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The local drug trade flourishes alongside international cocaine trafficking operations, while extortion and kidnapping prey on businesses and residents alike. Money laundering schemes blur the lines between legitimate enterprises and criminal networks, further complicating efforts to combat organized crime. Read the other chapters of the investigation here or download the full report PDF here. This criminal economy used to be dominated by loose networks of corrupt political and land-owning elites. Today, the criminal groups have largely pushed out and replaced the land-owning elites, colluding with corrupt political players to become the new land-trafficking force. One local described this process in the lates as being galvanized by the newly-designated municipal government, which encouraged settling on what authorities considered unused land: land whose owners had failed to plant crops, build a house, or develop it in some commercial way. In this particular case, the new owner went to the area in question and drove stakes into four corners of a swampy ridge. He then got a deed and began building his home, only to receive a visit from the previous owner. During the heated discussion that followed, the new owner told the old owner that he should file a lawsuit in court. Instead, the old owner returned that night with a sledgehammer, which he used to smash the walls of the half-constructed home. The new owner said he then sued, and the old owner absconded, never to be seen again. While some are in the process of legalization, that process can drag on for years. The informality of the way land is governed means opportunity for criminal operators. This land is often not zoned, lacks paved roads, or access to the water or sewer systems. Legally, anyone hoping to obtain a deed for informally settled land must also meet clear conditions, including having lived on the land for at least 10 years. In reality, land traffickers bribe municipal officials not to evict the invaders, several residents and current and former government officials told InSight Crime. The business has changed in the last five years. According to private security, residents, community leaders, experts, government officials, and a joint UNODC-municipal security plan seen by InSight Crime, violent criminal actors have almost entirely pushed out traditional land traffickers. Gangs largely follow the same pattern as traditional land traffickers, according to these sources. They identify undeveloped municipal lands near areas where they already have a strong presence and organize an invasion through word of mouth. However, while traditional land traffickers often disappeared into the background after selling off the land, armed gangs take control of the newly-settled sector, organize services, and establish links with the municipal government to influence the legalization process, residents, community leaders, a lawyer specializing in land trafficking, and government officials told InSight Crime. Land trafficking sets the stage for numerous other criminal economies. Gangs use the territory to sell drugs, stash stolen goods, and set up protection rackets, extorting people and businesses alike. They manage the provision of basic services, such as water, sewage, and electricity, for which they can overcharge residents who have no bargaining power or leverage. Though formalization can bring gangs economic profit by increasing the value of plots that belong to gang members, it can also undermine their control of territory. Once they have the deeds on their properties, residents no longer need the gangs. As such, gang leaders invest in corrupting municipal officials to influence when land is legalized, according to government officials and the lawyer specializing in land trafficking. From zoning permits to land deeds to infrastructure projects, there are a host of options for criminals to profit from public coffers. Many of these opportunities are the direct result of the chaotic development and lack of infrastructure in the area. Several residents, experts, and officials interviewed said they suspected that corrupt actors actively maintained these infrastructure and public-service deficits in order to perpetuate corrupt schemes. But aside from the staggering shortfall in basic public services, there is no documentary evidence to prove these allegations of willful, systemic sabotage. The most-cited example of this neglect is for water. To obtain or supplement their water supply, residents turn to a fleet of tanker trucks. The hand-to-mouth nature of the business has made it ripe for abuse and the tanqueros often squeeze residents for a higher price and pocket the difference. Associations of water tankers have attempted to bribe officials in the municipal government to give them exclusive rights to water delivery. As water delivery is profitable for municipal officials, they have had little incentive to invest in sustainable water infrastructure. Such infrastructure projects, when they have occurred, have often been plagued by corruption and embezzlement. Gangs sell drugs on street corners of territories under their control. They often recruit minors to deliver drugs and to sell them at local schools, where free samples are used to draw in new customers, according to community leaders, residents, government officials, and educators. Ecuador has not done a comprehensive survey of drug consumption since InSight Crime spent months trying to obtain a copy of the report, but police sources say they can no longer access it. This has driven demand for private underground rehab centers , which use abusive methods such as imprisoning patients and putting them on severe diets, the joint UNODC-municipal security plan found. Still, the criminal economy is relatively new to the area. In some areas, for example, gangs go door to door, demanding vacunas , or monthly payments, from small businesses, bars, and restaurants, as well as individual families, according to police intelligence and residents. Taxis are also easy targets. Different gang leaders also charge extortion at different intervals, and the rent demand varies based on the size of the business. The demands can range from hundreds of dollars a month for small food carts or mom-and-pop shops, to thousands of dollars for mid-size businesses. These businesses often receive a demand for a large initial sum, after which they pay a smaller monthly quota, owners of such mid-size businesses and a local sociologist and political scientist told InSight Crime. Failure to pay risks an attack on the business, its staff, management, or the owner, the sources added. There were reported extortion cases between January and August , according to police data, a more than four-fold increase over the 91 cases reported in all of The extortion is hitting businesses hard. More than such small businesses have closed their doors in due, in large part, to extortion, according to reports received by a local business community leader with knowledge of a large cross-section of business activity in the city. However, official statistics are unavailable. Businesses are not the only ones to get extorted. Schools, hospitals, and health clinics also face extortion, according to employees who have faced such threats and, in many cases, were too afraid for their safety to speak to InSight Crime in depth. Government officials also practice a form of extortion. The myriad licenses, permits, and registries required for any business to operate creates opportunities for corruption among municipal institutions, according to business community leaders, as well as former and current government officials. One business leader with direct knowledge of corruption cases told InSight Crime municipal officials routinely request bribes in order to establish businesses. The alternative could be myriad inspections, paperwork, and permits that grind business to a halt. This is especially true for the transit authority and the firefighters, both of which have the power to issue tickets as well as grant permits. Almost half of those reported involve physical violence. Gangs snatch and hold victims for a few hours, during which the kidnappers force the victim to extract money from their bank account via an ATM or transfer money via their telephone. Sociologists, security experts, government officials, and the business community leaders have all highlighted the skyrocketing number of cases in which owners and management of medium and large companies have been targeted for sophisticated kidnapping operations. In these operations, the gangs identify and research a victim beforehand, then send armed men to ambush them. From there, the kidnappers take the victim to a safe house, holding them for days while they negotiate a ransom. Business community leaders note that the gang leaders who run these operations do not provide protection for kidnapping victims who have paid the ransom, leaving many business elites at risk for repeat attacks. Money laundering seems to happen two ways. The first involves buying out or lending to small businesses, local sources, including a small business owner and a government official, told InSight Crime. They added that sometimes there is a coercive element to this scheme, with business owners being pressured into the arrangement and being charged exorbitant fees on loans. The second, more sophisticated way, involves opening front companies that bid on public works contracts. As a result of this money laundering method, some gangs — primarily the Chone Killers — are now competing with or taking over existing legitimate businesses. Over the past decade, as Ecuador gained importance as a drug trafficking transport hub, the various ports in and around Guayaquil have become particularly important dispatch points for cocaine exported to Europe. Corruption in the area is rampant. Sophisticated drug trafficking networks also sometimes hire local gangs as security or for contract killings. However, while media accounts have connected the Latin Kings to the European networks, intelligence officials contacted by InSight Crime dismissed the notion, stating that he is primarily involved in microtrafficking. Therefore, while local groups can access significant economic capital through drug trafficking, their opportunities diminish when inter-gang violence draws unwanted attention and security operations. Subscribe to our newsletter to receive a weekly digest of the latest organized crime news and stay up-to-date on major events, trends, and criminal dynamics from across the region. Donate today to empower research and analysis about organized crime in Latin America and the Caribbean, from the ground up. Skip to content. Lots are sold in settlements without access to utilities and few paved roads, that rely on trucks to deliver potable water to sales points. Guayaquil, Ecuador, May Stay Informed With InSight Crime Subscribe to our newsletter to receive a weekly digest of the latest organized crime news and stay up-to-date on major events, trends, and criminal dynamics from across the region.

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