this illegal mining is in S mainland but govt applies stricter permits nationwide to confront illegal mining
The finances of Mexico’s Knights Templar drugs cartel
Mexico's geography in the Press No Responses »
Feb 272014
A series of press reports over the past six months has shed interesting light on the variety of ways in which the Knights Templar cartel raises funding and manages its finances. The Knights Templar stronghold is the city of Apatzingan in Michoacán, but the cartel now operates in several states, including Guerrero.
Raising money:
1. Citrus and avocado production and exports
In January 2013, Alberto Galindo, spokesman for the Plan de Ayala National Movement, one of the largest organizations of Mexican farmers, claimed in a press interview that Mexico’s avocado farmers “have data that prove that 225 million pesos [17 million dollars] is the amount extorted by the drug cartels in Michoacán” each year. Citrus growers are also subject to regular extortion by the Knights Templar. We reported on avocado “protection money” back in 2012, and on the plight of citrus farmers in 2011.
2. Iron ore mining and exports
The Knights Templar levy “passage fees” on every ton of iron ore leaving mines in Michoacán for the port of Lázaro Cárdenas. In addition, they are alleged to have confiscated shipments of iron ore and then exported it themselves. They are also alleged to have funded illegal mining operations where iron ore is mined without the requisite environmental permits.
In response, the Mexican government has tightened the regulations for iron ore exports, which now require exporters to demonstrate that all ore being shipped has been mined legally. The main market for Michoacán iron ore is China. It is no coincidence that ore exports to China have quadrupled in the past 5 years. The federal government also ordered the military to take over the administration of the port of Lázaro Cárdenas to put an end to corrupt practices and sever this major source of funding for the Knights Templar.
The discussion related to cartel financing via iron ore exports has implicated several transnational firms who are said to have paid the Knights Templar to allow iron ore shipments from their mines to the port. For example, Minera del Norte, is said to have paid the Knights Templar $2 dollars/ton to move 10,000 tons of iron ore each week from its four mines in the Tepacaltepec region. Michoacán supplies about 25% of all the iron ore mined in Mexico, and about 1 million ha (almost 20% of the state) have been given in concession to transnational mining firms such as Mittal Steel, Ternium (Italy-Argenina), Minera del Norte (a subsidiary of AHMSA) and Pacific Coast Minerals.
3. Port traffic and operations
A levy of up to 10% on goods passing through the port of Lázaro Cárdenas.
4. Miscellaneous money laundering activities
Purchase and sale of property, vehicles, cattle, textiles (imported from China and sold in Guanajuato after being relabelled with major brand names), truck tires, etc.
5. Extortion payments
Extortion payments received from truck drivers, gas stations, grocery stores, bars, restaurants, pharmacies, car lots, and even direct from municipalities (in exchange for “permitting” municipal works related to drainage, street lighting, paving). The rise of self defense groups was partially due to citizens’ outrage at the various extortion payments demanded by the Knights Templar.
6. Shipments and sales of drugs (as far away as California and Texas), many of them supplied via the port of Lázaro Cárdenas.
Summary of Knights Templar income from illegal activities [dollars a month]
drugs, weapons, kidnapping, pirated items, vehicle thefts, etc: $2.8 million
extortion rackets, $1 million
extortion of municipalities, $1.1 million
investments in real estate, vehicles, textiles, electronic items, etc., $1.3 million
The port of Lázaro Cárdenas was key to the Knights Templar financial plans, and effectively served as the cartel’s “gigantic central bank”, capable of supplying an endless stream of funds to the cartel. It remains to be seen how effectively the government decision to put the military in charge of administering the port will destroy the ability of the Knights Templar to raise funds to support their illegal activities.
Where does all this money go?
Part of it goes on bribing officials. According to an investigation published in Milenio, a national daily, the Knights Templar cartel is believed to spend $2 million a month in bribing officials in the state of Michoacán, and a further $400,000 a month in other states. The Milenio articles (here and here) were based on an official intelligence report that their journalists were given access to for a few hours.
Sample payments made to officials range from up to $26,000 a month to a federal police commander in an important city to $19,000 a month to officials in the prosecutor’s office and $18,000 a month to a state police commander. Officials in smaller cities and local administrations are paid less.
Recipients of drug cartel money also include journalists, with some print journalists receiving $3,000 a month and payments of about $2000 a month to a TV executive.
Related posts (chronological order):
The geography of Mexico’s drug trade: an index page
Mexico’s drug cartels and their areas of operation, a 2014 update
The geography of Mexico’s drug trade: new cartels involved in turf wars (Feb 2013)
How much drugs money is laundered in Mexico each year? (Apr 2012)
How does money laundering work, and what is being done about it? (Mar 2012)
Mexico’s drug cartels and their shifting areas of operation, a 2012 update (Feb 2012)
Geographic trends in Mexico’s drug violence (Feb 2011)
The geography of drug trafficking in Mexico (Apr 2010)
The finances of Mexico’s Knights Templar drugs cartel
Mexico's geography in the Press No Responses »
Feb 272014
A series of press reports over the past six months has shed interesting light on the variety of ways in which the Knights Templar cartel raises funding and manages its finances. The Knights Templar stronghold is the city of Apatzingan in Michoacán, but the cartel now operates in several states, including Guerrero.
Raising money:
1. Citrus and avocado production and exports
In January 2013, Alberto Galindo, spokesman for the Plan de Ayala National Movement, one of the largest organizations of Mexican farmers, claimed in a press interview that Mexico’s avocado farmers “have data that prove that 225 million pesos [17 million dollars] is the amount extorted by the drug cartels in Michoacán” each year. Citrus growers are also subject to regular extortion by the Knights Templar. We reported on avocado “protection money” back in 2012, and on the plight of citrus farmers in 2011.
2. Iron ore mining and exports
The Knights Templar levy “passage fees” on every ton of iron ore leaving mines in Michoacán for the port of Lázaro Cárdenas. In addition, they are alleged to have confiscated shipments of iron ore and then exported it themselves. They are also alleged to have funded illegal mining operations where iron ore is mined without the requisite environmental permits.
In response, the Mexican government has tightened the regulations for iron ore exports, which now require exporters to demonstrate that all ore being shipped has been mined legally. The main market for Michoacán iron ore is China. It is no coincidence that ore exports to China have quadrupled in the past 5 years. The federal government also ordered the military to take over the administration of the port of Lázaro Cárdenas to put an end to corrupt practices and sever this major source of funding for the Knights Templar.
The discussion related to cartel financing via iron ore exports has implicated several transnational firms who are said to have paid the Knights Templar to allow iron ore shipments from their mines to the port. For example, Minera del Norte, is said to have paid the Knights Templar $2 dollars/ton to move 10,000 tons of iron ore each week from its four mines in the Tepacaltepec region. Michoacán supplies about 25% of all the iron ore mined in Mexico, and about 1 million ha (almost 20% of the state) have been given in concession to transnational mining firms such as Mittal Steel, Ternium (Italy-Argenina), Minera del Norte (a subsidiary of AHMSA) and Pacific Coast Minerals.
3. Port traffic and operations
A levy of up to 10% on goods passing through the port of Lázaro Cárdenas.
4. Miscellaneous money laundering activities
Purchase and sale of property, vehicles, cattle, textiles (imported from China and sold in Guanajuato after being relabelled with major brand names), truck tires, etc.
5. Extortion payments
Extortion payments received from truck drivers, gas stations, grocery stores, bars, restaurants, pharmacies, car lots, and even direct from municipalities (in exchange for “permitting” municipal works related to drainage, street lighting, paving). The rise of self defense groups was partially due to citizens’ outrage at the various extortion payments demanded by the Knights Templar.
6. Shipments and sales of drugs (as far away as California and Texas), many of them supplied via the port of Lázaro Cárdenas.
Summary of Knights Templar income from illegal activities [dollars a month]
drugs, weapons, kidnapping, pirated items, vehicle thefts, etc: $2.8 million
extortion rackets, $1 million
extortion of municipalities, $1.1 million
investments in real estate, vehicles, textiles, electronic items, etc., $1.3 million
The port of Lázaro Cárdenas was key to the Knights Templar financial plans, and effectively served as the cartel’s “gigantic central bank”, capable of supplying an endless stream of funds to the cartel. It remains to be seen how effectively the government decision to put the military in charge of administering the port will destroy the ability of the Knights Templar to raise funds to support their illegal activities.
Where does all this money go?
Part of it goes on bribing officials. According to an investigation published in Milenio, a national daily, the Knights Templar cartel is believed to spend $2 million a month in bribing officials in the state of Michoacán, and a further $400,000 a month in other states. The Milenio articles (here and here) were based on an official intelligence report that their journalists were given access to for a few hours.
Sample payments made to officials range from up to $26,000 a month to a federal police commander in an important city to $19,000 a month to officials in the prosecutor’s office and $18,000 a month to a state police commander. Officials in smaller cities and local administrations are paid less.
Recipients of drug cartel money also include journalists, with some print journalists receiving $3,000 a month and payments of about $2000 a month to a TV executive.
Related posts (chronological order):
The geography of Mexico’s drug trade: an index page
Mexico’s drug cartels and their areas of operation, a 2014 update
The geography of Mexico’s drug trade: new cartels involved in turf wars (Feb 2013)
How much drugs money is laundered in Mexico each year? (Apr 2012)
How does money laundering work, and what is being done about it? (Mar 2012)
Mexico’s drug cartels and their shifting areas of operation, a 2012 update (Feb 2012)
Geographic trends in Mexico’s drug violence (Feb 2011)
The geography of drug trafficking in Mexico (Apr 2010)
