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Tuesday, November 08, 2005
FTR #531 Interview with Lucy Komisar about Offshore
Featuring the brilliant investigative journalist Lucy Komisar, this
program highlights the use of “Offshore” entities to evade taxes,
maximize corporate profits and finance a variety of criminal
enterprises. Much of the first side of the program consists of analysis
and discussion of insurance giant AIG and its prolific use of
“offshore” scams. In addition to presenting AIG’s pioneering devlopment
of “captive” reinsurance companies to launder profits and evade taxes,
the program highlights AIG’s use of Coral Reinsurance for a variety of
illegal gambits. It should be noted that AIG’s illegal operations have
been aided by a number of powerful and influential people. Much of the
second side of the program consists of review of the pivotally
important Clearstream network, and its use by intelligence agencies,
corporations, criminal syndicates and terrorist organizations.
Program Highlights Include: A working definition of “Offshore;” the
links of AIG to the intelligence community; assistance given to AIG’s
scams by luminaries such as Henry Kissinger and former Secretary of the
Treasury Richard Rubin; Clearstream’s use of unregistered accounts; the
role of the Clearstream network in the Banco Ambrosiano, October
Surprise and BCCI scandals; the role of the Clearstream network in the
financing of Al Qaeda and 9/11; the role of the Clearstream network in
the machinations of the Russian criminal networks of Mikhail
Khordokovsky; discussion of the “Bermuda Inversion” gambit; discussion
of “Transfer Pricing;” discussion of an organization formed by Lucy
Komisar that is working to eliminate corporate tax evasion through the
use of “offshore.”
1. In this return appearance by the formidable Lucy Komisar, we
begin the discussion of “Offshore” with a functional definition: “DAVE:
‘Define ‘Offshore’ for us, Lucy.’ LUCY: ‘Offshore financial centers
are, mostly, confidential and parallel financial systems segregated
from the traditional banking structure of the jurisdiction and
restricted to non-residents. There are more than 4000 offshore banks
thought to exist in about 70 offshore jurisdictions. They lack the
regulation and supervision of banks found in developed onshore
jurisdictions. In many OFCs, a bank can be formed, registered and its
ownership placed in the hands of nominee directors via the Internet.
There are few, if any, disclosure requirements, bank transactions are
free of exchange and interest rate restrictions, there are minimal or
no capital reserve requirements, and transactions are mostly tax-free.
Some OFCs permit the licensing and registration of ‘shell banks’ that
exist only on paper and do not have a physical presence. They generally
have legal frameworks designed to obscure the identity of the
beneficial owner. Some OFCs offer the ability to form and manage
secretly a variety of international business companies (IBCs), trusts,
investment funds and insurance companies, many with nominee - that is
front -directors, nominee officeholders and nominee shareholders.’
2. Much of the program focuses on the scandals surrounding the
insurance giant AIG. We begin with an introductory discussion of this
enormous corporation and its position in the corporate landscape.
“DAVE: ‘Now, let’s turn to the subject of insurance giant AIG, the
focal point of two of your Alternet articles. Tell us about the
company’s size and importance in the industry and the corporate
landscape in general.’ ‘LUCY: ‘AIG is the world's second largest
financial conglomerate and the largest underwriter of commercial and
industrial insurance. In 2003, AIG reported net income of $10 billion.
It has $648 billion in assets, a market value of $195 billion, $77
billion in sales and $6.5 billion in annual profits. It has operations
in 130 countries and nearly 77,000 employees. It ranks third on Forbes'
list of the world's biggest companies, after Citigroup, and General
Electric.”
(Note that the material on AIG was drawn from Lucy Komsar’s two
articles written for AlterNet: “The Fall of a Titan” by Lucy Komisar;
AlterNet; 3/17/2005; “Take the Money and Run Offshore” by Lucy Komisar;
AlterNet.)
3. AIG and its CEO Maurice [“Hank”] Greenberg are very closely
related with the intelligence community. “DAVE’ ‘Tell us about AIG
chief Maurice [Hank] Greenberg, and his relationship to the
intelligence community.’ ‘LUCY: ‘The American International Group at
its origins was linked to the OSS (Office of Strategic Services) the
forerunner of the CIA. It grew from the Asia Life/C. V. Starr companies
founded by Cornelius Starr who started his insurance empire in Shanghai
in 1919, the first westerner to market insurance in China. Starr served
with the OSS during World War II, and the Starr Corporation, located in
the same building as the OSS in New York, provided intelligence on
shipping, manufacturing and industrial bombing targets in Asia and
Germany. When Casey became CIA director in the Reagan Administration,
he wanted Greenberg to be his deputy, but Greenberg decided to stay
with AIG. After the Ames scandal, Sen. Spector floated his name as a
replacement of Woolsey, but the job went to Tenet.’” (Idem.)
4. AIG features a number of luminaries on its board of directors and
international advisory boards: “DAVE: ‘Tell us about some of the
prominent people on the board of directors and international advisory
boards of AIG.’ LUCY: ‘Henry Kissinger chairs AIG's International
Advisory Board. Its board of directors includes William S. Cohen,
Former United States Secretary of Defense and Senator, Caria A. Hills,
Former United States Trade Representative, Richard C. Holbrooke, Former
United States Ambassador to the United Nations.’’ (Idem.)
5. AIG’s illegal and/or unethical stratagems feature a pioneering
use of “captives.” “DAVE: ‘Let’s turn to the subject of what AIG does.
What are ‘captives’ and how does AIG use them?’ LUCY: ‘A captive is an
insurance company that is owned by the company it insures - and has
that company as its only client. Reinsurance is insurance that an
insurance company buys so that if it has to pay out a claim, it doesn't
take all the risk. I discovered and reported on a case where AIG used a
reinsurance company secretly owned by its client's CEO to help him
evade taxes, and by the way, to increase AIG profits in a way that
cheated the client's stockholders. I wrote about the case on Alternet,
but it has not been reported in the corporate press. Victor Posner, who
died in 2002, was a crook known as the original ‘corporate raider,’
famed for engineering hostile takeovers of companies and looting them.
He had a history of corrupt dealings. He owned a Delaware factory
called NVF that made Vulcan rubber. NVF had a workers compensation
policy with an AIG company, which reinsured it with Chesapeake, a
reinsurance company based in Bermuda, an offshore center. It turned out
that Chesapeake was owned by Posner. In the early 90s, a Delaware
insurance investigator discovered that NVF was paying twice the market
rate to AIG for the insurance. The transaction meant all the parties
came out ahead: AIG would keep a portion of the inflated NVF premium
before sending the rest to Chesapeake, which meant AIG would have a
higher commission. Posner would write off the entire amount as a
business expense and enjoy the extra cash in Bermuda, tax free. A
former Delaware insurance regulator told me, ‘This was not an isolated
case with Vulcan. AIG did that a lot.’ He said, ‘AIG helped companies
set up offshore captive reinsurance companies. AIG would then
overcharge on insurance and pay reinsurance premiums to the captives,
giving the captive owners tax-free offshore income.’ However, the
Delaware Insurance Department took no action against the insurer. When
I gave AIG the details of this scam, company spokesman Andrew Silver
told me, ‘We don't have any comment on that.’ AIG declares on its
website that it ‘pioneered the formation of captives almost 60 years
ago,’ and it offers management facilities to run the captives in
offshore Barbados, Bermuda, Cayman Islands, Gibraltar, Guernsey, Isle
of Man, and Luxembourg - all places where corporate and accounting
records are secret and taxes minimal or nonexistent.’’ (Idem.)
6. AIG also used offshore insurance interests to move debt off its
books, thereby making the company appear to be more profitable than it
actually was. Of course, this did nothing to damage the price of its
stock. “DAVE: ‘What else did [does] AIG engage in that was illegal?’
LUCY: ‘In the late 90s, four state insurance departments New York,
Delaware, Pennsylvania and California were aware that AIG was moving
debt off its books via the use of an offshore insurance company it
secretly set up and controlled. But despite clear evidence of
wrongdoing, no sanctions were ordered. State laws require insurance
companies to keep a certain amount of capital available to pay out
claims. If they have reinsurance, that amount can drop. The reinsurer,
of course, has to be an independent company; the risk isn't reduced if
it's just moved to another division of the same company.’” (Idem.)
7. The program turns to the subject of AIG’s Coral Re gambit, and
the considerable assistance provided by investment firm Goldman Sachs
to the furtherance of this scam: “‘In the mid-80s, two of AIG's
reinsurers failed. AIG now was going to show unacceptably high levels
of debt on its books from claims it would now have to pay out itself.
So Hank Greenberg decided to set up Coral Re, a reinsurance company, to
move his bad debts off AIG books. It set up a shell company in
Barbados, where capital requirements and regulation was minimal
compared to the U.S., where American regulators couldn't readily
discover AIG's involvement and where, as an added incentive, it could
move money out of reach of U.S. taxes. The scam company was arranged
with the help of Goldman Sachs then headed by Robert Rubin, who would
become President Clinton's Treasury Secretary and is now chairman of
the executive committee of Citigroup. It got some high-level corporate
executives to front for this supposedly independent company. But I have
a confidential memorandum by Goldman Sachs which told why the company
was formed. ‘AIG's interest in creating the company is to create a
reinsurance facility which will permit its U.S. companies to write more
U.S. premiums. For a U.S.-domiciled company, a high level of surplus is
required to support insurance premiums in accordance with U.S.
statutory requirements. The statutory requirements in Barbados are less
restrictive.’ The people who got this memo were corporate executives
who, in exchange for their names, were offered a guaranteed return of
$25,125 in the first year and $45,225 each subsequent year. They didn't
have to put up any money: they got financing from Sanwa Bank of Chicago
secured by the Coral Re shares, a guarantee of enough dividends from
Coral Re to cover the interest, and agreement they could hand off the
shares and debt whenever they chose. Who got this no-lose so-called
investment? They included serving or former chairmen of Reynolds
Metals; Kraft; Itel, Mennen Company; Morton Thiokol. The Arkansas
Finance and Development Authority, headed by a man who went to work in
the Clinton White House, became lead investor, although state law
banned it from buying stocks. Clinton was then governor of Arkansas. He
would make Rubin his Treasury Secretary. The new company was not a
legitimately independent business. For investors, there was no money at
risk; the board of directors never made a decision; and Coral Re had no
office of its own but was managed by American International Management,
a subsidiary of none other than AIG. Eventually, the scheme unraveled.
In 1992, Delaware examiners smelled a rat, AIG initially refused to
provide Coral Re documents to the examiners, and it took them a couple
of years to nail the connection. When AIG finally supplied Coral Re's
financial papers, the regulator was incredulous. He told me, ‘The books
were definitely cooked.’ But the cowardly regulators in Delaware,
Pennsylvania, New York and California, though they agreed in 1996 that
AIG owned Coral Re and that there was no transfer of risk, did not act
to punish AIG, just told it to stop using Coral Re. If Coral Re was an
AIG affiliate, it would have to pay taxes on its income. If it was
‘independent,’ that money came tax-free. But the IRS didn't have the
guts to go after them, either. AIG spokesman Andrew Silver simply
denied the validity of what all the insurance commissions found. He
told me that ‘AIG was not involved in the offer and sale of Coral Re's
shares. That was done by Goldman Sachs, which approached potential
investors with which it had relationships. AIG did not control or have
an equity interest in Coral Re.’ That of course it completely untrue.
Goldman Sachs failed to respond to inquiries about its role in setting
up Coral Re. In May this year (2005), New York State Attorney General
Eliot Spitzer filed suit against AIG and Greenberg, charging a pattern
of fraud through the use of ‘sham transactions’ that bolstered the
conglomerate's financial statements.” (Idem.)
8. Next, the broadcast reviews some of the “offshore” stratagems
used by corporations to inflate profits and invade taxes, beginning
with discussion of “the Bermuda Inversion.” (For more discussion of the
Bermuda Inversion, see: http://www.spitfirelist.com/f458.html.)
“DAVE: ‘Let’s review some of the various gambits used by corporations
to utilize ‘Offshore’ to their advantage, beginning with the ‘Bermuda
Inversion.’ LUCY” ‘In a ‘corporate inversion,’ a U.S. company creates a
new parent corporation based in a tax haven like Bermuda. The company
and any foreign subsidiaries become subsidiaries of the new parent—and
the entire corporation then benefits from tax reporting and regulations
that are often significantly less demanding and expensive than those in
the United States. In the past few years, about two dozen publicly
traded companies have reincorporated in Bermuda or announced they would
do so. Among them are Tyco International, McDermott International,
Ingersoll-Rand, Nabors Industries, a huge, Houston-based operator of
oil-drilling rigs. Since they are now foreign corporations, they evade
billions of dollars of US taxes. Shareholders - including pension funds
- lose too. In Bermuda, corporate laws shift the balance of control
from stockholders to a company's directors and severely limit
investors' right to sue. There is no treaty with Bermuda guaranteeing
the reciprocity of judgments—meaning stockholders may have a hard time
ensuring American court orders are enforced. In addition, stockholders'
ability to obtain information about Bermudan court decisions is
limited: the island does not even maintain an official court reporter.
Legislation to block the tax advantages of conversions was decimated by
the Republicans, which applied only to future conversions.”
(For specific documentation, see: http://www.spitfirelist.com/f458.html.)
9. Next, the program reviews “Transfer Pricing.” (For more about “Transfer Pricing”, see: http://www.spitfirelist.com/f458.html.)
“DAVE: ‘How about ‘Transfer Pricing’? LUCY” ‘Is a way of evading taxes
by allocating profits for tax and other purposes among parts of a
multinational corporate group or to secretly owned companies. These
front companies are always offshore in tax havens. Offshore ‘trading’
offices or companies handle imports and exports, buying a U.S. export
from a company at a sharply reduced paper cost and selling it abroad
for the real-world market value, so the exporting company makes no
profit. That stays with the tax haven trading company. In the reverse,
a company buys goods at a real price and ‘sells’ to the U.S. firm at a
grossly inflated one, so the U.S. firm has a huge cost to deduct when
it uses the item in manufacture or resells it at a loss. Two US
professors used customs data to examine the impact of over-invoiced
imports and under-invoiced exports on U.S. federal income tax revenues
for 2001. The findings were staggering. Would you buy plastic buckets
from the Czech Republic for $973 each, tissues from China at $1,870 a
pound, a cotton dishtowel from Pakistan for $154? U.S. companies, at
least on paper, were getting very little for their exported products.
If you were in business, would you sell bus and truck tires to Britain
for $11.74 each, color video monitors to Pakistan for $21.90, and
prefabricated buildings to Trinidad for $1.20 a unit? After all the
deductions, the U.S. company has minimal profits. The offshore centers
levy no taxes on ‘profits’ claimed there. Comparing all the stated
export and import prices to real-world prices, the professors figured
the 2001 U.S. tax loss at $53.1 billion.” (Idem.)
10. A bipartisan senatorial team introduced legislation to curb the
ability of corporations to use Offshore to evade taxes: “DAVE: ‘This
past year, there was legislation introduced aimed at curbing these
abuses. Tell us about that.’ LUCY: ‘In July, Republican Senator Coleman
and Democratic Senator Levin introduced our ‘Tax Shelter and Tax Haven
Reform Act of 2005 which would, among other reforms, require economic
substance for transactions to be eligible for tax benefits and
strengthen the penalties for tax transactions lacking economic
substance.’”
11. Much of the rest of the program consists of review of the use of
the Clearstream network by corporations, banks, intelligence services,
criminal syndicates and terrorist organizations, often acting in
conjunction with one another. Lucy summarizes the Clearstream network,
its functions and its history. (For more about Clearstream, see: http://www.spitfirelist.com/f356.html; http://www.spitfirelist.com/f357.html; http://www.spitfirelist.com/f359.html; http://www.spitfirelist.com/f360.html; http://www.spitfirelist.com/f387.html; http://www.spitfirelist.com/f458.html; http://www.spitfirelist.com/f485.html.
In order to find specific documentary references for the points of
information that follow, access these “For The Record” descriptions,
utilizing the search function, available at: http://www.spitfirelist.com/FTR_search.html.)
“DAVE: ‘Lucy, let’s review the Clearstream network and how it was set
up. Let’s note in this context that ‘Offshore isn’t simply used by
corporations to amass illegal wealth. It’s also used by criminal
organizations, intelligence services and terrorist entities to move
finances illegally.’ LUCY: ‘Clearstream is a clearinghouse in
Luxembourg called Clearstream, which handles billions of dollars a year
in stock and bond transfers for banks, investment companies and
multinational corporations. It operates a secret parallel bookkeeping
system that allows its clients to hide the money that moves through
their accounts. In these days of global markets, individuals and
companies may be buying stocks, bonds or derivatives from a seller who
is halfway across the world. Clearinghouses like Clearstream keep track
of the ‘paperwork’ for the transactions. Banks with accounts in the
clearinghouse use a debit and credit system and, at the end of the day,
the accounts (minus ‘handling fees,’ of course) are totaled up. The
clearinghouse doesn't actually send money anywhere, it just debits and
credits its members' accounts. It's all very efficient. But the money
involved is massive. Clearstream handles more than 80 million
transactions a year, and claims to have securities on deposit valued at
$6.5 trillion. It's also an excellent mechanism for laundering drug
money or hiding income from the tax collector. Banks are supposed to be
subject to local government oversight. But many of Clearstream's
members have real or ‘virtual’ subsidiaries in offshore tax havens,
where records are secret and investigators can't trace transactions.
And Clearstream which keeps the central records of financial trades,
doesn't get even the cursory regulation that applies to offshore banks.
On top of that, it deliberately has put in place a system to hide many
of its clients' transactions from any authorities who might come
looking. According to former insiders: Clearstream has a double system
of accounting, with secret, non-published accounts that banks and big
corporations use to make transfers they don't want listed on the
official books. Though it is legally limited to dealing with financial
institutions, Clearstream gives secret accounts to multinational
corporations so they can move stocks and money free from outside
scrutiny.’” (For specific documentation, see: http://www.spitfirelist.com/f458.html.)
12. Next, the program reviews how the Clearstream network figures in
the Banco Ambrosiano scandal. For more about the Banco Ambrosiano
scandal, see RFA#’s 17-21—available from Spitfire—and use the Search
Function. “DAVE: ‘Tell us about the Clearstream network and the Banco
Ambrosiano scandal, currently in the news after the indictment of four
alleged conspirators for the murder of its chairman, former P-2 Lodge
member Roberto Calvi.’ LUCY: ‘By 1980, Ernest Backes had become No. 3
official of Cedel (the old name for Clearstream), in charge of
relations with clients. He was fired in May 1983. He told me the reason
given for his sacking was an argument with an English banker, a friend
of the CEO. ‘I think I was fired was because I knew too much about the
Ambrosiano scandal,’ Banco Ambrosiano was once the second most
important private bank in Italy, with the Vatican as a principal
shareholder and loan recipient. The bank laundered drug-and
arms-trafficking money for the Italian and American mafias and, in the
'80s, channeled Vatican money to the Contras in Nicaragua and
Solidarity in Poland. The corrupt managers also siphoned off funds via
fictitious banks to personal shell company accounts in Switzerland, the
Bahamas, Panama and other offshore havens. Banco Ambrosiano collapsed
in 1982 with a deficit of more than $1 billion. Bank chairman Roberto
Calvi was found hanged under Blackfriars Bridge in London; the death
was ruled a suicide. Michele Sindona, convicted in 1980 on 65 counts of
fraud in the United States, was extradited to Italy in 1984 and
sentenced to life in prison; in 1986, he was found dead in his cell,
poisoned by cyanide-laced coffee. (Another suspect, Archbishop Paul
Marcinkus, the head of the Vatican Bank, now lives in Sun City, Arizona
with a Vatican passport; U.S. authorities have ignored a Milan arrest
warrant for him.) Now several people are on trial in Italy for Calvi's
murder. Backes said that he and a colleague, who was found dead in
suspicious circumstance, moved all those transactions known later in
the scandal to Lima and other branches. Nobody even knew there was a
Banco Ambrosiano branch in Lima and other South American countries.’”
(For specific documentation, see: http://www.spitfirelist.com/f458.html.)
13. Much of the wrongdoing that surrounds Clearstream concerns the
use of its unpublished accounts: “DAVE: ‘Tell us about Clearstream’s
unpublished accounts, used and abused by major corporations, as well as
criminal syndicates, terrorist organizations and intelligence
services.’ LUCY: ‘Cedel/Clearstream violated its own statutes by
setting up unpublished accounts for industrial and commercial
companies. With accounts in their own names, companies could avoid
passing through banks or exchange agents to use the clearinghouse. They
thus skirted mandated due diligence and record-keeping. When Siemens
was proposed for membership, Backes says, some Cedel employees
protested that this violated Luxembourg law. However, management told
them that Siemens' admission had been negotiated at the highest level.
Among the major companies with secret accounts, Backes discovered the
Shell Petroleum Group and the Dutch agricultural multinational
Unilever, one of whose accounts was associated with Goldman Sachs. At
the discretion of Clearstream, clients can open ‘non-published’
accounts that do not figure in any printed document or record of
international financial transactions. When law enforcers ask to see
records, they don't exist. Unlike a bank, Clearstream has no effective
outside surveillance. It is audited by KPMG, one of the ‘big five’
international accounting firms. KPMG has either been ignorant of or has
overlooked the secret account system. Major companies use the secret
accounts. Backes discovered non-published accounts of the Dutch
agricultural multinational Unilever. The Shell petroleum group had a
non-published account in the name Shell Overseas Trading Ltd. The
German giant Siemens had four non-published accounts. Siemens has just
been accused of involvement in oil for food kickbacks to Saddam
Hussein. Among the international banks with the most secret accounts
are: Citibank (271); Barclays (200); Credit Lyonnais (23); and Japanese
company Nomura (12).’” (For more specific documentation, see: http://www.spitfirelist.com/f458.html, as well as: http://www.spitfirelist.com/f463.html .)
14. Continuing analysis of Clearstream’s role in major intelligence
scandals, the program reviews the use of the network by the
conspirators in the “October Surprise.” “DAVE: ‘In addition to the
Banco Ambrosiano and Iraqgate scandals, the Clearstream network
featured in many of the other major intelligence-related scandals of
the last quarter century or so. Tell us about Clearstream and the
‘October Surprise’—the sabotage of the Carter campaign by the
Reagan/Bush forces’ collaboration with the Iranian fundamentalist
regime.’ LUCY: ‘In November 1979, the U.S. Embassy in Iran was seized,
and 52 Americans were taken hostage. Their capture, and the Carter
administration's failure to win their release, became a major issue in
the 1980 presidential campaign. Carter had frozen $12 billion in
Iranian assets in U.S. banks, which was being claimed by American firms
and individuals who had lost property in the Islamic revolution.
American and Iranian officials were negotiating the amount of funds to
be released in return for freeing the hostages, and the amount to be
kept to settle claims. The Iranians also wanted Carter to release arms
that had been ordered and paid for by the deposed Shah. According to
numerous credible reports-many of which first appeared in In These
Times-Reagan campaign officials allegedly met with Iranian
representatives several times during the 1980 campaign, promising arms
and money if Iran delayed release of the hostages until after the
November election. This scandal would become known as the ‘October
Surprise.’ Reagan won the election, but Carter officials continued to
negotiate with the Iranians. Finally, around the turn of the year, an
accord was reached under which the United States would release $4
billion but no arms. However, the Iranians did not release the hostages
immediately. A few days before Reagan's inauguration, Ernest Backes
recalls, Cedel got an urgent joint instruction from the U.S. Federal
Reserve Bank and the Bank of England to transfer $7 million in bearer
bonds-$5 million from an account of Chase Manhattan Bank and $2 million
from an account of Citibank-both in offshore secrecy havens. The money
was to go to the National Bank of Algeria, and from there to an Iranian
bank in Teheran. Backes was informed that the $7 million was part of
sums being sent from around the world and concentrated in the Algerian
bank. He was told the transfers were linked to the fate of the
hostages. The Fed and the Bank of England were not members of Cedel,
and by its rules had no right to order the transfers. Backes' two
superiors were absent. He informed the president of the Cedel
administrative council, Edmond Israel, then acted to execute the order.
(Israel, now honorary chairman, did not respond to phone and e-mail
messages.) On January 20, 1981, about 15 minutes after Reagan took the
oath of office, the hostages were finally freed. Reagan and Vice
President George Bush have always denied the payoff happened.’” (For
specific documentation, see: http://www.spitfirelist.com/f360.html; http://www.spitfirelist.com/f485.)
15. The Clearstream network was also utilized by the BCCI. Note that
the milieu of the BCCI figures prominently in the investigation of
9/11, and that FBI chief Robert Mueller was in of the badly attenuated
“investigation” of BCCI by Congress. “DAVE: ‘Tell us about Clearstream
and BCCI.’ LUCY: ‘When Mayor Giuliani was assistant prosecutor in the
investigation of the Bank of Credit and Commerce International (BCCI)
in the early 1990’s, he received documents from Backes. BCCI was a
Pakistani-run bank registered via shell companies in the Cayman Islands
that used secret accounts to effect an $8 billion global
money-laundering fraud. Before it was shut down in 1991, BCCI was used
by U.S. and Saudi intelligence to fund the mujahideen, then fighting
the Soviet-supported government of Afghanistan.” (For specific
documentation about the BCCI/Clearstream connection, see: http://www.spitfirelist.com/f356.html; http://www.spitfirelist.com/f357.html.)
16. Clearstream appears to have been involved in the financing of Al
Qaeda through the Bank Al Taqwa and SICO. (For more about Clearstream
and 9/11, see—among other programs--http://www.spitfirelist.com/f456.html; http://www.spitfirelist.com/f498.html and http://www.spitfirelist.com/f499.html.)
“DAVE: ‘You’ve also written about the Clearstream involvement with the
Bank Al Taqwa, the main financial institution of the Muslim Brotherhood
and a major source of funds for Al Qaeda, according to many
intelligence sources.’ LUCY: ‘Following the September 11 attacks on the
World Trade Center and the Pentagon, the U.S. started focusing its
investigation on the financial trail of Osama bin Laden and the
al-Qaeda network. Like any other large, global operation, international
terrorists need to move large sums of money across borders
clandestinely. In November, U.S. authorities named some banks that had
bin Laden accounts, and it put them on a blacklist. One was Al
Taqwa-’Fear of God’-registered in the Bahamas with offices in Lugano,
Switzerland. Al Taqwa had access to the Clearstream system through its
correspondent account with the Banca del Gottardo in Lugano, which has
a published Clearstream account No. 74381. But Bin Laden may have other
access to the unpublished system. In what he calls a ‘spectacular
discovery,’ A series of 16 unpublished accounts had been opened under
the name of the Saudi Investment Company, or SICO, the Geneva holding
company of the bin laden family's Saudi Binladen Group it is run by Bin
Laden's brother, Yeslam Binladen. SICO is associated with Dar
AI-Maal-AI-lslami (DMI), an Islamic financial institution also based in
Geneva and presided over by Saudi Prince Muhammed Al Faisal Al Saoud,
and which directs millions a year to fundamentalist movements. DMI
holds a share of the Al Shamal Islamic Bank of Sudan, which was set up
in 1991 and partly financed by $50 million from Osama bin Laden.” (For
more specific documentation, see: http://www.spitfirelist.com/f356.html; http://www.spitfirelist.com/f357.html.)
17. The Clearstream network has been utilized by the burgeoning
Russian organized crime/oligarch networks. “DAVE: ‘Lucy, you’ve also
written about the use of Clearstream by the interests of criminal
Russian oligarch Mikhail Khodorkovsky. This scandal has been portrayed
in the media as a reversion by Russia to the bad old days of the Soviet
Union, with the authoritarian central government repressing the budding
flower of Russian free enterprise. In fact, the Khordovsky case could
be described as a ‘Russian Enron,’ with American investors among the
main losers. Enlarge on that, if you would.’ ‘LUCY: ‘The Russian bank
Menatep is on the year 2000 list even though it officially failed in
1998. Menatep is implicated in a Russian Audit Chamber report in the
diversion of $4.8 million lent to Russia by the International Monetary
Fund in 1998. Clearstream's dealings with Russian banks are another
area of concern. Menatep Bank, which had been bought in a rigged
auction of Soviet assets and has been linked to numerous international
scams, opened its Cedel account (No. 81738) on May 15, 1997, after
Lussi visited the bank's president in Moscow and invited him to use the
system. It was a non-published account that didn't correspond to any
published account, a breach of Clearstream's rules. Menatep further
violated the rules because many transfers were of cash, not for
settlement of securities. ‘For the three months in 1997 for which I
hold microfiches,’ Backes says, ‘only cash transfers were channeled
through the Menatep account.’ ‘There were a lot of transfers between
Menatep and the Bank of New York,’ Backes adds. Natasha Gurfinkel
Kagalovsky, a former Bank of New York official and the wife of a
Menatep vice president, stands accused of helping launder at least $7
billion from Russia. U.S. investigators have attempted to find out if
some of the laundered money originated with Menatep, which they
believed had looted Russian assets. (The Justice Department declined to
comment on the investigation.) Even though Menatep officially failed in
1998, it oddly remained on the non-published list of accounts for 2000.
(Clearstream also lists 36 other Russian accounts, more non-published
than published.)’” (For specific documentation, see: http://www.spitfirelist.com/f458.html.)
18. The program concludes with presentation of the website for an
organization Lucy has founded (in partnership with others) that is
working to eliminate the offshore tax evasion by corporations. “DAVE:
‘We’re almost at the end of the interview, Lucy. Many listeners will be
asking themselves what can be done about this situation. You have
formed an organization to deal with the use of ‘Offshore’ to evade
taxes. Tell us about that group and how people can find out more about
it.’ LUCY: ‘I’ve worked with some associates to form The Tax Justice
Network. To find out what it is and how it works, contact http://www.taxjustice.net.”
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