Film piracy profits could fund terrorism: Rand Corp

Los Angeles: Organized crime is assuming a larger role in film piracy, according to a new report from the Rand Corp released Tuesday. Though profits from film piracy have been used only in a limited manner to support terrorism this was likely to increase in the future, the report warns.

According to the report, film piracy has taken its place alongside other criminal activities such as drug trafficking, money laundering, extortion and human smuggling –the hallmarks of organized crime. It says crime syndicates are now involved in the entire supply chain of illegal films, from their manufacture to street sales.

"Given the enormous profit margins, it's no surprise that organized crime has moved into film piracy," said Greg Treverton, the report's lead author and director of Rand's Center for Global Risk and Security. "The profits are high, and penalties for being caught are relatively low."

"If you buy pirated DVDs, there is a good chance that at least part of the money will go to organized crime and those proceeds fund more-dangerous criminal activities, possibly terrorism," Treverton said.

The report, also funded by a grant from the Motion Picture Association (the international arm of the Motion Picture Association of America), estimates that the worldwide motion picture industry loses as much as $18.2 billion annually because of piracy.

Rand researchers documented 14 case studies of film piracy in North America, Europe, South America, Russia and Asia, in which organized crime had a part to play.

It cites three cases where film piracy helped support terrorist groups:

* In the '90s, the Irish Republican Army employed many criminal acts, including film piracy, to support its efforts to drive the British from Northern Ireland. Though a political agreement in 1998 has brought an end to the violence, a part of the IRA continues to operate as a criminal enterprise which is also involved in counterfeiting, the study says.

* The D-Company, an organized crime group active in India, has been involved in film piracy since the '80s. The group became a terrorist organization when it carried out the "Black Friday" bombings in Mumbai in 1993 that killed more than 257 people and injured hundreds more.

* The zone, where the borders of Brazil, Argentina and Paraguay meet, is an important financing centre for Islamic terrorism, channeling $20 million annually to the Hezbollah. At least one transfer of $3.5 million was made by known DVD pirate Assad Ahmad Barakat, who was labeled a "specially designated global terrorist" by the US government in 2004.

The Rand report says that piracy levels are not likely to decline unless governments worldwide commit more resources to fighting it and devising tougher laws to protect intellectual property.

The report highlights the role played by digital technology in facilitating film piracy and making it even more profitable than other criminal enterprises, such as drug trafficking. In a startling case, it cites the case of a pirated DVD made in Malaysia for 70 cents which ultimately sold for $9 on the street in London - a markup of more than 1,000 percent. It said the profit margin was three times higher than the markup for Iranian heroin and also higher than profits from Colombian cocaine.

Researchers also point out that globally, legal liabilities for piracy are relatively light and prosecution rare.