Rio’s Drug Gangs, Squeezed by Recession, Go on Hijacking Spree

by David Biller (feat. Robert Muggah)

Bloomberg
October 28, 2016

One night in late June, four black cars intercepted a truck on a highway 25 miles out of Rio de Janeiro. The hijackers, in well-practiced precision, disabled the truck’s tracking system, trained their rifles on the driver and ordered him to follow them back to the city to a favela named Chapadao.

There, the hijackers quickly transferred the truck’s load -- goods like electronics and textiles worth a total of 1.4 million reais ($440,000) -- to a waiting vehicle. The transfer complete, it disappeared in the hillside neighborhood’s winding, narrow streets crammed with small brick homes, according to the police report.

The most extraordinary thing about the hijacking may be just how ordinary such robberies have become in Brazil, and especially in just a handful of roads leading into and out of Rio’s northern region. Brazil’s rate of cargo theft is the highest in Latin America, and among the highest in the world, according to BSI Supply Chain Services and Solutions. In Rio state, hijackings have surged more than 150 percent from three years ago, part of a broader crime wave this year.

Brazil’s two-year recession is largely driving this phenomenon. The city’s organized crime rings have been diversifying from drug trafficking and extortion into truck heists, according to Robert Muggah, research director for Instituto Igarape, a think tank in Rio. Why? In part because they can easily sell their purloined goods to residents struggling with more than 11 percent unemployment and 8 percent inflation.

’Robin Hood’

Everything from meat and pharmaceuticals to beer, alcohol and cell phones can be had. And the prices can’t be beat. Stolen pork, washing machines and iPhones were sold at less than half the retail price, according to one resident from Chapadao. The thieves sometimes take on a “Robin Hood” approach to win support in the working-class communities, said Carlos Guimar, a risk consultant. They recently distributed stolen ice cream to children for free, he said.

With the police severely understaffed, the hijackings are a costly diversion for companies from beer-maker AmBev SA to JBS SA, the world’s largest meatpacker. Insurance premiums are rising and businesses say they have little choice but to boost spending on protection to outfox heavily armed bandits. Security measures range from using armored trucks to a satellite system that automatically shuts down a truck’s engine if the route it takes signals it’s been stolen.

“Investing big in security is the only path for now, and it doesn’t even guarantee results,’’ said Leandro de Melo, chief of risk for Meridional Cargas Ltda, the transport company whose truck was hijacked in June. “You either invest to make theft harder, or you become an easy target and have even more problems -- more difficulty negotiating an insurance policy, more difficulty passing on costs.’’

Mountainous Geography

Estimates of the value of merchandise stolen in Rio range wildly, from about $100 million each year to almost $1 billion. Cargo thefts are on track to surpass 8,000 this year, police say, nearly equal to neighboring Sao Paulo, whose economy is almost three times as big.

One reason is Rio’s mountainous geography. The northern region’s logistical hub, far from the sand and surf of Ipanema, is also surrounded by densely-packed, working-class neighborhoods. That leaves trucks precious few routes with multiple lanes to leave the area. Two run on either side of a group of favelas including Chapadao and Pedreira, where criminals used to focus most of their activity on drug trafficking, police say.

Authorities are well aware of these locations but are hamstrung by shrinking budgets and weak coordination with military police, according to Muggah. The police force tasked with cargo theft has half the personnel of a decade ago, said Marcelo Martins, head of the division.

Meat, Chicken

Corruption remains another problem, among both regular police and private security guards, Muggah said. Martins denied there is any corruption in his division.

“The state doesn’t have the adequate structure to provide top-notch service, it just doesn’t,” said Martins, whose cargo theft unit now numbers just 50 people. Rio declared a state of fiscal calamity in June.

Meat and chicken are among the products thieves most frequently seek because they are easy to sell amid soaring retail prices, according to Venancio Moura, security director for Rio’s union of cargo transport companies. Video published this month by local media Veja showed Chapadao residents dragging enormous cuts of stolen beef across the ground. Meatpacker JBS often loses two trucks a day, Moura said. JBS declined to comment.

Some electronics companies have taken to using armored cars like those banks deploy, the largest of which is affectionately called “The T-Rex,’’ according to Fabio Barbosa, head of the electronics industry association’s risk prevention committee.

“Security costs are increasing for a lot of companies, and on the flip side there’s been a fall in sales due to the recession,’’ Barbosa said. “It’s a dangerous trend.’’

Big businesses aren’t the only ones that suffer. When Ana Wambier, co-founder of fashion boutique Wasabi, read an e-mail about the truck hijacking in June, she broke down crying. Among the stolen goods were samples of Wasabi’s summer collection. They were headed to Sao Paulo to be photographed by the likes of Vogue and Elle for marketing purposes. The roughly 25,000 reais in merchandise stolen meant losing perhaps ten times that in orders.

“It was a gigantic loss,” said Wambier, who operates out of an Ipanema studio apartment. “It was a collection we expected a lot from.’’

Insurers now require many companies to hire risk consultants. AmBev, the Americas unit of the world’s largest beer maker, retained ICTS after a raft of truck thefts in 2014, up to 260 in November that year, a tenfold increase from just months earlier, AmBev said.

Now, some trucks are trailed by escorts in unmarked cars. If they see a hijacking they’ll call control room operators who remotely shut off fuel supply to the truck’s engine. Trucks likewise stop in their tracks if their satellite signal is jammed or if they drive into one of the nine areas to which AmBev won’t deliver, the two largest of which are by far Chapadao and Pedreira.

“If they get the truck into the favela, forget it,” said Guimar, an ICTS risk chief who oversees the AmBev account. “Once it’s inside, they do what they want.”