Cocaine King

Forbes released its annual billionaires list yesterday and not surprisingly there are a lot fewer of them. One interesting new name did manage to sneak onto the list this year. Joaquin Guzman Loera of Sinaloa, Mexico, is tied for #171 on the list with an estimated fortune of $1 billion.

Guzman’s industry is euphamistically described as “shipping,” but “El Chapo” is Mexico’s most infamous drug lord and has a $5 million bounty on his head. Guzman is the first trafficker to make the list since Pablo Escobar in 1993.

For eight years Joaquín Guzmán Loera reportedly managed his international drug smuggling operation from behind bars while enjoying a lavish prison life with access to booze, women and a home entertainment system. Then in January 2001, facing extradition to the U.S., Guzmán slipped into a laundry cart and escaped.

Since then “El Chapo,” or Shorty, as he is called, has tightened his grip on Mexico’s drug trade as head of the Sinaloa cartel, one of the biggest suppliers of cocaine to the U.S. It is a lucrative business to be in these days. Thirty-five million people in the U.S. use narcotics or abuse prescription drugs, spending more than $64 billion annually. The Drug Enforcement Agency and other industry experts believe Guzmán, 54, has controlled anywhere from a third to half of the wholesale Mexican drug market over the past eight years. In 2008 Mexican and Colombian traffickers laundered between $18 billion and $39 billion in proceeds from wholesale shipments to the U.S., according to the U.S. government. Guzmán and his operation likely grossed 20% of that–enough for him to have pocketed $1 billion over his career and earn a spot on the billionaires list for the first time.

While others with ten-figure fortunes have criminal records, Guzmán is probably the only one for whom the U.S. government is offering a $5 million reward for his capture. “He clearly is a sociopath and willing to engage in high levels of violence, but he is skillful in managing these turbulent waters,” says Bruce Bagley, chairman of international studies at the University of Miami. While traditional drug cartels are built around a family hierarchy, Guzmán’s operates more as a confederation of different groups. He hires gangs that have peeled off from competitors, offering attractive profit sharing. “The Sinaloa cartel is kind of a new animal in a way. He offers them a better deal,” adds Bagley.

Guzmán grew up in the Pacific coast state of Sinaloa in a rural region that has produced big drug traffickers. The farm boy was likely exposed to the trade at a young age. Officials say he honed his drug-running skills working for different gangs, most notably as an airplane logistics expert for Miguel Angel Félix Gallardo, “El Padrino,” or the Godfather, the country’s leading trafficker at the time. Gallardo was arrested in 1989.

By the early 1990s Guzmán had started his own international firm. Business didn’t always run smoothly. In 1993, at the northern border, Mexican authorities seized a 7-ton shipment of cocaine, believed to be his, that was hidden in chili pepper cans. The same year rival gang members, apparently trying to kill Guzmán at the Guadalajara airport, bumped off a Catholic cardinal instead. Also that year he was captured and convicted for homicide and drug trafficking.

A 1995 U.S. indictment alleges he directed a vast network of employees and assets, including warehouses in California, New Jersey and Chicago; a tunnel, running 65 feet deep and 1,416 feet long, between Mexico and Otay Mesa, Calif.; an executive jet rental business; and railcars carrying cooking oil. At least one of his employees was in charge of paying off Mexican prosecutors and police, allegedly dropping $1 million in cash in 1991 for the release of Guzmán’s brother, “El Pollo,” from a Mexico City prison. (El Pollo was murdered in 2004.)

How long can Guzmán, who may be in Guatemala, continue to elude authorities? The Mexican government is trying to crack down on the murderous drug trade that has killed 6,000 people in the past year, including Guzmán’s son, who was gunned down in May. It has dispatched thousands of soldiers to hot zones. In November it arrested the nation’s top antidrug authority for allegedly agreeing to a $450,000-per-month deal to tip off drug traffickers about raids and arrests. That pressure, along with more pressure from rival drug gangs, appears to be making business harder for Guzmán but hasn’t persuaded him to get out of the industry.

“It is striking that even though his organization has suffered setbacks, he seems to have maintained the ability to traffic cocaine,” says Stephen Meiners, Latin America analyst at Stratfor, a global intelligence firm in Austin, Tex.; Stratfor pegs El Chapo’s net worth at $12 billion.