A Lucrative Enterprise

Extortion is a profitable endeavour in the Northern Triangle. El Salvador leads in extortion-related monetary losses with an estimated yearly loss of over USD 400 million. In Honduras, at least three extortion cases are reported per day, while Guatemala reported a 30 percent increase in extortion cases in the past year, and a 72 percent increase between 2015 and the first quarter of 2019. 

Authorities in all three countries have noted an increase in extortion-related activities in 2019, including increasingly sophisticated schemes. However, such an increase is difficult to quantify. Extortion statistics are often unreliable. Studies do not typically distinguish between individual or business extortions, and many cases go unreported as victims fear retaliation. Some businesses simply account for extortion payments in their operating costs.

The Perpetrators

Transnational cartels — particularly Mara Salvatrucha (MS-13) and Barrio 18 — are the main perpetrators of extortion in the region, engaging in sophisticated schemes to sustain their operations. However, anecdotal accounts by companies and travellers indicate that security and government officials also capitalise on the practice. A recent phenomenon suggests that “copycat” criminals, who pretend to be part of prominent gangs to enhance the perceived legitimacy of their threats, have also proliferated in urban centres.

Tolls for Taxis

Commercial drivers and transportation companies are favoured victims of gang extortion. In El Salvador, MS-13 earns an estimated USD 600,000 per month by extorting public transport drivers. Meanwhile in Honduras, MS-13 has progressed from extorting motorcycle taxis to owning fleets and controlling the licensing companies. The Honduran national anti-gang unit reports that the cities of Choloma, Villanueva and San Pedro Sula all have neighbourhoods in which cartels have total or partial control of motorcycle taxis. Finally, in Guatemala, gangs frequently target bus drivers and can make upwards of USD 70 million per year. 

Media reports indicate that over the past year, MS-13 and Barrio 18 have sought greater control over public transport systems and their operating companies. Re-invested extortion payments thus become legitimate businesses through which gangs can purchase fleets, control routes and conceal illicit income. 

Extreme violence often accompanies the non-payment of extortion fees. Passengers have been killed in gang assaults on buses. Recently, Guatemalan authorities reported an escalation in deadly cartel-related bus attacks in Guatemala City in early 2019, involving shoot-outs and a bomb detonation at a central bus stop.

Prison Calls

Extortion can also serve as a way for prison-based cartel leaders to finance the cost of their legal fees and living comforts. Prison gangs operate virtual, or telephonic, extortion schemes by dialling cell-phone numbers provided by gang leaders and threatening victims into paying extortion fees. They rely on conspirators outside of prison to collect the money. According to recent media reports, prisons have become gang headquarters for telephonic extortions and gangs can earn hundreds of thousands of dollars per year from these activities.

The Cost of Doing Business

Many businesses in the Northern Triangle, ranging from corner stalls to multinational companies, have reported being victims of extortion in the past year. A survey by the Global Initiative Against Transnational Organized Crime recorded that in 2018, 54 percent of extortion victims in Honduras were businesses. Gang extortion has caused several small and medium enterprises in Tegucigalpa to close in recent months. Over half of extortions in Honduras take place in Tegucigalpa. 

Big businesses are often the focus of gang extortion in El Salvador and Guatemala. In 2019, the Salvadoran Asociación Nacional de la Empresa Privada (National Association of Private Enterprise) reported that Salvadoran gangs focus on extorting big businesses, with some companies reporting payments of up to USD 1 million a year. Private companies often include these payments as a fixed production cost. The Guatemalan Chamber of Industry confirmed that Guatemala-based companies make similar provisions, sometimes paying up to USD 10 million per year.

Under Colour of Office

Gangs may be the primary perpetrators of extortion, but government corruption is also deeply entrenched in the region. Guatemalan gangs sometimes work symbiotically with security personnel, as evidenced by an April 2018 case in which an army colonel was arrested for laundering MS-13 extortion money through vehicle purchases and sales. Government officials reportedly demand facilitation payments from foreign companies to process operating licences or grant tenders on government contracts. Foreign travellers also regularly report paying bribes to security officers at tolls or arbitrary checkpoints, or to overlook fabricated offences.

In Search of Profit

Foreign companies are not specifically targeted, although extortion payments are sometimes simply the cost of doing business in the Northern Triangle. Many banks ask companies applying for business accounts to disclose their extortion payments upfront. Extortion will remain a prominent feature of the private and commercial landscape in the region, particularly as gangs compete for influence and territory. This will drive up commercial operating costs as businesses must obtain additional security measures to offset the potential physical threat of noncompliance.