MexicoTo ensure success, Mexican drug cartels emulate corporate business model

Published 12 October 2012

When the subject of Mexican drug cartels come up, most people think of bloody violence, pounds of cocaine or marijuana, and so much money people have to weight it instead of counting it; what people do not think about is the business models the cartels emulate – and they emulate the models and management charts of typical American corporations

When the subject of Mexican drug cartels come up, most people think of bloody violence, pounds of cocaine or marijuana, and so much money people have to weight it instead of counting it. What people do not think about is the business models the cartels emulate.

Rafael Cardenas Vela, a Gulf cartel member who ran three territories, testified last month about his organizations structure and operations.

The Huffington Post reports that Cardenas was a boss for over a decade and each of his territories was within an hour’s drive of the Texas Border. Earlier this year Cardenas pleaded guilty to one count of conspiracy to possess and distribute cocaine and marijuana and is cooperating with U.S. authorities in other cartel cases with the hope of receiving a shorter sentence.

Prosecutors asked Cardenas to walk jurors through ten years of moves within the cartel; Cardenas turned to a huge organizational chart full of pictures of members of the organization with the words “arrested” or “deceased” under some of them.

Cardenas told jurors that in his territory he had managers in charge of different revenue streams including marijuana, cocaine, and “cuota” extortion payments they demanded from businesses. Each stream had its own accountant and another accountant tracked the tax that was charged on drug loads moving through Cardenas’s territory and another accountant supervised the whole operation.

“I can’t do everything myself,” Cardenas told the jurors. “That’s why we have someone in charge of every department.”

A structure this sophisticated means that killing or arresting the top man is not enough.

You have to keep attacking the command and control elements again and again.” Will Glaspy, who oversees the Drug Enforcement Administration’s operations in Texas’ Rio Grande Valley, told the Huffington Post.

Cardenas’s uncle Osiel Cardenas Guillen was extradited in 2007 and since then the cases have been piling up.

The man who took over for Osiel Cardenas was captured this month. Oseil Cardenas’s brother was killed by Mexican marines in 2010 and a third brother was arrested in Mexico earlier this month.

Juan Roberto Rincon-Rincon, a leader in the organization, was convicted Friday in Brownsville, Texas and is one of three Gulf cartel bosses arrested in the United States last year. Mexican authorities also captured another alleged boss this week.

It’s the government of Mexico that has had such tremendous success targeting the Gulf cartel over the last five or six years,” Glaspy told the Post. “They’re the ones who have continued to attack and focus on the command and control of the Gulf cartel.”

(The Gulf cartel’s) corporate structure doesn’t exactly look like a Fortune 500 company, but it’s probably not far off.”

The cartel’s primary revenue stream is drug trafficking, but recently it has moved on to other businesses such as smuggling immigrants and protection rackets. The cartel receives a cut for every illegal immigrant and kilogram of drugs that passes through its territory.

Guadalupe Correa-Cabrera, the chairwoman of the government department at the University of Texas-Brownsville, credits Osiel Cardenas with designing and leading the cartel’s structure. According to her, Osiel Cardenas’ biggest move was creating the Zetas, a special forces group that handles the cartel’s security and enforcement.

When (Osiel Cardenas) introduced the Zetas he changed the whole panorama of drug trafficking and organized crime in the hemisphere,” Correa-Cabrera told the Post. “Their expansion into other criminal enterprises beyond drug trafficking served as a lesson for their longtime patrons and other criminal organizations.”

The Zetas split from the cartel in 2010 and became an independent criminal organization, but since the cartel controls the smuggling territories, the Zetas moved on to piracy and extortion.

It’s all about the money, and if they’re not making the money from drugs they will seek out other criminal activity to reinforce or find other revenue streams.” Glaspy told the Post.

Rafael Cardenas testified that it cost him almost $1 million a month between payroll, rent, vehicles, and bribes when he ran the Rio Bravo territory. He also had to recruit, train, and equip his own gunmen. When his men were killed in action, their salaries were paid to their families.

Cardenas also paid off law enforcement, the press, members of the military, and corrupted U.S. officials. “In order to have your plaza well, all organized, you have to pay all the police agencies,” Cardenas told jurors. Cardenas also told jurors that paying off the local police in Rio Bravo cost $20,000 per week.