Criminals, Inc.

Organized crime is a multibillion-peso industry in the Philippines, its earnings accounting for a substantial portion of the country's gross national product.

WHOEVER said crime does not pay has certainly got it wrong. Organized crime is a multibillion-peso industry in the Philippines, its earnings, by conservative estimates, equivalent to 10 to 20 percent of the Philippine gross domestic product, or anywhere from P300 to P600 billion every year.

The most successful criminals are part of well-organized and well-funded syndicates that use their connections with police, military, and civilian officials so they can operate with virtual impunity. Despite occasional high-profile arrests and killings of crime bosses, the syndicates thrive, often with the authorities turning a blind eye while lining their pockets with illicit proceeds from criminal activities.

As shown by the following reports on two notorious criminal gangs — the Pentagon and the Kuratong Balaleng — the syndicates are nurtured by a complex layer of protection involving police and local, even national, officials. So tight are these gangs' connections to the authorities that even when their top leaders are arrested, they are often allowed to escape, as in the case of the notorious Pentagon boss Marahomsar Faisal and many others .

The gangs also use kinship, community, and ethno-linguistic networks to get their recruits and to provide a cover for their activities. The Pentagon gang thrived in Central Mindanao, drawing support from the almost-tribal closeness of Maguindanaoan clans. Similarly, the Abu Sayyaf exploited kinship and community ties among its predominantly Tausug and Yakan following in Southwestern Mindanao. The Kuratong Baleleng, meanwhile, is deeply rooted among the Christian, Cebuano-speaking migrant underclass in northwestern Mindanao.

Several of the gangs also draw their membership from rogue elements of rebel groups like the Moro National Liberation Front, the Moro Islamic Liberation Front, and the New People's Army. After all, gangs thrive on the kind of camaraderie and trust that bind comrades in the battlefield. Both the Pentagon and the Abu Sayyaf gangs, which specialize in kidnapping, bombings, and extortion, were formed from disgruntled chunks of the MNLF and the MILF. The Red Scorpion Group, which was into kidnapping and bank robberies, was made up of former NPA guerrillas. The notorious P50-Million Gang, named after the amount of ransom that its members demand from kidnap victims, has an ex-NPA commander in its ruling council, which is headed by a former bodyguard of an Ilocano politico.

The syndicates are organized in various ways, but most are divided into secret, compartmentalized cells, each with a specific function (e.g. surveillance, intelligence, operations, money laundering). They are headed by either one individual or a small group. In many instances, the crime bosses are local toughies who went big time by staging daring heists and ruthlessly cutting down rivals, Mafia style. In other cases, as in some kidnap and bank-robbery gangs, they are former policemen or soldiers who use their arms and their connections with the law for criminal ends.

It's hard to say how much money the gangs make: criminal syndicates don't report their activities and they don't pay income tax. But for sure the pickings are huge. The biggest money earners are drugs, kidnappings, bank robberies, and smuggling.

The illegal drug trade alone, according to estimates by the police and the U.S. State Department's International Narcotics Statistics Report, generates more than $5 billion (some P251 billion) a year, equivalent to about a third of the government's annual budget and eight percent of the country's GDP in 2001. Most of that — about $4 billion — is accounted for by shabu or crystal methamphetamine hydrochloride, which is mostly smuggled from China or manufactured here in clandestine laboratories, some of them in the heart of otherwise respectable, middle-class neighborhoods in Metro Manila.

The cost of producing shabu is ridiculously low, and the PNP estimates that dealers make P2,000 for every P10 they invest. The market, currently about 1.8 million Filipino drug users, is also an expanding one.

Kidnappings are another source of easy cash. This year kidnap-for-ransom gangs netted some P212 million in payments, and that's only for the reported cases. Anti-crime groups estimate that kidnappers were paid P1.4 billion in the last 10 years for the 124 kidnapping incidents that were reported to them during that period.

Bank robberies are another lucrative income source for criminal syndicates. PNP statistics show that there were 37 bank robberies in 2002, compared to only 27 the previous year. The number of armored van robberies saw a 60-percent increase from 27 incidents in 2001 to 44 last year.

Smuggling — of everything from garments to rice to handguns — is perhaps the most profitable of all. The Federation of Philippine Industries (FPI) claims that close to 80 percent of consumer goods sold in the country are smuggled. FPI chairman Meneleo Carlos Jr. said that some 50 percent of industrial goods are likewise smuggled.

Newspaper reports give some indication of the scale of the problem. Last year, $333,000 worth of smuggled Thai rice was seized while being unloaded at the Butuan City port. The rice, however, disappeared while it was in police custody and the vessel that brought it was allowed to leave the port without being cleared. Butuan City's Philippines Coast guard district commander lost his job afterward, but that was the last heard about the incident.


—Sheila S. Coronel
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