HSBC Caught in New Drug Money Laundering Scandal

While HSBC's Canary Wharf masters are back-peddling furiously over charges that they gave a leg up to terrorist financiers and drug traffickers as a recent U.S. Senate report charged, new evidence emerged that its business as usual for the multinational banking giant founded by Hong Kong-based British opium merchants.

Earlier this month, The Independent reported that French police had "intercepted one of the dozens of 'go-fast' cars which transport cannabis at high speed from Spain to Paris. The seizure--banal in itself--unravelled an extraordinary network of drug-trafficking, money-laundering, fraud and tax evasion which sprawled over the invisible barrier which separates Paris from the city's poor, multiracial suburbs."

The bank embroiled in this latest scandal? Why HSBC, of course!

According to reporter John Lichfield, "bank notes handed by clients to street drug dealers in the suburbs were ending up, French and Swiss investigators discovered, in the safes of seemingly law-abiding, well-heeled citizens in the French capital."

But that's not the only place where crisp bundles of cash were turning up.

"A trio of Moroccan brothers, including a prominent fund manager in Geneva, are alleged to have concocted an elaborate scheme to launder money by balancing two illegal flows of cash," The Independent averred.

At the center of this multimillion euro money laundering spider's web were: Meyer El-Maleh, the managing director of the fund management firm GPF SA, and brothers Mardoché El-Maleh, the alleged bagman of the cannabis-for-cash scheme and Nessim El-Maleh, a fund management specialist with the Swiss private banking arm of HSBC, HSBC Private Bank (Suisse) S.A.

The Independent reported that the trio "are suspected of handling up to €12m (£9.6m) in cash in the past seven months (and far more over the past four years). Assets seized by the police include €2m in cash, gold ingots, art treasures and guns."

"The HSBC bank has confirmed that its employee was involved in the affair," Swiss Info disclosed, "but says that it has been 'cooperating actively with the authorities about this over the past few months'. The Swiss newspaper Le Temps reports that GPF SA is about to dismiss the other brother."

Talk about closing the barn door after the horses have escaped!

Among the well-heeled perps arrested by authorities on charges of "conspiracy to launder money and association with criminals" was Florence Lamblin, a prominent Green Party politician and deputy mayor of the 13th arrondissement in Paris.

Her arrest was all the more ironic considering that fake "left" Greens are currently in coalition with François Hollande's pro-austerity "Socialist" government. Lamblin and her coalition partners had run on a platform demanding tougher action against (wait for it) international money laundering!

When Lamblin's home was raided "police discovered €400,000 (SFr484,000) in low-value notes" in safes belonging to the "progressive" politician, Swiss Info averred.

In the wake of her arrest, Lamblin was forced to resign although she denied "any involvement" in the drug smuggling scheme.

Her lawyer, Jérôme Boursican told AFP "she had held 350,000 euros from a family legacy in a Swiss account."

"If anything, my client may be guilty of tax fraud, over the transfer back to France of a sum of €350,000 from a family inheritance which was placed in a Swiss bank account in 1920," Boursican explained.

The attorney told France 24 that he would ask a judge "to dismiss the case against his client 'as soon as possible' and blamed her involvement on a 'judicial error'."

The "error" of getting caught perhaps?

Despite Lamblin's professed innocence, Swiss Info reported that "the sums involved are huge." French police have charged that "the sum involved in the money laundering is about €40 million, while French Interior Minister Manuel Valls says that the drug smuggling must have brought in about €100 million."

As preliminary reports suggest it appears that Lamblin was keen on keeping more than the environment "green."

A typical money laundering "placement" scheme, "cannabis profits leaving France were 'swapped' for assets hidden in Switzerland which tax cheats or business fraudsters wished to repatriate," The Independent reported.

"The risky job of smuggling drug-trafficking proceeds over the Franco-Swiss border was avoided," Lichfield wrote. "Instead, the drugs cash was handed over in plastic bags to Parisians who had hidden Swiss accounts."

"The same sums were debited from their banks in Geneva and sent on a complex route through shell companies in London and offshore tax havens to purchase assets for the drug barons in Morocco, Dubai or Spain. A commission was allegedly paid on both transactions," The Independent averred.

Referred to as "layering," the transfer of funds took place through a series of opaque financial transactions that camouflaged their illegal origins. In the case of our well-heeled Parisians, drug profits were swapped through bank-to-bank and bulk cash transfers via private banks in Geneva, one of which was owned by HSBC.

As Senate investigators disclosed, "Bulk cash shipments typically use common carriers ... to ship U.S. dollars by air, land, or sea. Shipments have gone via airplanes, armored trucks, ships, and railroads."

"Shippers," Senate staff averred, "may be 'currency originators,' such as businesses that generate cash from sales of goods or services; or 'intermediaries' that gather currency from originators or other intermediaries to form large shipments. Intermediaries are typically central banks, commercial banks, money service businesses, or their agents."

Eschewing armored cars, airplanes or ships, the "originators" of these illegal cash flows preferred ubiquitous black plastic trash bags and "go-fast" limousines as the method of choice for bulk cash transfers. It would certainly cut down on shipping costs as the loot moved "offshore" and entered the shadow world of private banking!

As financial researcher James S. Henry pointed out in The Price of Offshore Revisited: "The term 'offshore' refers not so much to the actual physical location of private assets or liabilities, but to nominal, hyper-portable, multi-jurisdictional, often quite temporary locations of networks of legal and quasi-legal entities and arrangements that manage and control private wealth--always in the interests of those who manage it, supposedly in the interests of its beneficial owners, and often in indifference or outright defiance of the interests and laws of multiple nation states."

"A painting or a bank account may be located inside Switzerland's borders," Henry wrote, "but the all-important legal structure that owns it--typically that asset would be owned by an anonymous offshore company in one jurisdiction, which is in turn owned by a trust in another jurisdiction, whose trustees are in yet another jurisdiction (and that is one of the simplest offshore structures)--is likely to be fragmented in many pieces around the globe."

Given Switzerland's strict bank secrecy laws, we do not know, and Senate investigators did not disclose, how many billions of dollars were hidden for HSBC's private banking clients in Geneva, where it originated or whether or not occult wealth shielded from scrutiny was derived from organized criminal activities.

In July however, when the Senate pointed a finger directly at HSBC over anti-money laundering "lapses," The Bureau of Investigative Journalism revealed that "British clients of an HSBC-owned private Swiss bank that is the focus of a major HM Revenue & Customs investigation are alleged to have evaded tax by an amount likely to exceed £200m."

Lord Stephen Green, Baron of Hurstpierpoint and current Minister of Trade and Investment in David Cameron's Conservative government, was previously HSBC's chief executive and the chairman and director of HSBC Private Banking Holdings (Suisse) N.A. for ten years.

During Green's tenure, journalist Nick Mathiason disclosed that "the sums allegedly evaded by Britons using HSBC's Swiss bank are massive. HMRC told the Bureau 'the early indications are that the amounts are significant'."

According to Mathiason, in 2010 the HMRC "received data smuggled out of HSBC by a former bank IT worker, now under arrest in Spain and facing possible extradition to Switzerland, that contained details of 6,000 UK-linked individuals, companies and trusts. Two senior tax investigators who both worked at HMRC told the Bureau the average amount evaded in the 6,000 accounts is likely to range between £33,000 and £50,000."

While the sums involved in the Parisian money laundering and drugs scandal may be chump change in comparison to the trillions of dollars in illicit drug money that enters the system each year as a result of "normal business relations" between global drug cartels and the international financial system as the United Nations Office on Drugs and Crime (UNODC) revealed last year, it does demonstrate the utterly corrupt nature of the system as a whole.

Indeed, seeming ideological foes are joined at the hip when it comes to fleecing the working class and imposing austerity and privatization schemes that profit their real constituents--the global class of financial parasites who "win" regardless of which party of hucksters gain power.

As Henry observed, "private elites ... had accumulated $7.3 to $9.3 trillion of unrecorded offshore wealth in 2010, conservatively estimated, even while many of their public sectors were borrowing themselves into bankruptcy, enduring agonizing 'structural adjustment' and low growth, and holding fire sales of public assets."

Public sector thefts that enrich the shareholders and officers of corrupt institutions like HSBC.

Although settlement talks between U.S. regulatory agencies and HSBC has forced the bank to set aside at least $700m (£441m) to meet the cost of any fines, it is highly unlikely that officials at the bank will be criminally charged.

Currently negotiating with the Justice Department, the Federal Reserve and the Office of the Comptroller of the Currency over serious allegations that the bank conducted a multiyear, multibillion dollar business with terrorist financiers and global drug cartels, the price tag may balloon even higher.

"HSBC's $700 million set-aside, if paid, would constitute the largest U.S. settlement reached over such allegations, topping the $619 million in penalties and forfeitures paid in June by ING Groep NV, the biggest Dutch financial-services company," Bloomberg News reported.

According to The New York Times, "federal authorities think HSBC could end up paying at least $1 billion. The bank itself said 'it is possible that the amounts when finally determined could be higher, possibly significantly higher'."

A spokesperson for HSBC however, told the Times this "case is not about HSBC complicity in money laundering. Rather, it's about lax compliance standards that fell short of regulators' expectations and our expectations, and we are absolutely committed to remedying what went wrong and learning from it'."

But as Rowan Bosworth-Davies, a former financial crimes specialist with London's Metropolitan Police observed: "You don't launder this volume of money by accident, because somewhere along the line, your systems and controls for preventing money laundering just 'broke down'! You do it because you work in a bank which is willing to flout every rule in the book and engage in layer upon layer of criminal conduct if the money is right! You do it because your management structure is defined by a criminogenic determination to amplify the anomic environment within which you operate and in which you expect your staff to co-operate."

For their part, Swiss bankers are scrambling to put as much daylight as possible between themselves, the Paris money laundering scandal and HSBC.

Bernard Droux, the chairman of the Geneva Financial Center foundation, an umbrella group of independent banks and wealth managers told Swiss Info: "We were surprised that it should still be possible to do this today. This is a practice that has been forbidden by law for more than 20 years."

But as with other recent examples of financial skullduggery, Droux reverted to form and claimed "You can never rule out the possibility of black sheep in any profession. No international centre is totally protected from this kind of thing."

He hastened to add that Switzerland was at the "forefront" of the international fight against drug money.

However, Droux's "black sheep" brush-off was undercut by a recent Bloomberg Businessweek report. We were informed that "Swiss private banks are looking for footholds in Latin America as the lower fees and higher interest rates offered by local wealth managers deter the region's super-rich from traveling to Geneva and Zurich."

This "changing relationship," Bloomberg reported, began "in the 19th century when Swiss banks guarded the fortunes of plantation owners and mining magnates. UBS AG (UBSN), Credit Suisse Group AG (CSGN) and other Swiss banks are being forced to seek acquisitions as Latin America’s $3.5 trillion wealth management market is set to grow by more than half by 2016, according to Boston Consulting Group."

"'People are becoming richer and richer,' said Gustavo Raitzin, head of Latin America for Julius Baer Group Ltd. (BAER). 'An emerging consumer class wants to make liquid investments and they need private banks and wealth managers'."

It is worth recalling in this context that Julius Baer's Cayman Islands division, as the whistleblowing web site WikiLeaks revealed, was instrumental in squirreling away "several million dollars" of funds controlled by late Mexican Army General Mario Acosta Chaparro and his wife, Silvia, through a shell company known as Symac Investments.

Acosta, who served time in prison for his ties to the late drug trafficking kingpin Amado Carrillo Fuentes, the self-styled "Lord of the Heavens" who ran the Juárez Cartel, was killed in May when an assassin fired three rounds from a a 9mm revolver into his head.

The secret-spilling web site averred: "With the assistance of Julius Baer, Mr Chaparro was able to invest several millions of USD in Symac with all the secrecy which the Caymans allowed and to draw out some $12,000 a month."

Who else might be in need of "private banks and wealth managers" employed by the likes of HSBC and Julius Baer to make such "liquid investments" possible with no questions asked?

Paging Chapo Guzmán, white courtesy telephone!

(Image courtesy of Daniel Hopsicker's MadCow Morning News)

Teflon President? Noose Tightens Around Uribe as Former Death Squad Leaders Spill the Beans

Last month's capture of Colombian drug lord Daniel "El Loco" Barrera by Venezuelan police was hailed as a "victory" in the "War on Drugs."

Barrera, accused of smuggling some 900 tons of cocaine into Europe and the U.S. throughout his infamous career, was described by Colombian President Juan Manuel Santos, who announced the arrest on national television, as "the last of the great capos."

But what of the "capo" who enjoyed high office, is wined and dined by U.S. corporations and conservative think-tanks, owns vast tracks of land, is a "visiting scholar" at a prominent American university (Georgetown) and now sits on the Board of Directors of Rupert Murdoch's News Corporation?

When will they be brought to ground?

A Family Affair

To clarify the questions above, one need look no further than the kid-gloves approach taken by the media when it comes to former Colombian President, the U.S. "Presidential Medal of Freedom" recipient Álvaro Uribe.

Accused by human rights organizations over his role in the forced disappearance of thousands of Colombians during two terms in office (2002-2010), Uribe may still land in the dock as a result of ongoing investigations by Colombia's Supreme Court into official corruption, drug trafficking and mass murder.

Recent arrests by Colombian authorities and revelations by the president's former allies however, are beginning to draw a circle around Uribe and the U.S. secret state in some of the hemisphere's worst human rights abuses of previous decades.

As the net tightens, members of the president's own family are sharply focused in the cross-hairs of investigators. Back in June, Antifascist Calling reported on the arrest of Ana Maria Uribe Cifuentes and her mother, Dolly Cifuentes Villa on drug trafficking and money laundering charges. The U.S Treasury Department froze their assets last year.

Accused by the Justice Department of having trafficked some 30 tons of cocaine into the U.S. as business partners of Sinaloa Cartel boss Joaquín "El Chapo" Guzmán, the women, members of the Cifuentes Villa crime family led by Dolly's brother, Jorge Milton Cifuentes Villa, are prominent members of Colombia's jet-setting narco-bourgeoisie.

According to the Justice Department, the investigation revealed that "the Cifuentes Villa drug trafficking organization was using sophisticated drug trafficking routes to distribute multi-ton cocaine loads from Colombia through Central America, for ultimate distribution in Mexico and the United States." In 2009, some 8.3 tons of cocaine which the family were attempting to export to Mexico were seized by law enforcement officials in Ecuador.

Federal prosecutors charged that the Cifuentes Villa family owns or controls 15 companies operating in Colombia, Mexico and Ecuador involved in a variety of ventures that supported their narcotrafficking enterprise.

Among the firms targeted were Linea Aerea Pueblos Amazonicos S.A.S., a newly-created airline operating in eastern Colombia, Red Mundial Inmobiliaria, S.A. de C.V., a real estate company located near Mexico City, along with Gestores del Ecuador Gestorum S.A., a consulting firm located in Quito, Ecuador.

It is also worth noting that the Cifuentes Villa organization, as the Center of Public Integrity reported, have also profited from illegal mining operations that traffic rare-earth minerals destined for the world market.

Accordingly, the Cifuentes Villa clan employed the same smuggling routes that trafficked cocaine to move precious metallic ores such as coltan and tungsten, used by the communications industry and weapons manufacturers, onto the international market. When the Treasury Department placed family members onto its drug kingpin list they identified their mining fronts as "a money-laundering operation in support of a cocaine-smuggling enterprise."

While U.S. media were mesmerized by the extradition of Sandra Ávila Beltrán, whom the press had dubbed "La Reina del Pacífico" (The Queen of the Pacific), over her lavish lifestyle and family ties to legendary Mexican drug lord Miguel Ángel Félix Gallardo, onetime godfather of the Guadalajara Cartel, Uribe's relatives inexplicably "disappeared" from "court records and authorities were unable to pinpoint the pair's whereabouts," Colombia Reports informed us.

Imagine that.

For his part, the former president denied allegations leveled against his brother Jaime, who died in 2001, and claimed that unnamed "criminals," who conducted "business" from his brother's car phone had cloned it. He also "denied any knowledge of his brother's relationship with Cifuentes or the existence of his niece, despite a birth certificate that was uncovered proving Jaime Uribe was her father," Colombia Reports averred.

What Uribe continues to gloss over however, is the inconvenient fact that brother Jaime had been arrested and interrogated by the Colombian Army after investigators recorded calls \made from his phone to none other than Pablo Escobar, the Nuevo Arco Iris political research center in Bogotá disclosed.

Among the unanswered questions surrounding these recent arrests, investigative journalist Daniel Hopsicker wondered: "Did Álvaro Uribe okay the loading of 3.6 tons of cocaine at an airport he controlled in Rio Negro Colombia onto a 'former' CIA Gulfstream (N987SA) jet from St. Petersburg Florida that crashed in the Yucatan in 2007?"

That fateful crash eventually led to the deferred prosecution agreement between the U.S. federal government and Wachovia Bank, fined $160 million for laundering some $378 billion for Mexico's Sinaloa Cartel, "business associates" of the Cifuentes Villa clan.

More pointedly Hopsicker asked: "Why did two successive U.S. Administrations lavish billions of dollars to stop drug trafficking on a President of Colombia who was himself involved in the drug trade?"

As the investigative net is drawn around the family of the former president, another Uribe brother, Santiago, "is facing a criminal investigation for the alleged founding and leading of a paramilitary group," Colombia Reports disclosed.

Investigations into that group, the notorious death squad the 12 Apostles, again surfaced when The Washington Post revealed that a former police chief, Juan Carlos Meneses, charged that Santiago "led a fearsome paramilitary group in the 1990s ... that killed petty thieves, guerrilla sympathizers and suspected subversives."

Meneses, who fled to Venezuela with his family, disclosed that the "group's hit men trained at La Carolina, where the Uribe family ran an agro-business in the early 1990s." For services rendered, Meneses told the Post "he received a monthly payment of about $2,000 delivered by Santiago Uribe."

The former police official said he came forward "because associates in the security services warned him he would soon be killed for knowing too much."

"The revelations," according to the Post, "threaten to renew a criminal investigation against Santiago Uribe and raise new questions about the president's past in a region where private militias funded with drug-trafficking proceeds and supported by cattlemen wreaked havoc in the 1990s. The disclosures could prove uncomfortable to the United States, which has long seen Uribe as a trusted caretaker of American money in the fight against armed groups and the cocaine trade."

"Uncomfortable" perhaps, but not surprising given the U.S. track record in support of drug-trafficking death squads, especially those which advanced corporate America's geopolitical interests throughout Latin America.

"Meneses," the Post averred, "is the first close collaborator of the 12 Apostles to speak publicly about the group's inner workings. His declarations are also the most extensive recounting by a security services official of how Colombia's militarized police and its army worked in tandem with death squads in one community--a model that investigators of the paramilitary movement say was duplicated nationwide."

For his part, the former president accused human rights' activists who have leveled charges against his family "of being guerrilla stooges who disseminate false accusations against his government."

However, Nobel Peace Prize laureate, Adolfo Pérez Esquivel, who was present when Meneses recounted his story during a taped interview in Buenos Aires, told the Post that the former police chief "'incriminates himself and also the brother of the president who managed the paramilitary group, but also President Uribe'."

Interestingly enough, Uribe's appointment to News Corp's board came while the former president is under investigation for illegally wiretapping human rights activists, journalists, Supreme Court justices and opposition politicians.

His former chief of staff is currently in jail awaiting trial on criminal wiretapping charges and his former secret police chief, Maria Pilar Hurtado, fled Colombia and sought asylum in Panama before similar charges could be filed against her.

And with two more senators now under investigation for suspected ties to paramilitary death squads Colombia Reports averred, Uribe's teflon armor is slowly being chipped away.

Parapolitical Scandal

If, as Voltaire once said, "the history of the great events of this world are scarcely more than the history of crime," what of the powerful actors who have looted entire nations and did so while serving the interests of their imperialist overlords?

Dubbed the "parapolitical scandal" by Colombian media, the investigation was set in motion when leftist opposition politician, Clara López Obregón, formally denounced and provided evidence in 2005 to the Supreme Court of links between drug trafficking organizations, the military/intelligence apparatus, right-wing death squads and members of Congress, including prominent officials of Álvaro Uribe's then-governing coalition.

That investigation gathered steam when a laptop was seized by authorities in 2006 from Rodrigo Tovar Pupo, alias Jorge 40, a leader of the Northern Bloc of the Autodefensas Unidas de Colombia (United Self-Defense Forces of Colombia, or AUC).

The origins of the AUC can be traced to the take-down of the Medellín Cartel and murder of "cocaine king" Pablo Escobar by rival drug organizations, principally the Cali Cartel run by the Rodríguez Orejuela brothers, who were provided logistical support and firepower by the CIA and U.S. Delta Force commandos to eliminate the competition.

An umbrella group comprised of far-right militants and drug capos aligned with Colombia's ruling class, the AUC and splinter groups such as the Águilas Negras, or Black Eagles, and the Ejército Revolucionario Popular Antiterrorista Colombiano (Popular Revolutionary Anti-Terrorist Army of Colombia, ERPAC), derive the bulk of their income from drug trafficking as they wage war against the leftist Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed Forces of Colombia, or FARC), trade unionists and land reform activists.

Readers will recall that during the 1980s both the Medellín and Cali cartels were given a leg up by the Reagan administration's CIA as funds derived from the drug trade were diverted to the Nicaraguan Contras as part of the administration's anti-Communist crusade in Central America.

In fact, as the Agency was forced to admit in the wake of "suicided" journalist Gary Webb's "Dark Alliance" investigation, the CIA and Reagan's Justice Department agreed to a Memorandum of Understanding that handed their dope-dealing Contra assets get-out-of-jail-free cards.

As political fallout from the latest "War on Drugs" scandal--the "gun walking" Fast and Furious affair that put thousands of high-powered weapons into the hands of cartel killers in Mexico--hovers like a radioactive cloud over the Justice Department, the old watchword of the 1980s, "drugs in, guns out," is all the more timely.

And like the Contras, the AUC were more than simply an enforcement arm of Colombia's narco-elites; they served as an unofficial though deadly instrument, to preserve the status quo. For Washington policy makers, this meant continued access by U.S. petroleum corporations, mining and agro-business interests to Colombia's vast wealth. If thousands of tons of cocaine entered the United States as the price for stamping out "leftist subversion," then so be it.

Along with incriminating evidence that linked Tovar's gang to 550 murders, it later emerged that Tovar was a close political associate of Jorge Noguera, the former head of DAS, the Departamento Administrativo de Seguridad (Administrative Department of Security), the Colombian equivalent of the CIA.

Noguera's links to Tovar came to light when his deputy, Rafael García Torres, DAS's former chief of Information Technologies, was arrested and charged by Supreme Court investigators of accepting bribes from right-wing sicarios (assassins) and drug traffickers in exchange for erasing their criminal histories, along with those of the Cifuentes Villa clan, from the state intelligence database.

In his testimony, García charged that Noguera, a Uribe crony, collaborated with Tovar's Northern Bloc in a coordinated move by the AUC to support local, regional and national candidates for office who supported their hardline against the left.

More recently, the not-so-hidden hand of the United States emerged.

The Washington Post reported that "American cash, equipment and training, supplied to elite units of the Colombian intelligence service over the past decade to help smash cocaine-trafficking rings, were used to carry out spying operations and smear campaigns against Supreme Court justices, Uribe's political opponents and civil society groups."

Post reporters Karen DeYoung and Claudia J. Duque disclosed that despite billions of dollars of aid supplied by U.S. taxpayers under Plan Colombia, "the DAS under Uribe emphasized political targets over insurgents and drug lords."

In fact, Colombia prosecutors told the Post that the "Uribe government wanted to 'neutralize' the Supreme Court because its investigative magistrates were unraveling ties between presidential allies in the Colombian congress and drug-trafficking paramilitary groups."

Based on "thousands of pages of DAS documents and the testimony of nine top former DAS officials, the prosecutors say the agency was directed by the president's office to collect the banking records of magistrates, follow their families, bug their offices and analyze their court rulings."

These black operations however, were not the work of a few proverbial "bad apples" but were a direct result of projects designed by the CIA.

"Some of those charged or under investigation have described the importance of U.S. intelligence resources and guidance," the Post disclosed, "and say they regularly briefed embassy 'liaison' officials on their intelligence-gathering activities."

"'We were organized through the American Embassy,' said William Romero, who ran the DAS's network of informants and oversaw infiltration of the Supreme Court. Like many of the top DAS officials in jail or facing charges, he received CIA training. Some were given scholarships to complete coursework on intelligence-gathering at American universities."

As with the previous Clinton and Bush regimes, the Obama administration vociferously denies any knowledge of corrupt practices by Colombian officials and in fact, "anti-drug" programs such as Plan Colombia "are viewed as so successful that it has become a model for strategy in Afghanistan," the Post reported.

By 2012 however, some 139 members of Congress were under investigation; five governors and 32 lawmakers, including President Uribe's cousin, Mario Uribe Escobar, a former President of Congress, were convicted of paramilitary ties and subsequently jailed.

In late August, former Colombian senator Jorge Visbal, a Uribe ally, "was charged with the promoting and financing of paramilitary groups, held responsible for tens of thousands of human rights violations," Colombia Reports disclosed.

"Former AUC leader Salvatore Mancuso testified before Colombian prosecutors that Visbal had an 'identical ideology' to the extreme-right paramilitaries and, on behalf of the cattle ranchers, brought 'information and suggestions' to meetings with paramilitary leaders to secure the expansion of paramilitary power in the north of Colombia."

Mancuso, who took over the AUC when Israeli-trained narcotrafficker and death-squad führer Carlos Castaño "disappeared" in 2004, said during recent court proceedings that Uribe was aware that the organization supported his campaign for president in 2002 "economically and logistically," according to Colombia Reports.

Prior to his arrest, the human rights organization Equipo Nizkor reported that Mancuso, the son of Italian immigrants, along with being an AUC "godfather," was also a member of the 'Ndrangheta, "the powerful Calabrian mafia which according to Italian police, exceeds the Sicilian Cosa Nostra in both strength and size."

In fact, when Italian anti-Mafia prosecutor Nicola Gratteri flew to Bogotá to investigate the 'Ndrangheta's Colombian drugs network, Gratteri was told by Mancuso he had spied on him the entire time.

"I was in the center of Bogotá, with lots of security protecting me. I didn't know that all the armored cars that I could see around my hotel belonged to Mancuso," Gratteri told The Daily Beast. "He told me his protection consisted of 600 men! Not even the U.S. President has such an escort. Can you imagine how much money he had?"

Mancuso claimed Uribe was aware of the AUC's backing. "There were previous meetings with members of Álvaro Uribe's campaign, including those delegates that asked us to decrease military operations because it was affecting the campaign and image of the candidate," Mancuso said.

During those same proceedings, another former AUC leader, Jorge Ivan Laverde, alias "El Iguano," said that "no evidence exists of these financial transactions because the groups burned all of their paramilitary records before they demobilized."

Rather conveniently, one might say.

"According to El Iguano," Colombia Reports disclosed, "the support of the ex-president all began when the righthand man of AUC creator Carlos Castaño called all groups to give them the order that they must support the Uribe campaign and spend money where necessary."

The former president denounced these claims and said he would launch "a criminal complaint against the former paramilitary for libel."

However, former Congressman Miguel Alfonso de la Espriella, who was part of Uribe's coalition government and later sentenced for ties to the AUC, told prosecutors in September that Uribe "knew he was receiving support from paramilitary groups during his 2002 election campaign," Colombia Reports disclosed last month.

The now-disgraced politician said that Uribe "never objected" to meeting with the AUC-backed politicians, but "simply maintained a prudent silence."

In a recent interview, de la Espriella told El Espectador that the AUC had donated some $134 thousand to Uribe's 2002 presidential campaign.

The former senator told the paper that Mancuso said "our participation in the self defense forces was to seek a deal with his [Uribe's] government. He [Uribe] did not explicitly reject this possibility or the support. What he did say was that we wait and if he got elected we would talk again."

More recently, Uribe's jailed ex-security chief, Mauricio Santoyo Velasco, accused of illegally ordering driftnet surveillance over electronic communications and the forced disappearance of human rights workers in Medellín, "is willing to officially testify against his old boss and other senior officials," according to Colombia Reports.

Santoyo is presently jailed in the U.S. for collaborating with the AUC and "previously acknowledged accepting bribes from paramilitary members in exchange for giving them information about police operations being carried out against them."

According to "highly credible sources" cited by Colombia Reports, Santoyo "is willing to implicate the ex-president and other top officials," in exchange for a "reduced sentence."

Although U.S. prosecutors previously said that the Santoyo case was the "tip of the iceberg" and an opposition senator accused the former president of bringing "a criminal apparatus" to the presidential palace in 2002, the current director of Colombia's National Police, General José Roberto León Riaño, denied that the U.S. is investigating anyone other than Santoyo.

"Yesterday I personally interviewed the toughest prosecutor of the United States on the matter of drug trafficking, Neil MacBride, who is running the case against [retired general Mauricio] Santoyo," Colombia Reports averred. "He indicated: 'there are bad apples in every institution, Santoyo is an apple that acted on his own, but that can't affect the whole organization'."

While evidence has yet to emerge that Uribe met with Mancuso as the former AUC chief testified, ubiquitous "facts on the ground" in the form of thousands of tons of exported dope, forced "disappearances" and the mass murder of peasants and left-wing activists tell a different tale and point to official complicity amongst Colombian elites and their U.S. "drug war" sponsors.

Back to the Future: U.S. Complicity and Cover-Up

The sordid history of collaboration between Colombian elites, drug gangs, the military and right-wing death squads was known for years by U.S. secret state agencies and federal prosecutors but was covered-up in the interest of "national security."

In declassified documents published by the National Security Archive in 2004, we learned that then Senator "Álvaro Uribe Vélez of Colombia was a 'close personal friend of Pablo Escobar' who was 'dedicated to collaboration with the Medellín [drug] cartel at high government levels,' according to a 1991 intelligence report from U.S. Defense Intelligence Agency (DIA) officials in Colombia."

Researcher Michael Evans revealed that the "newly-declassified report, dated 23 September 1991, is a numbered list of 'the more important Colombian narco-traffickers contracted by the Colombian narcotic cartels for security, transportation, distribution, collection and enforcement of narcotics operations'."

The former president, a "key U.S. partner in the drug war" and a major recipient of billions of dollars of taxpayer-supplied funds for Plan Colombia, "was linked to a business involved in narcotics activities in the United States" and "has worked for the Medellín cartel."

Evans disclosed that "The document is marked 'CONFIDENTIAL NOFORN WNINTEL,' indicating that its disclosure could reasonably be expected to damage national security, that its content was based on intelligence sources and methods, and that it should not be shared with foreign nationals."

One cannot help but ask: whose "national security" was threatened by the disclosure? Certainly not that of thousands of Colombian citizens murdered by drug-linked paramilitary gangsters or the hundreds of thousands of "drug war" victims incarcerated in American gulags for drug use or low-level sales.

"Uribe," the Archive informed us, was "the 82nd name on the list," and appeared "on the same page as Escobar and Fidel Castaño, who went on to form the country's major paramilitary army, a State Department-designated terrorist group now engaged in peace negotiations with the Uribe government. Written in March 1991 while Escobar was still a fugitive, the report was forwarded to Washington several months after his surrender to Colombian authorities in June 1991."

"Most of those on the list are well-known drug traffickers or assassins associated with the Medellín cartel," Evans averred. "Others listed include ex-president of Panama Manuel Noriega [and] Iran-contra arms dealer Adnan Khashoggi."

Four years later in another release of previously classified documents, the Archive revealed that "U.S. espionage operations targeting top Colombian government officials in 1993 provided key evidence linking the U.S.-Colombia task force charged with tracking down fugitive drug lord Pablo Escobar to one of Colombia's most notorious paramilitary chiefs."

"The documents," Evans wrote, "reveal that the U.S.-Colombia Medellín Task Force, known in Spanish as the Bloque de Búsqueda or 'Search Block,' was sharing intelligence information with Fidel Castaño, paramilitary leader of Los Pepes (Perseguidos por Pablo Escobar or 'People Persecuted by Pablo Escobar'), a clandestine terrorist organization that waged a bloody campaign against people and property associated with the reputed narcotics kingpin."

After Escobar's take-down, Los Pepes morphed into the AUC and led to a strategic realignment "between Colombian intelligence agencies, rival drug traffickers and disaffected former Escobar associates like Castaño, the godfather of a new generation of narcotics-fueled paramilitary forces that still plagues Colombia today."

"The collaboration between paramilitaries and government security forces evident in the Pepes episode is a direct precursor of today's 'para-political' scandal," said Evans. "The Pepes affair is the archetype for the pattern of collaboration between drug cartels, paramilitary warlords and Colombian security forces that developed over the next decade into one of the most dangerous threats to Colombian security and U.S. anti-narcotics programs. Evidence still concealed within secret U.S. intelligence files forms a critical part of that hidden history."

In this context, as Peter Dale Scott observed in Drugs, Oil, and War, "The true purpose of most of these campaigns has not been the hopeless ideal of eradication. It has been to alter market share: to target specific enemies and thus ensure that the drug traffic remains under the control of those traffickers who are allies of the Colombian state security apparatus and/or the CIA."

"Allies" like Álvaro Uribe.

Black Dossier 2: HSBC & the Global Drug Trade

Death penalty doesn't mean anything unless you use it on people who are afraid to die. Like... the bankers who launder the drug money. The bankers, who launder, the drug money. Forget the dealers, you want to slow down that drug traffic, you got to start executing a few of these fucking bankers. White, middle class Republican bankers. -- George Carlin, 'Back in Town Special,' 1996

In a recent investigation I presented the case that British banking and financial giant HSBC conspired with banking institutions with documented links to terrorist financing, including those responsible for helping bankroll the 9/11 attacks.

Drawing upon evidence published by the Senate Permanent Subcommittee on Investigations in their mammoth report, "U.S. Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing: HSBC Case History," we learned that senior HSBC officers, despite misgivings voiced by staff in internal correspondence, choose to continue profitable relations with Saudi Arabia's Al Rajhi Bank, described by U.S. law enforcement agencies as moneymen for the CIA's false flag specialists, Al Qaeda.

The same callous indifference which guided bank policy when it came to financing terrorists was HSBC's modus operandi as they aided and abetted drug money laundering by some of the most violent gangsters on earth.

And with "all criminal proceeds ... likely to have amounted to some 3.6 per cent of GDP (2.3-5.5 per cent) or around US$2.1 trillion in 2009," as the United Nations Office on Drugs and Crime (UNODC) pointed out in that agency's 2011 report, Estimating Illicit Financial Flows Resulting from Drug Trafficking and Other Transnational Crimes, the incentives for big banks to continue inflating their balance sheets with funds derived from global crime are compelling.

A Leg Up for Chapo

While it is oft said that "crime doesn't pay," that's only true if you aren't amongst the privileged few with enough cash and connections to avoid a trip to the slammer.

"Over the last decade," Senate investigators reported, "the U.S. Senate Permanent Subcommittee on Investigations has worked to strengthen U.S. AML efforts by investigating how money launderers, terrorists, organized crime, corrupt officials, tax evaders, and other wrongdoers have utilized U.S. financial institutions to conceal, transfer, and spend suspect funds."

In the wake of the 9/11 attacks, the Subcommittee focused "on how U.S. banks, through the correspondent services they provide to foreign financial institutions, had become conduits for illegal proceeds associated with organized crime, drug trafficking, and financial fraud."

The report underlined the key role that correspondent banking plays in washing illegal proceeds through the system. Senate investigators averred that "Correspondent banking occurs when one financial institution provides services to another financial institution to move funds, exchange currencies, cash monetary instruments, or carry out other financial transactions."

For HSBC's Canary Wharf masters, the U.S. affiliate was a key part of their strategy to expand the bank's tentacles into the lucrative North American market and they did so by standing up HSBC Bank USA N.A. (HNAH), better known as HBUS.

Indeed, a senior executive told the Subcommittee that the bank "acquired its U.S. affiliate, not just to compete with other U.S. banks for U.S. clients, but primarily to provide a U.S. platform to its non-U.S. clients and to use its U.S. platform as a selling point to attract still more non-U.S. clients."

Clients like Chapo Guzmán, the fugitive billionaire who runs Mexico's Sinaloa Cartel.

Investigators found that "until recently," that is, only after top officials were apprised of increased scrutiny by regulators, that "HSBC Group policy instructed its affiliates to assume that all HSBC affiliates met the Group's AML standards and to open correspondent accounts for those affiliates without additional due diligence."

"For years," Senate staff noted, "HBUS followed that policy, opening U.S. correspondent accounts for HSBC affiliates without conducting any AML due diligence. Those affiliates have since become major clients of the bank." In other words, liquidity trumped inconvenient rules and regulations which after all, following Leona Helmsley's maxim, only applied to "little people."

"In 2009, for example, HBUS determined that 'HSBC Group affiliates clear[ed] virtually all USD [U.S. dollar] payments through accounts held at HBUS, representing 63% of all USD payments processed by HBUS.' HBUS failed to conduct due diligence on HSBC affiliates despite a U.S. law that has required all U.S. banks, since 2002, to conduct these due diligence reviews before opening a U.S. correspondent account for any foreign financial institution, with no exception made for foreign affiliates."

One HSBC affiliate which amply illustrated the bank's shady proclivities was HSBC Mexico, known as HBMX. The Subcommittee asserted that "HBUS should have, but did not, treat HBMX as a high risk correspondent client subject to enhanced due diligence and monitoring. HBMX operated in Mexico, a country under siege from drug crime, violence and money laundering; it had high risk clients, such as Mexican casas de cambios and U.S. money service businesses; and it offered high risk products, such as U.S. dollar accounts in the Cayman Islands."

Despite the risks, "from 2007 through 2008, HBMX was the single largest exporter of U.S. dollars to HBUS, shipping $7 billion in cash to HBUS over two years, outstripping larger Mexican banks and other HSBC affiliates."

The Subcommittee noted that "Mexican and U.S. authorities expressed repeated concern that HBMX's bulk cash shipments could reach that volume only if they included illegal drug proceeds. The concern was that drug traffickers unable to deposit large amounts of cash in U.S. banks due to AML controls, were transporting U.S. dollars to Mexico, arranging for bulk deposits there, and then using Mexican financial institutions to insert the cash back into the U.S. financial system."

But as we previously learned when we explored cosy relations between suspected terrorist financiers at the Al Rajhi Bank and HSBC's London Banknotes division, senior managers cared not a whit that billions of dollars entering the United States from Mexico came from laundered drug money.

Gateway for Narcodollars

One "line of business" that proved particularly lucrative for the bank and their drug lord clients was the "Global Banking and Markets" division. Operating in some 60 countries, the office provided a wide range of "'tailored financial solutions' to major government, corporate, and institutional clients."

"This line of business," Senate investigators reported, "includes an extensive network of correspondent banking relationships, in which HBUS provides banks from other countries with U.S. dollar accounts to transact business in the United States. Due to its affiliates in over 80 countries, HSBC is one of the largest providers of correspondent banking services in the world."

What made this division particularly prone to manipulation was its brief to provide "access to the U.S. financial system by handling international wire transfers, clearing a variety of U.S. dollar instruments, including travelers cheques and money orders, and providing foreign exchange services. HBUS Payment and Cash Management (PCM) is a key banking division, located in New York, that supports HBUS' correspondent relationships."

Senate staff reported that until 2010, "HBUS housed the Global Banknotes Department, which used offices in New York City, London, Hong Kong, and elsewhere to buy, sell, and ship large amounts of physical U.S. dollars."

"The Banknotes Department," investigators disclosed, "derived its income from the trading, transportation, and storage of bulk cash, doing business primarily with other banks and currency exchange businesses, but also with HSBC affiliates."

It doesn't take a rocket scientist to suspect that unscrupulous managers, once the wheels were sufficiently greased by clients such as Chapo Guzmán or cartel moneyman Pedro Alatorre, wouldn't bend over backwards to clear dodgy transactions whatever the source.

Despite suspicions that all wasn't well, "for a number of years, HBUS held a contract with the U.S. Federal Reserve Bank of New York (FRBNY) to operate U.S. currency vaults in several cities around the world to assist in the physical distribution of U.S. dollars to central banks, large commercial banks, and businesses involved with currency exchange."

Undoubtedly, readers are aware that current U.S. Treasury Secretary Timothy Geithner, a former employee of Kissinger Associates was past president of FRBNY. From his perch at the New York Fed, Geithner worked assiduously to reduce the capital required to run a bank; an additional factor which led to the mammoth train wreck known as the 2008 capitalist economic crisis.

A protégé of former Treasury Secretary Robert Rubin, a Board Chairman of Goldman Sachs and one-time CEO at drug-tainted Citigroup, Geithner, in addition to a stint as a "Senior Fellow" at the Council on Foreign Relations, oversaw the $350 billion swindle known as the Troubled Asset Relief Program (TARP) which bailed out his good friends at Goldman and AIG in the wake of Lehman Brothers collapse.

As Senate staff reported, HBUS' "'Global Asset Management' line of business offers worldwide investment management services to clients, and currently manages nearly $400 billion in assets. It is one of the largest investment businesses in the world."

Through their correspondent banking and Payments and Cash Management businesses, "HBUS has become one of the largest facilitators of cash transfers in the world. Between 2005 and 2009," investigators informed us, "the total number of PCM wire transactions at HBUS grew from 20.4 million to 30.2 million transfers per year, with a total annual dollar volume that climbed from $62.4 trillion to $94.5 trillion."

In 2008 alone according to Subcommittee findings, "HBUS processed about 600,000 wire transfers per week. In 2009, PCM was the third largest participant in the CHIPS wire transfer service which provides over 95% of U.S. dollar wire transfers across U.S. borders and nearly half of all wire transfers within the United States, totaling $1.5 trillion per day and over $400 trillion in 2011."

How many of these trillions of dollars in wire transfers handled by HBUS were the result of illegal money laundering by drug gangsters? According to United Nations Office on Drugs and Crime estimates, with some 3.6 percent of global GDP resulting from "criminal proceeds," amounting to some $2.1 trillion in 2009 alone, certainly billions in hot money washed through the U.S. financial system while no one was looking.

Shooting the Messenger

While senior officers turned a blind eye to the bank's criminal practices, honest officials who tried to warn HSBC higher-ups that there were severe deficiencies in monitoring dodgy transactions faced retaliation.

As a result of losses suffered by HSBC's purchase of Household International and its portfolio of bad mortgages, the bank turned down requests to expand personnel at its Anti-Money Laundering division.

Despite the fact that "Compliance and AML staffing levels were kept low for many years as part of a cost cutting measure," Senate investigators learned through HSBC internal correspondence that those charged with monitoring suspicious transactions were "struggling to 'handle the growing monitoring requirements' associated with the bank's correspondent banking and cash management programs, and requested additional staff."

Compliance officer Alan Ketley wrote higher-ups that despite having "very efficient processes," his Compliance team was "handling an average of 3,800 [alerts] per person and [was] becoming overwhelmed thus potentially placing the business and the bank at risk."

"Despite requests for additional AML staffing," the Senate reported, "HBUS decided to hold staff levels to a flat headcount."

"After being turned down for additional staff, Carolyn Wind, longtime HBUS Compliance head and AML director, raised the issue of inadequate resources with the HNAH board of directors. A month after the board meeting, after seven years as HBUS' Compliance head Ms. Wind was fired," Senate investigators disclosed.

Wind, who had met with HNAH's board in October 2007 to discuss staffing, was reprimanded by her supervisor, Regional Compliance Officer and Senior Executive Vice President Janet L. Burak, for raising the issue. In an email to disgraced HSBC Group Compliance chief David Bagley, who dramatically resigned on camera during Senate hearings in July, Burak "expressed displeasure" with Wind. She told Bagley:

"I indicated to her [Ms. Wind] my strong concerns about her ability to do the job I need her to do, particularly in light of the comments made by her at yesterday's audit committee meeting .... I noted that her comments caused inappropriate concern with the committee around: our willingness to pay as necessary to staff critical compliance functions (specifically embassy banking AML support), and the position of the OCC with respect to the merger of AML and general Compliance."

In other words, because Wind had challenged shoddy staffing practices that led the institution into dangerous waters, she was fired by higher-ups more concerned with inflating the balance sheet, and raising their own profiles and salaries in the process, rather than complying with the law.

And despite a mountain of unresolved "alerts" and "suspicious activity reports," and with only eight Compliance officers under "rigorous pressure to complete manual reviews of about 30,000 OFAC [Office of Foreign Assets Control] alerts per week," Senate investigators found serious "deficiencies in the quality of the work" which required "an independent assessment. The independent assessment found that 34% of the alerts supposedly resolved had to be re-done."

While HSBC has cut some 27,000 jobs since 2011, the scandal-plagued bank still managed a 26 percent rise in 2012 first-quarter profits to the tune of $6.8bn (£4.18bn) according to The New York Times, attributed to "growth in its Asian and Latin American banking businesses [that] more than made up for a slump in Europe."

Why if one were inclined to believe various "conspiracy theories," one would almost believe that banks actually sought out dirty money from drug traffickers as a splendid means to bulk-up the bottom line.

Like Spots on a Hyena

As with other banks caught-up in recent money laundering scandals, HSBC's Mexican affiliate is a case study in how banks get away with murder. Senate investigators disclosed that HBMX "illustrates how providing a correspondent account and U.S. dollar services to a high risk affiliate increased AML risks for HBUS."

Created when HSBC Group purchased the Bital bank in 2002, we learned that a "pre-purchase review disclosed that the bank had no functioning compliance program, despite operating in a country confronting both drug trafficking and money laundering."

"For years," the Senate reported, "HSBC Group knew that HBMX continued to operate with multiple AML deficiencies while serving high risk clients and selling high risk products. HSBC Group also knew that HBMX had an extensive correspondent relationship with HBUS and that suspect funds moved through the HBMX account, but failed to inform HBUS of the extent of the AML problems at HBMX so that HBUS could treat HBMX as a high risk account. Instead, until 2009, HBUS treated HBMX as low risk."

As in the case of Wachovia, "HBMX engaged in many high risk activities. It opened accounts for high risk clients, including Mexican casas de cambios and U.S. money service businesses, such as Casa de Cambio Puebla and Sigue Corporation which later legal proceedings showed had laundered funds from illegal drug sales in the United States."

Undeterred by the risks involved, HBMX "offered high risk products, including providing U.S. dollar accounts in the Cayman Islands to nearly 50,000 clients with $2.1 billion in assets, many of which supplied no KYC information and some of which misused their accounts on behalf of a drug cartel."

"HBMX was also the single largest exporter of U.S. dollars to HBUS, transferring over $3 billion in 2007 and $4 billion in 2008, amounts that far outstripped larger Mexican banks and other HSBC affiliates," investigators disclosed.

Indeed, "Mexican and U.S. law enforcement and regulatory authorities expressed concern that HBMX's bulk cash shipments could reach that volume only if they included illegal drug proceeds that had been brought back to Mexico from the United States."

So blatant were HSBC's dodgy practices that for a three-year period between 2006-2009, Senate investigators discovered that "HBUS failed to conduct any AML monitoring of its U.S. dollar transactions with HSBC affiliates, including HBMX, which meant that it made no effort to identify any suspicious activity, despite the inherent risks in large cash transactions."

Proving that crime pays if you're well connected, "HBMX used those accounts to process U.S. dollar wire transfers, clear bulk U.S. dollar travelers cheques, and accept and make deposits of bulk cash, all of which exposed, not only itself, but also HBUS, to substantial money laundering risks."

"HSBC Group also compounded the AML risks by failing to alert HBUS to HBMX's ongoing, severe AML deficiencies," the Senate reported. But why would they? Given Carolyn Wind's firing when she sought to increase staff who might be in position to monitor shady transactions from a very profitable Mexican affiliate, one can only conclude that higher-ups were more than happy to turn a blind eye when it came to illegal practices.

A 2006 State Department International Narcotics Control Strategy Report (INCSR), noted that Mexico is a country of "primary" concern for money laundering, its highest rating.

"The State Department's relentlessly negative assessments of Mexico's drug trafficking and money laundering vulnerabilities continued unabated," Senate investigators observed.

"In 2008, the State Department wrote that 'U.S. officials estimate that since 2003, as much as U.S. $22 billion may have been repatriated to Mexico from the United States by drug trafficking organizations'."

"Four years later, in 2012" Senate staff averred, "the State Department wrote that drug cartels were using Mexican and U.S. financial institutions to launder as much as $39 billion each year: 'According to U.S. authorities, drug trafficking organizations send between $19 and $39 billion annually to Mexico from the United States'."

"As a consequence," of HBMX's "lowest-risk rating" the Senate reported, "under HSBC Group policy, clients from Mexico were not subjected to enhanced monitoring by HBUS, unless they were also designated a Special Category Client (SCC), a relatively rare designation that indicates a client poses high AML risks."
In other words, with upwards of $39 billion washing through the system annually, "enhanced due diligence and account monitoring" by HBUS of their clients wasn't in the cards.

Indeed, in a 2009 risk assessment conducted by HSBC, Mexico was assigned a score of "2," which was "one of the lowest scores."

When queried by Senate investigators about the low score, Ali Kazmy, the HBUS compliance officer responsible for country risk assessments "told the Subcommittee that, since 2006, HBUS' assessments had inadvertently failed to take into account a 2006 FinCEN advisory related to Mexico that would have added 10 points to its score each year. As a result of its low score, Mexico was rated a 'standard' risk, the lowest of the four risk ratings."

As U.S. law enforcement agencies, ironically enough under pressure from Mexican officials to crackdown on money laundering by U.S. banks, "Mexican regulators confronted HBMX with suspicions that drug proceeds were moving through its accounts at HBUS."

In 2009, the Immigration and Customs Enforcement Agency (ICE) "informed the OCC that ICE was investigating possible money laundering activity involving banknote accounts at HBUS. ICE indicated that Mexican drug traffickers appeared to be using the black market peso exchange in New York to transfer funds through a particular Mexican financial institution, which then sent the funds through its U.S. correspondent account at HBUS."

"What U.S. law enforcement officials had found was that, because drug traffickers in the United States were having difficulty finding a U.S. financial institution that would accept large amounts of cash, due to strict U.S. AML controls, many were instead transporting large volumes of U.S. dollars to Mexico, and depositing the dollars at Mexican financial institutions."

"The drug traffickers could then keep their deposits in U.S. dollars through the Mexican financial institution's correspondent account at a U.S. bank, or exchange the dollars for pesos," the Senate reported. "The Mexican banks, casas de cambio, and other financial institutions that were the recipients of the cash typically shipped the physical dollars back to the United States for credit to their own U.S. dollar correspondent accounts at U.S. banks."

In 2009, OCC Deputy Chief Counsel Dan Stipano explained the grift to Sally Belshaw, the OCC Examiner-In-Charge at HBUS:

"The scheme ... is similar to activity that we have seen at Union Bank, Wachovia, and Zions. Basically, the way it works is that drug money is physically hauled across the border into Mexico, then brought back into the United States through wire transfers from casas de cambio or small Mexican banks, or else smuggled across the border in armored cars, etc., before being deposited in US. Institutions. According to AUSA [Assistant U.S. Attorney] Weitz, most U.S. banks, recognizing the risks involved, have gotten out of this business, but HSBC NY is one of the last holdouts (although, interestingly, he said that HSBC-Mexico will no longer accept U.S. currency)." (emphasis added)

HBMX was rocked by scandal when it emerged that one of its biggest clients, the wealthy Chinese-Mexican citizen, Zhenli Ye Gon, was accused by the Drug Enforcement Administration, in a joint operation with Mexican authorities, of high-level drug trafficking. In March 2007, the Mexican Government "seized over $205 million in U.S. dollars, $17 million in Mexican pesos, firearms, and international wire transfer records" from Zhenli's residence.

The cash, hidden in a secret locked room in Zhenli's home was described by the media at the time as the largest cash seizure in a drug-related case in history.

Zhenli, a self-described "prominent businessman," was "the owner of three Mexican corporations involved in the pharmaceutical field, Unimed Pharm Chem Mexico S.A. de C.V.; Constructora e Inmobiliaria Federal S.A. de C.V.; and Unimed Pharmaceutical, S.A. de C.V."

According to Senate investigators, he was accused of using his corporations as fronts "to import, manufacture, and sell chemicals to drug cartels for use in manufacturing methamphetamine, an illegal drug sold in the United States. He was also accused of displaying 'significant unexplained wealth,' despite reporting no gross income for his companies for the years 2005, 2006, and 2007."

Although Zhenli was indicted in Mexico on drug, firearm and money laundering charges, he "could not be located." Why? Because he had fled to the United States where he awaits extradition to Mexico on drug trafficking charges.

Eventually indicted by U.S. federal prosecutors "for aiding and abetting the manufacture of methamphetamine," two years later "U.S. prosecutors dismissed the charges, after a witness recanted key testimony."

What made Zhenli's arrest particularly embarrassing to HBUS officials was the fact that internal documents revealed that Zhenli's Unimed "accounts were opened by Bital, retained by HBMX, and housed in HMBX's Personal Financial Services (PFS) division, even though the official clients were corporations and should not have been serviced by the PFS division."

Despite the dodgy nature of the accounts, they were not designated "high risk." One top HSBC executive, John Root, told the Senate that although the Unimed account "had attracted the attention" of HBMX regulators and they had been instructed to terminate the account, he and another top official, Susan Wright "did not realize the account was still open, until he and Ms. Wright saw the press articles regarding Unimed in 2007."

Imagine that!

Another Day, Another 'Investigation'

Regulatory "lapses" and half-hearted "investigations" continue.

Recently, The New York Times reported that "federal and state authorities are investigating a handful of major American banks for failing to monitor cash transactions in and out of their branches, a lapse that may have enabled drug dealers and terrorists to launder tainted money."

Citing (who else!) "anonymous officials," regulators "led by the Office of the Comptroller of the Currency, are close to taking action against JPMorgan Chase for insufficient safeguards, the officials said. The agency is also scrutinizing several other Wall Street giants, including Bank of America."

But rather than investigating the role of laundered drug money in inflating the balance sheets of the big banks, the Times, citing "compliance experts," argued that "violations are typically unintentional and often harmless because they aren't always exploited by criminals."

An April cease-and-desist order against drug-tainted Citigroup is instructive in this regard. Charging there were "gaps" in Citi's oversight of cash transactions, the order specified there were "internal control weaknesses including the incomplete identification of high-risk customers in multiple areas of the bank."

According to an unnamed "person close to the bank," Citi's "internal control weaknesses" were attributed "to an accident when a computer was unplugged from anti-money-laundering systems."

Such mendacity is the banking equivalent of "the dog ate my homework," yet for America's "newspaper of record" such fabrications are accepted at face value despite Citigroup's decades-long history of financial fraud, stock manipulation and other crimes, including laundering billions of dollars of drug money.

Today, the stakes are immeasurably higher. As the capitalist system threatens to implode and sinks ever-deeper into a liquidity crisis brought on in no small part by the gross criminality of our masters, a recent study by James Henry, author of The Price of Offshore Revisited, has shown that at least $21-$32 trillion (£13-£20.5tn) has been hidden in tax havens that operate as little more than global money laundering centers.

According to Henry: "The subterranean system that we are trying to measure is the economic equivalent of an astrophysical black hole." Indeed, "The very existence of the global offshore industry, and the tax-free status of the enormous sums invested by their wealthy clients, is predicated on secrecy: that is what this industry really 'supplies' as it competes for, conceals, and manages private capital from all over the planet, from any and all sources, no questions asked."

As former U.S. Customs deep-cover specialist Robert Mazur, the author of The Infiltrator: My Secret Life Inside the Dirty Banks Behind Pablo Escobar's Medellín Cartel, explained to Business Insider, "'the international community is today doing the same thing that BCCI and their officers were doing 20 years ago'--citing the HSBC money-laundering scandal and the tax havens of the super-rich--and told BI that the problem is much larger than the estimated $2.1 trillion that crime generates each year."

According to Mazur, HSBC employed methods "traditionally used by banks in a big way [to] facilitate relationships with people who want to hide money from governments" and explained that bankers provide these services "to entice these people to bank with them" thereby enabling banks to increase their deposits.

More attuned to the needs of their banking "clients" to remain "healthy," regulators are "not as focused on the issue of criminal conduct." In fact, "there's nothing built in the system to engage criminal investigations up front."

"One straightforward way" to deter financial officers from profiting from criminal activities, "would be to crack down on bankers who solicit shady business--like the ones at HSBC--by putting a few 'behind bars for a very long period of time' instead of just giving them a fine," Mazur said.

This is unlikely to happen. After all, the first order of business during a period of unprecedented elite criminality is to shield financial institutions and their officers, deemed "too big to fail or jail" from accountability.

Never mind that such practices facilitate global crime in all their varied forms--from drug trafficking to terrorism and from imperialist wars of conquest to the outright theft of public property for private profit--incentives for regulators to crackdown or for prosecutors to send corporate criminals to prison remain virtually nonexistent.

'Managing' the Plaza: America's Secret Deal with Mexican Drug Cartels

In a story which should have made front page headlines, Narco News investigative journalist Bill Conroy revealed that "A high-ranking Sinaloa narco-trafficking organization member's claim that US officials have struck a deal with the leadership of the Mexican 'cartel' appears to be corroborated in large part by the statements of a Mexican diplomat in email correspondence made public recently by the nonprofit media group WikiLeaks."

A series of some five million emails, The Global Intelligence Files, were obtained by the secret-spilling organization as a result of last year's hack by Anonymous of the Texas-based "global intelligence" firm Stratfor.

Bad tradecraft aside, the Stratfor dump offer readers insight into a shadowy world where information is sold to the highest bidder through a "a global network of informants who are paid via Swiss banks accounts and pre-paid credit cards. Stratfor has a mix of covert and overt informants, which includes government employees, embassy staff and journalists around the world."

One of those informants was a Mexican intelligence officer with the Centro de Investigación y Seguridad Nacional, or CISEN, Mexico's equivalent to the CIA. Dubbed "MX1" by Stratfor, he operates under diplomatic cover at the Mexican consulate in Phoenix, Arizona after a similar posting at the consulate in El Paso, Texas.

His cover was blown by the intelligence grifters when they identified him in their correspondence as Fernando de la Mora, described by Stratfor as "being molded to be the Mexican 'tip of the spear' in the U.S."

In an earlier Narco News story, Conroy revealed that "US soldiers are operating inside Mexico as part of the drug war and the Mexican government provided critical intelligence to US agents in the now-discredited Fast and Furious gun-running operation," the Mexican diplomat claimed in email correspondence.

Those emails disclosed "details of a secret meeting between US and Mexican officials held in 2010 at Fort Bliss, a US Army installation located near El Paso, Texas. The meeting was part of an effort to create better communications between US undercover operatives in Mexico and the Mexican federal police, the Mexican diplomat reveals."

"However," Conroy wrote, "the diplomat expresses concern that the Fort Bliss meeting was infiltrated by the 'cartels,' whom he contends have 'penetrated both US and Mexican law enforcement'."

Such misgivings are thoroughly justified given the fact, as Antifascist Calling reported last spring, that the Mexican government had arrested three high-ranking Army generals over their links to narcotrafficking organizations.

In Conroy's latest piece the journalist disclosed that the "Mexican diplomat's assessment of the US and Mexican strategy in the war on drugs, as revealed by the email trail, paints a picture of a 'simulated war' in which the Mexican and US governments are willing to show favor to a dominant narco-trafficking organization in order to minimize the violence and business disruption in the major drug plazas, or markets."

A "simulated war"? Where have we heard that before? Like the bogus "War on Terror" which arms and unleashes throat-slitting terrorists from the CIA's favorite all-purpose zombie army of "Islamist extremists," Al Qaeda, similarly, America's fraudulent "War on Drugs" has been a splendid means of managing the global drug trade in the interest of securing geopolitical advantage over their rivals.

That major financial powerhouses in Europe and the U.S. (can you say Bank of America, Barclays, Citigroup, Credit Suisse, HSBC, ING and Wachovia) have been accused of reaping the lions' share of profits derived from the grim trade, now a veritable Narco-Industrial Complex, the public continues to be regaled with tales that this ersatz war is being "won."

While the Mexican body count continues to rise (nearly 120,000 dead since 2006 according to the latest estimates published by the Instituto Nacional de Estadística y Geografía, or INEGI, as reported by the Paris daily Le Monde in a recent editorial) the United States is escalating its not-so-covert military involvement in Mexico and putting proverbial boots on the ground as part of the $1.6 billion U.S.-financed Mérida Initiative.

But have such "initiatives" (in actuality, taxpayer-funded boondoggles for giant military contractors), turned the corner in the drug war? Not if estimates published the United Nations are accurate.

According to the 2011 World Drug Report, published by the United Nations Office on Drugs and Crime (UNODC): "US authorities have estimated for the last couple of years that some 90% of the cocaine consumed in North America comes from Colombia, supplemented by some cocaine from Peru and limited amounts from the Plurinational State of Bolivia. For the year 2009, results of the US Cocaine Signature Program, based on an analysis of approximately 3,000 cocaine HCl samples, revealed that 95.5% originated in Colombia (down from 99% in 2002) and 1.7% in Peru; for the rest (2.8%), the origin could not be determined. The trafficking of cocaine into the United States is nowadays largely controlled by various Mexican drug cartels, while until the mid-1990s, large Colombian cartels dominated these operations."

Despite more than $8 billion lavished on programs such as Plan Colombia, and despite evidence that leading Colombian politicians, including former President Álvaro Uribe and his entourage had documented links to major drug trafficking organizations that go back decades, the myth persists that pouring money into the drug war sinkhole will somehow turn the tide.

But drug seizures by U.S. agencies only partially tell the tale.

As UNODC Executive Director Yury Fedotov pointed out in the introduction to the agency's 2011 report, Estimating Illicit Financial Flows Resulting from Drug Trafficking and Other Transnational Crimes, "all criminal proceeds are likely to have amounted to some 3.6 per cent of GDP (2.3-5.5 per cent) or around US$2.1 trillion in 2009."

UNODC analysts disclosed that illicit money flows related to "transnational organized crime, represent the equivalent of some 1.5 percent of global GDP, 70 percent of which would have been available for laundering through the financial system. The largest income for transnational organized crime seems to come from illicit drugs, accounting for a fifth of all crime proceeds."

"If only flows related to drug trafficking and other transnational organized crime activities were considered," UNODC asserted, "related proceeds would have been equivalent to around US$650 billion per year in the first decade of the new millennium, equivalent to 1.5% of global GDP or US$870 billion in 2009 assuming that the proportions remained unchanged. The funds available for laundering through the financial system would have been equivalent to some 1% of global GDP or US$580 billion in 2009."

"The results," according to UNODC, "also suggest that the 'interception rate' for anti-money-laundering efforts at the global level remains low. Globally, it appears that much less than 1% (probably around 0.2%) of the proceeds of crime laundered via the financial system are seized and frozen."

Commenting on the nexus between global drug mafias and our capitalist overlords, former UNODC director Antonio Maria Costa told The Observer in 2009, "that the proceeds of organised crime were 'the only liquid investment capital' available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result."

Would there be an incentive then, for U.S. officials to dismantle a global business that benefits their real constituents, the blood-sucking gangsters at the apex of the capitalist financial pyramid? Hardly.

Nor would there be any incentive for American drug warriors to target organizations that inflate the balance sheets of the big banks. Wouldn't they be more likely then, given the enormous flows of illicit cash flooding the system, to negotiate an "arrangement" with the biggest players, particularly the Sinaloa Cartel run by fugitive billionaire Joaquín "El Chapo" Guzmán?

In fact, as Narco News disclosed last December, a "quid-pro-quo arrangement is precisely what indicted narco-trafficker Jesus Vicente Zambada Niebla, who is slated to stand trial in Chicago this fall, alleges was agreed to by the US government and the leaders of the Sinaloa 'Cartel'--the dominant narco-trafficking organization in Mexico. The US government, however, denies that any such arrangement exists."

Narco News reported that according to "Zambada Niebla, he and the rest of the Sinaloa leadership, through the US informant Loya Castro, negotiated an immunity deal with the US government in which they were guaranteed protection from prosecution in exchange for providing US law enforcers and intelligence agencies with information that could be used to compromise rival Mexican cartels and their operations."

In court pleadings, Zambada Niebla's attorneys argued that "the United States government considered the arrangements with the Sinaloa Cartel an acceptable price to pay, because the principal objective was the destruction and dismantling of rival cartels by using the assistance of the Sinaloa Cartel--without regard for the fact that tons of illicit drugs continued to be smuggled into Chicago and other parts of the United States and consumption continued virtually unabated."

Those assertions seem to be borne out by emails released by WikiLeaks. Conroy disclosed: "In a Stratfor email dated April 19, 2010, MX1 lays out the Mexican government's negotiating, or 'signaling,' strategy with respect to the major narco-trafficking organizations as follows:

The Mexican strategy is not to negotiate directly.

In any event, "negotiations" would take place as follows:

Assuming a non-disputed plaza [a major drug market, such as Ciudad Juarez]:

• [If] they [a big narco-trafficking group] bring [in] some drugs, transport some drugs, [and] they are discrete, they don't bother anyone, [then] no one gets hurt;

• [And the] government turns the other way.

• [If] they [the narco-traffickers] kill someone or do something violent, [then the] government responds by taking down [the] drug network or making arrests.

(Now, assuming a disputed plaza:)

• [A narco-trafficking] group comes [into a plaza], [then the] government waits to see how dominant cartel responds.

• If [the] dominant cartel fights them [the new narco-trafficking group], [then the] government takes them down.

• If [the] dominant cartel is allied [with the new group], no problem.

• If [a new] group comes in and start[s] committing violence, they get taken down: first by the government letting the dominant cartel do their thing, then [by] punishing both cartels.

"MX1," Narco News revealed, "then goes on to describe what he interprets as the US strategy in negotiating with the major narco-trafficking players in Ciudad Juarez--a major Mexican narco-trafficking 'plaza' located across the border from El Paso, Texas:"

... This is how "negotiations" take place with cartels, through signals. There are no meetings, etc. ...

So, the MX [Mexican] strategy is not to negotiate. However, I think the US [recently] sent a signal that could be construed as follows:

"To the VCF [the Vicente Carrillo Fuentes] and Sinaloa cartels: Thank you for providing our market with drugs over the years. We are now concerned about your perpetration of violence, and would like to see you stop that. In this regard, please know that Sinaloa is bigger and better than [the] VCF. Also note that CDJ [Juarez] is very important to us, as is the whole border. In this light, please talk amongst yourselves and lets all get back to business. Again, we recognize that Sinaloa is bigger and better, so either VCF gets in line or we will mess you up."

I don't know what the US strategy is, but I can tell you that if the message was understood by Sinaloa and VCF as I described above, the Mexican government would not be opposed at all.

In sum, I have a gut feeling that the US agencies tried to send a signal telling the cartels to negotiate themselves. They unilaterally declared a winner [the Sinaloa Cartel], and this is unprecedented, and deserves analysis. If there was no strategy behind this, and it was simply a leaked report, then I will be interested to see how it plays out in the coming months.

Keep in mind that this "analysis" is from a senior CISEN officer describing U.S. "strategy" for managing, not putting a stop to the flood of narcotics crossing the border.

"In a separate Stratfor email dated April 15, 2010," Conroy wrote, "MX1's views on the US strategy with respect to the drug organizations in Juarez, essentially favoring the Sinaloa 'Cartel,' is referenced yet again:"

We believe that when the US made an announcement that was corroborated by several federal spokespersons simultaneously (that Sinaloa controlled CDJ [Juarez]), it was a message that the DEA wanted to send to Sinaloa. The message was that the US recognized Sinaloa's dominance in the area [Juarez], although it was not absolute. It was meant to be read by the cartels as a sort of ultimatum: negotiate and put your house in order once and for all.

One dissenting analyst thinks that the message is the opposite, telling Sinaloa to take what it had and to leave what remains of VCF. Regardless, the reports are saying that the US message to the cartels was to negotiate and stop the violence. It says that the US has never before pronounced that a cartel controls a particular plaza, so it is an unusual event.

"Unusual" perhaps, but not surprising given the secret state's documented history of close collaboration with major drug trafficking networks that serve as unofficial, though highly-effective instruments, for advancing U.S. imperial strategies.

In a recent piece published by Global Research, analyst Peter Dale Scott observed that America's two "self-generating wars" on "terror" and "drugs" have "in effect become one."

"By launching a War on Drugs in Colombia and Mexico," Scott wrote, "America has contributed to a parastate of organized terror in Colombia (the so-called AUC, United Self-Defense Forces of Colombia) and an even bloodier reign of terror in Mexico (with 50,000 killed in the last six years)."

And by "launching a War on Terror in Afghanistan in 2001, America has contributed to a doubling of opium production there, making Afghanistan now the source of 90 percent of the world's heroin and most of the world's hashish."

"Americans should be aware of the overall pattern that drug production repeatedly rises where America intervenes militarily--Southeast Asia in the 1950s and 60s, Colombia and Afghanistan since then," Scott noted. "(Opium cultivation also increased in Iraq after the 2003 US invasion.) And the opposite is also true: where America ceases to intervene militarily, notably in Southeast Asia since the 1970s, drug production declines."

"Both of America's self-generating wars are lucrative to the private interests that lobby for their continuance," Scott averred. "At the same time, both of these self-generating wars contribute to increasing insecurity and destabilization in America and in the world."

In this light, Narco News revelations make perfect sense. As the global financial crisis deepens, brought on in no small part by the massive frauds perpetrated by leading capitalist institutions, they have inflated their balance sheets with a veritable tsunami of hot cash generated by the Narco-Industrial Complex.

In turn, the American secret state, working to recapitalize financial markets beset by a seemingly insolvable liquidity crisis resulting from massive bank frauds, turn a blind eye as these same institutions become major centers of organized crime, monopoly enterprises which could not survive without the trillions of dollars of illicit funds parked in offshore accounts.