The Commodities Boom Is Luring Criminals to Make Bigger and Bolder Scores
(Bloomberg Businessweek) -- Sergeant Tosha Ternes spends most of her time at the Saskatoon Police Service investigating cases of breaking and entering. In recent months her department has seen a “drastic” increase in one type of crime: lumber theft from construction sites.
“Everything’s just lying there, kind of like a free-for-all,” Ternes says from the Saskatchewan city in Canada’s prairie region. “Some sites have been hit two, three, four times.”
Theft of commodities such as lumber, metals, and food crops is nothing new. Yet the combination of soaring prices, the coronavirus pandemic, and the hit to economies has created an unusually fertile ground for criminals.
Statistics are hard to come by because authorities use different data and much of it is from before the pandemic took hold. But interviews with experts, law enforcement agencies, and victims paint a picture of a spike in criminal activity as the jump in commodity prices fuels talk of another “supercycle” like the one in the first decade of the century.
In Chile, where the price of copper is tracked by bankers and taxi drivers alike because of its economic importance, gangs target freshly smelted stacks of the metal as it travels on rail cars. When thieves strike, police dressed in “war gear” give chase in patrol cars, says one officer in the Antofagasta region, which is home to some of the world’s biggest copper mines.
There are reports out of Germany, the U.K., and the U.S. of catalytic converters in cars being harvested for their precious metals. In Nigeria, which like many developing countries is suffering from runaway inflation in food prices, some farmers complain that thieves are targeting crops. “They used to steal in small quantities before,” says Johnson Akinwunmi, a farmer in Ondo state who grows cocoa and cassava. “But now it’s been at an all-time high since December.”
Then there’s what’s known as food fraud, which can mean adulterating food, or replacing it with an inferior product, or faking its origin. In Malaysia, some criminals are repackaging used cooking oil in tins or painted bottles to pass it off as palm oil, a staple that’s become more costly.
In India at least 500 people fell ill in April after consuming adulterated buckwheat flour. Police say there’s a notable increase in the common practice of cutting spices such as turmeric and chili with cheaper—and often toxic—substances, including rice flour and aniline dyes.
Amarendra Panda, an assistant commissioner of police in Cuttack in the eastern Indian state of Odisha, says his officers have raided about 20 premises recently and confiscated what he calls “adulterated commodities” worth millions of rupees, or tens of thousands of dollars. “Their motive was to earn huge profits by investing as little as possible,” he says.
U.S. lumber prices soared to an all-time high in May and are now more than double what they were a year ago. Copper is up 70% over the same period, having also hit a record last month. Global food prices increased for a 12th straight month in May to the highest in almost a decade.
“The value on the black market of commodities changes just like they do above board,” says Jim Yarbrough, who leads a team at the British Standards Institution that monitors supply chain risks, including terrorism. “That’s going to drive criminal activity just like all other forms of supply and demand.”
While soaring prices have provided an incentive for commodity-related crime, the pandemic has furnished fresh opportunities. Disruptions to supplies and reduced availability of some materials mean managers must at times resort to doing business with previously untested suppliers, says Kimberly Carey Coffin, global technical director at Lloyd’s Register, a quality assurance company.
Even seasoned buyers are in danger of being duped. Last summer, Swiss commodities trading firm Mercuria Energy Group Ltd. struck a deal to buy $36 million of copper from a Turkish supplier but got a load of painted paving stones instead.
Since the end of 2019, copper robberies in the northern Chilean province of Antofagasta have increased about 30%, according to Egidio Ojeda, an officer with Chile’s investigative police. While some of that can be attributed to the remoteness of the mines and a surge in social unrest that preceded the pandemic, it also reflects a huge runup in the market price for the metal. “The operations are like a movie,” Ojeda says. “It’s a business that moves a lot of money, and even more now that prices have shot up.”
Thieves in trucks chase and try to intercept rail cars that depart from mines such as BHP Group’s Escondida or Zaldivar, which is operated by Antofagasta Plc, according to Ojeda. They pilfer one or two bundles of copper cathode sheets at a time, each valued at about 20 million Chilean pesos ($27,500). In March police apprehended three people near train tracks. In their truck they found tools strong enough to cut through the metal straps that fasten the copper slabs.
Many business owners are beefing up their own security. Olusegun Olaniyi, a farmer in Osun state in southwestern Nigeria, is paying for guards to patrol his property to curb theft of cassava, corn, plantain, and other crops. The thieves come at night and in the afternoon when workers are on break, he says.
Akash Homes in Edmonton, Alberta, has endured repeated heists of lumber, with losses totaling C$100,000 ($82,915) since February, according to vice president Hersh Gupta. The company installed security cameras at its construction sites and joined forces with other builders on nearby lots to hire guards to patrol overnight and on weekends. “It’s getting pretty crazy, to the point that thieves are starting to hot-wire zoom booms to load their own trucks,” he says, referring to a type of forklift.
The company now uses spray paint in a sky-blue shade that matches its corporate logo to tag its lumber with the letter “A” to help identify it if it’s stolen. But though some victims of lumber theft monitor online sales platforms such as Facebook Marketplace in search of stolen goods, markings are easily shaved off, making the wood unidentifiable.
Tackling food fraud, estimated to cost the food industry as much as $40 billion a year in lost sales, product recalls and legal bills, is even tougher. Because of complex supply chains, products change hands several times, often across borders, before they arrive on supermarket shelves.
Cases tagged as fraud, adulteration, or authenticity-based jumped 38% in the final quarter of 2020 from the same period in 2019, according to Food Forensics Ltd., a U.K. company that carries out testing and has a database mainly focusing on Europe.
“We are as busy as we have ever been, particularly with white flaky fish, tomatoes, rice, and other core commodities that are usually vulnerable to fraud,” says Rick Sanderson, business development director at Food Forensics.
The pandemic has complicated efforts to crack down on criminal activity. Police resources have been diverted, government or food safety inspectors can no longer visit factories in places like India, and sampling is difficult. At the same time, online marketplaces and delivery platforms are creating more opportunities for illegal goods to be sold, says Coffin at Lloyd’s Register.
“There is no likelihood my goods will get to their final destination, and when they do, there is high chance of pilfering of the goods during transit,” says Anugboba Ebhodaghe, whose food export company in Lagos, Nigeria, deals in everything from cashew nuts to cassava chips. “Everybody is like a hawk, looking for what to take at the slightest advantage.” —With Pratik Parija, Anuradha Raghu, Jeremy Diamond, Liezel Hill, and David Marino
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