When people envision “modern slavery,” they sometimes conjure the image of a worker bent over in labour, while a menacing, weapon-toting overseer stands watch nearby. While that image may be an accurate depiction of a single aspect of the modern-day slave trade, it is nowhere near a comprehensive visual of the full scope of the illegal slave-trade enterprise. The reality is that the overseer would have no slave to control without the complicit support of a vast and complex slave trade industry. Unfortunately, no one sees the full scope of the industry because the very nature of its business is secrecy and subterfuge.
Knowingly or Not, Big Business Abets the Human Trafficking Enterprise
Around the world, millions of dollars are collected and banked daily by criminal enterprises that sell slave-produced products. Almost all of the time, their criminal “businesses” flourish because they cloak their illegal activities behind the false fronts of credible companies. Licenses, leases, machinery, and other attributes of the legitimate company provide a facade of legitimate business function. That facade is intended to deter investigation and distract attention away from the attached illegal activities. This “appearance of legitimacy” is a critical aspect of the human trafficking enterprise.
Corruption Plays a Big Part, Too
To make matters worse for the victims of slavery (people who are forced to work under threat to themselves or loved ones of injury or death), another key component to the tragedy of human trafficking is the vast scope of corruption that discards official obligation in favour of personal gain. The United Nations Office on Drugs and Crime (”UNODC”) recognises that of both public and private entities contributes foundational support to the human trafficking endeavour. It cites a 2005 report produced by the Council of Europe that articulated one of the first working treatises on the practice of, and participants in, the “trafficking in persons”:
- Defined: The crime consists of recruiting the victim; the provision of false documents; transportation and exploitation of the victims, and laundering the proceeds of the victim’s effort.
- Chain Participants: These contributors are either actively or passively involved in the practice, by providing supports to the criminal, or by failing to report or enforce anti-slavery laws. Their occupations range across all aspects of the slave-affected practice, from the “overseers” in the production field to the distributors at the end of the transaction process, which may be thousands of miles away from the site of the slave labour. The chain can include police officers, border and immigration officials, lawyers, judges, politicians, and military officials, as well as commercial services providers such as travel agents, banks, retail outlets, and other locations where the laundered money is disconnected from the criminal offence.
Complexity Impairs Enforcement
The size and complexity of the human trafficking organisations , for decades, impeded efforts to track the miscreant behaviours and bring the criminals to justice. In too many cases, the intentional (corrupt) or negligent (inept) acquiescence to criminal activity aids and abets the crime, and even the most well-respected entities can ignore the rules when caught up in the thrill of massive profit from questionable sources. Ergo, it should come as no surprise that the global banking industry is also an integral part of the human trafficking industry.
The U.S. bank, Wachovia, provides a chilling example of how billions of dollars of drug money (which almost certainly includes the proceeds from human trafficking) can overwhelm even the most scrupulous financial professional. Over the course of three years, between May 2004 and May 2007, Wachovia (now a part of Wells Fargo) “laundered” over U.S. $378.3 billion (billion with a “b”) of Mexican drug cartel money. Cartel members deposited the funds into Mexican foreign exchange businesses with which Wachovia did business. Those “legitimate” businesses transferred the money to Wachovia accounts; the “owners” of those American accounts then took that money and purchased the goods needed to sustain the cartel. (Assets acquired included the planes used to transport thousands of pounds of illegal drugs around the world, along with millions of dollars of luxury goods and services.) The bank pocketed the millions of dollars’ worth of associated transaction fees and interest payments despite the fact that the accounts, amounts, and deposit/withdrawal frequencies all raised red flags of illegal money laundering according to American banking laws. The total sum was the equivalent of one-third of Mexico’s national GDP.
The whistleblower who ultimately triggered the resulting investigation, Martin Woods, was happy that the bank was caught but disheartened by the consequences meted out: a US $150 million fine, the equivalent of only two percent of the bank’s US $12.3 billion in profits for 2009. According to Woods, Wachovia’s failure was emblematic of the failure of the entire regulatory system. Without adequate risk management, proper governance, and consistent law enforcement, the global crisis of criminal human and drug trafficking only gets worse because even “legitimate” businesses can be lured to participate in exchange for immense profit.
Technology is Providing Bigger, Better Enforcement Tools
As technology has evolved into Big Data and sophisticated analytics programming, however, the “good guys” are developing tools that will help to reduce, if not eliminate, the use of slave labour to further criminal practices. The American “Foreign Corrupt Practices Act” and the U.K.’s “Modern Slavery Act” are cutting through international barriers by covering all entities, regardless of location, that do business on their shores. And the global intelligence giant, Thompson-Reuters manages a “World Check” system that applies the full scope of Big Data analytics capabilities to snooping out criminal entities that use the Internet within their criminal systems. But more on those developments in a subsequent post…
How do we remediate this?
For close to 2 decades, I have worked in the markets of China and Asia, running audits on behalf of international brands and manufacturers. I have come across child labour, bonded labor of various degree, and other problematic behaviors, while assisting clients to eliminate these despicable practices in their supply chain, it is important to acknowledge that the problem is not just located in the hidden manufacturers in remote locations, but infact, its hidden in plain sight. My hope is that we will start working on these issues, right in front of our eyes, as it will have a cascading effect on the people affected by slavery.
If you would like to discuss further on unethical issue in the supply chain, feel free to get in touch with me directly.