Mar 25th 2010
Worries that organised crime is tightening its grip
IT WAS long an island of tranquillity surrounded by countries racked by
guerrillas and drug trafficking. But whereas violence has declined in
Colombia and Peru, Ecuador has acquired a reputation as a new capital
of financial crime. Last month the Financial Action Task Force, an
inter-governmental body, declared that Ecuador has not shown "a clear
high-level political commitment" to address its "strategic
deficiencies" in fighting money laundering and the financing of
terrorism. That put it on a list with the likes of North Korea, Iran
and Turkmenistan.
Others have reached similar conclusions. Francisco Huerta, an
experienced politician who led a government-commissioned investigation
into a Colombian raid on a FARC guerrilla camp just inside Ecuador in
2008, said that the country risks becoming a "narco-democracy".
Tourists, residents and club owners complain of rampant crime in La
Mariscal, Quito's nightlife district where some bouncers are now
Russian and many of the customers African and South Asian. Ecuador has
become particularly attractive for money launderers because of its
combination of weak laws and use of the American dollar as its
currency. An American think-tank, the International Assessment and
Strategy Centre, reckons that it has become a hub for Russian and
Chinese crime syndicates.
The left-wing government of Rafael Correa rejects all of this as
factually wrong or ideologically inspired, or both. "There are no
Russian or Chinese mafias operating here," insists Miguel Carvajal, the
security minister. But he admits that drugs from Peru and Colombia do
pass through. In response the army and the police have patrolled more.
They seized more than 73 tonnes of drugs (mostly cocaine) last year,
more than double the figure for the previous year. Surveillance of the
northern border, almost non-existent before the Colombian bombing raid
on the FARC camp, has been stepped up. Mr Correa has sharply increased
spending on the police.
But much of the extra money has gone on weaponry rather than urgently
needed training, says Fredy Rivera, who was in charge of domestic
security at the Interior Ministry. He is one of several officials who
recently resigned from a ministry in disarray. An American-supported
project to eavesdrop on suspected drug traffickers has been beset with
technical problems. An organised-crime unit has been idled by a dispute
with the United States, which provides the bulk of its funding, over
the control of lie detectors.
The criticism coming from the Financial Action Task Force was more
especially damaging. The foreign minister, Ricardo Patino, says the
government does not recognise this body's right to "dictate policy".
Its recommendations are indeed not binding on governments. But its
findings are already making it even harder for local banks and
companies to secure foreign loans. That problem began with Mr Correa's
default on $3.2 billion in foreign debt in 2008. Ecuadoreans have
difficulties using their credit cards overseas.
Ecuador's inclusion on the task force's blacklist seems to be mainly
because of its new ties to Iran. The Central Bank has dealings with
Iranian banks suspected of financing the country's nuclear programme,
despite the objections of the bank's own compliance officer. It has
received a $40m deposit from Iran's Central Bank, according to a former
central-bank president.
Mr Correa retorted that the government would ignore the task force's
findings. But his attorney-general said that it would seek to overturn
them. Mr Carvajal says that Ecuador already complies with 60% of the
recommendations and that officials are quietly drafting a bill to
outlaw the financing of terrorism. Not for the first time, Mr Correa's
government seems to be pointing in several directions at once.
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