Associated Press
- We spoke to the author of "Narconomics" and other experts about the estimated $1 billion worth of cocaine found on a ship owned by JPMorgan.
- They said the drugs are probably worth less than $500 million, and the smugglers may have used a high-profile boat to avoid suspicion.
- The smugglers probably paid off authorities, and US officials potentially blew their chance to catch them by seizing the drugs in Philadelphia.
- View Markets Insider’s homepage for more stories.
An estimated $1 billion worth of cocaine was recently found on the MSC Gayane, a container ship operated by Mediterranean Shipping Co. and owned by JPMorgan. The boat was traveling from Chile to Europe and passed through the Bahamas, Panama, and Peru before docking in Philadelphia, where federal authorities found the drugs.
We reached out to the author of "Narconomics" and four other experts for their views on the high-profile bust, which we’ve laid out below.
The drugs are worth way less than $1 billion
AP Photo/Matt Rourke
"The $1 billion estimate looks absurd," said Tom Wainwright, the "Narconomics: How to Run a Drug Cartel" author. "The true value of this seizure is going to be well under half" that amount.
The $1 billion figure assumes the 17.9 metric tons of cocaine could be sold for about $56 a gram. However, the wholesale price of cocaine in the US is closer to $28,000 per kilogram, or $28 a gram, according to UN data. Given the vast amount of drugs in question and the heightened risk of storing them, the smugglers might struggle to charge even that.
"Imagine that you’re trying to calculate the value of a sack of coffee beans, and that to do so you use the retail price of a cup of coffee," Wainwright said. "You’re going to get a very big overestimate."
Wainwright also flagged the consequences for drug policy of this type of error.
"By making this mistake, again and again, we overestimate the value of drug seizures like this one in Philadelphia, and thereby overestimate the effectiveness of trying to intercept illegal drug supplies," he said.
"The more effective thing to do is to try to reduce demand — through education programs and courses of treatment for addicts, for instance."
The MSC Gayane was part of a major conspiracy
Associated Press
"No cartel would risk such a large amount of their product unless they were pretty sure their method was low-risk and they had the right ‘controls’ in place, which could well include corrupting officials," said Peter Walsh, the author of "Drug War: The Secret History."
The smugglers likely used the MSC Gayane "because it was unlikely to come under suspicion: a modern, high-tech vessel with a clear chain of ownership to a blue-chip multinational company," Walsh said. "Such a vessel would be far less likely to attract law enforcement suspicion than a battered tramp ship of dubious provenance registered by a mysterious company in Panama. "
The "sheer scale" of the operation — which relied on multiple supply boats and a corrupt crew — along with the huge amount of cocaine, "strongly implies some kind of corruption or payoffs along the line," he added.
Gabriel Feltran, a sociology professor at the Federal University of São Carlos who has researched illicit markets in Brazil, agreed.
"Seven containers of cocaine, a drug sold in grams," Feltran said. "How could it be shipped without a sophisticated logistics system? How many controls were cheated in different countries? How many controllers have been paid? How could such money be laundered without official banks, without the financial markets? Impossible not to think that illegal markets are completely entangled with the formal ones."
US officials may have blown a chance to catch the smugglers
AP Photo/Matt Rourke
"The seizure at Philadelphia suggests either that the authorities were worried that they might lose control of the cocaine if they allowed it to run all the way to Europe, and could not take that risk, or, more likely, that the US authorities wanted the glory from the bust," Walsh said.
"By taking it out prematurely they will have scuppered any chance of trapping the receiving organisation at the European end," he added. "But sometimes they will do that if they get the kudos; the Drug Enforcement Agency in particular are notorious for that kind of behavior. "
Other experts agreed the DEA may have wanted the credit.
"It would not surprise me to learn that US authorities jumped the gun for publicity reasons while sacrificing efforts at unraveling trafficking rings into Europe downstream," said Bruce Bagley, a professor of international studies at the University of Miami.
The smugglers risked far greater scrutiny by transporting their product via the US, but it may have been an attempt to hide it in plain slight.
"Shipments often pass through the US to reduce suspicion/investigation," Bagley said.
See the rest of the story at Business Insider
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SEE ALSO: 4 surprising facts about the $1 billion worth of cocaine found on a ship owned by JPMorgan
Source: Business Insider – tmohamed@businessinsider.com (Theron Mohamed)