E	  -­‐	  CONSTRUCTION	  MATERIALS:	  A	  NEW	  THREAT	  	  “Fake	  goods	  worth	  more	  than	  USD	  200	  million	  ha...
French	   companies,	   in	   particular,	   prefer	   to	   remain	   silent	   for	   fear	   of	   destabilizing	   the...
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Preview of WAITO report 2011 - Counterfeiting Crime a major challenge


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The WAITO Foundation’s 2011 report provides an international reference in the fight against organized crime and dangerous counterfeiting (Counterfeiting-crime©) prejudicing the stability of States and the security of their populations, and industrial sectors, whose responsibility it is to guarantee the protection of consumers.

This preview focused on the threat of counterfeited building materials.

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Preview of WAITO report 2011 - Counterfeiting Crime a major challenge

  1. 1. E  -­‐  CONSTRUCTION  MATERIALS:  A  NEW  THREAT    “Fake  goods  worth  more  than  USD  200  million  have  been  seized  and  nearly  1,000  people  arrested   in   a   series   of   operations   co-­‐ordinated   by   INTERPOL   across   South   America  targeting   organized   criminal   counterfeiting   networks.”     Organized   under   the   auspices   of  Operation   Jupiter,   in   partnership   with   the   World   Customs   Organization   (WCO),   this  yearlong  operation,  throughout  2010,  led  to  a  series  of  interventions  across  13  countries  in  the  region  and  the  seizure  of  nearly  eight  million  counterfeit  products.  The  products  seized  included  construction  materials.      These   goods   (equipment   and   materials)   were   recovered   from   a   range   of   locations  including   markets,   commercial   shopping   centres,   and   street   vendors.   In   various   cases,   it  was  found  that  social  networking  sites  had  been  used  as  distribution  channels  for  these  counterfeits.    A   key   element   in   the   success   of   Operation   Jupiter   V-­‐   the   fifth   such   operation   co-­‐ordinated   by   INTERPOL   in   the   region   -­‐   was   the   increased   awareness   and   allocation   of  resources   to   tackle   the   dangers   posed   by   counterfeit   and   pirated   products   including   the  creation  of  dedicated  Intellectual  Property  crime  units  in  Chile  and  Peru.    “The   volume   and   range   of   goods   recovered   are   clear   evidence   of   the   value   that  Operation   Jupiter   brings   in   identifying   and   dismantling   organized   crime   networks  behind  these  counterfeits  and  also  demonstrates  the  massive  scale  of  this  type  of  crime  not   just   in   South   America,   but   globally,”   said   INTERPOL   Secretary   General   Ronald   K.  Noble.    In  recent  years,  the  global  boom  in  construction  and  the  growth  of  emerging  countries  has   caused   shortages   in   a   range   of   construction   materials   and   equipment   used   in   the  construction   and   public   works   sector.   In   this   context,   globalization   is   both   a   source   of  hope  and  danger.  There  is  an  ideal  kind  of  globalization  where  each  person’s  progress  contributes   to   the   progress   of   society   as   a   whole;   but   there   is   also   a   bad   kind   of  globalization  with  unfair  competition,  dumping  and  aggravated  deception,  endangering  the   economy   and   construction   and   public   works   companies,   and   above   all,   the   final  users  and  consumers.    Construction   and   public   works   companies   are   increasingly   exposed   to   major   criminal  charges   for   the   use   and/or   purchase   of   irregular   products   that   can   cause   accidents  endangering  people’s  safety.  Although  safety  regulations  have  become  stricter,  there  is  no   way   of   identifying   where   a   product   was   manufactured,   whether   it   meets   technical  requirements,   let   alone   cases   of   fraud.   In   the   event   of   an   accident,   insurance   companies,  often   forget   these   things,   which   are   essential   in   the   demonstration   of   proof,   establishing  facts,  assessing  the  damages  suffered,  reimbursing  such  damages  and  producing  reliable  statistics.    Recently   in   China,   a   general   audit   of   nuclear   power   stations   revealed   the   presence   of  non-­‐compliant   materials,   counterfeit   or   other,   inside   cooling   pools.   While   such   alarming  information  from  emerging  countries  is  becoming  increasingly  common,  European  and  
  2. 2. French   companies,   in   particular,   prefer   to   remain   silent   for   fear   of   destabilizing   the  market.    A   survey   carried   out   in   2010   by   a   large   professional   association   in   the   construction  sector,  revealed  that  counterfeiting  continues  to  be  seen  as  a  “shameful  disease”  in  the  sector.   The   large   majority   of   companies   approached   for   the   survey   either   refused   to  reply  or  wished  to  remain  anonymous.  This  points  to  a  real  conspiracy  of  silence.      Secondly,   the   survey   confirmed   the   interdisciplinary   nature   of   counterfeit   products,  including   construction   (compressors   and   machinery)   and   safety   devices   (footwear,  equipment,   lifting   hooks),   fences,   circuit   breakers,   fireproof   glazing,   building  applications,  taps  and  insulating.  This  is  becoming  a  prime  target  for  counterfeiters.    It  would  be  impossible  to  put  a  figure  on  the  scale  of  counterfeiting  in  this  sector,  but  for  electrical   equipment   alone   global   damages   are   estimated   at   more   than   1   billion   US$   a  year.    This   is   becoming   a   major   problem,   in   terms   of   safety,   for   both   final   users   and  construction   workers.   Lifting   hooks   can   be   taken   as   an   example   of   the   disastrous  consequences  of  using  non-­‐compliant  products.    Copies  can  be  identical  to  the  original,  but   in   terms   of   quality,   they   may   lift   40%   less   weight.   Likewise,   in   terms   of   the   final   use  of   a   counterfeit   product,   analyses   of   customs   seizures   of   taps   have   shown   that   copies  release  more  metals,  including  copper,  into  drinking  water1.    There   are   obvious   reasons   for   counterfeiters’   keen   interest   in   construction   equipment  and  materials.  On  a  global  level  the  construction  market  is  worth  hundreds  of  billions  of  US$.   New   construction   and   renovation   work   provides   a   major   pool   of   easy   money   for  counterfeiters;   this   has   led   them   to   invest   more   and   more   in   this   sector.   The   new  technologies  that  have  been  made  available  to  counterfeiters,  in  particular  through  the  investment   of   drug   trafficking   proceeds,   the   opening   of   the   market   to   “DIY”   through  wholesale  and  the  internet  and  new  professional  distribution  systems,  have  resulted  in  major  changes  in  counterfeiting  practices  and  their  impact.  This  is  a  structured,  highly  organized  and  aggressive  form  of  counterfeiting.                                                                                                                      1    Hansgrohe  (October  2009).  Press  release,  www.hansgrohe.be