Micronesia and its Law Enforcement Problems (Part II).

As described in the previous part of this small series (July / August APDR), Micronesia is an enormous, remote, thinly populated region containing two independent microstates (Kiribati and Nauru), three states in ‘Free Association’ with the USA (Republic of the Marshall Islands or RMI, Federated States of Micronesia or FSM, and Palau), and two US territories (Guam and the Commonwealth of the Northern Mariana Islands or CNMI). Micronesia straddles the equator and is composed of atolls, islands and reefs scattered across the open ocean from the Philippines to Hawaii. The total population is about 500,000 people on about 2,000 square kilometers of land dispersed across millions of square kilometres of sea. Of this population, about 400,000 are US citizens or residents, or have unfettered access to the USA due to Compacts of Free Association with that country.

2nd Nov 2011


 

Micronesia and its Law Enforcement Problems (Part II).

Byline: Michael Yui: Singapore


As described in the previous part of this small series (July / August APDR), Micronesia is an enormous, remote, thinly populated region containing two independent microstates (Kiribati and Nauru), three states in ‘Free Association’ with the USA (Republic of the Marshall Islands or RMI, Federated States of Micronesia or FSM, and Palau), and two US territories (Guam and the Commonwealth of the Northern Mariana Islands or CNMI). Micronesia straddles the equator and is composed of atolls, islands and reefs scattered across the open ocean from the Philippines to Hawaii. The total population is about 500,000 people on about 2,000 square kilometers of land dispersed across millions of square kilometres of sea. Of this population, about 400,000 are US citizens or residents, or have unfettered access to the USA due to Compacts of Free Association with that country. None of the Micronesian states are economically viable. All of its states are aid-dependant, and aid is at least a primary income source. Government corruption is endemic, if mostly minor and relatively low key. Other revenues flow from tourism, commercial fishing and a declining garment industry. The region is wide open to transnational criminal activity and transnational criminal groups from the Philippines, South America, Taiwan, China and Japan have been identified operating in Micronesia.

Commonwealth of the Northern Marianas (CNMI)

The major drug threat in the CNMI is methamphetamine, which is brought in from Asia by drug mules using bodypack and luggage concealment. Methamphetamine users funding their drug habits are responsible for much of the petty crime in the country. Most of the couriers are females and there is a connection to the sex trafficking trade. Prostitution centres on Japanese-owned bars run by Japanese organised crime. Girls are broken to the trade in these facilities before being shipped to Japan.

The good air and sea connections and recent drops in prices suggest that local production of methamphetamines in small clandestine laboratories is occurring. The CNMI has many remote areas where such production would be very difficult to find. There is no indication (as yet) of a major drug lab being established in the CNMI, but small ones are undoubtedly present. The Chinese control the distribution of methamphetamine on Saipan and sell wholesale to other ethnic groups, restricting their own ‘retail’ sales to ethnic Chinese.

There is a considerable local trade in marijuana. This includes both local plantations and imports from both Palau and the Federated States of Micronesia. The latest figures available are for 2006, when the annual anti-marijuana operation netted 2,415 plants. This is down from much higher levels during the 1990s, indicating that larger plantations have been broken up and better concealed.

Organised crime in CNMI revolves around people smuggling: it is a US territory but (uniquely) it maintains its own customs and immigration enforcement services. This interesting jurisdictional mix means that transnational criminal groups can pass through or operate with less scrutiny than they would get from US and Asian law enforcement agencies. Until recent years people smuggling was assessed to be sporadic, with most efforts revolving around smuggling Chinese from the CNMI to Guam (only 76 km) by boat. This still occurs, but a steady flow of persons via the air routes is now occurring.

The CNMI forms the northern part of the Marianas Archipelago and is a Commonwealth in political union with the USA under a 1986 Covenant. The country is essentially a voluntary colonial possession of the USA. Most of the circa 83,000 population live on Saipan, Rota and Tinian: 56% are Asian and only 36% Pacific islanders. There is little industry except tourism and the US military presence on Saipan. Saipan International Airport is reasonably busy and is connected to the other states of Micronesia, the USA, Japan, Taiwan, Philippines, Indonesia and Australia. Like most island states CNMI is heavily dependent on aid and remittances, especially since the decline of the garment manufacturing industry in the early 2000s.

Tourism is therefore the backbone of the CNMI economy, with around half a million visiting annually. Most are Japanese, and Japanese organised crime has a strong presence in the casinos, which are used for money laundering. The lack of a US immigration authority means that Chinese and Japanese criminals can enter the CNMI when they can legally enter no other US territory. From there, they can easily move to Guam by boat. This is also true of people trafficking. The combination of tourists and organised crime means that young women lured from China and the Philippines are forced into prostitution. The first case of this was in 2006. In addition, prostitutes are flown in to Saipan to meet peak tourist season demands.

As with all Pacific countries and territories, customs fraud is a serious issue in the CNMI. The Marianas are not as dependent for government revenue on customs duties as are South Pacific island nations (these average 60% of non-aid income in the form of customs duties) but undervaluing of cargoes imported from China is common. Discussions with CNMI Customs indicates that invoice undervaluing is not a high priority activity except in the case of cigarettes. These attract high duties and by 2005 the usual efforts at smuggling them in or understating the quantity in a shipment had been extended by a new form of criminal behaviour. This was the replacement of well known brands with expertly counterfeited cigarettes. Routine inspection did not reveal the issue due to the high quality of the counterfeit packaging. This revealed a gap in the training of CNMI customs staff. The problem was revealed by customer complaints and the efforts of legitimate cigarette manufacturers. This problem is now common across Micronesia as it is very lucrative for the Chinese transnational criminal (TNC) organisations behind it.

The activities of TNC gangs includes money laundering and persistent cases of discovery of counterfeit US currency (including the notoriously high quality North Korean made ‘supernotes’). The casino on Tinian generates a flow of persons traveling with in excess of US$10,000. While this has long been suspected to be a money laundering activity, lack of proof has meant few seizures, even with an increasing number of suspicious activity reports by local money service businesses since 2000. In common with the other Pacific nations, TNC is present, is embedded in the local economy at all levels, and goes to great lengths to corrupt law enforcement agencies. The Customs Service is their major target. CNMI law enforcement personnel are poorly paid (rarely more than US$2000 per month for junior ranks, and the cost of living is on par with Hawaii). Worse, they receive little post-basic training. They are vulnerable to penetration by Chinese TNC, which is active in the CNMI is trafficking drugs, people and counterfeit goods, while also conducting extortion, money laundering and prostitution. The CNMI are well known as a ‘rest and relaxation base’ for Japanese yakuza and Russian mafia.

The CNMI have been and remain as vulnerable to TNC as the smaller and weaker pacific states despite – and sometimes because of – their ties with the USA.

Republic of the Marshall Islands (RMI)

The RMI is an independent nation with a compact of free association with the USA – a version of the old British Imperial Dominion arrangement. The country is composed of 29 coral atolls and 5 islands sprinkled across nearly 2000km of open ocean. It has 181 sq km of land mass and a population of about 65,000. The economy is aid dependent and otherwise based on subsistence small-plot farming, and fishing. There are no significant natural resources and little tourism due to underdeveloped infrastructure. Under the Compact, the Marshallese have visa free access to the USA. The RMI has no military, although it does have a patrol service and one Australian-supplied Pacific Patrol Boat. However, it has a low operational capability and the areas to be patrolled is truly enormous. The country is protected by the USA, which has an important base at Kwajalein.

The Northern Trans-Pacific Cocaine Route

There is a local drug industry based on marijuana. However, the RMI is remarkable in having a persistent problem with cocaine. In 2004-55 a ‘crack cocaine’ problem was identified on Kwajalein. Originally thought to have been smuggled into the US base there, the low sale price (10% of retail crack price in mainland USA) showed that this assessment was not correct. The reality was remarkable. A 27kg load of this cocaine had been discovered washed ashore at Ebeye island on the south eastern side of Kwajalein lagoon. While this incident became notorious, cocaine washups have been occurring in the RMI since the 1980s. These have been ascribed in the past to drugs lost at sea off the central American coast and carried to the RMI by sea currents. However, an equatorial drift study by the US Naval Oceanographic Office showed that this would take three years, and drug packaging would degrade long before that occurred. The known facts are as follows:

Year Location Incident
2002 Bikini
Bikini 32 foot ‘go-fast’ boat with twin 225hp engines recovered
70lb of cocaine washed up on beach. Packages had negligible marine growth
2003 Wotje

 

Kwajalein 48 foot ‘go fast’ twin waterjet boat with Spanish language newspapers aboard recovered by private individual. Investingated by JIATFW and determined to be standard drug cartel transfer craft. Insignificant marine growth build up.
45 foot boat hull washed ashore inverted. When broken open by locals cocaine was found. 58lb of cocaine recovered, 100-400lb removed and not recovered. JIATFW assessed as standard drug cartel transfer craft. No marine growth build up.
2004 Kwajalein

Ebeye
Approx 60lb of cocaine bricks washed up on beach, 100-200lb more stolen
More than 30 cocaine bricks wash up on beach, more stolen, leading to cocaine problems at Ebeye
2005 Ebeye
Carlos In excess of 60lb of cocaine wash up. Little marine growth.
Small boat found with unknown quantity of cocaine aboard. Local resident caught with 45lb of cocaine from this vessel.
2006 Majuro 27 foot boat with three Mexican ‘shark fishermen’ aboard found adrift. Despite claims that they had been adrift for nine months with no food, fishing gear or shelter, they are in excellent condition and families report they have been gone for three months. JIATFW assess them as drug cartel ‘contract labour’
2007 Ailinglaplap Part-flooded 45 foot boat with 24-140 lb of cocaine aboard salvaged by islanders
2009 Kwajalein ‘Large shipment’ of marijuana washed up. Most removed by locals.
2010 Ratak Chain? Unconfirmed report of cocaine wash-up

This indicates a very substantial and long-established cocaine trade, and one on a massive scale. Occasions when large boats operating from motherships are lost with partial cocaine cargoes have to be rare. The chances of lost boats drifting safely ashore and being recovered are even more rare. That three boats and three ‘cocaine bundles’ all came ashore in condition to be recovered over a period of just five years means that this trade is on a considerable scale. The history of cocaine wash-ups in the remote north-eastern fringes of the RMI goes back into the 1980s. It is very difficult to research due to the extreme remoteness of the area, poor communications, lack of access to such records as do exist and local reticence, but it is known that JIATF-W has conducted an extensive intelligence-gathering operation between 2006 and 2010. It is well known in law enforcement circles that unidentified Australian law enforcement authorities knew of the existence of this cocaine route in about 2004-2005, but did nothing about it. JIATF-W was reported to be unhappy about this after expending considerable resources; only to find out that the issue was already known to an Australian law enforcement agency. They were even less impressed with the fact that the Australian law enforcement agency had for years done nothing about it!

The result has been that JIATF-W has focused a lot of effort on interdicting the eastern locus of this trade, the main part of which runs truly massive volumes of cocaine into Californian waters. The trans-Pacific route runs from the north-west coast of South America to China. The cocaine cartels load literally container-loads of cocaine on motherships – cargoes of 10-50 tons are reported to be the standard range – and these motherships are sailed to the very remote areas north east of the Ratak chain in the RMI. There, the cocaine is ‘sold wholesale’ in multi-ton lots, and trans-shipped at sea to small merchant ships or deep-sea long range fishing vessels. The trans-shipment is done in small, high speed craft specifically so that the ‘trading ships’ do not have to go alongside each other or even approach within several miles of each other at sea.

This lessens the risk of such a suspicious activity being noted by a patrol aircraft, removes the risk of damage to the ships but more importantly makes armed takeover of the entire cocaine cargo by an ambitious customer impossible. It is during these transfers that small craft and partial cargoes are lost. The 40-50 foot ‘go-fast’ boats are built in South America and Mexico and are disposable items in the Caribbean and Pacific coast cocaine trades. The small craft crews are equally disposable. The three Mexican nationals discovered adrift at sea in August 2006 in waters between Kiribati and the RMI were in 40’ open boat. They claimed to have been adrift for a year, to have drifted all the way from Mexico, and to have survived on fish they caught, seabirds and rainwater. The boat was modified for low-visibility, had little marine growth on it, no fishing gear in it, no shelter at all and the men were in good health. Reports in the Mexican media from their own village stated that the men had not been gone for more then three months when found and were involved in some form of work for a drug cartel.

There appears to have been very little law enforcement activity against this northern cocaine trade route over the last thirty years, except for US activity against its eastern end. There are unconfirmed but persistent reports that the route moves goods east as well. Cocaine is known to go west to Asia, these reports describe the east-flowing trade as Asian heroin, North Korean manufactured crystal methamphetamine, methamphetamine precursors (particularly ephedrine and Indian made pseudo-ephedrine), weapons and trafficked persons. The latter are reported to be females for the sex trade and high-value male labour of some kind. The reports are dispersed and fragmentary, it is to be hoped that US law enforcement agencies are paying some attention. It is known that Chinese law enforcement is paying attention due to the rising prevalence and ‘interesting cost structure over time’ of cocaine in China’s booming coastal cities. It is known that the Australian Federal Police are ignoring both this cocaine trade route and the one running 8-12 tons of cocaine per annum through Polynesia and Melanesia into Queensland and New South Wales. The reasons for this are not known, but their apparently deliberate inaction over many years is puzzling according to Singaporean law enforcement agencies.

Other Illegal Activities. The RMI has the usual slew of Pacific island problems. These include a thriving local marijuana trade – it is the local drug of choice – and a serious issue with human trafficking/smuggling and illegal immigration. As usual across the vast sweep of the Pacific, most of the illegal immigrants are Chinese. Chinese TNC operates prostitution syndicates to service the fishing fleets and foreign tourists. The Chinese fishing fleets bring in smuggled goods and people and there is little that RMI law enforcement can do about it. Even merchant ships arriving at Majuro can offload anything they like. The entry passage is lengthy and it takes hours for the pilot boats to arrive. Meanwhile, they are in close proximity to land: locals report boats often travel to meet the ships and return with bulk goods and people.

Some of the RMI’s problems are self-inflicted. From 1993 to 1996 the RMI government decided that sale of passports to Hong Kong Chinese businessmen was a viable concept. About 3,000 were sold, about 2,000 have since been accounted for. However, many were onsold to mainland China, and an unknown but substantial number of perfectly genuine RMI passports were sold by a corrupt RMI Chief of Immigration who was dismissed in 2005 by the Attorney General. This has been a long term concern for US authorities as RMI passport holders have free access to live and work in the USA.

Chinese Economic Penetration. As is the case throughout the Pacific, Chinese economic penetration is extensive. Nearly half of the small retail businesses are now run by Chinese, as are many of the larger ones including hotels, taxi companies and retail stores. The Chief of Immigration dismissed in 2005 was corrupted by Chinese businessmen. Bribes to law enforcement personnel are often offered, physical threats have been made and acted on, and document falsification to avoid import duties is rampant. The RMI Financial Investigation Unit (FIU) has reported declines in government income as Chinese penetration of the local economy has increased. Smuggled counterfeit goods (some of dangerously low quality) commonly found in the RMI include cigarettes, bottled water, alcohol, DVD’s, clothing, personal hygiene products including those for infants and canned foodstuffs.

Money laundering is common. RMI has three banks, two are commercial. Chinese businessmen have for many years been observed openly dividing large cash deposits among ‘hired depositors’ so as to avoid the $10,000 USD transaction flag. Movements of volumes of cash via the fishing fleets is suspected but has never been proven. However, law-abiding non-Chinese small and medium retail businesses cannot compete with the Chinese with their easy access to smuggled and undervalued goods, negligible labour costs (due to use of indentured illegal workers) and hui kan sources of capital. Yet, the profits of these firms are not seen in RMI and do not flow through the banking system.

Particularly Vulnerable. The RMI is particularly attractive to Chinese TNC and is the transfer point for a trans-Pacific cocaine trade so large that its estimated value dwarfs the GDP of the RMI. RMI law enforcement personnel are undertrained, poorly paid and too few: what real chance do they actually have to hold the line? The USA actually makes their job harder by deporting RMI criminals from the USA. This enhances the sophistication of the local criminal groups they now dominate and these have joined forces with Chinese TNC. The gradual replacement of local businesses by Chinese competition exploiting smuggled goods and indentured labour starves local youths of even basic jobs. The RMI is particularly vulnerable to TNC of all types.

 

APDR at a glance