Construction Site Extortion in Peru Shows Evolution of Local Org Crime

BRIEFWritten by Mimi Yagoub - JULY 21, 2014

Extortion

Peru

Peruvian construction workers protest widespread extortion

Peru is reportedly home to at least 60 criminal groups which extort the construction industry
under the guise of trade unions, indicating the development and expansion of local organized
crime.

According to the Secretary General of Peru’s Federation of Construction Workers (FTCCP), Mario
Huaman, up to 80 percent of Peru’s 72 informal construction worker trade unions are cover-ups
for extortion groups, reported La Republica.

The groups typically operate by demanding construction companies and workers pay extortion
fees to allow construction to continue unhindered, often under the threat of death. According to
Peru’s Protection of Public Works Division (DIPROC), the extortion fees can vary between two and
five percent of total construction costs, earning criminal groups up to $17,000 a month per
construction site.

To combat this problem, Interior Minister Daniel Urresti said police officers had infiltrated the
trade unions to determine which were dedicated to extortion, reported Prensa Latina. This
facilitated the recent capture of the leader and various other members of “La Gran Familia
Chinchana,” a criminal organization operating in the southern city of Chincha.

The head of DIPROC, Jose Saavedra Ballon, stated that between 2010 and July 14, 2014, the
institution disbanded 121 groups extorting the construction industry.

InSight Crime Analysis

The number of criminal groups extorting Peru’s construction sector, and the apparently
sophisticated tactics of some of these groups, is a sign of the evolution of local organized crime. In
March, the president of Peru’s National Confederation of Businessmen (Conaco) said there were
100 extortion gangs operating in capital city Lima alone, and that more than 500 businesses had
been extorted nationwide in 2014.

General Cesar Cortijo, the director of Peru’s Criminal Investigation Office (DIRINCRI), told InSight
Crime last year that an increase in extortion — especially in the construction sector — was one of
the country’s most serious law enforcement problems.
One of Peru’s most signficant national organized crime groups, La Gran Familia, was dedicated
principally to extortion — particularly of the construction industry — and contract killings. In spite
of past attempts to disband the group, remnants of La Gran Familia appear to remain active.

The growing sophistication of these local criminal groups poses a challenge to law enforcement,
whose job is made more difficult by the involvement of corrupt officials of all ranks in illegal
activity. In 2013, a police chief in northern Peru was arrested for working with El Nuevo Clan del
Norte, which is thought to have largely taken over La Gran Familia’s extortion operations.

There is a risk that these groups could also get involved in the drug trade, with Peru now the
world’s principal producer of cocaine. If they do so, they could make the leap into transnational
organized crime, allying themselves with Colombian or Mexican criminal syndicates.