CORE-Observatory

Analytical method to identify the number of containers to inspect at U.S. ports to deter terrorist attacks (CORE1204)

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Summary: The requirement for 100% container scanning has been a burning topic, since U.S. Department of Homeland Security issued the initiative in order to prevent terrorists from smuggling weapons of mass destructions into the U.S. The paper explores how much it is reasonable to come down from the 100% inspection rate, if deterrence and cost of retaliation are considered in the model. Deterrence means the power to dissuade an attacker from attempting to smuggle weapons as opposite to use coerce or compel.  Retaliation cost describes the cost incurred by an attacker e.g. due to dismantling the attacker’s network. It is assumed the defender discloses in advance how many containers are inspected. The paper can be viewed here: https://www.researchgate.net.

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Full review: The study provides an economical model based on the game theory to estimate the optimal inspection rates in order to deter perpetrators from smuggling weapons into the U.S. The model assumes the customs or Border agency aims at minimizing the expected damages and cost of inspections while perpetrators are simultaneously trying to maximize their rewards. The used parameters are number of attackers, estimated damages, the cost of inspecting a container, the cost of a smuggling attempt, the cost of retaliation and the probability of detecting weapons. Retaliation cost describes the cost incurred e.g. due to dismantling the attacker’s network.  Cost of a smuggling attempt are the costs of acquiring, developing or manufacturing the weapons, and any logistical costs required to smuggle them into the U.S.  It is assumed the government agency announces publicly the inspection level and set of retaliation policies. Retaliation policy must pose a credible threat that means the governmental agency would retaliate even if that were not economically justified.

The study has four main limitations. First, the paper does not describe under what conditions the model works well or poorly. The quality of strategic and tactical intelligence, the efficiency of criminal investigation and prosecution processes, the extent of inter-agency cooperation and information sharing, the degree of private sector involvement and successfulness of awareness campaigns on retaliation policies are probably factors that influence on the model and its parameters. Second, the study does not provide numerical estimates to the parameters such as detection rates and cost of retaliation. Third, it is very unlikely that weapons of mass destructions are transported in containers into the U.S., what makes it difficult to assess the usefulness of the model in real life cases. Forth, costs of retaliation are not calculated and published by law enforcement agencies, thus criminals cannot make decision based on financial risks.

Despite of these limitations the CORE project can adapt the game theory and benefit from the paper. Traditionally law enforcement agencies highlight the number of seizures, arrests and successful prosecutions to measure operations and their impacts. The presented model brings two interesting components, a cost of crime attempt and a cost of retaliation. If criminal activities are financed and managed based on the same principles like legal ones, expected losses due to seizures of illicit goods or drugs are very likely calculated in the criminal business models. Consequently, making criminal business unprofitable is key to stop criminal activities. The approach enables to model the dynamic between costs and rewards from viewpoints of both law enforcement and criminal actors. In the other words, the model makes possible to study two dimensions in the Innovation Agenda, societal costs and friction costs caused by implemented security measures.

Reference: Bier, Vicki M. & Haphuriwat, N. (2011). Analytical method to identify the number of containers to inspect at U.S. ports to deter terrorist attacks. Annals of Operations Research, 187(1), 137–158.

 

CORE1204

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Progress in combating cigarette smuggling: controlling the supply chain (CORE1203)

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Summary: The paper presents cases how government agencies have reduced illicit tobacco trade by making the industry liable for controlling their supply chains. Tobacco companies were required to monitor the movement of lawfully manufactured tobacco products in their supply chains, and even retrospectively track the route taken when products were seized due to suspected excise fraud. According the paper illicit trade was substantially reduced, if manufacturers stopped delivering lawfully manufactured tobacco products in amounts that exceeded the tobacco market in the countries with lower excise duties. The criminal market dried out due to unavailability of illicit tobacco products that had been smuggled to the countries of higher excise duties by organized criminal groups. The document can be viewed at: http://tobaccocontrol.bmj.com.

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Full review: The paper focuses on excise fraud and organized smuggling of originally legally produced tobacco products to the United Kingdom, Spain and Italy. Based on internal company documents and court judgments the authors summarize evidence how the tobacco industry was involved directly and indirectly in the large-scale excise fraud. First, the companies delivered intentionally large quantities of tobacco products to the countries of low excise tax rates and uncontrolled distribution network. Then organized criminal groups shipped the purchased tobacco products illegally through their smuggling networks into the countries of higher excise duties.

The cutting off the tobacco supply to the illicit market is the key to intervene in large-scale organized tobacco smuggling. According the article by means of legislative and punitive interventions tobacco industry was forced to implement new export polices and practices. Tobacco companies invested in tracking and tracing systems that helped to identify points where shipped tobacco products diverted from the legal supply chain to the illicit markets. The companies implemented security processes in order to clearly identify they business partners and ensure business partners had no criminal records. Government agencies increased information sharing and inter-agency cooperation on a national and international level.  The interventions led to a substantial fall in customs seizures and a rise in legal sales.

CORE project can learn two things in the article. First, the global scope and multifaceted nature of the illicit tobacco trade requires visibility over shipment processes and efficient collaboration between governmental agencies and private sector. Second, the study implies risk to investigations and punitive damages made tobacco companies to pay attention in which markets their products finally end up. In other words, enforceable measures not voluntary agreements made industry liable for controlling their end-to-end supply chain and reduce societal risk.

Reference: Lara Joossens, L., & Raw, M. (2008). Progress in combating cigarette smuggling: controlling the supply chain. Tobacco Control, 17(6), 399–404.

 

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Governmental actors in supply chains & Governmental procedures, compliance and risk management – CASSANDRA Compendium Chapters 4 & 7, 2012 (CORE2007c)

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Summary: The fourth and seventh chapters of the CASSANDRA compendium elaborate on the roles of government agencies in international logistics and supply chain security (SCS). A broad range of government actors – customs, police agencies, border guards and many others – play a crucial role in enforcing and facilitating cross-border traffic through the global supply chains. These government agencies are critical stakeholders to be involved in the development, design and implementation of the two central CASSANRA concepts: the end-to-end data pipeline and the risk-based approach to cargo inspections and company audits. The CASSANDRA compendium highlights that there are important differences in the national laws and regulations, even within the European Union, that complicate international government collaboration. The differences in the legal framework and organisational cultures must be taken into account when designing new SCS solutions in the CASSANDRA and other projects. The CASSANDRA compendium is available for download: www.cassandra-project.eu. Review by Toni Männistö (CBRA)

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Full review: The CASSANDRA compendium describes how the role of government agencies in the cross-border supply chain operations is changing. The trading community and high-level policy-makers are strongly advocating trade facilitation, to make international commerce faster, more cost-efficient and less cumbersome. To address the demand for trade facilitation, many border control agencies are adopting risk-based approaches for controlling cross-border trade and travel. They exploit information increasingly to identify and target high-risk cross-border movements while facilitating low-risk traffic. To further lowering administrative hurdles to the cross-border trade, many government agencies are eliminating duplicative and redundant reporting requirements and building modern ICT systems to enable fast and reliable digital exchange of data and information.

Many law enforcement agencies are also facing budget cuts and increasing work loads, which forces them to look for new ways to increase productivity. Increased collaboration among border control agencies has been proposed as a solution for boosting productivity. The efforts towards further coordinated border management (CBM) are clearly manifested as joint-border control posts, regional single window systems (an online interface enabling trading companies, customs and other border control agencies to exchange trade-related information) and mutual recognition agreements (MRA) that harmonize customs and security related regulatory requirements across jurisdictions.

Reference: Hintsa, J. and Uronen, K. (Eds.) (2012), “Common assessment and analysis of risk in global supply chains “, Compendium of FP7-project CASSANDRA, Chapters 4 & 7

 

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MARITIME SECURITY – Progress and Challenges 10 Years after the Maritime Transportation Security Act, GAO, September 2012 (CORE1013)

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Summary: This GAO report reviews how the US government has advanced maritime security since the introduction of the Maritime Transportation Security Act (MTSA) in 2002 and what kind of challenges the Department of Homeland Security (DHS) and its component agencies have encountered in translating the Act’s requirements into practice. The report describes in detail the character, progress and future vision of main US maritime security programs, which, according to the report, fall into four domains: (1) security planning, (2) port and vessel security, (3) maritime domain awareness and information exchange and (4) international supply chain security. The report points out that the US maritime security scheme calls for further improvements in the areas of (1) program management and implementation, (2) partnerships and collaboration, (3) resources, funding, and sustainability as well as (4) performance measures.  This report describes the entire field of US maritime security, and this information is very useful for CORE demonstrations that involve shipping into, through or out of the US ports. The report is available at: http://www.gao.gov/assets/650/647999.pdf

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Full review: This scope of this GAO document is broad as it covers the entire US maritime security, its many themes from funding to practical initiatives and risk assessment. CORE’s demonstrations that involve US-related maritime shipping can use this document to get a comprehensive and detailed information about the status and future challenges of the US maritime security scheme. Also the CORE’s risk cluster can use this document to analyze how the US government has established a risk-based, layered security system to protect the seaborne trade and logistics from terrorism, smuggling and other criminal activities. Because of the complete description of the US maritime security scheme, the report is excellent reference material for producing training material and educational contents in the CORE training cluster.

Cross-references:

  • Maritime Security: DHS Progress and Challenges in Key Areas of Port Security. GAO-10-940T. Washington, D.C.: July 21, 2010. See pages 10-11.
  • Maritime Security: The SAFE Port Act: Status and Implementation One Year Later. GAO-08-126T. Washington, D.C.: October 30, 2007. See pages 15-19.
  • Information on Port Security in the Caribbean Basin. GAO-07-804R. Washington, D.C.: June 29, 2007.
  • Supply Chain Security: Container Security Programs Have Matured, but Uncertainty Persists over the Future of 100 Percent Scanning. GAO-12-422T. Washington, D.C.: February 7, 2012. See pages 13-14.
  • Supply Chain Security: Feasibility and Cost-Benefit Analysis Would Assist DHS and Congress in Assessing and Implementing the Requirement to Scan 100 Percent of U.S.-Bound Containers. GAO-10-12. Washington, D.C.: October 30, 2009. See pages 41-43.
  • Supply Chain Security: U.S. Customs and Border Protection Has Enhanced Its Partnership with Import Trade Sectors, but Challenges Remain in Verifying Security Practices. GAO-08-240. Washington, D.C.: April 25, 2008.

CORE1013

Additional keywords: Maritime Transportation Security Act, Secure Freight Initiative, Customs-Trade Partnership Against Terrorism (C-TPAT), Container Security Initiative (CSI), risk assessment, container screening, counter-terrorism, maritime security

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Vision and Strategy 2020, U.S. Customs and Border Protection Strategic Plan – Delivering safety, security, and prosperity through collaboration, innovation, and integration 2015 (CORE2010)

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Summary

This document sets a vision of the US Customs and Border Protection (CBP), the primary border control agency present at the US borders, for year 2020. The vision builds on four general goals and associated objectives that aim to improve safety, security and prosperity of the American people. Collaboration, risk management as well as exchange and exploitation of information and intelligence are in the heart of the vision document and integral elements of its goals and objectives. The vision document is available at: http://www.cbp.gov/sites/default/files/documents/CBP-Vision-Strategy-2020.pdf

Review by Toni Männistö (CBRA)

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Full review

The vision’s first goal is to counter transnational terrorism and crime at and beyond the US borders. Keys to effective counter-terrorism and anti-crime efforts are understanding of threat landscape as well as interagency and international coordination on border management. The second goal is about promoting a comprehensive, whole-of-government approach to border security and management, in order to exploit complementary capabilities of various border control agencies to the fullest extent. Specific objectives underpinning this goal are “situational awareness of the air, land and maritime borders”, “detection, interdiction and disruption of illegal border activities” and “strengthening comprehensive trade enforcement. Here the key is to collect information and intelligence about trade flows and carry out risk assessment to identify and target high-risk cargo movements and facilitate low-risk traffic. Other objectives are strengthening processes to conduct out-bound enforcement and interdiction of travelers and cargo as well as advance a comprehensive, predictive targeting strategy to identify threats as early as possible.

The third goal is about enhancing the US economic competitiveness by facilitating lawful trade and travel. The goal consists of objectives that seek to reduce cost of trade and travel by streamlining customs processes. Other objectives are to harmonize procedures throughout US government agencies and to develop risk-segmentation for better facilitation of low-risk trade and travel. Agility and adaptability of the CBP organization is the fourth goal. Sub-goals, or objectives, include optimization of CBP’s organizational structure, strengthening organizational structure and advance CBP’s effectiveness through technologies and business innovations. The vision document concludes with a presentation of principles and process of risk management in the customs context.

This vision document contains lots of relevant information for many CORE work packages, especially for those that deal with US-bound supply chains (WP9, WP14 and WP17. Certainly, also work packages dealing with risk assessment and educational material benefit from this material. Altogether, revealing strategic priorities of the CBP, the document reflects the trends of customs-centric supply chain security worldwide, and this information is very valuable for CORE and its work packages.

Reference

US CBP, 2015. Vision and Strategy 2020, U.S. Customs and Border Protection Strategic Plan – Delivering safety, security, and prosperity through collaboration, innovation, and integration

CORE2010

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Border Posts, Checkpoints, and Intra-African Trade: Challenges and Solutions. Barka, H., B., 2012 (CORE2009)

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Summary

Pan-African economic integration has progressed over past years, producing a broad range of regional trade agreements and economic communities that seek to harmonise policies, develop common infrastructure and remove barriers to intra-African trade. Against expectations, however, this increased integration has not translated into strong economic growth in Africa. This article discusses how sub-Saharan countries can overcome trade barriers that undermine the African economic integration. The article’s focus is on border posts and customs procedures that play a key role in facilitating cross-border traffic.

According to the article, the problems of international trade in Africa are largely explained by inadequate infrastructure that creates congestion and limits connectivity, delays that stem from complex and manual customs procedures, corruption and by illicit trade. One-stop-border-posts are a promising approach to streamline customs procedures and curb corruption. The joint border post may bring trade facilitation benefits as significant as costly investments on roads, ports, bridges and other transport infrastructure. The articles highlights the Chirundu One-Stop Border Post between Zambia and Zimbabwe as a successful case of border agency cooperation. Previous Observatory review (CORE2008, 20 January 2016) describes the Chirundu border crossing in more detail.

The paper concludes by suggesting One-Stop-Border-Post as a promising way towards higher trade facilitation and African integration. To organise one-stop-border-post, the first thing to do is to analyse roles and procedures of different border control agencies. The task of high-level governance is to define how responsibilities across the various border control agencies are harmonised, coordinated and delegated. Metrics and statistics should underpin the design, as numerical data into traffic flows and clearance times are likely to reveal the major bottlenecks in the cross-border traffic. Finally, the article proposes extended exchange of information and data across government agencies, domestically and internationally. The article is available at http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/INTRA%20AFRICAN%20TRADE_INTRA%20AFRICAN%20TRADE.pdf

Review by Toni Männistö (CBRA)

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Full review

The discussion on one-stop-border-posts in the African context is closely related to the CORE project and its many work packages. Especially the WP12, the demonstrator Schipol, that deals with imports of fresh cut flowers from Kenya to the Netherlands, benefits from the insights into African bureaucratic practices at many African borders. The demonstrator should consider the set of recommendations for higher border agency cooperation that the article proposes. Besides the demonstrators, the article provides a concise and informative outlook on international in Africa. At least CORE’s WP19, should consider the African perspective on cross-border trade when developing training material.

Reference

Barka, H., B., 2012. Border Posts, Checkpoints, and Intra-African Trade: Challenges and Solutions. African Development Bank

CORE2009

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ECSIT Report Summary (CORE3005)

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Summary: This reference project review focuses on German national funded research project ECSIT: Enhancing container security through non-contact inspection at the seaport terminal. The work done in ECSIT in non-intrusive inspection devices should be continued and refined in CORE ST2.3 Next Generation Scanning System. Furthermore the ECSIT AP7 Demonstration of the system might be used as a good working example for organization and operating plans towards the CORE ST 2.3.4 Field Demonstration. More support from ECSIT might be given to CORE T7.3 Scenario-based simulation and towards US-based Demo WPs for the broadly discussed and approved scenarios how to survey container with a multi-layered inspection approach in mind. The authors of the review are Marcus Engler and Matthias Dreyer, ISL. You can find the full review and original files in CORE e-library, with the coding CORE3005. More information on the project at: https://www.isl.org/en/projects/ecsit
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Review on FP7-project IMCOSEC (CORE3001)

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Summary: This is review on reference projects / specifying reusable outputs, on FP7-project IMCOSEC. The research in IMCOSEC (Integrated approach to improve the supply chain for container transport and integrated security simultaneously) was on following two conflicting trends in years before the project started: the elimination of trade barriers to ensure free trade, and increasing security demands to counter the threat of terrorism mainly. The author of the review is Marcus Engler, ISL. The original document can be found in CORE e-library coded as CORE3001. More information on the project at: http://cordis.europa.eu/search/result_en?q=IMCOSEC
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Organised crime is now Italy’s biggest company (News on 4.3.2014)

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Summary: The Italian Mafia make more money than the country’s biggest company ENI – and run at a 56% profit margin. Within the CORE-project, this is just nice-to-know information, feeding primarily to WP19 Education and training.  This entry comes directly from the following web-page: http://ampp3d.mirror.co.uk/2014/03/04/organised-crime-is-now-italys-biggest-company/ Read more

UNODC interview on the Container Control Program, CCP (CBRA blog on 18.1.2015)

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Ms. Nicole Maric and Mr. Ketil Ottersen of UNODC were kind enough to share their views on the Container Control Program – originally for the CBRA blog on supply chain security and trade facilitation. Regarding the CORE-project, this is useful information at least for the Risk-cluster, as well as for Demos in the maritime sector. Read more

Interviews

Professor Guido Palazzo on illicit waste supply chains

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Today we interview Professor Guido Palazzo on illicit waste supply chains.

Hi Guido, and thanks for joining a CBRA Interview – can you first tell a bit who are you and what you do?

I am a Professor of Business Ethics at the University of Lausanne since 2003. In my research I focus on the dark side of the force. I examine human rights problems in global supply chains, the driving forces of unethical decision making in organizations and the interface of business and organized crime. In the early 2000s, when I started with my research, business ethics was largely marginalized and perceived as rather irrelevant for both business schools and companies. This has changed dramatically in recent years. Ethical questions have moved center stage.

One of your research project focuses on illicit waste supply chains, particularly in Italy. How bad is the situation there?

Since 25 years, organized crime, in particular Camorra and Ndrangheta are involved in the business of toxic waste recycling. This business is ideal from the perspective of a Mafia organization: Legal risks are negligible and profits are huge. Operating with straw firms they offer their services across Europe up to 90% below the prices of their legal competitors. Obviously, they do not really recycle the waste but simply dump it in South Italy mainly in Campania province, but also in Africa and Eastern Europe. We are talking here about slag and chemicals and tire and other forms of waste from hospitals, garment industry, chemical industry, nuclear industry and so on. The waste includes toxins like cyanide, dioxin, asbestos, chlorines and includes also nuclear waste. Since 25 years, millions of cubic meters of such waste have been dumped in a region which the Romans once called Campania Felix for its fruitful soil. Billions of Euros of profit have been made and laundered by banks in Zurich, London and New York. And the most amazing think is that until recently, this destruction of one of the most beautiful regions of Italy occurred in complete silence. Now, toxins have arrived at the ground water and cancer rates of people living around the waste dumps explode.

Sad and interesting – at the same time – to hear about this… If I recall correctly, I gave you couple of months ago a copy of the FP7-CWIT project´s final report – with recommendations and a tangible roadmap to better mitigate risks of illegal activities in electronic waste… Do you foresee opportunities for similar research projects in the field of toxic waste trade, supply chains and logistics?

We do indeed need a similar research project in order to better understand the journey of illegal waste through Europe and the critical points in the supply chain of toxic waste recycling where organized crime interferes. We need public awareness for the urgency of the problem, develop a better regulatory governance around waste recycling and impose a compliance system on companies so that the existing silent collusion can be stopped.

Thanks Guido for this enlightening interview; and let´s start working together – as UNIL, CBRA and other partners – towards future research funding & project, on this crucial environmental and human health protection topic!

Mr. Mike Ellis, INTERPOL, on illicit trade and counterfeiting

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Today’s CBRA Interview is with Mr. Mike Ellis who is the Assistant Director of Illicit Trade and Anti-counterfeit Sub-crime Directorate at INTERPOL, Lyon, France.

Hi Mike, can you first tell a bit who are you and what you do?

I am the Assistant Director for Police Services at INTERPOL, based in Lyon France.  INTERPOL is the world’s largest international police organization. Our role is to assist law enforcement agencies in our 190 member countries to combat all forms of transnational crime. We work to help police across the world meet the growing challenges of crime in the 21st century by providing a high-tech infrastructure of technical and operational support. Our services include targeted training, expert investigative support, specialized databases and secure police communications channels. I am responsible for the coordination of all activities related to illicit trade, smuggling of illicit goods and counterfeiting for the organization and police forces within our 190 member countries.  I lead a team of expert officers who are engaged in training, capacity building, and operational support who operate along with my analytical support who manage risk awareness and intelligence handling.

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From your perspective, how bad is the current situation with counterfeit and other illicit trade in global supply chains? Can one for example see links between illicit trade and transnational organized crime groups; or, even terrorist organizations?

For many years the clear link has been established between the trafficking of illicit goods and transnational organized crime. Criminal organizations are attracted by the lucrative profits involved in trading counterfeit or fake goods, or in trading legitimate goods through illicit channels. The criminals involved manufacture and trade illicit goods on a regional and increasingly global scale.  It is well documented that they use the profits to fund other criminal activities such as drug trafficking and people smuggling, and for investment into funding subversive political groups.  Selling fake or counterfeit products is one aspect of illicit trade, as is selling genuine goods on the black market to avoid paying taxes. By avoiding regulatory controls, the criminals behind these activities peddle dangerous and illicit goods with a complete disregard for the health and safety of consumers. The phenomenon has grown to an unprecedented level, posing tremendous risks to society and the global economy. Counterfeiting harms businesses which produce and sell legitimate products, governments lose tax revenue from products manufactured or sold on the black market, and consumers are at risk from substandard products.

By the way, we met first time about one year ago in Lyon at an INTERPOL workshop linked to FP7-Project CORE. One of the main objectives of CORE-project is to develop leading edge education and training materials on supply chain security – for the benefit of law enforcement agencies, supply chain practitioners, and academics alike. Can you share your views about law enforcement – academia – industry cooperation in education material development, as well as in the broader field of supply chain security management?

One of our principle functions is capacity building and training.  At INTERPOL we recognize that capacity building brings with it raised identification of the impact of illicit cross-border trade and counterfeiting and all our new operations, or established operations in new regions, are preceded by a capacity building workshop.  The public domain is represented by police, customs, border control officials, and prosecutors, as well as representatives from various regulatory bodies including trading standards.  In addition, INTERPOL TIGC, the Trafficking in Illicit Goods and Counterfeiting program which I am heading, has developed a Mentoring Program which aims to increase cross-border, cross-industry law enforcement operational interventions by: strengthening capacity to deal with all types of cross-border trafficking in illicit and counterfeit products. We have also developed an online International Intellectual Property Crime Investigator’s College and have built already a robust network of over 10.000 law enforcement officers, and partner stakeholders with specialist knowledge and skillset.  This online training course provides specialist knowledge on transnational organized crime.  It is aimed at all law enforcement officials, regulatory authorities and private sector investigators who are committed in the fight against illicit trade and intellectual property crime.   We aim to provide crime professionals with specialist awareness and learning on the subject of transnational organized intellectual property, IP, crime, and illicit trade, by delivery of leading-edge training that meets international standards and allows crime investigators from any discipline to quickly identify other certified investigators.  Through this learning platform we also facilitate cooperation between the public and private sectors in the fight against IP crime, and ensure all public and private sector crime investigators have a common understanding of the problems facing them, while being aware of each other’s competencies and roles.  We seek to promote knowledge on what intervention strategies and tactics work, in order that all stakeholders are better able to work together in partnership in enforcement operations.

Thank you Mike for this highly interesting interview. It complements well our previous interviews on similar themes – with non-law enforcement experts including Mr. David Hamon and Mr. Tony Barone. CBRA and the whole FP7-CORE consortium, around 70 partners in total, wishes to continue the great cooperation in research and education material development with INTERPOL, throughout the CORE-project, until April 2018 – and beyond!  Juha.

 

Criminalization of global supply chains, by Mr. Hamon

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Hi David, and thanks for joining a CBRA Interview – can you first tell a bit who are you and what you do?

I served in the US Army as a logistician, served with the United Nations Peacekeeping Department as well as work with the UN humanitarian organizations.  I recently retired from a not-for-profit government contractor to pursue more creative work.  Whilst at the latter position I was seconded to the US Defense Department, first in African Affairs, and then as Research and Studies Director for a strategic studies office within a US Defense Agency.  I currently work, mostly independently, on a great many things related to future threats and re-defining of security/stability as it pertains and impacts diplomacy, development, defense, society, and economics/finance.

We met first time in Lausanne, Switzerland, around 2005 – what was that roundtable event again about?

Many years before cyber based terror threats were on the radar, we launched an inquiry into what we termed “Economic/Financial Terrorism” and whether security threats emanating from terrorism in the future would take the form of attacks on the Western system of finance and the economy.  We brought in a host of experts from the US and Europe to debate the changing face of terrorism and likely goals of future terror groups.  We examined everything from evolving ideology, motivation and intent, culture and identity to strategy, tactics, targets, weapons, and groups.  It was an extremely interesting event with industry admitting – at the time – they were not prepared for this phenomenon and governments largely split on the issue.  Additionally, experts and think tanks disagreed on whether economic terrorism was tangible.  It was very forward-looking for its time.  All participants came away with greater awareness on the subject as we went above and beyond what is currently called “financial crimes,” exploring potential kinetic based threats terror groups would use against the economic and financial machinery that included physical attacks on the supply chain, tourist industry, psychological undermining of the Western economic system to disrupt the normal provision of goods and services.

Can you tell more about your views on ´criminalization of global supply chains´?

I take similar views on the subject as Dr. Moisés Naim, in his 2005 book ‘Illicit: How smugglers, traffickers, and copycats are hijacking the global economy.’ He addresses several tenants that remain true today including the role of governments, technology, the Illicit traders mimicking licit trade and logistics actors – while simultaneously collaborating with many of them, and criminal groups seek high-profit opportunities as opposed to any other attribution (see CBRA Blog 21 October 2014).  Terror groups care less about profit but when thinking about logistics networks, what if the two groups collaborated?  Today logistics systems are more complex and move faster than ever in history, have less margin to fail, are far less ‘hands-on’ and offer many ways and places to hide illegal activity.  Detection and interdiction of this activity isn’t exclusively in the realm of governments. Industry has a role to play if it wishes to minimize new regulations, taxes, deter corruption, and other drains on efficiency and profit.  Experts, both public and private, rarely take a systems approach to detecting criminal activity with much throughput going undetected.  Both parties want to specialize on one aspect and miss the big picture.  A good example was the AQ Khan network.  How long has it been since industry has undertaken an assessment of whether there is a new “Khan” network out there?  Do trade organizations war-game with governments on criminality within supply chains?

Interesting! What are your views on ‘multi-commodity trafficking / crime portfolios’?

At the last corporate organization where I worked my team did some analysis on unregulated, illegal fishing as a security threat to Pacific Island nations.  In the course of this analysis, we discovered it was the same actors doing the illegal fishing as doing illegal dumping, illegal smuggling, illegal trafficking, among other illicit activities.  The criminality was only one aspect of the supply chain as the “demand” side as well as the delivery side was entirely legal and within businesses who conduct practically all business legally.  The same boats as platforms – and their crews – were used to conduct all activity legal and illegal and to the local authorities – as well as donor nations attempting to help – it was impossible to project accurately when the activity would switch between licit and illicit.  We couldn’t analyze if this was a regional or global phenomena but I guess it was a widely copied practice.  As Anthony Barone has pointed out, border management and controls are not the panacea of containment but need to be part of a larger practice (see CBRA Interview 18 December 2015). Criminals use technology just as effectively!  His idea of assembling a group of independent experts to rethink new approaches to border management – and I might add, redefining the meaning of borders and how thinking differently about borders per se – is a good start.   Using strategic foresight come up with several alternative futures to present to a dedicated [supply chain] private-public partnership empowered to make changes would be my overarching recommendation

Sounds that the global supply chain community is facing increasingly more threats and risks! Any other suggestions on how to improve the situation, both short term and long term?

In the short term, as I mentioned, conduct a public-private-partnership exercise to rethink the concept supply chain surveillance for illicit activity and anticipating new and emerging illicit activity.  In the long run, we don’t give enough thought to knowledge as a part of the supply chain.  Using the supply chain for illicit activity begins with motivation and intent getting out in front of those who may do harm.  To address alternative futures will take some innovation and creativity, but the stakes are high.  The next AQ Khan Network may bring very bad things into Europe (and beyond!) compliments of ISIS.  We don’t know what knowledge the current refugee population possesses that may be part of some future attack on the financial and economic system of the EU or if some refugees worked on chemical or biological programs in their countries of origin.

Thanks David for this interview – and let´s start working towards a joint project on these topics of common professional and research interest!

Web-links:

https://www.cross-border.org/2014/10/21/dr-naim-on-illicit-trade/

https://www.cross-border.org/interviews/new-approaches-to-border-management/

Dr. Federico Magalini on waste logistics crime

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Hi Federico, and thanks for agreeing to join a CBRA Interview, as the first expert in year 2016 – can you first tell a bit who are you and what you do?

Thank you for the opportunity of sharing some of the past experiences and projects done, including those with CBRA and looking ahead into the next years. I’m a mechanical engineer as background, with a PhD in Management, Economical and Industrial Engineers and I am working as Associate Programme Officer at United Nations University – Vice-Rectorate in Europe. I’m in particular working for SCYCLE, SCYCLE operating unit of the UN University Institute for the Advanced Study of Sustainability.

Can you explain more on what is the United Nations University, UNU?

UNU is, despite the name, not a classical university as many might think. The United Nations University (UNU) is a global think tank and postgraduate teaching organization headquartered in Japan. The mission of the UN University is to contribute, through collaborative research and education, to efforts to resolve the pressing global problems of human survival, development and welfare that are the concern of the United Nations, its Peoples and Member States. We work a lot with leading universities and research institutes in various countries, functioning as a bridge between the international academic community and the United Nations system. Our operating unit SYCLE is particularly devoted to research in the field of electronic waste.

UNU, INTERPOL, CBRA and other partners finished few months ago a 2-year research project on electronic waste crime and non-compliance, the FP7-CWIT –project. From your perspective, what were the most important outcomes of that project?

The CWIT project contributed in my opinion to increase the general understanding of volumes of electronic waste annually arising in different EU Member States and the fate of the disposed equipment. Knowing the baseline of products annually discarded by EU citizens is a first, fundamental step to allow policymakers and stakeholders at large to develop a strategy to ensure proper collection and treatment. In addition to that the project described the main drivers behind the flows diverted from the actual take back and recycling systems across the EU.

A second important outcome of the project is the analysis and identification of the main crime patterns that are typical of such an Industry: in the illegal trade of WEEE, there is a varying degree of compliance and criminality that spans across a continuum ranging from minor unintentional violations or non-compliance by individuals to deliberate illegal activities following a criminal business model. The organisational structure differs by country and region, from individual traders to structured criminal groups.

The combination of those two elements – knowledge of the market and understanding of criminal behaviours – allowed drawing a roadmap for future improvement in compliance and enforcement.

Do you believe that some of the CWIT outcomes will have practical positive impacts to reduce future crime and non-compliance, in the broader context of e-waste handling and management?

I sincerely hope so. And I am sure this will happen. To which extent is hard to predict but in the second part of the project we really focused on how to derive practical recommendations for the various actors involved along the entire value chain. And we broadly discussed the ideas, in many cases deriving from real cases and best practices, with various stakeholders; I hope this will increase the likelihood of having some of the recommendations actually implemented.

We committed ourselves to disseminate the recommendations beyond the project duration and we have seen already some results, with the project findings being discussed in various fora, conferences and public events, including some internal meeting with EC officials. And we have seen official request from some Members of the EU Parliament, who quizzed the EC on the consequences of the CWIT project, challenging here to take concrete actions.

Now we are launching a new project called DOT.COM WASTE – with several CWIT partners, and few new partners. You are the project manager for this “CWIT follow-up” –project, congratulations on that. Can you please explain what this new project aims to achieve?

I am really happy of the DOT.COM waste project as combines some of the results of the CWIT project, particularly the recommendation on the need of better training of enforcement and prosecutors in one of the main areas of my personal interest and work at UNU: capacity building. The DOT.COM WASTE project seeks to increase the capabilities of law enforcement agencies, customs and port authorities, environmental agencies and prosecutors to fight cross-border waste crime more cost-effectively. To achieve this objective, the project aims to increase the stakeholders’ understanding of current waste crime trends and to identify and share good practices for detecting, investigating and prosecuting waste crime activities.

Which aspect of the DOT.COM WASTE project you see as the most challenging one?

I see two main challenges ahead for the DOT.COM WASTE project. The first one is related to the scope of the project itself: there are many waste streams and the challenges of different streams are different. As a consequence also the tools to tackle illegal activities might vary: we will have to identify the priorities in order to be effective.

The second one is related to the duration of the project; the project will translate the knowledge gained into training material and tools and will promote training sessions to help key stakeholders integrate good practices into their day-to-day operations. The project’s underlying objective is to intensify international collaboration through development and implementation of new mechanisms for information exchange, technology transfer and operational coordination. But I really hope that all those efforts will produce effects that will last longer than the two years of the project itself.

I sincerely hope that we will be able to make the difference here!

Thanks a lot Federico for this interview – and talk to you soon at the DOT.COM WASTE kick-off meeting.