Pubdate: Fri, 20 Jul 2001
Source: Texas Observer (TX)
Copyright: 2001 The Texas Observer
Contact:  http://www.texasobserver.org/
Details: http://www.mapinc.org/media/748
Author: Molly Ivins
Note: Molly Ivins is a nationally syndicated columnist. Her book with 
Louis Dubose, Shrub: The Short But Happy Political Life of George W. 
Bush, is out in paperback

TRACKING THE KLEPTOCRATS

The trial of Slobodan Milosevic is a rather noble effort to hold 
rulers accountable for genocide.

At great pain and cost, the man has been extradited and is on trial 
for crimes against humanity; on the theory that his having to face an 
international tribunal will give future genocidal dictators some 
pause.

But what if the crime of a dictator is not slaughter but massive 
theft? Various ex-presidents of Mexico; Fujimori of Peru; Idi Amin of 
Uganda; Mobutu Sese Seku, the late kleptocrat head of Zaire; Suharto 
of Indonesia; the late Shah of Iran-all have skimmed millions, if not 
billions of dollars out of their countries' economies, and most of 
them then headed off for la dolce vita in foreign parts.

The Bush Administration is now backing away from international 
efforts to reduce money laundering, a banking procedure used by drug 
cartels, arms traffickers and terrorist groups, as well as crooked 
dictators. In the current issue of Foreign Affairs, William Wechsler, 
who worked on these problems as special adviser to the secretary of 
the treasury from 1999 to 2001, has a fascinating account of the 
progress that has been made over the years in building international 
cooperation against rogue banking.

I am indebted to him for all the following information unless 
otherwise indicated.

Until this administration, the United States has been the leader in 
trying to stop money laundering. Several organizations work to stop 
this and other banking abuses-the G-7's Financial Stability Forum, 
the Financial Action Task Force, and the Organization for Economic 
Cooperation and Development (OECD), along with the IMF.

Wechsler reports, "According to the Russian Central Bank, $74 billion 
was transferred from Russian banks to off-shore accounts in 1998, the 
year of the ruble devaluation and the Russian financial meltdown."

The most popular new havens, in addition to the usual suspects, are 
small islands in the South Pacific-Nauru, Niue and Vanuatu. Some $70 
billion of the Russian money went into accounts of banks chartered in 
Nauru. In the old days-1O years ago-money launderers needed to be 
near the banks that kept their secrets: Europeans could easily get to 
Switzerland with a suitcase full of cash, Americans to the Cayman 
Islands. But with the advent of banking by Internet, many small, poor 
countries around the world realized that all they need do was 
establish strict bank secrecy, criminalize the release of customer 
information and ban international law-enforcement cooperation-and the 
money would roll in. The international community gradually figured 
out a strategy to combat this new plague-"name and shame." The FSF 
(11 nations with advanced financial systems) and FATF (29 nations) 
slowly developed criteria for international banking, focusing on bank 
regulation, customer identification, the reporting of suspicious 
activity, international cooperation and the criminalization of money 
laundering. The FATF developed a list of 15 non-cooperating nations 
and another 14 with serious banking deficiencies. The only way these 
efforts can succeed is with multilateral countermeasures, with 
penalties ranging from stronger warnings up to economic sanctions, 
including the wholesale restriction of financial transactions.

Unfortunately, Bush's chief economic adviser, Lawrence Lindsey, is 
opposed to legislation to deter international money laundering, 
apparently because he is generally opposed to banking regulation. As 
Wechsler notes, there are legitimate privacy concerns that do need to 
be addressed, but this is not a choice between privacy and law 
enforcement, but a question of how to balance them both.

Treasury Secretary Paul O'Neill told The Washington Times he shares 
"many of the serious concerns that have been expressed recently about 
the direction of the OECD initiative" and "the project is too broad, 
and it is not in line with this administration's tax and economic 
priorities." That mind-boggling gobbledy-gook is an indication that 
the United States will not go along with the OECD on multilateral 
sanctions.

So far, all O'Neill had done is the classic bureaucratic dodge of 
instituting a thorough study of the situation.

Unfortunately, the study is headed by Dina Ellis, formerly senior 
lawyer at the Senate banking committee under Phil Gramm, no friend to 
banking regulation he. According to The Financial Times of London, 
political pressure is being put on the administration by a coalition 
of small bankers (especially from Texas), privacy advocates and 
libertarians.

Here we move off the radar and into the wiggy conspiracy theories of 
the U.N.-black-helicopter set. I am as ready as anyone to oppose 
faceless, international regulatory agencies-I'm against trade 
agreements without labor and environmental provisions, always happy 
to fault NAFTA and the WTO, and generally opposed to secret and 
unaccountable organizations. But we are talking here about an 
international anti-crime effort that involves more transparency, not 
less; more accountability; not less. How this one ever got to be a 
bogeyman of the far right is beyond me. Why should we make life 
easier for kleptocratic dictators, drug traffickers, arms dealers and 
terrorists? Give us a break.
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MAP posted-by: Kirk