Brazil's gangs emerge as major cocaine exporters, flooding Europe with white powder

[March 12, 2020]  By Gabriel Stargardter

SANTOS, Brazil (Reuters) - Years of rooting out drugs at the Brazilian seaport of Santos had given customs inspector Oswaldo Dias a good nose for suspicious cargo. A shipment of second-hand backhoes, bound for Europe late last year, seemed fishy.

So on the morning of Nov. 18, Dias sent the machinery through a scanner, which revealed a strange mass lodged inside one of the excavator's yellow arms. He hopped up for a look and saw cracks in the metal and a dodgy paint job. Dias called for a blowtorch.

Inside, he found 158 kilograms of cocaine - almost 350 pounds of white powder - destined for the Belgian port of Antwerp.

The use of decoy construction equipment, Dias said, was just the latest ruse employed by Brazil's drug gangs. In less than a decade, he had watched them rise from domestic street sellers to major international players, using Santos and other ports to ship narcotics offshore.

"Europe is the destination par excellence," said Dias, who retired late last year from Brazil's Federal Revenue Service.

Brazil has become one of the top suppliers of cocaine to Europe, transforming the country's role in the trans-Atlantic drug trade at a speed that has stunned anti-narcotics authorities.

Long regarded as a cocaine-consuming nation, a market for product manufactured in Colombia, Peru and Bolivia, Brazil has turned into a critical launch pad to get it across the ocean. Local syndicates have infiltrated Brazil's ports, authorities said, sending record amounts of coke on container ships bound for Europe, where it fetches premium prices.

Brazilian gangs are now integral players feeding Europe's cocaine market, valued at more than 9 billion euros ($10.15 billion), according to a Reuters analysis of customs data on cocaine seizures, confidential intelligence reports and research studies on illegal drugs; and interviews with more than two dozen people, including law enforcement agents, public officials, diplomats, anti-narcotics experts and people involved in the illicit trade.

"For coke, Brazil has emerged as a major exporter nation," said Laurent Laniel, a senior analyst at the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA), the Lisbon-based EU drugs agency. "This is definitely something that is new."

The Brazilian cocaine trade spans vast distances across South America's largest nation. Reuters accompanied Brazilian and Peruvian police battling gangsters near the countries' shared border in the remote Amazon, where there has been an explosion of cultivation and processing of coca, the plant used to produce cocaine.

"It's out of control," Brazilian Federal Police Officer Antônio Salgado said after joining his Peruvian counterparts to take out coca processing labs. "You go up in the helicopter and within two minutes you start seeing plantations here, there, everywhere."

Reuters also reported from Paraguay, whose law enforcement has proven to be no match for Brazilian gangs using the country as a way station to move Andean product into Brazil; and from Santos, Latin America's largest port, where drug seizures keep breaking records.

Every link of this vast supply chain underscored Brazil's new status as a leading transshipment hub for coke to Europe, the world's second-largest economic bloc.

The shift can be seen in Belgium, the top gateway for South American cocaine entering Europe, almost entirely via the port of Antwerp, according to the EMCDDA. In 2019, authorities apprehended a record of nearly 62 tonnes of cocaine at Antwerp, Europe's second-largest port. The single-largest share of that - 15.9 tonnes, about a quarter of the total - came from ships arriving from Brazil, official Belgian data show. In 2015, Belgian customs seized just 293 kilograms (646 pounds) hailing from Brazil, less than 2% of that year's haul.

It's a similar story in Spain, Europe's second most important portal. Five years ago, Brazil did not rank among the major embarkation points for cargo ships caught bringing cocaine into Spain. The top five slots belonged to Colombia, Venezuela, Portugal, Ecuador and Chile, according to data provided to Reuters last year by Spanish customs. Brazil vaulted to the No. 1 spot in 2016 and again in 2018, when law enforcement seized a record 4.3 tonnes from ships arriving from Brazilian ports, the figures show.

Brazil was also the top point of origin for cocaine apprehended entering Germany in 2018, with a historic capture of nearly 2.1 tonnes, according to the most recent German customs data.

Experts cautioned that apprehension figures don't tell the whole story; bigger seizures can reflect better policing rather than increased flows.

But two things are certain: Europe is "swimming in drugs," and Brazil plays an increasingly crucial role in getting them there, said Andrew Cunningham, another expert at EMCDDA, the EU drugs agency. "There's absolutely no doubt about it," he said.

(For a graphic on cocaine imports apprehended in Europe, see: https://graphics.reuters.com/BRAZIL-VOILENCE-COCAINE/0100B5JT3ZK/[e-mail])

BRAZIL TAKES OFF

Brazil has always had the potential to become a major cocaine exporter, according to Elvis Secco, who leads a specialized anti-narcotics unit of Brazil's federal police. The country sits between coke-producing powerhouses to the west and the Atlantic Ocean to the east.

Brazil's three most important gangs - First Capital Command, Red Command and the Family of the North - have proven adept at moving drugs enormous distances to supply Brazilian consumers. With thousands of cargo ships leaving Brazil annually for Europe, Africa and beyond, there was no reason to stop at the water's edge, Secco told Reuters.

But other recent trends have helped Brazilian traffickers expand. Global cocaine production - almost exclusively from Colombia, Peru and Bolivia - more than doubled between 2013 and 2017, to reach an estimated 1,976 tonnes, according to the United Nations Office on Drugs and Crime (UNODC). South America has been awash with high-purity powder in need of buyers.

Burgeoning supplies have resulted in falling prices that have attracted new users worldwide, according to the UNODC's World Drug Report 2019.

With distribution into the lucrative U.S. market cornered by Mexican cartels, Brazil's gangs trained their sights on Europe. Prices there are higher than in the United States, due to the longer distances it must travel, authorities said. Europe is also a convenient pit stop for cocaine bound for growing markets in the Middle East and Asia, they added.

Like Europe, Brazil is also flooded with coke. In 2019, the federal police nabbed a record 105 tonnes, up 32% from 2018. Brazil's law-and-order President Jair Bolsonaro says it's proof the country is winning its war on drugs. "We're suffocating organized crime," he tweeted in October.

Secco, the Brazilian federal police drug czar, was more circumspect. He said apprehensions are up because Andean production has risen sharply and more cocaine is entering Brazil, "not because of any new investments" in law enforcement.

DRUGS ON THE DOCKS

Much of the cocaine flowing through Brazil to Europe is trafficked by Brazil's largest and most powerful criminal organization, First Capital Command, known by its Portuguese acronym PCC, according to authorities.

They say the gang dominates a prime smuggling route that starts in Bolivia, then heads southeast to Brazil via Paraguay, where the syndicate is overwhelming that nation's weak institutions. In January, 75 PCC members escaped from a Paraguayan prison in a brazen jailbreak that top security officials knew was coming, but were powerless to stop, because the gang had so many prison guards under its sway.

Peruvian anti-narcotics police officers check suspects during an operation at Amazon river in Caballococha, Peru October 30, 2019. Picture taken October 30, 2019. REUTERS/Gabriel Stargardter

Based in São Paulo, the PCC dominates the nearby port of Santos, which handles some 7,000 containers a day. Police say the gang bribes or threatens port workers to place cocaine in outbound shipping containers. Some drugs come aboard cargo ships at sea, with smugglers pulling alongside in smaller craft, said Cunningham of the EU drugs agency.

After reaching Europe, the merchandise is distributed across the continent by Eastern European, Moroccan and Italian mobsters partnered with the PCC, officials said.

In July 2019, Brazilian police arrested Nicola Assisi, reputedly a senior player in Italy's 'Ndrangheta mob, along with his son Patrick, near Santos. They are "accused of being some of the biggest suppliers of cocaine to Europe," according to a Brazilian federal court document. Currently jailed in Brasília, they await extradition to Italy. Their lawyer, Eugênio Malavasi, declined to comment.

With Santos swamped with cocaine, port officials have tightened security. Since 2016, every Europe-bound container has been X-ray scanned, according to Dias, the retired customs inspector. In 2019, customs agents nabbed a record 27 tonnes of cocaine at Santos, a 154% increase from three years earlier.

Ciro Moraes, the federal police commander in charge of Santos, reckons authorities only catch a fraction. The only good news, he said, is that cargo theft at the port has declined precipitously. "The guys who were stealing cargo are now in drugs logistics," he said.

COCAINE SURGE IN THE AMAZON

Brazil's gangs also import cocaine into the remote, northern Amazon region of the country along the so-called triple frontier with Colombia and Peru, according to federal police.

They say much of the product enters Brazil by boat along the Amazon River, bound for Manaus, a city of roughly 2 million people. From there, it moves downriver until it reaches northeastern seaports like Suape and Natal in preparation for the Atlantic crossing.

The Family of the North, known as the FDN, is the biggest player in the Amazon, authorities said. But booming European exports have lured challengers, with the PCC, Rio de Janeiro's Red Command and others looking to wrest control.

Much of the ensuing violence has played out in the region's jails where gangs recruit unaffiliated prisoners into their crews. Brazilian authorities blamed warring cartels for two prison riots that killed more than 100 people last year. Shootouts are common in Manaus and along the Amazon River. Police say they are increasingly outgunned.

Gangs are "less scared and more powerful" than they used to be, said Brazilian Federal Police Officer Charles Nascimento, a veteran of the Amazon drugs beat.

Bolsonaro's government has taken aim at the gangs by targeting their finances and moving jailed leaders to maximum-security federal lockups.

Brazil is also cooperating with other affected countries. Belgian and Brazilian authorities in 2019 pledged to deepen information sharing, tighten port security and tackle money laundering. And Bolsonaro's administration is stepping up anti-narcotics efforts with its Andean neighbors.

GANG PACT

Late last year, Reuters joined a joint mission between Brazil and Peru, spending a week with four Brazilian federal police officers and a few dozen Peruvian anti-narcotics cops in Caballococha, a Peruvian town of about 24,000 people. Accessible only by air or boat, Caballococha sits on the banks of the Amazon, just south of Colombia and about 100 kilometers upriver from the Brazilian border.

This region of Peru, classified as the Bajo Amazonas, accounts for just 4% of the nation's 50,000-hectare coca crop, according to the UNODC. But cultivation is growing, up 41% in 2017 from the previous year, the most recent data show.

Colonel Miguel Ángel Peric, the local head of Peru's anti-narcotics police, said those figures don't begin to capture the scale of the problem. He estimated almost all of Caballococha's residents had some direct or indirect link to the cocaine trade. Peruvian cops told Reuters they suspected some colleagues were in league with traffickers, although they presented no evidence.

Shifting gang alliances have added to the complexity. A partnership has emerged between Brazil's FDN and Los Caqueteños, a Colombian gang that supplies it with coke produced at home and in Peru, according to two classified intelligence reports seen by Reuters, one from Brazilian police and the other from Colombian cops.

Los Caqueteños was founded in 2010 by former members of a local paramilitary force and is based in the Colombian border town of Leticia. It is "the most belligerent organization in the triple frontier region," according to the Colombian report.

The bi-lateral anti-narcotics force hoped to disrupt some of Los Caqueteños' operations around Caballococha. But out in the jungle, the police always appeared to be one step behind the traffickers.

DISAPPEARING ACT

The mission relied on two aging Russian Mi-17 helicopters provided by the Peruvians. One broke down immediately, causing a delay of a few days while a new part was flown in.

Once the chopper was repaired, the mission netted just three arrests. Suspects vanished into the jungle at the sound of approaching aircraft.

The team also torched five so-called paste labs, which perform the first stage of processing on coca plantations. These facilities are typically crude shacks where workers fill plastic barrels with coca leaves, gasoline and other chemicals to form coca paste. This green-hued sludge is then transported to more sophisticated labs to be processed into white, powdery cocaine.

But as the days passed, the paste seizures didn't amount to much. Then came a potential break. An informant said a small plane carrying 300 kilograms (661.4 pounds) of coca paste had crashed during takeoff from a clandestine landing strip. There were another 700 kilograms (1,543.2 pounds) by the side of the runway, guarded by as many as 10 heavily armed men, according to the informant.

Around noon the following day, a few dozen Peruvian police set off in the choppers. As the runway came into view, helicopter gunmen strafed it with machine-gun fire.

But upon landing they found no armed guards, no drugs and no plane. They located the charred wreckage of a Beechcraft Baron 58, a Brazilian-owned aircraft, hacked up and left in the river. It, too, was empty.

(Reporting by Gabriel Stargardter; Additional reporting by Catarina Demony in Lisbon and Angelo Amante in Rome; Editing by Marla Dickerson)

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