World View : Crime Without Borders : There is a dark side to globalization, one that has hit nearly every nation. And law enforcement is trying to cope.

By ROBIN WRIGHT and RONALD J. OSTROW

April 27, 1993 12 AM PT

TIMES STAFF WRITERS

When Grace Gooljary dialed her husband’s mobile car phone in Hong Kong, a stranger answered. Taken aback, she demanded to know who was using the beige Mercedes 420 SEL.

The voice coolly informed her that the car had been stolen--a fact the thief felt safe disclosing because both he and the vehicle were already on a high-powered speedboat heading for China.

Gerald Lynch was walking through Moscow’s Arbat shopping district when 10 Gypsy women attacked him. One jumped on his back, another searched for his wallet and U.S. passport, a third grabbed a parcel, a fourth hung on his neck--while the rest badgered him.

But what really staggered Lynch, president of the John Jay College of Criminal Justice in New York, was the way Russian police watched the mugging in broad daylight “like spectators.”

Throughout the world, what has glibly been dubbed the “new world disorder” has in fact been taking a growing toll on both individuals and societies since the onset of global change in 1989. The tale of two crimes reflects the darkest side of globalization and the way new freedom has also come to mean new license to engage in criminal acts.

“A fundamental change has taken place in the post-Cold War importance of criminal issues,” said Ambassador Parker Borg, the State Department’s special adviser on crime.

The disorder plays out most visibly in two forms:

* First, criminal activity is increasingly international. The end of barriers between nations, the demise of totalitarian police states and technological wizardry have combined to open up vast new possibilities for both petty and organized crime.

The Gooljarys were victims of global change.

“Economic reforms in China have led to a bigger demand for luxury cars,” explained Albert Kwok, police superintendent of Hong Kong’s Organized Crime and Triad Bureau. “A lot of rich people in China are now placing orders with smugglers.”

Once one of the world’s safer cities, Hong Kong averaged six car thefts a day in 1992--a threefold increase over 1991. Most are smuggled from the British colony to China on tai feis , specially designed boats equipped with up to five 300-horsepower engines.

“As countries are opening their borders and movement is much freer, they are opening themselves to cross-pollination of crime,” said Floyd I. Clarke, deputy director of the FBI.

* Second, soaring crime rates within countries are increasingly a negative political force, particularly in new democracies in Eastern Europe, Latin America and Africa.

Lynch was a victim in a new democracy where the number of people below minimum subsistence income more than doubled in 1992. At least 29% of Russia’s 150 million live in poverty, according to the U.N. Economic Commission on Europe. And in a country where everyone until recently had a job, hidden unemployment could reach 7 million this year, Russia’s Labor Ministry predicted.

“Crime threatens some of the most basic elements of a democratic order,” said a new report by the U.N. Commission on Crime Prevention and Criminal Justice. Unless the trend is rapidly and effectively brought under control, new democracies may face “growing opposition to the ongoing political and economic reforms.”

The biggest problem is internationalized crime, from which no country is now untainted, according to American, U.N. and European Community experts. Illegal transnational--even transcontinental--transfers of everything from stolen cars and historic artifacts to drugs and endangered species is mushrooming.

Criminal networks in Western Europe have recently established “vast and highly effective” operations, for example, to meet the growing demand for stolen automobiles in Eastern Europe, Western Asia, Africa and Latin America, according to the U.N. Crime Commission, headquartered in Vienna.

But various organized rings are not the only sources of internationalized crime.

“We believe change is particularly affecting small- and middle-scale crime,” said Hans Nilsson, a legal specialist on the 26-nation Council of Europe’s division on crime, based in Strasbourg, France.

“Organized crime has always had so much power that they’ve known how to move quite easily across borders. Only the amount may change. What’s new is that the little guys can now engage in the same acts too.”

With the new freedoms in Eastern Europe since 1989 and the 1991 breakup of the Soviet Union, whole new markets for crime have also opened up. And the withdrawal and reduction of the former Red Army has unleashed new arms with which to carry out those crimes.

Latin American drug money, known as narco-dollars, is also now being routed through banks in former Soviet republics. U.S. Customs tracked one transaction as far as Belarus before it disappeared.

Banks in many of the poor new democracies are now being used because they are so strapped for hard currency that they don’t ask questions. Their records systems are also so slow, inefficient or inept that tracing funds is virtually impossible, according to John Hensley, assistant commissioner for enforcement at the U.S. Customs Service.

Other crimes, such as credit card fraud--by white-collar criminals, organized rings or even individuals such as truckers who systematically use cards stolen in one country for transactions below authorization limits in another--are also moving into new arenas that are not yet able to cope with or curtail the practice.

‘From Hearts to Heroin’

“With the internationalization of so much commerce--economic and human--criminals can move so easily that it’s hard for nations to deal with them. You get money from moving everything from hearts to heroin,” said Stanley E. Morris, a senior law enforcement official with the U.S. Treasury.

One of the more grisly proliferating crimes is the international black market in human organs--mainly from homeless and destitute people, including children, in developing countries--for use in transplants.

Even prostitution has a growing international dimension.

“Young women and sometimes male adolescents are taken from one country, or even one continent, to another, following well-organized supply lines that connect Africa, Asia, Europe and Latin America. Victims may be deceived by false offers of work or simply (be) kidnaped,” the U.N. report added.

Animals are also being exploited by international crime. Exotic birds from Latin American and Australia are being smuggled into Europe and the United States, according to Herman Woltring, officer-in-charge of the U.N. Crime Commission. Sold by hunters to local dealers for as little as $200, they can fetch up to $20,000 on the international black market.

And a new class of assassins from former Soviet republics is also now emerging on the international black market, mainly former Red Army or KGB operatives, according to a senior U.S. official.

Some of the most imaginative internationalized crime now involves theft of what is known as intellectual property rights, mainly copyrights and patents covering everything from books, movies and music to sophisticated electronics and designer fashion.

Border openings and globalizing markets since 1989 have helped craftsmen worldwide convert crude, local imitation industries started in the 1980s into high-quality, multimillion-dollar international enterprises in the 1990s.

Among the fastest-growing rackets is the export of copied European designer fashions, jewelry and handbags often now indistinguishable from the originals. Most clones from big-name houses such as Channel, Cartier, Dior and Louis Vuitton are made in developing Third World countries, notably in the East, and then smuggled to richer markets in developed states in the West.

Financial losses estimated in the billions of dollars are suffered not only by designers but also by countries unable to collect import taxes.

High-Tech Crime

The real innovations in crime, however, are the product of technology. Computers, for example, are now facilitating some of the most controversial crimes, such as child pornography and money laundering, and often putting them beyond the reach of conventional law enforcement.

Last month, U.S. Customs officials issued search warrants in 30 American cities to track three child pornography rings originating in Denmark. Unlike earlier pictures and films sent under cover of brown envelopes by mail, however, this network distributed lewd photos of children engaged in sexual acts by high-tech computers.

“Computer-distributed child pornography, through the use of computer bulletin boards and modems, provides its users with a permanent source of first generation materials that can be bought, sold, used and transferred worldwide in a matter of seconds, while never losing quality or the ability to multiply endless copies,” according to the U.S. Customs Service.

Because images literally leapfrog continents and oceans through the air, Customs believes that Operation Longarm, the largest U.S. operation against child pornography ever undertaken, may have uncovered only the tip of the iceberg, according to Hensley.

The current problems and future potential of computer-related crime are reflected in the fact that 80,000 different computer bulletin boards already operate in the United States. While most are legal, they can be easily exploited for criminal use.

In part because electronic systems are still penetrable, “the world is going to be confronted with a massive growth in organized computer criminality,” the U.N. Commission predicted.

One of the areas already deeply affected is the global financial system, which is particularly susceptible to technology-enhanced international crimes such as money laundering.

“As commercial banks, investment firms, insurance companies, full-service brokers and asset managers have all globalized their operations, the menu of financial institutions through which both clean and dirty money can be moved has never been so extensive,” explained Stephen Flynn, a guest scholar at the Brookings Institution, in the winter issue of the Brookings Review.

Big Profits

And the magnitude of criminal profits has reached unprecedented proportions. Drug trafficking alone probably generated between $3 trillion and $5 trillion during the 1980s, the U.N. Commission reported. Since then, narcotics and the growing array of other international crimes have in turn necessitated even larger money laundering operations to cover criminal tracks.

In Operation Green Ice last fall, law enforcement officials in six countries on three continents seized more than $47 million in about 90 bank accounts set up to launder the narco-dollars of Colombian drug lords.

Across the board, the world’s financial system is more vulnerable today because of both global and technological progress. The international money flow between 1970 and 1990 increased by 3,200%, while technology developed over the same period has now made it possible to move hundreds of millions of dollars with the stroke of a computer key.

Meanwhile, many institutions are now less tightly supervised because of a series of deregulations. The criminal potential was exposed in the case of the Bank of Credit & Commerce International.

Once the largest private bank in Britain and the sixth largest of its size in the world, with offices in 73 countries, BCCI allegedly laundered $20 billion, while also engaging in extortion, bribery, kidnaping and dealing with some of the world’s most notorious terrorists--activities BCCI allegedly got away with for more than a dozen years.

“Almost any computer-related crime can result in extremely large losses in a very short period of time, while leaving little or no evidence either of the crime or the identity of the perpetrators,” the U.N. report said.

Smaller computer-facilitated financial crimes are also increasing, according to Woltring.

Woltring cited the case of an employee in the foreign exchange department of a North American bank who set up a computer program to round off all international transactions to the nearest 10 cents. The program then deposited the remaining cents to an account he had set up.

The individual amounts were so small that no one noticed. But the huge volume of accounts netted thousands of dollars before the scheme was uncovered.

Yet most international financial crimes are either not uncovered or not reported, Woltring said. Several international financial institutions have opted not to go public to prevent exposing their vulnerability to computer crimes. Some have even hired the culprit to figure out ways to protect their systems.

“The modern era has both armed and encouraged crime,” the U.N. report concluded.

“Mass communications have facilitated contacts with (criminal) associates in other countries and continents, modern banking has facilitated international criminal transactions and the modern revolution in electronics has given criminal groups access to new tools enabling them to steal millions and to launder the huge illicit profits.”

Just as threatening, however, is the rise of crimes within states, according to American, U.N. and European officials.

Crime statistics in many countries in the midst of political or economic transitions are particularly staggering. Since 1989, for example, between 3,500 and 4,000 gangs have emerged in the 15 former Soviet republics.

In every major former Soviet city, from the northern Baltics to Central Asia and across eastern Siberia, crime has increased to record, even epidemic, levels.

Protection money demanded from Russia’s fledgling businesses is now a prominent racket, while indigenous Mafias have emerged as major powers in even remote new states such as Uzbekistan and Kazakhstan, according to European and U.N. officials.

Russia a ‘Mafia Power’

In a Kremlin address to Russia’s security chiefs, President Boris N. Yeltsin warned in January that crime had reached such unprecedented dimensions that it could pose a bigger threat to Russian stability than political conflict.

Yeltsin also conceded that Russia has become a “Mafia power. We are overtaking countries that had always been to the fore--such as, for example, Italy. . . . If we do not attack this (crime) issue in every district, city and region, as well as in (Russia) as a whole, we will never get out of the blind alley we are in.”

The problem for many new democracies is that en route to reform, economic overhauls can impoverish hundreds of thousands--even millions--of people, some of whom may turn to illegal activities to support families or to survive.

The subsequent crime can then threaten social stability and even lead citizens to demand tough state mechanisms to prevent lawlessness.

Thus begins the decline from democracy to more authoritarian rule.

Many other countries in transition in Latin America, Asia and Africa face similar problems. Since the white minority government’s decision to scrap apartheid, South Africa has faced the painful costs of change. Since 1989, the murder rate has doubled, in part because of uncertainty and racial tension during the transition to majority rule and to economic desperation.

A ‘Catch-22’

A third to half of South Africa’s 31 million population lives below the poverty line, a situation made worse by a steep recession. The disparity between rich and poor is among the highest in the world.

Like many other societies undergoing change, South Africa is trapped in a “Catch-22” in handling crime. Spending limited resources to combat it may diminish funds to end disparities and for reforms, restructuring, investment and technology to modernize.

Law enforcement officials around the world aren’t optimistic about gaining control over either international or internal crime in the near future.

“We’re fighting a 21st-Century problem with, at best, 19th-Century techniques and approaches,” said Mark Richard, a deputy assistant attorney general in the Justice Department’s Criminal Division.

Even the United States has problems. Most of the 90 U.S. extradition treaties with different countries are “terribly outdated,” Richard said. The treaty with the Dominican Republic, a major transshipment point for cocaine bound for the United States, doesn’t even cover narcotics, he noted as just one of several examples.

And since the negotiation of those treaties, authorities are seeking to bring back individuals wanted for crimes “never even imagined” when the treaties were drawn up.

International cooperation generally is limited. Interpol is only a gentlemen’s agreement rather than a formal treaty to collect data or share enforcement duties.

And law enforcement officials around the world lack language capabilities to communicate and common training or techniques that might foster informal cooperation.

Even among allies such as the United States and Europe, many countries have different laws and definitions of crime. The gap grows proportionately wider with cultural differences.

With many of the new democracies, for example, “we can’t pick up a phone as we do with the British MI-5 or the Mexican attorney general’s office or Canadian officials,” Hensley said.

The mechanisms of cooperation are only now taking shape. The U.N. commission, an arm of the U.N. Economic and Social Council, was created only last year and held its second session this month.

In its reorganization of the State Department, the Clinton Administration is planning to form a new bureau dealing with international crime. As yet untitled, its working nickname is “drugs and thugs.”

And the FBI has formed the Computer Assistance Reaction Team to work with academics and the commercial and government sectors on detecting and combatting new “hacker” schemes that make computer networks vulnerable.

“It’s now recognized that no one country can go it alone and that an interdependence of effort is required,” Woltring said. “But as with any international development, it doesn’t happen overnight. The U.N. now has 180 members, and you can imagine how hard it is to get agreement of 180 members on anything.”

Special correspondent Christine Courtney in Hong Kong contributed to this article.

An American Breakdown

U.S. citizens arrested overseas in 1992: 2,878

Drug related: 1,138

Immigration: 250

Fraud (all types): 174

Drunkenness: 145

Possession of a deadly weapon: 144

Assault: 133

Theft: 133

Other: 761

Source: U.S. State Department.

Researched by JANET LUNDBLAD

A Cooperative Effort

The U.S. Justice Department has been coping with a surge in international crime. The number of requests for extradition--by the United States to foreign governments and vice versa--has grown, as have the requests for mutual assistance in which the United States and other nations share evidence and other information.

* 1984

Requests for Law Enforcement Assistance: 158

Requests for Extradition: 377

Total: 535 * 1985

Requests for Law Enforcement Assistance: 346 Requests for Extradition: 489

Total: 838 * 1986

Requests for Law Enforcement Assistance: 418

Requests for Extradition: 429

Total: 847 * 1987

Requests for Law Enforcement Assistance: 354

Requests for Extradition: 572 Total: 926 * 1988

Requests for Law Enforcement Assistance: 395