This article was first published July 21, 2010.
When investigative journalist Daniel Hopsicker broke the
story four
years ago that a DC-9 (N900SA) “registered to a company which once used
as its address the hangar of Huffman Aviation, the flight school at the
Venice, Florida Airport which trained both terrorist pilots who crashed
planes into the World Trade Center, was caught in Campeche by the
Mexican military … carrying 5.5 tons of cocaine destined for the U.S.,”
it elicited a collective yawn from corporate media.
And when authorities searched the plane and found its cargo consisted
solely of 128 identical black suitcases marked “private,” packed with
cocaine valued at more than $100 million, the silence was deafening.
But now a
Bloomberg Markets magazine report, “Wachovia’s Drug Habit,” reveals that drug traffickers bought that plane, and perhaps
fifty others, “with laundered funds they transferred through two of the biggest banks in the U.S.,” Wachovia and Bank of America.
The Justice Department
charge sheet against
the bank tells us that between 2003 and 2008, Wachovia handled $378.4
billion for Mexican currency exchanges, “the largest violation of the
Bank Secrecy Act, an anti-money-laundering law, in U.S. history.”
“A sum” Bloomberg averred, equal to one-third of Mexico’s current gross domestic product.”
Since 2006, some 22,000 people have been killed in drug-related
violence. Thousands more have been wounded, countless others
“disappeared,” torture and illegal imprisonment is rampant.
In a frightening echo of the Reagan administration’s anti-communist
jihad in Central America during the 1980s, the Bush and now, Obama
administration has poured fuel on the fire with some $1.4 billion in
“War on Drugs” funding under Plan Mérida. Much of that “aid” is destined
to purchase military equipment for repressive police, specialized
paramilitary units and the Mexican Army.
There is also evidence of direct U.S. military involvement. In June,
The Narco News Bulletin reported
that “a special operations task force under the command of the Pentagon
is currently in place south of the border providing advice and training
to the Mexican Army in gathering intelligence, infiltrating and, as
needed, taking direct action against narco-trafficking organizations.”
One former U.S. government official told investigative journalist
Bill Conroy, “‘Black operations have been going on forever. The recent
[mainstream] media reports about those operations under the Obama
administration make it sound like it’s a big scoop, but it’s nothing new
for those who understand how things really work’.”
But, as numerous investigations by American and Mexican journalists
have revealed, there is strong evidence of collusion between the Mexican
Army and the Juarez and Sinaloa drug cartels. A former Juarez police
commander told
NPR in
May that “the intention of the army is to try and get rid of the Juarez
cartel, so that [Joaquin "El Chapo" Guzman] Chapo’s [Sinaloa] cartel is
the strongest.”
The cosy relations among the world’s biggest banks, drug trafficking
organizations and the U.S. military-intelligence apparatus is not
however, a new phenomenon. What is different today is the scale and
sheer scope of the corruption involved. As Michel Chossudovsky points
out,
“This trade can only prosper if the main actors involved
in narcotics have “political friends in high places.” As legal and
illegal undertakings are increasingly intertwined, the dividing line
between “businesspeople” and criminals is blurred. In turn, the
relationship among criminals, politicians and members of the
intelligence establishment has tainted the structures of the state and
the role of its institutions, including the military.” (The Global
Economic Crisis: The Great Depression of the XXI Century, Montreal:Global Research, 2010, pp. 195-196)
While the Bloomberg story should cast new light on highly-profitable
links amongst major financial institutions and narcotrafficking
organizations in what may be protected drug rackets green-lighted by
corrupt officials, media silence, particularly by outlets such as The
Wall Street Journal and theFinancial Times, threaten to propel
what should be an international scandal into a one-off news item
scheduled for a trip down the memory hole.
“Cocaine One”
If, as New York Times columnist Thomas Friedman claims “the hidden
hand of the market will never work without a hidden fist,” then perhaps
too, drug cartels work their “market magic” with their own “hidden fist”
or, as the Russians like to say akrysha, a web of protectors–and
facilitators–drawn from business, finance, organized crime and the
secret world of intelligence.
Dubbed “Cocaine One” by Hopsicker, the DC-9 was curious for a number
of reasons, not least of which was the fact that “one of the chief
shareholders” of a dodgy outfit called SkyWay Aircraft “is a private
investment bank in Dallas which also raised funds for a Mexican
industrialist with reported ties to a Cali and Juarez Cartel narcotics
trafficker.”
More curious still, the airline kitted-out its fleet with distinctive
colors and a seal “designed to impersonate planes from the U.S. Dept.
of Homeland Security.” And when he
learned that
“SkyWay’s genesis can be traced to In-Q-Tel Inc., a secretive,
Arlington, Va., investment group owned, operated, and financed out of
the black box budget of the Central Intelligence Agency,” well you can
bet corporate media ran themselves ragged investigating that!
To top it off, when another drug plane crash landed in the Yucatan
Peninsula eighteen months later and broke apart, a Gulfstream II
business jet (N987SA) that spilled “4 tons of cocaine across a muddy
field,” Hopsicker
reported that
it had originated from the same network and used the same source for
its financing, the “Casa de Cambio Puebla SA, a country-wide network of
currency exchanges.”
And to make matters even more intriguing from a parapolitical perspective, after searching through FAA records Hopsicker
discovered that
the Gulfstream II business jet “was owned by a secretive Midwestern
media baron and Republican fund-raiser, who had a business partner who,
incredibly, owned the otherAmerican drug plane, the DC-9, recently
busted in Mexico.”
In fact, as Bloomberg investigative journalist Michael Smith learned
years later, these were the same planes and samecurrency exchange which
Hopsicker reported back in 2007 traffickers had used to purchase drug
jets with funds laundered through Wachovia.
“One customer that Wachovia took on in 2004 was Casa de Cambio Puebla
SA,” Smith wrote. The Puebla, Mexico currency exchange was the
brainchild of Pedro Alatorre, a “businessman” who “had created front
companies for cartels.”
Alatorre, and 70 others connected to his network, were seized in 2007
by Mexican law enforcement officials. Authorities discovered that the
accused drug money launderer and airline broker for the cartels
controlled 23 accounts at the Wachovia Bank branch in Miami and that it
held some $11 million, subsequently frozen by U.S. investigators.
In 2008, a Miami federal grand jury indicted Alatorre, now awaiting
trial in Mexico along with three other executives, charging them with
drug trafficking and money laundering, accusing the company of using
“shell firms to launder $720 million through U.S. banks.” The Justice
Department is currently seeking Alatorre’s extradition from Mexico.
According to Bloomberg, “Puebla executives used the stolen identities
of 74 people to launder money through Wachovia accounts.” Jose Luis
Marmolejo, the former head of the Mexican attorney general’s financial
crimes unit told Smith, “Wachovia handled all the transfers, and they
never reported any as suspicious.”
Some $300,000 was transferred by Wachovia to a Bank of America branch
in Oklahoma City. With cash in hand Bloomberg reports, traffickers
“used the funds to buy the DC-9 through Oklahoma City aircraft broker
U.S. Aircraft Titles Inc.” When queried by Smith about the sale, “U.S.
Aircraft Titles President Sue White declined to comment.”
Jeffrey Sloman, the federal prosecutor who handled the Wachovia case said in a press
release that
“Wachovia’s blatant disregard for our banking laws gave international
cocaine cartels a virtual carte blanche to finance their operations.”
Yet, as Hopsicker wrote nearly three years ago, “the
politically-explosive implications of the scandal may explain why
American officials have been reluctant to move against, or even name,
the true owners of the planes and basically ‘turned a blind eye’ to the
American involvement exposed by the drug trafficking seizures.”
As of this writing, no Americans have been criminally charged in the cash-for drug planes banking conspiracy.
“Troubled Assets” or Something More Sinister?
When Wells Fargo bought Wachovia, once America’s fourth largest bank
in 2008 at the fire-sale price of $12.8 billion, the bank and its former
CEO, Kennedy “Ken” Thompson, who “retired at the request of the board”
before the full-extent of the financial meltdown hit home, were in deep
trouble.
Before the Wells takeover, Wachovia had been on a veritable shopping
spree. After the firm’s 2001 merger with First Union Bank, Wachovia
merged with the Prudential Securities division of Prudential Financial,
Inc., with Wachovia controlling the lion’s share of the firm’s $532.1
billion in assets. This was followed by the bank’s purchase of
Metropolitan West Securities, adding a $50 billion portfolio of
securities and loans to the bank’s Lending division. In 2004, Wachovia
followed-up with the $14.3 billion acquisition of SouthTrust
Corporation.
Apparently flush with cash and new market clout, Wachovia set it
sights on acquiring California-based Golden West Financial. Golden West
operated branches under the name World Savings Bank and was the nation’s
second largest savings and loan. At the time of the buy-out, Golden
West had over $125 billion in assets. For Wachovia however, it was a
deal too far.
With an enormous housing bubble fully inflated, and a new speculative
merger-mania in full swing, one can only surmise that the need for
liquidity at any price, had driven banking giants such as Wachovia to
play dumb when shadier, yet highly-profitable transactions, such as the
“arrangement” with Casa de Cambio Puebla SA, were involved.
Bleeding cash faster than you can say “mortgage backed securities,”
Wachovia was on the hook for their 2006 $26 billion buy-out of Golden
West Financial at the peak of the housing bubble, a move that
BusinessWeek reported generated “resistance from his own management team” but ignored by Thompson.
Why? “Because no one outside of Thompson and Golden West CEO Herb
Sandler seemed to like the deal from the moment it was announced,” a
company insider told BusinessWeek.
While the buy-out may have given Thompson “the beachhead in
California he had long desired … the ink was barely dry on the Golden
West deal in late 2006 when the housing bubble in markets including
California and Florida began to deflate.”
Hammered by the housing bust, Wachovia’s share price, which had risen
to $70.51 per share when the Golden West deal was announced had slid to
$5.71 per share by October 2008. In other words, Wachovia, along with
the world’s economy, began circling the proverbial drain.
However you slice it, although it was clear that the Golden West deal
had gone south quicker than you can say “credit default swaps,” this
didn’t seem to stop Wachovia from paying “smartest guy in the room”
Thompson $15.6 million in total compensation in 2007, a year after the
fatal Golden West transaction. Nor did these losses stop the bank from
showering Thompson with a severance package worth nearly $8 million.
But was something else going on here?
Wells Fargo bank admitted in a signed
Deferred Prosecution Agreement with the federal government that they would not contest charges brought by the Justice Department in its
indictment of the bank.
The banking giant was forced to admit charges by prosecutors that “On
numerous occasions, monies were deposited into a CDC [Casa de Cambio]
by a drug trafficking organization. Using false identities, the CDC then
wired that money through its Wachovia correspondent bank accounts for
the purchase of airplanes for drug trafficking organizations. On various
dates between 2004 and 2007, at least four of those airplanes were
seized by foreign law enforcement agencies cooperating with the United
States and were found to contain large quantities of cocaine.”
Bloomberg reported that Wells Fargo, in the wake of the settlement
“declined to answer specific questions, including how much it made by
handling $378.4 billion–including $4 billion of cash–from Mexican
exchange companies.”
There was however, more than “troubled assets” and charges of money
laundering to the story. In fact, the purchase of these drug planes have
been tied to some of the Bush administration’s most secretive “War On
Terror” programs.
Drug Flights, CIA Renditions. Just Another Day at the Office!Replicating
a pattern used by the Central Intelligence Agency during the
Iran-Contra scandal of the 1980s, the secret state used a network of
cut-outs and legitimate businesses to transport prisoners to Agency
black sites for “special handling.”
During Iran-Contra it was “guns in, drugs out.” Today one might say
its “drugs in, tortured prisoners out.” The results however, were the
same; egregious crimes and lawbreaking on a staggering scale.
Subsequent investigations by
Narco News revealed
that “this particular Gulfstream II (tail number N987SA), was used
between 2003 and 2005 by the CIA for at least three trips between the
U.S. east coast and Guantanamo Bay, home to the infamous ‘terrorist’
prison camp,” Bill Conroy reported.
“In addition,” Conroy wrote, “the two SkyWay companies are associated
with individuals who have done highly sensitive work for the Department
of Defense or U.S. intelligence agencies, public records show and Narco
News sources confirm.”
According to
AFP,
the Mexican daily El Universal said “it had obtained documents from the
United States and the European Parliament which ‘show that that plane
flew several times to Guantanamo, Cuba, presumably to transfer terrorism
suspects,’” the French newswire reported.
The plane was carrying “Colombian drugs” bound for the U.S. for the
“fugitive leader of Mexico’s Sinaloa cartel, Joaquin ‘Chapo’ Guzman,”
when it crashed in the Yucatan.
According to El Universal, the Federal Aviation Administration’s
“logbook registered that the plane had traveled between US territory and
the US military base in Guantanamo,” and that its last registered owner
was “Clyde O’Connor in Pompano Beach, Florida.”
The Independent confirmed
separately in January of this year that “Evidence points to
aircraft–familiarly known as ‘torture taxis’–used by the CIA to move
captives seized in its kidnapping or ‘extraordinary rendition’
operations through Gatwick and other airports in the EU being
simultaneously used for drug distribution in the Western hemisphere.”
Hugh O’Shaughnessy, confirming earlier reporting by Bill Conroy and
Daniel Hopsicker said that “a Gulfstream II jet aircraft N9875A
identified by the British Government and the European Parliament as
being involved in this traffic crashed in Mexico in September 2008 while
en route from Colombia to the US with a load of more than three tons of
cocaine.”
While O’Shaughnessy got the tail-number and date wrong, he’s correct
when he states that U.S. intelligence assets “continue the drug dealing
they indulged in during the Iran-Contra affair of the Reagan years.”
Narco News,
citing DEA sources, learned that the crashed Gulfstream loaded with
four tons of cocaine “was part of an operation being carried out by a
Department of Homeland Security agency.”
However in a later report, Mark Conrad, a former supervisory special agent with ICE’s predecessor agency, U.S. Customs, told
Narco News that
the crashed Gulfstream used to transport drugs and prisoners was
controlled by the CIA and “that the CIA, not ICE … [was] actually the
U.S. agency controlling the … operation. If this were the case, then
“any individuals or companies involved in a CIA-backed operation, even
ones that are complicit in drug trafficking, would be off limits to U.S.
law enforcers due to the cloak of national security the CIA can
invoke.”
In other words, a jet purchased by drug traffickers with funds
laundered through an American bank and used in the CIA’s “extraordinary
rendition” program may have been part of aprotected drug operation by
U.S. intelligence agencies. An operation furthermore, whose purpose is
still unknown.
This report tracks closely with evidence uncovered by Peter Dale Scott. In a recent piece in
Japan Focus Scott
wrote that “it is not surprising that the U.S. Government, following
the lead of the CIA, has over the years become a protector of drug
traffickers against criminal prosecution in this country.”
“A recent spectacular example” Scott tells us, drawing on research
from his forthcoming book, is the curious case of CIA Venezuelan asset,
General Ramon Guillén Davila.
General Ramon Guillén Davila, chief of a CIA-created anti-drug unit
in Venezuela, was indicted in Miami for smuggling a ton of cocaine into
the United States. According to the New York Times, “The CIA, over the
objections of the Drug Enforcement Administration, approved the shipment
of at least one ton of pure cocaine to Miami International Airport as a
way of gathering information about the Colombian drug cartels.” Time
magazine reported that a single shipment amounted to 998 pounds,
following earlier ones “totaling nearly 2,000 pounds.” Mike Wallace
confirmed that “the CIA-national guard undercover operation quickly
accumulated this cocaine, over a ton and a half that was smuggled from
Colombia into Venezuela.” According to the Wall Street Journal, the
total amount of drugs smuggled by Gen. Guillén may have been more than
22 tons. (Fueling America’s War Machine: Deep Politics and the CIA’s
Global Drug Connection (in press, due Fall 2010 from Rowman &
Littlefield).
Scott adds that “the United States never asked for Guillén’s
extradition from Venezuela to stand trial; and in 2007, when he was
arrested in Venezuela for plotting to assassinate President Hugo Chavez,
his indictment was still sealed in Miami. Meanwhile, CIA officer Mark
McFarlin, whom DEA Chief Bonner had also wished to indict, was never
indicted at all; he merely resigned.”
But the stench of Iran-Contra, like that of the CIA’s torture
program, as with earlier secret state machinations with drug cartels
never went away; in fact, like a cancer, one managed drug operation
seamlessly metastasized into another.
Greasing the Wheels
The United Nations Office on Drugs and Crime (
UNODOC)
state in their 2010 Annual Report that “money-laundering is the method
by which criminals disguise the illegal origins of their wealth and
protect their asset bases in order to avoid suspicion of law enforcement
and to prevent leaving a trail of incriminating evidence,” and that
financial institutions, particularly U.S. and European banks are key to
efforts to choke-off illicit profits from the grisly trade.
The trouble is these institutions, along with U.S. intelligence agencies, are the problem.
UNODOC estimate that profits derived from narcotics rackets amount to
some $600 billion annually and that up to $1.5 trilliondollars in drug
money is laundered through seemingly legitimate enterprises.
Part of the fallout from capitalism’s economic meltdown has been that
“drugs money worth billions of dollars kept the financial system afloat
at the height of the global crisis,”
The Observer disclosed late last year.
Antonio Maria Costa, UNODOC’s director, told the British newspaper he
saw evidence that proceeds from the illicit trade were “the only liquid
investment capital” available to some banks on the brink of collapse
last year and that “a majority of the $352bn (£216bn) of drugs profits
was absorbed into the economic system as a result.”
The UN drugs chief said that in “many instances, the money from drugs
was the only liquid investment capital.” And with markets tanking and
major bank failures nearly a daily occurrence, “liquidity was the
banking system’s main problem and hence liquid capital became an
important factor.”
According to Costa, “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.”
Web of Corruption
Although the UN’s top anti-narcotics official declined to identify
either the countries or banks that have benefited from the murderous
trade, a web of corruption envelops the entire financial sector of the
capitalist economy as the quest for “liquid assets” trumps everything.
Martin Woods, once director of Wachovia’s anti-money-laundering unit
in London told Bloomberg, “It’s the banks laundering money for the
cartels that finances the tragedy.” Woods told the magazine he “quit the
bank in disgust” after executives “ignored his documentation that drug
dealers were funneling money through Wachovia’s branch network.”
Despite warnings from the Treasury Department since 1996 that Mexican
currency exchanges were laundering drug money through U.S. banks,
“Wachovia ignored warnings by regulators and police, according to the
deferred-prosecution agreement,”Bloomberg reported.
“As early as 2004, Wachovia understood the risk,” the bank admitted
in court. “Despite these warnings, Wachovia remained in the business.”
At the bank’s anti-money laundering unit in London, Woods and his
counterpart Jim DeFazio in Charlotte, NC told Smith “they suspected that
drug dealers were using the bank to move funds.”
Former Scotland Yard investigator Woods, said he “spotted illegible
signatures and other suspicious markings on traveler’s checks from
Mexican exchange companies,” and that he sent copies of his report to
the U.K.’s Financial Services Authority, the DEA and U.S. Treasury
Department.
But rather than being rewarded for his diligence, Woods told Smith
“his bosses instructed him to keep quiet and tried to have him fired.”
In one meeting, “a bank official insisted Woods shouldn’t have filed
suspicious activity reports to the government, as both U.S. and U.K.
laws require.”
According to a whistleblower suit filed with an employment tribunal in London,
Barrons reported
last year before the Wachovia scandal broke, that Woods claimed “his
bosses bullied and demoted him, then withdrew his reports of other
suspicious activities in Eastern Europe.”
It gets worse. Woods’ complaint alleges “that Wachovia staff may have
even tipped off Mexican-exchange clients about his laundering
suspicions,” and the veteran investigator told Wachovia officials “he
feared for his safety.”
In response, bank spokesperson Mary Eshet said at the time, “Wachovia
believes that it has acted appropriately in its business dealings, and
Mr. Woods’ claims to the contrary are without merit.”
Meanwhile, on the American side of the pond, 21-year FBI veteran
DeFazio said “he told bank executives in 2005 that the DEA was probing
the transfers through Wachovia to buy the planes.” The bank ignored his
warnings and continued along on their merry way until their indictment.
The law enforcement veteran told Bloomberg, “I think they looked at
the money and said, ‘The hell with it. We’re going to bring it in, and
look at all the money we’ll make’.”
The former Scotland yard investigator added, “If you don’t see the
correlation between the money laundering by banks and the 22,000 people
killed in Mexico, you’re missing the point.”
But Wachovia wasn’t the only large financial institution “missing the
point.” Bloomberg also revealed that Bank of America and the
London-based “HSBC Holdings Plc, Europe’s biggest bank by assets,”
American Express Bank, Banco Santander SA, Citigroup Inc., as well as
“the world’s largest money transfer firm,” Western Union were also up to
their eyeballs in dubious transactions.
In 1994 for example, American Express paid $14 million to settle with
the federal government after “two employees were convicted in a
criminal case involving drug trafficker Juan Garcia Abrego.”
Yet between 1999-2004, Bloomberg reported “the bank failed to stop
clients from laundering $55 million of narcotics funds, the bank
admitted in a deferred-prosecution agreement in August 2007 … and paid
$65 million to the U.S. and promised not to break the law again.”
Charges were dismissed a year later under terms of the agreement.
And back in 2004,
The Independent disclosed
that “HSBC, the UK’s largest bank, have been slammed for lax
money-laundering procedures in a report by a US Senate subcommittee.”
Journalists Hugh O’Shaughnessy and Paul Lashmar revealed that “the
UK-based multinational stands accused of laxity in the fight against
money laundering, drug trafficking, corruption and terrorism, notably in
the oil-rich African state of Equatorial Guinea.”
“In one of the few cases” when the scandal-plagued and now-shuttered
Riggs Bank “seems to have properly followed US anti-money-laundering
legislation,” Riggs formally asked HSBC and a Spanish bank, Banco
Santander, “to divulge the identities of the owners of two companies
that kept accounts with them and that were receiving suspicious wire
transfers totalling in excess of $35m (£20m). The banks refused to say
who the owners were.”
Bloomberg disclosed that “federal agents caught people who work for
Mexican cartels depositing illicit funds in Bank of America accounts in
Atlanta, Chicago and Brownsville, Texas, from 2002 to 2009.” Authorities
contend that “Mexican drug dealers used shell companies to open
accounts at London-based HSBC.”
Nevertheless, neither bank were accused of wrongdoing by the federal
government and both firms denied any involvement in money laundering
schemes.
Bank of America spokeswoman Shirley Norton told Smith that they
“strictly follow the government rules.” Norton said, “Bank of America
takes its anti-money-laundering responsibilities very seriously,” a fact
not readily apparent from Bloomberg Marketsinvestigation.
Both Norton and HSBC spokesman Roy Caple told Smith that “[privacy] laws bar them from discussing specific clients.”
And so it goes.
Fallout? What Fallout!In the wake of
Wachovia’s admission to federal prosecutors, Wells Fargo will pay “$160
million in fines and penalties, less than 2 percent of its $12.3 billion
profit in 2009.”
“If Wells Fargo keeps its pledge,” Bloomberg reports, then “according
to the agreement [the federal government will] drop all charges against
the bank in March 2011.”
Why might that be? Large banks are immune from vigorous prosecution
for violating the Bank Secrecy Act “by a variant of the too-big-to-fail
theory.”
Veteran Senate investigator Jack Blum, who led probes into the
Iran-Contra drug connection and the CIA’s favorite shadow bank during
the 1980s, the Bank of Credit and Commerce (
BCCI) toldBloomberg, “the theory is like a get-out-of-jail-free card for big banks.”
“There’s no capacity to regulate or punish them because they’re too
big to be threatened with failure,” Blum says. “They seem to be willing
to do anything that improves their bottom line, until they’re caught.”
Meanwhile as the bodies pile up, there’s no jail time for executives
and the assets of firms that could charitably be described as part of a “
continuing criminal enterprise” haven’t been seized; only a slap on the wrist and a promise to “do better next time.”
Republished with permission from:
Global Research
Poor rummage through garbage to survive in the PhilippinesAs
we repeatedly focus on wealth inequality in the United States (i.e.;
just four hundred persons in the US have as much in assets and income as
the bottom 50% of Americans), a video points out the even more extreme global wealth disparity.
