<nettime> FW: Biz2.0: The Technology Secrets of Cocaine Inc.

[Bruce Sterling <bruces@well.com>]

------ Forwarded Message
From: John Gilmore <gnu@toad.com>
Date: Wed, 03 Jul 2002 02:38:38 -0700
Subject: Biz2.0: The Technology Secrets of Cocaine Inc.

Why does this remind me of cyberpunk fiction?  Maybe you have some avid
South American readers?

The broad tracking of phone call detail data, which in Colombia was used
to kill dissenters who leaked info that could damage the trackers, is
exactly what the USA Patriot Act expanded and automated in the US -- for
Internet accesses as well as phone calls.

    John

http://www.business2.com/articles/mag/0,1640,41206,00.html

By: Paul Kaihla
Issue: July 2002

Colombian cartels have spent billions of dollars to build one of the
world's most sophisticated IT infrastructures. It's helping them smuggle
more dope than ever before.

On a rainy night eight years ago in the Colombian city of Cali, crack
counter-narcotics troops swarmed over the first floor of a low-rise
condominium complex in an upscale neighborhood. They found no drugs or
guns. But what they did find sent shudders through law enforcement and
intelligence circles around the world.

The building was owned by a front man for Cali cocaine cartel leader
Jose Santacruz Londono. Inside was a computer center, manned in shifts
around the clock by four to six technicians. The central feature of the
facility was a $1.5 million IBM AS400 mainframe, the kind once used by
banks, networked with half a dozen terminals and monitors. The next day,
Colombia's attorney general secretly granted permission for U.S. agents to
fly the mainframe immediately back to the United States, where it was
subjected to an exhaustive analysis by experts from the Drug Enforcement
Administration and various intelligence agencies. The so-called Santacruz
computer was never returned to Colombian authorities, and the DEA's report
about it is highly classified. But Business 2.0 has ferreted out many of
its details. They make it clear why the U.S. government wants the
Santacruz case kept quiet.

According to former and current DEA, military, and State Department
officials, the cartel had assembled a database that contained both the
office and residential telephone numbers of U.S. diplomats and agents
based in Colombia, along with the entire call log for the phone
company in Cali, which was leaked by employees of the utility. The
mainframe was loaded with custom-written data-mining software. It
cross-referenced the Cali phone exchange's traffic with the phone
numbers of American personnel and Colombian intelligence and law
enforcement officials. The computer was essentially conducting a
perpetual internal mole-hunt of the cartel's organizational chart.
"They could correlate phone numbers, personalities, locations -- any
way you want to cut it," says the former director of a law enforcement
agency. "Santacruz could see if any of his lieutenants were spilling
the beans."

They were. A top Colombian narcotics security adviser says the system
fingered at least a dozen informants -- and that they were swiftly
assassinated by the cartel. A high-level DEA official would go only
this far: "It is very reasonable to assume that people were killed as
a result of this capability. Potential sources of information were
compromised by the system."

The discovery of the Santacruz computer gave law enforcement officials
a chilling glimpse into the cartels' rapidly evolving technological
sophistication. But here's what is truly frightening: Since the
discovery of the Santacruz system in 1994, the cartels' technological
mastery has only grown. And it is enabling them to smuggle more dope
than ever before.

The drug lords have deployed advanced communications encryption
technologies that, law enforcement officials concede, are all but
unbreakable. They use the Web to camouflage the movement of dirty money.
They track the radar sweeps of drug surveillance planes to map out gaps in
coverage. They even use a fleet of submarines, mini-subs, and
semisubmersibles to ferry drugs -- sometimes, ingeniously, to larger ships
hauling cargoes of hazardous waste, in which the insulated bales of
cocaine are stashed. "Those ships never get a close inspection, no matter
what country you're in," says John Hensley, former head of enforcement for
the U.S. Customs Service. Most of the cartels' technology is
American-made; many of the experts who run it are American-trained.
High-tech has become the drug lords' most effective counter-weapon in the
war on drugs -- and is a major reason that cocaine shipments to the United
States from Colombia hit an estimated 450 tons last year, almost twice the
level of 1998, according to the Colombian navy.

In a sense, the cartels are putting their own dark twist on the same
productivity-enhancing strategies that other multinational businesses have
seized on in the Internet age. Indeed, the $80 billion-a-year cocaine
business poses some unique challenges: The supply chain is immense and
global, competition is literally cutthroat, and regulatory pressure is
intense. The traffickers have the advantages of unlimited funds and no
scruples, and they've invested billions of dollars to create a
technological infrastructure that would be the envy of any Fortune 500
company -- and of the law enforcement officials charged with going after
the drug barons. "I spent this morning working on the budget," the head of
DEA intelligence, Steve Casteel, said recently. "Do you think they have to
worry about that? If they want it, they buy it." That's an especially
troubling thought just now, as the Bush administration pressures Congress
to expand the $1.3 billion anti-narcotics plan for Colombia and to allow
the U.S. military to take a more forceful role in the savage fighting
between Colombia's left-wing rebels, right-wing paramilitary units, and
the drug-trafficker allies of both.

Archangel Henao is the man whom authorities credit with much of the drug
runners' recent technological progress. According to Colombian and U.S.
narcotics officials, Henao heads the North Valley Cartel, the largest and
most feared criminal organization to emerge from the chaos that gripped
Colombia's underworld after the old Medell=EDn and Cali cartels were
broken up in the 1990s by the country's military -- with extensive U.S.
help. Officials say that Henao, a heavyset 47-year-old born with a
withered left arm, controls Buenaventura, the principal port on a stretch
of the Pacific coast that is the launching point for most of the cocaine
and heroin smuggled into North America from Colombia. His North Valley
Cartel foot soldiers are known for dismembering the bodies of their
enemies with chain saws and dumping them into the Cauca River. The U.S.
Treasury Department has banned Henao from doing business with U.S.
companies because he is a "drug kingpin," and the DEA publicly calls him
one of Colombia's biggest traffickers. He has never been convicted of a
drug-related offense, although a DEA official says the agency is "trying
to build an indictment" against him.

Henao's cartel is a champion of decentralization, outsourcing, and pooled
risk, along with technological innovations to enhance the secrecy of it
all. For instance, to scrub his profits, he and fellow money launderers
use a private, password-protected website that daily updates an inventory
of U.S. currency available from cartel distributors across North America,
says a veteran Treasury Department investigator. Kind of like a
business-to-business exchange, the site allows black-market money brokers
to bid on the dirty dollars, which cartel financial chiefs want to convert
to Colombian pesos to use for their operations at home. "A trafficker can
bid on different rates -- 'I'll sell $1 million in cash in Miami,'" says
the agent. "And he'll take the equivalent of $800,000 in pesos for it in
Colombia." The investigator estimates the online bazaar's annual turnover
at as much as $3 billion.

Henao and other cartel leaders recruit IT talent from many sources,
intelligence officials say. The traffickers lure some specialists from
legitimate local businesses, offering scads of cash. They also contract
with Israeli, U.S., and other mercenaries who are former electronic
warfare experts from military special ops units. Cartel leaders have sent
members of their own families to top U.S. engineering and aeronautical
schools; when the kids come home, some serve as trusted heads of technical
operations. Most of the high-end gear the cartels deploy comes from
household-name multinational companies, many of them American; typically,
front companies purchase equipment from sales offices in Colombia or
through a series of intermediaries operating in the United States.

The talent and tools are among the best that money can buy, and it shows.
For instance, Henao's communications have become so advanced that they
have never been intercepted, Colombian intelligence sources say. The last
clear view inside the organization's technical operations was provided in
1998, when a small army of Colombian police arrested Henao's top IT
consultant, Nelson Urrego. That bust soon led to the discovery of an
elaborate communications network that allowed Urrego to coordinate fleets
of North Valley Cartel planes and ships that were smuggling 10 to 15 tons
of cocaine each month.

The network's command center was hidden in a Bogot=E1 warehouse outfitted
with a retractable German-made Rhode & Schwarz transmission antenna about
40 feet high, and 15 to 20 computers networked with servers and a small
mainframe. The same kind of state-of-the-art setup existed in
communications centers at Urrego's ranch in Medell=EDn, at an island
resort he owned, and at a hideout in Cali. Seized invoices and letters
show that Urrego or his associates had recently bought roughly $100,000
worth of Motorola (MOT) gear: 12 base stations, 16 mobile stations
installed in trucks and cars, 50 radio phones, and eight repeaters, which
boost radio signals over long distances.

The range of Urrego's network extended across the Caribbean and the upper
half of South America. He and his operatives used it to send text messages
to laptops in dozens of planes and boats to inform their pilots when it
was safe to go, and to receive confirmations of when loads were dropped
and retrieved. According to one intelligence official who analyzed
Urrego's network, it was transmitting 1,000 messages a day -- and not one
of them was intercepted, even by U.S. spy planes.

When Urrego typed a message into his computer, it created a digital
bit-stream that was then encrypted and fed through a converter that
parceled the data out at high frequencies. Digital communications over a
radio network can be put into a code much more easily than voice
transmissions, and thus are far tougher to intercept and decipher.
"There's going to be a delay in sending and receiving messages," says a
surveillance expert who does code-breaking work for the DEA and CIA, "but
it's going to be fairly friggin' secure."

The cartel's fleets still had to dodge surveillance aircraft like the
dozen or so P3 Orions that U.S. Customs flies over Colombia. But by
bribing officials and drawing on an elaborate counterintelligence database
maintained by the cartels, Urrego learned the operations schedule of the
planes. According to a former narcotics operative in the U.S. Army's
Southern Command, cartel pilots routinely map the radar coverage of U.S.
spy planes by putting FuzzBuster radar detectors in their drug plane
cockpits and logging the hits. "They'd use every piece of data to build a
picture, just like a jigsaw puzzle," the retired officer explains. "A
piece of data could be 'One of our airplanes was flying on this azimuth at
this altitude, and his FuzzBuster went off,' which means he was being
painted by the radar. So they put that piece of data in the computer. Then
another airplane was flying on that azimuth at that altitude, and his
FuzzBuster did not go off. As they put that data together, they'd build a
picture of the radar signature."

Law enforcement officials believe that much of Urrego's system has simply
been reconstituted -- with upgrades based on the latest advances in
communications and encryption gear.

A lanky man with deep bags under his eyes sits in a cinder-block office
within a heavily fortified army base. He may have the most dangerous job
in Colombia. He is a top special operations commander, and he probably
knows more about the drug cartels' technological prowess than anyone on
the outside. He rarely gives interviews, but late one Saturday night, he
agrees to discuss one of his special areas of expertise: Archangel Henao.

Lately, the commander says, he has been studying how Henao's cartel uses
technology for what amounts to corporate espionage and competitive
advantage against business rivals. The North Valley Cartel has waged a war
against other smuggling groups over a variety of issues, including control
of the port of Buenaventura. The commander recites a litany of recent
assassinations and bombings. In February 2001, for instance, North Valley
Cartel operatives commandeered a Bell helicopter used by the government in
coca fumigation programs and pressed it into service in an attempted
assassination of a rival trafficker. The rival was in jail in Cali at the
time, so the hit men flew over the prison and dropped a homemade bomb
containing 440 pounds of TNT. The detonator failed, but had the bomb gone
off, it would have killed more than 3,000 people, the commander estimates.
Within a month of that attack, the intended victim's organization
retaliated with a flurry of hits -- among them, a submachine-gun ambush of
four North Valley Cartel figures in a Cali hospital cafeteria. (In
February, Henao's brother-in-law, a top North Valley Cartel capo, was
poisoned to death in a maximum-security prison.)

Many of the targets in the power struggle, the commander says, were
located by signals intelligence -- things like pager and e-mail
intercepts, transmitters planted on vehicles, or bugs hidden in homes and
offices. "This is a technological war," he says.

Actually, it has been for a long time -- as the mysterious story of the
Santacruz computer suggests. According to Carlos Alfonso Vel=E1squez
Romero, a now-retired colonel who commanded the elite unit that discovered
the computer, one of the principal IT gurus behind the system was Jorge
Salcedo Cabrera, a former army intelligence operative and electrical
engineer who crossed over to the underworld. The Santacruz computer wasn't
his first big technological splash. When the Colombian government launched
the unit that Vel=E1squez would later head, it established a toll-free tip
line for information about Cali Cartel leaders. The traffickers tapped the
line, with deadly consequences. "All of these anonymous callers were
immediately identified, and they were killed," a former high-ranking DEA
official says.

Henao's cartel built on this and other prior technology initiatives, in
part by creating what amounts to a narco research and development program.
One early fruit of that effort, intelligence officials say, was an
advanced version of a cheap boat called a semisubmersible. Shaped like the
Civil War-era Monitor, the small craft cruises below the waterline, except
for a conning tower where one of its two-man crew pilots the boat. The
vessel has underwater propulsion, radar, and short-band radio towers. And
it's virtually invisible to even the most sophisticated spy gear. "You
basically need a visual sighting to detect one, because you're not going
to pick them up in a radar sweep," says Hensley, the former U.S. Customs
enforcement chief.

Semisubmersibles, however, are unstable, and narcotics officials think the
cartels have lost several at sea -- one reason that the traffickers
upgraded to submarines. According to the head of the Colombian navy, Adm.
Mauricio Soto, the North Valley Cartel and other organizations have used
real subs for years. Authorities believe that the Cali Cartel purchased a
Soviet sub in the early '90s, and that its crew accidentally sank it off
Colombia's Pacific coast during its first smuggling run, probably because
they lacked the 10 skilled people needed to operate it.

More recently, the cartels have built their own subs, with help, Soto
suspects, from Italian engineers who stayed in Colombia after overseeing
the construction of the navy's own fleet of commando submarines two
decades ago. Henao, for instance, is believed by military and intelligence
officials to have a small fleet of mini-subs - -- used for, among other
things, hauling dope to those toxic waste freighters. So far, Colombian
authorities have found only two drug subs, both of which were under
construction. The most recent one, discovered 21 months ago outside
Bogot=E1, was a 78-foot craft that cost an estimated $10 million.
Intelligence sources say it belonged to Henao's North Valley Cartel. A
Colombian official says Henao wanted a vessel that could carry several
more tons than the Buenaventura mini-subs and travel as far as 2,000 miles
-- say, to the coast of Mexico or Southern California.

Arrayed against this formidable technological arsenal is, well, not much.
The commander of the narcotics agents in the Buenaventura area is a
world-weary man who rarely ventures outside his military compound not far
from town. He never goes into Buenaventura itself. Traffickers have put a
price of 35 million pesos (about $17,000) on his head. "Life is cheap
here," he mutters. He displays boxes and boxes of seized high-tech gear.
Even personnel at the bottom of the cartel food chain have Israeli
night-vision goggles, ICOM radio frequency scanners, and Magellan GPS
handhelds.

The commander says an informant told him about mini-subs off Buenaventura
months ago. But neither he nor his men have ever seen one. His outfit
doesn't have the equipment to detect underwater craft.

Nor does the commander know many details about the Santacruz computer bust
that first alerted officials to how technologically advanced his
adversaries had become. He is unaware, for instance, of one of the biggest
reasons U.S. officials want details of the system and the murders of U.S.
intelligence sources it triggered kept top secret. Jorge Salcedo Cabrera,
the main IT whiz who set up the Santacruz computer, eventually became an
informant against cartel bosses. The DEA declined to comment on Salcedo.
But according to several intelligence officials, he is now living in
America at taxpayer expense, under the witness protection program.




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