TIME: Almanac 1993/TIME Almanac 1993.iso/time/070191/0701000.000

Text File | 1992-08-28 | 21.0 KB | 467 lines

                                                                                WORLD, Page 28

COVER STORIES

New Kings of Coke


Now that Pablo Escobar is behind bars, the Cali cartel controls
the lucrative -- and deadly -- business of putting cocaine on
America's streets. Here is how drug sellers do it -- and why
it is so hard to stop them.

By ELAINE SHANNON/WASHINGTON


    To their admirers, they are Horatio Alger heroes, poor
boys who worked their way out of the slums and backwaters of
the Cauca Valley. Onetime delinquent Jose Santacruz Londono
studied engineering, went into construction and emerged as Don
Chepe, a billionaire whose marble citadel looms high above the
sugarcane fields of Cali, the country's third largest city.

    Down the road, in the new-rich suburb of Ciudad Jardin, is
the modern compound of Gilberto Rodriguez Orejuela. Nicknamed
the "Chess Player" because he runs his business -- and life --
with cold calculation, he parlayed youthful jobs as a drugstore
clerk by day and a kidnapper by night into a vast network of
enterprises, including a pharmacy chain, office and apartment
buildings, banks, car dealerships, radio stations and Cali's
talented America soccer team. His handsome younger brother
Miguel is a fixture on the local social scene, and their
children, educated in the U.S. or Europe, are often compared to
young Rockefellers or Kennedys by Colombians.

    Then there are Gilberto's cousin Jaime Raul Orjuela
Caballero and his three brothers, who are prominent impresarios
of concerts and sporting events in Cali, travel frequently to
New York City and have offices in Los Angeles. Ivan Urdinola
Grajales and his younger brother Fabio, cattlemen and landowners
from the northern Cauca Valley, are said to be exploring a
regional television network. Pacho Herrera, believed to be the
son of Benjamin Herrera Zuleta, an Afro-Colombian smuggler known
as the "Black Pope," is a wealthy valley rancher with business
interests in New York.

    They are among the richest families in Colombia, but to
the U.S. Drug Enforcement Administration, they are the new
kings of cocaine, patriarchs of a criminal consortium more
disciplined and protected from prosecution than the Sicilian
Mafia and now bigger than the Medellin cartel.

    The Cali combine produces 70% of the coke reaching the
U.S. today, according to the DEA, and 90% of the drug sold in
Europe. The Cali godfathers have a virtual lock on the global
wholesale market in the most lucrative commodity ever conceived
by organized crime. The cartel is the best and brightest of the
modern underworld: professional, intelligent, efficient,
imaginative and nearly impenetrable. Says Robert Bonner,
administrator of the DEA: "The Cali cartel is the most powerful
criminal organization in the world. No drug organization rivals
them today or perhaps any time in history."

    Most people think the narcotics trade belongs to Medellin.
It did in the 1980s, when that city's cartel did more than
anyone to put cocaine on the street corners of America. But
Medellin's drug power has been shattered by its long and vicious
war on the Colombian government. A 22-month counterattack by the
authorities has killed drug boss Jose Gonzalo Rodriguez Gacha,
forced the surrender of his fellow cocaine barons, the brothers
Jorge, Juan David and Fabio Ochoa, destroyed dozens of labs and
airstrips and scattered lesser capos abroad. In the most
stunning blow yet to the cartel, Medellin chief Pablo Escobar
Gaviria surrendered last week under a plea-bargaining program
that promises he will not be extradited to stand trial in the
U.S.

    After years of murder and mayhem, the government has
succeeded in disrupting one center of drug trafficking only to
have an even more powerful and insidious gang emerge in Cali.
While security forces concentrated on shutting down operations
in Medellin, the confederacy of crime families in the Cauca
Valley expanded cocaine production and grabbed the lion's share
of the market.

    Cali has insulated itself from government crackdowns
through political influence subtly cultivated over many years.
By means of legitimate business ventures, the Cali capos have
forged contacts with key people in business, politics, the law
and the press. Even police officials speak of los caballeros
(gentlemen) of Cali in contrast to los hampones (hoodlums) of
Medellin. "Cali gangs will kill you if they have to," says
Robert Bryden, head of the DEA in New York. "But they prefer to
use a lawyer."

    Drug-enforcement agents believe the architects of Cali's
takeover are Santacruz, 47, and Gilberto Rodriguez, 52.
Santacruz was the hands-on designer of worldwide trafficking
networks; Gilberto Rodriguez handled the finances.

    In the mid-1970s, while Medellin's cocaine cowboys were
monopolizing drug sales in Miami, Santacruz was sewing up
Manhattan. Today the DEA estimates that Santacruz, the Orjuela
Caballero brothers and the Pacho Herrera organization import 4
of every 5 grams of cocaine sold on the streets of New York
City. From that base, Cali operatives have fanned out across the
U.S. and deep into Mexico. The Rodriguez Orejuelas are generally
considered partners in Santacruz ventures, but they sometimes
appear to operate independently. Their cousins, the Orjuela
Caballero brothers, are also major dealers in Los Angeles. DEA
agents say the Urdinola brothers work somewhat independently
from the rest of the Cali consortium, with their own trafficking
and money-laundering organizations across the U.S. They are
linked to large lab operations in the northern Cauca Valley and,
according to DEA intelligence, are suspected of assassinating
a number of Colombians.

    The Cali families are now focusing their efforts on
cornering the market in Europe and Japan. Last year Dutch
officials seized 2,658 kg of coke packed in drums of
passion-fruit juice from Cali, the biggest single bust in
Europe. Santacruz bank accounts have been found across Western
Europe and as far afield as Hungary and Israel. DEA informants
report that Cali is looking for sales representatives to man
branch offices in Japan, where the going wholesale price for
cocaine is as high as $65,000 per kg. "If the Cali cartel makes
an alliance with the yakuza ((Japan's organized-crime
network))," warns a Colombian presidential aide, "watch out!"

    "El Gordo" (the Fat Man), as Santacruz is known, is a
legend in the New York Latin underworld. The word making the
rounds is that every so often he materializes in the middle of
a drug deal and exchanges a few pleasantries with the customer.
Then, as suddenly as he appeared, he is gone again.

    These tales filter back to the DEA. Possibly, Don Chepe
wants it that way. "He's toying with us," says William Mockler
Jr., chief of the New York task force investigating the Cali
cartel. He and Kenneth Robinson, a retired New York City
policeman who is now a DEA intelligence analyst, have been a
step or two behind Santacruz since 1978, when they found out
that he was building an air fleet and setting up businesses
along the East Coast. Thanks to their efforts, Santacruz was
indicted for drug-trafficking conspiracy in 1980, but he fled
the country. "He is my Professor Moriarty," Mockler says. "He's
the one I'll never get."

    Investigators in New York, Los Angeles, Louisiana and
Florida have won some battles against the cartel. They have
dismantled a succession of distribution rings. Federal narcotics
trafficking and conspiracy charges, which form the basis for
extradition requests, have been lodged against Cali's reputed
financiers Gilberto and Miguel Rodriguez, their four Orjuela
Caballero cousins and dozens of other senior figures. U.S.
Attorney General Dick Thornburgh has asked the Colombian
government to extradite them. Santacruz's half-brother and
confidant, Luis Santacruz Echeverri, has been convicted on
conspiracy charges in Miami, and his personal financial adviser,
Edgar Alberto Garcia Montilla, has been jailed in Luxembourg for
money laundering.

    Yet these setbacks have not impeded the cartel's steady
growth. Cali's leaders have carefully compartmentalized their
organization, so that individual losses do not threaten to bring
down the whole enterprise. The Cali management style is
cerebral, calculating and guileful. In the tradition of the
great Mediterranean trading dynasties, the major families have
a patriarchal, authoritarian structure that demands absolute
discipline and loyalty yet encourages creativity.

    The Cali imagination shines when it comes to the art of
smuggling. Medellin brazenly shipped cocaine across borders in
fast boats or light planes with extra fuel bladders. Calenos
prefer the slow but safe merchant marine. The cartel has devised
endless ways to hide contraband in commercial cargo and launder
it through third countries. U.S. Customs can check perhaps 3%
of the 9 million shipping containers that enter U.S. ports
annually, making the odds very favorable for Cali.

    When U.S. agents do uncover a shipment, the cartel adopts
new shippers, different routes and more ingenious deceptions.
Federal agents took nine years to crack a Santacruz-designed
lumber scheme. In 1979, a Cali operative was arrested with the
name of a Baltimore lumberyard in his pocket. There, agents saw
piles of mahogany boards sliced end to end, with pockets
hollowed out and the tops veneered on. A few more clues popped
up over the years, but nothing to pinpoint which planks, among
the tons of lumber imported from South America, contained
contraband.

    Then in April 1988, a load of Brazilian cedar boards
arrived in Tarpon Springs, Fla., aboard the freighter Amazon
Sky. DEA alerted Tampa Customs that an informer had reported
drugs were aboard. Inspectors drilled holes in stacks of lumber
planks, but found nothing. At the last moment, a Customs man saw
a crew member drop a plank and glance about nervously. The
inspector drilled into the board and hit white powder. The
seizure was a record 3,270 kg of cocaine, but just 700 of the
9,000 planks held any drugs.

    Other scams are just as difficult to uncover. In 1988
Customs officers found 2,270 kg of cocaine encased in 1,200
blocks of chocolate shipped from Ecuador. The cocaine bricks had
been wrapped in lead to thwart X-rays, but the lead set off
metal detectors. The next time, Customs found, the smugglers had
switched to heavy plastic wrapping.

    The cartel has also buried cocaine in toxic chemicals. In
1989 Customs agents and New York policemen found almost 5,000
kg of the drug inside 252 drums of powdered lye. No sane
inspector would poke around in lye, which can inflict severe
eye, skin and lung burns. Luckily, someone had tipped off the
authorities.

    The cocaine bricks unearthed from the lye were marked with
a destination code, "Baby I." The same marking had been found on
an 18,000-kg seizure near Los Angeles two months earlier. Baby
I turned out to be a Santacruz protege in New York, Luis
("Leto") Delio Lopez, 28. His style, according to DEA agents,
embodied the typical Cali cartel executive: businesslike,
resourceful, hard-working and discreet.

    The Cali families are conservative managers, much like
other big corporate heads. In the home office sit the chief
executive officer and his senior vice presidents for
acquisition, production, transportation, sales, finance and
enforcement. The logistics of importing, storing and delivering
the product to wholesalers are handled by dozens of overseas
branches, or cells, overseen by the home office through daily,
often hourly, phone calls.

    Each cell is directed by a Caleno like Leto Lopez and
staffed by relatives and neighbors whose salaries are banked in
Cali. Their accounts are debited when they make mistakes. The
code of conduct is strict: nondescript clothing, four-door
family cars, no drunkenness, no loud parties. Also no failures,
no excuses, no second chances. This unforgiving system produces
few defections: the penalty for dissent is death, not only for
cell members but also for their kinsmen back home in Colombia.

    Leto Lopez looked no different from his Westchester County
neighbors: he wore conservative suits, lived in a $775,000
colonial house and drove an Acura Legend. He opened a public fax
service to mix his drug messages with thousands of others
dispatched by honest customers. He set up an import business and
actually imported South American furniture so that the U.S.
Customs Service would think he was a legitimate businessman.

    After the highly publicized Baby I bust, Leto stayed away
from his house and offices, which DEA agents were watching. One
day in March 1990, he happened to drive past a DEA team running
another surveillance in Queens. As the agents started tailing
him, he whipped his Acura into a fast U-turn and melted into the
traffic. The next thing the agents knew, Leto was back in
Colombia -- where his luck ran out. At the request of the U.S.
government, police arrested him.

    U.S. agents have almost no chance of infiltrating a Cali
family. Calenos sell only to people they know, meaning other
Colombians. A prospective wholesale buyer must establish his
bona fides at an audience with top management in Cali. If he is
approved, he is not required to pay cash up front. He will send
the cartel payment after he resells the drugs to middlemen. The
wholesale buyer must put up collateral, cash or deeds to real
property as insurance if he is caught. He must also provide
human collateral in the form of his family in Colombia, who will
pay with their lives if he ever turns informer.

    The system for transferring the drugs is dizzyingly
complicated but well-orchestrated. When a load of drugs is
shipped to the U.S., the home office faxes to the cell head a
list of buyers, the amount of their purchases and their beeper
numbers. The cell head signals each customer's beeper to arrange
a delivery at a street corner or parking lot. After the customer
sells the cocaine down the line, he fixes a second meeting to
make payment. The deals take two minutes or less to consummate.

    After each meeting, both drivers alert the cell head in
code from a mobile phone or beeper. He telephones a desk
officer in Cali, then sends confirmation by fax. Detailed
ledgers are maintained in both countries. The ledgers have
proved the system's main vulnerability, providing a rich lode
of data to DEA analysts when seized.

    If anyone involved in a deal fails to call in, or catches
a whiff of the law, the cell is shut down. Last July, in a raid
on a Leto Lopez front business in Queens, agents found a list of
Calenos who had rented apartments around Manhattan. By the time
agents reached the addresses, everyone was gone, leaving behind
cocaine, ledgers, more than $1.5 million in cash, and two
steamer trunks full of arms. "Whenever we get close to these
people," says U.S. District Attorney Andrew Maloney, "they're on
a plane back to Colombia, and we have to start all over again."

    The cartel's need for goods, services and go-betweens has
spawned a thriving network of cottage industries. Front
companies acquire mobile phones by the dozen and "sublet" them
to the cells. The traffickers know investigators need four or
five days to get a court-ordered wiretap, so they use a phone
for two days and discard it. If a mobile phone is eventually
traced, the trail stops at the front company.

    Document specialists obtain clean driver's licenses and
car registrations. In 1989 the FBI and New York City
prosecutors cracked a scheme in which employees of the state
Department of Motor Vehicles were taking bribes of $100 to write
phony registration papers. Hundreds of falsely documented cartel
vehicles, fitted with hidden compartments, moved drugs north
from Mexico and returned south with cash.

    The cartel's second-biggest industry is money laundering.
The monthly gross for some New York cells runs from $7 million
to $12 million, all in $5, $10 and $20 bills. That translates
into 1,000 to 3,000 pounds of bills a month, a logistical
nightmare.

    In the early years a cell's financier would cart the money
to a local bank and wire it to Panama. The cartel had a
personal banker there: First Interamericas Bank, owned by
Gilberto and Miguel Rodriguez Orejuela. In 1985 the U.S.
government forced Manuel Noriega to close Inter americas and
required U.S. banks to report all large cash transactions.

    Many cells now ship the money in bulk to Cali, where some
is invested, some converted into pesos and some wired back to
banks in the U.S. or Europe under a relative's name. In January
1989 New York agents seized a Santacruz truck loaded with $19
million as it was departing for Mexico. Last October agents
found an additional $14 million inside heavy cable spools on
Long Island, along with records showing shipments of $100
million more over the previous nine months.

    The immunity the Cali cartel enjoys from prosecution is a
matter of intense concern to Bush Administration officials.
While Henry Orjuela Caballero is in jail in New York State
awaiting trial on federal drug-trafficking conspiracy charges,
brother Carlos is out on bail on similar charges filed against
him in Los Angeles. Another brother, Jaime, the family boss, is
free in Colombia. So are Don Chepe Santacruz, the Rodriguez
Orejuela brothers and such rising powers as the Urdinola
brothers. "You can't destroy the organization without lopping
off its head," says DEA's Bonner. "The tentacles grow back. If
the Cali cartel is to be attacked successfully, there must be
pressure in Colombia."

    President Cesar Gaviria Trujillo's ad visers insist the
Cali cartel will be given priority now that Escobar is jailed.
Bonner argues that the new gangs will prove a more formidable
threat to Colombia's security than the Medellin cartel
"precisely because they make more discreet use of murder,
bribery and intimidation." Says he: "The Cali organizations can
be characterized as murderous thugs who are more politically
astute in the way they carry out their business."

    Colombian national police officials say the Cali capos are
not living at home, are not doing business as usual and will be
arrested if found. Santacruz has kept out of sight since the
government began its antidrug campaign after the assassination
of presidential candidate Luis Carlos Galan in August 1989. But
others seem to feel safe from prosecution. Gilberto Rodriguez
Orejuela is very much at home, defiantly proclaiming his
innocence and that of his brother Miguel. Gilberto describes
himself as a "captain of industry and banker" and has the
portfolio to prove it. He also has reputable friends who are
partners, associates or suppliers in his business ventures,
which do much to promote development throughout the Cauca
valley.

    Even when police do close in, the Cali bosses have escaped
jail. When Gilberto was arrested in Spain in November 1984, the
Colombian government went to great lengths to prevent his
extradition to the U.S. According to a Rodriguez friend,
Gilberto's son Jaime Fernando appealed to then President
Belisario Betancur for help. Betancur declined comment. The
elder Rodriguez says, "If Betancur helped in seeing I was
extradited to Colombia and not the U.S., he was simply doing his
duty as President, supporting an extradition order issued by a
Colombian judge." Back in Cali, Rodriguez was tried on charges
identical to those filed in the U.S. and was acquitted -- along
with Santacruz, who was tried in absentia. The acquittal
protected both men from further extradition to the U.S. on
grounds of double jeopardy.

    While the Rodriguez and Santacruz clans seem to enjoy
considerable respect in Colombia, they are not universally
admired. Some intellectuals protest that if the drug mafia's
economic power is accepted, its values will eventually be
countenanced as well. Critics are especially wary of the
dynastic ambitions of the high-profile Rodriguez family. "They
invest in the future," says a Bogota businessman. "They are
thinking of the next generation, and the one after that."

    Gilberto's son Jaime Fernando graduated from the
University of Grenoble with a degree in international commerce.
Two other sons studied at Stanford University and the University
of Tulsa, and a fourth son is learning systems engineering. Gil
berto boasts that one of his daughters has a master's in
business administration and that a second is an engineer. "Most
are now working in our businesses," he says.

    Critics fear the proud father is grooming his children for
political office as well. "Someday their sons will rule part of
this country," predicts Luis Gabriel Cano, who has succeeded his
assassinated brother, Guillermo, as publisher of Bogota's
crusading newspaper El Espectador. Unless the Colombian
government can now break the hold of the cartel in Cali, Cano's
warning may have come too late.