Ed Warner on Drug Cartels and US Media Silence

My former editor, veteran American journalist Ed Warner, remains professionally active in his retirement in Arizona. His current area of interest is the power of Mexican cartels and their influence in our country - a subject I must admit to knowing next to nothing about. So I asked him to write about it for this blog. I think the information Ed provides here explains the widespread ignorance about the problem.
 
DRUG CARTELS AND AN ABSENT MEDIA 

Ed Warner, Carefree, AZ, February 23, 2015

Ed Warner

Why are some beheadings worse than others or at least more worthy of media attention? The question arises because videos of a few beheadings in the Middle East helped draw us into yet another questionable war, while similar grim videos are available in great quantities from Mexico. Yet we don't go to war there. Thanks to an absent media, we don't even know about the grisly killings.

In mid-February, 31 members of a big Mexican money-laundering ring were arrested in Chicago, a hub of drug trafficking. US Attorney Zachary Fardon said this kind of business is responsible for "countless devastated lives and ravaged communities," meaning both here and in Mexico. Again, hardly any media coverage while far away ISIS dominates the news.

The drug cartels, earning an estimated $6o billion a year from voracious American consumers, have wrecked much of Mexico and are an increasing presence in this country. Their danger is not just the drugs they purvey but the corruption that follows. It reaches into many areas of American life  - business, politics, law enforcement. In an important new book, The Accidental Super Power, author Peter Zeihan analyzes the interconnected US-Mexican crime scene and concludes: "More than China, more than Russia, more than Iran, it is the expansion of the Mexican drug wars to all of North America that is emerging as the single greatest geopolitical threat to the American way of life."

If only we knew about it. Why doesn't the media tell us? There are a number of possible reasons. First is Fast & Furious, the Obama Administration's delivery of weapons to the cartels despite their brutality that equals any on earth. Reputable gun dealers were forced by the ATF to sell arms to known criminals. If they refused, they could lose their licenses. The stated aim was to trace the guns across the border to higher ups who could then somehow be brought to justice. But the guns were never followed, and meanwhile they were used to kill many Mexicans and a few Americans. We await the real explanation of this debacle.

Faced with scandal, President Obama for the first time claimed executive privilege to prevent the release of key documents. Attorney General Holder asked the media to be "reasonable" in its coverage of what after all was a big story. The media complied and didn't look into it very hard. The exception was CBS correspondent Sharyl Attkisson, who dug too deeply and for that was hounded by the White House in various ways and finally removed from investigative reporting and resigned. The media took note. Time to be reasonable. Let's not lose access to the White House.

There's understandable fear of the cartels who have murdered dozens of Mexican journalists. If they can avoid it, they don't want to harm Americans - bad for business. But as they continue to expandd in this country, who knows? Prudence dictates pursuing less dangerous stories, though the media might at least pay tribute to the Mexicans who take the risk, like Anabel Hernandez, who was given round-the-clock bodyguards after exposing the links between cartels and government. She writes in her book Narcoland: " "Currently, all the old rules governing relations between the drug barons and the centers of economic and political power have broken down. The drug traffickers impose their own law. The businessmen who launder their money are their partners, while some local and federal officers are viewed as employees to be paid off in advance, for example by financing their political campaigns."

The cartels finally came close to grabbing Hernandez when a group of armed thugs raided her house in December. Luckily, she was not at home and decided it was time to go. She now lives in California. If she isn't worth a story, who is? But try to find one in our media.

Much of the media is financially strapped today and in search of help. With wealth to spare, the cartels could lend a hand but at a price of course: no unfriendly coverage. Despite the clear lack of news of Mexican crime, no element of the media has been accused of succumbing, though rumors abound. Mexican billionaire Carlos Slim, one of the world's richest men, has suspected but no proven ties to the cartels. A few years ago, he lent 350 million dollars to a needy New York Times and has since become the NY Times Company's largest stockholder. Let's see if the paper runs any cartel stories.

It's said these drug bosses seek power as well as wealth. It could be as stalwart Mexicans, they're aiming at a reconquest in their own way. Revenge on President Polk and his invaders who grabbed so much of Mexico. Now there's a story!

Finally, an element of ideology. Neocons, assorted arm chair warriors and profiteers all want US participation in the useless Middle East wars to continue indefinitely. Reports of actual danger from across the border would be a definite distraction and might lead to a rearrangement of US priorities and commitment. Please media, plead our warriors, don't do that and let Americans know what's happening in Mexico. That would be in the national interest, it's true, but not in ours.

The cartels fear only one thing: legalization of marijuana. As their main product, they would be crippled, maybe be put out of business. If US lawmen don't have to cart bales of marijuana around, they would be free to concentrate on the harder drugs and any other crimes the cartels devise. Meanwhile, the media could help by actually covering the story and producing for once a good, solid analysis of the power of the cartels and the extent to which they control Mexico and intrude on the US. Is this too much to ask?

About the author: Ed Warner who has been reporting for more than 55 years. He wrote for Time Magazine from 1958-1982 and wrote, edited and reported for the Voice of America from 1983-2005, and continues to freelance today. His articles have appeared in The American Conservative and on AntiWar.com and on his website: edwarner.org

International Money Laundering Perpetuates Global Poverty

Britain's HSBC is facing charges of fraud and money laundering from authorities in Belgium, who accuse the Swiss arm of Britain’s biggest bank of having helped wealthy customers evade tax. The Belgian authorities said Monday that “The Swiss bank is suspected of having knowingly eased and promoted fiscal fraud by making offshore companies available to certain privileged clients. ”

Earlier this year U.S. authorities said they had broken a crime ring that laundered tens of millions of dollars from drug cartels through businesses in Los Angeles, California. Authorities suspect that drug cartels were funneling their profits through the companies in an international laundering scheme.  Those might have included ransom payment made to release a U.S. citizen tortured by a drug cartel in Mexico.

Also this year, U.S. officials accused the British bank Standard Chartered of illegally laundering $250 billion in financial transactions with Iran during the past decade, allegedly filtering money through its New York branch in about 60,000 transactions with Iranian financial institutions. 

Illegal money transactions have come to plague the free market system because western laws passed since the 1960s have created a financial structure that facilitates the circulation of illegal money, wrote former businessman Raymond Baker, in his book Capitalism’s Achilles Heel.  

Raymond Baker

"This structure consists of tax havens, off-shore secrecy jurisdictions, disguised corporations where no one knows who owns the business; flee clauses that enable the trustee who is the nominal head of the disguised corporation to shift that disguised corporation to a different secrecy jurisdiction if anyone comes knocking on the door trying to find out who owns it; shell banks, anonymous trust - fake foundations where you can donate money to the foundation and then benefit yourself out of the foundation; false documentation, mispricing and a whole host of loopholes that facilitate the movement of money out of the dirty money structure into western coffers, ” Baker told an audience in Washington D.C.

Kannan Srinivasan, a researcher at Melbourne's Monash Asia Institute, said the easiest way to conceal unlawful funds is to move them across international borders. The absence of coordinated international legal and law enforcement efforts makes this possible.

“When money comes out of any country, one does not go very deeply into the origin of that money. Therefore, it takes on this new character of being a variety of international money and can sometimes come back into the very country from which it has exited because it is presumed to be a sort of international investment.” 

Srinivasan said many banks, including those in the United States and Switzerland, accept large deposits of money from overseas, typically without checking their origin. "For example," he said, "a person making money by running a prostitution ring in the United States could not by law deposit that money in an American bank. But if dirty money is earned outside the United States, it can be deposited in U.S. banks."

Drug dealers, racketeers, terrorists and other criminals have to conceal the sources of the money they earn through their illegal activities. So they usually have other legitimate businesses, such as shops, garages and restaurants, through which they channel their illicit incomes.  But money laundering takes various forms and is not confined to criminal and terrorist circles.

“Dirty money comes in three forms: corrupt, criminal and commercial," said Baker.  "The corrupt component is the proceeds of bribery and theft by foreign government officials. The criminal component is the drug and the racketeering and the terrorist money that sloshes around the globe in the billions of dollars. The commercial component has the characteristic of being almost always tax evading,” he said.

But many people are not aware of the devastating effect illegal money transactions have had on them and the rest of the world.

Baker estimated that some $ 11 trillion of dirty money were hidden away in tax havens around the world.  In addition, about $1 trillion in illicit funds crossed international borders every year, half of it originating in poor countries who receive aid. According to Baker, this makes eradicating global poverty a near impossible task.

“Consider the impact of this money. First, it eviscerates foreign aid.  Foreign aid has been running at about $50 billion a year, and higher in recent years. Match that against the $500 billion of dirty money that comes illicitly out of developing and transitional economies.”

Corrupt leaders in developing countries often use huge portions of aid money to enrich themselves and bribe those who help them in the endeavor.  Terrorism also is financed by dirty money and as we can see in the case of ISIS, there is no shortage of it.

Baker said that al-Qaeda had accumulated an estimated $300 million through the dirty money structure in the decade prior to September 11 attacks. "It’s the way that Saddam Hussein re-armed after the Persian Gulf War, buying munitions that were later killing Americans in Iraq. It’s the way that Abdul Quadeer Khan in Pakistan operated his nuclear network, buying and selling nuclear materials around the world," he said. 

Branko Milanovic, a senior scholar at the City University of New York, said international monetary laws should be tougher and more coordinated.

Branko Milanovic

“When you have people who are mutually benefiting from a relationship that is somewhere in a gray area, and which may be illegal in one country and quasi-legal or legal in another country, it is very difficult to actually go after them,” said Milanovic. "And having laws in place is not enough," he warned, "because even those already on the books are not properly enforced." 

Milanovic said the main reason is that most of the victims of money laundering are poor and powerless people in developing countries.

“It’s almost impossible for poor people to organize themselves and to fight back. They have no political power, they have no economic power and they have no access to the media.”

Perhaps more importantly, noted Milanovic,"the poor in developing countries often are unaware they have been harmed by money laundering."  
  
Huge amounts of international aid attract the vultures who siphon off large portions of it and often send it back to where it came from, using illegal channels.  Meanwhile, millions of destitute people die every year from preventable poverty-related causes.  

The corruption of international capitalism has prevented the spread of global prosperity, with those most hurt by it unable to prevent it.  Experts agree that new laws will hardly change a thing.  But governments can and should do more to educate the public and establish mechanisms to enforce the existing laws.  No amount of aid will erase poverty until the illegal flow of money out of poor countries is stopped.

*****
And on a lighter note:

http://www.tickld.com/x/capitalism-explained-this-is-so-accurate-it-hurts