How the kleptocrats’ $12 trillion heist helps keep most of the world impoverished

David Cay Johnston writes: For the first time we have a reliable estimate of how much money thieving dictators and others have looted from 150 mostly poor nations and hidden offshore: $12.1 trillion.

That huge figure equals a nickel on each dollar of global wealth and yet it excludes the wealthiest regions of the planet: America, Canada, Europe, Japan, Australia, and New Zealand.

That so much money is missing from these poorer nations explains why vast numbers of people live in abject poverty even in countries where economic activity per capita is above the world average. In Equatorial Guinea, for example, the national economy’s output per person comes to 60 cents for each dollar Americans enjoy, measured using what economists call purchasing power equivalents, yet living standards remain abysmal.

The $12.1 trillion estimate — which amounts to two-thirds of America’s annual GDP being taken out of the economies of much poorer nations — is for flight wealth built up since 1970.

Add to that flight wealth from the world’s rich regions, much of it due to tax evasion and criminal activities like drug dealing, and the global figure for hidden offshore wealth totals as much as $36 trillion.

In 2014 the net worth of planet Earth was about $240 trillion, which means about 15 percent of global wealth is in hiding, significantly reducing the capital available to spur world economic growth. [Continue reading…]

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Spain issues warrants for top Russian officials, Putin insiders

RFE/RL reports: A Spanish judge has issued international arrest warrants for several current and former Russian government officials and other political figures closely linked to President Vladimir Putin.

The named Russians include a former prime minister and an ex-defense minister, as well as a current deputy prime minister and the current head of the lower house of parliament’s finance committee.

The Spanish documents detail alleged members of two of Russia’s largest and best-known criminal organizations — the Tambov and Malyshev gangs — in connection with crimes committed in Spain including murder, weapons and drug trafficking, extortion, and money laundering.

But Spanish police also conclude that one of the gangs was able to penetrate Russian ministries, security forces, and other key government institutions and businesses with the help of an influential senior legislator. [Continue reading…]

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Hillsborough: Anatomy of a disaster brought on by a failure in public service

The 1989 tragedy in which 96 Liverpool fans died while attending a football match in the North of England might to some distant observers sound like a local story of concern primarily to the bereaved and their fellow citizens, but what happened in Sheffield that day speaks to the wider issue of state powers and responsibilities as they are exercised in every democracy.

During an era in which politicians never tire of speaking solemnly about their duty for protecting national security against the threat of terrorism, the task of providing public safety now (as in the past) has much less to do with thwarting foreign and domestic threats, than it does with an ongoing commitment to public service. In turn, serving ordinary people hinges on viewing and treating them with respect.

The victims at Hillsborough were betrayed by authorities (and the media) which placed the protection of their own interests above those they were meant to serve.

The events leading up to the disaster are described in this video:

The Guardian reports: It was a year into these inquests, and 26 years since David Duckenfield, as a South Yorkshire police chief superintendent, took command of the FA Cup semi-final at Hillsborough between Liverpool and Nottingham Forest, that he finally, devastatingly, admitted his serious failures directly caused the deaths of 96 people there.

Duckenfield had arrived at the converted courtroom in Warrington with traces of his former authority, but over seven airless, agonisingly tense days in the witness box last March, he was steadily worn down, surrendering slowly into a crumpled heap. From his concession that he had inadequate experience to oversee the safety of 54,000 people, to finally accepting responsibility for the deaths, Duckenfield’s admissions were shockingly complete.

He also admitted at the inquests that even as the event was descending into horror and death, he had infamously lied, telling Graham Kelly, then secretary of the Football Association, that Liverpool fans were to blame, for gaining unauthorised entry through a large exit gate. Duckenfield had in fact himself ordered the gate to be opened, to relieve a crush in the bottleneck approach to the Leppings Lane turnstiles.

The chief constable, Peter Wright, had to state that evening that police had authorised the opening of the gate, but as these inquests, at two years the longest jury case in British history, heard in voluminous detail, Duckenfield’s lie endured. It set the template for the South Yorkshire police stance: to deny any mistakes, and instead to virulently project blame on to the people who had paid to attend a football match and been plunged into hell. [Continue reading…]

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Hillsborough: At last, the shameful truth is out

By Jared Ficklin, University of Liverpool

Following two years of harrowing evidence, the verdicts in the inquest into the Hillsborough disaster in 1989 are a complete vindication of the 27-year campaign for justice for the 96 victims and their families. It is difficult to imagine the fortitude required to continue their fight for justice against the arrayed institutional might of the police, government and even sections of the media for so long.

But this fight for the truth did not take almost three decades, millions of pounds, and the longest court hearing in UK history because of its complexity. It was because within hours, the South Yorkshire police organised a conspiracy to protect themselves by defaming the dead and injured.

It is now clear that the police did not take blood from children to run alcohol tests or send a photographer to find empty beer cans because they wanted to understand what had really happened. It was simply to find any prop that could support the false narrative that the fans were drunk and abusive and were somehow responsible for their own deaths, and that the police had done their best under the circumstances.

We now know, from evidence heard at the inquest and admissions of senior police officers themselves, that this was so far from reality that the police had to collude to invent evidence. But even that wasn’t enough to hide the truth. There were thousands of fans there that day who knew what really happened – even in an age before everyone carried a phone with a camera, images existed that didn’t tally with the police’s claims.

But at the time the police had the most powerful allies there were: South Yorkshire police had been instrumental in breaking the miners’ strikes in 1984-1985, during which then prime minister Margaret Thatcher deployed them like her army in the north of England. The force also had form for blaming victims: we now know that South Yorkshire police had committed perjury during failed prosecutions of miners following the battle between police and strikers at Orgreave in 1984, and that senior officers were well aware of it and said nothing.

In 1989, the police needed support for their cover-up, and the Conservative government was happy to help. Thatcher herself toured the ground the morning after the disaster, and was aware that privately there were serious questions about the police propaganda, but it didn’t stop her government from backing the police. Her press secretary, Bernard Ingham, relied upon what he was told about the disaster by the police and blamed “tanked-up yobs” for the deaths. “Liverpool,” he later said, “should shut up about Hillsborough.”

[Read more…]

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Hillsborough disaster: Those responsible could face criminal charges

The Guardian reports: Officials implicated in the unlawful killing of 96 Liverpool fans in the Hillsborough disaster could face prosecution for criminal negligence and perjury, Theresa May has said.

The home secretary warned of potential criminal proceedings against police officers and other responsible groups over the 1989 tragedy while speaking in the House of Commons on Wednesday.

Reporting to MPs on the damning findings of the Hillsborough inquests, which gave their verdicts on Tuesday, May said the Crown Prosecution Service would decide later this year whether charges should be brought when two criminal investigations into the disaster were complete.

“It was this country’s worst disaster at a sporting event. For the families and survivors, the search to get to the truth of what happened on that day has been long and arduous,” May said. [Continue reading…]

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Missing Mexican students suffered a night of ‘terror,’ investigators say

The New York Times reports: Municipal police officers encircled the bus, detonated tear gas, punctured the tires and forced the college students who were onboard to get off.

“We’re going to kill all of you,” the officers warned, according to the bus driver. A policeman approached the driver and pointed a pistol at his chest. “You, too,” the officer said.

With a military intelligence official looking on and state and federal police officers in the immediate vicinity, witnesses said, the students were put into police vehicles and taken away. They have not been seen since.

They were among the 43 students who vanished in the city of Iguala one night in September 2014 amid violent, chaotic circumstances laid bare by an international panel of investigators who have been examining the matter for more than a year. The reason for the students’ abduction remains a mystery. [Continue reading…]

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Decriminalize all drugs, business and world leaders tell UN

The Guardian reports: A British billionaire, three former presidents and a renowned Aids researcher have called for all drugs to be decriminalized at a press conference that was sharply critical of the United Nations’ latest drug policy agreement, adopted this week.

Leaders of the Global Commission on Drug Policy said the UN’s first special session on drugs in 18 years had failed to improve international narcotics policy, instead choosing to tweak its prohibition-oriented approach to drug regulation.

“The process was fatally flawed from the beginning,” said Richard Branson, the head of the Virgin Group, adding that it may “already be too late” to save the international drug law system.

This week’s United Nations general assembly special session, UNgass, clearly displayed the deep divisions between member states over narcotics: while a growing number of countries, including several states in the US, have moved towards decriminalizing or legalizing drugs, others continue to execute people convicted of drug crimes. Three UN conventions prohibit drug use that is not medical or scientific.

The meeting, held Tuesday through Thursday in New York City, was billed as a forum to debate drug laws, called for by Mexico, Colombia and Guatemala in 2014. All three countries suffered disproportionate violence from cartels controlling drug supplies to the north. In Mexico alone, the government estimates 164,000 people were the victims of homicide related to cartel violence between 2007 and 2014. [Continue reading…]

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Israeli convicted of Palestinian murder that helped trigger 2014 war

AFP reports: The Israeli ringleader in the beating and burning alive of a Palestinian teenager in 2014 has been convicted of his murder.

Yosef Haim Ben David, 31, was found in November to have led the assault, but a verdict was delayed after his lawyers submitted last-minute documents saying he suffered from mental illness.

The court ruling on Tuesday said that Ben David “was not psychotic, fully understood the facts, was responsible for his actions, had no difficulty in understanding reality and had the capacity to prevent the crime”.

A sentencing hearing has been set for 3 May.

The family of the teenager, Mohammed Abu Khdeir, welcomed the decision but said they hoped judges followed through with a life sentence for Ben David.

At the hearing Mohammed’s mother wore a heart-shaped pendant containing an image of her son wearing a baseball cap, and his father said the decision “should have been made a long time ago”.

“We knew that he wasn’t mad,” Hussein Abu Khdeir told Agence France-Presse. “It was all a big lie to get off from the crime which he carried out. Even if they sentence him for life, this will never bring Mohammed back again. Our hearts are wounded from what happened.”

In February, a court sentenced Ben David’s two young Israeli accomplices to life and 21 years in prison for the killing, which was part of a spiral of violence in the run-up to the 2014 Gaza war. [Continue reading…]

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Offshore in central London — the curious case of 29 Harley Street

The Guardian reports: On 10 November, 2003, Gerry Florent, and Ralph Abercia, plus his son, Ralph Jr, left the Bellagio Hotel in Las Vegas, and drove to the Stirling Club, a high-end private venue just off the Strip. They were to attend separate meetings with Sir Richard Benson, but had met each other that morning, when they were collectively coached on the etiquette expected of them: speak only when spoken to, stand when he comes in. They were happy to comply. This was a man who had bailed out the Queen, after all.

Both Florent and the Abercias wanted the same thing from Sir Richard: money, of which he had plenty. Sir Richard, who was portly, balding and elderly, explained to them that he owned a company named Sherwin & Noble, which was worth billions and was prepared to finance their business projects. At their meetings, the prospective investors received a glossy spiral-bound summary of S&N’s balance sheet, which showed it to be a financial firm of significant size.

Florent wanted $55m to buy land on which to build a hotel in Florida; the Abercias needed $105m for an “aquarium/entertainment complex” in Houston. In return for the money, all Sir Richard asked was that they pay advance fees (two payments of $412,250 each from Florent, and two payments of $787,500 each from the Abercias) to signal their commitment to the projects. If S&N decided not to go ahead with the loans, the fees would be repaid.

The investors left Las Vegas, instructed their lawyers to wire the first tranche of the fees over, and settled down to wait for their money. They waited. And they waited. When they rang or faxed the S&N office in London, they were reassured that there was nothing to be concerned about. But, over the next few months, Florent and his business associates became suspicious. They held off wiring the second half of the fee, and brought in a private investigator, who discovered that S&N, far from being worth billions, was an empty shell company. The glossy booklet detailing its assets had been copied from the banking company HBOS, with the names changed.

Thus, the fraud fell apart. The Abercias, who had wired the whole fee asked of them, were devastated. “That was a lot of money,” Ralph Sr told a local journalist. “We’re still paying the damgum thing back.”

The whole saga had been scripted by a conman named Lal Bhatia. Sir Richard Benson was an actor. He had never rescued Buckingham Palace from foreclosure. The billions and the knighthood were fictitious. S&N had no assets, beyond a registered presence at a house in London – 29 Harley Street. [Continue reading…]

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Panama raids offices of Mossack Fonseca law firm

Reuters reports: Panama’s attorney general late on Tuesday raided the offices of the Mossack Fonseca law firm to search for any evidence of illegal activities, authorities said in a statement.

The Panama-based law firm is at the center of the “Panama Papers” leaks scandal that has embarrassed several world leaders and shone a spotlight on the shadowy world of offshore companies.

The national police, in an earlier statement, said they were searching for documentation that “would establish the possible use of the firm for illicit activities.” The firm has been accused of tax evasion and fraud. [Continue reading…]

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Mossack Fonseca: Inside the firm that helps the super-rich hide their money

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The Guardian reports: In June 2013, two Swiss lawyers held a private telephone chat. They were annoyed. In London, David Cameron had just given a speech. The prime minister had promised to sweep away decades of offshore “tax secrecy” by introducing a central register. Anybody who owned an offshore company would have to declare it to the authorities.

The G8 summit, to be hosted by Cameron on the shores of Lough Erne, in Northern Ireland, was looming. Top of the agenda: how to stop aggressive tax avoidance.

For much of the 20th century hiding your money was simple. You got a lawyer, filled in a form and set up a Swiss bank account or offshore “shell company”.

Nobody asked questions. For a couple of thousand dollars a year, it was possible to hide away profits where governments could never find them.

But in the UK crown dependencies and overseas territories where financial services were the main source of jobs and income times were changing. In tropical tax havens such as the British Virgin Islands a chill wind – or at least the threat of one – was blowing.

One of the Swiss lawyers was Sandro Hangartner, the Zurich boss of the Panamanian law firm Mossack Fonseca.

The other man, his disgruntled caller, was Sascha Züger. Züger’s company looked after the assets of some very wealthy South Americans.

In an email to his head office in Panama, Hangartner wrote: “Sascha is not very pleased about the development in BVI [British Virgin Islands].”

He was now looking for “alternatives”, Hangartner added – in other words other secret jurisdictions where a client might park their money.

For the network of international lawyers and accountants who serviced the offshore industry, these were troubled times.

Cameron’s speech was merely the latest piece of unwelcome attention. Since 2008, and the global financial crisis, cash-strapped exchequers had been trying to get their hands on billions in potential tax revenue hidden offshore.

How serious these attempts were was a matter for debate.

What wasn’t in doubt were the vast sums involved. According to the US economist Gabriel Zucman, 8% of the world’s wealth – a vast $7.6tn (£5.3tn) – was stashed in tax havens.

Zucman estimates the loss in global tax revenues at $200bn per year. That includes $35bn in the US and $78bn in Europe.

Previous attempts to bring about transparency had flopped. But now the world’s leading economies – the G20, G8 and Organisation for Economic Cooperation and Development – were apparently pursuing the theme with zeal.

If Cameron got his way, British overseas territories such as the BVI and Gibraltar would soon have to draw up a register of beneficial owners – the real owners of a company, even though their name may not appear on the shareholder register. The crown dependencies Jersey, Guernsey and the Isle of Man would fall into line, too. [Continue reading…]

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Why U.S. domestic violence is akin to honor crimes

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Jessica Winegar writes: The dramatic finale of the FX series “The People vs. O.J. Simpson: American Crime Story” aired this week after topping television ratings for over a month. The Oscar-winning documentary about an honor killing, “A Girl in the River: The Price of Forgiveness,” recently aired on HBO to critical acclaim.

One was set in Brentwood, a suburb of Los Angeles. The other was set in Punjab, Pakistan. One is called a domestic violence homicide. The other is called an honor crime.

A round-up of statistics from the Violence Policy Center, Bureau of Justice Statistics, National Institute of Justice and the Center for American Progress found that more than 18,000 U.S. women were killed in this country by intimate partners between 2003 and 2014. In the U.S., more than 22 percent of women will experience an extreme act of violence at the hands of an intimate partner in her lifetime, according to the Atlanta-based Centers for Disease Control and Prevention.

Why do we not call these acts of violence in this country honor crimes?

Human Rights Watch defines honor crimes as “acts of violence, usually murder, committed by male family members against female family members who are perceived to have brought dishonor upon the family” and defines those family members as “husband, father, son, brother or cousin.” There are 5,000 honor crimes each year in the world, according to the site, mostly in the Middle East and South Asia. In Pakistan alone, there are 1,000 honor killings every year.

But there is a common nefarious defense by perpetrators that links these cases of violence against women in the U.S and those acts called honor crimes in the Middle East and South Asia.

In both arenas, the woman who transgresses the boundaries of what men will accept has to be punished. And the men doing the punishing are from her domestic world.

In both domestic violence and honor crimes, male relatives and/or intimate partners rape, beat, psychologically abuse and kill. [Continue reading…]

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The Panama Papers

The Panama Papers is an unprecedented investigation that reveals the offshore links of some of the globe’s most prominent figures.

The International Consortium of Investigative Journalists, together with the German newspaper Suddeutsche Zeitung and more than 100 other media partners, spent a year sifting through 11.5 million leaked files to expose the offshore holdings of world political leaders, links to global scandals, and details of the hidden financial dealings of fraudsters, drug traffickers, billionaires, celebrities, sports stars and more. [Continue reading…]

The Guardian reports: The Panama Papers reveal:

  • Twelve national leaders are among 143 politicians, their families and close associates from around the world known to have been using offshore tax havens.
  • A $2bn trail leads all the way to Vladimir Putin. The Russian president’s best friend – a cellist called Sergei Roldugin – is at the centre of a scheme in which money from Russian state banks is hidden offshore. Some of it ends up in a ski resort where in 2013 Putin’s daughter Katerina got married.
  • Among national leaders with offshore wealth are Nawaz Sharif, Pakistan’s prime minister; Ayad Allawi, ex-interim prime minister and former vice-president of Iraq; Petro Poroshenko, president of Ukraine; Alaa Mubarak, son of Egypt’s former president; and the prime minister of Iceland, Sigmundur Davíð Gunnlaugsson.
  • Six members of the House of Lords, three former Conservative MPs and dozens of donors to UK political parties have had offshore assets.
  • The families of at least eight current and former members of China’s supreme ruling body, the politburo, have been found to have hidden wealth offshore.
  • Twenty-three individuals who have had sanctions imposed on them for supporting the regimes in North Korea, Zimbabwe, Russia, Iran and Syria have been clients of Mossack Fonseca. Their companies were harboured by the Seychelles, the British Virgin Islands, Panama and other jurisdictions.
  • A key member of Fifa’s powerful ethics committee, which is supposed to be spearheading reform at world football’s scandal-hit governing body, acted as a lawyer for individuals and companies recently charged with bribery and corruption.
  • One leaked memorandum from a partner of Mossack Fonseca said: “Ninety-five per cent of our work coincidentally consists in selling vehicles to avoid taxes.”

[Continue reading…]

Learn more at the International Consortium of Investigative Journalists, Suddeutsche Zeitung, the BBC, and the Guardian.

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How to hack an election

Bloomberg Businessweek reports on the confessions of Andrés Sepúlveda, a political hacker who rigged elections throughout Latin America for almost a decade: His teams worked on presidential elections in Nicaragua, Panama, Honduras, El Salvador, Colombia, Mexico, Costa Rica, Guatemala, and Venezuela. Campaigns mentioned in this story were contacted through former and current spokespeople; none but Mexico’s PRI and the campaign of Guatemala’s National Advancement Party would comment.

As a child, he witnessed the violence of Colombia’s Marxist guerrillas. As an adult, he allied with a right wing emerging across Latin America. He believed his hacking was no more diabolical than the tactics of those he opposed, such as Hugo Chávez and Daniel Ortega.

Many of Sepúlveda’s efforts were unsuccessful, but he has enough wins that he might be able to claim as much influence over the political direction of modern Latin America as anyone in the 21st century. “My job was to do actions of dirty war and psychological operations, black propaganda, rumors — the whole dark side of politics that nobody knows exists but everyone can see,” he says in Spanish, while sitting at a small plastic table in an outdoor courtyard deep within the heavily fortified offices of Colombia’s attorney general’s office. He’s serving 10 years in prison for charges including use of malicious software, conspiracy to commit crime, violation of personal data, and espionage, related to hacking during Colombia’s 2014 presidential election. He has agreed to tell his full story for the first time, hoping to convince the public that he’s rehabilitated — and gather support for a reduced sentence.

Usually, he says, he was on the payroll of Juan José Rendón, a Miami-based political consultant who’s been called the Karl Rove of Latin America. Rendón denies using Sepúlveda for anything illegal, and categorically disputes the account Sepúlveda gave Bloomberg Businessweek of their relationship, but admits knowing him and using him to do website design. “If I talked to him maybe once or twice, it was in a group session about that, about the Web,” he says. “I don’t do illegal stuff at all. There is negative campaigning. They don’t like it — OK. But if it’s legal, I’m gonna do it. I’m not a saint, but I’m not a criminal.” While Sepúlveda’s policy was to destroy all data at the completion of a job, he left some documents with members of his hacking teams and other trusted third parties as a secret “insurance policy.”

Sepúlveda provided Bloomberg Businessweek with what he says are e-mails showing conversations between him, Rendón, and Rendón’s consulting firm concerning hacking and the progress of campaign-related cyber attacks. Rendón says the e-mails are fake. An analysis by an independent computer security firm said a sample of the e-mails they examined appeared authentic. Some of Sepúlveda’s descriptions of his actions match published accounts of events during various election campaigns, but other details couldn’t be independently verified. One person working on the campaign in Mexico, who asked not to be identified out of fear for his safety, substantially confirmed Sepúlveda’s accounts of his and Rendón’s roles in that election.

Sepúlveda says he was offered several political jobs in Spain, which he says he turned down because he was too busy. On the question of whether the U.S. presidential campaign is being tampered with, he is unequivocal. “I’m 100 percent sure it is,” he says. [Continue reading…]

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Former U.K. attorney general linked to Russian mob

Michael Weiss reports: The former attorney general of Great Britain has been representing the lawyer for an alleged Russian crime family, The Daily Beast has learned, based on a tranche of email correspondence leaked online.

Lord Peter Goldsmith, who served for six years under Tony Blair’s premiership and is now a senior partner at the London office of U.S. law firm Debevoise & Plimpton, was retained in March 2014 by Andrey Pavlov to act as “legal advisor.” Pavlov for years acted as legal counsel for Russian crime boss Dmitry Klyuev; he was also directly implicated by whistleblower Sergei Magnitsky as being an accomplice in the theft of public Russian money. Pavlov has denied all these accusations.

Goldsmith — who provided the Blair government with the legal justification for Britain’s participation in the 2003 Iraq War — was tasked with helping Pavlov evade possible sanction by the European Parliament for being complicit in Magnitsky’s death in prison, and for “the subsequent judicial cover-up and for the ongoing and continuing harassment of his mother and widow,” as the text for the European parliamentary resolution stated. [Continue reading…]

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