Chapter 5
Transnational crime
5.1
To date, the committee has examined the security challenges that
originate from within Pacific island states. It has suggested that poorly
resourced policing organisations and overstretched justice systems create
difficulties for the Pacific island countries in managing law and order,
containing civil disorders and prosecuting and deterring criminal activity. It
has also noted that on occasion indigenous policing organisations have been
unable to manage breakdowns in law and order, with some states requiring the
support of regional partners to help restore peace. In this chapter, the
committee turns its attention to the nature and extent of illegal activities
that originate outside Pacific island states, giving specific attention to
those forms of transnational criminal activity that represent the most
significant threat: unauthorised fishing; smuggling and the transhipment of
illegal goods; money laundering; and terrorism.[1]
5.2
Transnational crime generally refers to any crime that crosses
international borders or moves from one jurisdiction into another. Weak policing
and poor security sector governance, as explored in chapters 3 and 4, have made
Pacific island states vulnerable to the activities of transnational criminal
groups. It is axiomatic that such groups target areas of least resistance. As
Mr Neil Jensen, CEO, Australian Transaction Reports and Analysis Centre
observed, transnational criminal syndicates 'will look for any chink in the
armour anywhere along the way'.[2]
5.3
The Pacific Islands Forum identified the threat of transnational crime
when adopting the Honiara Declaration on Law Enforcement Cooperation in 1992. Forum
leaders set out the rationale for the declaration in its opening paragraphs:
The threats to the stability of the region are complex and
sophisticated, and the potential impact of transnational crime is a matter of
increasing concern to regional states and enforcement agencies. The Forum
agreed that there is a need for a more comprehensive, integrated and
collaborative approach to counter these threats.[3]
5.4
The Declaration sought to promote and develop methods of cooperation,
specifically legal sector cooperation, to deal with transnational crime. In the
wake of September 11, the Forum decided to re-endorse the Honiara Declaration through
the Nasonini Declaration on Regional Security (2002).[4]
In this Declaration, Forum leaders recalled their commitment to act
collectively in response to regional security challenges.[5]
5.5
More recently, in an article which appears on the World Legal
Information Institute database, Ms Ciara Henshaw suggested that the threat of
transnational crime has steadily increased in the Pacific island countries over
the last 25 years:
The Pacific is known as a major production and distribution
hub for illicit drugs and has been chosen as a base by many transnational crime
groups, including terrorist organisations. There is strong evidence of
extensive money laundering within the region, corruption is manifest, small
arms have proliferated, the region is being used as a transit zone for both
human trafficking and people smuggling, and identity document fraud compounds
the problem. However, the transnational criminal activity that has manifested
itself in the region has largely been directed at supplying markets elsewhere
and has been planned and financed from elsewhere.[6]
5.6
In his opening address to the Forum Regional Security Committee Meeting
in June 2009, Secretary General Tuiloma Neroni Slade, provided a status report
on the current threat of transnational crime to the region. In referring to the
2009 Pacific Transnational Crime Assessment, which was developed in cooperation
with specialist regional law enforcement agencies, he suggested that transnational
criminal activity is of growing concern:
It is clear from the variety of investigations undertaken in
the last year that the region continues to be targeted by individuals and groups
attempting to undertake a range of transnational criminal activity. These
include the illicit movement of drugs, weapons and people. We are even
beginning to witness the incidence of new organised crime groups entities
attempting to exploit vulnerabilities in our banking and financial sectors.[7]
5.7
These concerns have been raised within the Pacific Island Forum's
Security Program which considers increased transnational criminal activity as a
symptom of globalisation. The program suggests that improved communications and
information technologies; greater mobility of people, goods and services; and
the emergence of the globalised economy all contribute to increased
transnational criminal activity.[8]
5.8
Recently, concern has also been raised that the region faces increased
transnational criminal activity as a result of the global financial crisis
particularly in the areas of commercial fraud: evasion of duty on imported goods
and the movement of counterfeit products.[9]
Unauthorised fishing
5.9
The vastness of the maritime waters of the Pacific makes enforcement,
regulation and the management of international boundaries extremely complex for
Pacific island states, and many struggle to regulate the movement of licensed
and unlicensed foreign fishing vessels through their Exclusive Economic Zones
(EEZs). When appearing before the committee, the Pacific Islands Forum
Secretariat identified the Pacific's fisheries security challenge in the
following way:
Given that fisheries are one of the clear and most stable
resources that the region possesses and given the potential to use those
resources for the future of the children of the region, it is basically a very
important security challenge. The need to protect the resources, the need to
surveil our waters and the need to provide effective approaches to ensure that
we have good security in the region are all basically underpinning quite
concerted efforts to cooperate across the region, both on surveillance and on
fisheries management issues...[10]
5.10
In a recent report by the Australian Strategic Policy Institute, Dr Sam
Bateman and Dr Anthony Bergin suggest that with declining fish stocks, 'illegal
fishing is the main transnational crime at sea in the region' and that 'fisheries
protection and law enforcement have become major tasks for maritime security
forces'.[11]
In its submission, DFAT contended that the landed value of fish taken from the
region is vastly under-reported, with poaching estimated at 40 per cent.[12]
5.11
As suggested above, the vastness of the maritime boundaries presents significant
challenges for Pacific island states. Typically, the EEZs are 200 nautical
miles.[13]
The combined EEZs of Pacific island states cover approximately 30,569,000 km².[14]
Figure
5.1. Pacific Island countries' land and EEZs[15]
|
Country |
Land area (sq km) |
Size of EEZ (sq km) |
Approx. ratio (land/EEZ) |
|
Cook Islands |
240 |
1,989,000 |
1:8,300 |
|
Federated States of
Micronesia |
701 |
2,900,000 |
1:4,150 |
|
Fiji |
18,272 |
1,338,000 |
1:73 |
|
Kiribati |
684 |
3,540,000 |
1:5,175 |
|
Marshall Islands |
181 |
2,131,000 |
1:11,735 |
|
Nauru |
21 |
320,000 |
1:15,238 |
|
Niue |
258 |
390,000 |
1:1,512 |
|
Palau |
508 |
629,000 |
1:1,238 |
|
PNG |
162,243 |
3,120,000 |
1:19 |
|
Samoa |
2,935 |
131,000 |
1:45 |
|
Solomon Islands |
28,530 |
1,340,000 |
1:47 |
|
Tonga |
699 |
720,000 |
1:1,030 |
|
Tuvalu |
26 |
725,000 |
1:27,885 |
|
Vanuatu |
11,880 |
680,000 |
1:57 |
5.12
By contrast, the collective land mass of Pacific island states totals
552,789 km² (with 84% of this landmass belonging to PNG).[16]
Kiribati, for example:
...consists of 33 atolls with a total land area of about 800 sq
km. The atolls exist in three separate groups—the Gilberts, Line and Phoenix. Each group has a separate Exclusive Economic Zone, with the total EEZ for Kiribati being around 3.5 million sq km.[17]
5.13
The map prepared for the committee by Geoscience Australia of the
region's EEZs (below) illustrates the enormity of the challenge. It highlights
just how difficult it is for archipelago states like Vanuatu, or island states
that are even more disparate or scattered such as Kiribati, Tuvalu and the Cook
Islands, to detect illegal activity in their EEZs.
5.14
There are primarily two forms of fishing activity that take place in the
Pacific: domestic fishing and fishing conducted by distant-water fishing
nations. The majority of the fishing by distant-water nations is undertaken by
countries including: China, Taiwan, Japan, Korea, the US and EC countries, in
particular Spain.[18]
Access agreements for the fleets of distant-water fishing nations are provided
through licensing arrangements, and vessels must be registered with the Pacific
Islands Foreign Fisheries Agency (FAA). However, despite these licensing
agreements, much illegal fishing across the Pacific goes undetected. Illegal
fishing activity takes several forms: foreign vessels that overfish their
quotas; overstay their prescribed time in the EEZs; and have no entitlement to
fish in the EEZs of Pacific states. Illegal fishing operators, however, are not
the only ones to use the vast areas of sea to their advantage.
5.15
The submission from the Attorney-General's Department and the Australian
Customs and Border Protection Service (ACBPS, formerly Australian Customs
Service), claimed that the manufacture, trafficking and consumption of illicit
drugs are significant security challenges for PNG and Pacific island countries.
It noted that Pacific island states are being used as a transhipment point for
the flow of various illicit drugs by sea and air between suppliers in Central
and South America and South East Asia and distributors in Australia, New Zealand
and North America. As an example it suggested:
In 2004, Fijian authorities raided the
largest methamphetamine laboratory ever discovered in the Southern Hemisphere
near Suva. The then Fijian Police Commissioner indicated that the lab was
linked to an Asian crime syndicate that was using Fiji as a staging ground for
its illegal activities. The laboratory had a large capacity to manufacture
crystal methamphetamine aimed at supplying regional markets, including
Australia.[19]
5.16
The ACBPS identified Fiji, Vanuatu, Tonga and PNG as states that have
been used as transhipment points for large drug consignments. In an attempt to
illustrate the extent of this activity, they identified a number of recent
seizures across the Pacific:
- 375kgs of heroin destined for Australia was seized in Fiji in 2000;
- 74kgs of methamphetamine was found
on a ship in Singapore headed for Fiji and Australia in 2002;
- 160kgs of heroin was shipped from
Myanmar to Vanuatu, presumed to be on route to Australia, in 2001;
- 120kgs of cocaine was found buried
at a beach in Vanuatu in 2004;
- 98kgs of cocaine believed to be
bound for Australia was seized in Tonga in 2001; and
- International Narcotics Control
Board thwarted an attempt to import 12 tonnes of ephedrine and pseudoephedrine
into PNG in 2002.[20]
5.17
However, the ACBPS surmised that, although the transhipment of illicit
drugs is known to occur, the precise levels of trafficking are unclear.
5.18
Because of its proximity to Australia, PNG represents the greatest
security threat as a transhipment point for illegal goods entering Australia.
ACBPS informed the committee that although PNG does not feature as a source
country, or transhipment point, they have concerns about the capacity of border
control and law enforcement agencies in PNG to effectively deal with such
threats, stating:
Although there are few confirmed cases of large scale
trafficking in illicit goods, potential remains for cross-border criminal
activity. The nature of PNG's borders makes them difficult to patrol and secure.
When this is combined with limited border enforcement capability and close
proximity to Australia, these factors contribute to an ongoing potential
threat.[21]
5.19
As is the case with the transhipment of illicit drugs, although the
transhipment of weapons is believed to occur, the precise levels of trafficking
are unknown. ACBPS explained:
Anecdotal information has surfaced periodically regarding a
'guns for drugs' trade through the Torres Strait but no evidence has been
uncovered of significant operations of this nature.[22]
5.20
The Pacific Islands Forum Secretariat suggested, however, that in the
past, there have been more problems with the storage and control of gun stocks,
as outlined in Chapter 2, than with arms trafficking.[23]
Money laundering
5.21
Typically, money laundering is the act through which illicit funds are
made to appear legitimate. However, money laundering may also refer to the conversion
or transfer of property, with an asset value, for the purpose of concealing or
disguising the illicit origin of money. The committee received evidence which
identified trade-based laundering:
Trade based money laundering is the process of disguising the
proceeds of crime, and moving value through the use of trade transactions in an
attempt to legitimise its illicit origins. In practice this can be achieved
through the misrepresentation of the price, quantity or quality of imports or
exports. For example, if organised crime is involved in illegal logging, funds
generated through, for instance, people trafficking could enter the financial
system through a seemingly legitimate logging transaction, where the value of
the logs is overestimated in an invoice.[24]
5.22
Money laundering, trade and non-trade based, can weaken states financial
stability and engender political instability and has been identified as critical
aspects of the Pacific's security agenda.[25]
5.23
In 2000, the Financial Action Task Force (FATF)[26]
listed Nauru, Cook Islands, Republic of Marshall Islands and Niue as
'non-cooperative countries and territories' due to the prevalence of offshore
banks and financial centres that were operating within these countries under
secrecy provisions.[27]
Nauru, in particular, has a poor reputation for accountability when it comes to
money laundering and offshore banking. The Australian Transaction Reports and
Analysis Centre (AUSTRAC) explained:
Back in 2000 when they were blacklisted Nauru had a number of, essentially, offshore banks which did not conduct any customer due diligence,
did not keep track of the beneficial owners of them and all that. With the introduction
of the AML/CFT [anti-money laundering/ counter-terrorism financing] arrangements
and that black-listing process, or the listing of noncompliant countries and
territories by the Financial Action Task Force, essentially all of the offshore
banks have been shut down.
There still remain offshore financial centres, which are
something different. There are trust company service providers in several
countries in the Pacific. But offshore banks, as they are defined, do not exist
any more. As a result, Nauru basically has no bank. Commercial banking in Nauru
has also left and money now, to get into Nauru, comes in on boats.[28]
5.24
States are particularly vulnerable to money laundering activities if
they have weak legislation, as DFAT suggested: 'Pacific island states with weak
legislation have been used by international criminal syndicates for large-scale
money laundering'.[29]
5.25
Under the Honiara Declaration, Pacific island countries have agreed to
implement legislation to prevent money laundering and to deal with the proceeds
of crime. The Nasonini Declaration expands this requirement to include
counter-terrorism measures. However, while leaders at the annual Pacific Island
Forum meeting frequently recognised that the countries in the region remain
vulnerable to transnational crime, legal and capacity issues limit effective
regional implementation and law enforcement activity.
Threat of terrorism
5.26
Published shortly after the terrorist attacks in Bali on 12 October
2002, the Australian Strategic Policy Institute's (ASPI) first strategic and
security policy review, Beyond Bali, identified the increased threat of
terrorism as the most urgent new security policy challenge faced by Australia.[30]
In the section headed, 'Our Failing Neighbours', the review suggested that
Melanesia contained failing states that were vulnerable to terrorist activity:
Three of our closest neighbours—Papua New Guinea (PNG), the Solomon Islands and Vanuatu—are in different ways struggling to survive as functioning
nations and societies. The Solomon Islands is the furthest down the road to
state failure, but PNG and Vanuatu also face serious problems...We have
humanitarian concerns about the well-being of our neighbours, and important
concerns about their providing footholds for transnational crime in our
neighbourhood. These countries are also potential havens for terrorist groups.
They could serve as bases for groups planning attacks in Australia, and their
weak security infrastructure means that such groups could not only slip in to
these countries unnoticed, but could also use these states as points of entry
to Australia. While the risk may be slight, it is one that we cannot ignore in
the aftermath of the Bali bombing.[31]
5.27
Thereafter, the link between transnational crime, potential terrorist
activity and the weakness of Pacific security institutions was made more
explicit. Reinforcing the assessment in Beyond Bali, Dr Elsina
Wainwright, formerly the International Program Director at ASPI, identified the
potential risks for Australia:
Of course, the south-west Pacific countries are
geographically very close to Australia. They could serve as bases for terrorist
groups planning terrorist attacks in Australia.
Given the weakness of their security institutions, some of
these states could be points of entry to Australia for such groups.[32]
5.28
In an ASPI publication of 2003, Our Failing Neighbour: Australia and the
Future of the Solomon Islands, which was launched by the former Minister
for Foreign Affairs, Alexander Downer, Wainwright went on to suggest that the 'Solomon
Islands risks becoming—and has to some extent become—a petri dish in which
transnational and non-state security threats can develop and breed'.[33]
5.29
In contrast to this characterisation of the Pacific as a hotspot for
international crime, a haven for money launderers and a region vulnerable to
terrorists, submitters to the inquiry referred to the threat of terrorism in
the Pacific as low.[34]
The Pacific Islands Forum Secretariat suggested:
The terrorist strikes of 11 September 2001, the Bali bombings and the numerous terrorist acts since, have caused states to focus on how
they can contribute to counter-terrorism efforts. There is now a recognised
risk that conflict and extremism can develop anywhere including the Pacific Islands. Notwithstanding this, the threat level from terrorist related activity in the
Pacific is recognised as low.[35]
5.30
Nevertheless, the Forum Secretariat was mindful to distinguish between
their assessment of the potential threat of terrorism and a security
environment that places the Pacific at risk of terrorist activity:
There is a converse risk that terrorist entities may exploit
the Pacific security environment in support of terrorist activity in the wider
international community. The utilisation of flags of convenience, money
laundering, arms trafficking are all activities that are undertaken by such
groups, and are activities that are occurring in the Pacific.[36]
5.31
DFAT made a similar distinction. It suggested that although the
terrorist threat is low, 'the factors which make the region vulnerable to
organised and transnational crime could potentially be exploited by terrorist
networks, particularly with regards to money laundering'.[37]
Both submissions suggested that because of weak security institutions and law
enforcement capacity, and the limited capacity to monitor the movement of
people and capital, Pacific island states may be exploited by transnational
criminal networks. The Pacific Islands Forum's Security Program has similarly
cautioned that 'Terrorist entities may also exploit the Pacific security
environment to support terrorist activity in the wider international community'.[38]
External donors
5.32
Pacific island states must also manage complex relationships with
external donors. In its previous report into Australia's relationship with
China (2006), the committee noted that some of the island states of the
southwest Pacific are among the smallest and poorest in the world and are
susceptible to the influence of outsiders willing to use their economic
leverage to serve their own foreign policy objectives.[39]
At this time, the committee suggested that the political and diplomatic rivalry
between the People's Republic of China (PRC) and the Republic of China (ROC)
did not provide an environment conducive for the most effective use of
development assistance. It therefore recommended that the Australian
Government, through the Pacific Island Forum, encourage members to endorse OECD
guidelines on official development assistance.[40]
5.33
Since that time, Taiwanese President Ma Ying-jeou has indicated that the
ROC would adopt OECD guidelines on aid effectiveness and work more
collaboratively with the PRC when it came to its development assistance to the
Pacific region.[41]
Witnesses who appeared before the committee suggested that this announcement
signifies the potential for a new era of engagement that may result in improved
aid transparency throughout the region.[42]
5.34
The committee also received evidence suggesting that the PRC pledged aid
to the Pacific had increased dramatically, almost tenfold, between 2005 and
2007:
Pledges went from around $US 30 million in 2005 to over $US
290 million in 2007. Much of this pledged aid may never arrive or take several
years to be dispersed. China has, nonetheless, emerged as a major regional
donor.[43]
5.35
In noting this increase, the committee reiterates comments in Volume I
that Australia work with all donors to the region to enhance good governance
and the transparency of aid.
Conclusion
5.36
Evidence taken by the committee points to a critical distinction between
security threats and security risks. For while the threat of
organised crime—or even terrorism—may be low, because Pacific islands states
have weak security institutions and law enforcement capacities, the risk for
the region, both in terms of probability and potential impact, is correspondingly
high. This distinction between threat and risk is also critical for
understanding Australia's assistance to the region. Much of Australia's
development assistance to the Pacific is anticipatory: it seeks to manage risk
through prevention rather than through containing a situation that has already
taken place. Such an approach seeks to develop the skills and capacity to plan
and manage a real security threat. These issues of capacity will be addressed
in detail in the following chapter.
5.37
This chapter has identified those transnational criminal activities that
present the greatest threat to the security of Pacific island states:
unauthorised fishing; smuggling and transhipment of illegal goods; money
laundering; and terrorism. In order to address these various forms of
transnational criminal activity, states are required to develop a robust and
diversified regulation and detection capacity. The capacity to develop the
surveillance capacity at ports, or within EEZs, is different to the
sophisticated surveillance and networked capacity that is required to respond
to money laundering and terrorism. In the next chapter, the committee examines
the capacity of states to protect their borders, prosecute unauthorised fishing
and detect the smuggling of contraband. This is followed by a chapter that
examines the capacity of states to deal with complex forms of transnational
crime, such as money laundering and terrorism.
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