Big Ideas Simply Explained - The Crime Book

["US energy company US authorities fine German WHITE COLLAR CRIME 99 Enron is exposed engineering giant Siemens for for a massive Russian malware and systematic using bribery to win developer Aleksandr overseas contracts. accounting fraud. Panin is arrested for hacking millions of online bank accounts. 2001 2008 2013 2007\u201308 2008 2015 In France, rogue trader Wall Street investment The US Environmental J\u00e9r\u00f4me Kerviel makes a advisor Bernie Madoff's Protection Agency number of unauthorized Ponzi scheme collapses trades at Soci\u00e9t\u00e9 Gen\u00e9rale and bankrupts thousands uncovers emissions and nearly brings down fraud by the German of people. car maker Volkswagen. the bank. that serial killers devastate than the entire organization. The law can be perceived by some families, while white collar case of Albert Bacon Fall \u2013 who, in unscrupulous executives as a criminals destroy societies. 1922, was convicted of conspiracy perfectly rational business decision. Nonetheless, punishment for white and bribery while working as US collar crime tends to be more Secretary of the Interior in what In a situation when virtually lenient than for violent crimes. became known as the Teapot Dome everybody in the company is scandal \u2013 typifies this behaviour. complicit in either illegal activity or Apportioning the blame a conspiracy of silence, it becomes Criminologists identify two broad More troubling are the corporate extremely difficult to establish categories of white collar crime: crimes such as the Enron scandal, individual culpability beyond \u201cindividual\u201d and \u201ccorporate\u201d (also Siemens scandal, and the Bhopal reasonable doubt \u2013 especially when known as \u201cstructural\u201d crime). Disaster. Here, criminality is the company can afford to employ located, motivated, and enacted accomplished defence lawyers. Individual white collar crime at an organizational level. occurs when a person or persons In cases such as J\u00e9r\u00f4me working within a political or private In cases like these, individuals Kerviel\u2019s, the official narrative of organization exploits their position may benefit from the wrongdoings a lone wolf operating within an without the knowledge of the of their company, but they are otherwise law-abiding company institution, and profits through their players in a larger conspiracy. has been met with outright illegal activities. They may be in Criminal activity is initiated or scepticism from many quarters. league with other members of the condoned at an executive level, Critics argue that others higher organization, or suppliers, or clients, often after a cost-benefit analysis. up in the organization simply had but it is a small minority of For example, if savings from illegal to know, believing that not being employees that are corrupt rather activities outweigh the cost of the aware of such systemic crimes possible fines, then breaking the would be functionally impossible. \u25a0","100 BDMMEEUOLELNNUTESIAYTI\u2026OUCNDAEUHOSSAFESOOFFTTEHNE THE MISSISSIPPI SCHEME, 1716\u201320 IN CONTEXT I n 1705, Scottish economist John There are good reasons to Law proposed major reforms to think that the nature of money LOCATION the Scottish banking system to is not yet rightly understood. France reduce public debt and stimulate the economy. These included the use of John Law THEME paper currency as money instead of Financial bubble gold. Law\u2019s theory was rejected, but \u00a32,000 today), a year later, they in 1716, the Duke of Orl\u00e9ans, regent were worth 20 times as much. The BEFORE for the young King Louis XV, invited value of the securities grew too. 1630s At the height of \u201ctulip him to try it in France, which was The scheme led to wild speculation, mania\u201d in the Dutch Republic, near bankruptcy. and stock markets across Europe speculators trade tulip bulbs boomed. The French authorities for huge sums of money, until Law founded a national bank responded by printing money, but the market folds overnight. which accepted gold and silver this caused rampant inflation and deposits and issued banknotes a loss in the value of currency and 1720 The British South Sea in return. In 1717, he created a securities. In 1720, the value of the Company, which trades with company with exclusive rights to Mississippi stock plunged, causing Spanish America, takes over develop France\u2019s US territories a major financial crash. Law fled to Britain\u2019s national debt. But it, in the Mississippi River valley; Venice, where he died in poverty and its shares, collapse, and by 1719, the company controlled nine years later. \u25a0 thousands of people of all all of the country\u2019s colonial trade. classes are ruined. He then undertook a radical AFTER restructuring of France\u2019s debt. He 1849 William Thompson devised the \u201cMississippi Scheme\u201d, commits a series of scams on selling shares in his company, the strangers in the streets of New value of which he had greatly York City. His exploits lead a exaggerated, in exchange for state- newspaper journalist to coin issued public securities. Investors the term \u201cConfidence Man\u201d flocked to buy shares, and their or \u201ccon man\u201d for short. price rose sharply: issued at 500 livres tournois each (about See also: Charles Ponzi 102\u201307 \u25a0 Bernie Madoff 116\u201321","WHITE COLLAR CRIMES 101 NLHOOOSNTTHOIUSNRAGVIES THE BLACK FRIDAY GOLD SCANDAL, 1869 IN CONTEXT I n late 19th-century America, government issued huge quantities the financial markets were of banknotes without the gold LOCATION unregulated, and some people reserves to back them up. In 1869, New York City, US known as \u201crobber barons\u201d engaged Ulysses S. Grant\u2019s government in shady practices to build huge provided the gold to effectively buy THEME fortunes. In 1869, financiers back the money. In so doing, the Stock market manipulation James Fisk and Jay Gould secretly Treasury set the value of gold: stockpiled vast amounts of gold when it sold its reserves, the price BEFORE in a bid to corner the market. They dropped; when it held on to them, 1821\u201337 Scottish fraudster planned to drive up the price, then the price rose. If speculators tried Gregor MacGregor invents a sell for enormous profits. But they to manipulate the gold market, the \u201cdeveloped colony\u201d in Central faced an obstacle. During the government could do the same. America and finds investors to Civil War (1861\u201365), the Union buy stock in it. Settlers relocate Fisk and Gould had to ensure there, but on arrival they find a government gold was kept off the strip of undeveloped jungle. market, which they did through political influence and bribery. AFTER They bought up gold, and the price 1986 Wall Street trader Ivan soared. But Grant became aware of Boesky confesses to a US the plan, and so released $4 million court that he acquired his (\u00a360 million today) of Treasury gold. $200 million personal fortune On 24 September 1869 (later called through illegal market Black Friday), the inflated gold price manipulation and insider dropped, and the market crashed. trading deals. Meanwhile, Gould had secretly sold his gold, before the price fell. \u25a0 1992 Harshad Mehta uses forged bank receipts as a James Fisk, unlike Jay Gould, did guarantee for loans of $740 not sell his gold before the prices fell million on the Bombay Stock on Black Friday, and lost a significant Exchange. In an attempt to portion of his investment. avoid prosecution, he then See also: Charles Ponzi 102\u2013107 \u25a0 J\u00e9r\u00f4me Kerviel 124\u201325 bribes politicians.","PPOTHFAEEYTROOELPDBRABGUAITNMOLGE CHARLES PONZI, 1903\u201320","","104 CHARLES PONZI IN CONTEXT Charles Ponzi smiles for a police a number of temporary jobs, such mugshot following his arrest for forgery as working as a waiter and LOCATION in Montreal, Canada, in 1909. At the translator. Ponzi moved to Montreal Boston, Massachusetts, US time, Ponzi went by one of his many in 1907, where he got a job at the aliases, Charles P. Bianchi. Bank Zarossi and worked his way THEME up to become a manager. Ponzi scheme in cash. As well as the banknotes, he passed out coffee and doughnuts, Early crimes BEFORE convincing investors that they had The bank he worked at failed, 1899 William \u201c520 Percent\u201d no reason to worry. However, Ponzi\u2019s leaving Ponzi feeling desperate. Miller runs a pyramid scheme brazen display attracted the He forged a cheque hoping to raise in New York, swindling attention of the US Attorney for the enough funds to return to the US, investors out of $1 million (\u00a319 District of Massachusetts. An audit but was caught, and spent three million today) with the promise was commissioned on Ponzi\u2019s years in a bleak prison facility on of 10 per cent interest a week. finances, which unravelled one of the outskirts of Montreal. Upon his the most notorious and remarkable release, he returned to the US, only 1910 A man calling himself scams in US history. to spend two years in an Atlanta Lucien Rivier sets up a bank in prison for smuggling Italian Paris and defrauds 6,000 A keen entrepreneur immigrants into the country. investors of around 2 million Unlike some of his fraudster Whether it was due to his francs (\u00a36.5 million today). successors, Ponzi did not appear to circumstances or his character, start out with nefarious intentions. being a crook soon became second AFTER In 1903, at the age of 21, the Italian nature to Ponzi. 2010 A whistle-blowing immigrant arrived in Boston with employee brings down just $2.50 (\u00a348 today) in his pocket. After his release, Ponzi returned Minnesota businessman to Boston. He met a stenographer, Tom Petters\u2019s $3.65 billion Although he was broke, Ponzi Rose Maria Gnecco, and they (\u00a32.5 billion) scheme. had an enduring entrepreneurial married in 1918. For the next few spirit, and longed to make a name months, Ponzi worked a variety of 1991\u20132009 Texan Allen for himself. He picked up English jobs, including one for his father-in- Stanford runs a $7 billion (\u00a35 quickly and travelled around law, while all the time dreaming up billion) 20-year scheme through the East Coast of America, taking ideas for businesses. his Antigua-based bank. He hoped to make it big with a I n July 1920, Charles Ponzi\u2019s new venture, a trade magazine, but grand financial scheme was by 1919 this too seemed doomed to collapsing. As the authorities failure. Faced with not being able tracked his every move, panicked investors crowded outside his I landed in this country with Boston office demanding their $2.50 in cash and $1 million in money back. The details of his hopes, and those hopes never scam were splashed over the front pages of the Boston newspapers. left me. Charles Ponzi Confident and charming as ever, Ponzi seemed unfazed. Dressed in a designer suit, he faced the horde of angry investors with a smile. For the next three days, Ponzi placated the crowd, handing out more than $2 million (about \u00a315 million today)","WHITE COLLAR CRIMES 105 See also: Bernie Madoff 116\u201321 \u25a0 J\u00e9r\u00f4me Kerviel 124\u201325 He is one of the best examples Ponzi obtained a loan and sent the initial investors using money from of misdirected energy in the money to his family back home in new investors, while all of his annals of American crime. Italy. He asked them to purchase investors were kept unaware of his postal coupons and send them back methods. To add a sheen of The Washington Post to him in the US. He reportedly legitimacy to his endeavour, Ponzi made more than 400 per cent profit opened his own company, the to afford the following month\u2019s rent on some of his sales. Security Exchange Company. Word for his office, desperation was quickly spread about the returns he setting in again. Generating investment had produced, and an initial tiny The scheme was not illegal \u2013 Ponzi pool of investors soon expanded into It was around this time that was buying an asset at a lower Boston\u2019s elite society, fuelled by the Ponzi received a letter from Spain price and selling it for a high price impressive rates that initial with an unusual document inside. in a different market \u2013 but he had investors were being paid. Similar to a self-addressed stamped no idea how to redeem the coupons envelope, the internal reply coupon for cash. Undaunted, he promised Whether it was a scam from the (IRC) looked like money but was friends and investors that he could beginning, or whether Ponzi actually a system for prepaying double their investment in 90 days. intended to pay the investors once international postage. It could be He confidently explained that the he figured out how to convert the redeemed in various parts of the fantastic returns on the postal reply coupons into cash, is unclear, but world, but the fixed prices did coupons made profiting simple. Ponzi made no effort to generate not reflect the dramatic post-war legitimate profits. Eventually, he devaluation of some currencies. Many investors were paid as stopped purchasing IRCs and kept Ponzi realized that he could turn promised, receiving $750 (\u00a34,635) all of the money for himself. By a profit if he bought the coupons in interest on initial investments of June 1920, Ponzi had made $2.5 Italy, where they were relatively $1,250 (\u00a37,725). However, these million (\u00a319 million) from about cheap, and exchanged them for profits did not come from trading in 7,800 customers. His desk drawers more expensive stamps in the US. IRCs. Instead, Ponzi paid back his overflowed with cash; money was \u276f\u276f Although Ponzi did not have a plan for converting the coupons into cash, he figured that he could make a profit of $2.30 (\u00a314 today) for every $1 (\u00a36) that he invested. Realizing the potential for a business venture, International Reply Coupons, which could be exchanged for postage stamps, inspired Ponzi\u2019s scam. This particular design was adopted by the Universal Postal Union in 1906.","106 CHARLES PONZI The schemer A pyramid scheme promises high returns to investors, who are paid back through the investments of later investors. As with all pyramid schemes, Charles Ponzi\u2019s was mathematically unsustainable because each round needs to involve at least double the number of investors as the previous round. In the first round, the Four friends of schemer takes a $1,000 the first round investment from two investors investors, promising to double their money. In the second round, the schemer finds four more investors and gets them to invest $1,000 each. With this $4,000, he pays back the first round investors. In the third round, he needs $8,000 to pay the second round investors, and finds eight investors to invest $1,000 each. The first round investors are pleased with the results, reinvest, and tell their friends. The scheme grows and the schemer is able to make payments to himself. even stored in his wastebaskets. Questions raised steered them away from inspecting Convinced of his genius, investors While Ponzi was making money, his books \u2013 his helpful offer to mortgaged their homes and his operation was running at a refuse new investments during invested their life savings with tremendous loss, using money their investigation calmed their Ponzi. Most did not take their collected from new investors to pay suspicions. When the US Attorney profits when offered, but instead the promised returns to earlier for Massachusetts did look at the reinvested, trusting him to increase investors. This type of scheme, books, he just found a box of index their wealth even further. In which \u201cborrows from Peter to pay cards bearing investors\u2019 names. February 1920, Ponzi was Paul\u201d, eventually came to be named promising customers a 50 per cent after Charles Ponzi himself. In July came another blow: the profit a mere 45 days after their US Post Office confirmed that Ponzi investment. Soon, that number was By the middle of 1920, Ponzi was could not be making the returns he raised to 100 per cent, sparking making about $250,000 (\u00a31.9 million) had claimed on the international even more investment. a day, but local newspapers began postal coupons \u2013 there were not to investigate when a furniture enough of them in circulation. The Ponzi deposited the money in dealer publicly claimed that Ponzi\u2019s Post reported this, too, and Ponzi Boston\u2019s Hanover Trust Bank \u2013 in cheques had bounced. The Boston filed a suit against the newspaper, which he also bought a controlling Post responded with a series of before spinning a yarn about stake. With the ever-increasing articles asking hard questions about purchasing coupons in Italy and influx of cash, Ponzi revelled in his Ponzi\u2019s money machine, noting that selling and reselling throughout new life of luxury: he bought a he himself was not investing with Europe. He convinced nobody. mansion with a heated pool in his own company. On 2 August 1920, newspapers Lexington, smoked cigars from declared Ponzi to be insolvent. diamond holders, and bought Around the same time, the dozens of gold-handled canes for Commonwealth of Massachusetts As investors pulled out, Ponzi parading around town. got involved. Although Ponzi was struggled to find the money to questioned by state officials, he pay them what they were owed.","WHITE COLLAR CRIMES 107 By 9 August, his main bank selling swampland to investors How Ponzi schemes account was overdrawn and the with the promise of substantial impact the economy district attorney froze it. Knowing returns on their money. Ponzi was his arrest was imminent, Ponzi arrested for fraud and sentenced Ponzi schemes inflict severe surrendered to federal authorities to one year in prison, but he was financial damage on investors on 12 August 1920. He was charged freed on appeal. and the economy by diverting with 86 counts of mail fraud. money away from productive In New Orleans, he was caught and legitimate investments. Final years trying to flee to Italy by boat \u2013 The bigger the scam, the more Ponzi had lost around $20 million despite shaving his head and damage it causes, particularly (\u00a3150 million) of investors\u2019 money. growing a moustache to disguise once large banks become While some were paid, Ponzi was himself \u2013 and was sent back to involved. When the scheme short by $7 million (\u00a353 million). His finish his original jail sentence in is revealed, investors can arrest brought down six large state Boston. Deported to Italy in 1934, lose confidence in those banks, including the Hanover Trust. he tried a few more unsuccessful institutions and are reluctant Many investors were financially schemes in Italy before moving to to invest in them again. crippled, receiving under 30 cents Brazil, where he died, in 1948. \u25a0 for each dollar they were owed. Discovering and closing A large crowd gathers outside down Ponzi schemes can be The impulsive Ponzi used his Charles Ponzi\u2019s Boston office in July difficult. Often, neither the bail release to flee to Florida, where 1920 after The Boston Post published perpetrators nor the schemes he launched the \u201cCharpon Land a number of articles questioning his themselves are regulated. And Syndicate,\u201d another Ponzi scheme business practices. even in regulated institutions, Ponzi schemes may use technical language to hide their true nature. Ponzi schemes that violate a number of financial laws may be investigated separately by more than one regulator, which makes it hard for the bigger picture to emerge. The financial significance of the institutions that have invested in the scheme can also make regulators reluctant to investigate, believing that the institutions are too big to fail.","108 MCYOOILUNLVCIOIACNNTD\u2019TAOLLARS THE TEAPOT DOME SCANDAL, 1921\u201322 IN CONTEXT U ntil Watergate, the illegal oil-producing areas as naval oil espionage operation that reserves \u2013 among them was a LOCATION led to the resignation of piece of land in Wyoming called Washington, D.C., US President Richard M. Nixon in 1974, \u201cTeapot Dome\u201d. US political scandals were defined THEME by the Teapot Dome incident of Politics and oil Political corruption the early 1920s. It had nothing to do In 1921, Taft was succeeded by with tea, or a dome \u2013 it was about President Warren G. Harding, BEFORE corruption, which was enough to who appointed a mixture of able 1789\u20131966 The corrupt taint a president\u2019s administration. politicians and old cronies to his leaders of Tammany Hall in cabinet. Among them was Albert New York, a powerful Early in the 20th century, the Bacon Fall, secretary of the interior. Democratic political machine, US Navy converted from coal to fuel In 1921, under pressure from Fall, allow mayoral candidates oil. To ensure that it would always President Harding issued an to buy their support and have sufficient supplies of fuel, executive order that transferred influence. President William Howard Taft supervision of the Teapot Dome oil designated several of the federal 1912 In Britain, senior members of the Liberal Bribery return \u2013 is a formidable task. government profit from inside This difficulty fuels much of the information about plans to A bribe is deemed to have taken controversy around the large issue a lucrative contract to place when an individual cash contributions lobbyists the Marconi company. exchanges favours with another \u201cdonate\u201d to politicians. party to gain an illegitimate Lobbyists hope these will have AFTER advantage over what should be an effect on government policy, 1975 The US Senate concludes a neutral process. It can take but proving that any eventual that American aerospace place at both corporate and changes in policy were a direct company Lockheed paid governmental levels. result of their donations is nearly bribes to members of foreign impossible. governments to guarantee Even today, in countries contracts for military aircraft. with comprehensive anti-bribery Bribery investigations tend laws, proving that an illegal to reply on wiretaps or elaborate quid pro quo has taken place sting operations, in which both \u2013 in which something is parties are tricked into explicitly specifically given in order stating what they intend to give for something to be done in and receive.","WHITE COLLAR CRIMES 109 See also: The Mississippi Scheme 100 \u201cTeapot Dome\u201d became part of the President Harding political lexicon, a synonym for appoints several friends high-level corruption. It was pressed into play on campaign cards (left) to senior positions in his during the 1924 presidential election. government field and two oil fields in California hidden and to cover his tracks His friends betray his from the navy department to the administratively, but he was seen trust by accepting bribes department of the interior. Fall then spending money lavishly on his covertly, and without competitive New Mexico cattle ranch and other and embezzling bidding, granted exclusive rights to business ventures. Suspicions government funds Teapot Dome to Harry F. Sinclair of arose about his sudden prosperity. Secretary of the interior the Mammoth Oil Company. A Albert Fall leases public similar deal was made with The scandal blows open oil reserves, including Edward Doheny of Pan American In 1922, the US Senate launched Teapot Dome, to private Petroleum and Transport Company an investigation into the leases and companies in return for for the Elk Hills reserve in contracts negotiated by Fall, and money and gifts California\u2019s San Joaquin Valley. In his dishonesty was finally exposed. A senate investigation return, Fall received hundreds of President Harding was ordered to into Albert Fall\u2019s activities thousands of dollars in interest-free cancel the leases, and the oil fields begins but President loans from the companies. were shut down. Harding was not Harding dies before it personally implicated in Fall\u2019s illicit releases its findings Although these leases and deals, but as the scandal unfolded, contracts were technically legal, his health began to suffer. In 1923, A Congressional Fall\u2019s acceptance of the money was he died of a heart attack, before all investigation held not. He attempted to keep the deals the details of Fall\u2019s wrongdoings after Harding\u2019s death were made public. I can take care of my enemies finds that his in a fight, but my friends, my Fall was found guilty of administration goddamned friends, they\u2019re accepting bribes in the Elk Hills and was riddled with the ones who keep me walking Teapot Dome negotiations. He was fined $100,000 (\u00a3865,000 today) and corruption the floor at nights! sentenced to a year in prison, President Warren becoming the first cabinet member to be convicted of a felony. His fine G. Harding was waived, though, because he was destitute, and he was released after nine months on the grounds of ill health. The heads of Mammoth Oil and Pan American Petroleum were acquitted of all charges of bribery and criminal conspiracy. Investigations initiated by Harding\u2019s successor, Calvin Coolidge, revealed that the Teapot Dome scandal had been one of many examples of corruption during Harding\u2019s tenure. His reputation was forever tarnished. \u25a0","110 IN CONTEXT RCWAINIGTEDIRHZECTE,ENDLNSYETIFNRTGE, LOCATION Bhopal, Madhya Pradesh THE BHOPAL DISASTER, 1984 state, India THEME Industrial accident BEFORE 1906 An explosion and fire at a French coal mine owned by the Courri\u00e8res mining company kills 1,099 miners. 1932\u201368 Methyl mercury dumped into Japan\u2019s Minamata Bay by chemical company Chisso Corporation contaminates shellfish, which in turn poisons local residents. AFTER 31 July\u20131 August 2014 A series of gas explosions caused by poorly maintained pipelines kill 32 people in Kaohsiung, Taiwan. I n the early morning hours of 2 December 1984, 40 tons of the deadly poisonous gas methyl isocyanate leaked from a pesticide plant owned by the Indian subsidiary of US firm Union Carbide Corporation (UCC) in Bhopal, Madhya Pradesh, India. Half a million people were exposed to the gas cloud that floated across the packed shanty towns around the plant. Estimates of the number of casualties vary, but the government of Madhya Pradesh reported that several thousand people died immediately from the effects of the gas, and thousands more were left with permanent disabling injuries.","WHITE COLLAR CRIMES 111 See also: The Siemens Scandal 126\u201327 \u25a0 The Volkswagen Emissions Scandal 130\u201331 Thousands of casualties, among them people whose eyes had been seared by the toxic fumes, assembled in the streets to await rudimentary treament. The local hospitals and mortuaries were quickly overwhelmed. It was the worst industrial accident In the early 1980s, widespread procedures that fell well short of the in history. The name Bhopal crop failures and famine across the standards maintained in its US became synonymous with death, Indian subcontinent meant farmers plants. India\u2019s government was corporate and government were unable to invest in pesticides, aware of the safety issues but was mishandling, and negligence. and demand fell accordingly. The concerned about the economic Bhopal plant reduced its output effects of closing a plant that Warning signs while UCC looked for a buyer. In the employed thousands of local people. In 1969, chemical manufacturer meantime, the facility continued to UCC built a plant on land leased to operate with safety equipment and Then came the terrible events them by the Madhya Pradesh State of 2\u20133 December 1984. A strong Government to produce Sevin, a The water caused a reaction wind quickly blew the poisonous pesticide used throughout Asia. that built up heat and pressure gas plume from the plant through The Indian government owned the city; it hugged the ground, and a 49.1 per cent financial stake in in the tank, quickly as victims inhaled it, their throats the operation. transforming the chemical and eyes burned. Many died horribly, vomiting or foaming at the But there were problems from compound into a lethal mouth. Chaos ensued as tens of the outset. The city of Bhopal was gas that escaped into the thousands of terrified people tried chosen for its good transport to escape the city. Arjun Singh, the infrastructure, but the plant\u2019s site cool night air. chief minister of Madhya Pradesh, was zoned for light industrial and Union Carbide was accused of fleeing to his commercial use, not for an industry palace outside Bhopal, leaving his with potential hazards. And Corporation constituents to fend for themselves. although the plant was supposed to produce pesticides using chemicals The investigation begins prepared elsewhere, in order to cut News of the disaster reached UCC\u2019s costs and gain a competitive edge headquarters in the US, and Chief in the market, it began making the Executive Officer Warren Anderson raw materials, too, a far more flew to India with a technical team dangerous process. to help the government manage the aftermath. When Anderson arrived, he was placed under house arrest. Technicians began to assess the cause of the gas leak and delivered medical supplies and equipment to the local community. What they discovered was horrifying: the streets were littered with human and animal corpses. Anderson was released after he promised to travel back to India to stand trial whenever he was \u276f\u276f","112 THE BHOPAL DISASTER summoned. Ten days after the Medical experts report a high dependents were still awaiting accident he appeared before the incidence of lung cancer, compensation more than 20 years US Congress to report that his adverse outcomes of after the disaster. And some group company had a commitment to pregnancy, and respiratory, claims remain in litigation. safety. He promised to take action to ensure that a similar incident neurological, psychiatric, and While no single saboteur was \u201ccannot happen again.\u201d In the ophthalmic problems among named, both civil and criminal months that followed, UCC set up cases were filed against UCC and a $120,000 (\u00a3200,000 today) relief those exposed to the gas. dragged on for years. In 2010, seven fund for their employees who had John Elliott former executives of UCC, all Indian been affected by the tragedy, but nationals, were convicted of causing that did not go far. By April 1985, it and paid $470 million (\u00a3460 million death by negligence. Each was fined had increased the fund to $7 today) in damages. However, some $2,000 (about \u00a31,450) and sentenced million (\u00a311.1 million today). commentators felt that the company to two years in prison. Given the significantly underestimated both devastation the gas leak caused the The struggle for justice the long-term health consequences punishment seems light, but it was The subsequent investigation into of exposure to the gas and the the maximum allowed by Indian law. the Bhopal disaster lasted for years, number of people affected. India\u2019s and eventually revealed that a government and UCC paid for a In terms of public safety, it faulty valve had allowed 1 ton of hospital to treat victims which seems that some lessons are yet water meant for cleaning internal opened in 2001, and established a to be learned from Bhopal. In the pipes to mix with 40 tons of methyl health insurance fund to cover the years since the accident, India has isocyanate. This caused a chemical expenses of 100,000 people. Yet, undergone rapid industrialization, reaction that forced a valve to open chronically ill survivors and their but activists say the government and allowed the gas to escape. The has been slow to regulate industry, investigators believed this was the continuing to put the health of the result of sabotage: an employee country\u2019s citizens at risk. Bhopal must have tampered with the tank. proved the need for preventative strategies to avoid similar events, At first, UCC tried to avoid legal enforceable international standards responsibility for the tragedy, but in for environmental safety, and 1989, it reached an out-of-court industrial accident preparedness. settlement with India\u2019s government A toxic legacy Decades after the Bhopal disaster, estimates of the death toll vary from as few as 3,800 people to as many as 16,000. However, the Indian government now cites a figure of 15,000 people, which includes those who have died from illnesses related to exposure to the gas. Several thousand more survivors continue to battle life- limiting conditions, such as cancer, blindness, and neurological and immune disorders. A large number Warren Anderson, CEO of UCC at the time of the disaster, was charged with manslaughter by the authorities in Bhopal in 1991. The US refused to extradite him to India to face trial.","WHITE COLLAR CRIMES 113 Survivors\u2019 organizations and other local activists regularly stage protests demanding harsher punishment for those responsible for the tragedy, and more compensation for its victims. of the children born after the was taken over by Dow Chemical government to resolve this disaster in the area around Company, which has steadfastly impasse. And while local activists the plant suffered mental and refused to accept liability for the have no doubt that the toxic physical deformities. Bhopal accident. Dow says the legal waste at the abandoned plant case was settled in 1989, and that poses serious health risks for Human rights groups claim responsibility for the cleanup people living nearby, they have that birth defects have actually operation, as well as for ongoing opposed government plans to occurred in the area since the plant medical care for victims and fresh remove and incinerate it, on safety opened in 1969 due to groundwater claims for compensation, now rests grounds. However, in 2015, a small contamination arising from the with the authorities in Madhya amount of waste from the site was hazardous waste dumped in and Pradesh state, who assumed control burned in a trial incineration and around the plant. However, the of the site in 1998. Little has been the emissions were deemed to be government has not confirmed a done in recent years by India\u2019s within permissible limits. \u25a0 link, and no long-term research has been carried out that proves the birth defects are directly related to the drinking of poisoned water. Government apathy Although UCC\u2019s 27-hectare (67-acre) factory was closed down immediately after the disaster, the company was not permitted to decontaminate the site until the early 1990s. While litigation was in progress, the methyl isocyanate unit was considered \u201cevidence\u201d in the criminal case. In 2001, UCC Corporate negligence (\u00a32.5 million today) after spilling a cup of their scalding coffee in The jury in the Robinson vs Generally, corporate negligence her lap and suffering serious Reynolds case found that the tobacco occurs when a company breaches burns. Today, most commercial giant had marketed its cigarettes as its promise to a third party to do hot drinks carry warning signs. safe, knowing full well they were not. no harm. Whether it is done accidentally or intentionally to In 2014, a US jury awarded save money, a company can be Cynthia Robinson $23.6 billion held accountable for a negligent (\u00a319 billion) in punitive damages action, or a failure to act. A parent in her law-suit against cigarette- corporation may be found liable maker R.J. Reynolds for the for the negligence of a subsidiary wrongful death of her husband, company, even if it played no part a smoker who died of lung in the wrongdoing. Landmark cancer in 1996. She argued that cases include 79-year-old Stella the company was negligent in Liebeck, who in 1994 successfully not informing consumers that sued McDonald\u2019s for $2.86 million its products are addictive and harmful to health.","114 BMTHIUGEGGGWEISNOTGRLD\u2019S THE CITY OF LONDON BONDS THEFT, 2 MAY 1990 IN CONTEXT F or John Goddard, a 58-year- Life as an undercover cop: old messenger for money You\u2019re always one slip away LOCATION broker Sheppards, based from death or a breakdown. London, UK in London\u2019s financial district, the working day on 2 May 1990 began UK police source THEME just like any other. He left the Bank Bond theft of England with a briefcase full of But City of London detectives soon bearer bonds and headed towards discovered that the perpetrators BEFORE a nearby finance house to deliver were in fact an international fraud 1983 An armed gang steal them. At 9:30am, while walking and money-laundering ring with \u00a36 million in cash from a along a quiet side street, he was links to organized crime in the US. Security Express depot in approached by a man in his late London. Brothers Ronnie and 20s, who held a knife against his Police dispatched a 40-officer John Knight are later convicted throat, grabbed his briefcase and team to locate the mugger and, in of masterminding the robbery. wallet, and ran off. a joint operation, worked with FBI agents who went undercover AFTER An audacious heist to infiltrate the crime ring. Both 2006 Seven masked men The mugger fled on foot and quickly parties worked with urgency brandishing guns burst into disappeared into a busy subway following the Bank of England\u2019s Securitas Cash Management tunnel. He had escaped with 301 warning that the gang might be Ltd\u2019s building in Kent, UK, bearer bonds \u2013 170 Treasury bills able to turn the bonds into cash. tie up 14 members of staff, and 131 certificates of deposit from and in just over an hour steal banks and building societies \u2013 Two months after the robbery, \u00a353 million in Britain\u2019s biggest mostly worth \u00a31 million each. The on 31 July, there was a major cash robbery. mugger\u2019s total haul was worth breakthrough. Mark Lee Osborne, an eye-watering \u00a3292 million. a Texas businessman, had tried 2007 Guards at a private to peddle \u00a310 million of the stolen bank in Baghdad, Iraq, steal The Bank of England issued a $282 million (about \u00a3187 global alert, notifying financial million today) in US dollars institutions of the bonds\u2019 serial from its vaults. numbers. The following day, the press reported the robbery as the work of an amateur opportunist thief who, without connections, would be unable to cash the bonds.","WHITE COLLAR CRIMES 115 See also: The Great Train Robbery 30\u201335 \u25a0 D.B. Cooper 38\u201343 \u25a0 The Antwerp Diamond Heist 54\u201355 bonds to a narcotics dealer in New York. Unfortunately for him, the potential buyer was undercover FBI Agent David Maniquis. Following the money but Cheeseman was the only After the mugging, in order to Osborne cooperated with the FBI successful prosecution. The prevent similar crimes, the Bank of and turned on his co-conspirators, mugger is believed to have been England (above) quickly developed a including British con man Keith 28-year-old Patrick Thomas, a petty service to enable the electronic transfer Cheeseman, who was cornered criminal from London who shot of sterling securities. by agents in a sting operation himself in December that year. codenamed \u201cOperation Soft Dollar\u201d. were sent around the City of He pleaded guilty to laundering As for the messenger John London by couriers who were some of the bonds and was jailed. Goddard, he only learned of the not told what they were carrying. true value of his briefcase after This risky delivery method was However, when Osborne the event. At that time, money- later discontinued. \u25a0 became an informant, he also market securities worth billions became a target for organized crime operatives, who do not take kindly to snitches. In August 1990, despite being placed under FBI protection, Osborne was fatally shot twice in the head. The stolen bonds were fenced worldwide. City of London police recovered a bag stuffed with undeclared bonds at Heathrow airport, and more were seized in Cyprus. During the summer of 1990, police traced all but two of the bonds. They made 25 arrests, Pistone\u2019s cover was so convincing Undercover police work One man who understood that that before the operation ended, he very well was undercover FBI was close to being proposed for In order to gather evidence and agent Joe D. Pistone (1939\u2013). In membership of the Bonanno family. intelligence about the ongoing 1976, he infiltrated one of New and future illegal activities of York\u2019s five organized crime groups and individuals, police syndicates, the Bonanno family, forces use specially trained as jewel thief Donnie Brasco. He undercover operatives. lived and worked with them for six years, while collecting Their assignments include evidence that would convict short-term stings that can last more than 100 mobsters. The for just a matter of a few hours, Mafia later put out a contract on to deep-cover, long-term his life, and he now lives under investigations that mean months a secret identity. He wrote a or years in the field. The personal book about his undercover work, risks can be huge, but the payoff which was the basis for the 1997 \u2013 putting criminals behind bars \u2013 movie Donnie Brasco. can outweigh them.","IBJTUI\u2019SGSTALOLINELE BERNIE MADOFF, 19960s\u2013\u20132200088","","118 BERNIE MADOFF IN CONTEXT high returns. However, where most Madoff is escorted into court in New Ponzi schemes lure investors by York on 10 March 2009,\u00a0where he was LOCATION offering high rates of returns, and charged with eleven felonies, including New York City, US then proceed to collapse quickly, securities fraud, mail fraud, wire fraud, Madoff\u2019s annual returns were money laundering, and perjury. THEME incredibly consistent. Ponzi scheme Madoff\u2019s firm took off. His first As news of the miracle major investor \u2013 Carl Shapiro, the BEFORE investments spread, the enticing owner of a successful women\u2019s 6 April 2007 Syed Sibtul regularity of the scheme was a key clothing company \u2013 gave Madoff Hassan, also known as the factor in perpetuating the fraud, $100,000 (\u00a3500,000) in 1960. This \u201cDouble Shah\u201d, is exposed by and Madoff could pick and choose signalled both the start of their an investigative reporter for from the scores of wealthy investors relationship as friends and business running a Ponzi scheme in desperate for a piece of the action. partners, and the first opportunity Pakistan, which promised that Madoff could exploit. Over the a 100 per cent return on Humble beginnings next 50 years, Shapiro would come investments in only 15 days. Madoff founded his Wall Street firm to see Madoff as a son, provide him \u2013 Bernard L. Madoff Investment with access to circles of wealthy 21 May 2008 Lou Pearlman, Securities LLC \u2013 in 1960 after investors, and eventually lose over the American record producer leaving college. He had saved up half a billion dollars through his and band manager, is jailed for $5,000 (\u00a325,000) from jobs as a investments in Madoff\u2019s firm. 25 years for running a Ponzi lifeguard and a sprinkler installer, scheme worth more than $300 and his accountant father-in-law, The firm was able to avoid million (\u00a3185 million today). Saul Alpern, provided a $50,000 scrutiny from the Securities and (\u00a3250,000) loan to help get the firm Exchange Commission (SEC) AFTER up and running. because Madoff seemingly had so 7 June 2011 Nevin Shapiro is few clients \u2013 it relied on an elite sentenced to 20 years in prison The company initially dealt in pool of wealthy investors. and ordered to pay more than penny stocks, which were traded Saul Alpern initially helped $82 million (\u00a365 million) in outside of the New York Stock Madoff recruit these clients for a restitution for operating a huge Exchange (NYSE) and American commission, but later also acted as Miami-based Ponzi scheme. Stock Exchange (AMEX), so that a conduit, investing money from Madoff could avoid their hefty fees. B ernie Madoff\u2019s elaborate Ponzi scheme evaded US financial regulators for decades. It delivered irresistible financial gains to thousands of investors before bankrupting people on five continents, leaving behind a trail of financial and emotional despair. Variously labelled a monster, a fraud, and a traitor, Madoff is seeing out the rest of his life with a 150-year sentence in jail. It began like similar swindles \u2013 an individual or organization lures investors by promising unusually","WHITE COLLAR CRIMES 119 See also: Charles Ponzi 102\u201307 \u25a0 J\u00e9r\u00f4me Kerviel 124\u201325 several clients under his own name served on an SEC advisory to make it appear that Madoff had committee and as nonexecutive fewer investors. chairman of the world\u2019s second- largest stock exchange. Family business I certainly wouldn\u2019t invest in Madoff\u2019s firm continued to grow. the stock market. I never When the scale of Madoff\u2019s By 2008, it was a multibillion-dollar believed in it. deception was revealed, his family business: his niece was Bernie Madoff hundreds of thousands of victims employed as a compliance officer, included Hollywood stars Kevin and his two sons, Andrew and for his investors\u2019 money focused on Bacon, John Malkovich, and Steven Mark, were placed in charge of the shares in the S&P 100-stock index. Spielberg, the French aristocrat and company\u2019s legitimate operations It reported a 10.5 per cent annual financier Ren\u00e9-Thierry Magon de la outside of the private investment return for 17 years. Even when the Villehuchet, and the UK army division. This division was a US stock market collapsed in 2008, veteran William Foxton. Tragically, secret even within the company, the fund was up. de la Villehuchet and Foxton were and was highly illegal \u2013 clients\u2019 driven to suicide as a result of their investments were deposited into For decades, people trusted in financial losses. Madoff\u2019s private accounts rather Madoff\u2019s consistency \u2013 and not just than being invested. the wealthy. Thousands of working Investigations commence people gave him responsibility for The point at which Madoff began When investors asked for their their life savings. His firm seemed his Ponzi scheme is unclear. When money back, Madoff\u2019s firm would legitimate, and he was, by all he finally confessed in 2008, Madoff return their investment with appearances, a trustworthy and insisted that the fraud had started interest, along with a fabricated list credible businessman, who had in the early 1990s, but federal of trades based on real data. The investigators believe that it may money actually came from other have begun as early as the 1970s investors\u2019 contributions. Perhaps or mid-1980s. In fact, Madoff\u2019s because of the aura that developed investment operation may never around Madoff and his magic have been legitimate \u2013 his financial investments, most saw no reason to operations were always highly doubt the returns. One Madoff fund secretive, to the extent that his \u276f\u276f Edward Snowden leaked classified Whistleblowers Whistleblowers, however, are information in 2013, which revealed also important in other fields, details about secret US-led global Whistleblowers are an important including education and surveillance programmes. but controversial factor in the healthcare, where workers are detection of crimes that might encouraged to speak up against otherwise continue unchecked by negligence and poor conduct. In bureaucratic processes. Despite matters of state, whistleblowers the harassment and intimidation can be extremely controversial. whistleblowers often experience, Former CIA employee Edward they are protected by the law. Snowden has been alternatively celebrated as a patriot and After noting the due diligence criticized as a traitor, while of whistleblowers during Madoff\u2019s former US Army soldier Chelsea case, the SEC set up a specific Manning was court-martialled whistleblowing fund intended and jailed for leaking to encourage financiers to come confidential documents to forward with vital information on condemn US foreign policy. financial crimes.","120 BERNIE MADOFF brother, Peter, who worked with The math was so compelling\u2026 on aspects of Madoff\u2019s firm. The him for over 40 years and was a unless you could change the frequent but unproductive contact codirector of the firm, was ignorant laws of mathematics, I knew between the SEC and Madoff\u2019s of the scheme\u2019s exact nature. I had to be right. compliance officers even led to the Harry Markopolos marriage of Madoff\u2019s niece and Eric Suspicions as early as the 1990s Swanson, an SEC lawyer leading that something was wrong were they investigated and shut down investigations into the Madoff fund. easily dismissed as the result of Avellino and Bienes, one of envy. In 2000, a financial analyst Madoff\u2019s \u201cfeeder funds\u201d to attract After years of incompetent and independent fraud investigator, potential investors, but failed to see investigations by the SEC, in late Harry Markopolos, told the SEC he the signs that its malpractice was a fall 2008 Madoff knew that his could prove that it was legally and part of Madoff\u2019s larger operation. scheme, and the economy, were mathematically impossible to beginning to crumble. Clients achieve the gains Madoff claimed. Subsequent investigations were suddenly requested a total of His findings were ignored for years, plagued by incompetence, a lack of $7 billion (\u00a34.4 billion) in returns. but others also arrived at the same financial expertise, and failures in Madoff had only $200\u2013300 million conclusion. Apart from Madoff\u2019s communication between SEC (\u00a3125\u2013185 million) left to give. private bank, J.P. Morgan, none of departments working separately the major Wall Street firms would The truth comes out invest or trade with Madoff On 10 December 2008, Madoff met because they did not believe his with his sons to discuss year-end numbers were real. J.P. Morgan bonuses totalling millions of dollars. would pay for their involvement \u2013 He explained that he wanted to give they were fined $2 billion (\u00a31.6 them earlier than scheduled. When billion) in 2014 to compensate his sons were suspicious enough to victims of his scheme. ask where the money was going to come from, Madoff admitted that it The SEC had investigated would come from a part of the Madoff before 2008, but missed the business they were not involved in, massive fraud. As early as 1992, Respected Wall Street figure 1990 Bernie Madoff had been secretly fooling Madoff begins three investors, regulators, and the years serving as chair government since the early 1990s, of the NASDAQ stock when he first devised his Ponzi scheme. exchange. 1960 Madoff founds Bernard L. Madoff Investment Securities LLC. 1986 1992 Madoff sets up his firm\u2019s The SEC shuts down headquarters at 885 Third Avellino & Bienes, a Avenue in New York. \u201cfeeder fund\u201d that recruited investors in Madoff\u2019s company, but fail to find a connection to Madoff himself.","WHITE COLLAR CRIMES 121 Embroidered velvet slippers\u00a0were released on bail as he awaited sentenced, Madoff apologized to included in an auction lot of Madoff\u2019s charges and sentencing. He and his victims, many of whom were possessions sold to raise funds to his wife Ruth packed up some seated on the benches behind him. compensate the victims of his $65 personal and family items, including In November 2009, the government billlion (\u00a347 billion) Ponzi scheme. jewellery, and posted it to their sons. began to sell and auction off Madoff\u2019s assets to repay his and confessed to an elaborate Ponzi In 2011, Ruth Madoff stated investors. These included a large scheme. Instead of accepting the that she and her husband had yacht and two smaller boats; a money, Madoff\u2019s sons reported him attempted suicide together on property portfolio including a New to federal authorities; FBI agents Christmas Eve, 2008. Scared and York City penthouse, a beach house arrested Madoff the next day. acting on impulse, they took a in Montauk, New York, and a Shortly after his arrest, Madoff was cocktail of different pills \u2013 including Florida mansion; artwork by what they hoped would be an Picasso and Roy Lichtenstein; overdose of sleeping pills \u2013 but his wife\u2019s extensive jewellery woke up unharmed. collection, a Rolex collection, and a Steinway grand piano. Tragic conclusion On 12 March 2009, Madoff pleaded The unravelling of Madoff\u2019s guilty to 11 different crimes, scheme \u2013 the biggest Ponzi scheme including securities fraud, in history \u2013 had a significant investment adviser fraud, mail impact on hundreds of families fraud, wire fraud, three counts of across the US, and Madoff\u2019s own money laundering, giving false family would fall apart in the statements, perjury, and making aftermath. His 46-year-old son, false filings with the SEC. Mark, hanged himself on the second anniversary of Madoff\u2019s On 29 June 2009, Madoff was arrest, as a sad finale to a complex sentenced to 150 years in prison \u2013 life lived under the constant but the maximum allowable sentence elusive authority of his father. \u25a0 for his crimes. Just before he was 2000 2005 Harry Markopolos\u2019s first Following concerns raised submission proving by Renaissance Enterprises, Madoff\u2019s guilt is LLC, the SEC begins another submitted to the SEC ultimately unsuccessful but eventually rejected. examination of Madoff\u2019s firm. 2002 2008 An anonymous hedge fund Madoff confesses the Ponzi manager registers a detailed scheme to his sons. They complaint with the SEC about immediately report their father to Madoff\u2019s investments. Nothing the FBI and Madoff is arrested. comes of the investigation.","122 ICTKHRNAIMTOIWINDAIILNDMNOYTMHIINNDG THE ENRON SCANDAL, 2001 IN CONTEXT O nly 15 years after its claiming $111 billion (\u00a3122 billion) formation, American in revenues and employing 20,000 LOCATION energy company Enron workers in more than 40 countries. Houston, Texas, US had become America\u2019s seventh- biggest corporation, but the firm Creative innovation THEME collapsed following a sensational After Jeff Skilling impressed Accounting fraud scandal in 2001, during which it as a consultant for McKinsey and was revealed that the firm\u2019s Company, Lay hired him in 1990 BEFORE success was built on fraudulent as Chief Executive Officer of Enron 1991 The Bank of Credit and accounting practices. Finance Corporation. He soon Commerce International became Lay\u2019s second in command. (BCCI) is closed by regulators The company was formed by Skilling began to implement an after it is implicated in a major businessman Kenneth Lay in 1985, aggressive investment plan, money-laundering operation. after merging two fairly small earning the company the title regional energy companies, of \u201cAmerica\u2019s Most Innovative 1998 Waste Management, an Houston Natural Gas Company and Company\u201d from Fortune magazine American trash disposal and InterNorth Inc. By 2000, the Enron for six consecutive years from recycling company, pays $457 Corporation had grown remarkably, 1996\u20132001. million (\u00a3400 million today) to settle a shareholder class- Skilling used a technique action lawsuit; the company\u2019s known as mark-to-market auditor, Arthur Andersen, is accounting to record an asset\u2019s fined $7 million (\u00a36.1 million). projected profits rather than its real value. If the eventual revenue AFTER generated by the asset did not end March 2008 The US up matching the projected profit, Securities and Exchange Skilling transferred the asset to a Commission (SEC) charges secret off-the-books company, Canadian company Biovail concealing the loss. Enron\u2019s Chief with engaging in fraudulent accounting schemes and Sherron Watkins, a vice president at fines the firm $10 million Enron, testifies at a Senate Committee (\u00a36.2 million). in 2002. She raised concerns to Enron bosses in 1996 about financial irregularities but was reprimanded.","WHITE COLLAR CRIMES 123 See also: Charles Ponzi 102\u201307 \u25a0 Bernie Madoff 116\u201321 \u25a0 J\u00e9r\u00f4me Kerviel 124\u201325 Kenneth Lay arrives at his fraud and conspiracy trial on 26 April 2006, under intense scrutiny from the media. He was convicted but died of a heart attack before he could be sentenced. Financial Officer Andrew Farstow Enron\u2019s board of directors and audit company leaders to hearings to was instrumental in creating a committee on the company\u2019s high- explain Enron\u2019s collapse. The network of companies to help hide risk accounting practices. hearings revealed that Enron\u2019s the losses. To the public and the aggressive accounting practices media, the company appeared to The fallout had been approved by the board of be growing rapidly. The suit prompted the SEC to directors. The Senate committee investigate. On 2 December 2001, also discovered that the company\u2019s It was only on 14 August 2001, Enron filed for bankruptcy and financial statements were so when Skilling suddenly resigned Chapter 11 protection \u2013 at the time, complex that investors could not on the day that Enron\u2019s broadband the largest bankruptcy in US understand what they were looking division reported a $137 million history. The US Senate convened at and did not understand the risks. (\u00a3150 million) loss, that confidence a committee, which summoned began to fall in the company. In June 2002, Arthur Andersen was charged with obstruction of justice for destroying Enron\u2019s documents. The decision was overturned by the Supreme Court but the damage to the company\u2019s reputation was irreversible. Kenneth Lay and Jeffrey Skilling were each convicted of securities and wire fraud in a federal court in 2006. Lay died a month later. In total, 22 other Enron executives were convicted in the scandal. \u25a0 The penny drops Forensic accounting The Enron scandal occurred at Shareholders only learned of the a time during the early 2000s state of the company\u2019s finances on Forensic accounting is a when the number of corporate 16 October 2001, when Enron filed specialized branch of accounting fraud cases investigated by the a $618 million (\u00a3680 million) third- used to investigate, analyze, FBI surged by an incredible 300 quarter loss. It was later discovered and interpret complex financial per cent, hugely increasing the that four days before, lawyers at and business issues. need for forensic accountants. Enron\u2019s auditor Arthur Andersen had destroyed almost all of Enron\u2019s files. Forensic accountants The fallout from the scandal are often employed by public has led to more robust After the company\u2019s stock price accounting firms, law legislation and stricter spiralled from a peak of $90.75 (\u00a391) enforcement agencies, insurance regulation to improve corporate per share in mid-2000 to less than companies, government governance. Financial $1 (\u00a31.10) by the end of November organizations, and by financial institutions and auditors also 2001, shareholders filed a $40 billion institutions to examine increasingly employ forensic (\u00a344 billion) lawsuit against the allegations of fraudulent accountants to prevent corporation. The suit claimed that practices, and regularly give fraudulent activities from taking Enron executives had misled expert evidence in court. place within their organizations.","124 OHTHFEETPHUEXETIBISNATNEPNEKRCIEL J\u00c9R\u00d4ME KERVIEL, 2007\u201308 IN CONTEXT F rench trader J\u00e9r\u00f4me over time these became larger and Kerviel\u2019s career in white- more regular, concealed by false LOCATION collar crime was relatively hedge trading. Kerviel always Paris, France short-lived, lasting just over a year. closed his trades within three days, In that brief period, the 31-year-old before the bank\u2019s control measures THEME caused one of the leading French kicked in. He did not personally Rogue trader banks, Soci\u00e9t\u00e9 G\u00e9n\u00e9rale, to profit from these transactions. lose \u20ac4.9 billion (\u00a34.4 billion). But BEFORE who was really to blame? In January 2008, Soci\u00e9t\u00e9 1992\u201395 The illegal trades of G\u00e9n\u00e9rale discovered that Kerviel Nick Leeson, a futures trader The crime had been making unauthorized based in Singapore, bring Kerviel joined Soci\u00e9t\u00e9 G\u00e9n\u00e9rale\u2019s deals. They asserted that Kerviel, down Barings, Britain\u2019s oldest compliance department in 2000 anticipating a decline in market merchant bank. Leeson is and became a junior trader in 2005. prices, made eight unauthorized sentenced to six and a half He started to make unauthorized trades in derivatives in December years in prison. transactions late in 2006. His 2007 and January 2008 totalling modus operandi was to make only \u20ac4.9 billion (\u00a34.4 billion) \u2013 more 2004\u201306 Jordan Belfort, small, occasional transactions, but than the total sum of the bank\u2019s reputedly the real-life Wolf of stock and net earnings. Wall Street, serves 22 months There was a tremendous in jail for securities fraud. culture \u2026 to take big risks Kerviel was charged with breach of trust, forgery, and AFTER in order to make the unsanctioned use of the bank\u2019s 2011 The unauthorized trading maximum profit. computer systems. His trial began of UBS Global trader Kweku on 8 June 2010. Adoboli costs the Swiss bank Bradley D. Simon \u00a31.5 billion. In 2012, Adoboli is During the proceedings, Kerviel convicted of fraud and jailed admitted to entering sham trades for seven years. and falsifying documents to obscure his actions, but claimed that his superiors at Soci\u00e9t\u00e9 G\u00e9n\u00e9rale had secretly condoned his behaviour because it yielded significant profits. Kerviel\u2019s lawyers claimed that he earned the bank \u20ac1.4 billion (\u00a31.27 billion) in the last quarter of 2007 alone.","WHITE COLLAR CRIMES 125 See also: Charles Ponzi 102\u201307 \u25a0 Bernie Madoff 116\u201321 J\u00e9r\u00f4me Kerviel and his lawyer David Koubbi arrive at the Paris appeal court in 2012. Kerviel lost this appeal, but a subsequent appeal in 2016 reduced the fine to \u20ac1 million (\u00a3840,000). On 5 October 2010, Judge Pauthe sentenced Kerviel to three years in prison and ordered him to pay Soci\u00e9t\u00e9 G\u00e9n\u00e9rale \u20ac4.9 billion (\u00a34.4 billion) in compensation. Alternative opinions appeared in court to appeal his him at the first sign of trouble. Sceptics of the official narrative, \u20ac4.9 billion (\u00a34.4 billion) fine. He Regardless of the level of the bank\u2019s including Kerviel\u2019s former work won the case and the fine was complicity, Kerviel has taken the colleagues, have pointed out that reduced to \u20ac1 million (\u00a3840,000). opportunity for self-aggrandizement the sheer scale of this unauthorized \u2013 in 2014 he made a well publicized trading could not have escaped the Unfairly or not, Kerviel is seen as pilgrimage to Rome to discuss the bank\u2019s attention for so long. They a martyr by some: a businessman \u201ctyranny of the markets\u201d with also said that completing such pressured to compete unethically Pope Francis. \u25a0 large trades within three days by a corrupt system that sacrificed would have been impossible. (6) know others will benefit from Furthermore, they argued, Kerviel\u2019s The psychology of lying their deceit, (7) are highly position in the company made it creative and imaginative, and unlikely that he had worked alone. In his book The Honest Truth (8) are tired or stressed. About Dishonesty, Dr Dan Wrongful dismissal Ariely, a cognitive psychologist In the case of J\u00e9r\u00f4me Kerviel, In 2014, France\u2019s Court of Cassation and behavioural economist at the first six factors certainly reduced the repayment amount on Duke University, North Carolina, apply, while the last two are the basis that Judge Pauthe\u2019s proposes that the likelihood of possible. Brain imaging has decision did not consider the role of an individual being dishonest shown that lying and repeated the bank\u2019s own inadequate risk- increases when they: (1) can deception reduces activity in the management procedures. Kerviel rationalize the lie, (2) have a amygdala, the area of the brain was freed that same year. conflict of interest, (3) have lied where emotional responses are about the matter in the past, processed. This reduction can However, Kerviel was (4) observe others behaving limit the feelings of shame or determined to carry on his fight dishonestly, (5) belong to a guilt that are often associated against the bank. In June 2016, he culture or sub-culture where with lying, making it easier to convinced a French labour tribunal dishonesty is normalized, continue lying. that the termination of his employment from the bank had been unethical. In a strange paradox, the labour board ordered the bank to pay him \u20ac300,000 (\u00a3250,000) in compensation, including recompense for unused vacation and his 2007 performance bonus. In September 2016, Kerviel","126 \u2026BTORRILBEEERWRAAYTREWDDAEASDND THE SIEMENS SCANDAL, 2008 IN CONTEXT W hat do a mobile phone Between March 2001, when network in Bangladesh, Siemens was first listed on the LOCATION a national identity card New York Stock Exchange, and Washington D.C., US scheme in Argentina, a UN food-for- September 2007, when US officials oil programme in Iraq, and two new intervened in the firm\u2019s operations, THEME rail systems in Venezuela have in Siemens\u2019 staff ran a foreign bribery Corporate corruption common? They are just a few of operation of unprecedented scale. the lucrative public works projects BEFORE awarded to German engineering Allegations of bribery 1914 German company giant Siemens by corrupt state The US stock exchange watchdog, Siemens and British rival officials who were happy to accept the Federal Securities and Vickers are exposed for bribing \u201cfinancial encouragement\u201d when it Exchange Commission (SEC), Japanese officials for warship came to choosing contractors. brought a case against Siemens in contracts; Siemens employee Karl Richter is sentenced to Siemens sets aside large Governments around the two years in prison. pools of cash for bribery world offer private 1985\u20132006 British defence companies contracts to group BAE Systems admits build large-scale misrepresenting its dealings with Saudi officials in the infrastructure projects Al Yamamah arms-for-oil deal. Siemens bribes government officials to bypass the public AFTER selection process and simply award the contracts to them 2009 Executives at US engineering company Kellogg Competitors are shut out, and Siemens profits from Brown & Root are convicted the day-to-day running of railway lines, energy for participating in a decade- grids, power plants, and other state projects long scheme to bribe government officials in Nigeria in return for $6 billion (\u00a34.3 billion) of contracts to build liquefied gas facilities.","WHITE COLLAR CRIMES 127 See also: The Teapot Dome Scandal 108\u201309 \u25a0 The Enron Scandal 122\u201323 \u25a0 The Volkswagen Emissions Scandal 130\u201331 The day is past when (\u00a3900,000) could be \u201cwithdrawn\u201d at Reinhard Siekaczek was largely multinational corporations a time to secure contracts for the responsible for Siemens\u2019 accounting at could regard illicit payments firm\u2019s telecoms arm; few questions the time of the scandal, but he helped to foreign officials as simply were asked and little paperwork was expose the company\u2019s corruption and, another cost of doing business. required. Between 2001 and 2004, as a result, received a lighter sentence. roughly $67 million (\u00a350 million) Cheryl J. Scarboro was taken out via the cash desks. Germany, the practice had been outlawed in 1999. In December September 2008. It had discovered However, most of Siemens\u2019 2008, Siemens pleaded guilty in a that between 2001 and 2007, 4,283 illicit business practices were US court; it was ordered to pay fines bribes and kickbacks totalling carried out less crudely: deniability of $1.6 billion (\u00a31 billion) and to $1.4 billion (\u00a3928 million) were was all. Special off-the-books bank rehabilitate itself by reforming its made by the firm to government accounts and \u201cconsultants\u201d were internal culture. It has since set up officials in over 60 countries. A widely used to hide the nature of the anti-corruption processes. \u25a0 further 1,185 payments with a total shady transactions. Accounting was value of $392 million (\u00a3260 million) kept deliberately sketchy. Managers were made to other third parties. would sign payment slips for bribes using Post-it notes, which would The SEC was not the only then be removed and disposed of at institution with allegations against the very moment the authorized Siemens. In Greece, prosecutors funds were transferred. pursued the firm for complaints arising from contracts for security Siemens\u2019 apparent tolerance of systems at the 2004 Athens these corrupt practices suggests its Olympics. In subsequent months, staff must have felt, on some level, fresh accusations were made about they were doing nothing wrong. Siemens\u2019 activities in other parts This attitude was at odds with the of the world, from Norway to fact that the firm\u2019s listing on the Slovakia and from China to Turkey. New York Stock Exchange meant it was subject to US anti-bribery laws. Culture of corruption And although offering bribes to For Siemens\u2019 management and staff, foreign officials was once legal in offering bribes when competing for foreign contracts was a standard Defining white collar crime strategy. The US Department of Justice revealed that the firm had The term \u201cwhite collar crime\u201d of a white collar crime was one three \u201ccash desks\u201d in its offices. was coined in 1939 by American \u201ccommitted by a person of Staff would bring in empty suitcases sociologist Edwin Sutherland. respectability and high social and carry them away stuffed with His work attempted to shift status in the course of his banknotes. Up to \u20ac1 million criminology\u2019s focus away from occupation.\u201d Sutherland claimed the blue-collar street crimes that the offences white-collar committed by the working class felons committed \u2013 including \u2013 according to the prevailing fraud, forgery, bribery, and theory, crime was intrinsically money-laundering \u2013 were more linked with poverty. Instead, he likely to be seen as matters for chose to study the financially civil rather than criminal law. motivated, non-violent crimes And compared with their committed by professional, often counterparts in the lower wealthy, businessmen and other classes, they were far more pillars of society. His definition likely to \u201cget away\u201d with them.","128 BNUTHAPOSETTIEORJMUMPESANITSRTCENHNEIRTESDF\u2019YINKIDS THE SPYEYE MALWARE DATA THEFT, 2009\u201313 IN CONTEXT I n recent years, the growth $8,000 (\u00a35,400), depending on of the \u201chidden\u201d part of the whether they wanted a basic or LOCATION internet has offered criminals premium version. Once in their Moscow, Russia a wider arena in which to operate. hands, they could use it to infiltrate Behind the \u201csurface web\u201d of computers and log the keystrokes THEME indexed sites accessed via search made by their owners. SpyEye\u2019s Cybercrime engines lies the \u201cdeep web\u201d. This main selling point was its ability to is essentially all the unindexed identify and isolate data entered BEFORE data behind firewalls: intranets, onto (supposedly) secure online 2000 RBN, a Russian internet archives, password-protected banking pages, whisking it away service provider that hosts sites, and so on. The deep web before protective software could illegal and questionable also contains \u201cthe dark web\u201d, encrypt it. Armed with passwords businesses, including malware anonymously hosted sites that can and PINs of their victims\u2019 accounts, distribution sites, becomes a be accessed only by using special the hackers were able to steal funds. major information highway for software. Some of these sites are organized crime worldwide. marketplaces for guns and drugs, The creator and administrator of or the release of computer viruses SpyEye was a young Russian man 2007 Hackers steal at least invented by criminal coders. called Aleksandr \u201cSasha\u201d Panin, 45.6 million credit card who worked out of an apartment in numbers from the servers of Data theft Moscow. Outwardly respectable TJX, who own several US Software programs designed to and studious, he had an entirely discount stores, and bring facilitate online fraud are one of the different persona online, where he massive data breaches to greatest risks to the security of went by the alias \u201cGribodemon\u201d. public awareness. billions of internet users worldwide. Panin\u2019s partner in crime was Among the most damaging of these Hamza Bendelladj \u2013 or \u201cBx1\u201d \u2013 an AFTER was SpyEye, a piece of malicious Algerian computer-science grad 2010\u201313 Turkish hacker Ercan software used by hackers between who marketed the tool kit online. Findikoglu\u2019s cybercrime ring 2010 and 2012 to secretly infect 50 distributes debit card data to million PCs and net confidential The pair acquired a Robin \u201ccashing crews\u201d around the information from individuals and Hood-style mystique when rumours world, who use it to syphon financial institutions worldwide. circulated that Panin intended to millions from ATMs. invest his profits in technology Cybercriminals could purchase research that could transform SpyEye\u2019s ready-made malware tool human life, and that Bendelladj kit for between $1,000 (\u00a3675) and made generous donations to Palestinian charities.","WHITE COLLAR CRIMES 129 See also: Frank Abagnale 86\u201387 Cybercriminals exploit the speed, among the billions of streaming It\u2019s detective work \u2013 convenience, and anonymity of the bits that make up computer code. good, old-fashioned internet to commit a diverse range of The firm put 1,200 researchers on crimes that know no borders, either the case; for four years they detective work. physical or virtual. mapped SpyEye\u2019s infrastructure. Rik Ferguson, They found IP addresses and one Trend Micro Finding the evidence infected computer in Atlanta, For law enforcement agencies in Georgia, which was used as a main An anonymous hacker the US, catching the cybercrooks server. It was remotely operated writes a malicious behind the anonymous screen from Algeria by Bendelladj. software program names was a challenging task. The FBI hired the private computer A team of researchers then This programme is offered security firm Trend Micro to impersonated cybercriminals to for sale on the dark web identify the suspicious bytes that infiltrate the online forums used to Cybercriminals purchase signal the presence of malware distribute SpyEye. By June 2011, Trend Micro had evidence in place. the program and The purchase of a SpyEye kit led it adapt it to Panin\u2019s money processor. Even after the online Gribodemon had The data and been decisively linked to the real- identities of hundreds, world Panin, the FBI had to wait two more years for him to leave thousands, or even Russia \u2013 which has no extradition millions of people treaty with the US \u2013 before it could can be accessed act. Panin was finally arrested in July 2013, when he incautiously and stolen took a vacation in the Dominican Republic. He was jailed for 9\u00bd years. Bendelladj, captured six months earlier in Thailand, received a 15-year sentence. \u25a0 The rise of cybercrime when faced with the innovations used by hackers. In the case of Today, cybercrime \u2013 defined as hacking tool kits that automate any type of criminal activity the theft of credit card and bank that uses computers or the web details, even after their creators as a tool to steal money, goods, are apprehended, their software information, or other assets \u2013 continues to circulate online. It is expanding as rapidly as can change form and name as legitimate online activities. easily as IP addresses. Cybercriminals can target individuals, corporations, The creator of a notorious institutions, and even piece of malware called Zeus, government departments. which inspired the creation of SpyEye, has never been caught, As more people conduct and his or her original source business online and utilize code has since been leaked, cloud storage, firms and adapted, and further circulated individuals can be powerless by hackers.","130 GTVHOOELAKIGRSARWIENAGSGUTELNEAVSRETIRTAYINETDSHS\u2026INFGOR THE VOLKSWAGEN EMISSIONS SCANDAL, 2015 IN CONTEXT The Volkswagen emissions I n an unprecedented move in scandal is the greatest 2015, the US Environmental LOCATION corporate scandal Protection Agency (EPA) Worldwide since the global accused German car manufacturer financial crisis. Volkswagen (VW) of installing THEME Peter Spence prohibited \u201cdefeat device\u201d software Software manipulation on diesel-powered vehicles sold in the US. BEFORE 2010 Cummins, Inc. motor The software reduced nitrogen vehicle engine company, oxide emissions when the cars headquartered in Columbus, were placed on a test machine but Indiana, pays a $2.1 million allowed higher emissions and (\u00a31.4 million today) penalty improved engine performance and recalls 405 engines after it during driving. Once on the road, ships over 570,000 heavy-duty cars would pump out up to 40 diesel engines without times the permitted level of pollution control equipment. Corporate punishment especially where internal AFTER controls are found to be lacking 2016 In Japan, Mitsubishi The typical punishment for or companies have failed to Motors admits falsifying fuel corporate wrongdoing is to levy cooperate with investigators. economy tests for 157,000 of fines against the corporation, its own cars and for 468,000 treating it as a legal \u201cperson\u201d, In September 2016, Deutsche vehicles that Mitsubishi rather than against its Bank, Germany\u2019s largest lender, produced for Nissan. executives. The US \u2013 which faced a $14 billion (\u00a311 billion) established the concept of demand from the US Department corporate criminal liability in of Justice for mis-selling the 19th century \u2013 investigates mortgages to investors during and prosecutes corporate a housing bubble in 2005. wrongdoing most vigorously, but other countries are also Critics claimed that such an embracing this concept. enormous fine could cause Recent trends have been to international financial instability increase fines substantially, and argued that Deutsche Bank should be restructured and strengthened instead.","WHITE COLLAR CRIMES 131 See also: The Enron Scandal 122\u201323 \u25a0 The Siemens Scandal 126\u201327 Defeat device software put into 11 million VW engines to fool emissions tests A portable emissions During emissions test, car produces low emissions measurement system is shown and passes the test attached to the exhaust of a car during tests performed by Germany\u2019s biggest On the road, engine emits nitrogen oxide at independent technical testing agency. 40 times the allowable level nitrogen oxide. In September 2015, Testing at the University of West Virginia in May 2014 Volkswagen admitted that reveals the diesel dupe 11 million VW and Audi 2.0 litre diesel cars had been equipped with software used to cheat on emissions tests. The auto giant\u2019s chief executive Martin Winterkorn apologized and resigned. The ringleader VW recalls millions of cars US investigators reviewed 1.5 worldwide and agrees to pay $15 billion million documents as part of its criminal probe into the scandal. (\u00a312 billion) to settle claims in the US Key to the investigation was James Robert Liang, a German citizen $15 billion (\u00a312 billion). The deal, were false. Federal investigators who headed the Volkswagen Diesel announced in August 2016, further contended that Liang Competence team in the US. He involved 652 US car dealers. emailed colleagues in Germany had been a member of the team about the software while of engineers that developed the In September 2016, Liang committing the crimes in the US. so-called \u201cclean diesel\u201d engine in pleaded guilty to US federal Germany. According to court charges for his role in the scandal Liang faces up to five years in documents, he and his colleagues and agreed to cooperate with the a US prison, deportation following concluded they could not design a investigation of other Volkswagen his release, and a fine of up to diesel engine that would meet the employees. It came out that Liang $250,000 (\u00a3200,000). However, this strict US emissions standards, had answered questions from is unlikely to be the end of the so they designed and implemented environmental regulators about the scandal: the company still faces software that would cheat the engines\u2019 test results, knowing they criminal and civil litigation. \u25a0 emissions tests instead. In June 2016, VW agreed to a separate civil settlement to pay regulators and consumers up to","CORRIGMAENIZ","ED","134 INTRODUCTION Mafia activity begins on During Prohibition in the island of Sicily in the Chicago, the Beer A smuggling ring Wars break out known as the form of citrus fruit between rival protection rackets. Hawkhurst Gang bootlegging gangs. plagues towns and villages in the southeast of England. 1735\u201349 MID-1800s 1923\u201329 1761 1889\u20131908 The Heaven and Earth Society, Butch Cassidy\u2019s Wild the precursor to the Chinese Bunch holds up trains Triads, forms in Manchuria in across the western states of the US. The outlaws are southeastern China. wanted \u201cdead or alive\u201d. T he FBI defines organized Marginal groups coincidence that cocaine cartels crime as a category of Crime groups often start out on emerged from the impoverished crime perpetrated by a the fringes of societies. The Triads city of Medell\u00edn in Colombia, or group of people with a formal were originally anti-Qing Dynasty that the Kray brothers and the structure whose primary purpose revolutionaries who arose in Richardson crime family stemmed is to obtain money through illegal 19th-century China; the Italian Cosa from deprived parts of south activities. Such groups use violence, Nostra and its American offshoots London. Modern Triad branches graft, and extortion to maintain evolved in the rural backwaters took root in the poorest areas of their position, often bribing corrupt of Sicily; and the Hells Angels Hong Kong and Macau. public officials to turn a blind eye or Motorcycle Club, which formed even lend their support. after World War II, mainly included In many cases, such individuals disaffected war veterans. These have been blocked by racial Organized crime can be both organizations thrive on unlawful prejudice. Prohibition-era mobs a local issue or a worldwide activities, such as drug trafficking, were largely made up of Italians, phenomenon. In the late 1800s, prostitution, moneylending, Jews, and the Irish, while 30 per Butch Cassidy\u2019s Wild Bunch, gambling, and labour racketeering. cent of Yakuza are Japanese-born derided as two-bit outlaws by the Koreans, who face persistent lawmen they eluded for so long, was The American sociologist discrimination. The crack cocaine perhaps the most successful train- Robert Merton believed that epidemic was fuelled by African robbing gang in US history. At the individuals turned to organized American street gangs. \u201cFreeway\u201d other end of the scale are crime crime when they were unable to Rick Ross, who was illiterate and syndicates whose tentacles spread obtain society\u2019s goals through unable to land a job in 1980s\u2019 Los across the world, such as Japan\u2019s socially accepted means because Angeles, built a multimillion-dollar Yakuza, and the Sicilian Mafia. of class hatred and poverty. It is no empire selling crack cocaine.","The Hells Angels emerge ORGANIZED CRIME 135 in San Bernadino, California, and spread all over the world, The Medell\u00edn Cartel begins its operations in Colombia and uses fighting rival gangs and extreme violence to monopolize trafficking narcotics. the cocaine trade and undermine the government. 1948 1972 1946 1960s 1980\u201395 In Japan, Kazuo Taoka The Krays and the In Los Angeles, becomes the boss of the Richardsons \u2013 rival \u201cFreeway\u201d Rick Ross Yamaguchi-gumi Yakuza gangs \u2013 rule the criminal creates a multimillion- crime syndicate and underworld in the East becomes known as the dollar market dealing \u201cgodfather of godfathers\u201d. End of London. crack cocaine. Perhaps the strongest allure of support as benevolent outlaws. notion that mainland Italy simply organized crime is that the groups Using both a populist platform and did not understand the nuances provide a sense of kinship to his savvy political manoeuvring, of Sicilian culture. individuals estranged from their the \u201cKing of Cocaine\u201d Pablo families or otherwise alienated Escobar even managed to win Hells Angels and other biker from society. election to Colombia\u2019s Chamber clubs attempt to market themselves of Representatives. as rowdy but ultimately harmless Underground activities throwbacks to an era of personal Some organized crime gangs have The Yakuza and the Triads have freedom exemplified by groups been glamorized by the public, infiltrated white-collar positions all such as the Wild Bunch. In doing especially groups operating in the over Asia, from the most powerful so, these groups exploit a collective, dim and distant past, such as corporations to the civil service and often misplaced nostalgia for a less during the Prohibition in 1920s\u2019 judiciary. However, unlike Pablo centralized world. America. Fast-forward to the street Escobar, who operated in the public gangs of the 1980s and 1990s \u2013 spotlight, these groups have been Mobsters often associated with who wreaked havoc on many poor successful precisely because of pop icons, such as crooner Frank communities with drive-by their ability to work behind the Sinatra and the American Mafia, shootings, burglaries, vehicle scenes, causing them to become which helped to legitimize them. thefts, and drug sales \u2013 and the almost invisible. After all, they could not be such public\u2019s attitude is less benign. bad people, could they, if they Until the last quarter of the socialized with such respected Sophisticated criminal groups 20th century, the Sicilian Mafia stars? For these organized crime became adept at operating under flourished by obscuring the fact groups, who were attempting to the radar and garnering public that they were a highly organized disguise what was actually going criminal syndicate through the on, the ruse worked. \u25a0","136 OSTTHHFMEAUATLMGLOGOFLTSERTTRHAHDEAEZSA,RDOUS THE HAWKHURST GANG, 1735\u201349 IN CONTEXT S muggling in England peaked pistols and sabres at the ready. The in the 18th century. When smugglers were notoriously violent, LOCATION the government began to and did not hesitate to use force South coast of England, UK tax imports heavily in order to against revenue officers. In 1740, finance the country\u2019s military the gang ambushed excise officer THEME campaigns against France, the rise Thomas Carswell and his dragoons Smuggling in the cost of goods \u2013 the price of on Silver Hill as they transported tea alone rose by 70 per cent in the 750 kg (1,650 lbs) of tea seized from BEFORE mid-1700s \u2013 made smuggling a barn in Etchingham. The gang 1735\u20131816 The Hadleigh lucrative. A band of smugglers shot Carswell dead, captured his Gang operates along the east known as the Hawkhurst Gang men, and claimed the tea. coast of England. Two of its became the most well-known. members are hanged for the Dawn raid murder of a dragoon. Taking their name from a town In spite of such violence, the in southeast England, the gang general public admired the gang AFTER plotted their exploits at the for outsmarting the taxman and 1799\u20131831 Jack Rattenbury, a Mermaid Inn in Rye, Sussex, their smuggler on England\u2019s south coast, keeps diaries of his The Robin Hood effect their culture\u2019s goals through exploits. They are published institutionalized means some with the help of a clergyman. The generally law-abiding pursue their goals illegitimately. public has long held popular Less bold citizens may idolize 1817\u201326 A battle between the outlaws in high esteem. It is an the lawbreaker\u2019s flagrant Aldington Gang, on England\u2019s attitude that sometimes comes rebellion and daring. However, Kent coast, and excise officers out of resentment against when gang violence claims leaves five dead and 20 injured. draconian laws imposed by the innocent victims, this ruling class. At other times, it admiration changes to outrage. 2014\u201316 NASCAR driver comes about when governments Derek White takes part in a are unable or unwilling to The murders of Daniel Chater major North American tobacco protect their citizens and the and William Galley turned the smuggling operation \u2013 selling resulting power vacuum is filled public against the Hawkhurst tobacco bought in the US in by organized gangs. Gang. The London Gazette, Canada and evading $409 the government\u2019s newspaper, million (\u00a3323 million) in tax. American sociologist Robert printed the smugglers\u2019 names Merton theorized that when and promised a royal pardon in individuals cannot achieve return for information on them.","ORGANIZED CRIME 137 See also: Bonnie and Clyde 26\u201329 \u25a0 The Beer Wars 152\u201353 Shoemaker Chater and revenue officer Galley are kidnapped, tied to a horse, and flogged by members of the Hawkhurst Gang before their brutal murder. giving them access to cheaper (3,000 lb) of tea. A \u00a3200 (\u00a330,000) abducted Chater and customs goods. However, this changed in reward was offered for the capture officer William Galley from the October 1747, when the smugglers of the smugglers, and former soldier White Hart Inn near Rowlands sought to recover \u00a3500 (about William Sturt formed the Goudhurst Castle, where the pair had stopped \u00a370,000 today) worth of contraband Militia to stand up to the gang. for refreshment on their way to tea, spirits, and coffee by attacking Chichester. Tying the men to a the custom house in Poole, Dorset, No one came forward to horse, the smugglers took them to where the goods were held. incriminate the smugglers. The the Red Lion Inn at Rake and into following year, however, a comment nearby fields. They murdered them The gang had been smuggling made by Fordingbridge shoemaker in cold blood, burying Galley alive the goods from Guernsey to Daniel Chater, who was acquainted and throwing Chater headfirst Christchurch aboard The Three with one of the gang, led to the down a well. Brothers when their ship was arrest and imprisonment of John intercepted by the Swift, a revenue \u201cDimer\u201d Diamond. Chater had Final retribution vessel commanded by Captain been given a small bag of tea by The gruesome violence used William Johnson. Although the Diamond as the gang passed against Galley and Chater turned gang evaded capture by escaping through the town of Fordingbridge, public opinion overwhelmingly in a rowing boat, the goods were drawing a large crowd of onlookers. against the smugglers. The confiscated and taken to Poole. Proud to be singled out by this ringleaders were arrested, tried, gesture, Chater had bragged to and found guilty of raiding the Determined to recover their neighbours about his friendship custom house in Poole. On merchandise, in the early hours of with Diamond. 26 April 1749, Kingsmill and 8 October, gang leader Thomas three of his associates were Kingsmill and 30 armed men broke Diamond was subsequently executed by hanging at Tyburn into Poole Custom House and arrested and plans were made gallows in London. Kingsmill\u2019s absconded with more than 1,500 kg to take Chater to the court at corpse was hung in chains at Chichester to testify against Goudhurst \u2013 a town he had once They are so immensely rich the smuggler. threatened to burn to the ground that they bribe ye private for turning against him. \u25a0 men\u2026 [who] at this time Alerted to the impending trial, harbour the outlawed persons fellow gang members William in their houses and are the Jackson and William Carter support of the whole affair. Mr Pelham","IN SICILY THIEVESTHERE IS A SECT OF THE SICILIAN MAFIA, MID-1800s\u2013","","140 THE SICILIAN MAFIA IN CONTEXT 19th-century mafiosi exchange fire My name is Mori and I will with the carabinieri in the town of Vita make people die! Crime must LOCATION in the province of Trapani in West vanish just as this dust carried Sicily, Italy Sicily, one of the region\u2019s six towns away by the wind vanishes! with a strong Mafia presence. THEME Cesare Mori Crime families Failed investigations Dr Galati of Palermo \u2013 the transported the goods. A member BEFORE capital of Sicily and the Mafia\u2019s of the Italian parliament, Diego c.1800 The Camorra, a epicentre \u2013 was driven from his Tajani, asserted that the Sicilian confederation of criminal citrus farm by this type of racket. Mafia was not intrinsically deadly families, emerges in the Although he complained to the and invincible; rather, it was its Kingdom of Naples; eventually, police, they did nothing about it. ability to collaborate with and it controls the region\u2019s milk, This convinced the doctor that the embed itself in local governments coffee, and fish industries. investigators were working in that gave the Mafia great power. tandem with his harassers. In 1874, AFTER Dr Galati abandoned his business In August 1875, Galati 1850s \u2019Ndr\u00e0ngheta forms in and moved his family to Naples. submitted the first known report Calabria, southern Italy. By the of \u201cMafia\u201d activities in Sicily to the late 1990s, it has become the Galati had learned that an Minister of the Interior in Rome, most powerful crime syndicate influential gangster named Antonio noting that although the population in Italy. Its activities include Giammona, who was based in the of Uditore was 800, there had been extortion, money laundering, village of Uditore, was running 23 murders in 1874 alone. Although and drug trafficking. protection rackets to extort money nothing was done to help Galati, from the owners of western Sicily\u2019s his memorandum forced the Late 19th century The lemon groves. His goal was to national government to look at American Mafia emerges develop a monopoly on the fruit. the growing problem in the south. among Italian immigrant Giammona\u2019s influence not only families in New York\u2019s East extended to the police and local From the 1800s to the end of Harlem, the Lower East Side, politicians but also to the cart World War I, government officials and Brooklyn. drivers and dock workers who and scholars conducted further investigations into the Mafia, or T he Mafia has its roots in \u201cCosa Nostra\u201d, often following a the 19th-century orange high-profile murder or a spate of and lemon groves of killings. Although individual western Sicily. Citrus fruits were mafiosi (members of the Mafia) a particularly lucrative commodity were indicted, the organization was during this period, and if the yield never successfully systematically was good, the owner of a Sicilian pursued or prosecuted. Meanwhile, lemon grove could expect to turn the Mafia continued to conspire a substantial profit. Unfortunately, with municipal governments and lemon trees were vulnerable to police to exercise a subtle, temporary water shortages \u2013 profitable, and coercive influence something all too common in Sicily. on Sicilian life. The potential to reap significant profits combined with the fruit\u2019s precariousness gave rise to a particularly Sicilian form of crime: citrus fruit protection rackets.","ORGANIZED CRIME 141 See also: The Triads 146\u201349 \u25a0 The Beer Wars 152\u201353 \u25a0 The Yakuza 154\u201359 Fascist enforcers The most successful efforts to quash the Sicilian Mafia were initiated in 1925 by Cesare Mori, a prefect of Palermo operating under the Fascist government of Benito Mussolini. His tactics were simple \u2013 the use of authoritarian power in conjunction with strong- arm tactics. Mori, who did not believe that the Mafia was a unified structure, set up an \u201cinterprovincial\u201d anti-Mafia police force and arrested 11,000 Sicilians, including many mafiosi and bandits but also innocent civilians. He processed them through mass trials, which he concealed from the press. Eventually, Mussolini could proclaim to the nation that organized crime had been crushed in Italy. During this time, approximately 500 mafiosi fled to the US, where they established the Sicilian mob in America. The Allied invasion of Sicily in 1943 inadvertently restored the Mafia to power. When the fascist government was overthrown, a power vacuum ensued, particularly at municipal levels. This allowed the Mafia to step back into the positions they had occupied before Mussolini\u2019s rise. Resolving disputes disputes among families and An Italian police handout of nine During a 1957 trip to Sicily, individuals, to determine suspected Mafia members accused of New York mobster Joe Bonanno punishment for breaching the rules drug trafficking in Sicily. The handout suggested that their European of the Mafia, and to control the was part of a 2008 international counterparts establish a committee use of violence against members operation codenamed \u201cOld Bridge\u201d, to resolve disputes. Prominent of government, lawyers, and \u276f\u276f which targeted 50 suspects in New mafiosi Tommaso Buscetta, York and 30 in Sicily. Gaetano Badalamenti, and Salvatore Greco began drafting the rules, and the following year, the first Sicilian Mafia Commission was formed in Palermo. The commission intended to resolve","142 THE SICILIAN MAFIA journalists, as these murders collusion between former mayor of We are at war\u2026 The mafiosi brought unwanted attention to Palermo, Salvo Lima, and the Cosa are firing with machine Sicilian organized crime as a whole. Nostra \u2013 the political will to act on guns and TNT. We can If a boss wished to order a person the final report was lacking. The only hit back with words. killed, it would have to be approved Sicilian Mafia temporarily dissolved There are thousands by the commission. their commission and hundreds of of them and only a few prominent members fled to other hundred of us. Warring mafiosi countries to avoid prosecution. For approximately 20 years the Anonymous policeman commission wielded little power, Beginning in the late 1970s, largely because regional bosses mafiosi from the village of Corleone Palermo\u2019s chief prosecutor were were accustomed to operating made a successful bid for killed in Mafia hits. In 1982, the independently. The commission dominance of the Cosa Nostra in murder of Pio La Torre, an active was unable to prevent the so-called what would become known as the member of the Anti-Mafia First Mafia War which erupted in Second Mafia War (1981\u201383). Led Commission, prompted a law that 1961 between the Greco and the by Salvatore \u201cTot\u00f2\u201d Riina, the made it illegal to belong to a La Barbera families, claiming 68 Corleonesi successfully took over \u201cMafia-type association\u201d. Later that victims. The war culminated in the the largely ineffective Sicilian Mafia same year, General Carlo Alberto, a infamous 1963 Ciaculli massacre, Commission and transformed it national hero, anti-Mafia advocate, in which seven police and military into a tool for exercising absolute and prefect of Palermo, was officers were killed while they tried power. Although uneducated, the murdered alongside his wife when unsuccessfully to defuse a car Corleonesi more than made up for a dozen mafiosi sealed off the road bomb intended for Salvatore Greco. this deficit with deviousness and on which they were travelling and The fallout for the Cosa Nostra violence. Predictably, their rise emptied their machine guns into was significant. Within 10 weeks, was accompanied by a dramatic his car. His funeral was broadcast 1,200 mafiosi were arrested. spike in the murder of public to weeping eyes all across Italy. figures, a departure from Cosa The government established Nostra\u2019s modus operandi. Legal offensive an Anti-Mafia Commission headed For the first time, the Italian public by Cesare Terranova, Palermo\u2019s In 1979, four establishment and the government decided to act former chief investigative figures including Terranova were to break the Cosa Nostra\u2019s deadly prosecutor. Ultimately, although killed in separate incidents. The grip on Sicily. A new law allowed the investigation made many following year, the captain of the government to confiscate the significant discoveries \u2013 such as Monreale\u2019s carabinieri, the wealth of convicts found to be president of the Sicilian region, and mafiosi, hindering their ability to Losing face exercise power while in prison. what the appropriate response In Mafia nomenclature, sfregio should be. If he chooses not In July 1983, a car bomb (literally translating as \u201cscar\u201d to respond, then he can be detonated in Palermo, killing chief or \u201cinsult\u201d) refers to a wound perceived as being weak and investigating magistrate Rocco resulting in disfigurement, dominated by his aggressor. Chinnici, his two bodyguards, either in the form of a physical The exchange of insults may and an innocent bystander. The scar or through humiliation escalate to deadly levels. violence spurred Antonino which causes the recipient to \u201close face\u201d. One example of this is the 1897 executions of Olivuzza A common form of sfregio family members Vincenzo Lo is the vandalism or theft of Porto and Giuseppe Caruso, property owned or under the which were sanctioned by the protection of another mafioso. heads of the eight families. They This forces the victim to decide had unanimously agreed that whether or not he should the two men had inflicted an respond to the injury and, if so, ill-conceived insult upon the leadership of their clan.","ORGANIZED CRIME 143 Caponnetto, a career magistrate providing information that would Sicilian police inspect the aftermath who was planning to retire, to finally prove the Cosa Nostra was of the car bomb attack that killed step in as Chinnici\u2019s replacement. a single unified organization. Judge Paulo Borsellino and his police Caponnetto developed a team of Caponnetto declared that the entire guards near the judge\u2019s mother\u2019s house anti-Mafia magistrates. Going on Mafia, rather than individual in Palermo, Sicily, on 20 July 1992. the offensive, he announced members or groups, was going on that the authorities were now trial. Caponnetto\u2019s team went on to squad member, Antonino Cassar\u00e0, working with ex-Mafia informant issue 366 arrest warrants on the was riddled with 200 bullets while Tommaso Buscetta, who was strength of Buscetta\u2019s testimony. his wife looked on in horror. When further witnesses came I obeyed orders, and I knew forward, more arrests were made. The sheer scale of the violence that by strangling a little boy I triggered what was known as the Fierce response \u201cPalermo Spring\u201d. Students held would make a career for Rather than toning down their anti-Mafia demonstrations in myself. I was walking on air. violence, the Corleonesi-controlled Palermo, an influential clergyman Mafia escalated it. As Italy had yet spoke openly of the \u201cMafia\u201d for the Salvatore Cancemi to develop an effective witness first time and shamed the national protection programme, the Cosa government for not addressing the Nostra gunned down informant problem, as did the mayor of Leonardo Vitale, Tomasso Palermo. Meanwhile, the anti-Mafia Buscetta\u2019s brother-in-law. Flying magistrates had accrued enough squad officer Beppe Montana, evidence to open a maxi-trial on responsible for tracking down Mafia 10 February 1986, in which 474 fugitives, was killed in July 1985. mafiosi and their allies were to face The next month, another flying charges. On 16 December 1987, \u276f\u276f","144 THE SICILIAN MAFIA Mafia chain of command Boss (king): Also known as Consigliere (rook): A trusted a \u201cDon\u201d, he is in charge of advisor to the boss. He can the organization. represent the boss in Underboss (queen): The boss\u2019s important meetings. second in command. He is usually a family member who takes over if Caporegime (bishop): Usually the boss is killed or incapacitated. shortened to \u201ccapo\u201d (head), he leads a crew of soldiers. There Soldier (knight): The may be anywhere between two lowest level of mobster and 20 in a family. attached to a gang. He is required to take Associate (pawn): An omert\u00e0, the code of individual who has not silence, and works yet become a \u201cmade\u201d in a small group. man, but works for a Mafia crew under the supervision of a soldier. 360 of the accused were found No one should provide of Appeal, ruled that some of the guilty and sentenced to a total of the police or judiciary with maxi-trial convictions should be 2,665 years in jail. This was only facts that help uncover any overturned based on technicalities. the beginning: Caponnetto\u2019s team had already prepared for two crime whatsoever. In 1991, Giovanni Falcone was more maxi-trials, and thanks to Niccol\u00f2 Turrisi Colonna appointed Director of Penal Affairs new information from informant in the Ministry of Justice. He Antonio Calderone, was poised to against his incompetence but were united anti-Mafia police from trigger another. In March 1988, ignored. To make matters worse, various organizations in a single 160 arrests were made. The Mafia the anti-Mafia mayor of Palermo, entity. New legislation allowed responded by murdering Palermo Leoluca Orlando, lost his position in phone taps on Mafia members, appeal court judge Antonio Saetta 1990. The bleakest moment came combated money laundering, and and his son. when Judge Corrado Carnevale, dissolved municipal councils presiding over the Palermo Court infiltrated by organized crime. Administrative setbacks When Caponnetto stepped down at Again, the Mafia answered the end of 1987, he was succeeded the threat with violence. In by the inexperienced Anthony August 1991, they contracted the Meli. He made countless clumsy \u2019Ndr\u00e0ngheta to murder Antonio decisions which endangered the Scopelliti, a Court of Cassation entire project. Judges Paolo prosecutor. Palermo businessman Borsellino and Giovanni Falcone Libero Grassi, who campaigned of the anti-Mafia team spoke out against extortion rackets, was the victim of a similar homicide three weeks later.","ORGANIZED CRIME 145 Wanted posters for the Mafia\u2019s \u201cboss of bosses\u201d Bernardo Provenzano appeared in Palermo in 2005. They were based on a 1959 mugshot \u2013 the only photo of him then in existence. New laws Mafiosi informants Provenzano wielded very little On 31 January 1992, the Italian This law was passed at the perfect power, and the organization Supreme Court overturned Judge time. In the wake of the Court of decentralized. Local Mafia leaders Carnevale\u2019s verdict, marking an Cassation\u2019s verdict, many mafiosi returned to small-time protection unprecedented victory for the anti- became informants. Based upon rackets, which were less profitable Mafia cause in Italy. However, it information provided by a captured but allowed them to operate in drew a furious response from the mafioso, Riina was caught in 1993. relative secrecy. Corleonesi. On 23 May 1992, Leadership of the Mafia passed to Falcone and his wife were Leoluca Bagarella \u2013 who was, in On 11 April 2006, after an murdered in a car bomb attack. turn, arrested in 1995 \u2013 and then extensive manhunt, Provenzano Paolo Borsellino and five members to Bernardo Provenzano. was finally captured. In the years of his escort were murdered two since, the Mafia has laid low, months later by another bomb. The anti-Mafia efforts of the unlikely ever to be as powerful as 1980s and early 1990s practically they were during the second half At this point, the government castrated the Cosa Nostra. of the 20th century. \u25a0 finally decided that enough was enough. They sent 7,000 soldiers to Sicily to take charge of day-to- day police duties, which freed up local forces to hunt down Riina and his men. The police were granted legal powers to infiltrate the Mafia and set up sting operations involving fake drug deals and money laundering. A significant new law also helped to protect informants by enabling them to change their identities. Giovanni Falcone A self-described \u201cservant of the Sicilians hung bedsheets from state in the land of infidels,\u201d their windows emblazoned with Judge Giovanni Falcone, more \u201cFalcone lives\u201d, and a tree than any other politician before outside his house was quickly him, fearlessly and dutifully set transformed into a shrine about crushing the Sicilian Mafia. adorned with photographs, flowers, and messages to the Through his conversations statesman who had exposed with informant Tomasso Buscetta, the Mafia. he became the first Italian government official to learn about Palermo\u2019s airport was even and document the structure of renamed Falcone\u2013Borsellino the Sicilian Mafia. When Falcone Airport in honour of Falcone and was targeted and killed by a his friend Paolo Borsellino, a Mafia bomb on 23 May 1992, fellow anti-Mafia judge who along with his wife and three was murdered in a similar car police officers, he was hailed as a bombing incident in Palermo hero to the Italian people. just two months after Falcone.","146 IN CONTEXT DTHOEAYNDYATRHEING LOCATION China and worldwide THE TRIADS, MID-1800s\u2013 THEME International crime syndicates BEFORE 1761\u20131911 The Heaven and Earth Society is established in southeastern China as a secret sect; after 1911, it evolves into the Triads. AFTER 1850s The \u201cTong\u201d brotherhood originates among Chinese expatriates in the US, and acquires a reputation for trafficking women. 1990 The Asian-American street gang Jackson Street Boys forms in San Francisco, US, and becomes involved in extortion, racketeering, and narcotics trafficking. A t the top-tier of the Chinese criminal hierarchy are the Triad societies, with 250,000 members worldwide and representation in Macau, Hong Kong, Taiwan, southeast Asia, and in Chinatowns worldwide. Triad members range from low-level thugs to those who occupy positions in politics and the criminal justice system. The three most powerful Triad societies are the Sun Yee On, 14K, and Wo Shing Wo. Founded by Heung Chin in 1919 in Hong Kong, the Sun Yee On is the largest, with approximately 55,000 members. Its operations extend to southeast Asia, Australia, Europe, and North","ORGANIZED CRIME 147 See also: The Sicilian Mafia 138\u201345 \u25a0 The Yakuza 154\u201359 \u25a0 The Medell\u00edn Cartel 166\u201367 The arrest of Samson Tan, a Chinese chemist, by Philippine police in 2008. Tan was charged with producing methamphetamine for Hong Kong-based Triad gangs. and Central America. Since the late ended Qing rule and led to the ranks are known as \u201c49 ers\u201d. A 2000s, it has acquired a reputation establishment of the Republic of special number \u2013 25 \u2013 is used to for trafficking methamphetamine China. After this time, the Triads denote spies, informants, or (crystal meth), and for supplying found new purpose and gained undercover police agents. Mexican drug cartels with the raw significant wealth through illegal materials needed to produce it. gambling and prostitution. The traditional initiation ceremony for new recruits can last Sun Yee On\u2019s main rivals are up to three days. It comprises 18 the 14K. Founded in Guangzhou in steps and historically involves 1945, the 14K moved its base to drinking the blood of members and Hong Kong in 1949 and also formed sacrificing a chicken. Modern a major branch in Macau during the ceremonies are much shorter with \u276f\u276f 1970s. It is the second largest Triad, with 25,000 members. I like to describe Chinese organized crime as the flu The Wo Shing Wo emerged from Toronto\u2019s Chinatown in 1930 virus because they\u2019re before it transferred its operations constantly mutating. to Hong Kong in 1931; it also has Kingman Wong a strong presence in London\u2019s Chinatown. The Wo Shing Wo is allegedly the top narcotics trafficker in Hong Kong. Early origins Triad hierarchy Most historians trace the origins of Triads are devoted to the ancient the Triads to the Heaven and Earth rituals and symbols of their Society \u2013 a secretive fraternal founders. As such, they rely on organization founded in 1761 in traditional Chinese numerology southeastern China. Also known as corresponding to the I Ching to the Hung Clan, the sect regarded structure their organization. the ruling Qing Dynasty, based in The leader of a Triad, who makes Manchuria, as \u201cforeigners\u201d and the executive decisions, is known plotted their overthrow. Among as the Dragon Head with the their other activities during the number designation 489. He is 18th century, the Hung Clan assisted by one or more office- conspired with foreign merchants bearing ranks, designated with to import opium. The English word the number 438, which include his \u201cTriad\u201d first appeared in reference Deputy and the Incense Master \u2013 to the triangular motifs on Hung usually a senior official in terms of Clan banners. rank and age. The lowest officer ranks \u2013 415, 426, and 432 \u2013 include The Triads are believed to have Enforcers, who work as military been a driving force in the Xinhai commanders. Non-office-bearing Revolution of 1911. This finally","148 THE TRIADS The Rank Structure of a Triad Society 489: Dragon Head (\u201cMountain Master\u201d) The boss of the Triad 438: Deputy (\u201cDeputy Mountain Master\u201d) The underboss, who leads the Triad if the Dragon Head is incapacitated 438: Ceremonies Officer (\u201cIncense Master\u201d) 438: Operations Officer (\u201cVanguard\u201d) Organizes new recruits and the Assistant to the Incense Master induction ceremony 415: Administrator 426: Enforcer (\u201cRed Pole\u201d) 432: Liaison Officer (\u201cWhite Paper Fan\u201d) A military commander (\u201cStraw Sandal\u201d) Advisor on financial and overseeing a group of 49ers A coordinator between business matters and Blue Lanterns different units 49: Ordinary members (\u201c49 ers\u201d) Uninitiated members (\u201cBlue Lanterns\u201d) After passing the initation ceremony, a Blue Individuals not yet regarded as Lantern becomes a \u201csoldier\u201d full members have no number designation but are connected to a Triad gang the chicken sacrifice omitted and stability. This led to a surge in Du became the leader of the recruits required to suck only their Triad power from the 1920s to the 100,000 member Green Gang, a own blood from their finger. 1940s. Their hub during this period secret society originally formed in was Shanghai, where the gangster the early 1900s by grain shippers The rise of the Triads Du Yuesheng secured the city\u2019s in Shanghai. The society soon In 1916, following the death of the opium trade by forcing \u201cprotection\u201d became corrupt and dominated Chinese Republic\u2019s first president, on local opium traders. Du bribed criminal activity in the city, Yuan Shikai, China split into a land French authorities $20 million (\u00a3180 especially in the opium trade. of feuding warlords. In the ensuing million today), and freely smuggled chaos, the Chinese people turned opium into Shanghai through the By 1923, the Kuomintang \u2013 the to the Triads for protection and French Concession area. Chinese nationalist republican army \u2013 allied with the Communists"]