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Wednesday, November 01, 2017
PAUL MANAFORT - Our National Narratives. Robert Mueller Sends a Message. The End of Facebook. - email@example.com - Gmail
Our National Narratives. Robert Mueller Sends a Message. The End of Facebook. - firstname.lastname@example.org - Gmail:
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In the indictment against Paul Manafort, made public on Monday, with the first wave of revelations in the Mueller investigation, there’s a telling pattern that appears on pages 7 through 14 in a listing of dozens of payments that overseas companies, allegedly owned or controlled by Manafort and his associate Richard Gates, made to several businesses in the United States. For years, starting in 2008, Manafort and/or Gates made routine payments—often every other week, sometimes every other month—to the same small group of companies. There is an unnamed home-improvement business in the Hamptons, a home-automation company in Florida, an antique-rug store in Alexandria, Virginia, and others. The indictment holds that these payments were for personal purchases, but that doesn’t appear to make much sense. It’s hard to imagine a person who spends twelve million dollars over six years but only shops at a handful of stores, and nearly always happens to have a bill that ends in multiple zeroes: $107,000, then $20,000, then $250,000. At an unnamed men’s-clothing store in New York, Manafort spent $32,000, $15,000, $24,000, and other multiples of a thousand. For money-laundering experts, this fact alone would be cause for suspicion. It is extremely rare for even a single purchase to end in three zeroes. An even more glaring sign is that the payments all came from businesses in Cyprus controlled by Manafort and/or Gates. And then, in February and March of 2013, the funds stopped flowing from Cyprus, and began to come from accounts in the Grenadines.
That timing is significant. The Cyprus payments stopped just as the global accounting firm Deloitte published a report on behalf of the forty-seven-nation Council of Europe, detailing stunning, naked criminality in the banking system of Cyprus and heralding a crackdown on money laundering in that country. The Republic of Cyprus is a small, middle-income country of a little more than a million citizens, yet its banking system has hundreds of billions of dollars in assets—more than nine times its gross domestic product. (The U.S. banking system is roughly the same as its G.D.P.) Cyprus was, economically speaking, more a group of global banks with a tiny country appended to them than a country that happened to have some banks. Many of those assets are owned by shell companies with, according to the report, “an average of three layers” of ownership, meaning that the banks were an anonymous shell company that was owned by another anonymous shell company that was owned by a third anonymous shell company. The actual identity of the true owner of an account was known in only nine per cent of the hundreds of hidden accounts that Deloitte studied. At some banks, the high-risk clients—those who trigger multiple signs of money laundering—made up more than half of the customer base.
None of that would have shocked anybody who was paying attention. Cyprus has long had a reputation for money laundering. Yet official groups had been giving Cyprus a pass for years; the Council of Europe itself had given the country high grades for its anti-money-laundering efforts just two years before. The report came out just as the European Union and others were spending billions of dollars to bail out Cyprus’s teetering banking system. That European institutions were, effectively, bailing out Russian oligarchs, and gangsters became a political and media obsession. The situation called for that rarest of events: a government body saying the clear truth about something everybody already knew.
The experience of Manafort this week and Cyprus in 2013 have much in common. Both cases involved activity that bears several of the hallmarks of money laundering. It was happening fairly openly, and many could have spotted it: the banks that processed the payments into and out of Cyprus, the banks in Cyprus themselves, government regulators in each of the countries through which the money flowed, the various businesses—and their accountants—that received the funds. They were only exposed because of overwhelming external political pressures. Government sources generally estimate global money laundering to account for around one trillion to two trillion dollars each year. That is serious money that concentrates in two types of places: offshore money centers such as Cyprus that profit from processing such payments and, crucially, a handful of global cities that have become central nodes in the global money-laundering economy, most notably New York and London. A former high-ranking official in New York State government told me that a serious attempt to reduce money laundering in New York City would be impossible because it would so severely damage the local economy. The Treasury Department, under President Obama, launched an effort to curtail money laundering through real-estate purchases in New York, Miami, Los Angeles, and a few other American cities by insisting that purchasers reveal their true identity when paying all cash for high-value properties; this measure was strengthened early in the Trump Administration. (It’s still easy enough to evade the rules, however: one can simply buy several lower-value properties in a single building and then remove the walls between them, to create one mega-unit.)
Manafort’s scheme, if proven, was brazen. It is remarkable that a sophisticated operator would feel so comfortable funnelling millions of dollars through Cyprus-based shell companies and bank accounts into the United States. He was probably right to feel invincible. Absent the Mueller investigation into possible collusion between the Russian government and the Trump Presidential campaign, Manafort would likely never have been caught. It seems reasonable to assume that many others are doing much the same and, similarly, have little fear of prosecution.
However, right now there also must be several people who, like Manafort, are part of the Trump world and are thus subject to unusually intense scrutiny, and who have operated in one or more of the parts of the world associated with money laundering. A brief glance at Trump’s business and political partners reveals many who, one might assume, are being given close attention. No doubt Mueller’s team has looked into the financial pasts of many in the Trump orbit. The Manafort indictment makes clear that Mueller will work toward their arrests even if their crimes have little to do with Trump himself, presumably creating an incentive to collaborate with Mueller’s investigation.
However the Mueller investigation ends, the world cannot continue to accept money laundering as inevitable, and only prosecuted when it is a useful tool toward some other end. Money laundering is terrible in and of itself. It transfers wealth away from tax-funded democracies and toward kleptocracies, rewarding crime and punishing legitimate businesses. Hopefully, one of the lessons of the Mueller investigation will be that global criminals should feel quite a bit more afraid about the illicit transfer of their money around the globe.
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