of Federal legislation that culminated in the Harrison Act of 1914, which introduced significantly stricter legislative controls over the sale of the drug. These effectively made it illegal to use it for recreational purposes – and indeed outlawed many of its previous medical uses. It was later banned in the UK in 1920 amid reports of crazed soldiers in the First World War as well as a series of moral panics surrounding the death of dancers like Billie Carleton.

  More than any other country, the US endeavoured to stamp out both the cultivation and abuse of the drug, but their efforts in the 1950s and 1960s saw little conspicuous reward; use of the narcotic continued to skyrocket, especially once the infamous cartels took control of the Colombian coke business and began to flood the market with unprecedented amounts of white powder. The excesses of the hedonistic seventies were typified by nightclubs such as the legendary New York club Studio 54, where customers snorted cocaine off table-tops in full view of other people. And recreational cocaine really took off in the UK in the early-to-mid-1980s. As a reporter on the London tabloids, I frequently visited nightclubs in pursuit of all sorts of stories, mainly about crime and celebrities. In those places, I found the drug’s use was rampant among the rich and famous. I remember watching men queuing up to snort a line in the lavatories of one well-known West End club. The attendant did nothing to prevent it and stood by in expectation of some big tips from the coke-sniffing clientele.

  It was probably no coincidence that Ronald Reagan’s publicly lauded ‘war’ against Colombian cocaine was declared in the same decade. An eradication programme was launched in which billions of US taxpayers’ dollars were used to wipe out cocaine production by spraying chemicals on all Colombia’s coca fields and offering subsidies to farmers to grow other things. It was a lot easier said than done.

  In fact, the US’s decision to target Colombia’s cocaine production created room for its neighbours step up their own coke production, which is why in 2012 Peru became the world’s number one producer of the drug. Cocaine had been closely linked to Peruvian history for almost as long as it has been in Colombia. In neighbouring Bolivia, production has also steadily risen since 1970. Bolivia has recently experienced a wave of coca nationalism, an explicit reaction against the repeated efforts of the US authorities to demonise the use, and combat the cultivation, of the leaf. Many Bolivians refuse to accept that cocaine is an illegal substance and they see its production as a vital part of the nation’s economy. Indeed it’s arguable that the financial survival of the eastern Andes as a whole remains dependent on the production of cocaine.

  The US has sponsored efforts similar to those employed previously in Colombia to stamp out the cultivation of coca in the other South American countries. But their attempts to substitute other crops have met with equally limited success. Nothing else provides a comparable income.

  The new market leader Peru exports about 60,000 tons of the drug a year, and Bolivia a further 50,000 tons. Brazil and Ecuador have also expanded their operations very rapidly in recent years and small plantations in other countries such as Panama, Venezuela and Argentina raise the total amount produced by South and Central Americans to at least 200,000 tons annually. It’s been calculated that the capacity for making illicit cocaine in the Andes is now 150 times the region’s peak capacity when the drug was a legal medical product at the start of the twentieth century.

  Control of the trade itself still rests firmly in the hands of the Colombians. Their traffickers and coke barons finance much of the coca cultivation throughout the Amazon basin, and it is estimated that as much as 60 per cent of the continent’s cocaine output passes through the country’s borders to be refined. In recent years, the much-feared Colombian cocaine ‘cartels’ have substantially changed their operating methods, gradually dispersing into hundreds of streamlined entrepreneurial groups who are constantly on the lookout for new cocaine production ‘bases’. As one South American cocaine expert says, ‘Their power has been diluted but that has made them even more lethal in many ways because they are much more desperate for business.’

  Right from the earliest days of the first big cocaine trafficking boom in the early 1970s, the Latin America countries that grew coca realised that the drug had the potential to provide the region with a lucrative homegrown product that could create a worldwide market. As a result, few foreigners were involved in the production of the drug and that has remained by and large the same to this day. It is without doubt these Andean historical roots that have also made the cocaine trade so difficult to infiltrate – and stamp out.

  The coca plants themselves have always grown virtually everywhere in the moist tropical climate of the Andes in Colombia, Peru and Ecuador. Today, much of the upper Amazon is still dotted with plantations where steep terraces climb the mountainsides as high as 2,000 metres. Some stretch blatantly across the lowland plains, others are hidden in the forest. But the really good quality plants tend to come from areas not too high above sea level.

  The leaves of the coca plant are processed in jungle laboratories using kerosene, methyl alcohol and sulphuric acid. The resulting powder is dried, cut into blocks and transferred to ports in Colombia and Venezuela, routinely these days, for shipment to the US, Europe and beyond.

  The small growers at the start of the cocaine food chain – often indigenous people encouraged by shadowy South American criminals to expand their production in exchange for guns, machetes and clothing – rarely make much money. Pickers in the Amazon region might expect to receive £1 for a kilo of leaves.

  A family unit processing the leaves is likely to make little more than £9 profit on each batch of 40 grams of cocaine paste, and assuming all goes well, can produce three batches a week.

  Further up the scale are the carefully integrated operations in the eastern plains and jungles of Peru and Colombia, which can produce over 10 tons of cocaine a month. They can rely on a large labour force, a constant supply of chemicals, clandestine airstrips and enough weaponry to equip a small army.

  Ever-higher mark-ups are introduced at every stage. A kilo of cocaine in Bogotá currently averages around $8,000 when sold in bulk. On delivery to the United States the price jumps to about $30,000 a kilo. In other countries it is higher. If the approximate value of South America’s cocaine export trade, before distribution, is $5 billion, the full commercial value (taking into account the fact that it will be ‘cut’ – i.e. its purity reduced by being mixed with extraneous substances – often by more than 50 per cent by the time it hits the streets) is over $25 billion.

  These days, cocaine shipments from South America to the US (despite steadily declining cocaine usage statistics, the most powerful nation on earth remains the world’s leading consumer of the drug) are often transported through Mexico and Central America over land or by air via staging sites in northern Mexico. The cocaine is then broken down into smaller loads for smuggling in land vehicles across the US/Mexico border. Sixty-five per cent of cocaine enters the United States through Mexico, and the vast majority of the remainder enters via Florida.


  The infamous Sinaloa and Zetas cartels, operating out of the north of Mexico, have something close to a stranglehold over the international cocaine trade as it passes through their territory. They exert ruthless control while at the same time outsourcing more routine tasks such as transportation, killings and vendettas to smaller local gangs, including the mafia-like families known as Maras. Their dominance, and the epic violence that has accompanied it, is believed to be another indirect result of America’s attacks on Colombian traffickers and their Caribbean air and sea routes. In other words, Mexico has been turned into the main hub for South American cocaine through no fault of its own.

  Cocaine traffickers from Colombia and Mexico have now rebuilt and re-established an additional labyrinth of new smuggling routes throughout the Caribbean, the Bahamas island chain and South Florida. They often hire smugglers from Mexico or Central American countries to transport the drug. The traffickers use a variety of smuggling techniques to ensure cocaine gets to those lucrative US markets. These include airdrops in the Bahamas or off the coast of places like Puerto Rico, mid-ocean boat-to-boat transfers, and the commercial shipment of tons of cocaine through the port of Miami.

  Bulk cargo ships are also often used to smuggle cocaine to staging sites in the western Caribbean/Gulf of Mexico area. These vessels are typically 150–250-foot coastal freighters, carrying an average cocaine load of approximately 2.5 tons. Commercial fishing vessels are also used for these smuggling operations. In other sea-lanes with a high volume of recreational traffic, smugglers use pleasure vessels, such as go-fast boats, identical to those used by the local population.

  One recent development has been the use of sophisticated ‘narco-submarines’ to bring cocaine north from Colombia and Peru. Originally, such vessels were viewed as a quirky sideshow in the drug war. But now they’ve become faster, more seaworthy, and capable of carrying bigger loads of drugs than earlier models, according to narcotics enforcement officers in South and Central America.

  Across the Atlantic, increasingly large shipments of cocaine continue to surge through Europe and the former Soviet Union as it emerges as the drug of choice for tens of millions.

  Today cocaine not only generates luxurious houses, expensive cars and large property portfolios for criminals, it also fuels the construction industry, financial groups and other businesses that provide perfect cover for money laundering, which in turn encourages economic power to buy political influence and threaten democratic institutions.

  But who are these shady underworld characters inhabiting the world of Cocaine Confidential?

  Read on and you will find out …

  PART ONE

  FARMERS, PRODUCERS, WHOLESALERS – CENTRAL AMERICA

  Cocaine’s traditional connections to South America have been well documented, but my research for this book has uncovered an area of Central America that has been secretly developed by Latin American gangsters who are plotting for it to eventually become a major producer of cocaine.

  Central America is already the world’s latest cocaine transit hot-spot: up to 90 per cent of the South American coke bound for the US now passes through the region, predominantly the ‘northern triangle’ of Guatemala, Honduras and El Salvador, before ending up in Mexico. These small, weak republics, many struggling with rocketing murder rates, endemic corruption and the baleful legacy of years of civil war, have been further destabilised as the powerful Mexican cartels have moved into vast amounts of territory over which their respective governments are too feeble and impoverished to exert any kind of meaningful control. In other words, they can’t even afford the police forces needed to catch the narcos. The consequences of this power vacuum are chilling. These countries of the northern triangle have suffered 33,000 homicides since 2010, the vast number of which have been perpetrated by the cocaine cartels and the maras – the vicious family groups who control so much of the movement of cocaine in the region.

  But further south, in the Central American nation of Panama there is a quietly booming cocaine trade thriving thanks to huge shipments coming through the country en route for the US and Europe plus a discreetly nurtured cocaine ‘production line’, which has been allowed to expand without any apparent interference from authorities.

  CHAPTER 1

  STEVE

  Panama City’s Casco Viejo – ‘Old Compound’ – embodies many of the contradictions that make visiting this settlement such a sensory overload. During the daytime the incredible noise made by the legions of construction vehicles that seem to swarm everywhere is an inescapable reminder of Panama’s burgeoning economy. After dark these shiny, destructive machines disappear. In their stead emerges a spectral city formed of shadows, crumbling colonial buildings, gaudy nightclubs and cobbled streets. It’s as if the Vienna of Orson Welles’ Third Man had been transported to the tropics.

  And it’s here down a darkened alleyway in a damp-smelling dive bar called Corumba that I am talking to Steve Francis, a failed British rock guitarist turned cocaine baron, who a few hours earlier greeted me at the arrivals gate of Panama City’s chaotic Tocumen international airport after I touched down on a flight from New York.

  ‘Anything goes here,’ Steve warned me. ‘People will rip you off as soon as look at you. They like conning the gringos best of all. It’s a challenge. Just watch yer back.’

  The 61-year-old Londoner has served time in prison in Spain for smuggling coke but he’s been in Panama for four years since authorities in Málaga, southern Spain, allowed him out of jail on bail on condition he left the country and never returned. With a price on his head after ripping off a couple of Russian coke barons on the Costa del Sol, Steve was happy to head west to seek out some old ‘friends’ in Panama.

  Despite the worldwide recession, the Panamanian economy has expanded by nearly 50 per cent since 2005. The omnipresent canal itself – which dominates the western edge of Panama City – is undergoing a $5.25 billion expansion that is expected to double its capacity and generate even more economic growth. Wealthy tourists and investors are pouring in from both the US and South American states like Venezuela and Colombia, and are buying second homes and retirement properties all over Panama.

  But behind this apparent boom, Panama continues to struggle with crime and poverty. ‘The slums in this city are worse than anything you will see anywhere else in Central and South America,’ explained Steve. ‘I had to pull out of a meeting only this morning because the area was swarming with cops after a shooting.’

  In Panama City Steve introduced me to Ignacio, one-time-gang-member-turned-cocaine-fixer. Back in 2003, when he was seventeen and the head of a street gang, he prowled the west side of Casco Viejo. There were three other gangs back then. They mostly sold drugs, though robberies and murders were common too. One day Ignacio says he was selling one man some marijuana when he was shot four times with a pistol.

  ‘Now I just fix up shipments of coca,’ he said, showing me the scar of one bullet wound on his hand. ‘It’s a lot safer than selling on the streets, hombre.’

  Steve, Ignacio and I talked further as we drank beer in a secluded corner of a dark bar. ‘Panama’s success is our success,’ said Ignacio. Steve agrees: ‘He’s right. This place is prime for cocaine shipments, production, you name it. Everyone thinks cocaine gangsters are part of Panama’s past. But they are all here.’

  Taking another sip of his drink, Steve went on: ‘When I got out of prison in Spain, they gave me my passport and said I must leave the country or they would lock me up again. I came straight here because I’d already heard about the opportunities.’

  Later, we supped a few cocktails at an exclusive rooftop bar, surrounded by chain-smoking members of the city’s fashionable elite. Ignacio explained more about his role as Panama City ‘cocaine fixer’. He said: ‘I line up the coca for people like my amigo here, Steve. A lot of guys come to me because they want to make some money turning the coke around quickly—’

  Steve interrupted: ‘That’s what I like about Igna
cio. We talk the same language. Always have done since the day we met, eh kiddo?’

  Ignacio nodded and smiled. ‘Here in Panama City many people are struggling to find work, so it’s no big surprise that cocaine provides a lot of us with employment.’ Ignacio explained that ‘chunks’ of massive shipments of cocaine that come through Panama en route for the US and Europe and beyond are often used to ‘pay off’ police, customs and dock workers and that is where these ‘offcuts’ of cocaine come from.

  Panama’s links to cocaine were first exposed to the world in the 1980s when the country’s then dictator General Manuel Noriega opened up his country to secret cocaine supply routes after accepting millions of dollars in bribes from Colombian coke barons, who needed a safe passage to the US for their product.

  Ignacio explained: ‘Noriega showed his people that it was fine to make money out of coke. He sort of rubber stamped it as a drug of choice here and a way to make a living.’

  Now back in a Panamanian jail where he’s expected to stay for the remainder of his life following a transfer back to his home country from France, General Noriega had been collaborating with America’s CIA for many years before his arrest. However, when his connections to the Colombian coke cartels were revealed, the US mounted their controversial invasion of Panama in December 1989. Noriega was eventually sentenced to thirty years in a Miami court before being extradited to Paris to face similar charges there. Then he was allowed back to Panama from France to serve out the remainder of his sentence.