ILLICIT DRUG TRADE RIVALS WALMARTS, EXXONS IN DOLLAR VALUE

Legislation Gives Authorities A New Tool

Bloody gang wars, targeted killings and dial-a-doper crackdowns like
the one recently conducted in Edmonton dominate the daily headlines.

But the murder, mayhem and street-level busts that go along with
illegal drug trafficking are really just a sideshow.

In the end, the illicit drug trade is all about the money. And at a
global level, it's very, very big money indeed.

How big? Think Walmart, ExxonMobil or Royal Dutch Shell. If the drug
business was a legitimate, tax-paying enterprise, only a handful of
the world's top companies would rival it in size.

The UN Office on Drugs and Crime estimates that illicit drugs
generate roughly $320 billion US a year in revenues, at the retail
level. At the wholesale level, the value is about $90 billion.

Even if one uses the latter as a benchmark, the cash that gushes from
illicit drug sales exceeds the annual revenues of such multinationals
as Sony, Procter & Gamble, Goldman Sachs and Nestle.

In the U.S. alone, some $65 billion worth of illegal drugs are sold
every year, according to the White House Office of National Drug
Control Policy. Yet only a tiny fraction -- roughly $1 billion -- is
intercepted and seized by police.

Some of the loot is used to buy real estate, luxury cars, boats,
planes and all the flashy toys favoured by drug dealers.

Some is laundered through casinos, currency exchanges, stock
purchases or front companies like travel agencies, bars or tanning salons.

But police say most illegal drug profits are electronically
transferred offshore and stashed away in secretive tax havens, where
shell companies with nominee directors don't have to disclose the
identities of their beneficial owners.

Since millions of bank transfers happen every day, with billions of
dollars flying around the planet in the blink of an eye, it's almost
impossible for law enforcement agencies to follow the money trail.

"The sums actually recovered are paltry," concedes John Cassara, a
retired former Central Intelligence Agency operative and special
agent for the U.S. Treasury Department who spent much of his career
in the Middle East.

"I think we have a lot more to do in terms of enhancing our
enforcement capabilities. We have to get the message out that this
type of behaviour is taken very seriously," he says.

"The end results and the numbers that we have speak to the crisis --
and that's pretty much what it is.

"We need to do a much better job of enforcing the anti-money
laundering laws that are already on the books."

Here in Canada, it's a similar story.

The Canadian Security Intelligence Service estimates that between $5
billion and $17 billion in illicit profits are laundered every year,
with a big chunk of that cash flowing from the illegal drug trade.

In B.C.'s Lower Mainland -- where more than 40 shootings and nearly
20 drug gang killings have occurred since Jan. 1 -- the province's
B.C. Bud (marijuana) crop generates an estimated $5 billion to $7
billion in annual revenues.

CSIS estimates there are roughly 950 organized criminal groups active
in Canada, and about 80 per cent derive revenues from illegal drug sales.

Although all municipal police forces can investigate money
laundering, the RCMP -- notably its Integrated Proceeds of Crime
units -- and provincial forces like the Ontario Provincial Police
conduct most investigations. As in the U.S., the annual value of
related seizures is modest, however.

"In 2007, the RCMP opened 73 money laundering cases, and opened seven
in the first four months of 2008; most have not concluded. The RCMP
also seized approximately $8.9 million," according to the U.S. State
Department's most recent International Narcotics Control Strategy Report.

Do the math. Even if that figure was 10 times larger, or roughly $89
million, it would still only represent a small fraction of the
billions of dollars in illegal drug profits that are laundered in
Canada every year.

Supt. Doug Kiloh, of B.C.'s Combined Forces Special Enforcement Unit,
knows how tough it is to seize criminal profits. Even obtaining
search warrants is often a herculean task, he says.

"Anecdotally I would say (the seizures) are pitiful compared to the
actual proceeds of crime, and I would relate that to the absolutely
labour-intensive difficulties we have in prosecuting (traffickers),"
he says. "It is absolutely stunning the amount of time and process we
have to put into it ... . In fact, prosecutors are more happy to drop
the charge (under the proceeds of crime legislation) and secure
convictions on other charges, and often that's what occurs."

In one recent international drug trafficking investigation, in which
$5 million worth of Canadian real estate properties were seized, plus
illegal drugs with a street value approaching $200 million, Kiloh
says police had to secure no fewer than 220 search warrants and other
judicial permits to do their work.

"In parallel investigations in the U.S. and Australia on that file,
they each needed about a dozen. So what we do with 30 people, they do
with three people. We just can't afford that," he says.

Now, provincial governments -- as opposed to police forces -- are
using a new weapon to seize the ill-gotten assets of drug dealers and
other criminals: civil forfeiture legislation.

First introduced in Ontario in 2002, later adopted by B.C., and more
recently, Alberta, such legislation empowers provinces to seize cars,
houses and any other assets used to commit criminal activity, notably
drug trafficking. Related illegal profits are also subject to seizure.

Unlike proceeds of crime investigations, which are conducted pursuant
to the Criminal Code, civil forfeiture is not a criminal process.
Rather, it is conducted through civil courts. Thus, the burden of
proof is much lower.

Since 2002, Ontario has seized -- or launched civil court proceedings
to seize -- more than $16 million worth of property, most of it tied
to drug traffickers. In B.C., $4.5 million worth of property had been
seized as of June 2008.

In Alberta, where the Victims Restitution and Compensation Payment
Act came into effect in November, roughly $600,000 worth of assets
had been seized even before this week's dial-a-doper sweep in
Edmonton, which netted police $14,500 in cash, six vehicles and
thousands of dollars in illegal drugs.

Besides a large rural grow op -- capable of producing $4.6 million
worth of marijuana annually -- the seizures to date include a string
of high-end cars, says Karl Wilberg, director of Alberta's Civil
Forfeiture Office.

"We've seized a Hummer, a BMW station wagon, an Acura, a Lexus and a
number of fairly ordinary domestic vehicles, too. Some of them have
hidden compartments that contained loaded and illegal firearms," he says.

"Those are vehicles used to victimize our communities, and could have
easily resulted in there being further victims."

Ontario's civil forfeiture law is being challenged in the Supreme
Court of Canada, however, and a ruling is expected soon. The outcome
could well determine whether drug traffickers continue to enjoy a
virtual free ride in Canada.