The Trafficking of Women and Children

Sally Ramage

 

 

Abstract

This article looks at the crime of trafficking of women and children and the connected crime of money laundering.  It explores ways in which businesses can hide this illegal activity behind a legitimate business and flags up some methods of discovering the activity.  It explains the technical accounting transactions that hide such activity and discusses the UK’s Proceeds of Crimes Act in relation to this activity.  Recent research in the UK has shown that, despite journalistic reports such as the Economist’s August article on pornography and trafficking which said that there is an extremely small amount of trafficking crime, there is a large and growing problem of children, aged 14 to 16, brought to the UK to supply the pornography market and the clothing sweatshops and ethnic restaurants.

 

Introduction

Trafficking of women and children is part of organised crime activity in which these women are transported from Africa, South America, Asia, Middle East and Eastern Europe to Western Europe and North America to be used as prostitutes and for child pornography, slave labour, automobiles couriers, body parts couriers, fauna and flora couriers, for thieving of nuclear material, drugs couriers, arms couriers, even ordinary thieving as pick-pocketing for gangs as part of trans-national organised crime[1].  Even from ten years ago, the range of criminal organisations has broadened.  This is due to the rapid improvement in technology which criminal have exploited to sustain a marked expansion in illicit markets and informal economies.

 

Where there used to be maritime piracy on the high seas, the trend today is rather for highly organised software piracy, part of the criminal process of producing paedophile and bestiality and perverse hard core pornography to supply the western appetite, this being a multi-billion pound pornography industry that generates huge profits.  When these illicit and illegal profits are introduced into the formal economy, the conversion to legitimacy through the purchase of business properties, aeroplanes, stocks and shares and high living, is termed as ‘money laundering’.  Such money is also used to further develop the illegal businesses and even to plot against the world’s security.

 

Not all women and children that are trafficked are caught and transported against their will.  Some are women who pay the traffickers[2] to get them to western countries, thinking that they would have a better life, only to be forced into prostitution with no hope of reporting it because they themselves are illegal immigrants in the new countries.  For the commercial sex trade, women and children are trafficked from Africa, India, Pakistan, Russia, Kazakhstan, China, Middle East, Indonesia, Central America, Panama, Nicaragua, Honduras, Brazil, Thailand, Philippines, Japan, Ukraine, Eastern Europe and Dominican Republic.[3]

 

The women and children who are the supply side of Western brothels and hard-core, bestiality, perverse pornography films and other material are trafficked to Western countries, namely the Netherlands[4], Western Europe[5], United States[6], Greece, Spain, Switzerland, [7], Australia[8], Germany[9], Austria[10].

 

In the Western world, the sexual exploitation of children is much more covert because of moral and criminal distaste for this very serious criminal activity.  Estimates from studies done for UNICEF reveal that in 1997, there were 300,000 child prostitutes in the United States.  A 1997 Report on trans-national child prostitution by the international police INTERPOL, stated ‘ The incredible escalation of child prostitution over the last ten years is directly caused by the tourism trade.  Child prostitution is the newest tourist attraction offered by developing countries.  The parallel to this phenemenon in the Western countries is the explosion of a huge underground trade in child pornography in videos and magazines.  Since laws against child prostitution are stringently enforced in most affluent countries, pornographic films and photographs often have their origin in countries where child prostitution has become a temporary escape from poverty for struggling rural people’.  So it can be estimated that most of the child prostitutes in non-Western countries are servicing the demand for Western tourists who travel to the children’s countries to indulge their criminality, making the 1997 estimate for total child prostitution some 2 million.

 

International Conventions to combat trafficking

A significant number of organised criminal activities have caused authorities and non-governmental organisations to confer and create Conventions to persuade the world’s countries to legislate and control such crimes.

 

The 1949 Convention on the Suppression of Traffic of Persons and of the Exploitation of the Prostitution of Others is an indication of the serious situation even fifty years ago.  The International Labour Organisation (ILO) pressed for the 1957 Abolition of Forced Labour Convention, an instrument which would cover child prostitution as well as trafficked women in brothels.  There was also the 1959 United Nations (UN) Declaration of the Rights of the Child.

 

The United Nations Convention of 1988 against Illicit Trafficking in Narcotic Drugs and Psychotropic Substances, also covers money laundering and precursor chemicals and drugs.  This 1988 UN Convention declares that these criminal activities need to be regulated, prohibited or criminalised and was followed quickly with the 1989 UN Convention on the Rights of the Child.

 

The UN continues to verbalise the rights of the child even though the evidence of almost 2 million children in child prostitution, and maybe many more, does indicate that this rhetoric needs vigorous simultaneous action to put an end to it.  To list the UN’s efforts, there was the 1991 ‘End Child Prostitution in Asian Tourism (ECPAT) a Non-governmental organisation which raised awareness of the crime.  There followed the UN’s 1992 ‘Programme of Action for the Prevention of the Sale of Children, Child Prostitution and Child Pornography’.  Also, there was the 1996 ‘First World Congress Against the Commercial Sexual Exploitation of Children’.

 

Still the UN keeps trying.  There is now a definition of the word ‘trafficking’ and that must be some progress.  The definition of trafficking in human beings in the United Nations Protocol to Prevent, Suppress and Punish Trafficking in Persons, especially Women and Children(2000) states: :

‘1.(a) ‘Trafficking in persons’ shall mean the recruitment, transportation, transfer, harbouring or receipt of persons, by means of threats or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments of benefits to achieve the consent of a person having control over another person, for the purposes of exploitation.  Exploitation shall include, at a minimum, the exploitation of the prostitution of others or other forms of sexual exploitation, forced labour or services, slavery or practices similar to slavery, servitude or the removal of organs.  The consent of the victim of trafficking in persons to the intended exploitation set forth in subparagraph (a) of this article shall be irrelevant where any of the means set forth in sub-paragraph (a) have been used.

(b) The recruitment, transportation, transfer, harbouring or receipt of a child for the purpose of exploitation shall be considered ‘trafficking in persons’ even if this does not involve any of the means set forth in subparagraph(a) of this article.

(c ) ‘Child’ shall mean any person under eighteen years of age.’

 

Germany’s Committee on Equal Opportunities for Women and Men organised a colloquium in November 2002.  They discussed trafficking of women and prostitution and studied the Dutch legalised prostitution industry as one direction they might take.

 

The United Nations estimate[11] that 1.2 million children[12] are trafficked each year[13].  This is not the total figure for all child prostitutes in the world as there are an extra estimated one million children in their own countries who are sexually exploited by tourists who travel to the children’s countries for sex with children., making the probable number of these abused innocent minors about 2 million.  Trafficking is part of serious organised crime and occurs for the purposes of prostitution,[14] slave labour[15], the movement of drugs[16] and arms, and recently for the specific purpose of using children for thieving.[17]

 

United Kingdom Legislation against trafficking

UK legislation against trafficking is found in the Nationality, Immigration and Asylum Act 2002 and the Sexual Offences Act 2003.  Section 145 of the Nationality, Immigration and Asylum Act 2002 covers the offences of arranging or facilitating the arrival, travel or departure of a person in the UK for the purpose of control over prostitution.  Section 143 of this Act states that the penalty for this offence is a maximum of fourteen years imprisonment.  The Sexual Offences Act 2003 deals with trafficking within and out of the UK for the purposes of sexual exploitation and the maximum sentence for such offences is also fourteen years.  The Sexual Offences Act also has measures against buying the sexual services of a child, and causing, facilitating or controlling the commercial sexual exploitation of a child in prostitution or pornography.  This Act came into force in May 2004..There is also the Criminal Justice Act 1987, section 2, which can be used by the Serious Fraud Office for compulsory questioning if trafficking involves serious financial fraud.  Also,the Proceeds of Crime Act 2002 can be used to conduct financial investigations into suspected traffickers’ financial affairs and to seize assets.  Part VII of the POCA contains the money laundering offences.  The definition of money laundering now extends to include proceeds of all crimes and section 329 states that the possession of criminal assets constitutes money laundering and there is the Extradition Act 2003.  to return offenders.  Yet the UK police claim that trafficking is very rare and that the majority of these women have come voluntarily to the UK to work as prostitutes[18].  It is this denial of the problem that causes the problem to be here after fifty years of combating this particular crime.  The UK has four hundred and seventy ‘brothels’ and yet no-one addresses the real underlying organised trans-national crime.  If migration to forced prostitution is merely the result of lack of prospects in the country of origin, unemployment and lack of education result in trafficked women and children, then those economic issues must be addressed.  In 2003 the UK police made co-ordinated raids on several ‘brothels’ in the north of England, arrested the prostitutes and deported those with incorrect papers. 

How can we track down and prosecute these traffickers?

 

Practical steps to combat trafficking in the UK

The accountancy profession, especially, because of their recording and auditing functions, can help to detect trafficking by being vigilant on the Pay-As-You-Earn taxation side, spotting large tranches of very low-paid workers in the accounts records, spotting payments to lorry companies in a non-transport company’s records, spotting one-off payments to someone abroad, spotting mass purchase of cheap clothing and footwear, spotting money being deposited in many different branches of the company’s bank, far away from the place of business, spotting sudden rises in income and spotting different modes of personal drawings.

 

What sort of accounts can reveal such organised crime? Any.  From newsagents, tobacconists, doctors’ accounts (sudden increase in patients), family firms with many low paid workers or much regular cash withdrawals, companies suddenly renting large cheap accommodation on the pretext of storage, sudden large purchases of cheap foodstuffs, clothing and footwear, sudden rises of income in any business from pornography retail outlets, massage parlours, market traders to new small subsidiaries abroad. 

 

How can such crimes be covered up in large companies’ accounts?  It is well known that as companies grow larger, it becomes necessary to have several “books” instead of just one ledger and as companies grows even larger, these “books” are further sub-divided and one such “book” is the petty cash book.  Whilst the petty cash account has advantages of handling and recording small cash payments by junior personnel and posting monthly entries to the main Profit and Loss account, it also has the disadvantage that the audit misses the significance of payments out of the petty cash account.  This is where trafficking expenses might be legitimised through a large company’s accounts.  So a large well-known, decent, incorporated company may be involved in illegal activities such as trafficking for arms or drug courier purposes or for Value Added Tax frauds by using petty cash accounts.  A well known example is of companies using people to but cigarettes and alcohol in Europe for personal use but in fact they are sub-dividing the transportation of corporate stock to avoid Value Added Tax.

 

Data mining and accounting data-bases

For accountancy and management purposes, computer programmes are written to make it easy for data to be processed.  For example, the accounting programme is written so that when an item is posted to an account, it may give you the running total to date, the account reference number and the budgeted figure for that expense.  Such an accounting software can be programmed to also include a flag-up of a creditor previously unknown to it.  So if an engineering business starts to pay rent for premises elsewhere, it can be flagged up and checked.  Like tackling other frauds, the accountancy software programme can be written to also flag up extra-ordinary items, for example, if there is a limit on how much stationery, say, can be bought from a certain supplier to a maximum of £200 per transaction, and the programme spots that the whole budget for the year has been spent in transactions of £200 in twelve transactions in January, it will flag that up.  Money to facilitate trafficking can be hidden by such a means and the audit would not spot it unless the limit was broken or the total amount was much more than last year’s figure. 

 

Common fraud : fictitious or false payroll

Another way that traffickers can use expense transactions is to create a highly paid fictitious person in the Payroll account  in order to send steady large amounts of money to the trafficker’s bank account to be used for his illegal purposes.  Companies that end up in administration, though not traffickers, sometimes have similar types of fraud perpetrated in them.  For instance, when the English company Fine-list Group plc went into administration in October 2000, various huge payroll discrepancies were found, amounting to millions of pounds[19].  In general, personnel signs would be employee numbers and locations, categories of employees (full or part time), methods of compensation (eg, salaried, weekly, hourly, piece-work, overtime, holidays, bonuses, commission). 

 

The exact nature of the business

Are these regular for the type of business that this business purports to be?  If a photography business is formed as a limited company and makes good net profits of over £100,000 each year, you would expect that it has regular corporate clients, contract work and staff.  If you find that this photography business is a one man company with a private aeroplane and that this company director then starts a second business which is a retail sex outlet, it might raise alarm bells that maybe this director is peddling more than photos, and if not, what type of photos is he producing and who audits his accounts, if indeed they are audited?.  For indeed, even if this is a registered company, the rules are that an unqualified accountant, not an auditor, may prepare and submit accounts for small companies, those incorporated companies with a turnover up to 5.6 million pounds (see UK Statutory Instruments 2004, No.16, Companies Act 1985 which came into force in January 2004 and is know as the audit exemption threshold of 5.6 million pounds sterling) And such a preparer of accounts has no compliance accounting standards, no body to disqualify him.  Could he be sued? The person perpetrating the illegal trafficking would not sue him.  If they have a contract, it would be to fool financial bodies in order to facilitate money borrowing.  An innocent preparer of such accounts for an illegal activity could not be sued by the lending bank for negligence under tort..  If an accountant made an error in judgement and was ignorant of the real activity of such a business, then he could not be sued in negligence.  In Whitehouse v Jordan [1980] 1 All ER 650, Lord Denning said that an error of judgement did not in fact constitute negligence. 

 

New Disclaimer by Accountants against negligence

In January 2003, the Institute of Chartered Accountants in England and Wales issued a technical release, recommending auditors to include a disclaimer in their report and accounts: “This report is made solely to the issuer’s members, as a body, in accordance with section 235,Companies Act 1985.  Our audit work has been undertaken so that we might state to the issuer’s members those matters we are required to state to them in an auditor’s report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the issuer and the issuer’s members as a body, for our audit work, for this report, or for the opinions we have formed.”.  This recommendation appears to be a move towards the German contract law instead of the English tort law that auditors’ liability at present come under.  If damages caused by a wrong audit are recoverable under an implied contract between auditor and shareholder, the auditor is usually liable for simple negligence.  There is general agreement that pure economic loss has to be compensated under contract law as the cost of protection is internalised in the contract.  Auditors have recently lobbied the Department of Trade and Industry to amend section 310,Companies Act to allow auditors to negotiate a cap on their liability but the Office of Fair Trading Report of 5th August 2004 stated that a cap would not prevent the collapse of an accountancy firm and that, anyway, there is professional indemnity insurance and that accountants can form limited liability companies.

 

Photographic shop or Hard-core Pornography film studio?

If an auditor is not thoroughly familiar with the nature of the business, he cannot spot fronting arrangements that hide trafficking offences.  This means that the auditor should really know the type of business he is auditing, the key business activities, the products, the service, the customers, the industry and the competitors.  This is not as easy as it sounds because a company can have whatever name it chooses, apart from the prohibitions under the Business Names Act 1985 sections 2 and 3, and Companies Act section 26.  For example, the sex shop outlets which are on some UK High streets and are known as “Private “ shops, are franchised from the American organisation which boasts in its annual report that it is “a purveyor of Hard Core Pornography”.  These Private shops, if formed as limited companies in the United Kingdom, can be registered at Companies House, Cardiff under a name other than “Private”.  Registered companies do not always declare their true business to Companies House.  Also, there are broad categories for registration and there are no categories for sexual retail outlets, massage parlours, etc.  Those will be registered under “other retail business” category and criminals can tick the wrong box because there is NO audit of the registration documents.

 

Commercial developments of companies can be tracked to disclose any illegal offences such as trafficking.  These include change in activities, product history ( for example, are they selling private hairdressing to hotel room occupants or are they selling sex?; are they transmitting soft pornography films in night clubs as a service activity or are they filming paedophiles in action? Both activities would need projectors, film, storage premises, staff, but the latter would have purchase of equipment for perverse purposes, food items purchased, clothes purchases, transport costs, aeroplane tickets, etc.)

 

The history of ownership/control and other significant events, for example major acquisition and disposals and major disputes can be the tell tale signs of other activities.  The location of the business is important as is the description of properties occupied.

As in all things, preparation is the key to success.  To stop trafficking in its steps, to catch traffickers in the early stages, to stop even the formation of such corporations, an accountant appointed to a new audit can pay particular considerations in a new engagement and must familiarise himself with the client’s business, recording background information on the permanent notes file.  He must obtain all necessary documents well in advance of the commencement of the first audit.

 

Profiling the trafficker

Profiling techniques can also be used to detect money laundering and thus trafficking.  Bank statements of criminal suspects can be examined to identify cash deposits, unusual transactions, gross income, female dependants, nature of personal transactions, standard of living, taste in entertainment, internet transactions, transfers of moneys to large corporations, etc.  The person can be checked against Companies’ House records for director disqualification.  An internet search might reveal some past criminality.  His credit reference may be sought.

 

Conclusion

The writer leaves this concluding comment.  Modern society has produced this peculiar variety of professional criminals.  The financial gains from pornographic businesses are phenomenal.  The Annual Report of the ‘Private’ sex shop franchise business declares extremely healthy profits from this ‘purveyor of hare-core pornography’, as the report describes the business.  Governments, despite their protestations, will do nothing to harm businesses; the health of the economy depends on business and the blur between the time between which trans-national organised crime.  is sordid to when crime becomes corporate and legitimate is very fuzzy.  Many have been waiting for fifty years to stop the savagery of sex exploitation.  They still wait..

 

Cases, Statutes and Conventions

Whitehouse v Jordan [1980] 1 All ER 650

Statutes and Conventions

Business Names Act 1985

Companies Act 1985

Criminal Justice Act 1987

Extradition Act 2003

ILO Convention 180

Nationality, Immigration and Asylum Act 2002

Proceeds of Crimes Act 2002

Sexual Offences Act 2003

 

References

Ebbe.O, (1989), ‘Crime and delinquency in metropolitan Lagos: a study of crime and delinquency area theory’, Social Forces.

Economist, (1997), 19 April.

Eluf.  L.N, (1992) ‘A new approach to law enforcement’, New York: United Nations Development Fund for Women.

EU, (1996), ‘Situation report on organised crime in the EU:1995’, Brussels:EU.

Farrington.D.P, (1996), ‘Understanding and preventing youth crime’, York: Joseph Rowntree Foundation.

Heise.L.L and Germain.A, (1994), ‘Violence against women: the hidden health burden’, Washington.D.C: World Bank.

Kerr.J, (1994), ‘ Calling for change:International strategies to end violence against women’, The Hague: Development Co-operation, Information Department, Ministry of foreign Affairs.

Mueller.G.W.O, (1998), ‘Trans-national crime; experiencing uncertainties’, Uncertainties Scenarios.

Musacchio.V, (2004), ‘Migration connected with trafficking in women and children’, German Law Journal, Vol 5.No.9, September 2004.

Pope.V, (1997), ‘Trafficking in women’, US News and World Report, 7 April 1997.

Redo.S, (1998), ‘International annals of criminology’, UN.

Reuters (2004), ‘Venezuela slams US over human trafficking sanctions’, 13 september 2004.

Reuters (2004), ‘Four commit suicide in Australia porn case’, 2 October 2004.

Reuters (2004), ‘Columbian drug king pin extradited to United States’, 13 September 2004.

Robinson.  C, (1994), The international conference on transnational migration in the Asia-Pacific region: problems and prospects’, January 1994.

Smith.P.J, ‘Human suffering: hinese migration trafficking and the challenge to America’s immigrant tradition’, Washington : Centre for Strategic and International Studies.

United Nations,(1995), ‘Action against organised crime’.

 

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[1]        Mueller.G.W, ‘(1998), ‘Transnational crime; an experience in uncertainties’, Uncertainty Scenarios.

Mueller states that although definitions of what constitutes organised criminal activity vary from one country to another, the concept has gradually come to mean ‘criminal activities extending into, and violating the laws of several countries’.  Transnational crime is different from international crimes (ie.crimes recognised as such by international law such as war crimes) and local crimes which can be influenced by factors beyond the boundaries of the affected jurisdiction, but which are limited to one jurisdiction.

[2]        Smith.P, (1997), ‘ Human smuggling : Chinese migrant trafficking and the challenge to America’s Immigrant tradition’,, Washington: Centre for Strategic and International Studies. 

[3]        Redo.S, (1998), ‘International Annals of Criminology’, UN.

[4]        Source : Department of Correctional services, Ministry of Justice, Netherlands.

[5]        Economist,(1997), 19 April. 

[6]        Winer.  J, (1997), ‘Alien smuggling elements of the problem and the US response’, Transnational Organised Crime Journal, January 1997.

[7]        Robinson.  C, (1994), The International Conference on Trans-national Migration in the East-Pacific Region: problems and prospects’ ARCM, January 1994.

[8]        Pope.  V, (1997), ‘Trafficking in women’, US News and World Report, 7 April, 1997.

[9]        Mugar., I, (1996), ‘ Trafficking in women for sexual exploitation’, Geneva: International Organisation for migration, June 1996.

[10]       Mugar.  I, ‘Trafficking in women to Austria for sexual exploitation’, Geneva: International Organisation for Migration, June, 1996.

[11]       The writer reasons that this UN figure is much lower by one million at least.  If the UN figures for known child prostitution, not even including figures for UK, Ireland, France, Germany, Italy, and the other developed affluent countries, then the UN’s 1997 figures total 1,651,000 child prostitutes in Thailand, Philippines, India, Central America, US and Poland.

[12]       Reuters,(2004), ‘Venezuela slams U.S over Human Trafficking sanctions’, Top News,13 September 2004.  There is so much human trafficking from Venezuela that US President Bush has ordered a cut in US assistance for not doing enough to stop his country’s trafficking of women and children for sex. 

          Colombia has similar organised criminals who traffic drugs around the globe and who are so dangerous that they do not hesitate to kill to protect their criminal activities.  See Brown.  R, (2004), ‘Death by deadline’, Financial Times Supplement, 2 October, 2004.

[13]       Musacchio.V, (2004), ‘Migration connected with trafficking and prostitution: An over-view.  ‘, German Law Journal Vol 5 No.  9.  Musacchio states that the European Commission estimates that 120,000 women and children are trafficked into Western Europe each year (a rather low estimate if the number of brothels in Western Europe are counted).

[14]       Reuters, (2004), ‘Four commit suicide in Australia Child Porn Case’, 2 October 2004.

          The FBI found thousands of audit trails of credit card transactions by men viewing child pornography from their computers around the world.  Last week, the Australian police charged 400 men with keeping internet child pornography libraries, some of which had over 250,000 images of child pornography, made in home studios.

[15]       Zia.F, (2004), ‘The effectiveness of trade sanctions and ILO Convention 182 on the eradication of Child Labour in the United Kingdom and Pakistan’, Paper given at Annual Conference :Society of Legal Scholars,22September 2004.  The research shows that there are thousands of female children working in the sex industry, the clothing industry and the restaurant sector in the Midlands, in London and other areas of the United Kingdom.  There are also thousands of foreign women working in the UK sex industry.  The research vigorously contradicts the police’s statements that ‘trafficking is very rare’ [Economist, ‘It’s a foreigner’s game’, 4 September,2004.  According to the Economist, the ‘Poppy’ project surveyed the UK sex industry.  They said to the Economist, ‘London’s sex workforce is remarkably international.  About a quarter of the women working in the four hundred and seventy British sex establishments turned out to be of Eastern European origin, the single largest group.  Twelve percent of the women working in the UK sex industry are of East Asian or Western European origin, with other sizeable groups from Scandinavia and South America.  Fewer than one fifth of the prostitutes were British’.  The Economist article stated that ‘such a rain-bow coloured workforce has given rise to the suspicion that many prostitutes are being imported as chattels.  There have been incidents of women and children being trafficked into UK prostitution from Russia and the Balkans.  The Economist stated that perhaps one reason why France and Sweden are closing commercial sex businesses may be because women and children are being trafficked to be exploited for commercial sex against their will. 

[16]       Reuters, (2004), ‘Columbian Drug Kingpin extradited to United States’, 13 September,2004.  This extradited man was head of an organised drug trafficking organisation.

[17]       Damianova.J, (2004), ‘ In Western Europe, poor children kept as thieves’, Reuters, 10 september,2004.

          Children from Bulgaria, Moldova and Romania are smuggled into Western Europe and forced to act as thieves for the people smugglers.  Austrian authorities estimate that up to 250,000 children and teen-agers are sent out daily by organised criminal gangs to steal in the streets of Western Europe.  The European police agency Europol say the problem is part of a wider pattern of human trafficking for the sex trade in Western Europe, for forced labour and crime. 

[18]       Economist, ‘It’s a foreigner’s game’, 4 September, 2004.

[19]       See The Times, Friday 20th October 2000: “Accountants facing scrutiny over Fine-list” and Mail on Sunday, 22nd October 2000 “Black hole in car parts firm”.