THE VERTICAL INTEGRATION OF ORGANISED CRIME LINKED TO POLITICAL CORRUPTION: AN ECONOMIC ANALYSIS OF ASSET FORFEITURES AND HUMAN RIGHTS

Abstract

The analysis presented in this study shows that greater scopes of criminal organizations’ vertical integration within the legal economic domains – where, for example, a transnational criminal network acquires the legal economic capacity to generate its own raw materials, produce the goods or services to be later trafficked, transport the goods or services to be trafficked, distribute the good or service and also control the wholesale and retail legal businesses – always come hand in hand with political corruption within the electoral campaign financing and public procurement domains in countries with more acute state failures to legally and judicially dismantle criminal syndicates through asset forfeitures. In this context, this analysis extends previous findings by providing conceptual and empirical foundation to the greater diversification of organized economic crimes associated with a more intense degree of vertical integration in legal businesses that are politically protected through illegally funding electoral campaigns and by engaging in public procurement bids. Building on Williamson’s theoretical frameworks, the vertical integration of legal economic activities by criminal enterprises is aimed at the criminal organizations’ aim to reduce transaction costs linked to the frequency, specificity, uncertainty, bounded rationality, and opportunistic behaviour in market transactions within economic environments where other criminal organizations also compete with violence and with corruption to capture legal markets in order to support their more diverse criminal activities. Moreover, the theory and empirical verification presented here will show that greater vertical integration of economic activities of a criminal network in the midst of State failures to provide public services (such as state failures in providing clean political elections and court services) will also come hand in hand with the greater organized crime supply of quasi-public goods and services (such as alternative dispute resolution mechanisms) aimed at the demand of the most economically vulnerable segments of the population located within the geographic areas where this same organized crime group operates. In this scenario, a systemic violation of political and civil rights, such as the systemic violation of the human rights to access justice or to cleanly elect public officials, will act as a pre-condition for the social empowerment of organized crime. In short, there is a chain reaction within which judicial system failures foster more frequent provisions of alternative dispute resolution mechanisms supplied by organized crime armed groups that are linked to a greater diversification of criminal markets and a greater vertical integration of legal markets supporting the criminal markets. One of the main implications of this piece is that a more efficient judicial performance in forfeiting criminal assets will strengthen the human right to access justice for the most vulnerable segments of the population and will positively impact on the right to cleanly elect public officials with less organized crime interference. Therefore, a more efficient judicial performance in dismantling criminal networks will enhance punitive/deterrence against criminal enterprises but also prevent the growth of social and political protection bubbles within which organized crime thrives.