Colombia loses $1.5 billion a year to untaxed, smuggled goods!


rum runners Colombia

rum runners Colombia

According to El Tiempo, liquor sellers in upper-class neighbourhoods in Medellin are forced to buy their product from a faction of the Rastrojos, who peddle diluted alcohol. “They come by Wednesday, Thursday and Friday distributing the false alcohol,” the article quotes one unnamed “high-level” government source as saying. “Monday and Tuesday they come back and pick up the money.”

A 750ml bottle of the popular anise-flavoured alcoholic drink known as aguardiente should legally sell for 22,000 pesos (about $11). Bootleg versions sell on the street, reportedly distributed by criminal gangs, can sell for as little as 4,000 pesos (about $2).

Authorities have previously expressed fears that such contraband activity — traditionally managed by extended families based along the coast or the frontier, who have been involved in smuggling for decades — is increasingly controlled by the BACRIMs. The profits are significant: according to customs and tax agency DIAN, Colombia loses $1.5 billion a year to untaxed, smuggled goods. This includes a loss of $300 million for bootleg alcohol and another $300 million for the contraband sale of cigarettes, the DIAN says.

El Tiempo reports that the bootleg alcohol business in Colombia follows three business models: the first is the sale of alcohol smuggled from Venezuela, either through the departments of La Guajira or Norte de Santander. The second is the fabrication of adulterated liquor, like the poisonous brew which killed at least 51 people in Ecuador over the course of several weeks this year. In Colombia, police have found primitive distilleries where bootleggers use rusty nails to give the Antioquia rum its characteristic “reddish” colour, as well as generous use of methanol.

The third business model reportedly pursued by criminal gangs is the recycling of alcohol containers to rebottle adulterated booze. “There’s basically something like a mafia around the recycling of these containers,” one unnamed ex-congressman told El Tiempo. A recycled bottle of whiskey or rum can go for 6,000 pesos ($3), more if the official label is still intact and in good condition.

Urban centres like Medellin are filled with families who make their living perusing through trash looking for glass recyclables. A typical daily income for such families can be as little as 12,000 pesos ($6) a day, and that’s without considering the daily cost of renting the cart used to haul the collected trash: 5,000 pesos ($2.50) a day. Considering the number of families that criminal enterprises could tax to use trash-collecting carts — in return for doing the dirty work of collecting the city’s abandoned alcohol bottles — this could in fact present an attractive source of income for the Medellin gangs who make up the Oficina de Envigado.

Contraband liquor running has been present in Colombia since before the 19th century. Sailors, merchants and immigrant families along the coast made use of smuggling routes along Colombia’s thousands of natural sea ports. Many one the most-travelled contraband routes – the desert town Maicao, which borders Venezuela; and the Atrato River, which flows into the Darien Gulf by Panama – are the same ones adopted by drug traffickers today. Liquor, cigarettes, salt and textiles were once the primary goods smuggled between Panama, Venezuela and Ecuador. Nowadays, Chinese knock-offs of toys, medicines and brand name fashion enter through Colombia’s Pacific ports, while subsidized gasoline from Venezuela enters from the eastern border towns. Ecuador sees a significant contraband trade of fertilizer and contraband oil — materials used in drug processing and for making explosives.

Far more than alcohol, the contraband gas trade has proved by far Colombia’s most widespread activity. Historically, it is also the trade that has most attracted the attention of illegal armed groups, beginning with the United Self-Defence Forces of Colombia (AUC). Rodrigo Tovar, alias “Jorge 40,” commander of the AUC’s northern bloc, killed a notorious contraband runner, Mario Cotes, in 2002, in order to gain control of smuggling hotspot La Guajira.

As Colombia’s northernmost peninsula which boasts hundreds of miles of coastline and easy access to Venezuela, La Guajira, along with its landlocked neighbour Cesar, is the capital of Colombia’s contraband gas trade. Controlling territory in La Guajira was so important that soon other paramilitary warlords followed Tovar’s example. Another AUC commander, alias “Pablo,” befriended an indigenous contraband runner in this department, alias “Chema Bala,” who enabled the entry of Pablo’s army into this department — all for the sake of gaining access to drug-running (and contraband routes).

Given the history of the AUC’s involvement in the gas trade, it is no wonder that in Colombia’s official political discourse, contraband is often mentioned in the same breath as “drug trafficking” and “terrorism.” In one recent speech about proposed reforms to Colombia’s customs agency, President Juan Manuel Santos stated that contraband is “linked to other crimes like money laundering and narco-trafficking, which finance terrorism and criminal networks.” This could explain why the government has recently made moves to crack down on contraband. A new customs agency, set to become active November 1, reportedly has the mandate of slashing smuggling rates from 14 per cent of all imports down to six.

Advertisements