Construction sites are increasingly extorted in Peru

Extortion by criminal groups is now an accepted cost of doing business for small businesses and construction companies in Peru, according to experts. The practice is facilitated by corrupt police forces that charge money for protection and collaborate with criminal groups.

Juan Chavez, president of the Peruvian Chamber of Construction (Capeco) in the town of Piura, told El Comercio that 100 percent of businesses in the region of La Libertad and Piura are extorted. Other business owners said, "At any moment we might receive a letter with a bullet or explosives, or worse still, a visit from an armed group."

Juan Carrasco, an anti-extortion lawyer in Chiclayo, told El Comercio that extortion cases have risen by 50 percent, even though only 3 percent of businesses report being extorted.

Extortionists can charge upwards of $175,000 for the "security" of a construction site, or $18,000 per month. In some cases, extortionists demand construction companies pay the $175 weekly salaries of fake workers. These costs can add up to almost 3 percent of the value of the company's contracts.

Many cases of extortion go unreported due to police corruption and collusion with criminals. Some owners of construction companies say when they ask for police intervention they are charged $70 per day for the police to guard their construction site, or a daily $70 per agent if they want the police to "clean the area" of criminals.

Sometimes, however, paying the police achieves little because the extortionists pay them more -- between $1,000 and $1,800 -- to stay away, according to El Comercio.

InSight Crime Analysis

As InSight Crime has recently reported, the rise of extortions is a serious concern for Peru. Construction is not the only economic sector affected, with other businesses such as transportation companies also suffering.

SEE ALSO: Peru News and Profiles

What is perhaps most concerning about the rise of extortion in Peru is police complicity with criminals of the type highlighted by El Comercio. However, such corruption is not only present among low level police but also commanding officers; this past December a Peruvian police chief was arrested on charges he was working with the Nuevo Clan del Norte extortion gang after seven of his deputies reported being ordered to work on their behalf. While this corruption continues unchecked, extortion is likely to continue to rise in Peru.