What El Chapo Can Teach Us About Risk?

I recently was lucky enough to be a guest on ABC Radio Adelaide Drive with Jules Schiller, and we talked about the upcoming trial of El Chapo Guzman in New York. I have been closely following El Chapo for many years now - as one of the world's most notorious Drug Lords, he is worth enough money to be listed on the Fortune 100, which has to be some irony given all his money is generated from illegal activities.  To achieve such stamina in the Underworld requires risk management skills, strong leadership and good financial management. Below is the transcript of the interview.

The New York trial of Mexican drug lord, Joaquin El Chapo Guzman, kicked off in the Federal Court in Brooklyn this week, with the selection of potential jurors. El Chapo, which means shorty in Spanish, is often described as Mexico's Pablo Escobar. But who is he and how powerful did he become? And why the hell did he do an interview with Shaun Penn?

Let's chat with someone who has written about El Chapo.

Kingpin: Legal Lessons From The Underworld

She's also a local lawyer, Sarah Bartholomeusz.

Hi, Sarah, El Chapo - is this the classic humble beginnings story? Was he like an orphan or pickpocket or something?

He wasn't an orphan, but he did come from humble beginnings. His family were farmers and there is conjecture about whether or not they were opium farmers. He quit school when he was in Year 3 and started selling oranges and it went from there.

Was he part of a syndicate or some sort of drug gang?

No, it didn't start out that way. But it kind of grew into that. He founded the Sinaloa cartel, which is the most powerful cartel in Mexico, and that made him one of the most powerful people in the world. Forbes actually named him 3 times in the top 100 powerful people in the world. He’s got an estimated wealth of about a billion dollars.

So, what was he selling?

He was selling heroin to the States.

Was he kind of brutal, was he executing rivals and terrorising towns in Mexico?

He did, and the cartel did that under his leadership. So yes, that's why he's been extradited to the United States and one of the interesting things about it is that he was extradited on the basis that he wouldn't face the death penalty. So, usually, these charges in the United States would. He won’t be facing that, but what he is facing is life in jail, if convicted.

Was he popular because you know, when you have the Escobar comparison. Pablo even owned a soccer team in Columbia, was El Chapo popular?

Pablo - one of the main ways that he got support was through community engagement and philanthropy. And yes, El Chapo’s done similar things by building roads and taking care of the poor people. I think it is difficult for us to see in Australia, to understand what it's like to live and grow a “business”, for want of a better word, in a developing country. But having people on the side, obviously, it's very important for the drug kingpins, and that's one very keen way they do it. The DA has said El Chapo has surpassed Escobar in terms of wealth and power, so he’s number one.

This isn't the first time that he's been caught, is it? He was caught by the Mexicans, wasn’t he?

He was in jail in Mexico and he escaped twice. He is an expert in tunnels, so he had tunnels built that helped him escape on more than one occasion.

This is almost like a TV series, I’m sure Netflix is going to be writing something like this. How did it end up in the States? I mean, why isn't he being tried in Mexico?

He's been extradited because a lot of the crimes that he committed had an impact on the United States. And the one thing that Pablo Escobar did differently, was he got elected to parliament and Pablo changed the laws in Columbia to make sure that he and his fellow drug-dealing mates could never be extradited to the United States.

As part of a cartel with a billion dollars, you can buy a lot of people off. You can hire a lot of people to do some damage. So what sort of security have they got in New York around this trial?

The security is unprecedented. They've been closing the Brooklyn Bridge to move him across every day. That would be just so disruptive to the people of New York. So, I’m fascinated about this. And I'm going to Brooklyn next week. They are still obviously choosing the jurors, don’t know if I’ll be able to get to the courtroom if it's open.

We read that one juror admitted he took a court officer to help him to get the autograph of Guzman.

And that's one of the things about these Kingpins is they become celebrities and the crimes that they commit are not ones that we should be glorifying they cause a lot of damage to people's lives and families and society.

But who would want to be on that jury, obviously, you'd need some courage. Surely, they’d be worried. The jury would need to be sequestered. To remain anonymous.

A lot of the security that I mentioned is to protect the personalities of the jury and they won’t be seen by the defendant. They'll be in a private room. It's meant to go for about 4 months.

So, when you have a trial like this surely the cartel just moves on. Passed onto another leader or something.

Yeah, his brother is now leading it. And I think that his family are heavily involved in running the business and that will probably continue for a long time.

In your book you talk about lessons people can learn from El Chapo. What do you mean by that in your book Kingpin?

I run a corporate law firm and so I was interested in having people think about risk in a different way. And so, the lessons that we can learn from El Chapo, number one is innovation. He was one of the most innovative drug lords of all time - because drug lords have law enforcement and the risk of assassination. They do have to put risk above everything else and innovating keeps them one step ahead of their competitors, as well all the other risks that they face.

When you talk innovations, when it comes to their personal security?

How they run their business, so El Chapo was the first drug lord to create tunnels. I said before he's a tunnel expert. He created the first tunnel between Mexico and the United States to import drugs, and there are literally hundreds of thousands of those holes now, so he was the first one to innovate in that way.

Wow. Have there been any threats on his life? Normally, these guys are often getting knocked off, but has he had any shots taken at him or anything like that?

I'm sure he has [laughter] and finding the truth about drug dealers’ lives can be very difficult because a lot of it is PR. They want to be seen as bad guys. And they want people to not come near them because they are worried about their whole families. But I'm sure that his life hasn't been all roses and skittles and beer.

Is it a lay down misere that he'll be convicted because you'd imagine that if the jury found him not guilty at the end of this trial. There will be uproar.

I guess then the Mexican authorities may want to have him if that did happen. In the unlikely event that there's not enough evidence to have a guilty verdict, he might be deported back to Mexico and face trial there.

So why do you want to go to Brooklyn? What fascinates you about it?

I just always have loved Underbelly and The Sopranos and those sorts of shows. And I think it really does show from my legal point of view, I'm interested in how they managed to run such successful and large businesses for such long periods of time without being apprehended. But I just think I'm interested to see him in real life - if that's possible - and be part of history in a way. We talk about the criminality and the killings and the effects drugs have and the illegality of it all but in some form, and you see this with Escobar, it is a business, they are selling a product. So, they have to do books and accounting and manage transport costs and hire people and all this sort of stuff. So it is this bizarre thing where there must be bureaucracy and good financial management as well. And hiring people, when you are running an illegal business, is hard because you don't know who to trust. Everything in running the business is probably harder than it is for traditional business.

Sick days are a bit of tough and superannuation good luck.

Yes, but there's not much tax that they pay.

Sarah Bartholomeusz. It's been a fun chat. And look if you do go over to Brooklyn, we might get in touch as the court case unfolds because like you say, they are shutting down the Brooklyn Bridge. It’s pretty extraordinary.

Thank you very much for coming in.

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