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 the
Financial 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 a
krysha, 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
other American 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
same
currency 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 a
protected 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 WheelsThe 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
trillion dollars 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 CorruptionAlthough
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 Markets investigation.
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) told
Bloomberg, "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."
Tom Burghardt is a researcher and activist based in the San Francisco Bay Area. In addition to publishing in
Covert Action Quarterly and
Global Research,
an independent research and media group of writers, scholars,
journalists and activists based in Montreal, his articles can be read
on
Dissident Voice,
The Intelligence Daily,
Pacific Free Press,
Uncommon Thought Journal,
Rowan's Avenger, and the whistleblowing website
Wikileaks. He is the editor of
Police State America: U.S. Military "Civil Disturbance" Planning, distributed by
AK Press.
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