- Extortion racketeering
- Links between organized crime and corruption
- Bribery versus extortion
- Liability of legal persons
Published in April 2018.
This module is a resource for lecturers
Systematic extortion on a regular basis has also been called extortion racketeering. As discussed in Module 2, racketeering is a separate offence in some countries. Although both extortion and racketeering imply planned intimidation, violence, corruption, and duress, extortion racketeering connotes the goal of organized criminal groups not only to sell illegal goods and services, but also to create criminal monopolies by extorting and controlling those who provide illegal goods and services. The underlying conditions for the existence of extortion racketeering are the presence of vulnerable targets, inefficient social control, and motivated criminal actors.
The term "protection rackets", mentioned earlier in this Module, is an analogous term to extortion racketeering, involving circumstances where money is paid by a victim under duress in exchange for avoiding damage to a business, construction site, or harm to employees and customers. There are numerous documented accounts of organized criminal groups infiltrating construction unions, hotels, restaurants, and the garment, food, and waste disposal industries. Organized criminal groups in multiple locations around the world have systematically demanded kickbacks (i.e., secret bribe payments) on contracts to guarantee labour peace or an uninterrupted shipment of supplies. (Rusev, 2016)
In this way, members of powerful organized criminal groups have drawn salaries from companies without performing any work, after they threatened the businesses. These fictitious "on the books" jobs are fraudulent and set up to hide their illicit income sources. (Capeci and Mustain, 1996; Jacobs with Friel and Radick, 1999; Maas, 1999)
There is no precise estimate of the extent of extortion racketeering, although empirical studies have been done on the topic. For instance, interviews conducted with business owners in ethnic communities in New York City found that most admitted to being approached by gangs for money, goods, or services and that most of these businesses paid what was asked. In other locations around the world, as many as four-fifths of all businesses have paid some form of extortion, but the numbers vary. These studies show that systematic extortion racketeering occurs most often with small businesses in urban locations, where the police cannot be relied upon for protection. (Chin, Ko-lin, 1996; Finckenauer and Waring, 2000; Finckenauer and Ko-lin Chin, 2007; Gambetta, 1996; Paoli, 2003; Tulyakov, 2001)
Extortion by public officials (rather than by organized criminal groups) might also occur as ongoing racketeering when public officials are used to threaten to exercise their official authority if they do not receive a payment or favour (which is thus provided under duress). The threatened actions can involve writing a summons, giving false testimony, conducting an official inspection, fabricating a criminal charge as well as denying a government contract. Therefore, extortion racketeering applies to a variety of systematic behaviours, all of which involve obtaining property by way of coercion or threats, implied or explicit, of some future harm.
It has been found in some cases that victims are willing to pay extortion to powerful organized criminal groups for protection in order to avoid being extorted by a continuing series of individual criminals or local gangs. In different countries and different continents, the use of extortion on a systematic basis appears to occur with some regularity. (Anita, 2009; Rusev, 2016; Chin, Ko-lin, 1996)