Bttt
Posted on 03/20/2002 7:52:49 AM PST by Nita Nupress
Edmond Safra had cooperated with our congressional banking committees and FBI regarding Suspicious Activity Reports.
SAR's were the topic of hearings and closed-door meetings throughout 1998 and 1999.
Not since BCCI had so much been laundered by so few.
Anne Williamson author of Contagion and Rape of Russia testified before congress.
ANNE WILLIAMSON GAVE THE FOLLOWING TESTIMONY TO OUR CONGRESS UNDER OATH. SHE IS AN EXPERT ON LAUNDERING OF IMF LOANS TO RUSSIA, AND EMAILED ME SHE KNEW IMMEDIATELY TED MAHER WAS A SCAPEGOAT.
The following is Anne Williamson's testimony before the Committee on Banking and Financial Services of the U.S. House of Representatives, presented Sept. 21, 1999.
It shows how the historic opportunity given the U.S. to help transform Russia into a free, peaceful, pro-Western country was squandered in the form of a bruising economic rape carried out by corrupt Russian politicians and businessmen, assisted by Bush and (especially) Clinton administrations engaged in political payoffs to Wall Street bankers and others, and by ineptitude and greed on the part of the U.S. Treasury and the Harvard Institute for International Development, assisted by fellow travelers and manipulators at Nordex, the IMF, the World Bank, and the Federal Reserve.
The losers were the Russian people and (mainly) U.S. tax-payers.
And the winners? Ms. Williamson names names, and that's why the elite media has shut out her book. She indicates their heroes are thieves, and they are afraid she may be right.
. . . I should like to add just a few words about myself by way of introduction. I am the author of Contagion: The Betrayal of Liberty, Russia, and the United States in the 1990s, which will be available to Committee Members and the American public in time for the nation’s Thanksgiving holiday. Prior to beginning my work on the book, I covered just about all things Russian for a broad range of publications which included inter alia The Wall Street Journal, The New York Times, Mother Jones, Art and Antiques, Premiere, Film Comment and SPY Magazine. From the late 1980s until 1997, I maintained homes in both Moscow and the United States. And therefore I can say for much of the last decade I had the privilege of being a witness to a dramatic history and the pleasure and excitement of sharing with the Russian people their remarkable land, language and culture. And it is with a profound gratitude to and a deep respect for that noble, heroic and too long-suffering people that I speak to you today.
In the matter before us – the question of the many billions in capital that fled Russia to Western shores via the Bank of New York and other Western banks – we have had a window thrown open on what the financial affairs of a country without property rights, without banks, without the certainty of contract, without an accountable government or a leadership decent enough to be concerned with the national interest or its own citizens’ well-being looks like. It’s not a pretty picture, is it? But let there be no mistake, in Russia the West has truly been the author of its own misery. And there is no mistake as to who the victims are, i.e. Western, principally U.S., taxpayers and Russian citizens whose national legacy was stolen only to be squandered and/or invested in Western real estate and equities markets.
The failure to understand where Communism ended and Russia began insured that the Clinton Administration’s policy towards Russia would be riddled with error and ultimately ineffective. Two mistakes are key to understanding what went wrong and why.
The first mistake was the West’s perception of the elected Russian president, Boris Yeltsin; where American triumphalists saw a great democrat determined to destroy the Communist system for freedom’s sake, Soviet history will record a usurper. A usurper’s first task is to transform a thin layer of the self-interested rabble into a constituency. Western assistance, IMF lending and the targeted division of national assets are what provided Boris Yeltsin the initial wherewithal to purchase his constituency of ex-Komsomol [Communist Youth League] bank chiefs, who were given the freedom and the mechanisms to plunder their own country in tandem with a resurgent and more economically competent criminal class. The new elite learned everything about the confiscation of wealth, but nothing about its creation. Worse yet, this new elite thrives in the conditions of chaos and eschews the very stability for which the United States so fervently hopes knowing full well, as they do, that stability will severely hamper their ability to obtain outrageous profits. Consequently, Yeltsin’s "reform" government was and is doomed to sustain this parasitic political base composed of the banking oligarchy.
Property Rights
The second mistake lay in a profound misunderstanding of Russian culture and in the Harvard Institute of International Development advisers’ disregard for the very basis for their own country’s success; property rights. It was a very grave error. Private property is not only the most effective instrument of economic organization, it is also the organizational mechanism of an independent civil society. The protection of property, both of individuals’ and that of a nation, has justified the existence of and a population’s acceptance of the modern state and its public levies.
Russian property rights are tricky; property has never been distributed, but only confiscated and awarded on a cyclical basis. For the big players property exists, as it always has, only where there is power. For the common man, the property right hasn’t advanced much beyond custom which prevents the taking of any man’s shelter, clothes or tools so long as continuous usage is demonstrable. An additional, purely Slavic feature of the Russians’ concept of property is the shared belief that each has a claim upon some part of the whole.
In ancient ‘Rus, property existed for the individual as a claim - or an entitlement if you will - to a shared asset, a votchina or "estate", held by all the members of a particular clan. This understanding of property still informs the culture; though Westerners bemoan Moscow mayor Yury Lyuzhkov’s retention of the system of the residential permit ("propiska") as an impediment to a flexible labor force, the policy is one of Lyuzhkov’s most popular. Muscovites are well-satisfied with a mayor who polices outsiders as they believe any proprietor of such a great estate as Moscow should.
The Russians’ failure to accept the Roman concept of private property has compelled them to suffer the coercive powers of the state so that at the very least a civil order, if not a civil society, might be established and sustained. The hackneyed idea that Russians have some special longing for tyranny is a pernicious myth. Rather, they share the common human need for predictable event undergirded by civil and state institutions and their difficult history is the result of their struggle to achieve both in the absence of private property. Since only the Tsar or the Party had property, no individual Russian could be sure of long-term usage of anything upon which to create wealth. And it is the poor to whom the property right matters most of all because property is the poor man’s ticket into the game of wealth creation. The rich, after all, have their money and their friends to protect their holdings, while the poor must rely upon the law alone.
Connections
In the absence of property, it was access - the opportunity to seek opportunity - and favor in which the Russians began to traffic. The connections one achieved, in turn, became the most essential tools a human being could grasp, employ and, over time, in which he might trade. Where relationships, not laws, are used to define society’s boundaries, tribute must be paid. Bribery, extortion and subterfuge have been the inevitable result. What marks the Russian condition in particular is the scale of these activities, which is colossal. Russia, then, is a negotiated culture, the opposite of the openly competitive culture productive markets require.
Ironically, the nontransferability of the votchina system’s entitlement was the very flaw a shareholding culture and an equities market could have addressed successfully had Lenin’s revolutionary dictum of "Property to the people! Factories to the workers!" been realized. And such a program existed. It was designed by Larisa Piasheva, a free market Russian economist who was appointed by Moscow mayor Gavriil Popov to design and execute a program for the privatization of Moscow’s assets. Ms. Piasheva’s program was a fearless and rapid plunge into the market which would have distributed property widely into Russia’s many eager hands. Further, the program – inspired as it was by the policies of Ludwig Erhard and his adviser, the renowned Austrian economist Wilhelm Roepke - did not rely upon Western lending but instead tailored itself to maximize direct Western investment.
When the Administration says it had no choice but to rely upon the bad actors it did select for American largesse, Congress should recall Larisa Piasheva. How different today’s Russia might have been had only the Bush Administration and the many Western advisers from the IMF, the World Bank, the International Finance Corporation, the European Bank for Reconstruction and Development and the Harvard Institute of International Development then on the ground in Moscow chosen to champion Ms. Piasheva’s vision of a rapid disbursement of property to the people rather than to the "golden children" of the Soviet nomenklatura.
Instead, after robbing the Russian people of the only capital they had to participate in the new market – the nation’s household savings – by freeing prices in what was a monopolistic economy and which delivered a 2500 percent inflation in 1992, America’s "brave, young Russian reformers" ginned-up a development theory of "Big Capitalism" based on Karl Marx’s mistaken edict that capitalism requires the "primitive accumulation of capital". Big capitalists would appear instantly, they said, and a broadly-based market economy shortly thereafter if only the pockets of pre-selected members of their own ex-Komsomol circle were properly stuffed. Those who hankered for a public reputation were to secure the government perches from which they would pass state assets to their brethren in the nascent business community, happy in the knowledge that they too would be kicked back a significant cut of the swag. The US-led West accommodated the reformers’ cockeyed theory by designing a rapid and easily manipulated voucher privatization program that was really only a transfer of title and which was funded with $325 million US taxpayers’ dollars.
Vouchers and Vandals
Voucher privatization’s conceits were compounded by a grievous insult; unregulated voucher investment funds, which the privatizers encouraged the uncertain Russian citizenry to patronize. Hundreds and hundreds of investment funds simply walked with their clients’ vouchers, reselling them to domestic criminals, Red Directors, western investment banks and international money launderers. In other words, the lion’s share of Russian money laundering occurs when capital enters the country, and what we see today in the Bank of New York scandal is, in fact, properly understood as capital flight. When the 18 month-long thieves’ banquet that voucher privatization was concluded in July 1994, the program, whose very design left the controlling shareholding of any single enterprise in the hands of the state, had actually institutionalized the state as the determinant owner of all that had formerly belonged to "the people".
Co-temporaneously with voucher privatization, an early and precipitous Bush Administration initiative was coming to fruition. In early 1992, the "Bankers Forum" project was wheeled into place by a former New York Fed chief, Gerald Corrigan, who at George Bush’s direction sent in a group of experts from the Fed, commercial banks and the Volunteer Corps on an off-the-books mission to teach the Russians at the Central Bank the bond game. Moscow-based Dialog Bank’s Peter Derby, who explained the project’s background remarked, "Basically, when Corrigan asks, I guess no one turns him down, because people reacted instantaneously. It was done by private investors, who were asked by a person you can’t say no to" (my emphases).
The improbable yields (290 percent on 3-month paper at one point) on the Russian market’s GKO instruments were paid with US taxpayers’ money via IMF loans. Guess where all investment went? By yielding those kind of non-market returns, the bond market insured that all the country’s resources and all that it was capable of attracting went to the support of the state, just as Tsarism and Communism had done previously.
So lush were the bond market’s rewards that dubious market participants included the Russian Central Bank itself through an off-shore firm known as Fimaco. The involvement of the Harvard Institute of International Development’s [HIID] honchos in the same conflict-of-interest activities has already been admitted publicly and remains the object of a Boston Grand Jury’s scrutiny. The Harvard Management Corporation[HMC], which invests the university’s endowment, was also an avid purchaser of Russian bonds, a dubious and unsettling history since there is no legal separation of HMC and the university itself. According to the Russian Interior Ministry’s Department of Organized Crime, Western employees of Russian banks, Western bankers and consultants, Russian bankers and anecdotal evidence, other likely participants include certain employees of the U.S. Treasury, of the multilateral agencies (most especially the World Bank’s Moscow offices), of bilateral aid agencies, and policy and program consultants acting through accounts established in their wives’ maiden names with non-U.S. reporting brokerages in Moscow. Even the Ford Foundation’s Moscow office sponsored its own internal Russian bond shop for which the unthinking Russian managers once asked this reporter to drum up U.S. investors.
Clinton Buys Wall Street
One particularly striking aspect of Bill Clinton’s presidency is how aggressively his administration has worked to capture the political support of the financial sector, offering up heretofore unseen gobs of government favor. [A disproportionate number of firms receiving OPIC (Overseas Private Investment Corporation, a government entity) guarantees, Export-Import bank lending, and IFC (International Finance Corporation, the private lending arm of the World Bank) and Russian Enterprise Fund participation were generous contributors to both Clinton campaign coffers and the DNC.] The basic formula was simple, it’s not the rocket science Russia’s Harvard advisers intimated it was: The bread and butter of all equity markets are bonds. Wall Street wanted a debt market. You build it and we’ll come, they said.
The aid program delivered best it could what was in reality a flimsy contrivance, which - in turn - was really only an exotic venue through which to pass public funds to selected Russians of the Clintons’ and HIID’s choosing and to Wall Street investment banks the Clintons hoped to entice permanently into their orbit of supporters and contributors. In short, the Russian bond market was the Arkansas Development Finance Authority gone international.
Today the Clinton Administration’s chief defense for their hand in Russia’s ruin is that somebody had to keep the communists at bay. But there were no communists in Russia by late 1991, only nascent investment bankers looking to nail down a stake any which way. Communism had evaporated by late 1987, the year in which the Russian people were allowed to hold convertible foreign currencies. Overnight, the power of money displaced the power of ideology.
The Role of Nordex and FPI
Though some now say the loans-for-shares privatization program marked the reformers’ fall from grace, I beg to differ. On 14 September 1991, Vladimir Shcherbakov, the last First Deputy Prime Minister of the Soviet Union, formed with two other partners, one of which was the now notorious Austrian firm, Nordex GmbH, the International Foundation for Privatization and Private Investment [FPI]. FPI’s charter was legitimized by Gorbachev’s signature and approved by 13 heads of what were still constituent republics.
In an interview published in a 1993 issue of VIP, the vanity organ of the commercialized nomenklatura, Shcherbakov reported excellent relations with the new regime of "eager young reformers" – Gaidar, Chubais et al – and their leader, Boris Yeltsin. All hail-fellows-well-met. So too did FPI enjoy similarly sympathetic connections to the EBRD, the IMF and the UN Industrial Development Organization. Shcherbakov even boasted about FPI’s "new approach to the problem of the property of the Western Army Groups in Eastern Germany that comes down to its joint exploitation by Russian and German businesses", an eyepopping admission since a year after the interview was published, the Russian scandal was Bonn’s claim that Soviet weaponry sales to rogue regimes originating in the Western Army Group had amounted to a $4 billion criminal take.
A former employee of FPI, speaking through clenched teeth, reported, "It’s [FPI] not a well-known organization, but it’s one of the most wealthy and most powerful organizations in Russia," and their work was engineering commission-paying deals for money or privilege with the Kremlin, thereby organizing a pipeline of tribute typical of corrupt regimes. "I can’t say it publicly, I can’t prove my position with documents, but I know they were privatizing companies, the very best companies, before we had a privatization program."
The CIA has determined that through Nordex, FPI seized the export earnings from Russia’s natural resource companies – oil, gas, platinum, gold, diamonds – and from industrial firms exporting items such as steel and aluminum and then stashed the hefty profits in Western bank accounts. And only now, eight years almost to the day later, do US taxpayers learn that the "eager, young reformers" to whom their resources were sent for the purpose of building a new Russia were in league from day one with the exhausted Soviet nomenklatura in a scheme to loot Russia’s wealth and park it in the West.
Yegor Gaidar still insists, John Lloyd was good enough to remind us in his recent New York Times Sunday Magazine article, that "he had no choice but to let prices rise to increase supply and to scrap trade barriers so that foreign commodities could begin to fill store shelves."
Freeing Prices Without Privatization
Gaidar’s assertion is untenable. The Soviet Union was economically self-sufficient except for bananas, coffee and coconuts. Foreign commodities weren’t required to fill Soviet shops. And even though the ruble was not convertible, that characteristic had nothing to do with the sudden shortages in late autumn 1991, which were only slightly worse than those normally encountered in the last thin years of Gorbachev’s perestroika.
No one had stopped producing, but shops were suddenly nearly empty. Producers had begun hoarding, as had fearful consumers, but why? It wasn’t that Yeltsin announced in November 1991 that the government intended to free prices, it’s that he also announced the exact date on which prices would be freed. Predictably, producers withheld their product from market and rubbed their hands together like flies awaiting the coming feast which Yeltsin’s newly announced policy guaranteed. Within a week of the ill-considered speech, Muscovites’ needs were being rationed.
However, Gaidar really was under pressure, but the pressure was coming from the West to open Russia to unrestricted imports in return for multilateral lending. Gaidar soon delivered a trade policy that was 100 percent back-to-front, accommodating as it did the self-serving demands of both the West and Russia’s nascent banking oligarchy; Russian manufacturing was to take the brunt of unrestricted foreign competition, but domestic banking was to be protected from competition! Even Russian Central Bank Chairman Viktor Gerashchenko protested, but the Russian bankers were accommodated and the IMF continued lending. So much for the "leverage" foreign policy elites claim foreign assistance programs provide the U.S.
In 1991, there was no hope whatsoever that wheezebag Soviet industries could compete with Western products. For decades, prices were set by Gosplan (State Ministry of Central Planning), any enterprise profits were claimed as Soviet tax revenues, all customer bases were guaranteed and therefore no enterprise had a financial incentive to compete. Without competition, there was never any need to improve quality.
How could freeing prices alone change this equation? Free prices only work to the benefit of consumers when producers compete with one another in the marketplace to satisfy customers’ demands, leaving consumers postitioned to reap the most benefit at the lowest price. Clearly, an equitable and transparent privatization that would have delivered property widely to Russia’s many eager hands should have preceded the freeing of prices. And during privatization, native producers should have enjoyed some protectionism at least, as did developing American industry and manufacture in the 19th century.
Jeff Sachs Can't Read
Competent advisers would have known Russia never did develop an effective banking sector and system of credit in a 1000 years of her history. The story of Russian banking – ancient and modern – always has the same plot, only the names and the dates change. S.Y. Borovoi’s easily obtained history of 18th century banking outlines a typical episode involving a certain "Suterland, who received 2 million pounds for transfer to London, but instead lent the sums to Prince Potyomkin (800,000), Finance Minister Vyazemsky, Foreign Minister Bezborodko and even to the future emperor Pavel. The debt of these honorable people was, according to the custom, forgiven and paid by the state." (My emphasis)
Certainly eager Western banks should have been given admission to Russia. By working initially with more developed and well-capitalized Western banks and later by competing with them, Russian banks could have developed quickly and today be mediating capital responsibly and profitably. No good economic purpose was achieved by foisting subsidized billion dollar loans onto Russia for the purchase of Western consumer goods.
Once the crime of voucher privatization was fully realized, thereafter ensued a years-long highly-criminal and oftentimes murderous scramble for hands-on control of the enterprises. Directors stashed profits abroad, withheld employees’ wages and after cash famine set in, used those wages, confiscated profits and state subsidies to "buy" the workers’ shares from them. The really good stuff - oil companies, metals plants, telecoms - was distributed to essentially seven individuals, "the oligarchs", on insider auctions whose results were agreed beforehand. Once effective control was established, directors - uncertain themselves of the durability of their claim to the newly-acquired property - chose to asset strip with impunity instead of developing their new holdings.
Unsurprisingly, the entire jury-rigged effort has collapsed in flames. The bond market has gone bust, Russia is crushed by her IMF loan payments, and OPIC’s nearly $2 billion in U.S. taxpayer-provided guarantees are yet to be resolved. The West’s best course under whatever new government the Russian people elect is to take its own advice, stop meddling, cease all subsidies and allow what few market mechanisms that do exist in Russia to work. The sooner the banking industry’s pylesos ("vacuum cleaners") are allowed to fail, then the sooner the national property can return to market where more able and productive hands might yet grasp it.
Until Russians have resolved for themselves how property is to be held and secured their decision de jure, all the destructive economic arrangements and cultural behaviors crowding Russian history will continue. Wealth will not be created without private property; without transferable property secured legally to protect no Russian will pay taxes; without revenues no Russian government can endure without falling back upon what is every state’s final reserve; coercion.
The years-long sugarcoating of what the Clinton administration’s policies have wrought in Russia is just one more lie bequeathed Americans. More Western money will only work to insure the continued degradation of Russia, bequeathing her people a future that can be discerned in that most familiar object of Russian folk culture - the Matryoshka nesting doll - a perfect, visual metaphor of Russia’s Brechtian universe: Each figure is captive, one inside the other, and in the end the biggest doll consumes the lot.
Free Money from the Fed
Turning to the question of the IMF and the World Bank generally and their specific roles in international finance, much needs to be said. When libertarians say that government produces nothing, they make a serious error. Government produces one thing in abundance - our money. U.S. paper fiat dollars have no intrinsic value and circulate only by faith and by edict. Consequently, the dollar in a baby boomer’s pocket is worth but the penny that was in his grandfather’s purse less than a century ago. But granddad’s penny was one hundredth of a gold-backed dollar’s value, while today’s dollar is the product of a government-operated pyramid scheme. Once the state slipped the "golden handcuffs" of budgetary discipline through the establishment of the Federal Reserve System, it gained the ability to create unlimited debt, thereby claiming for itself what before had been the purview of tyrants - the ability to debase the currency. It is the slow leaching of value from the U.S. dollar, not the far lesser sums raised by direct taxation, which has enabled the political class to purchase votes for its re-election, creating massive dependencies upon government amongst the citizenry in the process. The end result is the degradation of American society and the citizenry, a situation much remarked upon.
Any pyramid scheme remains viable only so long as its base continues to expand and it is that fact which has driven US foreign policy for much of the past century. Since politicians and investment bankers both have an interest in promoting deficits and in forcing taxpayers to redeem government debt, they were quick to come to terms on the advantages of underwriting foreign debt along with new markets and natural resources from abroad. Taxpayer-subsidized globalism then is not a new phenomenon, but it has reached an apogee of sorts under the guiding hand of the opportunistic Clinton Administration.
Once the criminal financial flows from Russia and Asia were combined with the easy money common to presidential election cycles and began pumping into the economy in the spring of 1995, it wasn’t long before asset inflation hit U.S. corporate share valuations. Throughout 1995 and 1996, the money supply kept rising, and along with it mutual fund holders’ paper wealth. Attracted by the double-digit yields found in risky, unregulated environments abroad, the banks - given the election year liquidity the Fed wished to export - lent unwisely and to excess. The moral hazard the 1995 $40 billion bailout of Mexico unleashed (the debt was refinanced, not repaid, with additional IMF lending and proceeds from eurobond sales in 1996) led to a tripling of international capital flows. Investors took greater and greater risks in the belief that the "new paradigm" economy promised taxpayer-provided redemptions if necessary. The consequence of all those dollars frolicking in exotic locales is a $141 billion bailout for Asia, more than $20 billion for Russia in 1998 alone, and $30 billion for Brazil in 1999.
Liberty vs. Empire
Cures under discussion all share one quality; each has some aspect that degrades American citizens’ independence and prosperity while delivering yet more more to intrude to the political class. It is one more irony of the post-cold war environment that ambitious American policymakers, who were so busy "reforming" Russia in the most appallingly cavalier and self-serving fashion, failed to honor the lesson Russia has to teach, i.e. liberty and empire do not cohabit.
The 1930s were the last era in which the international political and financial elite sought advantage through control of the global economy. What economists call "hot money" raced from one nation to the next throughout that era, leaving a trail of competitive currency devaluations in its wake. Six decades ago, as nation after nation was humbled by and strangled with the manipulations of the financial world’s insiders, history saw fit to serve up Adolph Hitler.
A world war and a score of years later, the allies established the IMF as a prophylactic money bag to prevent destabilizing trade imbalances and therefore, they thought, a repetition of the preceding decade’s nightmare. Yet over half a century later, the IMF, the World Bank and their similarly US-controlled spawn - the IFC, the six regional development banks and the EBRD - have become 800-pound gorillas of economic distortion and, over time, of pillage which unchecked will guarantee extensive international conflict and a broadly-based anti-Americanism.
During the Cold War, the International Monetary Fund got itself repeatedly into all sorts of financial and ethical mishaps in the West’s effort to contain the Soviet empire. But the IMF’s excesses were of little concern so long as its financial firepower could be directed at whatever nation appeared on the verge of toppling into the Soviet camp.
A Little Gift from Clinton via Rubin and Summers No longer serving in an arguably wasteful manner what was nonetheless an agreed national purpose, the IMF has come to function increasingly as the personal gift of the office of the U.S. Treasury courtesy of that office’s service to the US presidency. The US-dependent IMF has been well pleased; far easier to serve a single master than answer to a committee of Congressmen such as yourselves.
The ascendancy of Treasury in foreign policy at the State Department’s expense is the result of a neo-mercantilist foreign policy in which enterprise is to be subject to direction from the presidential administration it is to serve. By expanding the mandates and accelerating the use of a host of international agencies in which the US is dominant - the IMF, the World Bank, the EBRD, the regional development banks, the IFC - and combining their efforts with those of the Commerce Department, the Export-Import Bank, OPIC and USAID-financed Enterprise Funds, the Clintons succeeded in constructing an international patronage machine in which the American executive stands supreme.
Today the president’s men are seeking to institutionalize the socialization of private investors’ and global bankers’ risks in international markets via a freshly-capitalized IMF. The price of the US’s $3.5 billion contribution to the proposed IMF bailout fund on top of another requested $14.5 billion was said to be insignificant when weighed against the financial calamity of a worldwide recession that IMF ministrations and policing could avert. But how true is this?
Taking the IMF’s behavior in Russia as a guide, the answer is that we can expect a rapid escalation of taxpayers’ liabilities in the service of failed policies. After the chaos unleashed by the Fund’s initial advocacy of a single ruble zone for the Commonwealth of Independent States, which handed management of the ruble to 12 central banks, the Fund’s monetary sages settled down to their more usual business of lending large sums in return for secret, IMF-designed recovery programs always said to be strictly enforced. In Russia’s case, only the rhetoric of strict conditions was enforced.
For example, when the IMF touted a 1996 $10.2 billion loan on the basis of what an extraordinary job Russia had done in meeting the conditions of a 1995 $6.7 billion loan, one crucial detail went unmentioned. The $6.7 billion loan was extended without any conditions via the IMF’s Systematic Transformation Facility, a program designed to funnel money to Russia in return for "the promise to reform". Also left unsaid was that through the magic of money’s fungibility, the $6.7 billion loan financed - almost to the kopeck - Yeltsin’s bloody and disastrous assault on Chechnya.
Yeltsin and Tyson Chicken
Following the Russian Communists’ success in the December 1995 parliamentary elections, the Fund proceeded into even dodgier territory with the 1996 $10.2 billion loan, which came front-loaded with a billion dollars meant for Yeltsin’s re-election. Tape recordings of conversations between Mr. Clinton and Mr. Yeltsin made public demonstrate that in return longtime Clinton supporter and campaign donor Tyson Chicken’s exports to Russia – a $700 million annual business – were protected from a threatened 20 percent tariff increase.
Once the first tranche’s payout of a billion plus dollars arrived the following May, Yeltsin pulled out all the stops; back wages for state employees and pensions were paid, and after the IMF’s billion was consumed, the capricious Siberian ordered his initially mulish Central Bank to hand over a billion more. The IMF said nothing despite claiming the Fund’s main achievement during the previous 6 months was legislation establishing the Russian Central Bank as an independent institution. Therefore, the Fund’s current denial of any knowledge of the Russian Central Bank’s offshore operations through Fimaco is dubious at best.
But weren’t Americans told that Russia’s financial oligarchy paid for Yeltsin’s re-election? To the contrary, Russia’s bankers made serious money on Yeltsin’s electoral weakness by buying government bonds at distressed prices using cheap money handed over from government deposits. The lion’s share of the domestic bonds’ high yields have always been paid with IMF loans. Russia’s first representative to the World Bank, Leonid Grigoriev, explained, "Of course, the government was to return this money and that is why the yields on 3-month paper reached as much as 290 percent. The government’s paying such huge, impossible rates on treasury bills, well, it’s completely unbelievable. It had nothing to do with the market and therefore such yields can only be understood as a payback, just a different method."
Clearly, building an empire of finance capitalism is an expensive business. But who pays? U.S. taxpayers, who paid directly through contributions to both multilateral and bilateral assistance efforts, and Russian workers, who paid indirectly by having their wages go unpaid and their national estate continually degraded. Secondly, the Russian people paid by being denied a means of exchange since the banking and trade sectors of the economy were quick to socialize amongst themselves what few rubles the IMF’s tight money policies allowed the Russian Central Bank to print.
Academic Pigs at the Public Trough
"The new paradigm" economy concocted by the Harvard-connected Clinton Administration appointees in the U.S. Treasury, was designed to extend the federal government’s meddling hand worldwide through its control of the multilateral and bilateral public lenders, enabling government a free ride on the back of a re-structured U.S. economy grown vigorous and ever more innovative on account of the benefits the Reagan era’s low taxation, moderate inflation, reduced regulation and expanding world trade had delivered. The overall scheme works as follows:
Sell assistance programs on an alleged "free market" and "humanitarian" basis by awarding government grants to those academics who can be relied upon to supply the intellectual camouflage politicians and journalists then repeat ad nauseum to a distracted public, move the IMF and the World Bank to target, induce target to raise taxes, fine tune target’s central banking operations, encourage borrowing and debt creation through the target’s government and its national banks, allowing IMF lending to pay yields if necessary; induce target to privatize national property while building a flimsy, artificial "infrastructure" for an equities market good enough to attract high risk foreign investors. Once the target nation’s government flounders, step back and watch speculators assert discipline through a run on the target’s currency. The subsequent devaluation delivers, in turn, a flood of cheap imports to American manufacturers and producers.
The finishing touch on the swindle is to confiscate more money from G-7 citizens (the lion’s share from Americans) to pay for what is said to be an "essential" IMF bailout; thereby allowing Uncle Sam’s IMF minions to entrench themselves more deeply in the target’s government. Taxes are raised, the population struggles beneath indebtedness, government funding demands and the inevitable domestic inflation a devaluation delivers. Western neo-colonialists then bully the target over its rapidly compounding debt in order to extract yet more property. Once successful, the world’s insiders then turn around and deliver cheap shares from privatizations and initial public offerings into the maw of U.S. mutual funds and portfolio investors. US taxpayers get hit coming (foreign aid) and going (bailouts) and innocent foreigners’ property is finagled away either from, or on account of, inattentive and corrupt leaderships. The big winners are the world’s increasingly corrupt and cozy governing class, international bureaucracies and global banks.
What U.S. policy has wrought across much of the post-cold war landscape is a moral, political and financial abomination based on fraud, theft and deceit. In Russia the results of the Clinton Administration’s policies are the perpetuation of the longest depression of the 20th century in what is increasingly an unpoliced deadly weapons dump, the biggest swindle of national property since Vladimir Lenin muscled the country early in the century and the discrediting of the ideas of free markets and democracy.
The Chickens Come Home
But as the old saying has it, what goes around comes around. Unfortunately, all those dollars the Fed printed to get Bill Clinton re-elected in return for Alan Greenspan’s third appointment as central bank chief, are now returning to the United States in the form of manufactured goods and commodities with which U.S. producers can not compete on price.
When exchange rates fluctuate against one another as they do now, some countries will inflate more quickly than other countries. The G-7 are the only nations that try to co-ordinate their monetary policies and the effort usually ends up a failure over time. When one country inflates too quickly, the value of its currency will decline.
Some governments - especially those with an election on the horizon - actually want to devalue since national exporters, their goods now being cheaper, sell more goods. Global lenders like the IMF are also fond of devaluations because a rising national income from bargain exports leaves plenty in the national kitty for principal and interest payments to them. (Global direct investors who stick to the dollar, quasi-"good guys", fear devaluations, because their profits calculated in a devalued domestic currency buy fewer dollars for repatriation.)
But when exchange rates depreciate rapidly the specter of capital flowing out of a country appears. Foreigners and residents put their savings elsewhere. The currency goes into free fall, its value plummets, more investors flee and at the end of the cycle, interest rates skyrocket. This is exactly what happened in Asia in 1997, in Russia in 1998 and in Brazil in 1999.
One World, One Currency, One Tax Collector
Yet to curse the speculators is useless; since the 1973 collapse of Bretton Woods that broke the international link between the dollar and gold, the fear of the syndrome described above is the only remaining bit of discipline in the international system. How much better, the globalists reason, if there were to be one central bank and one fiat currency for everyone so that then national leaderships (and the financial oligarchies they sustain) could inflate and rob their own populations in unison.
In time, U.S. corporate profits will decline as a consequence of the IMF-induced deflation and share prices of all but premiere multinational corporations will follow suit. Alas, those Americans up to their necks in credit card debt may well be the next class of debtors to be rolled, and American farmers are already suffering serious losses from the collapse of farm commodities prices. In time, credit will dry up, government receipts will dwindle, the national debt will skyrocket and unemployment will increase. Eventually the government will inflate its way out of its accumulated debt.
Camdessus & Fischer: the Inmates Run the Asylum
Before concluding my remarks, I would like to recall one curious and mostly unremarked detail from 1994, that sticks out in this sad story like a boy’s unruly cowlick. In mid-July 1994 - at the very moment dollar-based Mexican tesobonos were being oversold to prosperous clients of Goldman Sachs and other U.S. investment banks, which, in turn, would lead to the 1995 Mexican bailout and the introduction of moral hazard into the world’s financial system - Michel Camdessus told a press conference that he intended to press for the creation of a new IMF facility to give members resources with which to defend themselves against speculative attacks in financial markets.
In other words, long before bailouts of entire countries became routine Camdessus wanted a new loan program to feed the last disciplinarians in the world’s financial system - currency speculators - so that national governments might become even more unaccountable to their citizens. At the time, The Economist slammed the proposal, saying it was "absurd and almost certainly unworkable," since Camdessus "bizarrely" was assuming the IMF would know more about economic fundamentals than the markets. And that assumption, The Economist noted, was the very assumption which had been the undoing of the USSR’s centrally planned empire. But Camdessus’ 1994 plan is the very one the Clinton Administration implemented and seeks to institutionalize.
So who wags the tail of the money dog? Citizens who labor to create wealth for themselves and their families or folks like IMF chief Michel Camdessus, a French socialist and lifetime bureaucrat, and his deputy, Stanley Fischer, who together are quite possibly the two most incompetent people on the planet? Sadly, it appears a once free people are slowly but surely being enserfed to globalism’s useless hors d’oeuvres eaters and incompetent lenders.
It doesn’t take a conspiracy theory to observe that the downward arc of citizens’ liberties, independence and civic competence and of American culture generally parallels the declining value of the U.S. dollar, which has lost 99 percent of its value since the founding of the Fed, and 75 percent of that debasement has occurred since the last link with gold established by Bretton Woods collapsed in 1971. From that perspective, it’s really not very surprising that at the end of the century, not quite a century after America instituted the Federal Reserve and thereby began the process that would deliver the power of creating unlimited debt to the political class, the White House is occupied by a couple who share not so much a marriage as they do a collection of felonies.
Throughout the 1990s, finance capitalism’s shills have been a "new paradigm" economy so glorious one might have thought Beatrice awaited us each and every one at the very lip of Heaven itself. Their brassy tune celebrated the defeat of the business cycle by globalization, productivity gains and computer technology. Inflation was tamed, the golden horns sounded, and we were to dwell eternally in lush fields of full employment, low interest rates and a booming stock market. And, insiders winked, foreign money once mugged by speculators would have nowhere else to go but directly into Wall Street’s money machine.
But what if - instead of Beatrice - what waits over our collective shoulder down Purgatory way is a repeat of the European currency instabilities of the 1930s, which culminated in the most vicious and widely-fought war in world history?
Mother Russia
From the perspective of the many millions of her children, Mother Russia in late 1991 was like an old woman, skirts yanked above her waist, who had been abandoned flat on her back at a muddy crossroads, the object of others' scorn, greed and unseemly curiosity. It is the Russian people who kept their wits about them, helped her to her feet, dusted her off, straightened her clothing, righted her head scarf and it is they who can restore her dignity - not Boris Yeltsin, not Anatole Chubais, not Boris Berezovsky nor any of the other aspirants to power. And it is the Russian people - their abilities, efforts and dreams - which comprise the Russian economy, not those of Vladimir Potanin or Viktor Chernomyrdin or Mikhail Khodorkovsky or Vladimir Gusinsky. And that is where we should have placed our bet - on the Russian people - and our stake should have been the decency, the common sense and abilities of our own citizens realized not through multilateral lending but through the use of tax credits for direct investment in the Russian economy and the training of Russian workers on 6-month to one year stints at the U.S. offices of American firms in conjunction with the elimination of U.S. tariffs on Russian goods.
Russia is a fabled land, home to a unique and provocative thousand year-old culture, and a country rich in the resources the world needs whose people had the courage and resilience to defeat this century’s greatest war machine, Hitler’s invading Wehrmacht. Yet, thanks to Boris Yeltsin’s thirst for power and megalomaniacal inadequacy, Russia has become the latest victim of American expediency and of a culturally hollow and economically predatory globalism. Consequently, Americans, who thought their money was helping a stricken land, have been dishonored; and the Russian people who trusted us are now in debt twice what they were in 1991 and rightly feel themselves betrayed.
The worst of it was that some pretty good ideas - private property, sound money, minimal government, the inviolability of contract and public accountability - that have delivered to the West’s citizenry the most prosperity and the most liberty in world history, and might have done the same for the Russians, were twisted into perverse constructions and only then exported via a Harvard-connected cabal of Clinton administration appointees who funded - without competition - their allies at Harvard University courtesy the public purse. Joining the US-directed effort were the usual legions of overpaid IMF/World Bank advisers whose lending terror continues to encircle the globe.
But where, in a land in which today more of the people die each year than are born, lies the gain? History’s yardstick will measure out the answer, and I suspect it will not suit us.
Of special note in the money-laundering investigations was the Benex-Bank of New York (BONY) traffic. Natasha Kagalovsky of BONY was defended by Lily's attorney Stanley Arkin. Natasha's husband Konstantin had been Russia's IMF representative. Times' Russia Journal cited the chief prosecutor of Geneva saying Safra was killed for cooperating with the FBI re the laundering of $4.8 billion in IMF loans to Russia through Republic.
Bump for Ted Maher and his loving family......In Jesus' Precious Name, Amen.
One doesn't have to work hard to push water down a pipe.
Pushing it up a pipe requires constant pressure.
At one end of the three-year pipe, Monaco beat a confession out of Ted Maher.
At the other end, it awakened him every twenty to forty minutes throughout the ten-day trial to keep him off balance.
After all, the deal all along was, cooperate and your family won't be hurt and you won't be sentenced to life.
Just telling the truth was never an option.
As in 2404 above, billions were at stake:
Federal and state authorities, examining possible money laundering through the Bank of New York, suspect that Russian organized crime may have been involved in skimming International Monetary Fund (IMF) loans and other foreign economic aid to Russia, the Wall Street Journal reported on August 25. Altogether, as much as $10 billion was allegedly laundered through the bank, the 16th largest asset-holding bank in the United States. A top IMF team started consultations in Moscow to pour over Russia’s finance books.
The probe into the route of IMF loans to Russia is part of a wide-ranging U.S. federal investigation into Russian money transfers that passed through the Bank of New York (and its London offices) in the past year or so.
Capital Flight Schemes
Russia’s national police agency, the MVD, conservatively estimates that $9 billion illegally flees the country each year. A study by the Institute of Economics of the Russian Academy of Sciences and the Centre for the Study of International Economic Relations at the University of Western Ontario, published this May, suggested that up to $70 billion disappeared in 1992 and 1993 alone. Other specialists argue that total capital flight in 1994–98 amounted to more than $140 billion and currently is running at more than $15 billion a year. Overall, some $350 billion in capital has fled the country since the fall of the Soviet Union, with nearly a third of it landing in the United States, intelligence sources told the U.S. News and World Report. And investigators believe that the flow of funds has accelerated since the crash of the ruble in August 1998. As Russian companies face bankruptcy, their motivation to preserve assets tends to vanish.
During an August 21 raid on the Bank of New York, U.S. federal investigators seized the files of Natasha Gurfinkel Kagalovsky, a senior vice president who supervised the bank’s East European division. She and the bank’s vice president in London, Lucy Edwards, were suspended. Ms. Kagalovsky is the wife of Konstantin Kagalovsky, Russia’s representative to the IMF in the early 1990s under Prime Minister Yegor Gaidar’s government. After Gaidar was replaced, Kagalovsky moved to Russia’s Bank Menatep, headed by Russian oil and banking baron Mikhail Khodorkovsky. Menatep snapped up a number of enterprises during Russia’s controversial "loan to share" privatization, including a controlling stake in the country’s second-largest oil company, Yukos. Menatep failed last year amid Russia’s financial crisis (see box on page 16). Kagalovsky is now deputy chairman of Yukos.
Investigators say Menatep and Kagalovsky increasingly are becoming a focus of the investigation. Federal and international law enforcement officials say they are looking into whether Kagalovsky helped construct a byzantine network of offshore corporations that politically connected or mob-linked Russians may have used to siphon hundreds of millions of dollars out of the country. Investigators say that sum may include part of foreign aid and funds pumped into Russia by the IMF to shore up the reeling Russian economy.
Yukos denies that it has been involved in transfer pricing schemes, but oil industry analysts calculate that its subsidiaries effectively lost hundreds of millions in revenue last year by selling its oil to the holding company at bargain rates. Yukos, like all petroleum companies battered by last year’s low world oil prices, itself reported a $79 million loss for 1998. A deal earlier this year scattered the ownership of Yukos’s two oil production companies among six separate offshore firms, from the British Virgin Islands to the windswept Pacific atoll of Niue in the South Pacific.
Elaborate shell games have become a dominant feature of Russia’s post-Soviet economy. Menatep’s own purchase of Yukos back in 1996 began with a flourish of thinly disguised deception by Kagalovsky. He said "an unknown company called Monblan" had won 85 percent of Russia’s second-biggest oil company. Menatep later admitted that Monblan was a subsidiary.
Secrets of New York Bank Accounts
Also under the scrutiny of U.S. federal and local investigators is Russian businessman Peter Berlin and his wife, Lucy Edwards. Berlin, British corporate records show, is listed as a director of Benex Worldwide Ltd., the company that kept several of the suspicious accounts at the New York Bank. Benex maintained close ties to Semion Mogilevich the alleged head of Solnetsevo, Russia’s largest organized crime group. Mogilevich has built a $100 million empire from arms dealing, extortion, prostitution, and other rackets. Before submerging in recent years, he lived in Budapest, Hungary, but is thought to have moved to Moscow in recent weeks. Mogilevich allegedly is the principal target of a strike force assembled in early 1998 by the U.S. government. The force is comprised of the FBI, the Treasury Department, the State Department, the Central Intelligence Agency, and the Hungarian Interior Ministry.
A senior U.S. government official said there were "substantial links" between Benex and YBM Magnex International Inc., a Newtown, Pennsylvania, maker of industrial magnets. Mogilevich was a founding shareholder of the company. Founded in 1994 by a Russian emigre scientist, YBM Magnex, a magnet and bicycle manufacturer, rose from an obscure penny stock to a multinational worth nearly $1 billion in less than four years. Its numbers astonished competitors and delighted stockholders. Net sales quadrupled from 1994 to March 1998, net income jumped ninefold, earnings rose by a factor of five, and the future looked just as promising. Benex became a distributor of YBM Magnex’s magnets. By March 1998 YBM was boasting of plans to become "the world’s leading producer of high-energy permanent magnets."
But six months later, in June of last year, YBM Magnex pleaded guilty to conspiracy to commit securities fraud and has since filed for bankruptcy-law protection. In December 1998 the company’s new board, composed of outside investors, admitted to U.S. authorities that there was evidence of YBM’s criminal wrongdoings, possibly involving links to organized crime. YBM had faked customer lists showing money laundering activity in accounts and business dealings in Eastern Europe and the Caribbean. (Money laundering means moving ill-gotten gains through a series of bank accounts to make them look like legitimate business proceeds).
Earlier this year, the FBI and other federal agents raided YBM’s world headquarters in Newtown. The confiscated documents suggest that Russian mobsters may have used the company’s Eastern European operations to launder millions in dirty money through a web of related enterprises.
The Budapest-based production facility of Magnex was established eight years ago as the property of the Mogilevich-controlled Arigo Ltd. Shortly thereafter its capital increased and it started to produce high-tech magnets. (As the Budapest-based World Economy Weekly reported, the shabby, run-down building that employed 200 people, one third of them Russian, did not reveal much about the hi-tech production, and hardly reflected the $80 million investments in the mid-1990s). "The products were sent back to the offshore company at Caiman Island and then reshipped to the CIS countries."… At least that is what the owners claimed.
A year ago the Hungarian company, now renamed Crumax Inc., decided to start a new investment with $20 million in order to increase production and build a new research and training basis. The Canadian investors vetoed the plan.
With the Money, Mogilevich Disappeared Too
Mogilevich disappeared from Budapest following a Hungarian-American coordinated raid. Officials confiscated documents and computers in his Budapest offices that well-informed sources link to the FBI’s New York investigation. The Hungarian authorities declined to discuss the results of these raids. The Hungarian tax police have extended an ongoing inquiry into companies controlled by Mogilevich.
Investigators in New York estimate $6 billion zipped through the Benex accounts in the short time since authorities began monitoring the transactions last fall. They told the New York Times that the Berlins may be involved in one of the largest money-laundering operations ever conducted in the United States. Some $4.2 billion passed through a single account in more than 10,000 transactions between October and March, the New York Times reported. The cash in question appears to have passed through European and U.S. banks before landing in an offshore account in the Channel Islands that was controlled by a Russian commercial bank.
Some of the accounts Berlin established at the Bank of New York weren’t regular deposit accounts but "micro/CA$H-REGISTER" accounts. These accounts are typically used by businesses for cash management purposes and are designed to make international fund transfers simpler. Account holders access their accounts and can conduct numerous transactions, including wire transfers and payment orders in foreign currencies, via a personal computer.
Were IMF Funds Hijacked?
The IMF said on August 23 that it was looking into reports of diverted funds but that it had made payments only to the Central Bank of Russia. IMF spokesperson Graham Newman pointed out that under the current standby credit IMF money is paid into the Russian government’s account at the New York Federal Reserve Bank and that these funds can only be used for repayments to the IMF. Earlier credits were paid into either the central bank of Russia’s account at the New York Federal Reserve, or its account at (Germany’s) Bundesbank, and were used by the authorities to build up reserves, help finance the budget, or pay international obligations.
The possible siphoning of funds from IMF credits to Russia comes at a time when an audit released this summer by Pricewaterhouse Coopers shows that Russia’s central bank funneled $1.2 billion in IMF money in 1996 to a firm it controlled called Financial Management Co., or Fimaco, in the Channel Island of New Jersey. The central bank hid that transaction from the IMF and later explained it was trying to keep the money beyond the reach of creditors. The IMF has lent about $20 billion to Russia since 1992. In July the IMF approved a new loan of $4.5 billion for Russia.
All this makes the ongoing IMF-Russia discussions even more complicated. Moscow’s IMF envoy, Mikhail Zadornov, told NTV television that negotiations, scheduled to last here until September 1, will concentrate on the 2000 budget parameters and Russia’s compliance with a tight fiscal policy agreed on with the IMF over the summer. The IMF wants Russia to aim for a primary budget surplus of 4 percent of GDP next year—a figure that excludes Russia’s foreign debt payments. Moscow ministers want the IMF to lower its sights, stressing that chronically poor revenue collection should improve only enough next year to meet a three-percent surplus.
Meanwhile, some members of Congress are launching their own probes into the matter. James Leach, a Republican from Iowa and chairman of the House Banking Committee, is planning a hearing, tentatively set for mid-September, on the role Western banks may have played in helping Russian money laundering, including an investigation of whether IMF funds have been siphoned. "Russian banks appear to be more platforms for insiders seeking to spirit money out of the country than intermediaries for domestic economic growth," Leach said in a press statement. At issue is whether foreign theft has been facilitated by self-serving banking practices in the Western world, including the United States.
This article was based on reports of reporters Michael Allen, Paul Beckett, Michael Binyon, James Bone, David S. Cloud, Alan S. Cullison, Andrew Higgins, and David Lister of the Wall Street Journal, Lacy McCrary of the Philadelphia Inquirer, Gyorgyi Kocsis of the World Economy Weekly, Budapest, and David E. Kaplan of the U.S. News and World Report.
Lily's lawyer Stanley Arkin defended BONY's Natasha Kagalovsky in the Benex laundering affair. Natasha's husband is Konstantin Kagalovsky of Menatep. Edmond testified before congressional banking committees and the FBI regarding the laundering. The Times' Russia Journal of the time cited the chief prosecutor of Geneva saying Safra was killed for cooperating with the FBI re the laundering through his Republic Bank of $4.8 billion in IMF loans to Russia.
Bump for Ted Maher and his loving family......In Jesus' Precious Name, Amen.
Ted Maher had a strong advocate in Congressman Ben Gilman as chairman of the House International Relations Committee.
Chairman Gilman wrote Prince Rainier III of Monaco on Ted's behalf (letter is upstream in Free Republic and at TedMaher.com).
When I first called Gilman's office I spoke with his chief of staff, then with his HIRC liason John.
John arranged meetings with the State Department to get them on track in visiting Ted and transferring funds from home.
Because Republicans held to term limits on committee chairs, Gilman was replaced by Hyde.
Due to gerrymandering redistricting, Gilman was defeated for office.
Hyde's staff did work with Sue Kelly's to get Powell to force Monaco to do the legal thing and allow Griffith to represent Ted.
For Gilman's efforts in not just Ted's case but throughout his service he deserves recognition.
His staffer John was a voice of genuine concern.
If you're PLA Gen. Xiong Guangkai and you want to see Beer Crinton, you send in Johnny Chung, Charlie Trie and John Huang with bags of money.
If you're Ted Maher in need of justice, you need people who care for justice.
One of these is Amy Waters Yarsinske, author of No One Left Behind: The Lt. Commander Michael Scott Speicher Story.
Amy Waters Yarsinske has been in contact with Ted's family, even as she makes the rounds of Washington contacts on behalf of Scott Speicher.
She's been writing on Scott Speicher for eight years, from the time he was given up for dead, to the mention of his plight by President Bush in an internationally broadcast speech.
For some, truth beats inertia, though it takes years.
Merry Christmas to our troops and veterans two hundred twenty-five years into this grand experiment, this Republic.
Three Years.....(Rm # 101).....Three Years!........Enough is enough!
Bump for Ted Maher to be freely and graciously returned in health and safety to his loving family and country.
......In Jesus' Precious Name, Amen.
Merry Christmas!
From Inner City Press "HSBC Watch":
December 7, 1999 -- Mid-week flash (full weekly report of 12/6, below)
On December 6, the five Federal Reserve Board Governors voted unanimously to adopt a 37-page order approving HSBC’s take over of Republic New York Corporation. The order contains not a word of the December 3 murder of Republic founder and 29% owner, Edmond Safra. As to the ongoing Princeton notes scandal, the Fed cursorily states, in a footnote, that it “has considered... confidential and supervisory information regarding the charges of securities fraud filed against the owner and founder of Princeton Global Management Limited, a customer of Republic New York Securities Corporation... Neither RNYC or RNYSC has been charged with wrongdoing by any government authority in connection with this matter... the Board has taken account of plans by HSBC to address potential effects that might result from the Princeton matter. The Board is coordinating its review of this matter with the functional regulators of RNYSC and other appropriate law enforcement authorities.” Order, n.20.
For the Fed, the self-proclaimed umbrella regulator, to take such a hands-off approach is more than a little surprising. Republic has been sued for over $100 million by Amada, one of the Japanese company which bought the Princeton notes. While the Fed refers to the “functional regulators of RNYSC,” the Fed just spent months pushing its position in Congress that it should be granted wider regulatory turf.
The Fed’s treatment of Community Reinvestment Act and fair lending matters is similar. Another major issue in the proceeding, the Fed confines to a footnote: “One commenter maintained that the purchase by Republic Bank of mortgage-backed securities issued by Delta [Funding Corporation], which recently reached a settlement with New York State authorities regarding its lending practices, suggests that Republic Bank lacks fair lending compliance safeguards and might constitute a discriminatory lending practice. Republic Bank purchases MBSs issued by Delta on 10 occasions between July 1997 and June 1999. The Board has reviewed Republic Bank’s standards for investing in MBSs and has found nothing to suggest that its decision to invest in particular MBSs are based on any prohibited criteria. Moreover, RNYC has indicated that it was not involved in originating the underlying loans that were securitized. The Board has forwarded a copy of all comments on Delta to the Department of Justice, [HUD] and the [FTC], which have responsibility for reviewing compliance with the fair lending laws by nonbanking companies.” Order, n.44.
The Fed uses an absurdly narrow interpretation of the fair lending laws -- whether Republic intentionally applied discriminatory criteria to buying MBSs. The Fed ignores a decision on just this issue by another Federal regulator, the OTS, on Lehman Brothers’ activities with Delta. And while the Fed tries to tip its hat to a recent GAO study that criticized the Fed’s refusal to coordinate with HUD and the FTC on fair lending, the referral is too limited: the allegations are about Republic Bank, not only Delta.
As to HSBC, the Fed admits (again, in a footnote) that “HSBC’s mortgage originations in LMI and minority census tracts and to African-American and Hispanic applications, as a percentage of its total mortgage lending, are lower relative to the aggregate and relative to the demographics of the markets in which HSBC operates.” Order, n.35. The Fed bumbles on to say that this does not indicate discrimination, because raw lending numbers do not include credit histories. But both HSBC’s actual loans made to, and the applications it receives from, protected classes are below industry aggregates -- credit histories and denial rates have nothing to do with it.
Moments before the Fed announced its approval, the Fed faxed ICP a one page “memo to files,” stating that “[b]etween September 1, 1999, and November 1, 1999, I and other members of the Board staff spoke on various occasions by telephone with representatives of HSBC... HSBC’s counsel inquired on occasion as to what, if any, written information the System might require with respect to allegations of fraud involving Princeton.... HSBC was required to provide information concerning the nature and extent of any potential liability... as well as a discussion of the steps to be taken by HSBC to avoid a recurrence of this situation.”
The Fed’s own Ex Parte rules state that the “System” is not to communicate with either side to a disputed issue without the other side present. While the Fed tries to get around this by memorializing such ex parte contact, to withhold the memo until the date of the Board’s vote is contrary to the Fed’s own rules.
And. . .
The New York Post (Dec. 4) reported that Mr. Safra was only in Monaco to hold meetings with HSBC’s John Bond.
Martin Armstrong denies wrongdoing, and an examination of his treatment shows judicial caprice and vindictiveness. Presiding judge appointed his own former clerk to seize Armstrong's assets in their entirety, leaving him to defend himself from a jail cell, writing the most eloquent briefs in pencil on pad, having been denied the barest essentials of clerical equipment--let alone the documents he needs for his defense.
Said judge has ruled out of pique, denying appeals and withholding a contempt citation which I stipulate is without merit.
The Martin Armstrong Defense Fund provides significant archived information.
Armstrong seems another scapegoat of the Republic octopus, held an incredible 35 months, while Republic Securities paid 600 million--a prima facia admission of its guilt, yet quite content to let blame be deflected to its neutralized scapegoat.
Stephen Toth, former manager of Monaco Republic, now held on one more extorted false confession, deniable culprit for missing funds in that hallowed institution.
Now Lily entertains Prince Charles from her palatial London digs, having profited handsomely from the sale of Edmond's Republic to Sir John Bond of HSBC headquartered in London--said sale approved Monday December 6, 1999, the first business day following Edmond's convenient death.
Nothing stops the inquiry like the death of the only witness to the facts.
Dear Maher family, still wishing and hoping for freedom for Ted and hoping that you will be reuniTED.
Dear FReepers, thanks for your interest and help during the past year, whether a bttt or prayer or an e-mail/letter to someone who can possibly help get our fellow American home to his family. Still hoping for a miracle.
Dear Phil, you are tremendous. : )
Merry Christmas to those celebrating, and a Happy Holiday Season to all. Best wishes.
Monaco: Give Ted back to his family.
To Monaco:
Your 'Grace',.....where is your 'grace'?
Merry CHRISTmas?
Three Years.....(Rm # 101).....Three Years!........Enough is enough!
Bump for Ted Maher to be freely and graciously returned in health and safety to his loving family and country.
......In Jesus' Precious Name, Amen.
Merry Christmas?
Bump for Ted Maher to be freely and graciously returned in health and safety to his loving family and country.
......In Jesus' Precious Name, Amen.
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