An Analysis of Economic Crimes in Trinidad and Tobago (Essay)

Analysis of Five Economic Crimes in Trinidad and Tobago

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There are two schools of thought that have spawned distinctly different

definitions of economic crime. The first applies a focused definition

that limits economic crime within parameters that suggest that this

type of crime occurs during the prosecution of legal business

transactions while the second can be considered to take a more

generalist approach to the issue, and defines economic crime in the

broadest terms, encompassing all criminal acts with financial

motivation. The first school of thought is championed by

PricewaterhouseCoopers (PwC), one of the world’s largest accounting

firms. PwC publishes the Global Economic Crime Survey and defines

economic crime, for the purpose of the survey as, “…..the intentional

use of deceit to deprive another of money, property or a legal right”

(PwC 2009). Consequently, PwC tends to limit its examination of

economic crime to an area that could easily be described as “financial

crime” and mainly includes acts such as cyber-crime and fraud. This is

not surprising given PwC’s interest in financial and accounting matters

however, it is too narrow a definition with which to engage in the

examination of the economic crimes that exert effects on the Republic

of Trinidad and Tobago.

The second school of thought defines economic crime as, "..... illegal


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acts committed by an individual or a group of individuals to obtain a

financial or professional advantage. In such crimes, the offender’s

principal motive is economic gain. Cyber-crimes, tax evasion, robbery,

selling of controlled substances, and abuses of economic aid are all

examples of economic crimes" (uslegal.com 2013). This definition is

broad enough to encompass a wide range of criminal activities.

Certainly, most of the criminal activities in which organized and

trans-national criminals in Trinidad and Tobago engage, fall easily

into this definition. At the core of the definition therefore, are the

terms, “illegal acts” and, “economic gain”. An adequate definition

therefore would be that economic crimes are illegal acts that are

committed for the specific purpose of realizing economic gain.

This essay will examine the trends in cocaine trafficking, the

marijuana trade, robberies, money laundering and bribery in the nation

state of Trinidad and Tobago. Further, the essay will attempt to

understand their individual and cumulative effects on Trinidad and

Tobago’s economy. Consequently, while each of the economic crimes

under consideration will first be analyzed singly in order to achieve


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clarity and coherence, an attempt will be made at the end to develop

the relationship between them and to examine their cooperative effect

on the economy of Trinidad and Tobago.

Trinidad and Tobago is a twin island unitary state located in the

southern Caribbean Sea. The islands have very different economic

drivers; Trinidad possesses an industrial base focused on oil and gas

production while Tobago focuses on the service industry with tourism as

its main income earner. For the purposes of this essay however, no

distinction will be made between the two and a reference to Trinidad or

Tobago is synonymous with a reference to the twin-island state.

One of the main challenges that is likely to be encountered during any

academic investigation into the subject of economic crime is the dearth

of statistical data and accurate measurement tools. The very nature of

crime means that information about its commission is seldom forthcoming

(Mejía and Posada 2008). While this presents a significant challenge

to academic inquiry, it does not present an insurmountable one, and

gaps in the data have been spanned by indirect measures, logical

inference and, in some cases, plain common sense (Thoumi 2005). Even

the data on robberies, a crime for which there is an abundance of

statistics in Trinidad, may not reflect accurate figures as the

statistics are based on reported cases only. Certainly, very little is


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known about the extent of money laundering and bribery, and the

trafficking in drugs is the subject of broad estimates, the accuracy of

which is questionable (Reuter and Greenfield 2001, Thoumi 2005). It

is in this environment of uncertainty therefore, that all positivist

dalliances with the analysis of the effects of these crimes on national

economies must take place. This essay, does not profess to be greater

than its predecessors in this regard, as it is saddled with the same

limitations. Its major departure from the norm is its willingness to

accept those limitations and approach the subject without the

encumbrance of vested interest.

Cocaine Trafficking

The cocaine trade is made up, like the trade in most other processed

agricultural commodities, of three stages. The first stage is

production and processing which includes the cultivation of coca leaf

and the processing of the plant material into coca paste and cocaine

hydrochloride. The second stage is the trafficking stage and involves

the logistics of moving the processed product in bulk form from the

country of origin to the consumer countries. Essentially, this stage

is not conceptually different from the supply chain of a legal

business, although the illegal nature of the product affects some of


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the administrative processes and modes of transportation. The final

stage is consumption and includes breaking of bulk for sale by retail

merchants (dealers) and sale to final customers (UNODC 2010). Trinidad

is involved in the trafficking and consumption stages of the cocaine

trade.

The island of Trinidad is situated just seven miles off the coast of

Venezuela, a major cocaine transshipment country for Colombian cocaine.

Consequently, Trinidad is part of the Caribbean route for cocaine

trafficking to North America and Europe (UNODC 2010). An understanding

of Trinidad’s position in the cocaine trade is important to analyzing

the effects of the cocaine trade on the national economy. As Reuter

and Greenfield (2001, 162) explains, “In absolute terms, most of the

value added in the supply chain accrues when drugs are distributed

within consuming countries”. Additionally, it is a longstanding

practice in the cocaine trade to pay for trafficking services in

cocaine rather than cash. As rational actors concerned with

maximization, Trinidadian trans-shippers will likely seek out the most

profitable phase of the drug trade and are thus likely to become

involved in local drug sales at the wholesale or retail levels.

Trends in Cocaine Trafficking in Trinidad


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What do we know for sure about drug trafficking in Trinidad?

Certainly, we know that it occurs as police statistics on drugs seized

within Trinidad’s boarders attest. The volume of the trafficking

however, is unknown and a matter of speculation. Thoumi (2005, 186) in

discussing the international cocaine trade, argues that the data is

difficult to collect and interpret and that, “Figures are often quoted

to buttress preconceived and personal agendas”. He goes on to say

that, “….data are quoted without a reference to sources, at other[s]

[times] it even appears that figures are spontaneously produced or

invented” Thoumi (2005, 186). How then can we approach the analysis of

trends in cocaine trafficking in Trinidad given the problems with the

available data? One method would be to divine a trend using available

statistics on drug seizures over time or police drug arrests. This

would probably be acceptable for both academic and policy purposes

however, such an approach is flawed as it makes assumptions that are

unfounded and unrealistic. It assumes that seizures represent a

reasonably constant percentage of trafficking and makes other

assumptions about consistency of rates of work within law enforcement.

In any event, as can be clearly seen in Figures 1 and 2, the available

data demonstrates no easily recognizable trend.

Another way to deal with this problem of data paucity may be to use


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data from the one crime that is reported with reasonable accuracy;

murder, then syllogize a series of logical inferences founded in

current theoretical work to link the data for murder to the prevalence

of the drug trafficking, using a vehicle of organized and transnational

organized crime. In other words, we can use murders as a proxy

variable to determine the intensity of the economic activities of

organized crime (Fajnzylber, Lederman, and Loayza 2002). This is a

tempting solution and a similar method has been used to estimate the

extent of money laundering (Walker and Unger 2009). If it is agreed,

as some theorists have suggested that organized crime is

disproportionally responsible for crime and violence (Geis 1966 and

Manwaring 2007) and that as Mejía and Posada (2008), Fiorentini (1999)

and Manwaring (2007) have suggested, violence and murder are simply

tools used by organized crime to arbitrate illegal contracts, deal with

competition and manage internal discipline among other things; then it

follows that murders can be viewed as a barometer of economic activity

within illegal markets. In short, murder would be positively

correlated to the other illegal activities of organized crime.

Certainly there is some empirical evidence that supports such thinking.

An examination of the most murderous cities in South and Central

America shows that the cities with inflated murder rates map the route


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of cocaine from the producer countries through the trafficking

countries (see Figures 3 and 4).

An examination of the trends in murders over the period 2001-2010 show

that up to 2008 murders were on the rise, suggesting a rise in

organized criminal activity including cocaine trafficking (see Figure

5). Of course not all murders are the product of organized illegal

economic activity and those would have to be removed from the yearly

totals. The challenge with embarking on this analytical route is that

it circles back to the original problem of the scarcity of data. While

this logic may establish the broad correlation between the independent

variable of murder and the dependent variable, the intensity of the

economic activity of organized crime, it would be impossible to say

what portion of the murders was attributable to cocaine trafficking

without additional data on the distribution of criminal activities

within organized crime. In short therefore, I agree with the views

of both Thoumi (2005) and Reuter and Greenfield (2001) that the

estimates produced from the current data is frail at best. As Reuter

and Greenfield (2001, 172) puts it, “There is enough interest in these

[cocaine trade] numbers that it is worth considering whether the

estimates might be made substantially more precise. We tend toward

pessimism on this matter. It requires data collection that is certainly


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expensive and, at some points in the distribution system, of doubtful

feasibility”.

Marijuana Trade

The trade in marijuana is similar to the trade in cocaine in many

respects with the notable exceptions that marijuana requires no real

processing and, in the Trinidad context, it is grown locally. Trinidad

has been a producer of marijuana for many years and was even an

exporter of the drug up to a decade ago however, the eradication

efforts of Trinidad’s law enforcement and military organizations aided

by American military aviation had relegated the cultivation of

marijuana to local consumption. In fact, recent experience suggests

that Trinidad is actually an importer of marijuana from St. Vincent and

elsewhere. Trinidad is therefore involved in every aspect of the

marijuana trade, from production to consumption.

While there is considerably more opportunity to harvest data about the

local marijuana trade than the trafficking in cocaine, insufficient

efforts have been made to gather the best data about the cultivation of

marijuana in Trinidad and Tobago. One example is the absence of a

physical survey of the total acreage under cultivation that could be

used as the datum for a subsequent analysis of trends. While the


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Organized Crime, Narcotics and Firearms Bureau (OCNFB) of the Trinidad

and Tobago Police Service has been conducting aerial reconnaissance of

marijuana fields for years, no attempt has been made to arrive at the

total number of hectares cultivated in any one year. It should also be

noted that the authorities make no attempt to segregate the data on

marijuana seizures based on origin. Thus there is no way to

differentiate from the available data, locally grown marijuana seized

after sale to wholesalers from imported marijuana.

Trends in the Marijuana Trade in Trinidad

None of the data on the marijuana trade are conclusive in and of

themselves. The critical missing piece is the survey of the number of

hectares under production annually. That figure has been an important

part of estimating world cocaine flows as it establishes the starting

estimate for the quantity cultivated and gives greater meaning to the

figures for drugs eradicated and seized. In addition, there is the

problem of marijuana importation from St. Vincent and possibly

Venezuela. Without further data to confirm the origin of seizures, too

many assumptions have to be made in order to make the available data

useful.

Figure 6 suggests a gradual rise in marijuana seizures from 2000-2008


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with a sharp jump in 2010. Figure 7 and Figure 8 both show

considerable increases around the same period suggesting that something

significant was happening at around that time. These figures however

are generally too erratic to establish a projection about future trends

and would require the acceptance of assumptions about the consistency

of seizures as a portion of the marijuana trade that the data does not

allow us to make.

Robbery

According to section 24(1)(a) of the Larceny Act of Trinidad and

Tobago, any person who, being armed with any offensive weapon or

instrument, robs or assaults with intent to rob someone, has committed

an act of robbery. This act involves the forcible transfer of property

from one person to another and is motivated by the desire for economic

gain. One criminological theory describes the process by which

robberies occur with reasonable accuracy. The routine activities

theory (Cohen and Felson 1979) explains that crimes like robbery are

more likely to take place under conditions where there is a motivated

offender, a vulnerable target and the absence of capable guardians.

Groff (2007) used simulation modeling to examine the spatio-temporal

structure of routine activities as it relates to street robberies and


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found that the number of robberies was positively related to time spent

away from home by civilians. Robbery is a crime that has inherent

risks occasioned by, among other things, the presence of a victim and

guardians in the equation. It is therefore more likely to be reported

to the police than victimless drug offences. As a result, the data for

robberies is expected to be more accurate than the data for the drug

trade.

Robbery Trends in Trinidad

The statistics presented for robberies in Trinidad and Tobago includes

both robberies and larceny as the similarity in definition is

considerable leaving little difference between the two acts. Further,

data are presented for 1998-2008 as opposed to 2000-2010. This is

because, the Central Statistical Office (CSO) has not yet released data

beyond 2008 and the police data this essay has used to fill the gaps

elsewhere, are presented differently from the CSO’s data and cannot be

reconciled. As can be seen in Figure 9 there was an upward trend in

robberies over the period. The average yearly increase was 7.8

percent. The relationship between robbery and GDP (not shown) is both

positive and strong with a coefficient of correlation of 0.717161. It

is therefore to be expected that as Trinidad begins to recover from the


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current economic downturn and returns to positive economic growth, that

robberies will continue to rise.

Money Laundering

Section 43 of Trinidad and Tobago’s Proceeds of Crime (Amendment) Act

(2009) says that:

A person is guilty of an offence who conceals, disposes,disguises, transfers, brings into Trinidad and Tobago or removesfrom Trinidad and Tobago any money or other property knowing orhaving reasonable grounds to suspect that the money or otherproperty is derived, obtained or realized, directly or indirectlyfrom a specified offence.

UNODC-IMF (2005, 1) explains that, "Money laundering can be described

as the process by which a person conceals or disguises the identity or

the origin of illegally obtained proceeds so that they appear to have

originated from legitimate sources.” Levi (2002) has described money

laundering as a three step process that includes; the infusion of

illegal money into the legitimate financial system, methods used to

hide the illegal origins of the funds such as passing the funds through

different accounts and financial instruments in multiple jurisdictions

and the assimilation of the funds into some legitimate economic

concern.

The structured monitoring of money laundering in Trinidad is a fairly


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recent event. In fact, Trinidad’s Financial Intelligence Unit (FIU)

was only established in 2009 as part of the Financial Intelligence Unit

of Trinidad and Tobago Act, 2009. Legislation on the proceeds of crime

was also passed in the same year. As a result, data is not generally

available prior to 2010.

Trends in the Money Laundering Trade in Trinidad

Similar to drug offences, the major challenge to analyzing the trends

in money laundering in Trinidad and Tobago is the general dearth of

information on the extent of money laundering (Quirk 1997, Levi 2002).

Many methods and models have been used over time and in different

countries to attempt to arrive at accurate estimates for the extent of

money laundering in the national and international economies. Methods

include expert information, survey data and the use of suspicious

activity reports (Walker and Unger 2009). Trinidad’s Financial

Intelligence Unit (FIU) uses suspicious activity reports to estimate

the amount of money laundering taking place in Trinidad and Tobago.

The following table is a summary of data presented it the FIU’s 2010-

2012 annual reports.

Period No. of Value of SARs


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SARs

Feb-Sep

2010

111 TT$ 263,073,491

2011 303 TT$ 569,796,997

2012 258 TT$ 638,844,310

Walker and Unger (2009) argues that since money laundering is a multi-

phase process, dirty money may easily be double or even triple counted

as it passes through the system. They explain that there are also

likely to be substantial errors from legal transactions being counted

as illegal and vice versa. They conclude that, “By focusing only on

‘suspicious transactions,’ such researchers substantially

underestimated the scale of money laundering” (Walker and Unger 2009,

827).

This issue of underestimation is more than likely the case in Trinidad.

Money laundering as a percentage of GDP was estimated to be between 4–

12 percent in Australia, 10–33 percent in Italy, 4–15 percent in Japan

and 4–33 percent in the United States. Trinidad’s 2012 GDP hovered

around US$ 24 billion or approximately TT$153 billion. Using the SAR

data from the FIU yields a figure for money laundering of approximately

0.417 percent of GDP. Assuming that the FIU’s figures are reasonably


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correct, this would suggest that the extent of money laundering in

Trinidad is minute in relation to the countries listed above. UNODC-

IMF (2005) has suggested however, that small countries like Trinidad

are more vulnerable to money laundering as the profits from organized

crime can easily make up a substantial portion of GDP.

Anecdotal evidence point to substantially more money laundering in

Trinidad and Tobago than the FIU has estimated. It may well be that

the system of money laundering in Trinidad and Tobago is so entrenched

and has been so integrated into the legal economy that most of it goes

unrecorded by the FIU. This could easily be the case as the majority

of the large businesses in Trinidad and Tobago are registered as

private limited liability companies. This form of business entity has

lower financial reporting requirements than publicly traded firms, thus

making the possibility of money laundering easier. Additionally, many

of these companies are cash intensive, retail businesses and are

therefore fertile ground for money laundering activities. Taken at

face value, the data available suggests that money laundering is

trending upward however, this is unlikely to be an accurate prediction

of the trend in money laundering due to the limited number of data

points and the challenges with using SARs to measure money laundering.


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Bribery

Bribery is a subset of the crime of corruption. Not all corruption

however is economically motivated. According to the Encyclopedia

Britannica online (2013), bribery is, “the act of promising, giving,

receiving, or agreeing to receive money or some other item of value

with the corrupt aim of influencing a public official in the discharge

of his official duties.” Corruption is more broadly defined as, “…the

misuse of public power, office or authority for private benefit

through bribery, extortion, influence peddling, nepotism, fraud, speed

money or embezzlement” (UNDP 1999, 7). Trinidad and Tobago’s Prevention

of Corruption Act 1987, criminalizes every act by a person or an agent

who, corruptly solicits, receives or offers, any gift, reward or

advantage as an inducement to do or forbear to do anything in respect

of any matter or transaction in which the State or a public body is

concerned. Bribery can therefore be examined as an economic crime

within the broader context of corruption.

Bribery has been described by some as rent-seeking behavior or as

directly unproductive profit-seeking (Seligson 2002, Fiorentini1999).

When government officials seek bribes, the amount of the bribe is an


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addition to the actual price of the service and can be seen as rent-

seeking behavior (Seligson 2002). Rent-seeking is possible because the

government has monopoly control over certain services and public

officials seeking rents have been imbued with state authority to

dispense those services.

As with other economic crimes, it is difficult to measure the extent of

bribery. This is due to the nature of corruption and the fact that it

is unlikely that either the persons demanding the bribe or those

supplying the bribe will report the crime. As a consequence, there is

an absence of statistical data on bribery in Trinidad. Further, there

have been few convictions for corruption in Trinidad and Tobago,

especially grand corruption. The public’s perception of corruption

therefore, is driven by individual and societal anecdotal evidence and

a few high profile cases that have either been settled in court or in

the court of public opinion. It is the individual experiences of

citizens with corrupt public officials and the stories of alleged

government corruption brought into the public domain through the media

that influence the public perception of the level of corruption in the

society.

Bribery Trends in Trinidad and Tobago


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It is very possible that the most useful measure of bribery in Trinidad

and Tobago is in fact the Transparency International Corruption

Perception Index. Transparency International does not measure the

amount of corruption in societies, rather it measures the perceptions

of the nationals and residents of a country as well as other interested

parties, of the amount of corruption in that country. This concept of

perception of corruption is valid as persons are likely to act on their

perceptions of reality, regardless of what the actual reality may be

(Melgar, Rossi and Smith 2010). The extent of corruption/bribery in a

country can be viewed as inversely related to the country’s score in

the Corruption Perception Index (CPI). Therefore, when Trinidad’s CPI

score falls it is because the level of perception of corruption/bribery

rises. An easy way to represent the extent of corruption is by finding

the inverse of Trinidad’s CPI scores between 2001 and 2010 and plotting

the results on a graph to derive the shape of the curve representing

the perception of the extent of corruption/bribery in Trinidad. As can

be seen from the corruption/bribery graph (see Figure 10), the

perception of corruption/bribery increased between 2001 and 2006, fell

during 2007-2008 then leveled out in 2009 and 2010.

Another way of conceptualizing the level of bribery in Trinidad may be

to see bribery as an integral part of the activities of organized crime


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and to ascribe a positive and constant relationship between the two.

Therefore, a measure of the activities as derived in the section on

cocaine trafficking should yield the shape of the bribery curve. This

however is not a viable solution as many ordinary citizens are involved

in supplying bribes in order to speed up the wheels of the state

bureaucracy.

Effects of economic crimes on the Trinidad and Tobago economy.

Many theorists have posited that crime has a deleterious effect on

economies while others have espoused the opposite view (Powell, Manish,

and Nair 2010). It may well be that these differences are based on the

nature of organized criminal activity and the nature of the economy

being studied. The data for Trinidad and Tobago has produced some

interesting results that bear further research. It is noteworthy for

instance, that the relationship between Trinidad’s GDP for 2001-2010

and murders for the same period is very intimate. In fact an analysis

of GDP and murders in Figure 11 produced a correlation coefficient of

0.941912. It may be remembered that a relationship between murders and

the magnitude of economic activity within organized crime was posited

in an earlier section of this essay. While the correlation coefficient

cannot be seen as establishing causation, this positive relationship


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would appear, prima facie, to support the literature that suggests that

economic crime may be beneficial to the economy and one might speculate

whether, in the Trinidad context, the nature of organized criminal

activity is in fact having a net positive effect on GDP.

It might be useful to model the effect of crime on GDP as such a model

might assist in using data on GDP to analyze trends in the criminal

economy. Consider a model of the economy that seeks to establish the

effect of economic crime on GDP. This model ignores the effects of

rent seeking behavior as it is simply a transfer of wealth. In the

model there are two contributors to GDP, legal or regular output and

illegal or criminal output. The model can then be explained by two

production functions thus:

R=f(Kr, Lr)

C=f(Kc, Lc)

Y= R+C

Where:

R= regular or legal output inclusive of the legal output within the

informal economy.

C=Criminal or illegal output

Kr and Lr = Capital and labour used in the production of regular output

Kc and Lc = Capital and labour used in the production of illegal output


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In this model, the effect of crime on GDP will be the difference

between Kc and Lc used in profit generating criminal output and Kc and

Lc used in loss generating criminal output. An example of loss

generating output would be murder as it removes labour from the

economy. In other words, the direct economic losses due to criminal

behavior such as murder and arson is subtracted from the earnings of

the drug trade etc. in order to determine whether the effect of

criminal output on GDP is positive or negative. The model also raises

interesting questions, such as how to classify output in the formal

economy that is based on the earnings from illegal output. From a

legal point of view, such earnings are seen as the proceeds of crime

and, as a result, they are treated as such in the model. In other

words, some of the output currently being counted in GDP under R should

be correctly placed under C.

Another model of the economy, patterned after the externalities model

used to analyze the effect of military spending on GDP can be

developed. This model considers the negative criminal externalities

posited by some theorists. Powell, Manish, and Nair (2010, 328)

explains that these externalities are created when, “High levels of

crime [can] undermine the security of property rights and confidence in

the rule of law. Both property rights and the rule of law have been


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illustrated to be vital for long-run economic growth”. The model would

therefore reflect the effect of crime on the regular economy.

R=f(Kr, Lr, C)

C=f(Kc, Lc)

Y= R+C

The effect of crime on GDP would therefore be an amalgam of the direct

economic effect of crime and the negative externalities created by

criminal behavior.

This essay considered the relationship between cocaine trafficking, the

marijuana trade, robberies, money laundering and bribery and the

economic performance of Trinidad and Tobago. Robberies and bribery can

be viewed as rent seeking activities in that they do not produce

additional wealth, rather they simply redistribute wealth from one

economic agent to another. As a result, their effect on GDP would be

negligible and have not been considered here. Quirk (1997) posits that

money laundering should be roughly equivalent to the profits in illegal

markets as it facilitates the proceeds of crime merging into the flow

of cash in the legal economy. Therefore money laundering and the

profits from cocaine trafficking, the marijuana trade and other profit

seeking crimes, should be roughly synonymous. Consequently, this essay

will examine the connection between cocaine trafficking, the marijuana


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trade and GDP.

As explained in previous sections of this essay, the extent of these

two crimes is almost impossible to determine with any accuracy. As a

result, what will be analyzed is the relationship between cocaine

seizures, marijuana seizures and eradication and GDP. The essay makes

the assumption that seizures and eradication activities in year one

affects GDP in year two. This is not farfetched as the illegal profits

will take time to pass through laundering processes before they can

have an effect on GDP. What is being examined therefore is the

relationship between counter drug activity in one year and GDP in the

following year. Table 1 lists the value of counter marijuana

activities using a constant price of TT$10,000 per kilogram (kg) as

given by the OCNFB. It also lists the amount of cocaine seized in

kilograms and GDP. Figure 12 is the graphical representation of Table

1 however, the line representing GDP has been shifted back one year in

order to align the counter drug activities in one year with GDP in the

following year in order to more easily show the relationship. What can

be clearly seen is that as counter drug activities decrease, GDP

increases and as counter drug activities increase GDP decreases. This

is an especially interesting result in 2009 as Trinidad’s economy,

which had already begun to be affected by the financial crisis of 2008,


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experienced a small recovery simultaneously with a considerable

reduction in counter drug activities. It appears therefore that there

is a negative relationship between counter drug activities and GDP.

Conversely, this suggests a positive relationship between profitability

in the illicit drug industry and Trinidad’s economic performance as

measured by GDP. In this analysis, counter drug efforts is the

independent variable and GDP is the dependent variable This is not, in

the first instance, useful for establishing trends for drug

trafficking. It can however be used to examine the trends

retrospectively and use that data to project the direction of drug

trafficking activities in the future. This relationship will require

further study and modeling in order to establish the existence and

direction of causation.

c. Suggest policies to reduce the impact of the economic crimes

identified above.

Introduction

Economic theory is founded on the concept that human actors are

rational and motivated by self-interest. This self-interest is


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expressed in their desire to fulfill unlimited wants within an

environment of scarcity. Merton (1938) anomie theory argues that

humans are motivated by culturally defined goals and regulated by

institutional norms. According to Merton (1938, 674), “The sole

significant question then becomes, which available means is most

efficient in netting the socially approved value?” When these goals

are focused on the attainment of wealth and the actor is incapable of

achieving the goals through the acceptable means, the possibility

exists that innovative means might be employed. It is from this

innovation that criminal behavior arises. Policy initiatives to deal

with economic crime must therefore remove criminal activity as a viable

option for the achievement of wealth.

Decriminalization

Crime is a socially constructed phenomenon. Cocaine was an ingredient

in Coca Cola before its use was criminalized. From a pragmatic point

of view therefore, the easiest way to deal with crime is to reconstruct

those social phenomenon in order to decriminalize crime. Indeed, the

ideas of decriminalization and/or legalization have driven the debate

surrounding marijuana and cocaine for several years (Thorton 1991).

One needs look no further than the United States experience with

alcohol prohibition to understand the point. Prohibition made


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criminals rich while imposing the cost of security as well as other

economic and social costs on the rest of society (Thorton 1991). The

issue however, is not a simplistic one and there are serious economic

and moral questions to be answered. Will the economic costs of

addiction treatment and loss of productivity etc. under

decriminalization be greater or less than the cost of maintaining the

current system? What about the social and moral consequences of

decriminalization? How will they be measured and given value? The

truth is however, that decriminalization is not always socially

acceptable, politically prudent or even sensible.

Cocaine Trafficking and the Marijuana Trade.

The trafficking of cocaine and the marijuana trade have several

negative impacts on Trinidad and Tobago. They produce a pool of

addicted users, fuel other crimes including murder and contribute to

the increasing level of national corruption. Policy initiatives must

therefore be multi-faceted and include demand reduction measures as

well as measures to remove the profitability from the drug business.

Education has proven to be an effective tool in demand reduction.

Consequently, a coordinated drug education programme, aimed at children

and youth and utilizing every possible media, including face to face


May 15, 2013 23

communication and electronic media, must be implemented. Law

enforcement should aggressively target the proceeds of the narcotics

industry supported by robust legislation thereby making the trade less

profitable. At the same time harsher penalties for drug crimes will

further shift the balance of the criminal’s cost benefit analysis.

Viable economic alternatives must be provided to youths in rural areas

(cultivation environment) and urban centres (consumption environment)

in order to limit the pool of criminal labour and help to break up the

street gangs responsible for the majority of murders.

Money Laundering

The FIU is the organization responsible in law for monitoring and

reporting on money laundering. Currently this organization has neither

investigative nor prosecutorial powers. It is woefully understaffed

and under-resourced. It lacks the synergistic relationship with the

intelligence gathering community, law enforcement and the revenue

authority needed to do its job properly. The FIU legislation must be

revised in order to imbue it with the powers it needs and it must be

adequately resourced. Additionally, the accounting requirements of

partnerships and private limited liability companies of a determined

size should be upgraded and a system of random auditing by the FIU


May 15, 2013 23

instituted.

Bribery

The cost benefit structure of bribery has to be adjusted. This can be

accomplished in two ways. First, the legal framework must impose

onerous financial penalties for both accepting and paying bribes, thus

making the cost of bribery more prohibitive. Second, the wage packages

of public officials should be improved, making bribe taking less

desirable and attracting better quality employees.

Robbery

Critical to the prevention of robberies is the reduction in the supply

of illegal firearms. Access to firearms reduces the risk inherent in

robbery for the robber, shifting the balance toward the benefit side.

Further, economic alternatives to robbery; employment training and a

social safety will all go a long way to prevent this crime by making

the opportunity of robbery more attractive.


May 15, 2013 23


May 15, 2013 23

Figure 1 - Cocaine Seizures in Trinidad and Tobago3000

2500

2000

1500 Cocaine Seizures

(Kgs)

1000

500

02000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Data received from Crime and Problem

Analysis Branch (CAPA) Figure 2 - Arrests forCocaine for the purpose of trafficking 16

14

12

10

8 Arrests - Cocaine for the purpose of

trafficking


May 15, 2013 23

6

4

2

02000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Data received from Crime and Problem Analysis Branch (CAPA)

May 15, 2013 26


Figure 5 - Murders Trinidad and Tobago 2001 -2010

600

500

400

300 Murders

200

100

02001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Data received from Central Statistical Office (CSO)


May 15, 2013 27

Figure 6 - Marijuana Seizures Trinidad andTobago

45000

40000

35000

30000

25000

20000

15000

Marijuana Seizures (Kgs)

10000

5000

02000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Data received from Crime and Problem Analysis Branch(CAPA)


May 15, 2013 28

Figure 7 - Marijuana Supply Reduction Activities

$1,400,000,000.00

$1,200,000,000.00

$1,000,000,000.00

$800,000,000.00

$600,000,000.00

Eradicated Eradicared andseized

$400,000,000.00

$200,000,000.00

$0.002005 2006 2007 2008 2009 2010

Source: Data received from Crime and Problem Analysis Branch (CAPA) and Organised Crime, Narcotics and FirearmsBureau

Figure 8 - Arrests for marijuana for the purposes of trafficking

35

30

25

20

Arrest - marijuana for the purposes of

15 trafficking


May 15, 2013 29

10

5

02000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Data received from Crime and Problem Analysis Branch (CAPA)


May 15, 2013 30

Figure 9 – Robberies Trinidad and Tobago

12 000

10 000

8 000

6 000 Robberie

s

4 000

2 000

01998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008


Year CPI Score

CPIInvers

200 5.3 0.200 4.9 0.200 4.6 0.200 4.2 0.200 3.8 0.200 3.2 0.200 3.4 0.

6


May 15, 2013 31

Figure 10 - Bribery Trinidad and Tobago

CPI Score5

4

3CPI Score

2

1

0

0.35

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Corruption/Bribery score

0.30

0.25

0.20

0.15

0.10

0.05

Corruption/Bribery score

0.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Year CPI Score

CPIInvers

200 5.3 0.200 4.9 0.200 4.6 0.200 4.2 0.200 3.8 0.200 3.2 0.200 3.4 0.


May 15, 2013 32

Source: Data received from Transparency International. http://www.transparency.org/research/cpi/overview


May 15, 2013 33

Figure 11 - Relationship between GDP and Murders in Trinidad

200 200 200 200 200 200 200 200 200 201GDP(US 176 180. 224 257. 321 369 434. 560 394. 41850M) 8 66 2 94 7 1

808 5

408 0

6Murder 15 17 22 26 38 37 39 54 50 47

GDP in US$50M

600

500

400

300

200

GDPMurders

100

02001200220032004200520062007200820092010


May 15, 2013 34


NB. GDP in US$ 50M was used to bring GDP into same range as murders so that both curves could be observed together.


May 15, 2013 35

Figure 12 - Relationship between counter drug activities and GDP

2000

1800

1600

1400

1200

1000

800

600

400

200

0

2005 2006 2007 20082009

Cocaine seizures GDP

Marijuana seizures

Table 1 - Relationship between counter drug activities and GDP

Year

Marijuanaeradication

s andseizures

GDP (US$100,000,

Cocaine

2005 746.4855

$159.82

461.172006 234.71

75$183.70

382.072007 149.08

93$217.38

178.152008 424.90

09$271.33

1803.112009 266.5

09$197.09

597


May 15, 2013 36

2010 1231.637

$206.04

85.18

Source: Data received from Central Statistical Office (CSO), Crime and Problem Analysis Branch (CAPA) and Organised Crime, Narcotics and Firearms Bureau

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An Analysis of Economic Crimes in Trinidad and Tobago (Essay)

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