Money Launderers Discover Their Inner Policemen

In a comic opera turn of events those who run the global money-laundering system are declaring their sudden discovery of the need to oppose themselves.

Prime Minister David Cameron of Britain has written to other European Union leaders, urging that the June G-8 Summit he is hosting initiate "radical" international action to crack down on tax evasion and avoidance.

His Minister for Middle East affairs, Alistair Burt, told the Deutsch Press Agency (DPA) that the British Foreign Office would create a special team to help with the return of stolen assets to the “Arab Spring” countries. (The former dictator of Tunisia is reported to have decamped with about a ton of gold.)

Prime Minister Juliana O’Connor-Connolly of the Cayman Islands (among the most active of offshore tax havens), wrote to her British counterpart pledging support for the initiative on a multilateral automatic exchange of tax information. She called on other national leaders to participate in the system to “ensure efficiencies of cost and resources,” and “avoid the risk of multiple competing standards.” (More plainly, Don't bother investigating the specifics of who actually drained trillions of dollars from developing countries.)

Juergen Fitschen, executive head of Deutsche Bank AG declared on German Radio that there would be "zero tolerance" for tax evasion. "Tax evasion is a criminal offense. That says it all," he said.

The reason for all this righteous zeal?

The secrecy surrounding the payments system of the global black market is falling away under pressure from the American and German governments; also, developing countries, newly aware of their losses, are raising the issue in international forums.

African countries especially, have made it a joint priority to stop the haemorrhage and have established a high-level panel on the matter chaired by former South African President Thabo Mbeki. They have made it a key target of their post-Millennium Development Goals (MDG) development agenda.

Meanwhile, the super-rich around the world have been making their own adjustments to the loss of hideouts. Businessweek reported last week on how a number of Russian and Western European billionaires were running for cover. Reuters carried a story saying wealthy Americans were filing tax returns showing their long-standing secret accounts as if they were newly opened.

But does all this mean the end of money laundering and the Global Black Market?

Not by a long shot.

Last week Indian mass media ignored or reported sotto voce that British telephone giant Vodafone would be partnering with ICICI bank to introduce the “mpesa” in India. The “mpesa” is Vodafone’s system for moving money over mobile telephones, and it can undercut all efforts to make financial institutions responsible for knowing their clients and monitoring suspicious transactions.

Which part of the government authorized the launch of the “mpesa” system in India has not been reported, but the Finance Ministry cannot be without a role.

There should be an investigation to see who specifically was involved.

Did they take into consideration that ICICI bank is currently being probed for money laundering? Or that Vodafone’s massive tax problems with the Income Tax authorities centre on the use of tax haven funds to buy into the Indian mobile market? Or that the company it acquired was a joint venture of ESSAR, which was caught funding the Naxalites, and Hutchinson Whampoa, the Hong Kong conglomerate with close links to the Chinese People’s Liberation Army (PLA)?

The “mpesa” mobile phone currency would make it impossible to track the funding of violent individuals and groups in India.

There are many other ways that money can be laundered and moved, and the government should consider carefully the implications of “economic reforms” that make the country increasingly vulnerable to groups with a long record of international criminality.

Rather than pussy-foot around this issue, perhaps it is time to do some plain speaking to British governmental and corporate leaders.