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Venezuelan gang’s arrival shakes Latin America’s safest nation

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Venezuelan gang’s arrival shakes Latin America’s safest nation

The grand Beaux-Arts Portal Fernández Concha building was once a fashionable hotel in downtown Santiago. Now, the 19th-century property in Chile’s capital has become the face of the country’s gang-driven crime wave.

As Venezuela’s Tren de Aragua gang made its first push into Chile — one of Latin America’s safest and most developed economies — over the past five years, men alleged to be members of the gang turned rented rooms in the downtown building into the base for a sex trafficking ring.

Police said they dismantled the operation in 2023, but on a recent afternoon, young women still hovered in the square outside, approaching passing men.

“At the peak, we had 1,500 people entering every day,” said a security guard at the building. “I was seeing knife fights outside most weeks. I had never seen anything like it.”

The historic Portal Fernández Concha building has become a hub for the sex trade © Vanessa Volk/Alamy

Experts say Chile has fallen victim to a regional trend, in which organised crime groups have embraced business models less tied to their home territories in the wake of the pandemic. Cells in different countries exercise autonomy while communicating with their home base and taking on contract-based work, enabling the gangs to expand into new regions.

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The Tren de Aragua, which was formed in a Venezuelan prison in 2014, has been one of the most successful. It has taken advantage of an exodus of some 7.7mn refugees from its home country’s economic collapse, which expanded the pool of poor, jobless and marginalised people vulnerable to exploitation across the region.

While Peru, Ecuador and Colombia have all reported its presence, Chile’s lack of criminal competition and relative wealth have made it an especially desirable target.

“The Tren de Aragua and other foreign groups saw a big business opportunity in the flow of vulnerable people towards the country,” Ignacio Castillo, director of organised crime at Chile’s public prosecutor’s office, told the Financial Times.

“They have fundamentally changed the nature of crime in Chile.”

Chile’s murder rate has nearly doubled since 2019 to 4.5 per 100,000 people in 2023, very slightly down from 2022. Last year it lost its spot as the country with the region’s lowest murder rate to El Salvador, where a crackdown on homegrown gangs dramatically cut violence, according to a ranking by watchdog group Insight Crime.

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Chilean Investigative Police officers take part in an operation against Los Trinitarios criminal gang in an area known as Nuevo Amanecer or New Dawn, in the Cerrillos commune of Santiago
The police launch a raid against an international criminal gang in the capital Santiago © Esteban Felix/AP
Members of the Chilean police work at the site where three policemen were murdered, in a Mapuche area in Cañete, Biobio region
Chilean society was stunned when three policemen were killed in April © Guillermo Salgado/AFP/Getty Images

Kidnappings, extortion and sex trafficking have also increased in Chile, Castillo said.

Fears over the gangs have transformed the country’s politics. Seven in 10 Chileans rank crime as their top concern, according to a March Ipsos poll. That has pulled attention away from economic inequalities that sparked mass protests in 2019, and helped to sap the popularity of leftist president Gabriel Boric even as his government works to beef up security policy.

“Crime and organised crime are the greatest threats we face today,” Boric said in his State of the Union address in June. “Without security, there is no freedom, and without freedom there is no democracy.”

On a recent afternoon in Maipú, a suburb of Santiago, salsa music played loudly from one of hundreds of homes improvised from MDF and corrugated iron beneath an underpass, which house mainly Haitian and Venezuelan migrants.

In March, a body was found here, stuffed in a suitcase and buried under cement: the corpse of Ronald Ojeda, a former Venezuelan soldier and critic of Venezuelan president Nicolás Maduro’s authoritarian regime.

Chile’s public prosecutor said the Tren de Aragua had carried out Ojeda’s high-profile assassination. He later added that the killing had been “organised” from Venezuela and was probably politically motivated.

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Maduro’s foreign minister responded by claiming the gang “does not exist”, triggering a diplomatic dispute.

Similar migrant settlements to the one in Maipú have sprung up across Chile as the state failed to absorb millions of new arrivals: the country’s foreign-born population grew from just 1.8 per cent in 2013 to 13 per cent in 2023.

“The state loses control in these areas, and there is a generation of young people who aren’t getting access to education, healthcare and employment,” said Claudio González, director of the University of Chile’s Citizen Security Studies Centre. “It’s a perfect hunting ground for crime groups.”

Fears over organised crime have fomented anti-migrant sentiment among Chileans, polls show, but González said the gangs’ victims themselves were mostly migrants. Cases of violent gang crime targeting Chileans were “very exceptional”, he said.

Relatives and friends of Mayra Castillo, a 13-year-old victim of violence, hug during a protest against criminal violence outside La Moneda government palace in Santiago
Relatives and friends of 13-year-old Mayra Castillo who was killed in gun violence hold a protest outside the president’s office © Esteban Felix/AP

A volunteer working with children on a community art project in the settlement, who declined to give his name because he also works for the government, said authorities had only carried out “isolated interventions” such as pop-up health clinics, and failed to reach undocumented migrants.

“Mostly they treat these communities as a security problem — they don’t prioritise their quality of life, so they won’t solve the problem,” the volunteer said.

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The Tren de Aragua differs sharply from more famous groups like Mexico’s cartels, said Ronna Rísquez, a Venezuelan journalist who published a book on the gang last year.

“Those groups are militarised, and [tend to stay in] fixed territories, while the Tren de Aragua is more fluid, with loosely connected cells,” she said, adding that the group numbered 3,000 people at most.

The gang picks up contract jobs, such as assassinations or transporting drugs for other gangs, González said.

“These are basically predators who look for niches to exploit — they do a lot of harm, but they’re not very sophisticated,” he added.

The arrival of organised crime in Chile, combined with a conflict with separatist indigenous groups in the south, has pushed security to the top of the political agenda ahead of elections next year.

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Chile’s rightwing has seized on Boric’s history as a critic of the country’s police. Its approval ratings have surged to an all-time high of 84 per cent amid the crime wave, according to pollster Cadem.

The situation has become a major headache for Boric, who had hoped to expand Chile’s social safety net and human rights protections, but has instead been forced to focus on security.

Since 2022, the government has created organised crime units within the public prosecutor’s office and police, launched the first national organised crime policy, and passed dozens of crime-related reforms.

Having imprisoned some 100 members of Tren de Aragua, according to authorities, Chile is preparing to launch the region’s first mass trial of the group, with 38 people — 34 Venezuelans and four Chileans — facing charges including murder, kidnapping, and human and drug trafficking.

However, the country is not immune from the institutional corruption that enables organised crime to expand. In April, Chilean media reported two members of Chile’s investigative police had shared information with the Tren de Aragua.

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“Our institutions have reacted very efficiently in an exemplary way,” Castillo said. “But when it comes to this type of crime, you have to be permanently vigilant.”

Additional reporting by Martín Neut and Benjamín Martínez in Santiago

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Tech reversal pushes US megacaps into correction territory

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Tech reversal pushes US megacaps into correction territory

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Four of the so-called Magnificent Seven technology stocks that have powered the US market rally for the past nine months ended the week in correction territory, having fallen by more than 10 per cent from recent peaks. 

Another two — Microsoft and Amazon — are close to the double-digit falls that define a correction. Investors are looking ahead to further tech earnings updates next week amid worries about punchy valuations and the risks that returns from vast artificial intelligence-related spending may not live up to early hopes.

Nvidia and Tesla are each down 17 per cent from their recent peaks while Meta and Google parent Alphabet have fallen 14 per cent and 12 per cent. Apple is the best performer in the group, having lost just 7 per cent while Microsoft and Amazon have slid about 9 per cent each.

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On Wednesday Alphabet sparked a wider market sell-off when, despite it reporting solid quarterly operating numbers, its shares fell more than 5 per cent on concerns about AI-related investments. Its $13bn quarterly capital expenditure was almost double the levels of a year ago.

“For a long time investors were really sold on the premise that AI investment in and of itself — spending money — is good,” said Max Gokhman, a senior vice-president at Franklin Templeton Investment Solutions. “What we’re seeing now is . . . investors saying, ‘Hold up a sec, what are the productivity gains here, when do you expect to see them?’”

Alphabet’s fall helped drag the tech-heavy Nasdaq Composite to its worst one-day decline in 18 months on Wednesday, down 3.6 per cent. The index ended the week down 2.1 per cent.

Microsoft, Meta, Apple and Amazon earnings next week may set up a fresh test of investor faith in the AI narrative that has been a crucial driver of market gains.

“Expectations are high and valuations for the Mag Seven aren’t cheap. We’re also closer to the point when we see some decelerations in earnings from them as a group — from the beneficiaries of AI in general,” said Josh Nelson, head of US equity at T Rowe Price. 

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Investors this week also showed they were prepared to punish companies that missed expectations, with Tesla losing 12 per cent on Wednesday after slowing sales and its own AI spending shrank profits more than expected. And Ford shares tumbled 18 per cent on Thursday when its profits fell short, hurt by unexpectedly high warranty costs.

On average, companies that missed expectations had seen their shares drop 3.3 per cent in the days surrounding their earnings, according to data from FactSet, more than the five-year average of 2.3 per cent.

Companies that beat expectations saw on average no gains in their share price, FactSet reported.

“The trend of misses getting punished more than beats get rewarded is getting a little bit more significant,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “There is uncertainty and skittishness with regard to just how fast the market, driven by those names ran, without the commensurate improvement in their forward earnings prospects.”

Sonders also pointed to the fact that the earnings season under way had coincided with a “rotation” among investors taking profits in the biggest tech names in favour of backing smaller companies that were more likely to see big benefits if the Federal Reserve begins to cut interest rates in September.

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This week, the Russell 2000 index of small-cap stocks added 3.5 per cent while the blue-chip S&P 500 fell 0.8 per cent.

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Boar's Head recalls 200,000 pounds of deli meat linked to a Listeria outbreak

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Boar's Head recalls 200,000 pounds of deli meat linked to a Listeria outbreak

An electron microscope image of a Listeria monocytogenes bacterium, which has been linked to an outbreak spread through deli meat. Boar’s Head recalled meat on Friday, after two deaths and 33 hospitalizations linked to Listeria.

Elizabeth White/AP/Centers for Disease Control and Prevention


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Elizabeth White/AP/Centers for Disease Control and Prevention

Boar’s Head is recalling more than 200,000 pounds of deli meat that could be contaminated with listeria, the Food Safety and Inspection Service announced Friday.

The recall includes all Liverwurst products, as well as a variety of other meats listed in the FSIS announcement. The CDC has identified 34 cases of Listeria from deli meat across 13 states, including two people who died as of Thursday. The statement also said there had been 33 hospitalizations.

The CDC warns that the number of infections is likely higher, since some people may not be tested. It can also take three to four weeks for a sick individual to be linked to an outbreak.

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Listeria is a foodborne bacterial illness, which affects about 1,600 people in the U.S. each year, including 260 deaths. While it can lead to serious complications for at-risk individuals, most recover with antibiotics. Its symptoms typically include fever, muscle aches and drowsiness,

The CDC says people who are pregnant, aged 65 or older, or have weakened immune systems are most at risk. It suggests that at-risk individuals heat any sliced deli meat to an internal temperature of 165°F.

The investigation from the CDC and FSIS is ongoing. This is not the first listeria outbreak of the summer, as more than 60 ice cream products were previously recalled during an outbreak in June.

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US charges short seller Andrew Left with fraud

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US charges short seller Andrew Left with fraud

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A federal grand jury in Los Angeles has charged prominent short seller Andrew Left with more than a dozen counts of fraud, alleging that he made profits of at least $16mn from “a long-running market manipulation scheme”, according to a statement from the Department of Justice.

The DoJ added: “Left knowingly exploited his ability to move stock prices by targeting stocks popular with retail investors and posting recommendations on social media to manipulate the market and make fast, easy money.”

The grand jury indictment charged him with 17 counts of securities fraud, one count of engaging in a securities fraud scheme and one count of making false statements to federal investigators.

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The indictment alleged that Left, who has a high profile on social media, publicly claimed that companies’ share prices were too high or low, often with a recommended target price and “an explicit or implicit representation about Citron’s trading position”. This, the DoJ said, “created the false pretence that Left’s economic incentives aligned with his public recommendation”.

Left prepared to quickly close positions after publishing his comments, taking profits on price moves he had caused, according to the indictment.

It also accused Left of presenting himself as independent and concealing Citron’s links with a hedge fund by fabricating invoices and wiring payments through a third party.

If convicted, Left could face decades in prison. Each securities fraud count carries a maximum penalty of 20 years in prison, while the securities fraud scheme and false statements counts each carry a maximum prison term of 25 years and five years, respectively.

The US Securities and Exchange Commission has also filed a separate civil fraud case against Left and his firm Citron Research, claiming the founder made $20mn from a “multi-year scheme to defraud followers.” Left declined to comment on the DoJ and SEC charges.

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“Andrew Left took advantage of his readers. He built their trust and induced them to trade on false pretences so that he could quickly reverse direction and profit from the price moves following his reports,” said Kate Zoladz, regional director of the SEC’s Los Angeles office. “We uncovered these alleged bait-and-switch tactics, which netted Left and his firm $20mn in ill-gotten profits, and we intend to hold Left and his firm accountable for their actions.”   

The practice of betting that a company’s share price will go down has long been controversial — opponents say it gives traders incentives to spread misinformation, while supporters argue that it improves price discovery and holds management accountable. Last year the SEC adopted new rules that require investors to disclose short positions more quickly and fully.

Left has been most vocal recently in his scepticism over GameStop, the ailing video games retailer. In May it raised $3bn selling new shares following a surge in its price driven by the reappearance of Roaring Kitty — whose real name is Keith Gill — who was instrumental in the 2021 meme stock mania that had sent its value rocketing.

Left told followers in mid-June that Citron had closed its short position on the stock not because he had changed his views but because of GameStop’s newly-strengthened balance sheet.

In 2016, Left received a five-year “cold shoulder” ban from regulators in Hong Kong — a landmark ruling for the city — temporarily barring him from its markets after he was found culpable of misconduct related to a research report he published on Chinese property developer China Evergrande.

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Additional reporting by Stefania Palma in Washington and Brooke Masters in New York

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