Mexico: Corporate Hit Men Find New Ways to Turn a Profit

Following the modern recipe for corporate enterprise, the directors of Mexico's increasingly powerful murder-for-hire firm, the Zetas, have begun to diversify from the company's principal activity of providing armed enforcement for the drug-trafficking Gulf Cartel. According to U.S. and Mexican officials, the group has gone into the lucrative business of stealing and selling contraband gasoline. It steals from Mexico's nationalized petroleum company PEMEX, and resells to Texas oil companies, including one run by a former Bush administration insider.

Todd Miller

Following the modern recipe for corporate enterprise, the directors of Mexico's increasingly powerful murder-for-hire firm, the Zetas, have begun to diversify from the company's principal activity of providing armed enforcement for the drug-trafficking Gulf Cartel. According to U.S. and Mexican officials, the group has gone into the lucrative business of stealing and selling contraband gasoline. It steals from Mexico's nationalized petroleum company PEMEX, and resells to Texas oil companies, including one run by a former Bush administration insider.

Were the group not known for countless brutal murders in Mexico's endless and ever-more violent drug war, it might be considered the poster child of the North American Free Trade Agreement (NAFTA), able to see a business opportunity when there is one, and to cut through trade barriers like a specialized drill cuts into a highly pressurized steel pipe carrying oil.

This is not only an example of criminals tapping savvy entrepreneurial skills to make another few million bucks, it is also an example of U.S. policy blowback: the perversely unintended result of a failed policy. On one hand the Zetas have been able to take advantage of NAFTA partly because of the "two way overland highway of contraband," aptly described by political economist Jeff Faux, that has been greatly facilitated by the agreement, and which now includes companies that cook deals with organized crime.

The real power of the Zetas, however, that clearly sets them apart from Mexico's other hit squads, comes from their roots. Before the founding members of the Zetas deserted an elite unit of the Mexican army, they received highly sophisticated training by U.S. Special Forces in anti-narcotic operations. This tale of oil thievery thus becomes a compelling one, especially as the U.S. public scrutinizes the ten-fold increase in "drug war" aid to Mexico under the Merida Initiative. Since 2008 Washington has pumped over a billion dollars into Mexico, with millions designated to military and police training. There will be more in store for 2010 if the funding passes later this year in Congress.

The Zetas first came to the attention of Mexico's Attorney General's office in 1999, after somewhere between 30 and 60 recently U.S.-trained soldiers defected from the Airmobile Special Forces Group (GAFE), an elite Mexican army unit specializing in counter-narcotics activity. GAFE units were trained in the United States by the "Snake Eaters," the 7th Special Forces Group, famous for their role in building up and training armies in El Salvador and Honduras in the 1980s. Between 1996 and 1999 the Snake Eaters trained over 3,000 Mexican soldiers, mostly in Fort Bragg, North Carolina. It didn't take many of these soldiers long to realize that their talents could be put to much more profitable uses - running drugs, extortion, and kidnapping for ransom, for example. The 1999 GAFE defections gave birth to the Zetas, but things didn't stop there. Between 2000 and 2005, over1,300 more of these elite soldiers defected. The GAFE desertion rate of 25% towers over any other branch of the Mexican military.

"It wasn't the tactical combat training gained under the tutelage of the 7th that should be the greatest concern," says investigative journalist Michael Reynolds. "It was the sophisticated lessons learned in intelligence gathering, counterintelligence, psychological operations," that made the training of the future Zetas like a "MIT graduate program."

With the business know-how of MIT grads, the Zetas have indeed diversified their output. The voracious U.S. appetite for gasoline almost matches that for illegal drugs. Now, not only do the Zetas have an arsenal of highly sophisticated weaponry, but they are using equally sophisticated tools to tap into Mexico's lucrative veins of oil pipes, principally in the gulf-coast states of Tamaulipas and Veracruz where they now dominate criminal enterprise. They use specialized drills to puncture steel pipes, valves to regulate the pressure, and hoses that can carry the oil as far as three kilometers to an awaiting tanker. In the state of Veracruz alone the Zetas are tapping approximately 80,000 gallons of fuel per week and illegal extraction has tripled since 2006, the year that Mexican president Felipe Calderón began his current iron-fisted approach to the war on organized crime. Over the past two years, drug traffickers have "siphoned more than $1 billion worth of oil from Mexico."

The Zetas, with their sophisticated multilayered structure that includes vast intelligence gathering, have become a "parallel government," says Mexican federal lawmaker Eduardo Mendoza Arellano. "They practically own vast stretches of pipeline - from the highway to the very door of the oil companies."

Late last year four Texas oil companies pleaded guilty to felony charges of receiving and selling stolen petroleum condensate, a liquid hydrocarbon that refiners can blend with crude oil as they produce fuel, presumably brought into the United States by the Zetas. The contraband went through a chain of companies starting with Y Gas and Oil, which received about $327,000 to coordinate deliveries to Continental Fuel, which resold the condensate to Houston-based Trammo Petroleum for $2 million. Trammo then turned a $150,000 profit, selling it to the Texas-based German company BASF, the final buyer, and the only one to claim not to know that it had been stolen. U.S. officials returned 2.4 million dollars to Mexico for the stolen fuel.

Last August the former president of Trammo, Donald Shroeder, pleaded guilty to buying the stolen Mexican petroleum. In his testimony Shroeder said that former Bush administration insider Josh Cresenzi of Continental Fuel had previous knowledge that the "condensate was stolen." In 2004 Cresenzi worked for the Bush campaign as Presidential Press Advance, a liaison to the media.

Mexico's federal police commissioner Rodrigo Esparza said that to get the condensate into the United States the Zetas used "false import documents." Although it is still unclear how the U.S. import documents were forged, journalist Michael Reynolds says that, given Shroeder's testimony, there are strong suspicions that "Cresenzi/Continental imported the condensate." Reynolds writes that the "image of Cresenzi - fresh out of Karl Rove's White House office - sitting across a desk from Zetas' Heriberto Lazcano [the Ft. Bragg trained founder of the Zetas] in Tamaulipas is like a fantastic scene conjured up from a Soderburgh/Rodriguez mashup."

The stark and illusory beauty of the U.S.-Mexico border region again shows the true nature of U.S. policy - organized crime, big business, and "former" government officials become mirror images of each other, to do the only "noble" thing under the NAFTA regime, make money. The border has become a world where murderous thugs are savvy entrepreneurs, and where former Bush campaign insiders are moving contraband. The combination of free market ideology and organized crime in a context of dramatically increasing militarization only has proven to exacerbate this type of situation, as more contraband of all types flows back and forth across the border. This is a critical narrative to contemplate when further Merida Initiative funding is debated in 2010.

Todd Miller is a NACLA Research Associate

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