DUBAI // Extremist groups are flooding the region with amphetamines to fund their wars, using illegal laboratories capable of making more than $19 million a day in profits, a forum was told on Monday.
Seizures of Captagon, a cheaply produced psycho-stimulant used and exported by extremists fighting in Syria, have increased in the Middle East and North Africa, including the UAE.
Michelle Spahn, attache at the US Drug Enforcement Administration’s Dubai office, said: “The DEA assesses that Captagon serves as both a tactical and a financial resource for violent extremist organisations, such as Hizbollah and ISIL.
“The financial outlook and gain that these organisations have and the profits they are able to make off Captagon manufacturing and distribution starts with production.
“There is a recent emergence of Captagon seizures in the Middle East and Mediterranean region, specifically in the Gulf countries.”
Ms Spahn said that several labs, some of which could produce up to two million pills a days, had been dismantled.
“Syria is a top producer of Captagon and pre-existing criminal groups are involved in production – and ISIL production is emerging,” she said.
“The funds are being used by these violent extremist organisations to conduct their activities. We found labs in Syria, Lebanon, Turkey, and most recently the first lab found in Egypt was in 2014.”
Col Abdul Rahman Al Owais, deputy director of the anti-narcotics department at the Ministry of Interior, said that the UAE seized almost 12 million Captagon pills last year, a significant increase from 2,501 in 2011, but down from 33 million in 2014.
“In the years between 2013 and 2015, we arrested 169 people involved in Captagon activity, including users and traffickers,” Col Al Owais said. “Of those, 49 were Emiratis, 95 carried Arab passports and 25 were other nationalities, but mostly Asian.”
He said political instability and lack of monitoring in some Arab countries contributed to the increase of Captagon production.
“There is lack of proper monitoring in some countries due to the ongoing instability,” Col Al Owais said. “The UAE, though it does have recorded cases of consumption, was used mostly by drug traffickers as a transit country.”
Ms Spahn said that producing 1 kilogram of Captagon cost about US$1,680, which meant each pill cost about 29 cents to produce.
They are sold for between $3 and $33 a tablet. In explaining how profitable production was for extremists, she used an average sale price of $10 a pill.
“Some of the high-capacity Captagon labs that we’re finding can actually manufacture up to two million pills a day, or 345kg of Captagon, which equals a profit margin and gain of more than $19m a day.”
The business is very lucrative for violent and extremist organisations, she said, and very difficult to police.
“A lack of sources on Captagon production, transport and distribution within Syria – that’s one gap. How do the proceeds from the sale of Captagon get to Syria? That’s another gap,” Ms Spahn said.
The way forward is awareness, prevention and enforcement, and organisations producing the drug must be aggressively pursued, she said.
Dr Amin Al Amiri, assistant undersecretary of public health policy and licensing at the Ministry of Health, said: “Some regional governments’ lack of monitoring has allowed for pharmaceutical factories to become sources of counterfeit drugs and Captagon.”
Dr Al Amiri said international cooperation was essential in combating drug trafficking.
The Hemaya International Forum on Drug Issues began on Monday and runs until Wednesday.
dmoukhallati@thenational.ae
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12.30pm GP3 race (18 laps)
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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