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Americans Accuse Themselves and UK of Lax Money Laundering Controls

A staff reporter, 29 January 2005

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Evidence has emerged that yet another member of Nigeria’s Abacha group has washed or hidden his dirty millions in the UK; while US lawyers a...

Evidence has emerged that yet another member of Nigeria’s Abacha group has washed or hidden his dirty millions in the UK; while US lawyers are pointing the finger at the City of London, Bill Clinton, the outgoing president is trying to stop the United States from becoming the world’s most popular destination for the proceeds of Third World corruption. The City came under fire last year when it emerged that Nigeria’s late dictator, Sani Abacha, washed more than £200m in London’s financial system. In a Colorado court case, US lawyers have now alleged that Mahey Rafindadi Rasheed, the deputy director of the Central Bank of Nigeria, used the Trident Trust Group, a fund manager regulated by the Investment Management Regulatory Organisation, to set up a trust fund for his family. The Trident Trust, according to its web site, has offices in the Bahamas, Barbados, British Virgin Islands, Cayman Islands, Cyprus, Guernsey, Hong Kong, Isle of Man, Switzerland, Jersey, United Kingdom, United States and US Virgin Islands. When asked how many people worked at the London branch, a receptionist said: “I can’t tell you that, it’s more than my life’s worth.” He said the same when asked for the name of his manager. The revelations were made in documents which emanated from a recent Colorado fraud case, Southway v Central Bank of Nigeria. The case arose from a scheme in which Nigerian officials sought to defraud a group of Colorado investors. Purported members of the Nigerian National Petroleum Company asked a Colorado lawyer to help them collect $21.3m from an “over invoiced” contract for oil drilling machinery. In exchange for Brown’ s assistance, the NNPC members agreed to pay him a percentage of the proceeds. Between November 1995 and April 1996, numerous communications occurred between Brown and purported representatives of the central bank, RN and the NNPC. Brown and his wife recruited several Colorado investors to help them pay the “up-front costs,” something that CBN and RN officials demanded prior to the payoff. The Nigerians’ offer turned out to be a scam in which the investors together lost more than half a million dollars. The lawsuit followed. It is doubtful, however, that most of the money from the defendants’ scams (of which there were allegedly many) made its way out of the United States. Most of it, according to Southway, is probably hidden in accounts onshore. As a result of cases of this type, the US government is keen to crack down on the proceeds of foreign corruption as well as the fraudulent activities of Nigerian officials in the US itself. To this end, the outgoing Clinton administration is using its waning influence to promulgate a voluntary code of practice by which banks would keep an eye out for large sums owned by the friends, known associates and relatives of Third World dictators. If the guidelines came into force, “red flags” would go up every time a bank came into contact with such people. This could only happen if the banks followed a set of rigid, in depth procedures. The guidelines, to be released shortly after a furious spat between US banks and law enforcers over their contents, are said to owe a great deal to the Swiss anti-laundering model. Many commentators believe that the USA badly needs a way of keeping track of foreign officials’ assets. They are claiming that huge sums of Abacha’s dirty money were found in the UK and Switzerland because the British and Swiss regulators were better placed to detect them than their American counterparts were in the States. Only a full-blown criminal investigation could uncover the true extent of Abacha’s holdings in the USA, it is claimed. The same is said to be true of Peru’s Vladimir Montesinos, whose antics have already been covered extensively on Complinet. Against this background, US law enforcers like FinCEN have been railing against the half-heartedness of the draft proposals. Many banks, on the other hand, have been upset that there should be any new procedures for them at all. If the United States eventually acquires an effective means of keeping track of the assets of foreign dictators within its borders, there is little doubt that the next wave of corruption scandals will emphasise the role of US financial institutions, said sources.

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