Trices Group Book Review Journal

Evil Money

Ehrenfeld, Rachel

by:

HarperCollins Publishers

Publisher:

Location:

1992

Cover:

Hardcover

Type:

Lynard Barnes

reviewed by:

05/02/1995

Comment:

Highly Recommended.

Republished from Crushies Book Reviews - Volume II Issue No. 2 - February 1995 - Copyright 1995:

What exactly is evil money?

Let's say you receive $100 a week pay from your employer. On the side, you receive another $5 in payment from some illicit activity you would like to keep secret. You obviously have a problem.
If you deposit $105 into your bank account each week someone might ask about that $5. If you earn $100 a week, how can you possibly deposit $105 a week into your bank account?

Having a money laundering mindset, you decide the best tactic in this situation is set up a company with a bank account to deposit the extra $5. You can then have that company, which we'll call the X company, pay you $5. You now have a legitimate source for that extra $5 you deposit into your bank account. But suppose someone asks about this X company that is paying you $5. Where does this X company get its $5 to pay you and why is it paying you? Well, you decide, just to be safe, to set-up another company, Y, to pay the X company $5. The X company then pays you $5.

As you can see, the strategy of money laundering is to keep the source of money secret. Your illicit $5 goes from company Y to company X into your bank account. The people who asks questions, like the Internal Revenue Service, have no reason to question your extra $5. It's payment for some product or service you render to company X. Trouble might start however when someone asks questions about company X. Well, company X gets its $5 from company Y. But where does company Y get the $5 to pay company X?
If you're a money launder schemer, your ultimate goal is to stop the questions. One possible way is to make the amounts so small that pursuit of the question where does the money come from not worth the effort. (Instead of one company paying you your $5, you have five companies paying you $1). Another approach is to have your $5 returned to you from a source which can not be questioned. You might set-up a company Z with a bank account in a country with bank secrecy laws--someplace like Switzerland or The Bahamas or Panama. Company Z pays company Y which pays company X which pays you. Anyone questioning your $5 payment is eventually lead to company Z where all questions stop.

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If you appreciate the intricacies of hiding sources of money, you'll appreciate, though not necessaries like, Evil Money.

The sub-title of Evil Money is "Encounters Along the Money Trail". There are five chapters examining the schemes, rationale and consequences of money laundering in the international marketplace. Little new is revealed though there is a tremendous amount of detail--perhaps too much detail to sustain general reader interest. If you read a weekly news magazine or watch nightly news programs you are probably familiar with some of the material covered. What you are familiar with is only the bud of a very corrupting weed.
Starting with the gross payment of brides to officials in The Bahamas, Ehrenfeld traces the increasing sophistication of money laundering schemes. Its focus is money derived from the illicit drug trade.

Suppose for instance that the $5 you were so earnestly attempting to hide was instead fifty thousand dollars derived from the brisk sale of cocaine in California. Fifty-thousand dollars is a bit much to add to a weekly pay check. A new stratagem might be to create three companies processing and trading gold. Company Z based in South America could sell gold to Company Y in California which in turn could sell the processed gold to Company X in New York. This is the gist of a money laundering scheme uncovered in the mid-1980s in California. Ehrenfeld does a good job of explaining the details of the operation which the participants labeled La Mina ("the mine"). It came to an end almost by accident.
The author also devotes 70 pages to the Bank of Credit and Commerce International, or BCCI as it is best know. This is the most interesting chapter in the book. When BCCI was shut down in July 1991, it had 430 branches in 73 countries. From the news headlines, you might have gotten the impression that BCCI was a recent manifestation of greed. Actually, the bank had been around, in various incarnations, since 1947. In 1972 it branched out beyond Pakistan into Europe and the world. The people running BCCI knew how to use money. No question. But was there an ulterior motive behind the greed, as Ehrenfeld implies? You can read the chapter yourself and make a determination. My inclination is to avoid conspiracy theories.

Ehrenfeld correctly points out that BCCI was shut down only after the Gulf War, though the U. S. and British governments knew of the bank's corrupt practices long before. In other words, BCCI was shut-down not because it was violating laws but because it was in the strategic political interests of the U. S. and Britain to remove the bank's influence in Third World countries and in the West. It is an interesting supposition on Ehrenfeld's part.

But is it true?

In the final chapter of Evil Money, titled "The Colombianization of the United States", Ehrenfeld makes a pretty strong case that America, with the quiet and sometimes active complicity of bankers, accountants and lawyers, is being transformed from a "land of opportunity" to a "thoroughly corruptible third-class nation". Everyone is willing to shout about the evils of drugs because the evils are so easily perceived. But the money, flowing into the pockets of the already well heeled, flows quietly, without raising a ripple of protest or indignation. As with the BCCI incident, laws are enforced, wrong-doers brought to justice only when it is politically expedient to do so. What then does this make of laws?
In passing, the author relates the 1982 incident in which William von Raab, U. S. Commissioner of Customs, attended a conference in Miami on banking. Rather point blank, he told the assembly that "you and your banks are engaging in sleaze." Despite subsequent

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attempts to get him fired, von Raab continued an almost zealous direction of his agency in anti-money laundering enforcement. Such leadership is rare. But it is this type of leadership that will keep America from becoming a "thoroughly corruptible third-class nation". The only question is whether it will be too little too late.

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