1. Organised crime and legal sectors Theory & cases
Prof. Dr. Tom Vander Beken
Seminar Organised and Corporate Crime, Leuven, 11 April 2005

2. Overview Background Theory Methodological aspects Cases
Risk Assessment
Existing research on vulnerability studies
Methodological aspects
Cases
The Belgian diamond sector
The European transport sector (project MAVUS)

3. 1. Background Belgium: European Union: (annual) reports on OC
Action Plan 1996
Long-term methodology
European Union:
Traditional descriptive reports on OC needed improvement (CRIMORG 55 & 19)
Action Plan to convert the OCSR into an annual strategic report for planning purposes (CRIMORG 133)
future oriented (OCR)

4. 1. Background EU Risk assessment Methodology for OC:
1. Organised Crime Groups
2. Counter Measures
3. Illicit Market Scans
4. Licit Market Scans
An urgent need for a reliable and common methodology for (vulnerability) studies of sectors (EUROPOL 2002)

5. 2. Theory 1. Risk assessment
Reporting on organised crime. A shift from description to explanation in the Belgian annual reports on organised crime (IRCP, 2001)
making better and more transparent assessments of the seriousness of OC, especially on the qualitative level
detecting and anticipating crime-facilitating opportunities and crime trends (pro-active approach)
Risk Assessment Matrix (RAM)

6. Risk Assessment Matrix (RAM)
Source: Brown (1998)
KNOWLEDGE
RESOURCES
RISK
CAPABILITY
EXPECTATIONS
DESIRE
INTENT
HARM
THREAT

7. 2. Theory 2. Existing research on vulnerability studies
There are studies…
The Netherlands (Van Traa)
Belgium (Parliamentary Comm. on OC)
US (Albanese, Reuter)
Europe (Levi, Savona)
.. but their methodological basis is weak
Vague conceptual framework
No elaborate methodology
Method not useful for all legal sectors

8. 3. Methodological aspects
“vulnerability study”: identification of crime opportunities that might be exploited by OC
Focus on OC task environment, not on OC capacity
Task environment = legal market
How? Analysing the external environment
Conceptual framework:
‘spectrum of enterprise’ (SMITH)
Multidisciplinary approach:
Economic science: ‘cluster model’ (PORTER)
Criminology: ‘criminal networks’ (PAOLI, KLEEMANS et.al.), ‘nature of the legal-illegal interface’ (PASSAS)
Multi-directional relationship between OC and licit sectors

9. 3. Methodological aspects
Tentative methodology to scan legal sectors for OC:
1. Sector analysis: economical approach of sector and market players (meso level)
Product, market structure, international position, price setting, economic situation…

10. 3. Methodological aspects
2. Cluster analysis: approaching the broader context of the sector (macro level)
Environmental scanning (PEST)
Cluster analysis (key actors):
Local, regional, (inter)national governments
Financial, legal players
National related and supporting sectors
Foreign related and supporting sectors
Social and other organisations
Relations outside the cluster (coincidence factor)
Crime

11. 3. Methodological aspects
3. Reference Models: identification of a chain of ‘business processes’ as a model for business entities in the sector (micro level)
4.Width and depth scan: analysis of the information from macro, meso and micro level on the basis of a diagram of indicators:
1. Illicit Market
2. Nature of the Product
3. Viability of the Entity
4. Threshold
5. International character

12. 3. Methodological aspects

13. 3. Methodological aspects
Methodology for licit market scans:
Sector Analysis
MESO
Cluster Analysis
MACRO
Reference Model Analysis
MICRO
Width Scan
INDICATORS
Depth Scan
VULNERABILITY PROFILE
Conclusions &
Recommendations

14. 3. Methodological aspects
Scaling-technique for awarding a vulnerability score to the indicators in the width scan:
Very high Vulnerability: the exploitation of the vulnerability on this point is highly likely + indications from case studies, law enforcement material and/or circumstanstial evidence serve as indications
High Vulnerability: the exploitation of the vulnerability on this point is highly likely + strong indications from the market analysis
Low Vulnerability: the exploitation of the vulnerability on this point is probable
Very low Vulnerability: the exploitation of the vulnerability on this point is unlikely

15. 4. Cases The Belgian Diamond sector
Measuring the vulnerability of legal economic sectors for organised crime. (IRCP & Antwerp University, )
A Methodology ( )
Case Study ‘Diamond sector’ ( )
Principal: Belgian Federal Office for Scientific, Technical and Culteral Affairs (OSTC)

16. 4. Cases A. General conclusions: On the methodological aspects:
Cluster model = usable concept in sector scanning
Width scan = feasible instrument
Depth scan requires more methodological research
On the case study: the methodology allows to draw meaningful and relevant conclusions on the basis of the vulnerability profile of the different groups of indicators

17. 4. Cases B. Conclusions on the case study
1. A complex and barely transparent sector
Definition and registration problem
Government and sector insufficiently have the disposal of reliable information
Enormous fragmentation in the area of control and supervision
Lack of infrastructure, manpower & resources
Flow, origin and final destination of the financial transactions often remains unknown
Practical impossibility to trace the activities of Belgian diamond traders in an international context

18. 4. Cases 2. More than just tax and economic crime
3. Very high to high vulnerability:
Nature of the economic product
Mobility
Compatibility & flexibility
International character
Viability of the legal entities in the diamond sector
Solvency rate
Black market
Nature

19. 4. Cases 2. The European Transport sector
Project MAVUS: Method for and Assessment of Vulnerability of Sectors
Research Partner: Transcrime (Italy, University of Trento & Milan)
Time frame:
Principal: European Commission (Agis programme)

20. (Literature/Eurostat/Sector organisations)
4. Cases
Research findings:
SECTOR ANALYSIS
(Literature/Eurostat/Sector organisations)
important economic sector
Open market with strong competition
Non-transparent price-formation
CLUSTER ANALYSIS
(Law enforcement authorities/Customs authorities/security sector representatives)
Important role of sector organisations
Low quality of regulation
Low quantity of enforcement
Sector subjected to various crime types

21. 4. Cases ENVIRONMENTAL SCAN: PEST REFERENCE MODEL
(Literature/public and private sector bodies)
Political White Paper
Economic JIT/delocalisation/bipolarisation
Social Global Village/Image of the sector
Technological ITS & techno-preventive developments
REFERENCE MODEL
(Literature/private sector)
Business process ‘Production’
=activity outside the transport company
Business process ‘Personnel Management’
=lack of personnel-screening

22. 4. Cases

23. 4. Cases