Drug trade: Long arm of billion dollar drugs business reaches NZ

This 490g package of high-purity amphetamine sent from Poland to Kaitaia had a street value of $900,000.

* An extensive investigation into the illicit drug business in New Zealand. A four-month inquiry by Herald reporters shows how international crime syndicates have taken over the trafficking of drugs into the country. They and outlaw motorcycle and ethnic gangs now run an industry worth a billion dollars, more than twice the earnings of our export wine industry and more than the police budget of $900 million. The Herald has conducted dozens of interviews and made extensive record searches to produce this portrait of a big money trade that has invaded almost all of New Zealand society.

Despite the sticky heat, each morning he slips on a business shirt, knots his tie and does battle with the traffic. Sitting in the gridlock, his mind whirrs like any other entrepreneur plotting how to expand his business.

You won't have heard of him but he and his partners impact on the lives of people you know, perhaps even on you.

His business is drugs, and his name is Wong Moon Chi. If your son, workmate, friend, or the guy who burgled your house have smoked P, snorted speed, or gulped ecstasy in the past five years, there's a good chance the product will have come from a cartel run by Wong or someone like him.

He will never have personally dealt with the customers. He sits at the top of the supply chain, never soiling his hands with the dirty work, left in New Zealand to the gangs. When people in New Zealand think about big-time drug dealers, they think of Mr Asia and the late 1970s. These days men like Wong operate on a scale Terry Clark could only have dreamed of. They are less Mr Asia than Mr Globe, such is the scope of their dealings.

In a perverse collision of worlds, the foreign syndicates have formed partnerships with the New Zealand gangs who use imports to supplement their own manufacturing businesses.

Their success is driven by the demand for a winning product. Rather than concentrate on drugs like cocaine, heroin and LSD, they have turned their attention to the amphetamine family of designer drugs - speed, methamphetamine, ecstasy.

They are the drugs of our busy times, enabling people to work hard and play hard, and the user base has spread wide. It seems amphetamines are for everyone - nightclubbers, professionals, solo mothers. Demand for the designer drugs has proven so high in New Zealand that, according to last year's United Nations World Drug Report, we are among the highest users of amphetamines (behind Thailand and Australia).

No wonder international smugglers have established a foothold, with up to a dozen confirmed active overseas syndicates operating here. They come from Asia, West Africa, the Middle East, a new breed of druglords with tentacles all over the world, looking for ripe markets. Places like New Zealand.

"In the last five years, we have seen a marked change in the dynamics of the New Zealand drug scene," says the Customs Service manager of drug investigations, Simon Williamson.

"The Mr Asia syndicate was an example where you had New Zealand criminals who then set up shop and departed for greener pastures offshore but still had their New Zealand criminal echelon here to do their dealing.

"Now we have a supply very much in the hands of what are commonly known as transnational drug trafficking syndicates."

Men like Wong. Late last year, the Chinese 44-year-old was arrested driving to work in the Cambodian capital, Phnom Penh. He had moved to Cambodia under an assumed name in 1992, and began a double life which included running a hotel and working in a casino.

Since April last year, investigators from around the world, including detectives from the Auckland metro crime unit, had been involved in hunting for Wong, described by United Nations anti-drug officials as "one of the biggest fish in the drug world".

He stands accused of smuggling heroin and methamphetamine into Australia, Japan, mainland China and the United States.

He also had what Auckland metro crime unit commander Ted Cox calls "established connections" in New Zealand.

He has not been here under the name Wong, but police believe he may have under other aliases.

"Although the arrest of Wong did not take place in New Zealand, nor were there any drug seizures effected in New Zealand, the result is very significant for New Zealand law enforcement," says Cox.

WONG is not alone. A Taiwanese man, Kuang-Hua Chen, 45, was arrested at Sydney International Airport in February and accused of large-scale trafficking of drugs including crystal methamphetamine (known as Ice).

New Zealand police say Chen has known connections here, but won't elaborate because of continuing investigations. Chen is opposing his extradition to the United States.

And there are others, much closer to home. Police say "key international high-impact targets" are living right here. "These are people who live in New Zealand and are believed to be big players in international drug trafficking," says a senior police source. "They run their operations from here."

These dealers came to New Zealand in the late 1990s under the investor category which gave residency to applicants who could prove they had money. The quietness of New Zealand and the absence of capital punishment were attractive features.

For the most part, their business has been conducted overseas because their main stock-in-trade is heroin, a drug not in great demand in this country.

But it is no coincidence that Asian syndicates were the first to recognise the potential in New Zealand for synthetic drugs such as ecstasy and crystal methamphetamine.

China has also been a prime source of what are known as precursor drugs, particularly the base ingredients of methamphetamine products such as P.

In March last year, an Asian in New Zealand and associates were thwarted in their efforts to import a one-tonne shipment of ephedrine from China.

The group had arranged to pay the cut-price rate of US$38/kilogram ($53/kg) for a haul that could have produced 700kg of meth - almost 100 times more than the amount of amphetamines (including methamphetamine) seized by police and Customs in 2002.

It was stopped when the China Narcotics Control Commission contacted New Zealand and asked if it was an appropriate export. "We had a look [at the people] and told [the commission] it would not be appropriate," says a source.

A police intelligence officer says he is aware of up to 10 Asian criminals who have been in New Zealand for more than a decade playing a co-ordinating role in drug operations and other profit-making opportunities.

They have the roles of local enforcers: some have been convicted of serious crimes, including knife attacks. But one of their main roles is co-ordination with local criminals.

There are connections between this group and several New Zealand gangs including the Headhunters and the Mongrel Mob and through domestic gang relationships to the Hells Angels. Meetings have taken place at four locations.

New Zealand has become a branch office of heavy Asian gangs. The 14K and Wo Group from Hong Kong and Ah Kong from Malaysia have an established presence dating back to the early 1990s. Recently, police have detected the emergence of the Big Circle Gang, said to be the most brutal of the Chinese groups.

Last month, a man believed to be a member of Big Circle was convicted of attempted murder. Big Circle, like other Chinese gangs, is an enterprise driven by money and allegiances are easily set aside in pursuit of profits.

"They just see drugs as a huge business opportunity," one officer says of the Asian gangs. "When they need something done or when there is product to be moved, they will contact their business partners."

But criminals other than Asians have scented opportunity in New Zealand. Drug lords come from around the world. Customs says that of the 53 significant drug seizures at the border last year (up from 28 the previous year), known international syndicates were responsible for more than 80 per cent.

Officers believe there are between six and 12 such groups plying their trade in New Zealand but their operations locally depend on the co-operation of New Zealand gangs and criminals.

"What we've seen emerge clearly is that you've got supply networks of the transnational sort who are looking to expand their business interests with the help of men whose job it is to connect foreign traders with local distributors."

Until a few years ago, that belief was only a suspicion. Then along came a conglomerate of Eastern Europeans and the King Cobras, colluding in a conference facility otherwise known as the remand wing of Mt Eden Prison (see case study 1: the Poles and the King Cobras).

Lessons from this case were not only that the feared relationships between locals and overseas criminals were a reality but also that transnational groups had brought with them a hard-edged business approach.

Unlike local gangs who for decades had seen their business expansion ambitions thwarted by traditional rivalries, the foreigners were prepared to deal with whoever they needed.

Criminologist Greg Newbold says connections were inevitable if there was money to be made for both partners. "Gangs are good to deal with because they are reliable," he says. "Racism would not come into it." A serious Asian gang has kudos among locals because of their mystique and tough, uncompromising reputations.

AS well as inadvertently helping to bridge traditional rivalries, overseas gangs have introduced a more sophisticated market approach. They are savvy in product selection, discovering market gaps for new drugs and exploiting the demand created once users develop a taste for their latest stimulant.

In the past two years, this tough-edged business approach has seen international syndicates heavily pushing Ice into New Zealand, a crystallised form of the methamphetamine drug, P. Police got the first inkling of the threat of Ice - and the fact that New Zealand was proving to be a major drug transit point - in July 2001 when two Malaysian cousins arrived at Auckland Airport carrying suitcases with false bottoms. Inside were 4.5kg of heroin and 1kg of Ice (see case study 2: the Malaysian cousins).

Calculated, strategic decisions are a mark of the new supply kingpins.

In January 2001, investigators uncovered a multinational cartel believed to have made an aggressive move to seize control of the country's ecstasy demand. It was a landmark case which sent a signal that there were clearly international groups willing to deliberately target New Zealand. Evidence of the ring's activities were discovered in the unlikeliest of places - a BMW gearbox. The gearbox housing, sealed in an unusual way with a metal flange, had been sent from Antwerp, Belgium, to an Otahuhu mechanic. Inside were more than 25,000 Ecstasy tablets worth $2.5 million.

Two men, Chinese Canadian restaurant manager Eric Yuk Chu Lo and Auckland-based Simon Wu, were convicted over the shipment. Investigations revealed the deal was only part of a syndicate operating a pipeline of bulk ecstasy importations from Europe and Southeast Asia.

"This syndicate is believed to be bringing into New Zealand more than 20,000 tablets a month, using Malay couriers through Auckland International Airport," says a 2002 Customs report on the drug market.

"It has also been linked to an international heroin trafficking syndicate, believed to consist principally of Canadian Chinese and US nationals, that was behind the October 2000 seizure of 357kg of high purity heroin in Fiji. The heroin, concealed beneath the floorboards of three containers, had passed through Auckland from Myanmar en route to Fiji, and was apparently destined for Australia."

In fact, the connections go further. Individuals involved with the Fiji heroin bust were also involved in the bust of the huge clandestine laboratory in Suva last year. The lab, capable of producing hundreds of kilograms of methamphetamine, was set up to supply markets in Asia, Australia and New Zealand (see case study 3: the steamy Pacific).

The lure of the Australian market, accessed via New Zealand, has been attractive to traffickers of many drugs.

Last year, a 33-year-old Chilean woman was arrested at Auckland Airport allegedly carrying a kilogram of high-purity cocaine. The seizure led to investigations across South America, Australia and New Zealand.

A report by the Australian Bureau of Criminal Intelligence found that syndicates regularly used New Zealand as a transit point on the cocaine route from South America. Over a three-year period in the late 1990s, 37 couriers were caught on Aerolineas Argentinas flights from New Zealand carrying 130kg of cocaine into Australia.

The appeal of New Zealand is that the traders believe it is not seen as a drug-exporting country so people and packages coming from here cause less suspicion.

"Such importations into Australia will probably continue, with New Zealand being used as a transit country in an attempt to disguise the drugs' country of origin," said the report.

IN the best traditions of closer economic relations, the transtasman trade goes both ways. Several years ago, police drug intelligence officers became aware of Israeli syndicates thanks to colleagues in Australia who alerted them to traffickers bringing ecstasy to New Zealand.

Interpol had become concerned about the spread of Israeli traffickers around the world and alerted Australian officials attending a meeting in Lyon, France. Interpol told the Australians of Israeli couriers active in the South Pacific.

"When we interrogated the movement data, we found we had a number of trips down to New Zealand. We knew the couriers were coming in during mid-2002," says one officer. A string of operations was launched.

"They [Israeli smugglers] just virtually came in one after another [so] we committed resources to international operations. There was a large number of seizures internationally and in New Zealand."

Last year, the number of Israeli smugglers detected dried up. But they are not believed to have vanished.

"They are just working a bit smarter now," said the officer. "They have had to change their techniques. There's a lot of intelligence in relation to their international activities and what is alleged to have occurred in the South Pacific."

Last year's United Nations World Drug report identified Israeli transnational groups as being responsible for a large volume of the trade in ecstasy. While Dutch criminals make the drugs, Israeli and Dominican rings were behind many shipments. Chinese syndicates were heavily involved, too, says the report.

The involvement of these groups had seen ecstasy spread from being a European problem to a worldwide one. In the mid-1990s, 80 per cent of the world's ecstasy seizures were in Europe. That has fallen to around 60 per cent.

Taking a line from the ecstasy seizures, other drugs are being pushed more and more to the wider world: the Middle East, Caribbean, South America and Oceania. In other words, our place.