Michael Weiss writes: Not every bank lists a convicted spy serving 30 months in an Ohio prison as its active deputy representative in New York. But then, not every bank is headed by a former spy, much less one found to have spent time with Jared Kushner during a “roadshow” last year, when Donald Trump’s son-in-law was then just a top campaign advisor and not a likely witness about to testify before a Senate committee on Russia’s meddling in U.S. democracy.
In those charmed days before the director of the FBI raised in an open session of Congress the very real possibility that some of the president’s men might be working on behalf of a hostile foreign power, there was the curious case of a Wall Street analyst who was handcuffed in his Bronx neighborhood in late Jan. 2015 after going out for groceries. His crime wasn’t peddling junk sub-primes to trusting pensioners but working for Moscow Center.
Evgeny Buryakov, a former tax inspector turned officer of the Sluzhba vneshney razvedki, or SVR, Russia’s foreign intelligence service, had arrived in the U.S. just weeks after the feds executed Operation Ghost Stories and brought down ten out of an 11-person spy ring of Russian “illegals,” without whom Anna Chapman’s clothing line and The Americans would now be impossible. [Continue reading…]
The New York Times reports: Federal prosecutors are investigating North Korea’s possible role in the theft of $81 million from the central bank of Bangladesh in what security officials fear could be a new front in cyberwarfare.
The United States attorney’s office in Los Angeles has been examining the extent to which the North Korea government aided and abetted the bold heist in February 2016, according to a person briefed on the investigation who was not authorized to speak publicly.
In the theft, the attackers, using a global payment messaging system known as Swift, were able to persuade the Federal Reserve Bank of New York to move money from the Bangladesh bank to accounts in the Philippines. The Swift system is used by some 11,000 banks and companies to transfer money from one country to another.
In the months that followed the Bangladesh heist, it was disclosed that cyberthieves had also attacked banks in Vietnam and Ecuador using Swift. [Continue reading…]
The Guardian reports: The German bank that loaned $300m (£260m) to Donald Trump played a prominent role in a money laundering scandal run by Russian criminals with ties to the Kremlin, the Guardian can reveal.
Deutsche Bank is one of dozens of western financial institutions that processed at least $20bn – and possibly more – in money of “criminal origin” from Russia.
The scheme, dubbed “the Global Laundromat”, ran from 2010 to 2014.
Law enforcement agencies are investigating how a group of politically well-connected Russians were able to use UK-registered companies to launder billions of dollars in cash. The companies made fictitious loans to each other, underwritten by Russian businesses. [Continue reading…]
The Organized Crime and Corruption Reporting Project reports: Three years after the “Laundromat” was exposed as a criminal financial vehicle to move vast sums of money out of Russia, journalists now know how the complex scheme worked – including who ended up with the $20.8 billion and how, despite warnings, banks failed for years to shut it down.
The Organized Crime and Corruption Reporting Project (OCCRP) broke the story of the Laundromat in 2014, but recently the reporters from OCCRP and Novaya Gazeta in Moscow obtained a wealth of bank records which they then opened to investigative reporters in 32 countries.
Their combined research for the first time paints a fuller picture of how billions moved from Russia, into and through the 112 bank accounts that comprised the system in eastern Europe, then into banks around the world. [Continue reading…]
The Guardian reports: Britain’s high street banks processed nearly $740m from a vast money-laundering operation run by Russian criminals with links to the Russian government and the KGB, the Guardian can reveal.
HSBC, the Royal Bank of Scotland, Lloyds, Barclays and Coutts are among 17 banks based in the UK, or with branches here, that are facing questions over what they knew about the international scheme and why they did not turn away suspicious money transfers.
Documents seen by the Guardian show that at least $20bn appears to have been moved out of Russia during a four-year period between 2010 and 2014. The true figure could be $80bn, detectives believe.
One senior figure involved in the inquiry said the money from Russia was “obviously either stolen or with criminal origin”.
Investigators are still trying to identify some of the wealthy and politically influential Russians behind the operation, known as “the Global Laundromat”.
They estimate a group of about 500 people were involved. These include oligarchs, Moscow bankers, and figures working for or connected to the FSB, the successor spy agency to the KGB.
Igor Putin, the cousin of Russia’s president, Vladimir, sat on the board of a Moscow bank which held accounts involved in the fraud. [Continue reading…]
The Wall Street Journal reports: The debts of President-elect Donald Trump and his businesses are scattered across Wall Street banks, mutual funds and other financial institutions, broadening the tangle of interests that pose potential conflicts for the incoming president’s administration.
Hundreds of millions of dollars of debt attached to Mr. Trump’s properties, some of them backed by Mr. Trump’s personal guarantee, were packaged into securities and sold to investors over the past five years, according to a Wall Street Journal analysis of legal and property documents.
Mr. Trump has previously disclosed that his businesses owe at least $315 million to 10 companies. According to the Journal’s analysis, Trump businesses’ debts are held by more than 150 institutions. They bought the debt after it was sliced up and repackaged into bonds — a process known as securitization, which has been used for more than $1 billion of debt connected to Mr. Trump’s companies.
As a result, a broader array of financial institutions now are in a potentially powerful position over the incoming president. If the Trump businesses were to default on their debts, the giant financial institutions that serve as so-called special servicers of these loan pools would have the power to foreclose on some of Mr. Trump’s marquee properties or seek the tens of millions of dollars that Mr. Trump personally guaranteed on the loans.
“The problem with any of this debt is if something goes wrong, and if there is a situation where the president is suddenly personally beholden or vulnerable to threats from the lenders,” said Trevor Potter, who served as a general counsel to the presidential campaigns of Republicans George H.W. Bush and John McCain. [Continue reading…]
Politico reports: Government Sachs is returning to Washington.
After a decade in the wilderness, Wall Street’s most powerful firm, Goldman Sachs, is dominating the early days of the incoming Trump administration. The newly picked Treasury Secretary, Steven Mnuchin, spent 17 years at Goldman. Trump’s top incoming White House adviser, Steve Bannon, spent his early career at the bank. So did Anthony Scaramucci, one of Trump’s top transition advisers.
Goldman’s president, Gary Cohn, spent an hour schmoozing with President-elect Donald Trump on Tuesday and could be up for an administration job, possibly as director of the Office of Management and Budget, people close to Cohn and the transition said. Cohn, a long-time commodities trader, is friendly with Trump’s powerful son-in-law, Jared Kushner.
It’s a stunning reversal of fortune for Goldman, a long-time Washington power that fell out of favor following the financial crisis. CEO Lloyd Blankfein got hauled before Congress along with other Wall Street executives to account for their behavior. And Trump, who ran as a populist and bashed Wall Street on the campaign trail, featured Blankfein as a shady and dangerous character in his final campaign ad.
Rolling Stone’s Matt Taibbi famously labeled Goldman the “great Vampire Squid” on the face of America.
Had Hillary Clinton won the White House, Goldman faced a virtual lock-out from Washington with Sens. Elizabeth Warren and Bernie Sanders poised to block and major picks from the bank or any other firm on Wall Street. [Continue reading…]
The Guardian reports: Britain’s biggest banks are preparing to relocate out of the UK in the first few months of 2017 amid growing fears over the impending Brexit negotiations, while smaller banks are making plans to get out before Christmas.
The dramatic claim is made in the Observer by the chief executive of the British Bankers’ Association, Anthony Browne, who warns “the public and political debate at the moment is taking us in the wrong direction”.
A source close to Brexit secretary David Davis said he and the chancellor Philip Hammond had last week sought to offer reassurance that they were determined to secure the status of the City of London.
However, the government’s stated intention to take control of the freedom of movement into the UK is widely recognised among officials to be a hammer blow to any chance of retaining the present terms of trade for banks, particularly given the bellicose rhetoric of major politicians on the continent. [Continue reading…]
Alan Rusbridger writes: In a seminar room in Oxford, one of the reporters who worked on the Panama Papers is describing the main conclusion he drew from his months of delving into millions of leaked documents about tax evasion. “Basically, we’re the dupes in this story,” he says. “Previously, we thought that the offshore world was a shadowy, but minor, part of our economic system. What we learned from the Panama Papers is that it is the economic system.”
Luke Harding, a former Moscow correspondent for The Guardian, was in Oxford to talk about his work as one of four hundred–odd journalists around the world who had access to the 2.6 terabytes of information about tax havens — the so-called Panama Papers — that were revealed to the world in simultaneous publication in eighty countries this spring. “The economic system is, basically, that the rich and the powerful exited long ago from the messy business of paying tax,” Harding told an audience of academics and research students. “They don’t pay tax anymore, and they haven’t paid tax for quite a long time. We pay tax, but they don’t pay tax. The burden of taxation has moved inexorably away from multinational companies and rich people to ordinary people.”
The extraordinary material in the documents drew the curtain back on a world of secretive tax planning, just as WikiLeaks had revealed the backroom chatter of diplomats and Edward Snowden had shown how intelligence agencies could routinely scoop up vast server farms of data on entire populations. The Panama Papers — a name chosen for its echoes of Daniel Ellsberg’s 1971 leak of the Pentagon Papers — unveiled how a great many rich individuals used one Panamanian law firm, Mossack Fonseca (“Mossfon” for short), to shield their money from prying eyes, whether it was tax authorities, law enforcement agencies, or vengeful former spouses. [Continue reading…]
The New York Times reports: A Tennessee woman slipped into a coma and died after an ambulance company took so long to assemble a crew that one worker had time for a cigarette break.
Paramedics in New York had to covertly swipe medical supplies from a hospital to restock their depleted ambulances after emergency runs.
A man in the suburban South watched a chimney fire burn his house to the ground as he waited for the fire department, which billed him anyway and then sued him for $15,000 when he did not pay.
In each of these cases, someone dialed 911 and Wall Street answered.
The business of driving ambulances and operating fire brigades represents just one facet of a profound shift on Wall Street and Main Street alike, a New York Times investigation has found. Since the 2008 financial crisis, private equity firms, the “corporate raiders” of an earlier era, have increasingly taken over a wide array of civic and financial services that are central to American life. [Continue reading…]
Reuters reports: The $2.08 trillion wiped off global equity markets on Friday after Britain voted to leave the European Union was the biggest daily loss ever, trumping the Lehman Brothers bankruptcy during the 2008 financial crisis and the Black Monday stock market crash of 1987, according to Standard & Poor’s Dow Jones Indices.
Global markets skidded following the unexpected result from the June 23 referendum, in which Britons voted to withdraw from the EU by a 52 percent to 48 percent margin.
Markets in mainland Europe were hit the worst, with Milan .FTMIB and Madrid .IBEX each down more than 12 percent for their biggest losses ever. Britain’s benchmark FTSE 100 .FTSE was down nearly 9 percent at one point on Friday, but rallied to close down 3.15 percent.
The route started in Asia, with the Nikkei .N225 down 7.9 percent, and carried over into Wall Street as the S&P 500 fell 3.6 percent.
Mohit Bajaj, director of ETF trading solutions at WallachBeth Capital LLC in New York, said the severity of the sell-off was partly due to investors misreading the outcome and betting the wrong way. [Continue reading…]
Before Thursday’s vote, George Soros wrote: avid Cameron, along with the Treasury, the Bank of England, the International Monetary Fund and others have been attacked by the leave campaign for exaggerating the economic risks of Brexit. This criticism has been widely accepted by the British media and many financial analysts. As a result, British voters are now grossly underestimating the true costs of leaving.
Too many believe that a vote to leave the EU will have no effect on their personal financial position. This is wishful thinking. It would have at least one very clear and immediate effect that will touch every household: the value of the pound would decline precipitously. It would also have an immediate and dramatic impact on financial markets, investment, prices and jobs.
As opinion polls on the referendum result fluctuate, I want to offer a clear set of facts, based on my six decades of experience in financial markets, to help voters understand the very real consequences of a vote to leave the EU.
The Bank of England, the Institute for Fiscal Studies and the IMF have assessed the long-term economic consequences of Brexit. They suggest an income loss of £3,000 to £5,000 annually per household – once the British economy settles down to its new steady-state five years or so after Brexit. But there are some more immediate financial consequences that have hardly been mentioned in the referendum debate. [Continue reading…]
The New York Times reports: Over the years, William R. Ponsoldt had earned tens of millions of dollars building a string of successful companies. He had renovated apartment buildings in the New York City area. Bred Arabian horses. Run a yacht club in the Bahamas, a rock quarry in Michigan, an auto-parts company in Canada, even a multibillion-dollar hedge fund.
Now, as he neared retirement, Mr. Ponsoldt, of Jensen Beach, Fla., had a special request for Mossack Fonseca, a Panama-based law firm well placed in the world of offshore finance: How could he confidentially shift his money into overseas bank accounts and use them to buy real estate and move funds to his children?
“He is the manager of one of the richest hedge funds in the world,” a lawyer at Mossack Fonseca wrote when the firm was introduced to Mr. Ponsoldt in 2004. “Primary objective is to maintain the utmost confidentiality and ideally to open bank accounts without disclosing his name as a private person.”
In summary, the firm explained: “He needs asset protection schemes, which we are trying to sell him.”
Thus began a relationship that would last at least through 2015 as Mossack Fonseca managed eight shell companies and a foundation on the family’s behalf, moving at least $134 million through seven banks in six countries — little of which could be traced directly to Mr. Ponsoldt or his children.
These transactions and others like them for a stable of wealthy clients from the United States are outlined in extraordinary detail in the trove of internal Mossack Fonseca documents known as the Panama Papers. The materials were obtained by the German newspaper Süddeutsche Zeitung and the International Consortium of Investigative Journalists, and have now been shared with The New York Times. [Continue reading…]
CNET reports: One of the biggest databases of leaked documents has just hit the internet, and what lies within is a massive and complicated web of corporate ownership that spans the globe.
The Panama Papers contain more than 2.5 million files, analysed by the International Consortium of Investigative Journalists and 112 reporters across 58 countries. Today’s data dump is just part of the picture, detailing the relationships between individuals, companies and offshore entities.
Think of it like a searchable corporate registry. But in this case, it’s a network made up of hundreds of thousands of individuals and companies, with seemingly endless links criss-crossing from Australia to Zimbabwe. The question now is which of these links can be used to prove the companies involved were attempting to hide massive wealth overseas.
While there’s no evidence that any of the entities have acted illegally, the “John Doe” behind the leak argues the data dump exposes the names behind growing income inequality, saying “it doesn’t take much to connect the dots.” [Continue reading…]
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…]
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…]