When the vast wealth generated by drug trafficking is as deeply ingrained in society as it is in the Netherlands, it disappears into the nooks and crannies of the economy until it’s indistinguishable from what’s generated legitimately. That’s money laundering – the key to successful gangsterism.
Even hardened detectives are sometimes surprised by what they find. One recent example was a routine investigation to identify a network of hiding places for cocaine that instead stumbled upon a huge mortgages scam at the heart of the country’s hottest property market: Amsterdam.
The story of the capital’s criminal underbelly is as old as the city itself. Violence is nothing new. The Dutch slang word “penoze” refers to a criminal fraternity dating back to the 17th century that controlled arms, drugs, prostitution, extortion, money laundering, loan sharking and even murder.
The current scale of that criminality was underlined by the Central Statistics Bureau this summer when it calculated the total value added by “illegal activities” to the Dutch economy in 2021 as a huge €4.5 billion or 0.5 per cent of gross domestic product.
Of those illegal activities, the relatively trouble-free production and distribution of cannabis added most value, followed closely by activities connected to cocaine trafficking and the manufacture and sale of synthetic drugs such as amphetamines, methamphetamine and ecstasy.
However, drill down specifically into the bureau’s figures for the value of cocaine to the Dutch economy and you’ll find two quite distinct answers.
In 2021, the headline value that cocaine trafficking added to the Dutch economy was €1.2 billion.
But include the added value that leaves the Netherlands for the unspecified overseas destinations where the gang bosses lay their heads and that €1.2 billion becomes €10.7 billion – a profit befitting a global criminal enterprise with multiple moving parts and extremely dangerous principals.
The Dutch government – shocked by the shooting dead of lawyer Dirk Wiersum in 2019 and of investigative journalist Peter R de Vries two years later – acknowledges that it’s locked in an existential struggle with increasingly unscrupulous organised crime gangs grown rich from cocaine.
Most notorious is one led by the man formerly the Netherlands’ “most wanted”, Moroccan-born Ridouan Taghi (46), currently serving life imprisonment in a maximum security jail for multiple murders – but every bit as dangerous, it’s said, behind prison bars as outside them.
In 2022, Taghi, his Irish associate Daniel Kinahan (47) and Camorra drugs boss Raffaele Imperiale (49), who’s currently in jail in Italy, were named by the US authorities as key figures running a Dubai-based “super cartel” behind about a third of the cocaine imported into Europe.
In response to May’s figures from the statistics bureau, the Department of Justice in The Hague said it had set its sights on these gangs – who’ve repeatedly been accused by the police of turning the Netherlands into “a narcostate”.
[ Dutch police struggling to cope with rash of drugs-related explosionsOpens in new window ]
“Penalties for hard drug offences have remained virtually unchanged in recent years, while the Netherlands has developed into a major producer of synthetic drugs and a global trans-shipment hub for hard drugs”, then justice minister Dilan Yesilgöz said. “These are criminals for whom extortion, intimidation and murder are part of the business model – people who will do anything to dominate the competition.”
It was to investigate an apparently very insignificant aspect of this very profitable cocaine-related gangsterism that a small unit of Amsterdam detectives was set up in 2018 – its task was to track down a network of drugs-hiding places believed to have been spread across the capital.
The properties and hidden spaces were used to store drugs until they were ready to be released on to the market at a premium – and sometimes used to house the army of migrant workers who do much of the grunt work necessary to keep the narcotics underworld running.
Occasionally the properties were used as safe houses to allow wanted criminals to hide out. In the tiny bockety backstreets of Amsterdam, criss-crossed by bridges and intersected by endless canals, anonymity was virtually guaranteed. Police could be seen and heard coming a mile away.
The easiest way to disappear was by bike – unglamorous but certainly effective.
It was during that seemingly marginal investigation that the Amsterdam detectives – some of whom were working undercover as potential purchasers for suitable properties – happened across a real estate agent who piqued their interest.
It transpired that this agent had previously been in the drugs business but had seen an opportunity and had switched to offering warehouses and ordinary homes to the drugs world, something that didn’t in itself surprise the officers – until the scale of his operation began to emerge.
The estate agent was the kingpin of his own criminal network, which consisted of six separate mortgage advisory firms, several smaller estate agents and a handful of financial services companies spread around the city – big enough to be effective but not so big as to attract undue notice.
There’s no suggestion this fraud was in any way connected to Taghi specifically or any of his associates. Police have been tight-lipped about where exactly the scam fits into the cocaine underworld, anticipating that many of the cases will end up before judges.
The scam was beautiful in its simplicity. The various mortgage advisers would file bogus mortgage requests with banks, all accompanied by fake documentation, including employer statements, payslips and enhanced accounts – the lot impeccably turned out on an industrial scale.
“On countless occasions, we saw fictitious monthly wage payments made to applicants’ bank accounts”, one detective said. “Anything to give the mortgage lender the illusion that the customer had a well-paid job.”
Applicants were typically charged between €7,000 and €12,000 for the falsified paperwork, in addition to the usual brokerage fees and adviser’s commission.
In total, police estimate, at least 800 houses have been bought this way since the drug dealer-turned-estate agent began his business in 2018 – although because it continued to operate “on a large scale” well into 2023, they admit this figure is likely to be just “the tip of the iceberg”.
Realistically, the numbers of properties are likely to be in the thousands, at least.
In May, police arrested 10 people linked to the scam and 12 others have been questioned and held on suspicion of fraud, money laundering and forgery.
There’s also the fact that while the police investigation has so far focused on Amsterdam, the Dutch regard the capital as part of what’s called the Randstad, the interconnected conurbation of the country’s four biggest cities – Amsterdam, Rotterdam, Utrecht and The Hague – with a massive population of some 8.2 million people between them.
“So yes, it’s likely the same scam is also being perpetrated in other cities”, figures Amsterdam public prosecutor, Ursula Weitzel.
And not alone that, but for every mortgage that’s taken by a fraudulent applicant, a real applicant in the booming Dutch market loses out.
“Ordinary citizens are complying with all the rules – but are seeing the homes they set their hearts on pass them by”, says Weitzel.
“The reality is that banks in these circumstances are not able to distinguish the bogus paperwork from the real thing. This means the fraud is almost impossible to tackle unless you know which properties to start with. It’s going to be extremely difficult, time-consuming and costly to unravel.”
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