Case Studies

According to the Guardian, illegal gold mining in Peru’s Loreto region is devastating local waterways and forests, impacting Indigenous communities who rely on these resources. The rapid expansion of gold mining has been destroying the Nanay River, a critical water source for local communities. High gold prices and a lack of government oversight have driven the increase of illegal mining in the area, with 122 new cases identified between 2021 and 2023. These activities involve the use of dredging rafts and other equipment to extract gold from the river. However, this mining process contaminates the water with toxic substances like mercury, which disrupts the natural flow of water and contaminates it. The illegal miners have also encroached upon protected areas and Indigenous reserves, causing environmental damage and illegal deforestation. The pollution of the Nanay River has led to a severe degradation of its water quality, compromising a vital source of drinking water for the 170,000 Indigenous inhabitants. This contamination has also resulted in numerous health issues among the local population.  

Keywords: Latin America, Peru, minerals, gold, primary production, illegal mining, environmental crime, Indigenous rights, illegal deforestation

Sources:  https://www.theguardian.com/global-development/2023/dec/22/illicit-gold-mining-loreto-peru-indigenous-peoples-fight-protect-amazon-rivers 

A report by the Organisation of American States details how the Los Topos Del Frio organised crime group developed an extensive illegal gold network in Peru. The network managed every aspect of the illegal gold supply chain, comprising illegal miners, transport companies, processing plants, illegal gold exporters and foreign financiers. Los Topos Del Frio paid illegal miners to extract gold, before concealing the extracted minerals in local buildings and warehouses. The gold was then transported in vehicles belonging to transport companies linked to the Los Topos network, before being processed and transformed into gold bars. The gold was then delivered to the port of Callao after being purchased by two foreign nationals based in Peru who financed the illegal operation. The foreign financiers used multiple shell companies and trade-based money laundering to export the illegal gold, hiding it among declared exports of copper, silver, and zinc. The Integral Registry of Mining Formalization (REINFO) was also involved in hiding this illicit activity. The Los Topos network encompassed numerous small-scale and artisanal miners, along with consortiums listed in REINFO as being in the process of formalisation. This registry provided protections that facilitated the transport and processing of illegal gold within the country, effectively concealing its unlawful origins. 

Keywords: Latin America, Peru, minerals, gold, primary production, trade and transport, illegal mining, money laundering, gold trafficking, smuggling

Sources:  https://www.oas.org/en/sms/dtoc/docs/On-the-trail-of-illicit-gold-proceeds-Peru-case.pdf 

According to Mongabay, concerns were raised amongst prosecutors and environmentalists as a Peruvian court overturned a prior ruling. Indeed, in December 2020, a Peruvian court overturned a previous judgement against employees of the cacao company Tamshi SAC, absolving them of crimes related to illegal deforestation in the Amazon. This decision followed a significant lobbying effort by the company, but could lead to dramatic negative impacts in terms of combating deforestation. Tamshi SAC, formerly Cacao del Perú Norte SAC, cleared nearly 2,000 hectares of primary rainforest without proper permits and was fined 129 million soles by Peru’s Environmental Assessment and Enforcement Agency (OEFA). The company's officials, previously sentenced for illegal timber trafficking and obstruction, saw their sentences dismissed in December 2020. Environmental advocates argue the court’s decision sets a harmful precedent, undermining efforts to enforce environmental laws in Peru. The Ministry of the Environment plans to appeal the ruling to the Supreme Court. 

Keywords: Latin America, Peru, cocoa, primary production, illegal deforestation, illegal production, environmental crime

Sources:  https://news.mongabay.com/2020/12/peruvian-court-absolves-cacao-company-of-illegal-amazon-deforestation/ 

An investigation by The Bureau of Investigative Journalism (TBIJ), Mongabay, and Ojo Público has revealed that PepsiCo has potentially used palm oil sourced from deforested lands in eastern Peru. This land is claimed by the Shipibo-Konibo people. The palm oil, entering PepsiCo's supply chain through a Peruvian consortium called Sol de Palma, is mixed with oil from Ocho Sur, a company linked to significant deforestation and Indigenous rights violations. Indeed, Ocho Sur has been associated with 15,500 hectares of forest loss over the past decade, partly on land claimed by the Santa Clara de Uchunya community of Shipibo-Konibo people. Despite pledges to ensure a deforestation-free palm oil supply by the end of 2022 and to achieve net zero operations by 2040, PepsiCo products continue to use palm oil potentially linked to illegal deforestation. Ocho Sur denies responsibility for the deforestation and community division, attributing past actions to the companies it acquired. Meanwhile, the Santa Clara de Uchunya community continues to fight for recognition and protection of their land. The issue has been further exacerbated by the Peruvian government's loosening of deforestation regulations. 

Keywords: Latin America, Peru, palm oil, primary production, trae and transport, illegal deforestation, Indigenous rights, human rights violations

Sources:  https://www.business-humanrights.org/en/latest-news/peru-pepsicos-peruvian-suppliers-have-been-sourcing-palm-oil-from-deforested-territory-claimed-by-the-shipibo-konibo-people-says-investigation-includes-companies-comments/ 

https://news.mongabay.com/2024/04/snack-giant-pepsico-sourced-palm-oil-from-razed-indigenous-land-investigation/ 

According to Ojo Publico, park ranger Victorio Dariquebe Gerewa, was ambushed and killed on April 19, 2024, in Queros, Madre de Dios, Peru. His murder is linked to his efforts against illegal mining in the Amarakaeri Communal Reserve. Victorio had been receiving threats from illegal miners. These miners significantly threaten the reserve's ecosystem through deforestation, habitat destruction, and pollution from their activities. Ojo Publico explained that the region also faces substantial environmental crimes related to drug trafficking. Coca cultivation in Kosñipata has surged, increasing by 64% between 2018 and 2022, and is linked to the production of narcotics, further destabilising the area. Illegal logging and unregulated road construction exacerbate these issues, leading to widespread environmental degradation. Victorio’s death marks the 34th murder of an environmental defender in Peru since 2013. 

Keywords: Latin America, Peru, minerals, gold, illegal mining, illegal deforestation, illegal logging, drug trafficking, murder of environmental defenders

Sources:  https://ojo-publico.com/ambiente/territorio-amazonas/mineria-ilegal-y-narcotrafico-detras-del-crimen-victorio-dariquebe 

Peru’s forests, crucial for global sustainability, face severe threats from illegal logging driven by high global demand for timber. Between 2001 and 2018, deforestation rates soared, with illegal logging being a significant contributor. This case study focuses on the financial crimes associated with this deforestation, particularly trade mis-invoicing, which facilitates tax evasion, fraud, and money laundering. A Trade Discrepancy Analysis (TDA) revealed substantial discrepancies in trade data between Peru and its major trading partners, including the USA, China, Mexico, and the Dominican Republic, from 2009 to 2018. For instance, discrepancies with the USA averaged at US$1.5 million per year, peaking in 2013. These discrepancies often indicated under-invoicing by Peruvian exporters to conceal profits and evade taxes, and over-invoicing by importers to shift money illicitly. The analysis also highlighted the lack of stringent auditing and regulatory oversight, which allows such discrepancies to persist and exacerbate deforestation without adequate legal repercussions. This case underscores the urgent need for enhanced inter-institutional cooperation and stricter auditing to curb illegal timber trade and protect Peru’s forests. 

Keywords: Latin America, Peru, timber, primary production, illegal deforestation, trade misinvoicing, illegal logging, tax evasion,  money laundering, illegal timber trade

Source: https://traccc.gmu.edu/wp-content/uploads/2021/05/Topic-Brief-The-International-Links-of-Peruvian-Illegal-Timber-A-Trade-Discrepancy-Analysis.pdf 

Peru’s forests, crucial for global sustainability, face severe threats from illegal logging driven by high global demand for timber. Between 2001 and 2018, deforestation rates soared, with illegal logging being a significant contributor. This case study focuses on the financial crimes associated with this deforestation, particularly trade mis-invoicing, which facilitates tax evasion, fraud, and money laundering. A Trade Discrepancy Analysis (TDA) revealed substantial discrepancies in trade data between Peru and its major trading partners, including the USA, China, Mexico, and the Dominican Republic, from 2009 to 2018. For instance, discrepancies with the USA averaged at US$1.5 million per year, peaking in 2013. These discrepancies often indicated under-invoicing by Peruvian exporters to conceal profits and evade taxes, and over-invoicing by importers to shift money illicitly. The analysis also highlighted the lack of stringent auditing and regulatory oversight, which allows such discrepancies to persist and exacerbate deforestation without adequate legal repercussions. This case underscores the urgent need for enhanced inter-institutional cooperation and stricter auditing to curb illegal timber trade and protect Peru’s forests. 

Keywords: Latin America, Peru, timber, primary production, illegal deforestation, trade misinvoicing, illegal logging, tax evasion,  money laundering, illegal timber trade

Source: https://traccc.gmu.edu/wp-content/uploads/2021/05/Topic-Brief-The-International-Links-of-Peruvian-Illegal-Timber-A-Trade-Discrepancy-Analysis.pdf 

According to InSight Crime, the “Patrones de Ucayali”, a criminal group led by Juan Miguel Llancari Gálvez and Jorge Edilberto Alvarez Choquehuanca, developed an intricate network of illegal timber trafficking in Peru. The network was involved in felling trees in the Peruvian Amazon and laundering illegal timber through corrupt officials and falsified documents. Investigation into the mid-level criminal group began in 2015, when police detected suspicious paperwork related to Timber Transport Permits (GTFs). Following this, police surveillance, phone taps and undercover operations revealed the network's operations, involving loggers, forgers, transporters, and corrupt officials. However, corruption and tip-offs allowed the network's leaders to evade arrest. InSight Crime also highlights the involvement of the Bozovich family in this criminal network. Major players in Peru's timber industry, the Bozovich family, were suspected to operate through a series of shell companies, allowing them to launder proceeds from illegal timber trafficking with relative impunity. 

Keywords: Latin America, Peru, timber, primary production, trade and transport, serious organised crime, illegal timber trade, illegal logging, fraudulent documentation, corruption and bribery, money laundering

Sources:  https://insightcrime.org/investigations/peru-patrones-patrons-timber/ 

In the Peruvian Amazon, the Mashco Piro tribe, reputed to be the world’s largest Indigenous tribe still living in voluntary isolation, have been encroached on by a logging company, whose workers have been penetrating deeper into their territory since 2010. This encroachment has led to violent confrontations, with a Catahua worker killed by the tribe in 2022. Despite Indigenous people and their advocates stating that these activities violate national and international law aimed at protecting the unique rights of highly vulnerable peoples who have live in voluntary isolation, allegations of “possible forced contact”, and calls from the U.N. special rapporteur on Indigenous rights for Catahua to halt logging, the Peruvian government has not intervened. This case highlights the human rights abuses linked to illegal logging, as the intrusion into the Mashco Piro’s territory not only disrupts their way of life but also puts them in mortal danger.  

Keywords: Latin America, Peru, timber, primary production, Indigenous rights violations, murder, human rights violations

Source: https://www.washingtonpost.com/world/2024/05/25/uncontacted-indigenous-tribe-amazon-peru/  

A study by the Terrorism, Transnational Crime and Corruption Center (TraCCC) at George Mason University has revealed significant discrepancies in timber trade values between Peru and its trading partners. This suggests significant issues with money laundering, tax evasion, and corruption. Firstly, the study shows that over-invoicing of timber exports to China and the Dominican Republic is constant. This practice demonstrates a high likelihood of money being laundered through illicit transfers to foreign countries. By inflating export values, exporters can move larger amounts of money than officially declared. In addition, under-invoicing of timber exports is a common practice for Peruvian timber traffickers. The undervaluing of timber exports to countries such as Mexico and the USA is a strategy used to lower reported profits and thus evade taxes. Exporters often mislabel products to benefit from less stringent controls, which may also involve bribery of customs officials to overlook such discrepancies.  

Keywords: Latin America, Peru, timber, trade and transport, money laundering, tax evasion, corruption and bribery, trade misinvoicing, illegal timber trade, tax evasion 

Sources:  https://traccc.gmu.edu/wp-content/uploads/2021/05/Topic-Brief-The-International-Links-of-Peruvian-Illegal-Timber-A-Trade-Discrepancy-Analysis.pdf