The Only Liquid Investment Capital
Earlier this month, The Observer reported that “The vast profits made from drug production and trafficking are overwhelmingly reaped in rich ‘consuming’ countries–principally across Europe and in the US–rather than war-torn ‘producing’ nations such as Colombia and Mexico, new
research has revealed.”
The authors of that report provide compelling evidence that financial regulators in the west are reluctant to go after western banks in pursuit of the massive amount of drug money being laundered through their systems. Indeed, at the height of the global financial crisis Antonio Maria Costa, then the head of the UN Office on Drugs and Crime told The Observer “he has seen evidence that the proceeds of organised crime were ‘the only liquid investment capital’ available to some banks on the brink of collapse during the financial crisis. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.”
“Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities… There were signs that some banks were rescued that way.” While Costa “declined to identify countries or banks that may have received any drugs money, he said the money is now a part of the official system and had been effectively laundered.”
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| Brent Kovar |
Selective Prosecutions
In stark contrast to the impunity enjoyed by our capitalist overlords, the wall street journal reported that the U.S. Treasury Department “slapped sanctions on two more key operatives of the Sinaloa drug cartel.
The Journal informed us that “Kingpin Act sanctions were placed on Maria Alajandrina Salazar Hernandez and Jesus Alfredo Guzmán Salazar, the wife and son of Joaquín “Chapo” Guzmán, the fugitive drug lord who heads the Sinaloa Cartel.”
In announcing sanctions against the Guzmán clan, Adam Szubin, the director of Treasury’s Office of Foreign Assets Control, said in a statement: “This action builds on Treasury’s aggressive efforts, alongside its law enforcement partners, to target individuals who facilitate Chapo Guzmán’s drug trafficking operations and to pursue the eventual dismantlement of his organization, which is culpable in untold violence.”
While Chapo, Inc. earned honourable mention at No. 1153 on Forbes “World’s Billionaires List,” and may very well be responsible for the estimated 25% of illegal drugs trafficked into the United States as the DEA alleges, his place at No. 55 on Forbes list of “The World’Most Powerful People,” sandwiched between PIMCO founder and “Bond King” Bill Gross and Ahmed Shuja Pasha, Director-General of Pakistan’s Inter-Services Intelligence agency, speak volumes about the rather interesting juxtapositions between the worlds of finance, crime and covert operations.
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| Pedro Alatorre Damy |
Citing findings by two Colombian academics, Alejandro Gaviria and Daniel Mejía in their study, Anti-Drugs Policies In Colombia: Successes, Failures And Wrong Turns, Ed Vulliamy disclosed “that 2.6% of the total street value of cocaine produced remains within the country, while a staggering 97.4% of profits are reaped by criminal syndicates, and laundered by banks, in first-world consuming countries.”
Gaviria told The Observer, “Colombian society has suffered to almost no economic advantage from the drugs trade, while huge profits are made by criminal distribution networks in consuming countries, and recycled by banks which operate with nothing like the restrictions that Colombia’s own banking system is subject to.”
Where, inquiring minds can’t help but wonder, are Treasury’s “aggressive efforts” when it comes to those simple, yet readily demonstrable facts?
A case in point. Back in 2000 when Narco News publisher Al Giordano and Mario Menéndez, a reporter for the Mexican newspaper Por Esto! were sued in a New York court for libel by Banamex-Citigroup, Giordano wrote that “The true bosses of the illegal drug trade do not appear on the FBI ‘Most Wanted’ list.”
No, Giordano averred, “The Chief Operating Officers of drug trafficking are not Mexicans, nor Colombians: they are US and European bankers, those who launder the illicit proceeds of drug trafficking. Institutions like Citibank of New York–as this report documents–are the true beneficiaries of the prohibition on drugs and its illegal profits.”
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| Urrego Cardenas |
While Chapo Guzmán’s family are now targets of Treasury Department sanctions, what can we learn from recent reporting on Justice Department inaction when it came to prosecuting officers of America’s fourth largest bank, Wachovia, bought by Wells Fargo & Co. in 2008 at the height of the capitalist financial meltdown?
Bloomberg Markets Magazine and The Observer revealed in 2010 and 2011 respectively, that Wachovia was up to its eyeballs in laundering hot money for Colombian and Mexican drug cartels. One customer that Wachovia took on in 2004 was Casa de Cambio Puebla SA,” Bloomberg Markets reported. The Puebla, Mexico currency exchange was the brainchild of Pedro Alatorre Damy, a “businessman” who “had created front companies for cartelsAlatorre, and 70 others connected to his network were arrested in 2007 by Mexican law enforcement officials. Authorities discovered that the accused money launderer and airline broker for the Sinaloa Cartel controlled 23 accounts at the Wachovia Bank branch in Miami and that it held some $11 million, subsequently frozen by U.S. regulators. Although investigators from DEA and the IRS uncovered evidence that Wachovia had laundered as much as $378.4 billion, “a sum equivalent to one-third of Mexico’s gross national product–into dollar accounts from so-called casas de cambio (CDCs) in Mexico,” and later paid federal authorities $110 million in forfeiture, including a $50 million fine “for failing to monitor cash used to ship 22 tons of cocaine,” no criminal proceedings were ever brought against bank officers.
ten tons of cocaine on board, we learned that as many as 100 planes had been purchased
with hot money laundered through Wachovia Bank.Bloomberg’s Michael Smith reported, “a DC-9 jet landed at the international airport in the port city of Ciudad del Carmen, 500 miles east of Mexico City. On board army marines found 128 identical black suitcases “packed with 5.7 tons of cocaine, valued at $100 million. The stash was supposed to have been delivered from Caracas to drug traffickers in Toluca, near Mexico City. One of the two owners of the DC-9 (tail number N900SA) busted at the airport in Ciudad del Carmen that freighted 5.5 tons of cocaine had been appointed in 2003 to the Business Advisory Council of the National Republican Congressional Committee by then-Congressional Majority Leader Tom Delay,
The owner Brent Kovar had cloned a jet flown by the U.S. Transportation Security Administration. An official-looking seal read “Sky Way Aircraft, Protection of America’s
Skies”. When FAA and corporate records were searched revealed evidence indicating that the firm is part of a cluster of related air charter firms being used as dummy front companies to provide ‘cover’ for CIA flights.”
The companies involved include Royal Sons, Express One International, Genesis Aviation
and United Flite Inc. The second plane, a Gulfstream II business jet (N987SA) which crash landed on the Yucatán peninsula in 2007 with four tons of coke on board, was registered to a “Donna Blue Aircraft, Inc.” (DBA, or “doing business as”) and was previously employed as a “private charter” that did “terrorist” rendition flights for, who else, the CIA.The “key to the ill-fated Gulfstream II cocaine shipment is a prolific Colombian narco-trafficker and U.S. government informant named Jose Nelson Urrego Cardenas–who was recently arrested by police in Panama. Urrego allegedly played a major role in organizing the cocaine shipment as part of [Immigration and Customs Enforcement's] Mayan Express.
operation.
This may highlight the CIA’s role in managing, not eliminating, the global drug trade, Narco News disclosed that the Agency had a “quid-pro-quo” arrangement with Chapo Guzmán’s
Sinaloa Corporation’s “leadership and US government agencies seeking to obtain information on rival narco-trafficking organizations.” Indeed, one of the “private aircraft” used in Chapo Guzmán’s drug importation schemes was none other than that ill-fated Gulfstream II (N987SA) which crash-landed in the Yucatán in 2007. Purchased with funds laundered through Wachovia Bank, the business jet was subsequently linked by Council of Europe investigators to CIA ghost flights.
Jesus Vicente Zambada Niebla from the Chapo Guzmans Sinaloa cartel claims “he served as the ‘logistical coordinator’ for the ‘cartel,’ helping to oversee an operation that imported into the U.S. ‘multi-ton quantities of cocaine … using various means, including but not limited to, Boeing 747 cargo aircraft, private aircraft … buses, rail cars, tractor trailers, and automobiles’.Jesus Vicente Zambada Niebla claimed that a deal exsisted between the U.S and Guzman that “assured protection for the Sinaloa Cartel’s business operations while also undermining its competition–such as the Vicente Carrillo Fuentes organization out of Juárez, Mexico. The information provided by the Sinaloa Cartel to US agencies against its rivals assures a steady flow of drug busts and media victory headlines for US agencies and for the Mexican government.
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| Jesus Vicente Zambada Niebla |
This war of minds in the media is necessary for hoodwinking their citizens into believing that progress is being made in the drug war and thereby assuring the continued funding of bloated drug-war budgets and support for failed policies. The National Institute of Statistics and Geography of Mexico has released startling figures: 27,199 homicides were recorded in 2011; between 2007 and 2011, the total came to 95,632 murders.
The global drug connection is not just a lateral connection between CIA field operatives and their drug-trafficking contacts. It is more significantly a global financial complex of hot money uniting prominent business, financial and government as well as underworld figures. Martin Woods, a former senior detective with London’s Metropolitan police anti-drugs squad joined Wachovia in 2005 as the bank’s chief anti-money laundering investigator and paid a steep price for his diligence. Hounded out of his position when he refused to stop filing suspicious activity reports to headquarters in Charlotte over dubious deposit practices by Wachovia branches in London and Miami, Woods told The Observer: “New York and London have become the world’s two biggest laundries of criminal and drug money, and offshore tax havens. Not the Cayman Islands, not the Isle of Man or Jersey. The big laundering is right through the City of London and Wall Street.
UNODOC estimate that profits derived from narcotics rackets amount to some $600 billion annually and that up to $1.5 trillion dollars in drug money is laundered through seemingly legitimate enterprises.In U.S. federal court, conviction of possession of crack cocaine with a street value of only $378 results in a minimum sentence of 5-10 years in prison. The majority of the 2.3 million jailed people in the United States are there for small-time drug offenses.
So, the Wachovia executives, who admitted their guilt, must have gotten really long sentences for their $378 billion drug business, right? Not exactly. Not one Wachovia executive spent a night or even an hour in jail, although the value of their crime was 1 billion times greater than the average street dealer. The federal prosecutors, after making strong-sounding speeches for public relations purposes, settled the case by fining Wachovia (which by then had been acquired by Wells Fargo) only $110 million and penalizing them an additional $50 million. That amounts to about .04 percent of the $378 billion they laundered, and a mere 2 percent of Wells Fargo’s profits for 2010. Apparently, if you operate a multi-billion dollar bank, crime does pay. Contemporary capitalism is in no position to renounce the cartels. Because it is not the cartels that has transformed itself into a modern capitalist enterprise, it is capitalism that has transformed itself into a cartel, the rules of drug trafficking are also the rules of capitalism.