Revealed: how Mexico's Sinaloa cartel has created a global network to rule the fentanyl trade
Carlos is a Mexican businessman employed by an import-export company that specializes in the trade of tequila and agricultural and chemical products. But in January 2016, he was a long way from his home in Culiacán, capital of Sinaloa state.
Two associates accompanied him as he travelled from Shanghai to Hong Kong, Japan, and finally, India.
There, they met Manu Gupta, a businessman active in a variety of sectors: chemical and pharmaceutical industries, agri-food products, sand, and even machinery.
Two years later, allegations were made about another aspect of Gupta’s business interests. On September 25, 2018 he was arrested in the city of Indore, Madhya Pradesh, along with a Mexican associate and an Indian chemist. The three men were wearing masks and gloves – and were in possession of more than 10kg of fentanyl — an ultra-potent synthetic opioid.
Gupta and his associates are accused of planning to ship the fentanyl to Mexico on a commercial flight, hidden in a suitcase. The three men are currently awaiting trial in India. All three have denied the allegations.
Analysis of social media posts and publicly available company information suggests that Carlos (not his real name) appears to match the profile of a man described in a 2019 DEA report as an independent dealer in precursor chemicals.
That report – obtained by the international hacking group Anonymous and released in the “BlueLeaks” document dump in June – says the unnamed man from Sinaloa was dispatched to “purchase additional large quantities of fentanyl precursor chemicals directly from China” on behalf of the cartel. Carlos did not respond to the Cartel Project’s requests for an interview.
The case sheds light on the both international networks which Mexican cartels have built up – and the business methods they employ to dominate the lucrative fentanyl market.
As murderous as they are, Mexico’s crime organizations use the same strategies as any other business: the seek to maximize profit, they outsource to specialists – and they adapt constantly to reflect changing international regulations.
A dominant force
Despite the imprisonment of its most notorious leader Joaquín “El Chapo” Guzmán, the Sinaloa cartel remains a dominant force in the drug trade. The October 2019 DEA report describes the group as “a prominent producer and trafficker of Mexico-based fentanyl into the United States”.
Fentanyl is a synthetic opioid analgesic like morphine, but cheaper, and 50 to 100 times more potent.
Fentanyl increasingly displaced heroin on the underground market, causing record numbers of overdoses around the world. In 2018, fentanyl and similar synthetic drugs accounted for nearly half of the 67,367 drug overdose deaths in the US. This year, overdoses have rocketed during the coronavirus pandemic, with more than 40 US states reporting an increase in drug mortality rates – particularly from synthetic opioids like fentanyl, according to the American Medical Association.
Not so long ago, the mountains of Sinaloa and Guerrero states were a patchwork of small plantations, where subsistence farmers eked out a living by cultivating marijuana and opium poppies. Now, however, those crops are being replaced by clandestine laboratories churning out shipments of synthetic drugs.
At one such lab – little more than a few tables amid scrubby woodland near the state capital Culiacán – a cartel chemist and his assistant were working on a new batch of pills. Both
men wore white overalls and respirator masks. The chemist, a burly man with a master’s degree in biochemical engineering described the industry’s transformation, as the pair worked at an outside table.
“Fentanyl brings in more profits. You only need one pill per person. So if we transport 10,000 pills, then it’s 10,000 people who are going to take them,” he said.
Stirring a white powder with a plastic spatula, he said: “I know my pill is very powerful and that it will create dependence. And that’s what I want. When a consumer takes one and then needs another dose.”
Fentanyl is extraordinarily profitable to produce: where opium poppies require acres of land and months of care, this highly powerful drug requires only a minimal workforce and infrastructure. A 2019 DEA report estimated that each fentanyl pill costs only $1 to produce. It can be resold in the US for at least 10 times as much.
New opportunities
Until very recently, most of the fentanyl sold in the US came from China, but that changed with stricter international regulations in 2017, and a Chinese crackdown in 2019. Shipping fentanyl directly became riskier, but China remains the main producer of the precursor chemical.
Meanwhile, the cartels saw a new opportunity to enter into the market as intermediaries.
With its well-established network, the Sinaloa cartel already had a solid infrastructure to expand into synthetic drugs. A DEA memo released through “BlueLeaks” described a highly organized circuit that included warehouses at the border and distributors across the United States.
“The profit margins they get out of it is by synthesizing plus refining the product into its consumable form,” explained Falko Ernst, senior Mexico analyst at International Crisis Group in Mexico.
And despite the cartels’ popular image as vertically integrated organizations, they often turn to independent networks to outsource logistics or money laundering.
“Cartels’ brand names fade away eventually. [But] all of those [other] networks stay in place because they’re much less visible. They’re much more clandestine in their operations. They don’t go public and they’re much more shielded from the volatility of the market,” said Ernst.
Back on the other side of the globe, Chinese manufacturers of precursors adopt similar strategies to avoid getting caught. And as Beijing tightens regulations, some criminal networks are relocating parts of their business to countries with less strict monitoring, notably Vietnam and India.
‘Things have just changed so dramatically’
In theory, sales of precursors are highly regulated: the International Narcotics Control Board (INCB) maintains a “Red List” of substances subject to restrictions.
But there are almost endless possibilities to circumvent these controls by tinkering with chemical compounds to produce new substances which fall outside the current rules.
To combat this phenomenon, the INCB also maintains the international special surveillance list of non-scheduled substances, ISSL, to monitor products that are not necessarily controlled substances but are frequently used illegally.
This regulation system is flawed, however: the INCB – a nonbinding entity – relies on the goodwill of companies and inspections by authorities which works better in theory than in practice. In reality, the extent of the problem is revealed with a simple Google search.
Entering keywords for fentanyl precursors quickly leads you to the social network Pinterest, where – nestled between wedding moodboards and home decor inspiration – are posts from Chinese companies offering fentanyl precursors for export— many directed towards Mexico.
At the top of the page is “4-AP,” a substance on the ISSL list that recently became a controlled substance in the US. According to the DEA, 4-AP only has one purpose: to produce fentanyl.
Under the cover of a false Mexican identity, the Cartel Project contacted three companies, all of which offered our undercover reporters substances known to be used in the opioid synthesis.
One company offered multiple substances similar to 4-AP that were still available for sale. The vendor proposed using a “special line” to ship it Mexico.
“We bought off some people at the Mexican customs, we trusted them very much, and they helped with all our shipments to Mexico. So you don’t have to worry about customs,” the vendor wrote.
In another conversation, the vendor explained that one of their “big” clients in Mexico used cargo planes to deliver precursors. “When the goods arrived in Mexico, he would use his own connections to pick up the goods.”
Bryce Pardo, a researcher at the Rand corporation who specializes in drug policy, said modern legislation is simply out of step with today’s narcotics market.
“Our drug control laws are based on a very old system where everything is based on the UN single convention from 1961. These were really focused on three plants: cannabis, coca and poppy. Things have just changed so dramatically in the last 10, 15 years, ever since China really got online with its pharmaceutical sector – to the point where we just cannot keep up.”