The VICE Channels

      Tequila Is Being Distilled in the Shadow of Organized Crime

      Tequila Is Being Distilled in the Shadow of Organized Crime Tequila Is Being Distilled in the Shadow of Organized Crime Tequila Is Being Distilled in the Shadow of Organized Crime
      Photo by Guillermo Arias/AP

      Crime & Drugs

      Tequila Is Being Distilled in the Shadow of Organized Crime

      By Duncan Tucker

      When the violence in Mexico's tequila-producing region was nearing its peak, distillery owner Felipe Camarena awoke one night at his home in the town of Arandas to the sound of machine gun fire. It continued sporadically through the rest of the night.

      "It was awful," the distiller said, insisting he saw 15 bodies carried away as he peered through his bedroom window, though the local press later reported only two deaths. "I thought, 'Is this a war or what?'"

      Around the time of that incident in 2011, tequila producers in the highlands of Jalisco state in western Mexico faced a wave of threats, attempted kidnappings and extortion, Camarena told VICE News. He said criminal gangs would also charge them a quota for importing agave — the spiky blue cactus-like plant from which tequila is made — from neighboring Michoacán.

      The violence, that was primarily blamed on the Zetas drug cartel, has faded in the last couple of years as the organization has lost influence in the region and the country after its main leaders were captured or killed by government forces, and it lost several key turf battles to rivals. But the shadow of organized crime still hangs over the emblematic industry in signs that smaller distillers are being pulled into networks laundering criminal profits for groups such as the New Generation Jalisco Cartel, or CJNG.

      Last month the US Treasury Department added tequila brand Onze Black to its blacklist of businesses involved in money laundering drawn up under the Foreign Narcotics Kingpin Designation Act.

      A little-known brand produced in the town of Tepatitlán and promoted at local cockfights and mariachi concerts, Onze Black was named as providing "financial support" to the CJNG, alongside four other Jalisco-based companies.

      "CJNG has used widespread violence and corruption to become one of the most powerful drug trafficking organizations in Mexico," said John E. Smith, of the department's Office of Foreign Assets Control. "The variety of businesses designated today demonstrates the extent to which CJNG has penetrated the economy, both locally and beyond.

      The brand is registered as co-owned by Jessica Oseguera, the daughter of Nemesio Oseguera, alias "El Mencho," who runs the cartel.

      Staff at the distillery that produces Onze Black told VICE News they were unaware of any ties to the cartel. They said they had no further information to give.

      Two years ago another tequila brand, El Viejo Luis, was blacklisted for laundering drug money on behalf of Los Güeros — a group once considered an offshoot of the large Sinaloa cartel that has since faded from Mexico's organized criminal landscape.

      Viejo Luis was a well regarded premium tequila with a presence in the US, Europe and South Africa. Alcohol vendors in Guadalajara told VICE News the brand was known for its constant two-for-one promotions, which meant it sold at well below market value.

      Luis Margáin, a white-haired lawyer with 45 years of experience in the tequila industry, told VICE News he advised one of the investors behind Viejo Luis when they first entered the market.

      "He seemed like a nice man, the last thing you'd imagine was that he was a narco," Margáin said at his office in Guadalajara, the state capital. "I had him sat at this table, telling me he wanted to open a factory because they wanted to produce thousands of liters."

      Margáin advised the investors, whom he said he only later learned were criminals, to hire an established distillery to create the product for them, a typical practice for first-time investors. The lawyer insisted that in such cases the distilleries are innocent parties who rarely meet their clients and have no obligation to investigate where their funds are coming from.

      Viejo Luis was discontinued three months after being blacklisted, although no criminal charges against the company directors were ever reported.

      While the US government prohibits its citizens from doing business with blacklisted entities and can freeze any assets held under its jurisdiction, it cannot obligate the Mexican authorities to take action.

      Edgardo Buscaglia, an expert on international organized crime, said this very rarely happens.

      "In Mexico the state does not react to denouncements," Buscaglia told VICE news, adding that cleaned money from such business is often filtered into political campaigns.

      Mexico, he added, rarely even audits the finances of companies suspected of laundering money. "The Mexican government basically paralyzes any action against businesses blacklisted abroad."

      Just how deep the problem goes in tequila country is difficult to gauge given the lack of information openly available.

      Tequila expert Mike Morales said he believed drug gang infiltration is not currently a major problem in the industry. He added, however, that while it would be difficult for drug gangs to infiltrate the biggest tequila companies, which have their own distilleries and are mostly owned by multinational consortiums, it would be much easier to launder money through the many smaller brands that pop up and then quickly disappear.

      Regulators, he said, must "make it very difficult for the narcos to get in" to the industry, or risk seeing it "tainted" by association with drug trafficking.

      The Tequila Regulatory Council declined to comment publicly, as investigating investors' finances does not fall under its jurisdiction.

      Related: How the Jalisco New Generation Cartel Is Terrorizing the People of Western Mexico

      Patrick Corcoran, an analyst for to website Insight Crime, told VICE News that the decline in the level of crime against tequila producers is likely due to Jalisco's New Generation Cartel having driven the Zetas out of the region.

      "It's indisputable that the Zetas are much more aggressive toward legitimate industries," he said, whereas the New Generation "would be much more inclined to collaborate with the industry rather than point a gun at them."

      Back in Jalisco's rugged and rolling hills lined with endless rows of blue agave, there are still some reports of extortion but distillers say the situation is much calmer than it was though the dangers of getting sucked into the drug cartel world remain.

      "Anything can happen," tequila producer Camarena said of the possibility of unwittingly dealing with narcos intent on using the industry to make their earnings look respectable. "Maybe I sell you tequila at 100 pesos per liter and in your company books you say you're selling each liter for 1,000 pesos. You might not be selling a single drop but you're justifying the money that's coming in from some other illegal activity."

      Having temporarily relocated his sons after armed men hijacked one of his trucks at the height of the violence, Camarena is also wary of assuming that the days of violence will not return and still takes a different route to work everyday at the distillery he owns that produces the G-4 tequila brand.

      "The idea is to avoid routines and make it difficult for them to locate you," said the distiller who often hides his weathered features beneath a sombrero or baseball cap, "so that they find someone else who's easier to go after." 

      Follow Duncan Tucker on Twitter:@DuncanTucker

      Topics: mexico, americas, crime & drugs, tequila, jalisco, sinaloa cartel, ofac, kingpin act, treasury department, onze black, new generation jalisco cartel, los gueros, zetas

      Comments

      comments powered by Disqus

      In The News

      More News

      Features