Police highlight growth in extortion rackets

If prostitution is the world's oldest profession, then the art of the protection racket - whereby an organized group extorts businesses under the guise of providing security - is a close second.

As longstanding it may be, extortion is enjoying new life in the Czech Republic, according to a recent report by the state police Organized Crime Unit (ÚOOZ).

"In cases where [business owners] do not hand over the money, the [criminal] organization treats them and their families and property with brutality and violence," the report said.

"The initial amounts of fees are for the damaged persons usually bearable. But after this relatively bearable phase, the pressure constantly increases. Currently a new trend has been recorded that the fees are being increased until it exhausts all the resources of the damaged person, who is subsequently forced to hand over their firm."

The ÚOOZ report summarizes findings for the duration of 2010, and only portions of the document were made public. It divides organized crime groups into three main categories - "Russian-speaking, Asian and domestic" - and the public portion of the report puts a large emphasis on the protection racket phenomenon as it applies to the Czech Republic's Vietnamese minority, although it also concedes that the phenomena is general problem.

"The racketeering problem is definitely not just a problem in the Vietnamese community," said Pavel Hanták, a ÚOOZ spokesman.

The report notes an evolution in protection rackets in recent years.

"Victims of the crime were originally Ukrainian workers working illegally/legally in the Czech Republic," the report said.

"Over time the attention of perpetrators turned to restaurant owners, where higher amounts of money can be expected. Victims are forced under threat or by using direct physical violence to hand the crime organization amounts of money on a regular basis."

The Czech Republic is hardly alone in coping with extortion, and the dynamics of a protection racket are time-tested and replicated in any number of international settings.

Italy offers perhaps the most publicized cases of organized crime, and it is also the country where the most research has been done on the structures of criminal groups. A 2008 study by Confesercenti, an Italian SME association, found that shop owners paid more than $250 million (173.5 million euros/4.2 billion K?) a day in protection money in installments colloquially referred to as pizzo. The study also found the going rate for protection in Sicily and Naples was 10,000 euros per month for a building site, between 3,000 and 5,000 euros for supermarkets and 200 to 500 euros per month for small shops.

"While organized crime is typically said to be common in underdeveloped territories, it is not always necessarily like this," Lino Busa, president of SOS Impresa, an Italian association of business owners created to combat organized crime. "Extortion can easily take place in wealthy regions as well and in places where the presence of the state seems to be more perceptible."

Protection rackets often serve as the proving ground for criminals looking to move on to bigger things.

"Extortion is the 'university' for mafia affiliates," Busa said. "The majority of new affiliates form their Mafiosi status in this activity, learning violence and intimidation, the sense of belonging to a family, and criminal social values."

Back in the Czech Republic, "racketeering has always been here," said Miroslav Nožina, an organized crime expert at the Prague Institute for International Relations.

"In the foreign community, the certainty that a damaged person will not report something to the police has always been much higher, since the person does not live in his home environment as Czechs do," he said. "For a foreigner living in a foreign country, cooperation with police traditionally stagnates. You come to a different country, you don't speak the language, and you become an easy target for blackmail."

The ÚOOZ report specifically refers to a criminal class within the Vietnamese community known as the "Bo Doi," a phrase which translates as "foot soldiers," as the enforcers of protection rackets.

"In the Vietnamese community, it is a big problem," Nožina said. "In the past 20 years, organized crime has developed into an international phenomenon. The community of some 70,000 [Vietnamese] people does not open up to the majority - or we have not been able to communicate with them. Therefore, parallel power mechanisms have developed with the legal and illegal parts working hand-in-hand."

Indeed, the ÚOOZ report expresses concern that Prague-based crime syndicates are increasingly integrating themselves into the globalized world of trans-border crime.

"Many of [the organized crime groups] have links to criminal structures operating outside the Czech Republic, and the nature of their activity is thus largely determined by the current development of organized crime internationally," the report said.

While Nožina notes the strength of Vietnamese crime groups, he calls Russian-speaking organizations "unambiguously the strongest in this country."

"With Russian-speaking communities, the organized crime comes from the street; now it has become a big business in a more organized form," he said. "It does not work so much as it used to, when they would rob a bank and escape to Ukraine. [Now,] they cover up the illegal activities with legal activities, like with businesses in Karlovy Vary."

Some question why the publicly released portions of the ÚOOZ report focus disproportionately on crime within minority communities.

"I'm not saying it's not possible [that protection rackets are common among Vietnamese businesses]," said Marcel Winter, chairman of the Czech-Vietnamese Society. "But if it was happening on a large scale, we would know about it."

"I remember once that former [Interior Minister Ivan] Langer said the Vietnamese are the minority with the highest criminality rates," he added. "I checked it, it was a big fat lie. First were Ukrainians, then Slovaks. Vietnamese ranked ninth."

While some experts say the ÚOOZ report expresses a growing awareness of criminal syndicates rather than an actual growth in organized crime, the report also cites homegrown causes for a potential rise in extortion, citing "corruption in the public sphere, which is often (not exclusively) tied to low transparency in public tenders, low transparency in funding private (business and nonbusiness) organizations and the associated lack of legislation fighting the corruption and modern forms of organized crime."

Later on, the report refers to means by which organized groups obtain legal residency for otherwise illegal immigrants, citing "increased  corruption on the part of Czech state administration workers."

When combined with the protection racket trend, an increasingly precarious situation emerges, and in international business circles, perception can become the reality.

"There is no organized crime syndicate that doesn't include extortion," Busa said. "It's a plague that enormously affects industrial and commercial development."

- Klára Ji?i?ná contributed to this report.

Read more in Business: "Extortion of small businesses rising," The Prague Post, July 6, 2011. 

Benjamin Cunningham can be reached at
bcunningham@praguepost.com