McMafia: Russian mob versus U.S. Cosa Nostra

December 30, 2008

russiantattooMisha Glenny, a  BBC reporter and author of  McMafia: A Journey throught he Global Criminal Underworld, says that the Russian protection rackets of the 1990s differed in three ways from the classic mob families of southern Italy or New York and Chicago.

1. The Russian mob was indispensable in the transition from socialism to capitalism.

By the mid-1990s the Russian government estimated that between 40 and 50 percent of its economy was in the gray or black market…the phenomenon of organized crime emerged from chaos and was very brutal. But was a rational response to a highly unusual economic and social environment.

2. Unlike the traditional American and Italian mafias, members of the gangs were not strictly bound by family loyalties.

The codes of the thieves’ world (which conferred honor and recognition on the vory [leader]) only survived a matter of months in Russia’s primitive capitalism….”The Chechen mafia…became a brand name, a franchise – McMafia if you like…”

3. In contrast to the five families of America’s Cosa Nostra, there were thousands of these organizations in Russia.

By 1999, there were more than 11,500 registered “private security firms” employing more than 80,000 people. Of these almost 200,000 had licenses to carry arms

…this brotherhood evolved at an early stage fro the first phase of organized crime, the protection racket, into the second phase, monopoly controller of goods and services. This was the shift from privatized law enforcement agency to a full-fledged organized crime syndicate.

Summary

Traditional organized crime activity is analyzed using its two activities (key success factors):

  1. offering products within a monopoly (cigarettes, narcotics, women) and
  2. involuntary protection services (safety from competitors, from bankruptcy).

If viewed in this light, it enables us to understand the structural similarities and differences between franchising and “the mafia”.

  • How we perceive something or our judgments tend to be very sticky.

How we frame or define the actors and activity has a tremendous influence on the limits of our enquiry. There is also a tremendous tendancy to attribute success or failure to the individual rather than to the group or social situation (fundamental attribution error).

This near Cult of the Individual has been used by many totalitarian regimes and is useful in covering systemic opportunism in franchising. It holds out the promise of personal freedom if you submit and mark yourself with the sign of the mob.

  • Both of You (1) fictitious person (corp) and (2) your personality are branded by franchising.

McMafia: A Journey through the Global Criminal Underworld

December 12, 2008

mcmafiabookThis is a Canadian television interview with the former BBC reporter, author Misha Glenny.

  • His summary that corruption anywhere is a threat is well taken.
  • “Corruption is what facilitates organized crime around the world. Unless you get rid of it, you’re in big, big trouble.

The dust jacket says: … the highly acclaimed author of The Rebirth of History:  The Fall of Yugoslavia, and The Balkans. Glenny has written for the New York Times, the New York Book Review, Foreign Affairs, Harper’s Magazine, the London Review of Books, “etc.

For more information  see Anansi Press, his Canadian publisher.

McMafia was selected in 2008 for the Globe and Mail Top 100 Book of the Year and shortlisted for the 2008 FT/Goldman Sachs Business Book Award.

Reviews

“In this well-researched and riveting account, Misha Glenny dissects the international criminal organizations that run much of the world’s economy and explains how the criminal underworld has benefited from and contributed to globalization.”
– Joseph E. Stiglitz, former Senior Vice President and Chief Economist of the World Bank, and winner of the Nobel Prize in Economics

“This is the most important non-fiction book of the year . . . organised crime’s version of Fast Food Nation, Eric Schlosser’s bestseller about the junk-food industry.”
– Mail on Sunday

“. . . immensely informative and more than slightly scary. . .”
– Washington Post

“. . . [McMafia is] a vividly recounted journey through a dozen of the world’s most potent gangs, cartels and transnational mafias . . .”
– The Wall Street Journal


Criminal groups threatening capital markets, RCMP

December 8, 2008

fattonyDean Beeby, The Canadian Press and The Globe and Mail have an interesting article today, Criminal groups threatening capital markets, RCMP.

OTTAWA — Organized crime has become a significant threat to Canada’s capital markets, a new report from the RCMP’s fraud squads says.

Major crime groups are recruiting investment professionals to help them move far beyond traditional activities – smuggling, extortion and counterfeiting – into the rarefied world of high finance and market manipulation, the Mounties say.

“Using the markets requires a degree of knowledge and expertise,” says the draft report from the RCMP‘s Integrated Market Enforcement Teams, or IMETs.

“Organized crime groups harness this skill set by using professional facilitators in the industry.

“The facilitators’ subjective knowledge of the true nature of these schemes ranges from willful blindness to direct fraudulent participation.”

This has hypothetical interest only since franchising is essentially a capital exchange mechanism. Further:

Organized crime and “criminalized professionals” – rogue investment specialists – are described as the two main players in financial crimes.

Criminalized professionals? They mean the crooked investment dealers, right? Right?

The Canadian Bar Association is ferocious in protecting any tiny little-weeny, tensy attempt to limit its members’ airtight solicitor-client privilege.

This of course (again in only the most-twisted imaginations possible) creates and maintains a safe haven for the buying and selling of legal services that enable international organized crime.

  • Fat Tony and his counsel have nothing to fear from any hoser.

It’s taken Canada years to develop its reputation as the world’s best place for white-collar crime:

  1. no national regulator (take our OSC…please),
  2. no securities investigations (Lord Black, Nortel, Livent…),
  3. amnesiac centralized commercial bankers.
  4. oh the list goes on and on.

A farce, really.  In summary, just go ask Al Rosen why he doesn’t invest in CDN listed stocks.


Russian mafia

November 28, 2008

alzheimersocietyTwo years ago I had a problem with a couple of lawyers.

  • It seems that their memory was failing about payments that were due me from the clients I had developed and sent to them. Notwithstanding their solemn pledges, no payments were forthcoming.

I went to a 3rd lawyer, someone who had done my Mom’s estate. I went to school with his son and his 1st wife was my landscaping customer. He is about late-60s, sole practitioner who is a Queen’s Counsel or QC

In Canada, the honorary title of Queen’s Counsel or QC is used to recognize Canadian lawyers for exceptional merit and contribution to the legal profession. Source

Almost immediately upon shaking hands, this was the conversation:

QC: So you deal with franchise systems?

Les: Yes.

QC: Are you dealing with [he named 5 or 6 medium-sized, national systems]?

Les: No, none of those right now.

QC: Good. They’re all controlled by the Russian Mafia.

I have no particular reason to distrust this commercial lawyer of 40 years.


Franchising through the eyes of The Simpsons

November 27, 2008

The Simpsons is a cultural phenomenon.

margetwisted

They also capture the essence of franchising quite well. The Twisted World of Marge Simpson is the 1997 episode where Marge buys a pretzel franchise.

Homer helps out the cratering business scheme by getting organized crime involved.

Find below what I found funny or check out a transcript of the episode here.

Host [Discovery Day]: Now, folks, I don’t wanna alarm ya, but scientists say forty percent of America’s pictures… are hanging crooked.
[the audience gasp in shock]
Yep, it’s true.  And I hear you asking: “Well, who’s gonna straighten out all these artistic abominations?”  Your friends? A neighbor?   Those fat cats at Washington?  [chuckles]  Good luck.  Hey, you know, maybe no one’ll notice!  Maybe the problem with ju-u-u-st fix itself.

Marge: Now you’re the one who’s being naive.

Man: Okay.  Fair enough.  But you sound like you’re ready to become your own boss in the exciting world of frame-nudging!  Yes, for a minimal franchise fee, you’ll receive a pair of straightening gloves, a cannister of wall lubricant and a booklet of the most commonly asked questions you will hear, including: “Who are you?” and “What are you doing here?”

++++

Marge: When can I start?  Where’s my territory?

Frank [franchisor]: Your… territory.  Well, lemme tell ya.  Wherever a young mother is ignorant of what to feed her baby, you’ll be there.  Wherever nacho penetration is less than total, you’ll be there.  Wherever a Bavarian is not quite full, you will be there.

Marge: Don’t forget fat people.  They can’t stop eating!

Homer: [passing by the stand]  Hey, pretzels!

=+++
Tony: [clearing his throat]  Greetings, Homer.

Homer: Hey!  Fat Tony!  You still with the mafia?

Tony: Uh…  Uh, yes, I am.  Thank you for asking.

Now, Homer, as you no doubt recall, you were done a favor by our, uh, how shall I say — Mafia Crime Syndicate.

Homer: Oh, yeah…

Tony: Now the time has come for you to do us a favor.

Homer: [shocked] You mean the mob only did me a favor to get something in return?  Oh, Fat Tony!  I will say good day to you, sir! [folds his arms in disgust]

+++++

Marge: Homer!  Did you tell the mafia they could eliminate my competitors with savage beatings and attempted murder?

Homer: [swallowing beer] In those words? … Yes. I saw your pouring your heart and soul into this business and getting nowhere.  I saw you desperately trying to cram one more salty treat into America’s already bloated snack hole.

So I did what I could.  I did what any loving husband would do!  I reached out to some violent mobsters.


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