Financial Corruption

I thought I'd heard it all, but the latest news from Mexico is so ridiculously over-the-top, I was genuinely shocked:

MEXICO CITY – U.S. refineries bought millions of dollars worth of oil stolen from Mexican government pipelines and smuggled across the border, the U.S. Justice Department told The Associated Press — illegal operations now led by Mexican drug cartels expanding their reach.

Criminals — mostly drug gangs — tap remote pipelines, sometimes building pipelines of their own, to siphon off hundreds of millions of dollars worth of oil each year, the Mexican oil monopoly said. At least one U.S. oil executive has pleaded guilty to conspiracy in such a deal. [AP]

What the hell is going on here!? It's been clear for a while now that these people should never be underestimated, but this seriously sounds more like the plot of a James Bond movie than something that could be pulled off in real life. Once again, the situation in Mexico has managed to reach new heights of out-of-control absurdity and it seems to be doing so with increased frequency as of late.

Does anyone honestly believe that pouring more money and lives down the drug war drain is the solution to this?

Further evidence that the Mexican drug war is making progress…in the exact wrong direction:

MONTERREY, Mexico, Nov 11 (Reuters) - Companies in Mexico are scrapping plans to float shares on the stock exchange for fear of raising their profile amid a brutal drug war and a surge in kidnappings, the bourse president said on Tuesday.

Stock exchange President Guillermo Prieto said that aside from market volatility in the past two months due to the global financial crisis, crime was a major issue for firms thinking about initial public offerings (IPOs).
…
Going public to raise funds for expansion requires far greater company disclosure and a higher public profile for company executives who go on roadshows to attract investors.

This is a whole new level of economic disruption, as the drug war begins to chip away at financial institutions. If this kind of thing continues, there’s no limit to how far-reaching the damage could become.

Violence and corruption are just the first symptoms of the disease of drug prohibition. If left untreated, the sickness spreads throughout every social institution, weakening anything it touches.

A disturbing report from NPR illustrates that many police departments have become dependent on confiscated drug proceeds in order to fund their anti-drug operations:

Every year, about $12 billion in drug profits returns to Mexico from the world's largest narcotics market — the United States. As a tactic in the war on drugs, law enforcement pursues that drug money and is then allowed to keep a portion as an incentive to fight crime.
…

Federal and state rules governing asset forfeiture explicitly discourage law enforcement agencies from supplementing their budgets with seized drug money or allowing the prospect of those funds to influence law enforcement decisions.

There is a law enforcement culture — particularly in the South — in which police agencies have grown, in the words of one state senator from South Texas, "addicted to drug money."

Just pause for a second and think about the implications of a drug war that funds itself with dirty money. It is just laughable to think that such conditions could exist without inviting routine corruption, from our disgraceful forfeiture laws to the habitual thefts and misconduct that occur with such frequency that we're able to publish a weekly column dedicated to them.

It is truly symbolic of the drug war's inherent hopelessness that illicit drug proceeds are needed in order to subsidize narcotics operations. If we ever actually succeeded at shrinking the drug market, we'd be defunding law-enforcement! Progress is rather obviously impossible under such circumstances.

Drug enforcement is a job like any other, and police have mouths to feed, bills to pay, maybe a little alimony here or there. So they take their paycheck and sign out; I don’t blame anyone for that in and of itself. But consider that law-enforcement operations artificially inflate the value of drugs, only to then hunt down those same proceeds, collect, and redistribute them within the police department. Morally, is that any better than the dealer who pushes dope to put food on the table?

Really, a structure such as this is not designed to achieve forward momentum towards reducing drug abuse. It's the law-enforcement equivalent of subsistence farming and it ought to warrant income substitution programs not unlike those we push on the peasants of Colombia and Afghanistan. All of this lends substantial credence to the popular conception that "the drug war was meant to be waged, not won."

Each day that the drug war rages on, its finely tuned mechanisms become more effective at sustaining itself and less effective at addressing the issues of drug abuse and public safety that supposedly justify these policies in the first place.

This "Prohibition in the Media" post is not tied to a particular article. If you do a Google News search on "drug money laundering," you'll get a list of over 1,400 articles. These are only the ones that the news outlets still have online -- the global financial system is virtually "awash" in illicitly-generated revenues, much of it from the drug trade.

From the Pittsburgh Post-Gazette:

The Allegheny County district attorney's office has launched an investigation into what happened to $4,000 that Glassport police failed to return to a local bar owner when drug charges against him were dropped. "The fact that money was seized and placed in an evidence locker and turned up missing is unacceptable," said district attorney's office spokesman Mike Manko.

I agree, but I’d go a step further and call it a crime. Grand larceny to be specific. Of course, Glassport officers think it’s just a procedural problem: