A CRIMINAL MELTDOWN -- CHAPTER 5 FROM "CROSSING THE RUBICON"

by Michael C. Ruppert

Globalization, the World Trade Organization, NAFTA, the IMF, the World Bank, the Great Bull Market of the 1990s, and the economic adulthood of the Empire have all been nurtured by the controlled and directed use of criminal money streams. One of the other great contributors to America's economic growth has been its willingness to profit from the destruction of the life, health, safety, and  happiness of its population. As I write, more than two million people are in prisons or jails in the United States. 1 Many of those prisons are run by private corporations. That the profits of crime and war, which are destructive of human life, of labor, of happy, healthy neighborhoods (whether in the US or in Afghanistan, Africa, and Iraq), are in effect a keystone of the global economy and a determinant of success in a ruthless competition, is a compass needle for human civilization. One cannot expect to follow the recipe for road-kill stew and produce a creme brulee.

So obvious has the situation become that it was addressed in February 2001 by a five-volume US Senate investigation of money laundering by foreign banks through the US banking system. Senator Carl Levin (D-Michigan), the ranking minority member of the Senate's Permanent Subcommittee on Investigations, issued a particularly scathing minority report but seemed to miss the obvious:

Through the Minority Staff's year-long investigation, its 450-page report, its close look at 10 high-risk foreign banks and its survey of 20 major US correspondent banks, and through the Subcommittee's two days of hearings last week with experts and correspondent banking  participants, we are getting a good understanding of the role of US correspondent banking in money laundering. Drug traffickers, defrauders, bribe takers, and other perpetrators of crimes can do indirectly -- through a foreign bank's correspondent account with a US bank -- what they can't readily do directly -- have access to a US bank account. The stability of the US dollar, the services our banks perform, and the safety and soundness of our banking system make access to a US bank account an extremely attractive objective for  money launderers. It is up to us -- the Congress, the regulators, the banks -- to try to stop money launderers from reaping the benefits of the prestigious banking system and stable economy we've worked so hard to achieve. 2

Levin's statement missed the fact that the US economy was directly benefiting from this practice. Specifically named as offending banks, all too willing to do business with shell banks or banks known to launder illegal money, were JP Morgan Chase, Citigroup, Bank of America, and First Union Bank. 3

That report, and testimony during the hearings, acknowledged that approximately $500 billion to $1 trillion in criminal money was laundered annually through the US banking system. While acknowledging that correspondent banking had been a significant factor in the looting of Russia and in aiding terrorist and drug organizations, the report did not fully explore money laundering through US securities markets or by US banks directly. It did, however, acknowledge that probably half of all laundered money, anywhere, got washed in the United States.

Perhaps the best summation of how the global economy actually functioned just prior to the World Trade Center attacks was offered in a brilliant two-part series by Le Monde Diplomatique in the spring of 2000. In part, the series said:

Indeed the engine of capitalist expansion is now oiled by the profits of serious crime. From time to time something is done to give the impression of waging war on the rapidly expanding banking and tax havens. If governments really wanted to, they could right this overnight. But though there are calls for zero tolerance of petty crime and unemployment, nothing is being done about the big money crimes.

Financial crime is becoming less visible, periodically coming to light in one country or another in the guise of scandals involving companies, banks, political parties, leaders, cartels, mafias. This flood of illicit transactions -- offences under national law or international  agreements has come to be portrayed just as accidental malfunctions of free market economics and democracy that can be put right by something called "good governance." But the reality is quite different. It is a coherent sstem closely linked to the expansion of modern capitalism and based on an association of three partners: governments, transnational corporations, and mafias. Business is business. financial crime is first and foremost a market, thriving and structured, ruled by supply and demand.

Big business complicity and political laissez faire is the only way that large-scale organized crime can launder and recycle the fabulous proceeds of its activities. And the transnationals need the support of governments and the neutrality of the regulatory authorities in order to consolidate their positions, increase their profits, withstand or crush the competition, pull off the "deal of the century" and finance their illicit operations. Politicians are directly involved, and their ability to intervene depends on the backing and the funding that keep them in power. This collusion of interests is an essential part of the world economy, the oil that keeps the wheels of capitalism turning.

Better still, under the aegis of international financial crime's number one partner, the US, we are seeing a rationalization, or rather, Americanization, of corruption techniques, seeking to replace the somewhat archaic practices of palm-greasing and secret (or open) "commission" payments by lobbying, which is more effective and presentable. It is a service industry in which the Americans have a considerable lead over their competitors, not only in know-how, but  also in the vast financial and logistical resources they are able to make  available to their multinationals: these include the secret services of the world's most powerful state apparatus, which, with the cold war over, have moved into economic warfare.

The only objective of the anti-corruption campaigns taken up by international organizations (World Bank, IMF, and OECD) is the "good governance" of a financial crime that is now an integral part of market globalizations under the leadership of the American democracy, the most corrupt on the planet.

Countries have opened their borders wider to criminal trades more than to any other kind. Doubtless they had little choice, since the real pioneers of globalization, the 1960s drugs traffickers, obviously did not ask anyone's permission before organizing trade in the world's most expensive and profitable commodity on a global scale. 3

Banamex

In May 2001 Citigroup paid more than $12 billion in cash to purchase Banco Nacional de Mexico, better known as Banamex. 4 Its owner, Roberto Hernandez, was widely known to be one of the largest drug money launderers in Mexico.  Hernandez is also one of the largest landowners on the Yucatan Peninsula, home to the famous vacation resort of Cancun. 5 Because of the drug smuggling activity  on Hernandez's land, the locals have come to call it "The Cocaine Peninsula." 6 

After buying Banamex, undoubtedly to gain control of its large cash flows, Citigroup placed Hernandez on their board of directors, right next to former CIA Director John Deutch and former US Treasury Secretary Robert Rubin.  Hernandez is known for his political clout. Bill Clinton vacationed on his property in 2000. 7 Hernandez also shared a media consultant with Texas Governor George W. Bush in 2000. 8 And the day after he was elected, Mexican President Vicente Fox paid a courtesy call to Hernandez, no doubt to express gratitude and ask for direction. 9

So overt was Hernandez's drug activity that, when the Mexican paper Por Esto published a series with photographs, Hernandez lost his libel suit in a Mexican court. The reason: Por Esto had proved its case. Subsequently, American expatriate journalist Al Giordano, publisher of the wildly successful <www.narconews.com>,  translated and expanded the Por Esto story in English. Hernandez sued again, this time in New York, in an attempt to quash Internet journalism by making journalists respond in a number of countries; the suit was again thrown out after many American journalists responded to Giordano's plight.

Pug Winokur and Enron

An outstanding homegrown example of Realeconomik is the career of Herbert "Pug" Winokur, Harvard man. Aside from playing a major role in the looting of  Russia, Harvard University also seems to have deep connections into the domestic economy of crime. Catherine Austin Fitts connected the dots in a 2002 article which told us that not only had Winokur chaired the Enron finance committee  and escaped federal scrutiny, he was also a lead investor in, and creator of, a company called DynCorp (now CSC-DynCorp) that has lucrative vaccine and  biowarfare contracts. Through documentary videos, military investigations, and even its employees, DynCorp has been connected to a child prostitution/sex slavery ring in Bosnia. 10 So ubiquitous is DynCorp that we will see its hands all over the map in connection with 9/11 and the ruling of America. DynCorp is everywhere. It manages the Congressional telephone system. Along with Lockheed-Martin, it does the computerized bookkeeping for a dozen federal agencies including the DoD and HUD, which have lost (or allowed to be stolen) trillions of taxpayer dollars. It also has a contract to manage the police and court systems in US-occupied Iraq.

Winokur's connections to Enron, DynCorp, and the Harvard Endowment (which, during the Clinton years, saw its assets increase from 3 to 19 billion dollars) demonstrate that quite often the key players escape mainstream scrutiny altogether. However, a group of diligent Harvard students did publish a series of  investigative reports starting in October 2002 that shed unwanted light on Winokur's career and ultimately forced his resignation from the board of the Harvard Endowment. 11 Among other revelations were the facts that Harvard had made direct financial investments bailing out an ailing Harken Energy Corporation, then run by George W. Bush, and that, through its investment arm, High Fields Capital, it had dumped large quantities of Enron stock just before it crashed: insider trading at its best. 12

Conveniently, DynCorp's financial auditor until the company's merger with CSC in 2003 was Arthur Andersen, the same company that handled Enron's books. The new firm, CSC-DynCorp now has a sole source contract to provide police and court services in occupied Iraq. 13

Europe vs RJReynolds

There has never been a spy novel or a political thriller that can compare with one remarkable battle that broke into public view in the fall of 2002. The combatants are the European economy and the American economy, and the fight is over dirty money.

On October 31, 2002, the European Union (EU), the official economic government for almost every nation on that continent, filed a Racketeering Influenced and Corrupt Organizations (RICO) lawsuit against the tobacco giant RJ Reynolds for knowingly laundering billions of dollars in criminal money derived from drug trafficking and other criminal enterprises. According to a press release issued by the EU, the RICO suit was filed after the technical dismissal of an original civil suit without prejudice, meaning that the dismissal had nothing to do with the merits of the case. The move to a RICO suit, which can lead to subsequent criminal prosecutions, indicates the threat that the EU sees to its economic survival. A press release from the EU tells more:

In August 2001 the EC launched a tobacco smuggling complaint with the US District Court for the Eastern District of New York against three US cigarette manufacturers -- Philip Morris, RJ Reynolds, and Japan Tobacco, together with the following Member States: Italy, Germany, France, Spain, Portugal, Greece, Belgium, The Netherlands, Finland, and Luxembourg. In February 2002, the US District Court in New York handed down a ruling which dealt separately with the  smuggling and money laundering parts of the complaint. 14

As critical as what the EU is alleging are the lengths to which the member nations have gone to in order to document RJR's criminal activity. A reading of  the 100-plus-page complaint reveals that the intelligence and law enforcement agencies of the member agencies were involved in the investigation of RJR's criminal activities. The press release continued:

The purpose of this new claim is to obtain injunctive relief to stop the laundering of the proceeds of illegal activities and to seek compensation for losses sustained. "Protecting the financial interests of the European Community and fighting against money laundering and fraud remains a top priority for the European Commission," said Commissioner Schreyer. 15

Not surprisingly, the suit also takes us through the Balkans, the Middle East, and territories where Islamic fundamentalist groups linked to Osama bin Laden have been very active. 16 The kind of intelligence documented in the suit could only have been gathered by national intelligence services, which gives further credibility to the allegations of economic warfare raised in the chapter on PROMIS  software.

For those in pathological denial

Now, some Americans will assert that the Bush administration is really trying to clean up the corporate corruption in the wake of the accounting scandals of 2002.  They will point out that the president has appointed a White House staff member to oversee a crackdown on corporate corruption. They will contend that the SEC, under a new accounting law, is getting tough. And they will assert that the  government itself, through the Treasury, is in ultimate control.

For the record: Larry Thompson, the deputy attorney general charged with leading the Bush anticorruption task force, has himself been sued by shareholders of Providian Bank Corp for participating in corrupt accounting practices and insider trading from 1997 to 2001. He sold almost $4 million in Providian stock just before the company's stock crashed after book-cooking was disclosed. 17 Harvey Pitt, the embattled SEC director and former board member of accounting firm Arthur Andersen, resigned his post at the SEC on November 5, 2002. 18  There are few who want the post, which, as many press reports later noted, may go unoccupied for some time.

And, after being asked by Senator Fritz Hollings to certify that the books of the United States government were as accurate as the government now expected corporate books to be, Budget Director Mitch Daniels refused to do it. 19 In an August 14, 2002 statement released on his Senate website, Hollings said, "I think Mr. Daniels's inaction also will make it more difficult for the Securities and Exchange Commission to come down on bad corporations. After all, how can the SEC throw the book at corporations, when the Administration fails to set a good example with its own accounting?"

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