by Tom Burghardt
July 21, 2010
from
GlobalResearch Website
When investigative journalist Daniel
Hopsicker broke the story four years ago that a DC-9 (N900SA),
"registered to a company which once used as
its address the hangar of Huffman Aviation, the flight school at the
Venice, Florida Airport which trained both terrorist pilots who crashed
planes into the World Trade Center, was caught in Campeche by the
Mexican military... carrying 5.5 tons of cocaine destined for the U.S.,"
it elicited a collective yawn from corporate media.
And when authorities searched the plane and
found its cargo consisted solely of 128 identical black suitcases marked
"private," packed with cocaine valued at more than $100 million, the silence
was deafening.
But now a Bloomberg Markets magazine
report,
"Wachovia's Drug Habit," reveals that drug
traffickers bought that plane, and perhaps fifty others, "with laundered
funds they transferred through two of the biggest banks in the U.S.,"
Wachovia and Bank of America.
The Justice Department charge sheet against the
bank tells us that between 2003 and 2008, Wachovia handled $378.4 billion
for Mexican currency exchanges,
"the largest violation of the Bank Secrecy
Act, an anti-money-laundering law, in U.S. history."
"A sum" Bloomberg averred, "equal to one-third of Mexico's current gross
domestic product."
Since 2006, some 22,000 people have been killed
in drug-related violence. Thousands more have been wounded, countless others
"disappeared," torture and illegal imprisonment is rampant.
In a frightening echo of the Reagan administration's anti-communist jihad in
Central America during the 1980s, the
Bush and now,
Obama
administration has poured fuel on the fire with some $1.4 billion
in "War on Drugs" funding under Plan Mérida. Much of that "aid" is
destined to purchase military equipment for repressive police, specialized
paramilitary units and the Mexican Army.
There is also evidence of direct U.S. military involvement.
In June,
The Narco News Bulletin reported that,
"a special operations task force under the
command of the Pentagon is currently in place south of the border
providing advice and training to the Mexican Army in gathering
intelligence, infiltrating and, as needed, taking direct action against
narco-trafficking organizations."
One former U.S. government official told
investigative journalist Bill Conroy,
"'Black operations have been going on
forever. The recent [mainstream] media reports about those operations
under the Obama administration make it sound like it's a big scoop, but
it's nothing new for those who understand how things really work'."
But, as numerous investigations by American and
Mexican journalists have revealed, there is strong evidence of collusion
between the Mexican Army and the Juarez and Sinaloa drug cartels.
A former Juarez police commander told NPR in May
that,
"the intention of the army is to try and get
rid of the Juarez cartel, so that [Joaquin "El Chapo" Guzman] Chapo's
[Sinaloa] cartel is the strongest."
The cozy relations among the
...is not however, a new phenomenon.
What is different today is the scale and sheer
scope of the corruption involved.
As Michel Chossudovsky points out,
"This trade can only prosper if the main
actors involved in narcotics have "political friends in high places." As
legal and illegal undertakings are increasingly intertwined, the
dividing line between "businesspeople" and criminals is blurred.
In turn, the relationship among criminals,
politicians and members of the intelligence establishment has tainted
the structures of the state and the role of its institutions, including
the military."
(The
Global Economic Crisis: The Great Depression of the XXI Century,
Montreal-Global Research, 2010, pp. 195-196)
While the Bloomberg story should cast new
light on highly-profitable links amongst major financial institutions and
narco-trafficking organizations in what may be protected drug rackets
green-lighted by corrupt officials, media silence, particularly by outlets
such as The Wall Street Journal and the Financial Times,
threaten to propel what should be an international scandal into a one-off
news item scheduled for a trip down the memory hole.
"Cocaine One"
If, as New York Times columnist Thomas Friedman claims "the hidden
hand of the market will never work without a hidden fist," then perhaps too,
drug cartels work their "market magic" with their own "hidden fist" or, as
the Russians like to say akrysha, a web of protectors - and
facilitators - drawn from business, finance, organized crime and the secret
world of intelligence.
Dubbed "Cocaine
One" by Hopsicker, the DC-9 was curious for a number of reasons,
not least of which was the fact that,
"one of the chief shareholders" of a dodgy
outfit called SkyWay Aircraft "is a private investment bank in Dallas
which also raised funds for a Mexican industrialist with reported ties
to a Cali and Juarez Cartel narcotics trafficker."
More curious still, the airline kitted-out its
fleet with distinctive colors and a seal,
"designed to impersonate planes from the
U.S. Dept. of Homeland Security."
And when he learned that,
"SkyWay's genesis can be traced to In-Q-Tel
Inc., a secretive, Arlington, Va., investment group owned, operated, and
financed out of the black box budget of the Central Intelligence
Agency," well you can bet corporate media ran themselves ragged
investigating that!
To top it off, when another drug plane crash
landed in the Yucatan Peninsula eighteen months later and broke apart, a
Gulfstream II business jet (N987SA) that spilled,
"4 tons of cocaine across a muddy field,"
Hopsicker reported that it had originated from the same network and used
the same source for its financing, the "Casa de Cambio Puebla SA, a
country-wide network of currency exchanges."
And to make matters even more intriguing from a
parapolitical perspective, after searching through FAA records
Hopsicker discovered that the Gulfstream II business jet,
"was owned by a secretive Midwestern media
baron and Republican fund-raiser, who had a business partner who,
incredibly, owned the other American drug plane, the DC-9, recently
busted in Mexico."
In fact, as Bloomberg investigative journalist
Michael Smith learned years later, these were the same planes and
same currency exchange which Hopsicker reported back in 2007 traffickers had
used to purchase drug jets with funds laundered through Wachovia.
"One customer that Wachovia took on in 2004
was Casa de Cambio Puebla SA," Smith wrote.
The Puebla, Mexico currency exchange was the
brainchild of Pedro Alatorre, a "businessman" who "had created front
companies for cartels." Alatorre, and 70 others connected to his network,
were seized in 2007 by Mexican law enforcement officials.
Authorities discovered that the accused drug
money launderer and airline broker for the cartels controlled 23 accounts at
the Wachovia Bank branch in Miami and that it held some $11 million,
subsequently frozen by U.S. investigators.
In 2008, a Miami federal grand jury indicted Alatorre, now awaiting trial in
Mexico along with three other executives, charging them with drug
trafficking and money laundering, accusing the company of using "shell firms
to launder $720 million through U.S. banks."
The Justice Department is currently seeking
Alatorre's extradition from Mexico.
According to Bloomberg,
"Puebla executives used the stolen
identities of 74 people to launder money through Wachovia accounts."
Jose Luis Marmolejo, the former head of
the Mexican attorney general's financial crimes unit told Smith,
"Wachovia handled all the transfers, and
they never reported any as suspicious."
Some $300,000 was transferred by Wachovia to a
Bank of America branch in Oklahoma City. With cash in hand Bloomberg
reports, traffickers,
"used the funds to buy the DC-9 through
Oklahoma City aircraft broker U.S. Aircraft Titles Inc."
When queried by Smith about the sale,
"U.S. Aircraft Titles President Sue White
declined to comment."
Jeffrey Sloman, the federal prosecutor
who handled the Wachovia case said in a press release that,
"Wachovia's blatant disregard for our
banking laws gave international cocaine cartels a virtual carte
blanche to finance their operations."
Yet, as Hopsicker wrote nearly three years ago,
"the politically-explosive implications of
the scandal may explain why American officials have been reluctant to
move against, or even name, the true owners of the planes and basically
'turned a blind eye' to the American involvement exposed by the drug
trafficking seizures."
As of this writing, no Americans have been
criminally charged in the cash-for drug planes banking conspiracy.
"Troubled Assets" or
Something More Sinister?
When Wells Fargo bought Wachovia, once America's fourth largest bank
in 2008 at the fire-sale price of $12.8 billion, the bank and its former
CEO, Kennedy "Ken" Thompson, who "retired at the
request of the board" before the full-extent of the financial meltdown hit
home, were in deep trouble.
Before the Wells takeover, Wachovia had been on a veritable shopping spree.
After the firm's 2001 merger with First Union
Bank, Wachovia merged with the Prudential Securities division of
Prudential Financial, Inc., with Wachovia controlling the lion's share of
the firm's $532.1 billion in assets.
This was followed by the bank's purchase of
Metropolitan West Securities, adding a $50 billion portfolio of
securities and loans to the bank's Lending division. In 2004, Wachovia
followed-up with the $14.3 billion acquisition of SouthTrust Corporation.
Apparently flush with cash and new market clout, Wachovia set it sights on
acquiring California-based Golden West Financial. Golden West
operated branches under the name World Savings Bank and was the
nation's second largest savings and loan.
At the time of the buy-out, Golden West had over
$125 billion in assets. For Wachovia however, it was a deal too far.
With an enormous housing bubble fully inflated, and a new speculative
merger-mania in full swing, one can only surmise that the need for liquidity
at any price, had driven banking giants such as Wachovia to play dumb when
shadier, yet highly-profitable transactions, such as the "arrangement" with
Casa de Cambio Puebla SA, were involved.
Bleeding cash faster than you can say "mortgage backed securities," Wachovia
was on the hook for their 2006 $26 billion buy-out of Golden West Financial
at the peak of the housing bubble, a move that BusinessWeek reported
generated "resistance from his own management team" but ignored by Thompson.
Why?
"Because no one outside of Thompson and
Golden West CEO Herb Sandler seemed to like the deal from the moment it
was announced," a company insider told BusinessWeek.
While the buy-out may have given Thompson,
"the beachhead in California he had long
desired... the ink was barely dry on the Golden West deal in late 2006
when the housing bubble in markets including California and Florida
began to deflate."
Hammered by the housing bust, Wachovia's share
price, which had risen to $70.51 per share when the Golden West deal was
announced had slid to $5.71 per share by October 2008.
In other words, Wachovia, along with the world's
economy, began circling the proverbial drain.
However you slice it, although it was clear that the Golden West deal had
gone south quicker than you can say "credit default swaps," this didn't seem
to stop Wachovia from paying "smartest guy in the room" Thompson $15.6
million in total compensation in 2007, a year after the fatal Golden West
transaction.
Nor did these losses stop the bank from
showering Thompson with a severance package worth nearly $8 million.
But was something else
going on here?
Wells Fargo bank admitted in a signed Deferred Prosecution Agreement
with the federal government that they would not contest charges brought by
the Justice Department in its indictment of the bank.
The banking giant was forced to admit charges by prosecutors that,
"On numerous occasions, monies were
deposited into a CDC [Casa de Cambio] by a drug trafficking
organization. Using false identities, the CDC then wired that money
through its Wachovia correspondent bank accounts for the purchase of
airplanes for drug trafficking organizations.
On various dates between 2004 and 2007, at
least four of those airplanes were seized by foreign law enforcement
agencies cooperating with the United States and were found to contain
large quantities of cocaine."
Bloomberg reported that Wells Fargo, in the wake
of the settlement,
"declined to answer specific questions,
including how much it made by handling $378.4 billion - including $4
billion of cash - from Mexican exchange companies."
There was however, more than "troubled assets"
and charges of money laundering to the story. In fact, the purchase of these
drug planes have been tied to some of the Bush administration's most
secretive "War
On Terror" programs.
Drug Flights, CIA
Renditions. Just Another Day at the Office!
Replicating a pattern used by the Central Intelligence Agency (CIA)
during the Iran-Contra scandal of the 1980s, the secret state used a network
of cut-outs and legitimate businesses to transport prisoners to Agency black
sites for "special handling."
During Iran-Contra it was "guns in, drugs out." Today one might say its
"drugs in, tortured prisoners out." The results however, were the same;
egregious crimes and lawbreaking on a staggering scale.
Subsequent investigations by Narco News revealed that,
"this particular Gulfstream II (tail number
N987SA), was used between 2003 and 2005 by the CIA for at least three
trips between the U.S. east coast and Guantanamo Bay, home to the
infamous 'terrorist' prison camp," Bill Conroy reported.
"In addition," Conroy wrote, "the two SkyWay
companies are associated with individuals who have done highly sensitive
work for the Department of Defense or U.S. intelligence agencies, public
records show and Narco News sources confirm."
According to AFP, the Mexican daily El Universal
said,
"it had obtained documents from the United
States and the European Parliament which 'show that that plane flew
several times to Guantanamo, Cuba, presumably to transfer terrorism
suspects,'" the French newswire reported.
The plane was carrying "Colombian drugs" bound
for the U.S. for the "fugitive leader of Mexico's Sinaloa cartel, Joaquin 'Chapo'
Guzman," when it crashed in the Yucatan.
According to El Universal, the Federal Aviation Administration's,
"logbook registered that the plane had
traveled between US territory and the US military base in Guantanamo,"
and that its last registered owner was "Clyde O'Connor in Pompano Beach,
Florida."
The Independent confirmed separately in January
of this year that,
"Evidence points to aircraft - familiarly
known as 'torture taxis' - used by the CIA to move captives seized in
its kidnapping or 'extraordinary rendition' operations through Gatwick
and other airports in the EU being simultaneously used for drug
distribution in the Western hemisphere."
Hugh O'Shaughnessy, confirming earlier
reporting by Bill Conroy and Daniel Hopsicker said that,
"a Gulfstream II jet aircraft N9875A
identified by the British Government and the European Parliament as
being involved in this traffic crashed in Mexico in September 2008 while
en route from Colombia to the US with a load of more than three tons of
cocaine."
While O'Shaughnessy got the tail-number and date
wrong, he's correct when he states that U.S. intelligence assets,
"continue the drug dealing they indulged in
during the Iran-Contra affair of the Reagan years."
Narco News, citing DEA sources, learned
that the crashed Gulfstream loaded with four tons of cocaine,
"was part of an operation being carried out
by a Department of Homeland Security agency."
However in a later report, Mark Conrad, a
former supervisory special agent with ICE's predecessor agency, U.S.
Customs, told Narco News that the crashed Gulfstream used to
transport drugs and prisoners was controlled by the CIA and,
"that the CIA, not ICE... [was] actually the
U.S. agency controlling the... operation."
If this were the case, then,
"any individuals or companies involved in a
CIA-backed operation, even ones that are complicit in drug trafficking,
would be off limits to U.S. law enforcers due to the cloak of national
security the CIA can invoke."
In other words, a jet purchased by drug
traffickers with funds laundered through an American bank and used in the
CIA's "extraordinary
rendition" program may have been part of a protected drug
operation by U.S. intelligence agencies. An operation furthermore, whose
purpose is still unknown.
This report tracks closely with evidence uncovered by Peter Dale Scott.
In a recent piece in Japan Focus Scott
wrote that,
"it is not surprising that the U.S.
Government, following the lead of the CIA, has over the years become a
protector of drug traffickers against criminal prosecution in this
country."
"A recent spectacular example" Scott tells us, drawing on research from
his forthcoming book, is the curious case of CIA Venezuelan asset,
General Ramon Guillén Davila.
General Ramon Guillén Davila, chief of a
CIA-created anti-drug unit in Venezuela, was indicted in Miami for smuggling
a ton of cocaine into the United States.
According to the New York Times,
"The CIA, over the objections of the Drug
Enforcement Administration, approved the shipment of at least one ton of
pure cocaine to Miami International Airport as a way of gathering
information about the Colombian drug cartels."
Time magazine reported that a single shipment
amounted to 998 pounds, following earlier ones "totaling nearly 2,000
pounds."
Mike Wallace confirmed that,
"the CIA-national guard undercover operation
quickly accumulated this cocaine, over a ton and a half that was
smuggled from Colombia into Venezuela."
According to the Wall Street Journal, the
total amount of drugs smuggled by Gen. Guillén may have been more than 22
tons. (Fueling America's War Machine: Deep Politics and the CIA's Global
Drug Connection - in press, due Fall 2010 from Rowman & Littlefield).
Scott adds that,
"the United States never asked for Guillén's
extradition from Venezuela to stand trial; and in 2007, when he was
arrested in Venezuela for plotting to assassinate President Hugo Chavez,
his indictment was still sealed in Miami.
Meanwhile, CIA officer Mark McFarlin, whom
DEA Chief Bonner had also wished to indict, was never indicted at all;
he merely resigned."
But the stench of Iran-Contra, like that of the
CIA's torture program, as with earlier secret state machinations with drug
cartels never went away; in fact, like a cancer, one managed drug operation
seamlessly metastasized into another.
Greasing the Wheels
The
United Nations Office on Drugs and Crime (UNODOC)
state in their 2010 Annual Report that,
"money-laundering is the method by which
criminals disguise the illegal origins of their wealth and protect their
asset bases in order to avoid suspicion of law enforcement and to
prevent leaving a trail of incriminating evidence,"
...and that financial institutions, particularly
U.S. and European banks are key to efforts to choke-off illicit
profits from the grisly trade.
The trouble is these institutions, along with U.S. intelligence agencies,
are the problem.
UNODOC estimate that profits derived from narcotics rackets amount to some
$600 billion annually and that up to $1.5 trillion-dollars in drug money is
laundered through seemingly legitimate enterprises.
Part of the fallout from capitalism's economic meltdown has been that,
"drugs money worth billions of dollars kept
the financial system afloat at the height of the global crisis," The
Observer disclosed late last year.
Antonio Maria Costa, UNODOC's director,
told the British newspaper he saw evidence that proceeds from the illicit
trade were,
"the only liquid investment capital"
available to some banks on the brink of collapse last year and that "a
majority of the $352bn (£216bn) of drugs profits was absorbed into the
economic system as a result."
The UN drugs chief said that in,
"many instances, the money from drugs was
the only liquid investment capital."
And with markets tanking and major bank failures
nearly a daily occurrence,
"liquidity was the banking system's main
problem and hence liquid capital became an important factor."
According to Costa,
"Inter-bank loans were funded by money that
originated from the drugs trade and other illegal activities... There
were signs that some banks were rescued that way."
Web of Corruption
Although the UN's top anti-narcotics official declined to identify either
the countries or banks that have benefited from the murderous trade, a web
of corruption envelops the entire financial sector of the capitalist economy
as the quest for "liquid assets" trumps everything.
Martin Woods, once director of Wachovia's anti-money-laundering unit
in London told Bloomberg,
"It's the banks laundering money for the
cartels that finances the tragedy."
Woods told the magazine he,
"quit the bank in disgust" after executives
"ignored his documentation that drug dealers were funneling money
through Wachovia's branch network."
Despite warnings from the Treasury Department
since 1996 that Mexican currency exchanges were laundering drug money
through U.S. banks,
"Wachovia ignored warnings by regulators and
police, according to the deferred-prosecution agreement," Bloomberg
reported. "As early as 2004, Wachovia understood the risk," the bank
admitted in court.
"Despite these warnings, Wachovia remained
in the business."
At the bank's anti-money laundering unit in
London, Woods and his counterpart Jim DeFazio in Charlotte, NC told
Smith,
"they suspected that drug dealers were using
the bank to move funds."
Former Scotland Yard investigator Woods, said
he,
"spotted illegible signatures and other
suspicious markings on traveler's checks from Mexican exchange
companies," and that he sent copies of his report to the U.K.'s
Financial Services Authority, the DEA and U.S. Treasury Department.
But rather than being rewarded for his
diligence, Woods told Smith,
"his bosses instructed him to keep quiet and
tried to have him fired."
In one meeting,
"a bank official insisted Woods shouldn't
have filed suspicious activity reports to the government, as both U.S.
and U.K. laws require."
According to a whistleblower suit filed with an
employment tribunal in London, Barrons reported last year before
the Wachovia scandal broke, that Woods
claimed,
"his bosses bullied and demoted him, then
withdrew his reports of other suspicious activities in Eastern Europe."
It gets worse.
Woods' complaint alleges,
"that Wachovia staff may have even tipped
off Mexican-exchange clients about his laundering suspicions," and the
veteran investigator told Wachovia officials "he feared for his safety."
In response, bank spokesperson Mary Eshet
said at the time,
"Wachovia believes that it has acted
appropriately in its business dealings, and Mr. Woods' claims to the
contrary are without merit."
Meanwhile, on the American side of the pond,
21-year FBI veteran DeFazio said,
"he told bank executives in 2005 that the
DEA was probing the transfers through Wachovia to buy the planes."
The bank ignored his warnings and continued
along on their merry way until their indictment.
The law enforcement veteran told Bloomberg,
"I think they looked at the money and said,
'The hell with it. We're going to bring it in, and look at all the money
we'll make'."
The former Scotland yard investigator added,
"If you don't see the correlation between
the money laundering by banks and the 22,000 people killed in Mexico,
you're missing the point."
But Wachovia wasn't the only large financial
institution "missing the point."
Bloomberg also revealed that,
-
Bank of America
-
London-based "HSBC Holdings Plc,
Europe's biggest bank by assets"
-
American Express Bank
-
Banco Santander SA
-
Citigroup Inc.
-
"the world's largest money transfer
firm," Western Union,
...were also up to their eyeballs in dubious
transactions.
In 1994 for example, American Express paid $14 million to settle with the
federal government after,
"two employees were convicted in a criminal
case involving drug trafficker Juan Garcia Abrego."
Yet between 1999-2004, Bloomberg reported,
"the bank failed to stop clients from
laundering $55 million of narcotics funds, the bank admitted in a
deferred-prosecution agreement in August 2007... and paid $65 million to
the U.S. and promised not to break the law again."
Charges were dismissed a year later under terms
of the agreement.
And back in 2004, The Independent disclosed that,
"HSBC, the UK's largest bank, have been
slammed for lax money-laundering procedures in a report by a US Senate
subcommittee."
Journalists Hugh O'Shaughnessy and
Paul Lashmar revealed that,
"the UK-based multinational stands accused
of laxity in the fight against money laundering, drug trafficking,
corruption and terrorism, notably in the oil-rich African state of
Equatorial Guinea."
"In one of the few cases" when the scandal-plagued and now-shuttered
Riggs Bank "seems to have properly followed US anti-money-laundering
legislation," Riggs formally asked HSBC and a Spanish bank, Banco
Santander, "to divulge the identities of the owners of two companies
that kept accounts with them and that were receiving suspicious wire
transfers totaling in excess of $35m (£20m). The banks refused to say
who the owners were."
Bloomberg disclosed that,
"federal agents caught people who work for
Mexican cartels depositing illicit funds in Bank of America accounts in
Atlanta, Chicago and Brownsville, Texas, from 2002 to 2009." Authorities
contend that "Mexican drug dealers used shell companies to open accounts
at London-based HSBC."
Nevertheless, neither bank were accused of
wrongdoing by the federal government and both firms denied any involvement
in money laundering schemes.
Bank of America spokeswoman Shirley Norton told Smith that they,
"strictly follow the government rules."
Norton said, "Bank of America takes its anti-money-laundering
responsibilities very seriously," a fact not readily apparent from
Bloomberg Marketsinvestigation.
Both Norton and HSBC spokesman Roy Caple
told Smith that "[privacy] laws bar them from discussing specific
clients."
And so it goes.
Fallout? What Fallout!
In the wake of Wachovia's admission to federal prosecutors, Wells Fargo
will pay,
"$160 million in fines and penalties, less
than 2 percent of its $12.3 billion profit in 2009."
"If Wells Fargo keeps its pledge," Bloomberg reports, then "according to
the agreement [the federal government will] drop all charges against the
bank in March 2011."
Why might that be? Large banks are immune from
vigorous prosecution for violating the Bank Secrecy Act "by a variant of the
too-big-to-fail theory."
Veteran Senate investigator Jack Blum, who led probes into the
Iran-Contra drug connection and the CIA's favorite shadow bank during the
1980s, the Bank of Credit and Commerce (BCCI)
told Bloomberg,
"the theory is like a get-out-of-jail-free
card for big banks."
"There's no capacity to regulate or punish them because they're too big
to be threatened with failure," Blum says. "They seem to be willing to
do anything that improves their bottom line, until they're caught."
Meanwhile as the bodies pile up, there's no
jail time for executives and the assets of firms that could charitably
be described as part of a "continuing criminal enterprise" haven't been
seized; only a slap on the wrist and a promise to "do better next time."