Sam (Mooney) Giancana’s move to Mexico coincides with the time period of the Blue Ocean strategy1 of American organized crime. Blue Ocean refers to a business strategy. For the Mob, it refers to branching out beyond American shores. It involved not only geographical diversity, but the attainment of higher education by Mob figures. These figures would eventually became CEO’s, attorneys and bankers. Today we can only guess at the degree of mob infestation around the world.
Organized crime has political goals in addition to its business strategy. It wasn’t understood that organized crime operated like a business until quite recently. Its political aims took longer to be recognized. The Mob pursues many of the same goals as governments. This has been understood for twenty-five years.
The Testimony of James Woolsey
In 1999, when James Woolsey was CIA director, he appeared before the Committee on Banking of the United States House of Representatives. He testified that it had become difficult to tell mafias, businesses, and states apart.
If you should chance to strike up a conversation with an articulate, English-speaking Russian in, say, the restaurant of one of the luxury hotels along Lake Geneva, and he is wearing a $3,000 suit and a pair of Gucci loafers, and he tells you that he is an executive of a Russian Trading company and wants to talk to you about a joint venture, then there are four possibilities. He may be what he says he is. He may be a Russian intelligence officer working under commercial cover. He may be part of a Russian organized crime group. But the really interesting possibility is that he may be all three–and that none of those three institutions have any problem with the arrangement. 2
Mob Infestation is a Global Phenomenon
This is not unique to the United States. Boris Yeltsin admitted in 1993 that the Soviet Union had become a ‘mafiya’ power on a world scale. Over the next decade several former Soviet regimes evolved into mafia states. Under such regimes, organized crime groups work as a complement to state structures. Their purpose is to do everything the government can’t legally do as a government. This includes trafficking arms, carrying out domestic assassinations, extortion, money-laundering, drug trafficking and controlling offshore investments in strategic industries.
By 2012 analysts were warning of the convergence of criminal, political and business power in Latin America Africa and Asia. The warnings were issued by analysts such as Moises Naim, Misha Glenny, Douglas Farah and John T. Picarelli.
Signs of a Worldwide Convergence of Organized Crime
Signs of a worldwide convergence of organized criminal activity have been identified in North Korea and the Middle East. Armed groups are found in Afghanistan, Colombia, Mali and Myanmar. These groups traffic drugs, sometimes with the help or participation of state actors.
The traffic in minerals and wildlife fuels conflict in Africa, and organized piracy has emerged as a central factor in Somalia’s political economy. It goes without saying that it aggravates Somalia’s politics and civil war.
In the Sahel and North Africa, terrorist and militia fortunes have been tied to organized hostage markets as well as drug, oil and cigarette smuggling.
In the Balkans, there is cigarette smuggling, organ trafficking, human trafficking and a trade in stolen cars. All of these activities factor into the region’s bloody past and post-war politics.
The Death Toll Rivals War Deaths
Homicide rates in Central America are higher than Afghanistan, Syria and South Sudan. The high death rate is the result of struggles by locals to control drug, human trafficking and extortion markets.
The Blue Ocean Strategy
It’s important to mention that government collusion with organized crime is not the fault of a single administration. We have talked about the Kennedy Administration’s dealings with the Mob, but JFK and his brother, Bobby Kennedy, inherited the problem. However, the Blue Ocean strategy began after the Bay of Pigs operation failed to oust Castro.
Of course the Mob kept this strategy to itself. Previously, the Mob had been counting on its American partners to help recover its investments in Cuba. With the Blue Ocean strategy, this became less important.
Making Sense of the Collaboration
When the Castro government came to power, it hurt the interests of the Havana Mob, the American Mob and the US government. So, these three entities cooperated in the attempt to remove him. But there were complications.
The Mob had more autonomy in international affairs that anyone realized at the time. However in spite of this relative freedom to maneuver, its manipulations may have contributed to the failure of the Bay of Pigs.
Before Kennedy was elected, the Mob was a participant in the larger Cold War. So, the Kennedy’s continued to believe it would assist in removing Castro after the Bay of Pigs fiasco. Unfortunately, the Mob had lost interest in Cuba by 1961 or 1962. It did not keep its partners informed of this fact.
The Kennedy Administration
US relations with Cuba had already soured when Kennedy became president. Cuba had turned to Soviet protection in the mid-50s as a result of Eisenhower’s coercive policies. Then, in February 1960, Cuba signed a five-year trade and investment deal with the Soviet Union. In response the US pressured Esso, Texaco and Anglo-Dutch Shell not to refine Soviet Oil. The government also blocked sales of Cuban sugar to the US. It wasn’t long before Cuba began accepting arms shipments from the USSR.
On July 9, Khrushchev threatened to provide military support to Cuba in the event of an invasion. In September Castro moved against US commercial interests in Cuba by nationalizing $1 billion worth of industries.
In October 1960, Eisenhower imposed an embargo on US trade with Cuba for anything other than food and medicine. This embargo lasted more than 50 years. This history is covered in detail in Cockayne’s book, cited below.
What Went Wrong at the Bay of Pigs?
JFK was concerned about Soviet escalation from the beginning of his presidency. As a result, he was less hawkish on Cuba than the previous administration. This was another factor in the failure of the Bay of Pigs. An additional factor was the plot between the CIA and Mob to assassinate Castro. Although the two efforts were separate, some of the participants assumed the assassination was one part of the effort to overthrow the regime.
The two plans had actually been combined at one time, but as subsequent plans developed the connection was lost. The aim of the invasion changed. It was now supposed to create a political shock inside Cuba. This would trigger an uprising or a failure of the Cuban military.
Both the CIA and the Mob failed to inform the US administration of their collaboration. The partners had originally planned to assassinate Castro before the operation began, but as planning progressed the Mob dropped this plan. Unfortunately, Richard M. Bissell, CIA agency officer, continued to believe Castro would be dead before the Brigade hit the beach.This may explain why the CIA did not inform the President that landing exiles at the Bay of Pigs would not hurt Castro’s popularity. Bissell still depended on the assassination.
The Kennedys Chose the Wrong Friends
Both the Kennedys and Eisenhower were more involved in plotting the overthrow of Castro than they admitted. Plausible deniability was an important reason for covert action for all of these actors, the administration, the CIA, and the Mob.
The Kennedys’ may have been more culpable however. They knew exactly how the Mob worked, but they continued to work with them. Removing Castro was the bigger priority.
The administration’s plans switched to covert methods after the Bay of Pigs, which made the Mob’s methods seem even more important. What the Kennedy administration didn’t understand was that the Mob-CIA partnership was the main problem. Because JFK did not understand this, he refused Castro’s offer to negotiate. He chose to continue working with the Mob.
What Bobby Kennedy Knew
Bobby Kennedy knew Operation Mongoose involved working with Cuban gangsters. (Operation Mongoose was a covert operation to cause a popular uprising in Cuba as a pretext for US intervention.) He also knew that the lead military planner, Lansdale, had previously cooperated with criminal groups in Vietnam. Last but not least, he knew the CIA was working with Sam Giancana. Bobby didn’t object to any of this. However, he did order the FBI to watch Giancana. As a result he learned that Giancana was sharing a mistress with JFK.
What Bobby Kennedy Did Not Know
As it happened, the CIA omitted choice bits of information from their briefings with the Kennedys, just as the Mob withheld information from the CIA. They all had incentives to do so. For example, aside from plausible deniability, the Mob had a domestic incentive to string the CIA along. The CIA provided protection against prosecution.
As Cockayne put it, they were all practicing the mafia’s omertá. They were conducting themselves by the internalized code of the covert operator’s governmentality. The end result of all these factors was inoperability. (Cockayne, p. 243).
The Situation From Castro’s Point of View
As complicated as things were for these participants it was even less clear to Castro, especially since he was not able to distinguish between plots of the CIA, the US government and the Mob. There was a good reason for his confusion. The goals and methods of these actors did not really differ from each other. Castro began to call American diplomats and officials ‘gangsters’. In retrospect it seems inevitable that he would allow the USSR to put nuclear warheads in Cuba.
One effect of Soviet intervention was that it made killing Castro irrelevant to the US Government. Castro’s death would not solve the strategic threat posed by the Soviets. Kennedy formally suspended sabotage or militant operations during negotiations with the Soviets. But after an agreement was reached, Castro remained concerned that the US would continue covert attacks.
The US Government Limited its Covert Actions But its Partners Did Not
At this point, Kennedy shut down support of Cuban exiles from within the US as well as cooperation with the Mob. However, killing Castro remained relevant to the CIA. Agents promptly sent commando teams to Cuba by submarine without clearing it with the President.
And of course, the Mob was determined to reestablish its gambling colony in Cuba. American mafiosi worked with Cuban exiles to create another government in exile. They planned to install it through force. The CIA-Mob collaboration raised the possibility that Castro would view Mob freelancing as US strategy. Suddenly the Mob was a wildcard in geopolitics.
The US Finally loses faith in its Mob Partners
The US distanced itself but did not try to prevent the Mob’s activities. It did however break up a planned air raid on Cuba by Santo Trafficante Jr. The US government was beginning to understand that criminal groups could be self-serving and unpredictable. Military forces would clearly be more effective, especially when the objective was to send a political message.
All along there had been warnings to the US Government about the costs of collaboration with the Mob. In January 1961, a US assistant secretary of defense warned the Eisenhower administration what might happen in Latin America if the Castro assassination plans became known. J. Edgar Hoover warned Bobby Kennedy of political blowback caused by the CIA’s collaboration with the Mob. William Harvey warned his CIA superiors of the possibility of the mafia blackmailing the CIA. However, no one considered the possibility that the ‘monster’ would turn on its former master.
The Mob’s ‘Frustration’
When he became Attorney General, Bobby Kennedy continued his attempts to shut the Mob down. He was establishing the existence, structure and activities of the mafia Commission, and its record of political activism. This threatened to disrupt the Mob’s connections with the political establishment and it caused Mob leaders much frustration.
When JFK was assassinated, there were immediate suspicions about the Mob. Both Bobby Kennedy and LBJ voiced these suspicions in private, but they could never be proven. There was even talk that Castro may have collaborated with the Mob. This possibility had been a major concern of the Navy at the beginning of the Underworld Project. If the US could collaborate with the Mob, what would stop other countries from doing the same?
Blue Ocean and The Birth of Offshore Capitalism
The Mob apparently had a centrally directed strategy. In the Mob’s case, the Blue Ocean plan involved criminal relocation and strategic learning. The ambition was far-reaching. It sought to shape political developments amidst the changing geography of power.
There had been signs in 1958 and earlier that Batista was losing his grip on power. As a result, Lansky had begun to consider other locations where they could duplicate the Havana joint venture. This eventually led to the birth of offshore capitalism in the Bahamas.
Haiti had been the first target, but it didn’t work out. The Bahamas on the other hand were ruled by a small, white establishment clique, the Bay Street Boys. They did not mind breaking international law.
Globalization, Deregulation and Money Laundering
Under globalization, state power does not depend so much on territory. It depends on deregulation to attract transnational capital. Under such a regime, state leaders can use arbitrage by legalizing or licensing goods that are illegal nearby. For example, using casinos and financial institutions as money laundering services.
The Nature of State Power
State power is like mafia power. In Cuba, a CIA-Mob collaboration operated between organized crime’s coercion and state covert operations. In the Caribbean and Atlantic City it operated between the strategic logic of organized crime and economic statecraft.
The Weakness of Global Financial Regulations is the State’s Downfall
For the state, international power depends on controlling sovereignty and governmental institutions to broker between international capital flows and local jurisdictions. However, the weakness of global financial regulations means there are few checks on shady deals.
In subsequent decades offshore tax and banking havens proliferated. This was due to the Mob’s strategic vision. It was important to them to create venues for private accumulation of capital without losing capital to public governmental purposes. In the presence of a functioning state, private accumulation would be limited through redistribution, social welfare, or provision of public goods.
The Bahamas became an ‘exemplar’ of the offshore plaza.
The strategic logic of organized crime and the economic logic of states seemed to be converging. The stage was set for the merger of criminal groups’ political strategies with states’ economic strategies. [This Merger] was hinted at by the term ‘mafia states’. ( Cockayne, p. 262)
Ideally, Capital in a Democracy is Public. In the Underworld, Capital is Private.
Contrary to the ideal use of capital in a democracy, capital in the underworld economy is always private. Criminals deny that it has any relationship at all with the public order. It follows that any rules and regulations that would restrain capital accumulation or allocate it to those less fortunate is firmly resisted (criminologist Alan Block, cited by James Cockayne).
The Blue Ocean Strategy and Atlantic City
Atlantic City was one of several places where rules were relaxed. It was developed to bring weekenders from Philadelphia’s steel mills and New York’s tenements by railway to New Jersey seaside amusements. Grand Bahama on the other hand, involved bringing the middle class and professional criminal class in by airliner. And then there was Las Vegas.
Resorts International
Legalizing gambling in Atlantic City was finally accomplished by a constitutional amendment. But not without a struggle. The 1976 referendum campaign was bankrolled by a Bahamian company, Resorts International. This was the old Mary Carter Paint Co. which partnered with the Mob in Bahama.
Resorts lobbied for political influence to get the license approved and contributed to political campaigns. When this didn’t work, they switched to coercion. For example, a private security subsidiary of Intertel with connections to U.S. law enforcement, sent politicos to jail. However, civil servants uncovered Resorts’s link to organized crime and recommended against it. In response, Resorts bought blocks of advertising. This made Governor Byrne comfortable with approving it. The new Resorts Casino opened May 28, 1978.
Donald Trump and Resorts Internatinal
(The following is not included in Cockayne’s book.) Donald Trump bought a controlling interest in Resorts International Inc. in 1987. There was another bidder, but the family of the late Resorts Chairman James M. Crosby, believed Trump was more able to complete the massive Taj Mahal casino project. (Crosby held the controlling interest in the company.)
The company was later sold, and Trump became the owner of the Taj Mahal casino. The casino was also sold later. Other properties that previously used the “Trump” name, are no longer affiliated with him. One example is the former Trump International Hotel & Tower in Vancouver.
Donald Trump’s Ballroom in the White House
To conclude we have to go back to the Mob’s development on Grand Bahama. DevCo’s new resort, the Lucayan Beach Hotel, had a mysterious, giant 9,000-square-foot handball court at the center of its plans. It was eventually revealed to be a gambling floor.
