US Banks found to be involved in Mexican drug war

Last week, I posted a story about Mexican drug gangs threatening to kill US police officers in Nogales Arizona.  While discussing the post, I said the following:

In a way, the violence in Chester PA and that in Mexico are mirrors of the same thing. The economic situation is so desperate and the social controls are so non existent that the most viable option perceived by many is the drug trade. I believe that also extends to the poppy fields in Afghanistan and South America. What we have are a bunch of dispossessed people forming the gendarmes of a world wide drug army.

At some point, we have to grapple with some very uncomfortable questions here. I’ll use an analogy to explain what I mean. Suppose the auto industry was declared illegal tomorrow, but major players like GM and Toyota continued to operate making cars secretly and shipping them everywhere. Could they really hide from aggressive law enforcement? You might not catch the small players, but the big players would have a difficult time covering their economic tracks mainly because the economic infrastructure they have to have in place is so massive that it leaves footprints everywhere. So, raw material inputs like steel and rubber could be traced to them, payments to suppliers could be traced to them, they really couldn’t keep a few billion sitting around in cash and as they move these massive amounts of money, that could be traced to them. The Federal Reserve, the US Government and various and sundry players have departments whose only job is to maintain statistics and measure economic activity. Are we to believe that the drug trade doesn’t result in some data “blips”? So are we really to believe that the major players can not be found? Are we really to believe that the “soldiers” in the streets of Juarez, Nogales or Chester are the only problems? Who put them there? How is it that we can have satellites arrayed around the globe and can see and hear everything, but somehow are blind and deaf when it comes to the drug trade’s major players?

These are but a few of the questions that are never ever raised about the drug trade. The illegal drug industry has estimated sales about equal to the big three auto makers.

 

Today, a story comes out on Bloomberg about Wells Fargo/Wachovia Bank admitting to moving money (i.e. laundering) for the Mexican drug cartels in a deal with federal prosecutors.  What’s the penalty they get for that?  A fine of $ 160 million and they have to promise not to do it again.  After a year, potential criminal charges will be dropped against the executives responsible.  There’s no doubt that other US banks and Wall Street firms have been involved  in this.

There is so much to say here, but time limits me. This is major news, but where are the headlines? Why isn’t the tea party clamoring about this threat to freedom?  Why are politicians of all stripes silent?

This is an outrageous example of the corruptness that’s pervasive in our economic and political system.   The implications of this are highly disturbing once you really think about this. One of the most powerful lobbies in the US is the financial lobby.  They were powerful enough to bend the will of a president and congress to get taxpayer funded bailouts and it’s highly disturbing to consider that some of the “grease” for the palms actually came from Mexican drug cartels.  If our politicians can be bought and paid for by everyone else, then it stands to reason that whoever has the money can “play”.

The implications of this are broad.  We have an out and out war occurring in Mexico.  Who is financing this war and why is it really being fought?  Is it just cartels fighting for territory or is there really something else occurring here?

For some time, many observers have concluded that our nation has moved towards the merger of corporate and political powers.  It’s clear that this merger is complete when the government refuses to prosecute for a clear violation of law.  It’s clear this merger is complete when the government refuses to expand the probe of this to cover all major banks and Wall Street firms.  The allure of drug money has undoubtedly brought others in.

It is impossible for a multi billion dollar industry to exist without the economic and political support of some very major players both in the US and worldwide.  This story is prima facie evidence of that.  

In the first video below, they’re interviewing an former anti money laundering officer for Wachovia.  They ask him if he’s fearing for his life.

 

 

 

Banks Financing Mexico Gangs Admitted in Wells Fargo Deal – Bloomberg

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11 Responses to “US Banks found to be involved in Mexican drug war”
  1. Thanks for highlighting this. It’s telling that CNN, FOX News, nor MS-NBC, to my knowledge, have picked this story up.

    You called it: Someone in the banking industry had to be complicit in helping these cartels move these large sums of money undetected.

    And it’s also telling that no one in these banks are going to be prosecuted. The government levies a fine to give the appearance of non-cooperation, when it fact, they’re as complicit as the banks in these money-laundering schemes by not doing enough to stop it.

    I’m going to e-mail all three networks and ask them why the silence. But we all know why. I’m surprised that Bloomberg chose to bring this to light when other news outlets are virtually mute on the subject.

    “For some time, many observers have concluded that our nation has moved towards the merger of corporate and political powers. It’s clear that this merger is complete when the government refuses to prosecute for a clear violation of law.”

    If it hasn’t been complete, it is now.

    • Greg L says:

      And it’s also telling that no one in these banks are going to be prosecuted. The government levies a fine to give the appearance of non-cooperation, when it fact, they’re as complicit as the banks in these money-laundering schemes by not doing enough to stop it.

      This is a major story and scandal that goes to the very heart of the US banking system. Note that they only mention Wachovia as the bank being prosecuted, but most certainly this sort of activity is not limited to them. It’s very likely that all of the major banks have been involved with this. It is also very likely that some Wall Street firms are also involved with this as well. It’s also likely that this activity is not limited to the Mexican drug cartels.

      Please understand that I’m no great conspiracy theorist, but one doesn’t have to be to see that there’s one unbroken line from those who grow the poppies to the gangs that run the streets in urban America. Much of the violence that occurs in Chester, Los Angeles, Philly and elsewhere is evidence of this. In the first video, the former Wachovia investigator speculates just how close are the bankers’ hands to the trigger behind all of the violence in Mexico. That question needs to be expanded to America’s cities. The gangs here are just smaller and less organized versions of the cartels. I really wouldn’t be surprised if the same major players involved in the illegal drug industry are also involved in building privatized prisons.

      IMO, there are several facets of this story–complicity of our government is certainly one aspect. There was an expose written by a reporter named Gary Webb several years ago during the Iran Contra scandal that posited that entire guns for hostages deal was financed entirely by crack cocaine sales in the African-American community. I maintain that African-Americans are frequently “positioned” such that we’re exploited economically and this is yet another example. Here, our community is being used as an end link in the distribution chain for the illegal drug trade to great detriment to our people. Granted, no one has to be involved with this as there are other choices, but when you see few, it’s easy to see how one could get snared. The issue is that the conditions in our communities are conducive to the role they play in this trade and once conditions are favorable for something that’s making money, there will be resistance to changing them. What I’m suggesting is this—there’s an economic interest in the conditions of high crime and mayhem that’s occuring in the African-American community. Those interests are exist from within and, more importantly, from without. Consequently, anyone who seeks to improve the conditions dramatically is going to run up against economic interests that will resist and do so violently. IMO, this is something that many don’t consider when looking at what needs to be done within the community to address the scourge of drugs.

      Again, several facets with broad implications in this story. In the Jamaica, there was a drug lord extradicted to the US to face trial after violent resistance to the Jamaican police and after great hesitation from the Prime Minister, who finally succumbed to US pressure to go after the guy. So we can selectively extradict and prosecute certain people but can’t go after the key infrastructures that support their existence? We can arrest someone in Jamaica, but can’t go after our own banks who are laundering money? Something stinks here. Let me put it this way. Suppose you’ve got a convenience store, but you face stiff competition from several stores in the area which impacts your profits. If a few of these stores could be gotten rid of, the remaining stores would be better off and if via some legal action, a competitor or two were “taken out”, the remaining stores would swarm like bees for their customers. Hell, if you were connected enough, you might even want to encourage that your government take out your competitors. Of course, this is total speculation on my part not backed up by anything, so I can’t say this particular situation went down this way, but given the undue influence of money in political systems here in the US and across the world, it’s likely that “selective prosecutions” have been used to give market advantages to other competitors.

      Why isn’t this news? There are a ton of questions that would have to be addressed if this were “news” and the storyline has yet to be developed.

    • Greg L says:

      Back in here with another thought on this issue that revolves around questions that need to be raised. On the terrorist front, our government has implemented seizures on bank accounts and various and sundry other controls that purport to prevent money laundering. The government has gone after things such as charities that are supposedly front organizations for Islamic terrorist groups and have shut them down. The Patriot Act and various other amendments have been put forth making even the remotest association with a listed terrorist group a criminal offense. It has gone to the UN to arrange for numerous sanctions on Iran and has gone all out to isolate them economically.

      Here’s what I question–either our government is efficacious or it isn’t on these sorts of matters. Either it’s telling us lies when it comes to fighting terrorism or it’s choosing to be effective at that fight while choosing not to be so on the drug war. IMO, there’s no in-between given the threat that we face from the drug barons.

      As far as the African-American community is concerned, I have similar questions of accountability. With all the problems the illegal drug industry has caused in our community, why are we not calling on our government to do far more to interdict shipments and drain the swamp of all the supporting actors (i.e. the banks). Why are we not leading the call and forcing the conversation around this where none exists currently? If given a choice between marching on Glen Beck or marching to uphold the legacy of Dr. King by calling for the government to do its job, I’d be more than willing to do the later. But again, just to be clear this is something not to be taken lightly, for just as abolition and civil rights was violently resisted, so to would be these sorts of calls. Each of these historical calls threatened a way of economic life for others based on the misery in the African-American community. So too is the case with the illegal drug industry. I say and I say again, that there’s a vested economic interest in the conditions in the African-American community from a variety of sources. Any attempt to change those conditions for the better will displace these interests.

      By way of example of the power of these interests, in Mexico the cartels have been killing political candidates who are viewed as unfavorable to their cause and are supporting those who are. The focus is on the Mexican cartels as if they’re the only drug barons. They’re not and they’re not the only ones who might behave this way.

  2. Greg L:

    Do you know the amount of money that is involved in this operation and the PORTION of money that makes up the Mexican Drug War?

    What concerns me is – just as we see in Haiti, Congo, Nicaragua one finger print seen by the US Government or American Corporation can trigger some people to place 100% of the blame upon them as part of their agenda of indictment.

    Its interesting that when the governor of Arizona said the other day that “illegals are transporting drugs into the country” she was said to be biased because she failed to QUANTIFY her charge.
    Yet it seems that when indictments are made against US corporations and government broad based indictments serve certain people’s ends.

    Do you personally know the extent that Wachovia and Bank Of America played in the entire scheme of things?

    Do YOU support “Racial Profiling” of all large financial transactions where a Mexican or Mexican owned company comes through the front door of the banking center looking to transfer some money into the Mexican state?

    • Greg L says:

      Do you know the amount of money that is involved in this operation and the PORTION of money that makes up the Mexican Drug War? Do you personally know the extent that Wachovia and Bank Of America played in the entire scheme of things?

      CF,

      The article and the video imply that this is not a single isolated incident. Both refer to banks not a bank. As to Wachovia, they alone laundered over $ 350 billion, an amount of money that can’t be dismissed as immaterial by itself, but let’s assume that this accounts for only a small portion, say 10%, of the money laundered for the drug barons worldwide, who is laundering the other 90%? Here are some questions I have for you:

      1) What is the main currency drug transactions being settled in? The Mexican Peso or the USD and the Euro?
      2) Do Mexico, Afghanistan, Columbia and etc. have the banking and financial infastructure to handle billions of dollars of deposit activity related to drug sales?
      3) If the European and US banks aren’t involved in money laundering given that their currencies are the main ones used, who exactly is performing this function?

      When commodities trade in dollars, deposits and investments are frequently made in the same currency. This is why China and Saudi Arabia own so much of the outstanding US Treasuries. Since they’re getting paid in a currency other than their own, any amounts not needed for current consumption are frequently invested in dollar denominated investments and/or deposited in US banks. Frequently, their own currencies and financial institutions aren’t robust enough to handle their needs. Which brings me to the final question—if the dollars generated from oil sales and Chinese exports work this way, why wouldn’t drug sales?

      There’s no difference in how this trade is handled.

      • Greg L:

        You picked out the $350B in transactions as criminal. I did not take this to be the case. With Mexico as a large trading partner with Canada – only surpassed by Canada – there are billions and billions of dollars of legitimate transactions that transpire between our two nations.

        Wachovia, based in Charlotte, N.C., admitted it didn’t do enough to spot illicit funds in handling $378.4 billion for Mexican-currency-exchange houses from 2004 to 2007.

        From this passage from the Minneapolis Star Tribune do you gather that there was $378B CRIMINAL transactions or not enough SCRUTINY of the criminal transactions that were bundled within?

        It appears that you are in agreement that the situation at hand with Mexico requires that a higher state of scrutiny be served upon all of the funds transacted with their banks, lest there be more sanctions upon the US bank (authorities) who fail to case a wary eye sufficiently. (Notice I did not say “profiling”. Such a dirty word it is).

        [quote]1) What is the main currency drug transactions being settled in? The Mexican Peso or the USD and the Euro?[/quote]

        Not sure if I understand the relevance of the question. Since the proximity of Mexico to the USA means that the USA is their largest market it stands to reason that the Mexican drug king pin would transact in dollars.

        In this year alone I can point to 3 raids in metro-Atlanta in which more than $1M have been confiscated from Mexican drug gangs that use the nondescript residential homes as drug transfer depots.

        If they found Euros in these homes in Georgia then I would be surprised and impressed.

        [quote]
        2) Do Mexico, Afghanistan, Columbia and etc. have the banking and financial infastructure to handle billions of dollars of deposit activity related to drug sales?

        GregL:

        The bulk of the cash proceeds from US drug sales appear to be smuggled BACK INTO Mexico in cash form rather than through banking channels were monitoring is easier.

        Before we continue let’s try to establish some accurate dimensions to the drug trade:

        [quote]”[T]he value of the global illicit drug market for the year 2003 was estimated at US$13 bn [billion] at the production level, at $94 bn at the wholesale level (taking seizures into account), and at US$322bn based on retail prices and taking seizures and other losses into account. This indicates that despite seizures and losses, the value of the drugs increase substantially as they move from producer to consumer.”
        Source: United Nations Office on Drugs and Crime (UNODC), World Drug Report 2005 (Vienna, Austria: UNODC, June 2005), p. 127.

        “In 2000, Americans spent about $36 billion on cocaine, $10 billion on heroin, $5.4 billion on methamphetamine, $11 billion on marijuana, and $2.4 billion on other substances.”
        Source: Abt Associates, “What America’s Users Spend on Illegal Drugs 1988-2000” (Washington, DC: Office of National Drug Control, December 2001), p. 2. [/quote]

        Clearly as these piles of US dollars make their way back into Mexico some “official” entity is required to accept these funds and convert them into Mexico pesos.

        Some of it no doubt remains in the USA and is used for other profit making ventures that benefit the Mexican drug gang.

        I am wanting to make sure that you and Black Diaspora are in agreement that the USA needs to do more forensic auditing and inspection of all business operations where there is evidence that these illicit funds are used as startup or operating cash – thus opening the door to the “washing machine”.

        [quote]
        3) If the European and US banks aren’t involved in money laundering given that their currencies are the main ones used, who exactly is performing this function?
        [/quote]

        Greg L – It appears that you are arguing that a wilful and complicit act has transpired. Again I wonder what the result would be if the Mexicans were HIGHLIGHTED because of the context of what is going on – if this would cause protests against “profiling”?

        You are proving my point. It sounds like you are supporting the heightened “profiling” of all financial transactions that may eventually lead to a sanction of these banks. I just explained to you that this drug money gets “laundered” in its largest quantity in the USA or in Mexico. The USA banks have better “double flag” all money related to Mexico.

        Now let me ask you – do you know of any organized effort to keep an eye on Mexican financial institutions to insure that money that successfully crossed back into the country is not inserted into their “legitimate” system?

      • Greg L says:

        From this passage from the Minneapolis Star Tribune do you gather that there was $378B CRIMINAL transactions or not enough SCRUTINY of the criminal transactions that were bundled within?

        On this point, I stand corrected. The laundered transactions were within the total but not the total transacted. The amount laundered over that time however is still a very significant number and we really don’t know the full extent, but according to the US attorney, Wachovia’s blatant disregard for anti money laundering laws makes this the largest violation in history–a violation, by the way, which only resulted in a slap on the hand with no one going to jail. Wachovia made a habit of moving money for the drug barons. This is no isolated incident and they are surely not the only US financial institution involved. No matter how one slices it, their involvement runs counter to the administrations attempt to shore up the Calderon government’s fight against the drug barons and effectively supports the on-going killing and other mayhem that’s occuring not only in Mexico, but also on the domestic front here. They’re not only killing regular folks, but politicians and police that won’t toe the line. With this occurring right on our border, it’s totally insane that US Banks would be involved in any way, shape or form with this and the deferred prosecution deal they got is an absolute outrage.

        Not sure if I understand the relevance of the question. Since the proximity of Mexico to the USA means that the USA is their largest market it stands to reason that the Mexican drug king pin would transact in dollars. In this year alone I can point to 3 raids in metro-Atlanta in which more than $1M have been confiscated from Mexican drug gangs that use the nondescript residential homes as drug transfer depots. If they found Euros in these homes in Georgia then I would be surprised and impressed.

        Proximity doesn’t necessarily dictate the currency used for transactions. If that were the case, China would be conducting the bulk of its trade in North Korean won or Russian rubles as those nations are right there in the neighborhood. What normally would drive the currency that one trades in is where you’re selling the bulk of the goods and that was the point I was establishing with the question. The US and Europe are the biggest markets for the drug barons while also having the deepest currencies and financial infrastructures, so it stands to reason that any laundering is going to occur with US and European banks and the drug barons, whether in Mexico, Columbia or Afghanistan can’t function without this key “support” provided by US and European financial institutions.

        It appears that you are arguing that a wilful and complicit act has transpired. Again I wonder what the result would be if the Mexicans were HIGHLIGHTED because of the context of what is going on – if this would cause protests against “profiling”? You are proving my point. It sounds like you are supporting the heightened “profiling” of all financial transactions that may eventually lead to a sanction of these banks. I just explained to you that this drug money gets “laundered” in its largest quantity in the USA or in Mexico. The USA banks have better “double flag” all money related to Mexico. Now let me ask you – do you know of any organized effort to keep an eye on Mexican financial institutions to insure that money that successfully crossed back into the country is not inserted into their “legitimate” system?

        CF, it’s not the Mexicans that need to be profiled, but the supporting cast here in the US and those in Europe certainly could use a “hard look”. Of course, I’m not suggesting that the Mexican drug barons or those from other countries don’t require attention, but the fact of the matter is that we 1) have drug barons amoung us here and 2) our financial institutions are providing them tacit support. Of course, the basic demand issue here in the US needs to be examined as well. Some argue why do all of this and why not just legalize all drugs. I’m not sure how I feel about that one, but I do feel that the drug barons will resist it as that would drive down profits. It would open a entire customer class for our financial institutions–of course, they’re servicing them already, it’s just that they’d be able to do so legally.

        Finally CF, how do you reconcile this situation with the war on terror. Are they lying to us about the effectiveness of shutting down terrorist financial activities while at the same time they can’t handle drug barons money laundering through our banks?

  3. For all your insistence that you’re not a Republican, you certainly cast yourself as either an apologist, or a card-carrying member.

    CF, just on your lame arguments, alone, I’ll never vote Republican again. If you’re the example of “conservative thought” in this country, I don’t want to be seen as aligned with you, or with it.

    As one who works so assiduously to influence political actions and outcomes, you’re your own worse enemy!

    • Black Diaspora:

      Might it be that I sample enough of the people who I stand ideologically opposed in reference to their claims to be focused upon the “Black Community” to that I know what THEIR ultimate agenda is? Thus my responses are often used to declaw their fraudulent attacks.

      I hope that you DON”T ever vote Republican again. At least not if you assume that YOUR VOTE is the main vehicle by which you will achieve repair in the “black diaspora” (small “b” and “d”).

      Actually my goal is to have YOU look at YOUR key focus and how this impacts the present state of affairs.

      Just listen to these two likeminded individuals to you discuss the Congo. It is clear that there is a greater interest to talk about corporations and the United States THAN the governance of the Congo. 5M people killed and the USA and corporations are responsible. Do you hear a tinge of “Mexico” in this audio report: (http://withintheblackcommunity.blogspot.com/2010/07/black-africans-running-congo-today-are.html).

      Black Diaspora – I give you credit. You and others are experts on history. If I want to learn “Who did this to us” I will read your book.

      However, if I want to figure out a strategy forward, leveraging all of the resources that we have at our disposal I would make sure that you have no authority in the mission forward.

      Why don’t you formulate a CORPORATION for the advancement of the diaspora? It seems that you are more inclined to throw out accountability to the corporate operatives.

  4. [quote]Wachovia’s blatant disregard for anti money laundering laws makes this the largest violation in history–a violation[/quote]

    So again – it sounds like you are arguing for increased “profiling” of transactions destined for Mexico because failing to do so with increased scrutiny than, for example, European trade partners will insure that these banks won’t face future sanctions. This effort on the front end is necessary. Agreed?

    It sounds like you are suggesting that there is some complicity in these banks to purposely launder dirty money.

    My main objection is that those with an ideological/political axe to grind are trying to put an AK-47 in the hands of American bankers and accusing them of mowing down Mexicans at the border. Notice that there was no previous indictments against Mexican bankers with guns in their hands as well.

    It appears to me that you are arguing that Mexican “War On Drugs” transactions should be treated as would “War On Terror” transactions: Fail to apply “double profiling” at your own peril.

    Beyond indictment of the banks – please clarify your position.

    • Greg L says:

      It sounds like you are suggesting that there is some complicity in these banks to purposely launder dirty money.

      That’s correct. That’s precisely what I think.

      My main objection is that those with an ideological/political axe to grind are trying to put an AK-47 in the hands of American bankers and accusing them of mowing down Mexicans at the border. Notice that there was no previous indictments against Mexican bankers with guns in their hands as well.

      No, the Mexicans are not without guilt. They’re the ones killing regular folks, police and policians. They need to be dealt with. The bankers who provide the financial infractructure behind this have bloody hands as well and they need to be dealt with. Again, the fight against terrorism encompasses not only the terrorists but those who support them. It appears that the drug war is not similarly structured. Either the government is lying to us about their effectiveness in fighting terrorism or they’re choosing to not apply the same techniques to the drug war.

      It appears to me that you are arguing that Mexican “War On Drugs” transactions should be treated as would “War On Terror” transactions: Fail to apply “double profiling” at your own peril.

      Actually, I don’t argue for profiling Mexicans per se as they aren’t the only guilty party. I’m for going after anyone who is actively involved in the drug trade whether they’re in a direct import/export role or in a support function like laundering money. So if there’s a profile, it would need to be greatly expanded.

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