Only way to stop the Drug Trade is to target the money-laundering Banks behind it
by Peter Myers on 30 Jun 2011 2 Comments

The Global Commission On Drug Policy sounds like a government body; but it’s an NGO, partly funded by George Soros via his Open Society Foundation. This Soros report on the impossibility of Drug Control makes no mention of the role of Banks, Tax Havens and the City of London in Money Laundering. Such laundering occurs not at the level of street sales, but at the Wholesale level, where wholesalers, as middlemen between producers and consumers, deposit funds into bank accounts or buy assets with them.


The small growers, eg in Afghanistan and Columbia, would not produce their crops unless they were paid for them. Between them and the consumers in the West come several middlemen, who concentrate the supply and distribution. Their role is to buy the crops from the myriad small growers, and send shipments to trade centres such as Dubai, where they are exchanged for cash, and from which they are forwarded to consumer countries.


Yet, the role of the US banks in facilitating this trade is “largely undocumented”. That is, undocumented in the media and in academia. Neither Soros nor Chomsky, in their numerous statements attesting the failure of the War on Drugs, make any mention of the role of banks in the Drug trade. Western governments are wasting billions of dollars fighting the Drug Wars, while the key middlemen (the banks) are right under their noses.


Chomsky, in putting the case for Decriminalization of Drugs, argues that the tobacco industry is a model. Tobacco use, although legal, has declined through PR campaigns, punitive taxes, and restrictions on advertising. But once legalized, the Drug industry would be harder to control. In Australia of recent decades, numerous kinds of gambling have been legalized, at the cost of many ruined lives, and there are now campaigns to save families by banning Poker Machines, but the Gambling industry uses its vast profits to lobby against restraint.


A distinction should be made between herbs and the synthetic products derived from them. Traditional field-grown herbs - cannabis, coca, opium, ephedra - should be legal on a small scale. The refined products, which concentrate the effect, should remain banned - thus Heroin, Cocaine, Amnphetamines etc.


Organic, traditional field-grown marijuana should be legal on a small scale. This would remove the stepping-stone effect to more serious drugs. Hydroponic marijuana and specially bred highly-potency field varieties, the likely cause of the Schizophrenia blamed on marijuana, should remain banned. Coca leaves, as a herbal product used to alleviate altitude sickness, should be legal; but the refined product, cocaine, banned.


The traditional opium poppy, as a herb, should be legal if grown on a small scale, but refined products eg heroin should remain banned, as should modern varieties of the herb, highly-bred to concentrate the active ingedients. Opium poppies are grown as a legal crop by farmers in Tasmania, to supply the medical industry. They’re quite beautiful; I used to live there. Injectable drugs, being concentrated, should remain banned except on medical prescription.


Whilst this position might seem to approach that of Chomsky and Soros, it’s actually quite different. Under this scheme, there would be greater personal autonomy for the little guy, but the high-level Drug industries would be smashed, through government control of the banks, shutting down the tax havens, and seizing the assets of bankers, lawyers and accountants involved in money-laundering. The best way to attack the Drug Trade is to get rid of the Tax Haven system and seize the assets of the bankers who launder funds.




City of London is a global money laundering centre - French parliamentary report (2001)

Report says Bin Laden has extensive interests in UK

Jon Henley in Paris

The Guardian, Wednesday 10 October 2001 00.00 BST


Osama bin Laden’s extensive financial interests in Britain are outlined today in a French parliamentary report that says the City is a money laundering haven for billions of pounds of tainted and terrorist money.


Up to 40 companies, banks and individuals based in Britain can legitimately be suspected of maintaining direct or indirect relations with the terrorist, according to a 70-page annexe, The Economic Environment of Osama bin Laden, attached to the French report. Compiled by an independent team of financial experts whose identity the French parliamentarians have undertaken not to reveal, the annexe reveals that the structure of Bin Laden’s financial network bears a striking similarity to that used by the collapsed BCCI bank for its fraudulent operations in the 1980s.


“This document clearly shows the great permeability of the British banking and financial system and the fragility of the controls operated at its points of entry,” write the authors of the French report, a copy of which has been obtained by the Guardian. The annexe establishes numerous links between Bin Laden with international arms and oil dealers and even members of the Saudi elite.


It also pinpoints the relationship and its subsequent breakdown between Osama bin Laden and his family’s holding company, Saudi Bin Laden Group, and its multiple subsidiaries, investments and offshoots in Europe. Many of the individuals concerned, several with British connections, were also involved in various senior roles with BCCI, the report says. Hundreds of banks and companies are mentioned, from Sudan, Geneva and London to Oxford, the Bahamas and Riyadh.


The names of half a dozen former BCCI clients and officials, including Ghaith Pharaon, wanted by the US authorities for fraud, and Khalid bin Mahfouz, a Saudi banker who was closely involved with the bank before it was closed down by the Bank of England in 1991, recur throughout the annexe and are directly linked to Bin Laden through banks, holding companies, foundations and charities, at least one of which, the International Development Foundation, has its headquarters in London.


“The convergence of financial and terrorist interests, apparent particularly in Great Britain and in Sudan, does not appear to have been an obstacle with regard to the objectives pursued [by Bin Laden],” the annexe concludes. “The conjunction of a terrorist network attached to a vast financing structure is the dominant trait of operations conducted by bin Laden.”


The Bin Laden study appears as an appendix to a French parliamentarians’ report that blames lax and outdated legislation, inadequate enforcement and the lack of political will to challenge powerful commercial interests for the City’s status as a global money laundering centre.


The exhaustive 180-page report is based on interviews with senior Metropolitan police officers, leading City regulators and European judges investigating cross-border financial crimes in Spain, Belgium and France.


“Those responsible for combating financial crime are depressed and discouraged by an archaic and dysfunctional system,” said the author, Arnaud Montebourg, a Socialist MP. “The British authorities must realise that they have fallen badly behind.” The report, titled The City of London, Gibraltar and the Crown Dependencies: offshore centres and sanctuaries for dirty money, says criminal organisations “have been able to exploit to their profit the reckless financial deregulation of the 1980s”, which Britain has failed to accompany with “the security measures demanded for all too long by the battle against money laundering and financial crime”.


Between 1986 and 1998, only 357 money laundering cases came to trial in London, compared with 538 in Italy and 2,034 in the United States in 1995 alone.


Wells Fargo & Bank of America launder Mexican drug money; gangs “cannot work without a bank”

Banks Financing Mexico Gangs Admitted in Wells Fargo Deal

Michael Smith - Tue Jun 29 04:00:01 GMT 2010


June 29 (Bloomberg) -- Bloomberg Markets Magazine senior writer Michael Smith discusses the use of Wachovia Corp., Bank of America Corp. and others by Mexican drug cartels to launder funds. In the magazine’s August 2010 issue, Smith reports that Wells Fargo & Co., which bought Wachovia in 2008, admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers. Smith speaks with Betty Liu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)


Just before sunset on April 10, 2006, a DC-9 jet landed at the international airport in the port city of Ciudad del Carmen, 500 miles east of Mexico City. As soldiers on the ground approached the plane, the crew tried to shoo them away, saying there was a dangerous oil leak. So the troops grew suspicious and searched the jet. They found 128 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, Mexican prosecutors later found. Law enforcement officials also discovered something else.


The smugglers had bought the DC-9 with laundered funds they transferred through two of the biggest banks in the US: Wachovia Corp. and Bank of America Corp., Bloomberg Markets magazine reports in its August 2010 issue.


This was no isolated incident. Wachovia, it turns out, had made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers -- including the cash used to buy four planes that shipped a total of 22 tons of cocaine.


The admission came in an agreement that Charlotte, North Carolina-based Wachovia struck with federal prosecutors in March, and it sheds light on the largely undocumented role of US banks in contributing to the violent drug trade that has convulsed Mexico for the past four years. ...


To make their criminal enterprises work, the drug cartels of Mexico need to move billions of dollars across borders. That’s how they finance the purchase of drugs, planes, weapons and safe houses, Senator Gonzalez says. “They are multinational businesses, after all,” says Gonzalez, as he slowly loads his revolver at his desk in his Mexico City office. “And they cannot work without a bank.”

[Contact Michael Smith in Santiago, Chile, at]


Drug money “liquid investment capital”, saved banks from collapse during GFC - UN advisor

Drug money saved banks in global crisis, claims UN advisor

Drugs and crime chief says $352bn in criminal proceeds was effectively laundered by financial institutions

Rajeev Syal, The Observer, Sunday 13 December 2009


Drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis, the United Nations’ drugs and crime tsar has told the Observer. Antonio Maria Costa, head of the UN Office on Drugs and Crime, said 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 last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.


This will raise questions about crime’s influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago. “In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system’s main problem and hence liquid capital became an important factor,” he said.


Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said. “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.” Costa declined to identify countries or banks that may have received any drugs money, saying that would be inappropriate because his office is supposed to address the problem, not apportion blame. But he said the money is now a part of the official system and had been effectively laundered.


“That was the moment [last year] when the system was basically paralysed because of the unwillingness of banks to lend money to one another. The progressive liquidisation to the system and the progressive improvement by some banks of their share values [has meant that] the problem [of illegal money] has become much less serious than it was,” he said.


The IMF estimated that large US and European banks lost more than $1tn on toxic assets and from bad loans from January 2007 to September 2009 and more than 200 mortgage lenders went bankrupt. Many major institutions either failed, were acquired under duress, or were subject to government takeover.


Gangs are now believed to make most of their profits from the drugs trade and are estimated to be worth £352bn, the UN says. They have traditionally kept proceeds in cash or moved it offshore to hide it from the authorities. It is understood that evidence that drug money has flowed into banks came from officials in Britain, Switzerland, Italy and the US.


British bankers would want to see any evidence that Costa has to back his claims. A British Bankers’ Association spokesman said: “We have not been party to any regulatory dialogue that would support a theory of this kind. There was clearly a lack of liquidity in the system and to a large degree this was filled by the intervention of central banks.”


[This material is at]

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