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Illustration: Viktor Hachmang for Bloomberg Businessweek
Businessweek
The Big Take


HOW A COCAINE-SMUGGLING CARTEL INFILTRATED THE WORLD’S BIGGEST SHIPPING COMPANY

As MSC grew into a dominant force in global trade, it also became a prime
drug-trafficking conduit for Balkan gangs.

By

Lauren Etter and

Michael Riley

+Follow
December 16, 2022 at 12:00 AM GMT


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This is the first story in a three-part series about global shipping and the
surge in drug trafficking.  Read the second installment and third story in the
series.

In the summer of 2019, Claudio Bozzo, chief operating officer of MSC
Mediterranean Shipping Co., flew 4,000 miles from Geneva to Washington, DC, for
a meeting with US Customs and Border Protection. He’d been sent by MSC’s owner,
a secretive 82-year-old billionaire named Gianluigi Aponte, to contain a crisis.

Listen to the story

A few months earlier, more than 100 agents had boarded one of MSC’s ships, the
Gayane, as it slid into the Port of Philadelphia for what was supposed to be a
quick stop on its way to Rotterdam. Deep below deck, hidden in containers packed
with wine and nuts, the agents discovered nearly 20 tons of cocaine, worth $1
billion. The ensuing investigation showed that more than a third of the crew—all
MSC employees—had helped transfer vast amounts of cocaine from speedboats at
night while the ship powered through the open ocean off South America. It was
the largest maritime drug bust in American history.

The crime was so big and brazen that authorities made the exceptional decision
to seize not just the cocaine but also the Gayane itself, a 1,000-foot-long ship
worth more than $100 million. During Bozzo’s meeting with the CBP in the
limestone Ronald Reagan Building, he apologized for the ordeal and said the
crew’s actions had come as a surprise, according to a person familiar with the
events. He extolled MSC’s growth from humble beginnings into the world’s largest
shipping company and impressed upon the officials how seriously the Aponte
family takes the responsibility of running a fleet that accounts for nearly 20%
of all seaborne container trade.



For US officials, the company’s claim of ignorance didn’t add up. Years before
the Gayane was boarded, law enforcement authorities in multiple countries had
been monitoring MSC’s vessels and crews, a Bloomberg Businessweek investigation
found. US authorities had not only been tracking the Gayane long before it
entered American waters, but they also had previously boarded and searched
several other MSC ships as part of a broader investigation into an international
cocaine trafficking ring that had burrowed into the shipping company. Using
clues collected during those boardings, as well as intelligence gathered in
Eastern Europe, they identified the powerful Balkan Cartel as the architect
behind the massive shipments. Authorities in the US and Europe also concluded
that the syndicate, which controls more than half of the cocaine flowing into
Europe, had infiltrated MSC’s crews over a decade, exploiting its manpower and
vessels to help build a cocaine smuggling empire.

“We certainly didn’t see MSC as a victim in all this,” says William McSwain,
former US attorney for the Eastern District of Pennsylvania, who presided over
the Gayane case until he left the office in January 2021.


Bar, Montenegro, where MSC hires many of its crew.
Photographer: Zoran Marinovic for Bloomberg Businessweek

MSC and the US government are now locked in a legal battle that has taken place
largely out of public view. Customs officials have been pressing the company to
pay more than $700 million in penalties, according to multiple law enforcement
sources who spoke on the condition of anonymity about the nonpublic
administrative proceedings. Prosecutors in the US Attorney’s Office for the
Eastern District of Pennsylvania, meanwhile, are building a civil case arguing
that MSC, as the operator of the Gayane, bears responsibility for the drug
trafficking and must forfeit the vessel or a substantial portion of its value.
While MSC concedes that record amounts of cocaine were found aboard its ship, it
disputes key aspects of the government’s version of events and argues that it
was the victim of traffickers, not a co-conspirator.



A spokesman for MSC, Giles Broom, says that the company has always taken
narcotrafficking seriously, but that the Gayane “incident showed a new level of
security threat that we and, as far as we know, the container shipping industry
were not yet ready to face.” Today, he says, MSC is regarded as “by far the
industry leader in anti-smuggling efforts.” Still, “there is a limit to what
anybody should expect from a company and from civilians doing their job: We are
not a law enforcement body and we are not mandated, resourced or trained to
confront dangerous organized criminal groups.”

MSC dominates routes that double as cocaine superhighways

Businessweek’s investigation is based on interviews with more than 100 people in
a dozen countries, including current and former law enforcement officials and
people familiar with MSC’s business, as well as a review of trafficking cases in
multiple countries. Many of the sources requested anonymity to discuss
confidential details of ongoing or past investigations.

Every shipping company that runs routes from South America to Europe is at risk
of being preyed on by cocaine traffickers. But MSC made for a uniquely
attractive target, officials say. It dominates routes that double as cocaine
superhighways, primarily those used to haul fresh fruit and vegetables from
South America to Northern Europe. It’s also the world’s largest employer of
seafarers from Montenegro, a home to the Balkan Cartel. Years before the Gayane
seizure, European police officials had warned MSC that its crews had been
infiltrated. Yet the steps executives took to mitigate the problem fell woefully
short, officials on both sides of the Atlantic say.



The situation has frustrated law enforcement and customs officials as record
quantities of cocaine deluge global ports, especially in Europe. American
prosecutors aren’t alleging that MSC’s leadership was involved in or benefited
from the trafficking, but they’re trying to learn more about the breakdowns in
the company’s hiring and security protocols, according to two senior officials
involved. Investigators in the US and Europe say they keep coming back to a
central question: Why have criminal organizations apparently been able to
control key operations aboard some of the company’s ships for so long? “How high
the influence of the narcotraffickers lay within this company is unquestionably
something that from Day 1 was of great interest to the US government,” says
Robert Perez, who was deputy commissioner at CBP from 2018 to July 2021.

It’s rare for a shipping company to incur serious penalties for drugs found
aboard its vessels. When fines are imposed in the US, regulators frequently let
a carrier negotiate them down. In Europe, fines are rarely imposed at all.
Although there are international security requirements for shipping companies,
customs and law enforcement officials have little power to hold the companies
accountable. All of that has allowed the shipping industry, the primary engine
of globalization, to escape major consequences as it has become increasingly
entangled in drug trafficking.

Until the Gayane sailed into Philadelphia in the summer of 2019.

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How a Balkan Drug Cartel Infiltrated Global Shipping

Despite the name, Mediterranean Shipping Co. is based far from the spray of the
sea, in a quiet neighborhood of Geneva. Even in a notoriously insular industry,
MSC’s inner workings are especially difficult to decipher. It’s one of the few
major shipping companies that’s not publicly traded. It operates a cruise line
that publishes annual results, but its cargo business doesn’t release financial
statements. Aponte also owns a maze of hundreds of related entities that oversee
ferry operators, speedboat manufacturers, shipping terminals, even a private
island in the Bahamas.


Aponte
Photographer: Damien Meyer/AFP/Getty Images

Aponte is slight, with a head of silver hair, icy eyes and an aristocratic
bearing. He remains the chairman of MSC Group. His son, Diego, is president. His
daughter, Alexa, is chief financial officer. Two years ago, following the Gayane
seizure, he tapped Soren Toft, a longtime executive at rival AP Moller-Maersk
A/S, to be chief executive officer of MSC’s cargo business, the first time an
outsider has occupied the seat.

The family likes to say seawater runs through their veins, citing shipping
documents from the 17th century that bear their name. Aponte was born in tiny
Sant’Agnello, on the Bay of Naples; his family sailed goods and passengers
across its waters. He also became a seafarer, training as a ship captain and
working under Achille Lauro, a former mayor of Naples and shipping magnate. He
sailed on vaporetti that ferried wealthy tourists to nearby island resorts such
as Capri and Ischia. It was on one of those trips that Aponte met his future
wife, Rafaela Diamant, the daughter of a Swiss banker.


Featured in Bloomberg Businessweek, Dec. 19, 2022. Subscribe now.
Illustration: Viktor Hachmang for Bloomberg Businessweek

In 1970, Aponte purchased an old German break-bulk ship and started MSC. The
following year he bought a second used vessel, naming it after his wife. He
eventually began buying container ships. When Aponte entered the business,
shipping was dominated by legacy companies such as Maersk and Hapag-Lloyd, whose
pedigrees dated to the 1800s. He carved out a niche by taking on underserved
routes. He also developed a shrewd business model, buying up secondhand
container ships, some from scrap yards, then rehabbing them and sending them
back out to sea. MSC also distinguished itself by emphasizing price over speed
of delivery. “MSC, very often in the early years, the inside joke in the
industry was that it was shorthand for ‘maybe ship comes,’ ” says Lars Jensen,
founder of the consulting firm Vespucci Maritime and a former executive for
Maersk. “Your cargo would get there eventually, but you wouldn’t quite know
when.”

These strategies allowed him to expand an empire almost entirely organically,
rather than via acquisitions, as most of his rivals did. Over time, MSC added
routes covering Asia, the US and South America, and by the early 2000s its motto
was “Land covers one-third of the Earth—we cover the rest.”

But as Aponte was building MSC, a powerful criminal organization was building a
maritime operation of its own.

Just after midnight on May 30, 2010, the MSC Oriane was cruising through the
English Channel on its way to Antwerp, Belgium, when a nearby lobster fishing
boat called the Galwad-Y-Mor began a series of odd maneuvers, moving first in
front of, then behind, the giant cargo vessel. As the Galwad approached,
according to UK prosecutors, the Oriane’s crew tossed overboard 11 waterproof
duffel bags containing a total of 255 kilos of cocaine worth about $80 million.
After collecting the duffels, the four men on the Galwad, including one from
Montenegro, sailed to nearby Freshwater Bay, where they used metal weights to
submerge the drugs and connect them to a buoy for later pickup by traffickers.

They never got the chance. UK antidrug police had been monitoring the operation,
and they arrested the men on the Galwad, along with an accomplice. The following
year, all five were sentenced to lengthy prison terms. The fishermen continue to
maintain their innocence more than a decade later.

Behind the scenes, the incident triggered a European investigation into the
infiltration of shipping companies by organized crime, according to a person
familiar with the matter. Checking with police in Spain, Belgium and the
Netherlands, UK authorities learned that the Oriane wasn’t a one-off. Each of
those countries had seen operations in which cocaine was carried across the
Atlantic on commercial container ships owned by various companies, then
transferred to smaller vessels before the cargo arrived in port. These
maneuvers, known as drop-offs, let traffickers avoid official ports of entry,
where the chances of seizure were greater, but it meant they needed to recruit
crew members aboard commercial cargo vessels, paying them to toss drugs over the
side.


COCAINE SEIZED, IN TONS





Source: European Monitoring Centre for Drugs and Drug Addiction



UK authorities took the case to Europol, which coordinates cross-border criminal
probes among European Union members. Around 2012, agents from the UK, Spain,
Belgium and the Netherlands met and agreed to gather all the information they
had on drop-offs and to enter case details in Europol’s intelligence-sharing
database. It emerged that while several major companies had been used, one name
came up frequently: MSC.

Various European trafficking organizations used drop-offs, but they were known
to be a specialty of the Balkan Cartel, a rising force in the international
cocaine trade. The cartel is a constellation of gangs in five countries, bound
by a common language, Serbo-Croatian. Many began as private military groups
during the Balkan War of the 1990s, pivoting afterward to weapons trafficking,
cigarette smuggling, auto theft and money laundering. Among their ranks are
ex-cops and former intelligence operatives. Their factions cooperate but also
compete. Some have gained a reputation for brutality—last year a police raid in
a Belgrade suburb uncovered an industrial meat grinder with traces of human DNA.

Although the cartel operates all manner of criminal schemes, US officials say
its revenue comes mainly from cocaine. The gangs are also innovators. In the
early 2000s they began stitching together a logistics network that stretched
across the Atlantic. In South America, they embedded members with producers,
cultivating relationships right down to individual labs deep in the jungle. In
Europe, they built a wholesale distribution network. And in the early days, they
sometimes filled out their supply chain by acquiring their own ships. Most of
the time, the ships would transport legitimate loads of soybeans or other bulk
commodities. For illicit loads, the traffickers would bring in a dirty captain
and crew.



Then the Balkan Cartel doubled down on what current and former law enforcement
officials say was a primary competitive advantage: Balkan sailors. Many came
from Montenegro, a tiny nation on the Adriatic Sea that has a maritime tradition
dating back centuries and several schools that train and accredit seafarers.
Even high schools there prepare students for a career at sea. This created a
very attractive recruiting pool for the criminal gangs that were leveraging the
high seas for their trafficking operations.

In many respects, the Oriane case had the telltale signs of earlier Balkan
smuggling operations that used their own ships and crews. Now, to Europol
investigators, it looked as though the traffickers had instead started planting
their corrupt crews on the vessels of major shipping companies.

By 2013 other countries in Europe had come to suspect that the cartel had found
a way into MSC’s crewing operation. The findings of their investigations were
considered highly sensitive, but they occasionally emerged in public. That
November the Montenegrin police directorate published a 100-page report on
Balkan organized crime, a portion of which was dedicated to cocaine trafficking.
Gangs in the area, it read, “have developed networks of temporary members which
usually consist of seafarers from Montenegro, Serbia and Croatia, who are mainly
employed on container ships of the MSC company.”


MSC headquarters in Geneva.
Photographer: Fabrice Coffrini/AFP/Getty Images

The following year, Spanish police began tracking a gang of Montenegrin and
Serbian traffickers who were arranging for cocaine shipments to be carried
across the Atlantic on MSC ships and dropped by the crew off the coast of
Europe. Court records detail how the group’s contacts in South America
controlled “an immense fleet of seamen hired from MSC ships” who could help
traffic large quantities of cocaine to Northern Europe. Another report from the
Montenegrin police directorate, this one in 2015, said the main mode of cocaine
smuggling for Balkan organized crime groups remained “container ships of the MSC
company, covering the South America—Western European line.”

Around 2016, officers from the Netherlands, Belgium and the UK approached MSC’s
management, with senior Dutch police taking the lead. They provided the company
with select details gathered from the investigations and asked for help curbing
the drop-offs. MSC was told that the Balkan Cartel had used a crewing agency in
the region to get corrupt sailors on board its ships, according to Jan Janse,
police chief for the Port of Rotterdam, whose team was involved in the outreach.

The company also got a warning. “We told them what we saw. And we told them that
it had to stop,” Janse says. “And if it wouldn’t stop, we told them that there
would be the risk that we would do what the United States did later, which was
seize their ships.”



It’s unclear what MSC did with the information. Broom, the spokesman, says the
company doesn’t have a record of such a meeting taking place in Geneva in 2016.
“MSC has met over many years with various customs and law enforcement
authorities to discuss drug trafficking risks as part of our collaborations in
many countries,” he says.

Janse says he believes the company took extra security measures and switched the
crewing agency it used in the Balkans. Dutch antidrug police began to see fewer
drop-offs, and the technique eventually disappeared almost entirely. But the
smugglers only grew more sophisticated.



Illustration: Viktor Hachmang for Bloomberg Businessweek

By 2016, record quantities of cocaine were arriving in Northern Europe, partly
because of increased production in South America. There was evidence that
traffickers were forgoing the customary passage through Spain in favor of large
commercial container ports in Belgium and the Netherlands. For the first time,
Belgium surpassed Spain as the country with the largest quantity of cocaine
seized, according to an EU drug report.

The same year, Panama completed a $5.4 billion expansion of the Panama Canal.
Formerly 33 meters (108 feet) at its narrowest, it was now at least 55 meters
wide, granting access to supersize ships and tripling the volume of cargo that
could pass through. Businesses cheered the expansion, but Jürgen Stock, the
secretary-general of Interpol, warned in a speech in Panama a month after the
project’s completion that it could hasten the flow of cocaine across the
Atlantic.

MSC began operating a route that capitalized on the enlarged canal. Several of
its largest ships would load up on fruits and vegetables in Chile, Peru and
Colombia, then make stopovers in the Bahamas and Philadelphia before crossing
the Atlantic to the massive ports of Northern Europe. Then they’d circle back.
Port officials in Philadelphia dubbed the route the Philadelphia Express and
said it would boost the local economy and transform the region into a major
gateway for fresh produce on the East Coast. Within months, MSC’s behemoth ships
were snaking up the Delaware River, laden with blueberries, mangoes and
asparagus. The company’s container capacity going from South America’s Pacific
coast to Europe nearly tripled from June 2016 to June 2019, according to
BlueWater Reporting. By 2019, MSC accounted for almost half of all container
capacity on those routes.



MSC’s new routes ended up opening commercial opportunities for traffickers, as
well. There’s an old drug agent adage: Smugglers are in the logistics business.
Here, traffickers were able to gain many of the same efficiencies as established
shipping companies simply by inserting their goods into the massive flow of
containerized cargo. Most of the cocaine that enters the US comes over land,
through Mexico. But geography stipulates that Europe get it by air or by sea,
and by 2016 most of it arrived there by commercial cargo ship.

As the cocaine surge to the continent turned into a crisis, European officials
offered to share more information about seizures with their American
counterparts. Immediately one fact stood out: Some ships known to have carried
cocaine to Europe were stopping briefly in US ports. And some of those were MSC
ships sailing through Philadelphia.


THE GAYANE’S PATH





Source: Compiled by Bloomberg



The main investigative arm of the US Department of Homeland Security, known as
Homeland Security Investigations, began working with European partners to
analyze major cocaine busts, especially those at the ports of Antwerp and
Rotterdam. HSI agents tapped into data collected by customs authorities on
shipping manifests and vessel movements in South America. They learned that
while Europe-bound cocaine had mostly come from South America’s east coast,
especially from Brazil, over the past few years the trend had begun to shift.
Now much of the cocaine heading to Europe originated in and around west coast
ports, such as Callao in Peru and Guayaquil in Ecuador.

At first, investigators assumed the drug was being smuggled through traditional
methods, such as hiding it alongside legitimate cargo that’s being packed at
warehouses or farms, or the “blind hook,” in which accomplices break into
containers and stash cocaine inside. Beginning around 2017, HSI spent months
trying to uncover the traffickers’ methods, first in Colombia and then Panama,
according to two people familiar with the probe, but the agents kept hitting
dead ends.

HSI, along with US customs agents, began boarding cargo vessels as they neared
Philadelphia, examining crew quarters, engine rooms, even one ship’s propeller
shaft, mostly without luck. But the searches also allowed them to isolate
individual crew members in an effort to develop sources aboard the ships,
according to one former senior US official.

By 2018, the official says, investigators had concluded that the traffickers
weren’t using the traditional smuggling methods at all. Instead, they were using
Balkan crew aboard MSC cargo vessels to load the drugs while the ships were at
sea. Investigators worked every angle to get inside that network, tapping
communications and cultivating informants. Finally, they had the opening they
needed.


An MSC container at the port in Bar.
Photographer: Zoran Marinovic for Bloomberg Businessweek

By the time Aleksandar Kavaja started preparing for his upcoming voyage aboard
the MSC Gayane in the spring of 2019, his hometown of Bar, Montenegro, was an
established recruiting ground for the Balkan Cartel. Locals say it wasn’t hard
to guess which sailors might be in on the cocaine trade—they were likely the
ones with Maseratis and new homes overlooking the Adriatic.

Bar, a small, ancient city dotted with beaches and olive groves, is home to
Montenegro’s largest seaport, where MSC is ubiquitous. It’s a stop for the
company’s cruise line, and MSC also operates a crew training center just to the
north—one of four it runs worldwide, with the others in India, Italy and
Ukraine. Of the 6,000 seafarers in Montenegro, about 2,250 work for MSC,
according to Mimo Draskovic, head of the maritime management study program at
the Faculty of Maritime Studies in Kotor.

Kavaja was among them. He’d grown up on the outskirts of Bar, on a farm that had
been in his family for generations. His mother, Ranka, worked at a local soup
kitchen, and his father, Radoslav, earned money by fashioning trinkets from
seashells and selling them to tourists. Aleksandar’s grandfather had been a
sailor, so his family was thrilled when he graduated and landed a job with MSC.
He would earn a salary of about €4,500 a month ($4,750), more than 10 times what
his parents were earning. In 2015, at age 21, Aleksandar went to sea.



Over the next several years, he sailed on at least four MSC ships—the Lorena,
the Diana, the Deila, the Erica—installing, wiring and repairing electrical
equipment as the vessels made stops in South Korea, Panama, Malta and other
far-flung places. He didn’t love the job or the months away from his family.
“He’s not a sailor at heart,” his mother says. But he was committed to
supporting his family financially.

One day in mid-April 2019, Kavaja had lunch in a coffee shop in Bar. He was due
to board the Gayane at the Port of Antwerp in a few days, for what would be his
sixth journey aboard an MSC ship. After finishing his meal, he stepped outside
and was approached by a man he didn’t know. “We know who you are, we know who
your family is,” the man said, according to US court records. “We know that
you’re going to leave on that ship in five days.”

The man held out a mobile “narco” phone, as prosecutors referred to it in court
filings, and told Kavaja he had a choice. He could either take the phone and
agree to follow orders, or he would risk his and his family’s safety. If he
agreed, he would be paid $50,000, nearly a year’s salary.

He took the phone.


The MSC PSA container terminal in Antwerp.
Photographer: Dirk Waem/Belga Mag/AFP/Getty Images

Two months before Kavaja set foot on the Gayane, drug agents got information
that there was cocaine on board another MSC ship, the Carlotta, according to a
person with knowledge of the probe. The ship was on its way to the port of
Newark, New Jersey, which MSC sometimes uses as a backup to Philadelphia. When
the Carlotta arrived, agents searched the vessel and found 3,200 pounds of
cocaine stashed in a container of dried fruit. It was the largest drug seizure
in Newark in 25 years.

The load’s size garnered immediate attention, and resources poured into the
investigation from HSI and the US Drug Enforcement Administration. Homeland
Security agents in New York began working with the DEA’s international division,
which had tracked the Balkan Cartel for years from its office in Croatia.

The Newark bust yielded fresh clues. Investigators collected data from some of
the Carlotta’s refrigerated containers, which track sudden changes in interior
temperature. The data indicated that some of the containers had been opened
while the ship was underway. It “showed pretty clearly that something was going
on at sea,” says a person familiar with the probe.



During the search of another MSC cargo ship that spring, agents found a small
two-way radio in a crewman’s cabin, according to a person with knowledge of the
discovery. The radio used a frequency typical of small craft, and the captain
told investigators there was no reason the device should have been aboard a
commercial cargo ship. HSI questioned the crewman, who was from the Balkans, but
he wasn’t arrested. During other searches, investigators found evidence that
someone on board the ships had snipped a wire, overriding a device limiting the
weight small cranes at the stern could lift.

A second major US seizure took place on March 19, this time on board the MSC
Desiree in Philadelphia. Customs officials found more than a half ton of
cocaine, the largest amount seized in Philadelphia in almost two decades. Agents
ultimately identified at least four MSC ships where they believed crew members
were involved in smuggling cocaine: the Carlotta and the Desiree, plus the Avni
and the Gayane.

The story the crew told about hoisting five elephants’ worth of cocaine off
speedboats seemed far-fetched

US agents weren’t the only ones finding drugs. In April, Peruvian authorities
discovered 2.4 tons of cocaine stuffed into 64 suitcases and bags aboard the
Carlotta, which had apparently gone right back to carrying drugs. Authorities in
Panama then found 1.3 tons of cocaine during a search of the Avni. (American
investigators had also suspected that cocaine was on the ship and planned to
search it in Philadelphia, according to two people familiar with the
investigation, but the Panamanians beat them to it.)

The crew members’ roles on the vessels gave the traffickers a huge advantage.
The sailors had access to key data, such as container locations and
destinations, which investigators later said allowed them to pick boxes that had
room to stash large amounts of cocaine and that were less likely to trigger a
customs search once they arrived in port. That posed an enormous challenge for
US authorities, since drugs could be located virtually anywhere in a sea of
boxes on the ship.

Searching a fully loaded ship is difficult, so much so that it’s rarely done.
Holds are cramped and containers can be difficult to get to. The agents acquired
special oxygen monitoring devices in case they had to go deep beneath the deck,
where rusted iron can deplete oxygen levels. They assembled a group of
drug-sniffing dogs and obtained cameras that could be snaked into a loaded
container to find cocaine.

The agents also began quietly briefing the partners they’d need to conduct a
full vessel search: the US Coast Guard, the Delaware State Police, Philadelphia
city cops, even a maritime-trained SWAT team. All they lacked was the
last-minute intelligence that would tell them which ship to search. By the time
the Gayane arrived in Philadelphia that June, everything was in place.


The Gayane moored in Philadelphia in 2019.
Photographer: Matt Rourke/AP Photo

As the Gayane was sailing southbound from Panama, Kavaja’s narco phone rang.
When he picked up, according to his lawyer, a man told him to report to the
upper deck. Kavaja did so and found other crew members there waiting.

Court records show that three others had been recruited in Montenegro before
boarding the ship. Kavaja’s role was to phone traffickers carrying cocaine on
speedboats and communicate the Gayane’s position so they could locate it at
night. He also recruited others to help move the heavy loads. In total, at least
8 of the 22 crew members aboard the Gayane—6 from Montenegro, 2 from
Samoa—handled the job. Each stood to make $50,000 or substantially more,
depending on their role.

While the Gayane was just off the coast of Peru, according to court records, a
Montenegrin seafarer named Bosko Markovic helped assemble the crew members, who
waited on the deck alongside four men in ski masks. Markovic was the ship’s
first officer, one rank below the captain and in charge of the cargo and deck
crew. A speedboat had just pulled up alongside the hulking vessel. Another
Montenegrin, Ivan Durasevic, the ship’s second mate and third in command,
operated a small crane, hoisting up giant nets stuffed with black duffel bags
and bales of cocaine. Once the nets were on deck, the other crew pushed the
drugs to a hold on the vessel. The men broke into a series of containers by
cutting the security seal on each one. After stashing the cocaine inside, they
resecured the containers with a fake seal, complete with the MSC logo. Sometimes
they had to cut steel cables or bend metal railings to squeeze in the cocaine,
then use welding irons and paint to disguise the damage.



Over the next several nights, as the Gayane sailed south, the ship was met by at
least six speedboats, according to court records. It never stopped moving. It
didn’t even appear to slow down, according to law enforcement officials. The job
was carried out as the vessel powered through the open ocean—an incredible feat
of seamanship.

By June, the Gayane had made its southernmost stop, at a small port in the Bay
of Concepción near Coronel, Chile, and begun the return journey. When the vessel
hit the coast of Peru again and made its northbound journey to Panama, it was
approached by at least eight more speedboats. The nighttime hoisting and heaving
resumed.

On the afternoon of June 16, the Gayane was in US territorial waters, bound for
Philadelphia. As it entered Delaware Bay, the Coast Guard contacted the captain
and directed the ship to head for an area called Big Stone Anchorage. Commercial
vessels normally stop there to await an authorized riverboat captain who can
navigate a local channel. But as the Gayane pulled in, three patrol boats and a
helicopter approached the ship, and a team of law enforcement officers ascended
its Jacob’s ladder.

Some agents rounded up crew in the galley, while others headed for the bridge to
find schematics for the vessel. The search for drugs started with the above-deck
containers while the Gayane was still in the bay. At around 3 a.m. on June 17,
the ship reached Philadelphia’s Packer Avenue Marine Terminal, within view of
the spring-green Walt Whitman Bridge. More than 100 agents were waiting. They
believed there was cocaine on board, but they didn’t know where it was. A team
began swabbing the crew’s hands for traces of the drug. Several tested positive.

At around 7 a.m., just as the sun rose over the bay, agents got their first
strike: a stash of bricks tucked into burlap sacks inside a container. Joseph
Martella, CBP’s port director, was off the day the Gayane arrived in
Philadelphia, but he was carefully monitoring his phone and headed to the port.
Just after 10 a.m., a second container full of cocaine was found. Martella then
made the unusual decision to offload and physically inspect every one of the
4,000 containers on the ship.

After nearly a week of work, the government had dug through loads of wine, dried
nuts and scrap batteries to identify seven containers that carried cocaine.
Customs officials spent days weighing the drugs, counting the bricks and logging
it all into evidence. At one point, as the agents rushed to finish their task,
they looked around and saw white dust everywhere, Martella recalls. One of the
agents realized it wasn’t ordinary dust and instructed everybody to mask up.


Agents with cocaine seized aboard the Gayane.
Photographer: Steve Sapp/CBP

In total, the haul consisted of more than 15,000 bricks of cocaine, weighing
nearly 20 tons and with an estimated street value exceeding $1 billion. The
authorities were alarmed not only by the sheer quantity of drugs but also by the
audacity of the operation. The leader of the onboard scheme, the first officer,
had been in charge of the crew’s schedule, allowing the co-conspirators to be on
duty at the same time. And both he and the second officer had access to key
details about the containers, according to court records. (The captain of the
Gayane was questioned by a grand jury but never arrested or charged.)

On June 18, two days after the Gayane was detained, MSC released a public
statement. “MSC Mediterranean Shipping Company is aware of reports of an
incident at the Port of Philadelphia in which US authorities made a seizure of
illicit cargo,” it said. “MSC takes this matter very seriously and is grateful
to the authorities for identifying any suspected abuse of its services.
Unfortunately, shipping and logistics companies are from time to time affected
by trafficking problems.”

Over the following 10 days, agents continued to interview the crew members, who
remained sequestered on the ship. They pulled the sailors off one at a time,
interviewing them for hours as they pieced the operation together. At first, the
story the crew told about hoisting five elephants’ worth of cocaine off
speedboats while the ship coursed through the waves seemed far-fetched. But
prosecutors obtained a warrant to seize the ship’s voyage data recorder, which
contained information on the vessel and its movements, and on it they found
radar images indicating the various points at which small boats had approached
the Gayane and remained alongside, three officials say.



Seizing a ship is an extreme measure, but the revelations about the crew
members’ involvement in trafficking so much cocaine emboldened authorities. On
the morning of July 4, CBP agents boarded the Gayane and handed the captain a
seizure warrant. At nearly the same moment, notice of the seizure was emailed to
MSC executives. “When a vessel brings such an outrageous amount of deadly drugs
into Philadelphia waters, my office and our agency partners will pursue the most
severe consequences possible,” said US Attorney McSwain in an announcement.

MSC moved swiftly to get its very expensive cargo ship sailing again. In
exchange for a $10 million cash payment, as well as a $40 million bond and
promises that the company would cooperate with any ongoing investigation, the
Gayane was allowed to continue to its original destination of Rotterdam. On July
13, almost a month after being detained, the ship was out on bail.

By the time Bozzo, the MSC executive, arrived in Washington on Aug. 27, the
potential for long-term harm to the company was mounting. Customs officials had
suspended the “trusted trader” status granted to MSC under a Sept. 11-era
program that allows carriers to avoid lengthy screenings and delays at American
ports in exchange for observing certain security protocols. Meanwhile,
prosecutors in the Eastern District of Pennsylvania brought criminal charges
against the eight crew members, including Kavaja and the first and second
officers. All of them would eventually plead guilty and be sentenced to time in
federal prison. Behind the scenes, American authorities identified a faction of
the Balkan Cartel that had financed and organized the operation, learning that
the gang had brought in partners from Colombia and Northern Europe to share the
risk. So many groups had a share of the Gayane’s cocaine that one American law
enforcement official described it as the trafficking equivalent of an Amazon
truck.

Over the next several months the government entered discussions with MSC, with
the aim of getting it to agree to new security measures, such as rotating crews
more frequently and requiring them to take polygraph tests. In exchange, the US
government held out the prospect that it would substantially reduce the fines
MSC was facing. Including the earlier seizures aboard the Carlotta and the
Desiree, those now totaled more than $700 million, based on the statutory
penalty of $1,000 per ounce of cocaine.

The focus of federal prosecutors now shifted to a civil forfeiture
investigation—a step designed to recover proceeds used in the commission of a
crime. Although the use of the Gayane in a crime was an established fact, MSC
could mount an “innocent owner” defense. It would require the company to show
that it couldn’t have anticipated the use of its vessel to traffic cocaine or
that it had taken reasonable steps to prevent such conduct.



By the fall of 2020, it had become clear that MSC wasn’t ready to strike a deal
with the government. The company informed CBP that it planned to contest the
penalties connected to the Gayane, as well as the Carlotta and the Desiree.
Company lawyers also presented customs officials with findings of an internal
investigation it had conducted. “MSC does not dispute that US authorities found
almost 20 tonnes of cocaine at the Port of Philadelphia,” says Broom, the
company spokesman. “But MSC’s investigation has led us to the conclusion that
the majority of that cocaine was not, and could not have been, loaded at sea.”
MSC didn’t give further details about where and how it believes the drugs were
loaded.

If the company were to demonstrate that some portion of the cocaine was loaded
on land, indicating that its employees played a lesser role in the scheme, the
government could have a more difficult time justifying harsh penalties. It could
also serve as evidence if the forfeiture matter ever went to trial. According to
one US official involved in the investigation, though, MSC’s claims contradict
facts already established in court as part of the crew’s guilty pleas and
sentencing proceedings. “That position is directly at odds with the factual
findings of the court,” the official says.

The government is also pursuing a wider criminal investigation against members
of the Balkan Cartel who are believed to have orchestrated the Gayane operation.
On Oct. 30, Goran Gogic, a Montenegrin former heavyweight boxer, was apprehended
at Miami International Airport before he could board a flight to Switzerland. In
an indictment, prosecutors accused him of organizing logistics for cocaine
smuggling aboard commercial container ships on behalf of the Balkan Cartel,
including on the Carlotta, the Desiree and the Gayane. According to one person
familiar with the investigation, Gogic is “probably two or three levels down
from the person who pulled all this together.” Gogic’s attorney says his client
maintains his innocence.



The Gayane ordeal could serve as an inflection point for the industry. Janse,
the Dutch police official, likens the situation to the one faced by banks two
decades ago, when regulations across multiple countries forced them to better
track the criminal activities of their clients and adhere to strict compliance
standards. It was a profound change in the way they did business, and it cost
them billions of dollars. “I was involved in combating money laundering 30 years
ago, and all the banks used to say that they couldn’t look at clients’ money and
say it comes from criminality,” Janse says. “None of them say that now. And
that’s the thing we have to do with all the shipping companies.”

If there were ever a moment for shipping companies to spend more money to curb
trafficking aboard their vessels, now would be it. When demand for consumer
goods rebounded from the initial pandemic crash, cargo prices surged, and the
companies enjoyed a once-in-a-generation windfall. They pulled in a record $217
billion in profit in 2021 and are on track to make $275 billion this year,
according to Drewry Shipping Consultants Ltd. Aponte’s personal wealth more than
doubled during the pandemic, to $19 billion, according to the Bloomberg
Billionaires Index. And MSC went on a ship-buying spree, purchasing 128
secondhand container ships between 2020 and 2021, expanding its fleet to 645 and
passing Maersk as the leading shipping line, according to industry data provider
Alphaliner.

While MSC says it has long taken security seriously, it concedes that the Gayane
was a “wake-up call.” After the incident, the company said it would spend $100
million over five years on anti-smuggling security upgrades. It says it now uses
guard patrols on vessels sailing along the west coast of South America,
drug-sniffing dogs at high-risk ports and remotely monitored cameras on its
vessels. Earlier this year, Bozzo, the chief operating officer, helped arrange
an industry-sponsored conference with the United Nations and the World Customs
Organization to discuss ways to better tackle narcotics trafficking. And MSC has
made one other big change, according to a person familiar with its internal
decision-making: Montenegrin seafarers are no longer used on its ships crossing
the Panama Canal.

Meanwhile, the Gayane continues to navigate the world’s oceans. It stopped
recently in Thailand, Saudi Arabia, Egypt and Portugal—far from the sea lanes of
South America. —With Misha Savic and Sergio Di Pasquale

• Read more: Seven Takeaways From Businessweek’s Cocaine-Smuggling Cover Story


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