London is the ‘global capital of money-laundering’


by Guest    
12:14 pm - August 9th 2012

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contribution by Tom Costello

Britain is still the money-laundering capital of the world, according to a special six-page investigation published in this fortnight’s Private Eye.

Richard Brooks, a former tax inspector responsible for Private Eye’s groundbreaking exposés of corporate tax avoidance, turns his attention to the dirty money flowing through our banks and tax havens.

Weeks after a US senate committee slammed Britain’s biggest bank, HSBC, for facilitating vast money-laundering operations, including washing money from Mexican drug cartels, he finds that light-touch banking regulation and a thriving network of tax havens, have made Britain the centre of an embezzlement industry that steals billions from the world’s poor.

Brooks has spent months tracking high-profile corruption cases as they make their way through British courts.

He zeroes in on one of the most outrageous cases, that of James Ibori, former governor of the Delta State in Nigeria, who between 1999 and 2007, funnelled £200m of pounds of state money through British banks to fund an outrageously lavish lifestyle.

While many Nigerians went without basic education and social care, Ibori spent stolen loot
on a Bentley, private school fees for his children, properties in Hampstead, a fleet of armoured Range Rovers and dozens of gambling trips to Las Vegas.

With the help of a British solicitor, Bhadresh Gohil, Ibori managed to sneak Nigerian wealth out of the country and launder it through HSBC and Barclays bank accounts.

It’s a complex story, in which dirty money zips between secretive tax havens, obscure front companies, and British high street banks. But, as Sasha Wass QC told the jury at Ibori’s eventual trial, ‘If you’re confused by this … that is exactly the idea.’

It was only when the eight police officers who make up the Met’s Proceeds of Corruption unit painstakingly followed the money that they managed to piece together what Judge Pitts, who sentenced James Ibori to 13 years at Southwark Crown Court in April this year, called ‘one of the biggest money laundering cases ever seen’.

But despite Ibori’s long sentence, the British banks who facilitated his crimes and so many others like it, have not seen the inside of a court room and are unlikely to any time soon.

The regulation-free tax havens where stolen loot is stashed and the bankers who wash the money are still a long way from proper regulation.

Private Eye points out that Lord Green, a current trade minister and member of the Treasury team deciding how to reform Britain’s banks, was chief executive of HSBC during the years it was turning over hundreds of millions of pounds of dirty money.

When Private Eye asked one former policeman why the bankers aren’t getting arrested for money laundering, the answer was simple: ‘They are untouchable’.

—
London’s Dirty Laundry is in the current issue of Private Eye.
Article cross-posted from The Bureau of Investigative Journalism

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Story Filed Under: Blog ,Crime ,Economy


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Reader comments


1. SadButMadLad

This is the same Richard Brooks that “discovered” that Vodafone was evading billions of pounds of tax. And whose argument fell flat on its face when it was found that Vodafone was actually following all the legal rules about how much to pay as was shown by the likes of Tim Worstall and many others, even some of the left. But just like any good lie, it went round the world before the truth could be out.

2. Tim Worstall

“Richard Brooks, a former tax inspector responsible for Private Eye’s groundbreaking exposés of corporate tax avoidance,”

Quite.

I’ve corresponded with Brooks about where that £6 billion number came from and his answer was quite clear. He’d made it up.

In detail, his calculation was that if a Luxembourg company was subject to the UK’s CFC rules, and if the money going into the Luxembourg company had not been taxed by either Germany or Luxembourg, then the tax due would have been £6 billion.

Except, of course, the profits/dividends from Germany were taxed, the interest in Luxembourg was taxed. And, better, the entire matter was over whether the UK’s CFC rules apply to a Luxembourg subsidiary of a UK company.

The answer to that being no.

(The actual settlement with Vodafone is even more interesting than most know. HMRC hasn’t demanded tax on the money in Lux. What it has said is, well, we’ll tax it if you bring it into the UK. Which was always the case, that that would be taxable. And Vodafone has said, well, we’d like to bring some of it into the UK to pay dividends. So we’ll pay the tax on what we bring in.)

As to Ibori: man gets prosecuted and jailed for money laundering. This shows laws against money laundering not strong enough.

Err, yes, great logic.

3. Sigil

My understanding of finance is vanishingly small, but I can’t see how it’s any surprise that banks are involved in money-laundering. If I’m Ibori and I’ve got £200m that I want to vanish, how many mattresses would I have to stuff?

4. pagar

OMG

A Nigerian called Ibori offered to put £5m in my bank account a while back.

I thought he was a fraudster…………

5. Sally

Good to see Boris and all the so called pro law and order tories defending the worlds biggest govt backed crooks, namely The City.

Exactly the same in the US where not a single banker has gone to jail for the corporate theft that has taken place. These rich 1%’s don’t pay all that money to politicians for nothing. They buy their own justice.

6. Charlieman

5. Sally: “Exactly the same in the US where not a single banker has gone to jail for the corporate theft that has taken place.”

I write these words for intelligent readers of LC.

1. Money laundering via London banks and misguided (perhaps fraudulent) banking loans are separate things.

2. Bankers who received a hefty salary plus bonus extracted that money from their employers and indirectly from the banks’ owners.

3. Protecting deposit holders (normal people) from the financial collapse was appropriate government behaviour at the time. The conundrum is how to allow banks to collapse in the future.

7. Robin

Are the tax dodgers running a rebuttal unit on LC?

8. hrh lizzie

Did he not find it perculiar that the crown prosecution did not want to hand over the hard financial evidence to the defence in court. I did. I dont remember seeing a brooks at the hearings of Ibori.

We know it is a scam , why should NONE of the banks be done for breaking the money laundering law when it clearly states in the law that institutions that aide and abett them will also be prosecuted, IF the laws are legal that is.

9. Tim Worstall

“Are the tax dodgers running a rebuttal unit on LC?”

Sunny has suggested (on Twitter I think it was) that I am paid to post here on LC.

Just for clarification: no, I’m not.

Just like Sunny himself does, I get paid to write in paid locations….Comment is Free, Telegraph blogs, the ASI site, Forbes, …..the usual freelance outlets.

LC doesn’t pay me to write here, nor does anyone else pay me to comment here.

In fact, the only person I know of who is actually paid to blog in general is Richard Murphy. He gets £35,000 a year off one of the Joseph Rowntree things to do so.

10. Jimmy

“Britain is still the money-laundering capital of the world,”

I suspect far more takes place in the US but I’d be interested how he arrived at that conclusion. Surely it wasn’t just from watching a trial?


Reactions: Twitter, blogs
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