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By Tobar ANAGUA, Nicaragua Central America has become a crucial way station in the billion-dollar cocaine business, with traffickers shipping hundreds of tons northward from Colombia along the isthmus and increasingly infiltrating police and government agencies, U.S. and regional sources say. The recent killings of three Salvadoran legislators in Guatemala underscored the shift, intelligence sources say. The lawmakers were shot and their bodies set ablaze last month, allegedly by a group of Guatemalan policemen working on behalf of Mexican drug traffickers. All sorts of people have been swept up in the drug trade as the smuggling routes have changed, including impoverished fishermen, small-town mayors, legislators and high- ranking police officials.

In years past, the favored route was across the Caribbean to the southeastern United States. Now, with greater Mexican cartel involvement, the cocaine often moves up the coasts of Central America and overland through Mexico. Although it remains unclear whether the dead Salvadorans had ties to traffickers, other lawmakers from the country have been linked to the trade. Guatemalan officials have said the killings point to widespread infiltration of the police force by organized crime. The four police officers charged in the killings, including the head of organized-crime unit, were later slain in their prison cells, in a stunning raid by armed men who may have entered the facility with the aid of guards and prison officials.

An intelligence official working in the region said the slain police officers worked for a Mexican cartel that ships drugs along the Pacific coast of Central America. The officers were enforcers dedicated to rival traffickers, the source said. is a crime that can best be understood as part of the dynamic that sees drugs flow between Mexico and said a second intelligence official, referring to the killing of the legislators. The officials asked not to be named, given the sensitive political nature of the crime one of the victims was Eduardo Jose the son of the founder of El ruling party. Although drug trafficking has long been common in remote areas of the region, such as the Caribbean coast of Nicaragua, the growing power of Mexican cartels has increased the importance of Central America as a transshipment point.

Smuggling routes across the Caribbean have largely fallen into disuse thanks to U.S. interdiction efforts there, and Colombian drug producers have ceded the bulk of the transportation business to Mexicans. About of the estimated 780 tons of cocaine entering the United States each year passes through the hands of Mexican drug traffickers, according to U.S. studies. Mexican traffickers see Central America as a natural hub between their Colombian suppliers and the smuggling routes the Mexicans control on the U.S.

border. The America corridor is predominant transit route for cocaine destined for the United U.S. officials wrote in the 2007 National Drug Threat Assessment. Michael A. Braun, chief of operations for the U.S.

Drug Enforcement Administration, said in a 2005 congressional hearing that corrupting power of il- licit drug trafficking organizations on the governmental institutions of Central America significantly increases the difficulty of successful drug interdiction Central America will remain the primary transit zone for U.S.-bound drugs the foreseeable Braun added. The growing trade has reached areas of Central America where drug trafficking was rare just a few years ago. Police and military forces there are often undermanned and outgunned. small navy, for example, only has enough boats to patrol its coastline 12 days a month, officials say, a fact that helps shape the strategy. know what our limitations said Capt.

Roger Gonzalez Diaz of the Nicaraguan navy. On the Pacific coast, the Nicaraguan navy has no craft larger than 40-foot-long boats with outboard motors, vessels nearly identical to those the drug traffickers use. In fact, many of the boats are vessels that were discarded by smugglers, Gonzalez Diaz said. Operatives of Sinaloa cartel arrived on the Pacific coast two years ago, officials with National Police said. With their Mexican accents, the men stood out.

They were eager to buy old, abandoned farms along the beach. They look like farmers, but they bought several tractors. They collected boats, too, but they look like fishermen. tractors were to build new airstrips and also to rehabilitate old said a Nicaraguan police officer who specializes in drug intelligence. One of the men was Samuel Gutierrez, a Colombian with Mexican identity documents, police said.

He and two brothers from Mazatlan, Jorge and Roberto Garcia Villasenor, were air and sea police said. The drug cartel operatives soon found themselves in a cat- and-mouse game with police leading to a plane crash on a rural highway and the arrest of a Mexican couple with nearly $300,000 in cash at a Managua airport. confiscated three tons of said an intelligence official with national police. hit them Nearly all of the cocaine that enters the United States is produced in Colombia, according to U.S. studies.

Most of it enters the U.S. through a two-stage process in which it is offloaded and stored at least once in Mexico or Central America. Cocaine is shipped out of Colombia by sea and air, usually in amounts of a ton or more, through what U.S. officials call transit the stretch of ocean between Colombia and Mexico. Sometimes the traffickers hopscotch up the coast from Colombia to Panama, Costa Rica and other countries in the boats.

Or they may take a more circuitous route in a larger ship that will travel around the Galapagos Islands in the Pacific southwest and later offload to smaller vessels. Once in Mexico, the drug traffickers benefit from well- traveled smuggling routes protected by corrupt state and local officials, as they move their shipments northward overland to the U.S. border. A war among competing cartels to control those routes, known as in Mexico, led to more than 2,000 killings last year. The various routes through the pass through the beaches of Belize, seaside villages in Honduras and ports along the Pacific coast of Mexico and many other places, according to data from the U.S.

Joint Interagency Task Force South, based in Florida. In 2005, U.S. officials discovered, via satellite imagery, an in the Peten jungle of Guatemala where drug traffickers had disposed of light aircraft that brought shipments from South America. The drugs were eventually smuggled overland into Mexico. U.S.

officials said that Central American organized-crime groups, working with the Mexican and Colombian cartels un- der a subcontracting system, are reaping huge profits. That money, in turn, is fueling a crime wave, especially in Guatemala and El Salvador. In El Salvador, sources pointed to a key killing that went largely unnoticed in the local media: the 2005 shooting death of Jose Cortes outside a San Salvador nightclub. According to a Salvadoran academic who has studied the drug trade, Cortes controlled the retail drug trade in an urban region of El Salvador and was assassinated for trying to make connections with Colombian suppliers without the permission of other gang leaders. It was the first time officials had documented contacts between high-level Salvadoran gang leaders and Colombian traffickers, the source said.

Along the impoverished Pacific coast of El Salvador and Guatemala, mayors and other low-level officials in seaside towns find that the sums of money offered by the traffickers are often too tempting to resist. guy tells you that you can make $60,000 easily, very said one intelligence official who was not authorized to speak publicly. The same networks that smuggle drugs northward are responsible for shipping several billion dollars in cash southward, usually in $20 bills, DEA officials said. So vast is the money flow that it is routine to arrest couriers carrying $1 million in cash or more in Central America. The huge sums of money involved in the drug trade have already ensnared top officials in El Salvador.

Last year, William Eliu Martinez, a former Salvadoran congressman, received a 29-year prison sentence from a U.S. judge in Washington after being convicted of smuggling more than 30 tons of cocaine into the United States. If the privileged can be drawn into the drug trade, then what hope is there that a poorly paid policeman, soldier or sailor can resist the temptation? Capt. Gonzalez Diaz of the Nicaraguan navy asks himself that question often. a constant struggle with our he said.

tell them, would be tempted if they offered you $500 or $5,000. But for that, if you owe them anything, come after you or your wife and hector.tobar@latimes.com Hector Tobar is a Times staff writer. Special correspondent Alex Renderos contributed to this report from San Salvador. ILLEGAL DRUGS Smugglers bring havoc to Central America Antonio Aragon European Pressphoto Agency INTERCEPTED: Nicaraguan soldiers and police guard men arrested for allegedly transporting drugs. Increased U.S.

interdiction along Caribbean smuggling routes has resulted in cartels using land routes through Central America. 8 A new cocaine trade route to the U.S. cuts a path of corruption and bloodshed. By Daniel Gross offee addicts were shaken, and stirred, recently when a memo written by Starbucks Corp. founder and Chairman Howard Schultz was posted on the Internet.

Noting with a mixture of pride and horror that Starbucks has gone from 1,000 to 13,000 stores in 10years, Schultz expressed regret over a of decisions that, in retrospect, have led to the watering down of the Starbucks experience and what some might call the com- moditization of our Schultz wrote, call our stores sterile, cookie cutter, no longer reflecting the passion our partners feel about our The memo was seen as a rare example of brutal executive candor. Of course, to this it would have been more timely, say, five years ago, back when there was still a block in midtown Manhattan that have a Starbucks. But the Schultz memo is interesting and useful nonetheless, because it shows that even an iconic company that serves a highly addictive product can water down the im- mense value of its brand by expanding too far and too fast and in too many directions at once. Sadly, this is a fate that befalls many American companies. Time and again in recent years, seen small, cutting-edge and quirky brands gain critical mass only to lose their charm and customer appeal after they engage in breakneck expansion.

Why does this happen? Companies help it, in part because the huge macroeconomic forces that dictate corporate behavior impel them to expand too fast and too wide. But at the same time, the powerful psychological forces that dictate consumer behavior can cause customers to recoil from the chains they once loved. Many of best- known chains came of age in a period in which it was easy for companies to go public at a comparatively young age. And publicly held companies, whether they make turbines or tiramisu, are programmed to maximize efficiency and increase sales every quarter no matter what. Inevitably, this mentality leads to the cutting of corners.

In his memo, Schultz noted that increasing the scale of Star- bucks had led to a number of necessary corner-cuts: For instance, the introduction of that has caused stores to lose their distinctive aroma, or the decision to install automatic espresso machines. solved a major problem in terms of speed of service and Schultz noted, but the fact that we would remove much of the romance and theatre that was in play with the use of the Consumers can quickly punish companies that water down their offerings too much for the sake of scale. Consider the sad case of Krispy Kreme. A beloved icon of the U.S. South, Krispy chief selling point was a limited selection of sickly sweet doughnuts, made fresh on the premises.

When the chain began to expand along the East Coast in the 1990s, exiled Southerners and salivating locals queued on the chilly sidewalks, waiting for the red light to signal fresh glazed gut-bombs. But after Krispy Kreme went public in 2000, the company, eager to supercharge sales, started making doughnutsin central locations and distributing them, hours or even days later, for sale in convenience and grocery stores. Feh! The store- bought sugar rings quickly got stale. And so did Krispy Kreme. Soon after it was flogged on the cover of Fortune as hottest in July 2003, the stock collapsed.

In flat, borderless world, managers and investors now expect that a great business idea will and can instantly turn into a great global presence. These days, a suddenly hot company believes that it should be expanding in Canton, Ohio, at the same time it is expanding in Canton province in China. Schultz noted that the need to build so many outlets at once has resulted in that no longer have the soul of the past and reflect a chain of stores vs. the warm feeling of a neighborhood In other words, in order to turn into a Fortune 500 company, Starbucks had to start thinking and acting like one. And nothing saps the essence out of a creative, quirky brand faster than a bunch of senior vice presidents at a Fortune 500 company.

Snapple, for from obscurity to household name in the early 1990s based on its funky flavors and offbeat advertising campaign, which fea- tured Wendy Kaufman, a heavyset employee of the company with a thick Long Island accent. The impressive growth attracted the attention of the conglomerate Quaker Oats which paid a whopping to buy Snapple in 1994. Of course, the Quaker Oats crowd decided the suddenly big brand needed advertising that was more professional and high- concept. In 1996, when the company unceremoniously canned the Snapple Lady, the backlash in the marketplace was almost instantaneous. Sales plummeted, and in May 1997, Quaker Oats sold Snapple at a fire sale price of $300million.

One of the first acts of the acquirer, Triarc Companies, was to bring back Kaufman as a spokesperson. The Snapple case illustrates how important consumer psychology is to the well-being of brands. Part of the original lure of Starbucks was that its arrival bestowed a certain cultural significance on town or neighborhood. No longer. When a chain becomes of every place, no longer of any place.

The first California Pizza Kitchen, which opened in Beverly Hills in 1985, with its then- exotic wood-burning ovens and Thai pizza, became part of the local, experience. But now that noshers can order mango tandoori chicken pizza at 180 outlets across the country, Angelenos no longer take pride in the chain. very little California in the California Pizza Kitchen any more. One of the greatest traps into which rapidly growing chains fall is expanding beyond their natural habitat into inhospitable climes. The first Restoration Hardware was founded in 1980, in Eureka, and became a haven for yuppies interested in retro home furnishings.

It grew slowly, mostly in California, and by 1998, the year it went public, it had 47 stores. But then, pow! Within three number of stores more than doubled as the company expanded into places such as Oklahoma, Mississippi and Missouri. This was like planting palm trees in Montana. It take. Selling expensive retro light fixtures was a brilliant business model when it was confined to a few markets, but a failure when extended beyond the coasts.

The overriding imperative of American business is to give customers what they want, whenever and wherever they want it. precisely what Starbucks has done in recent years. And precisely what is causing the barista-in-chief so much angst. Daniel Gross writes the Moneybox column for Slate. MARKETING Page4 WORLD REPORT A Special Section Produced in Cooperation with TheKoreaTimes CURRENT.