City of London money laundering unlimited
We are fond of lecturing developing countries on the virtues of dropping
trade restrictions in order to attract inward investment. And, in at least
one significant way, we are walking our talk. The UK has become the international
criminals ‘laundry of choice’.
London is no slouch when it comes to attracting foreign investment.
Right now (with the dollar
sliding) cash rich foreign investors are feverishy snapping
up multi-million pound properties in the city and buying up British
companies with a mind to profit. Described as ‘Private
Equity Investors’, their activity is said to thrive on their
ability to borrow vast sums of money at low rates of interest.
the Rubicon, Michael Ruppert observes that access to cheap money (loans)
is what ultimately makes one operator a winner and the next one an ‘also
ran’. For a company, cheap loans mean reduced costs mean higher
profits mean higher dividends mean greater demand for company shares and
bonds which means more buying power. Criminals, Ruppert suggests, will
happily offer cash loans to reputable companies well below the market
rate of interest. For the criminal, the opportunity to channel ill-gotten
gains through a respected institution is a chance to make serious cash
safe to spend without fear of prosecution.
Financial institutions and cash rich criminals are obvious partners, as
has sometimes been revealed, as in the case of BCCI.
This is no secret. In fact, the CIA factbook,
in the Illicit Drugs section, refers to the UK as a ‘money-laundering
center’. Afghan opium alone
(with production expected to peak at over 6000 tonnes this year) is creating
very large amounts of dirty laundery. Globally, according to IMF estimates,
a total of between $590 billion and $1.5 trillion is laundered every year.
So what makes the UK such a popular destination for dirty money? A discussion
on BBC Radio 4’s ‘File on 4’ offers some pointers. Corrupt
politicians from Kenya, Nigeria and the Congo have all been able to buy
multi-million pound properties in London.
Loop holes, which the government show no signs of closing, allow companies
to be registered without the full details of who owns them. Whilst the
name of every shareholder has to be recorded in the company’s statutory
registers and at Companies House, an individual can hide their ownership
by having another company act as a nominee shareholder. Officials explain
that companies may wish to do this to keep secret the ownership of their
company for valid commercial reasons. But why wouldn’t someone want
to be associated with a company that they owned or ran?
Does the money market care that public limited companies are falling into
the hands of unaccountable individuals at knock-down prices? Does the
market care where all the cheap money came from to give these wealthy
individuals such collosal loan-raising leverage? I guess not. We like
commissions. We like bonuses. The market adores inward investment. Weak
enforcement of regulations completes the picture. Although obliged by
the Proceeds of Crime Act to report any suspicious transactions, in 10
years not a single UK bank employee has been prosecuted for failing to
We remain the ‘laundry of choice’.
Ends | 3 Dec 2006 | The Leg