A very deep dive into some very nasty people, from Reuters, October 22:
The Jalisco New Generation Cartel has mastered the use of tankers to smuggle fuel to Mexico. U.S. oil players are helping them. Reuters traces one ship's brazen journey.
On the afternoon of March 8, a petroleum tanker named Torm Agnes entered the Port of Ensenada on Mexico’s Pacific coast carrying almost 120,000 barrels of diesel.Such a vessel was a rare sight in that port, which mainly hosts cruise liners, luxury yachts and container ships. Ensenada lacks the infrastructure needed to unload cargos of flammable hydrocarbons safely – making what happened later that day odder still.Waves of fuel-hauling trucks rolled up to the dock to cart away much of the Torm Agnes’ load. Workers scurried about filling the vehicles’ cavernous tanks, up to six at a time, using hoses springing from a larger hosepipe affixed to the vessel. The operation, while risky, ran like clockwork, according to an eyewitness and a photo and video from the scene shared with Reuters.“They had a team, they were very thorough on what to do, and they were very fast,” the person said. “They worked insane hours, like through the night.”The audacious maneuver was the work of cartel-linked smugglers, according to three Mexican security sources and three people familiar with the operation – part of a wave of bootleggers upending Mexico’s fuel market with a flood of cut-rate fuel procured mainly from the United States that’s disguised in customs declarations as something else.The Mexican crooks didn’t act alone. A Houston company named Ikon Midstream played a key role in the multi-million-dollar Ensenada operation, Reuters has found. It purchased the diesel in Canada, claimed in paperwork it was lubricants, and chartered the tanker to deliver it to a customer that Mexican authorities allege is a front for one of the country’s largest and most violent cartels.Ikon Midstream and its executive director, Rhett Kenagy, did not respond to multiple requests for comment. Attorney Joseph O. Slovacek, who represents the company and Kenagy, told Reuters in an October 18 email to stop contacting his clients. “No one will speak to your reporter!” Slovacek said.The Port of Ensenada did not respond to a request for comment. Denmark-based Torm, which manages one of the world’s largest fleets of tankers, including Torm Agnes, said it stopped doing business with Ikon Midstream just weeks after the Ensenada incident.Narcotics remain the principal money-maker for Mexico’s cartels. But illegal fuel and stolen crude oil have become the largest non-drug revenue source for these criminals, the U.S. Treasury Department says. Narcos have built this lucrative sideline by effectively embedding themselves inside North America’s vast energy sector and mastering the logistics of moving petroleum products by truck, rail and most recently tanker. Some U.S. officials have taken to calling the tankers carrying illegal fuel a new “dark fleet,” a term more often associated with illicit shipping of Russian or Iranian crude oil designed to evade sanctions.Fuel smuggling has grown so fast that bootleg imports now account for as much as one third of Mexico’s diesel and gasoline market, swiping profits from some of the biggest names in the oil industry, five current and former Mexican government sources told Reuters. Illegal fuel entering the country is now valued at more than $20 billion a year, according to one of the people who helped Mexico’s treasury calculate the size of the illicit trade.Law enforcement agencies on both sides of the border are alarmed. The U.S. government is offering rewards of up to $10 million for information on cartel fuel crimes. In Mexico, tanker smuggling has sparked a corruption scandal now rocking the country’s navy, which runs the ports and has long been considered one of the most trusted institutions in the country. In a September 7 press conference, the head of Mexico’s Navy, Raymundo Morales, said the institution had launched an internal investigation and “will not tolerate corruption under any circumstances."To uncover the inner workings of fuel smuggling into Mexico, Reuters spoke to more than 50 people with knowledge of the racket. They include five people who have had dealings in illicit cargos, Mexican and U.S. law enforcement officials, current and former oil industry executives in both countries, as well as energy traders and compliance specialists. Many of these people spoke on condition of anonymity out of fear for their safety.Reuters is the first to publish a full account of Torm Agnes’ journey, from loading in Canada to discharging at Ensenada and at another Mexican port from which it beat a hasty retreat. The account is based on information from seven people, all of whom were either involved in the logistics of moving the cargo or are investigating the journey’s fallout, as well as tanker-tracking data and satellite images, internal shipping documents, customs data and port records.
Through those documents and sources, Reuters pieced together in previously unreported detail how the alleged scheme works and how it exploits loopholes in the vast and complex U.S. energy sector, touching a host of entities including oil majors, shipping companies and government agencies.Aiding the cartels are U.S. players who help procure and transport the products, some unwittingly, others actively participating, authorities say. Texas State Senator Juan Hinojosa said his oil-producing state has become a hotbed for shady operators.“The cartels have infiltrated many legitimate businesses along the border and further north,” said Hinojosa, a Democrat who sponsored legislation in March that aims to crack down on unlicensed motor fuel depots near the border, toughen regulations on fuel transporters and boost punishment for scofflaws. The bill is stalled in the Texas senate but could be revived in the future.The fuel smuggling scheme largely boils down to a lucrative tax dodge. Mexico slaps a levy known as IEPS on a wide variety of goods, including imported diesel and gasoline. Mexico is a major crude oil producer, but it imports these fuels because its aging refineries can’t meet local demand. Crooks evade the tax, charged by the liter and often costing upwards of 50% of the cargo’s value, by declaring the foreign fuel to be some other type of petroleum product that’s exempt from the duty....
....MUCH MORE
For more on just how depraved the CJNG members are see Borderland Beat on blogroll at right or here in a site search.
