SA is not alone in having to deal with a blend of small-scale mining and organised criminal activity. We are following the path Latin American countries have been on for some time, where criminal gangs have extended their operations from drug dealing and smuggling into mining, logging and wildlife trafficking.
As the Latin American experience shows, once these criminal gangs become firmly established in legitimate business activities they are difficult to dislodge. They can even morph into structures that cogovern territories with the legitimate branches of the state — the executive, judiciary and legislature.
The Latin American experience is a warning for SA to strengthen its capacity to fight off organised crime. President Cyril Ramaphosa flagged the issue in his state of the nation address earlier this year, warning that drug trafficking syndicates, gangs and other forms of organised crime “represent an urgent and growing challenge in SA”. Ramaphosa also mentioned the “construction mafia” which invade construction projects and other businesses premises “to extort money from companies”.
Failure to fight off organised crime risks turning SA into some of the Latin American countries. The Wall Street Journal reported last week how a “a drug-trafficking gang” had taken more than 48km of tunnels in Colombia’s richest gold mine, siphoning off 3.2 tonnes of gold estimated to be worth about $200m last year. The loot equalled 38% of the Chinese-owned gold mine’s production.
Quoting Colombian officials, the journal said illegal gold mining had increased on the back of a 30% rise in the gold price, which is now more than $2,600/oz. A security official at the mine, owned by Zijin Mining, said the company was losing the war against illegal mining. “Over the past four years illegal miners have built an underground network so vast that Zijin engineers said the mountain has started to resemble Swiss cheese, criss-crossed with makeshift passageways and tunnels leading from an estimated 380 above-ground entryways,” the journal reported.
In a recent report US think-tank Council on Foreign Relations said criminal groups in Colombia and Peru were now making more money from illegal gold mining that from cocaine. The two countries are the world’s top two producers of the coca leaf. “The price hike triggered a gold rush in Latin America starting in the early 2010s. But whereas small informal ‘wildcat’ miners reaped the benefits of previous gold rushes, powerful organised crime groups and hostile authoritarian regimes benefited most from this most recent one, effectively colonising gold-rich regions and subjugating local miners,” the council said.
It added that US metal companies have been buyers of “billions of dollars worth” of illegally mined Latin American gold over the past 10 years. This despite efforts by the US government to stop the trade, efforts the council has described as “not nearly enough”. A similar accusation has been made by an NGO against SA businesses.
The council reported in January that organised crime was a threat Latin American democracies had not dealt with effectively. “For the last 40 years — about as long as Latin America’s democracies have been around — the region’s illicit economies have experienced a practically uninterrupted boom,” the council said, pointing to a cocaine trade that had birthed one of the world’s complex transnational criminal organisations.
“Such groups have inserted themselves into the above-ground economy by laundering their vast wealth and have branched out into other illegal activities: extortion, mining, logging and fishing in protected areas and, increasingly, human smuggling.”
The council warned that organised crime only grew where it had state protection, which was why Latin America’s organised crime groups had prioritised the capture of the state, or parts of it. They bribed legislators, the police, courts, port authorities and air traffic control officers.
A recent paper by IMF officials on violent crime in Latin America and the Caribbean notes that violent crime affects the region more than any other globally, hobbling the region’s socioeconomic development. The paper’s authors use homicides as a measure of violent crime.
Organised criminal groups and gangs caused half of the homicides in the region — more than twice the global average. The connection between organised criminal groups and gangs and homicides was far stronger in areas “where criminal organisations compete for the control of markets”. The IMF paper also noted the expansion of transnational organised crime into illegal gold mining, logging and wildlife trafficking.
As the Latin American experience shows, once organised crime gets its roots into a country’s legal and illicit economic activities and encroaches onto its governance structures, it is very difficult to remove.
• Sikhakhane, a former spokesperson for the finance minister, National Treasury and SA Reserve Bank, is editor of The Conversation Africa. He writes in his personal capacity.
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