Tuesday, January 16, 2018

Money Laundering "The Russian Laundromat and Blackpool Football Club"

From Lobster Magazine, Summer 2017:
The Laundromat is a 20 billion dollar offshore money laundering racket exposed last month by the Sarajevo-based Organized Crime and Corruption Reporting Project (OCCRP). Its deepest secrets are still hidden in the British Virgin Islands, where fewer than 25,000 residents of fifteen tropical islands host the registered offices of 800,000 offshore companies.

Researchers in the multinational OCCRP network have been tracking bankers who act as money launderers when they move the proceeds of both legal and illegal commerce – along with the profits of political corruption and tax evasion – out of Russia and Eastern Europe and into remote tax havens.

Between January 2011 and October 2014, the illegal network, known for years to bankers and businessmen in the former Soviet Union as The Laundromat, moved 20.8 billion dollars through Latvia and Moldova by false 1 accounting, from nineteen Russian banks, into the accounts of 5,140 companies at 732 banks in 96 countries.

In March 2017 OCCRP released details to 32 participating newspapers and news services worldwide. The Süddeutsche Zeitung in Munich immediately revealed that Deutsche Bank, the only remaining clearer of Latvian dollars with a US base, had processed 24 million US dollars for firms in the Laundromat scheme.

Deutsche Bank’s own analysis in 2015 had suggested that
‘There is strong evidence that a good chunk of the UK’s £133 billion of hidden capital inflows is related to Russia.’
Lucy Fitzgeorge-Parker of Euromoney described the part played by Latvian bankers:
‘. . . fictitious debts between UK shell companies were guaranteed by Russian entities, enforced by rigged Moldovan courts and then funnelled through the Latvian banking sector. Anti-corruption campaigners estimate that more than $20 billion of stolen money was washed by Russian officials and organized criminals before the scheme was exposed and shut down.’ 
In presenting its findings, the OCCRP’s opening online statement describes the scheme. 
‘Call it the Laundromat. It’s a complex system for laundering more than $20 billion in Russian money stolen from the government by corrupt politicians or earned through organized crime activity. It was designed to not only move money from Russian shell companies into EU banks through Latvia, it had the added feature of getting corrupt or uncaring judges in Moldova to legitimize the funds. The state-of- the-art system provided exceptionally clean money backed by a court ruling at a fraction of the cost of regular laundering schemes. It made up for the low costs by laundering huge volumes.’ 
Nicholas Shaxson, a consultant at Britain’s Tax Justice Network, has shown how offshore tax havens are now financially starving both the neo-liberal capitalist states and the European social democracies by diverting much needed tax revenue. In his Treasure Islands: Tax Havens and the Men Who Stole the World, he has this towards the end of the prologue:
‘Offshore connects the criminal underworld with the financial elite, the diplomatic and intelligence establishments with multinational corporations. Offshore drives conflict, shapes our perceptions, creates financial instability and delivers staggering rewards to les grands -- to the people who matter. Offshore is how the world of power now works.’ 
Then, in his first chapter, Shaxson quotes the economic academic Marshall Langer: 
‘. . .the most important tax haven in the world is an island . . .the name of the island is Manhattan. The second most-important tax haven in the world is located on an island. It is a city called London in the United Kingdom.’ 
Some big users of the Laundromat have been named. One of them is Georgy Gens, a Moscow businessman who owns the Lanit group , the information technology product distributor in Russia, for Apple, Samsung, and AsusTek Computer Inc (a Taiwanese multinational computer hardware and electronics company)....
...MUCH MORE (17 page PDF)