Spotlight 28: The UK Govt lost billions to loan fraud
How three Covid loan schemes made the UK Govt lose £4.9 billion
Hi and welcome back to the 28th issue of Spotlight, a fortnightly collection of news, articles, and events about organised crime and corruption curated by Firm UK.
Every two weeks a collective of experts, academics, and volunteers will select a few relevant articles and/or events that will help you to understand our society under the hood.
Last Saturday, British newspaper The Guardian published the story of how three Covid loan schemes made the UK Government lose £4.9 billion. An unimaginable amount of money that reminds us no one - not even one of the most powerful institutions in the world - is safe from fraud.
This issue is full of suggestions: a research article by our FIRM UK associate Anna Sergi about the Australian ‘ndrangheta is now available open access. And next Thursday, a seminar by our friends at Ex Legi will dig deep into the mafia in North India.
We hope you enjoy Spotlight. And if you like it, please share it with your network and invite them to subscribe.
Thank you!
How the UK government lost £4.9bn to Covid loan fraud
In the space of 15 months, from March 2020, the three main Covid loan schemes – bounce back, CBILS and a scheme for larger loans, CLBILS – handed out nearly £80bn to businesses in the UK. The government was repeatedly warned that the approach was leaving it open to fraud. The business department, which ran the schemes, has revealed that its top civil servant sought ministerial directions to push through the three loan schemes because they did not meet the usual standards for government spending. Susan Hawley, the executive director of Spotlight on Corruption, said the scale of the fraud highlighted longstanding problems in the UK’s approach to white-collar crime, including repeated delays to reforms of Companies House, the UK’s corporate register.
“The government is just not putting its money where its mouth is” on fighting fraud, said Hawley. “This is really chickens coming home to roost in the failure to fund it.”
MS13 & Co.
This article is part of a three-part investigation into the Mara Salvatrucha, commonly known as MS-13, in Guatemala, Honduras and El Salvador. Originated in Los Angeles, California, in the 1980s, the MS13 is today a criminal gang whose reach spans Central America. In some neighbourhoods, the gang controls every aspect of life, from the more obvious supply of crack, cocaine, and marijuana to bottled water. The article recounts the history of the group in El Salvador, from its outset as a clandestine unit of deported gang members up until today’s money laundering business.
A notorious sloth cartel kingpin vanished. We tried to find him.
Isaac Bedoya is Latin America’s most notorious sloth trader. Colombian wildlife authorities estimate that he and his accomplices captured and sold as many as 10,000 sloths into the pet trade during the three decades before his conviction in 2015. This long-read takes a closer look at the so-called “sloth cartel”. As it turns out, not a sophisticated, interconnected criminal enterprise but supply and demand at its most elemental: tourists wanting baby sloths, and desperate young men hunting them down to sell for a living.
Crypto money laundering rises 30%, report finds
This article explores data in a just-published Europol report and another report by Chainanalysis that is due to appear soon and questions the rise of money laundering via crypto-currencies. According to a Europol report criminal networks specialised in large-scale money laundering "have adopted cryptocurrencies and are offering their services to other criminals".
By following flows of cryptocurrency from addresses associated with criminal activity, Chainalysis was instead able to estimate the amount "laundered". While billions of dollars worth of cryptocurrency move from illicit addresses every year, most of it ends up at a surprisingly small group of services, many of which appear purpose-built for money laundering".
The ultra-violent cult that became a global mafia
This long read reports on a two-year BBC investigation into Black Axe - a Nigerian student fraternity that evolved into a mafia-type group with a widespread presence across the globe. The investigators unearthed evidence of infiltration of politics, trafficking, scams and murders spanning the globe. The investigators notice the violence at the core of the group.
“As global as Black Axe's criminal empire might be, its roots lie firmly in Nigeria. The group was founded 40 years ago in Benin City, Edo State. In their homeland, male university undergraduates - aged between 16 and 23 - are Black Axe's primary recruits. The gang's secretive initiation process, known as "bamming," is notoriously brutal” But the promise of "Secrecy, discipline and brotherhood," as well as the possibility to make money through the group's criminal enterprises keeps the allure alive.
[ANALYSIS] Abela’s logic: When fighting the mafia turns you into a ‘mafia state’
Malta’s Prime Minister Robert Abela claimed the Nationalist Party is proposing a legislative amendment “purportedly” aimed at fighting corruption, as a veiled attempt at “recognising Malta as a mafia state”. This article questions this logic and argues that it is not laws against collusion between state, organised crime and business that makes a country a ‘mafia state’ – but their absence. In Malta, especially after the murder of journalist Daphne Caruana Galizia major revelations have been exposed concerning levels of corruption. The analysis argues that
“Under the watchful eyes of FATF and other international monitors, Abela cannot afford to send the message that he is more interested in partisan games than in buttressing Maltese democracy against organised crime. Therefore Abela is bound to come up with a counter-proposal”.
Events
[Thursday, 03rd February 2022 h 16:00 GMT] ExLegi Seminar Series 3 “Mafia Raj: Ethnographic Notes on Intimidation in North India”
Drawing on long term fieldwork Lucia Michelutti, Professor of Anthropology (University College London), explores how ‘dhamakana’ (to intimidate/ to instil fear) is central to everyday politicking in North India.
[Tuesday, 22nd February 2022 h 13:30 GMT] Latin America risk outlook: emboldened criminal groups, failing states and rising climate insecurity
Security experts Michael Deibert, Douglas Farah, Dr Betilde Muñoz-Pogossian, Dr Vanessa Neumann and Dr Irene Mia will discuss the conflicted outlook for Latin America, focusing on current and emerging areas of fragility, conflict hotspots and political risks with a special reference to those with regional repercussions. The webinar will address current themes such as the impact that climate change and the coronavirus pandemic, among others, have and will have on the conflict landscape in Latin America.
[Event in July 2022 - deadline Monday, 28th February 2022] 4th General Conference on Organised Crime
The Conference follows on from previous editions held in Naples (2015), Bath (2017), and Sofia (2019). The 4th General Conference will take place in Pisa and online from 04th to 06th July 2022.
The Conference offers a unique platform to dissect, diagnose and discuss the characteristics, resources, strategies and modus operandi adopted by traditional and emerging criminal organisations operating both at the local and global levels, as well as the evolution of the responses at multiple levels and by different actors (international organisations, law enforcement, communities, social movements, etc.). The deadline for panels and papers is open: you can submit them within 28th February 2022.
Books, podcasts & more
Research article about the Australian ‘ndrangheta - This 2021 research article on the Journal of Criminology "Stumbling upon places and cultures: An involuntary ethnography in researching the Australian ‘ndrangheta" by FIRM UK associate Prof Anna Sergi is now available open access and free of charge.
In the Vortex of Violence: Lynching, Extralegal Justice and the State in Post-Revolutionary Mexico by Gema Kloppe-Santamaría (University of California Press, 2020).
The book recently received the Honorable Mention for the María Elena Martínez Book Prize in Mexican History awarded by the Conference on Latin American History (CLAH). It examines the uncharted history of lynching in post-revolutionary Mexico. Based on a collection of previously untapped sources, the book examines why lynching became a persistent practice during a period otherwise characterized by political stability and decreasing levels of violence. It explores how state formation processes, as well as religion, perceptions of crime, and mythical beliefs, contributed to shaping people’s understanding of lynching as a legitimate form of justice. Extending the history of lynching beyond the United States, this book offers key insights into the cultural, historical, and political reasons behind the violent phenomenon and its continued practice in Latin America today.
“Organised Crime During and After the Pandemic” by Virginia Comolli (Chapter of the book: Global Security in Times of Covid-19 by various authors).
Organised criminal networks are known for their adaptability and the rapidity with which they exploit opportunities. The introduction of quarantine measures has impacted licit and illicit businesses alike, and restrictions of movement have prompted a doubling of efforts into cybercrime, fraud and counterfeiting whilst many forms of physical crime have momentarily slowed down. In the post-pandemic period, it is reasonable to expect that criminals will take advantage of, among others, the expected economic downturn, growing unemployment levels, new opportunities for smuggling economic migrants, and changes in consumer demands and practices. At the same time, other forms of trafficking that are currently impaired by the pandemic are likely to return to pre-COVID-19 levels. This chapter assesses how COVID-19 has changed the way of doing illicit business and looks at how permanent those changes are likely to be in the coming years, before concluding with reflections on how law enforcement itself has and must contend with the changing criminal landscape.
Podcast: African Drug Markets and Alternative Development
In this episode: African countries are no longer just drug trafficking hubs for the global market, local cultivation and use is growing rapidly.