Archive 2005-- Click here for current ICP Global Inner Cities Report, reports from the United Nations
Inner City Press welcomes readers' comments or critiques.
January 3, 2006 -- Iraqis Absent from Oil Oversight Meeting on Development Fund for Iraq, Purportedly Due to Visa Problems
On December 28, four of the five members of the oversight board of the Development Fund for Iraq answered reporters’ questions for an hour at the United Nations in New York. Missing was the representative of Iraq on the International Advisory and Monitoring Board. The explanation offered by the IAMB’s chairman Jean-Pierre Halbwachs was that the Iraqi representatives had not been able to obtain U.S. visas in time. Their absence proved convenient, as questions soon arose about a line in Mr. Halbwachs prepared remarks, regarding the ongoing lack of metering on oil production in Iraq. Mr. Halbwachs read out: “we understand that a recent agreement has been reached between the Government of Iraq and a U.S. company to undertake the task” of oil metering.
When asked for the name of the U.S. company, the IAMB chairman’s response was that only the Iraqi representatives would have that information. When a question arose about the Iraqi representative’s written reference to the cost of metering being covered by “donations,” no answer was forthcoming. When asked why it has taken two years to make even this gesture toward metering, the representative of the Arab Fund for Economic and Social Development Khalifa Ali Dau shrugged and smiled. Finally, the IMF’s deputy press secretary said he will be providing follow-up information about the metering contract (presumably on the IAMB’s web site, www.iamb.info).
There were questions about KPMG’s partial audit, and Halliburton’s subsidiary Kellogg, Brown & Root. The IMF’s representative Bert Keuppens confirmed reports of oil smuggling out of, and in some cases back into, Iraq.
When asked in conclusion to assign a grade to the transparency of the spending process at the Development Fund for Iraq, the World Bank’s representative Fayezul Choudhury declined to assign a grade, and pointed out that even most European Union countries, and also the United States, have only qualified opinions from their auditors. The press conference ended with many questions unanswered. The IMF’s Bert Keuppens rushed out of the briefing room. He returned a few minutes later and handed out two business cards. It would have made sense, one wag said, to provide contact information for the representatives to the IAMB from Iraq. And to have thought more deeply about this question of their visas. Again, the IAMB’s web site is www.iamb.info...
December 26, 2005
At the United Nations on December 21, Kofi Annan accused British journalist James Bone of “behaving like an overgrown schoolboy in this room for many, many months and years.” Bone had asked about Kofi Annan’s son’s Kojo’s purchase of a Mercedes for $14,000 using diplomatic discounts intended only for the secretary-general. Close observers of UN-media relations note that Annan’s spokesman Stephane Dujarric had been asked the same question by Bone on Monday, December 19, but had not answered. The focus of the Monday press briefing had been the UN’s inquiry into Syria’s involvement in political assassinations in Lebanon. The questions about procurement impropriety and nepotism were a side show on Monday, but became the source of a rare outburst by Annan on Wednesday. The U.N. Correspondents Association has come to James Bone’s defense, and many correspondents, including this one, note that the nepotism and even corruption questions have yet to be answered.
More seriously, late on December 23, the United Nations General Assembly adopted a $3.8 billion two-year budget for the organization, beating the end-of-year deadline. The budget is in effect an extension to require consideration of changes to the structure of the organization before June 2006, when the $980 million allocated for 2006 will run out.
This “mind-focusing” function is similar to two other recent extensions: to that adopted in Washington by the House of Representatives, where earlier in the week the USA Patriot Act was extended for five weeks, and to the not-yet-disclosed understanding that on December 22 broke the impasse between the MTA and transit workers’ union. This putting off until tomorrow (or next year) the problems of today is the current trend, as 2005 comes to a close.
The denouements will unfold in 2006 in this order: on January 20 in state supreme court in Brooklyn there will be a hearing on the $3 million in fines imposed on the Transit Workers’ Union. In early February, the USA Patriot Act is slated again to expire. And in or before June, the United Nations will run out of money. Then these decisions deferred in this pre-Christmas week will come due… or perhaps be extended again.
December 5, 2005
Last week, France-based Total agreed to settle a lawsuit for illegal labor practices, paying eight oil pipeline workers more than $6 million. Citizens of Myanmar -- formerly known as Burma -- agreed to drop charges against Total that alleged the company used forced labor to build the Yadana gas pipeline in the country in exchange for the payouts and the establishment of a fund to compensate victims of human rights violations. Unocal Corp., Total's partner on the Yadana gas project, settled a similar lawsuit of forced labor violations in March. The charges were directly related to the 1996 construction of the 60-mile pipeline through Southeast Asia. Villagers said Unocal worked with the brutal military regime in Myanmar to find and control laborers... -by staff reporter Matthew Lee
November 28, 2005
This week, China’s engagements in Africa, with Sudan, Zimbabwe and others. Chinese government figures now show that state and private companies have pumped $100 million into Zambia - mostly its copper industry - during the past four years. At the start of the year, Angola signed a $2 billion deal with China, selling oil and future exploration rights. And Chinese engineering firms are providing most of the expertise behind a $1.2 billion dam on the fourth cataract of the Nile in Sudan. Zimbabwean earlier this year took delivery of three aircraft from a Chinese manufacturer. The Irish Times last week opined that “China is able to exploit markets in countries with questionable human rights records because its companies are not subjected to legal challenges by home-grown pressure groups, unlike in the West. Nor are they worried about corporate image in the same way as western companies.” Food for thought…
Meanwhile, Dutch-based ABN Amro, which claims to eschew high-cost subprime lending in the United States, has bought into a subprime lender in Australia. On November 22, ABN Amro Capital Australia agreed to buy a 39.2% stake in Australian “non-conforming lending specialist” Bluestone Group for an undisclosed sum. Its spokesman JP Kaumeyer bragged that “Bluestone is very well-positioned to benefit from the forecasted ongoing growth in the issuance of nonconforming mortgages as well as the expected growth in equity release mortgages.” Great…
Finally for this week, a quote from, and reaction to, “Organic Intellectuals and counter-hegemonic politics in the age of globalization: The case of ATTAC,” by Vicki Birchfield and Annette Freyberg-Inan, in “Critical Theories, International Relations and the ‘Anti-Globalization Movement,” edited by Catherine Eschle and Bice Maiguashca (Routledge 2005). The quote:
“ATTAC associations see themselves as part of a movement for critical, popular education. All ATTAC publicity material, whether on websites or in print publications, describes the association as an educational movement and a counter-establishment social force, as opposed to a conventional NGO or issue-based social movement… the key difference being that in ATTAC there is ‘no hierarchical order and no top-down decision-making about common actions’…The fact that a more permanent transnational organizational structure has yet to emerge (there is no international headquarters, for example) is a reflection of ATTAC’s commitment to local autonomy and cultural diversity.”
The reaction / review: What the authors do no sufficiently question or explore, Inner City Press opines, is the degree to which particular global financial institutions -- as four examples Citigroup, HSBC, Deutsche Bank and BNP Paribas – are not sufficiently targeted by ATTAC. It’s fine to talk about Gramsci and the Tobin Tax. But where the rubber meets the road, there are trillion-dollar institutions running circles around existing rules and even counter-rules…
November 21, 2005
This
week we review a dry but quite
interesting book, “Reinventing Accountability: Making Democracy Work for Human
Development,” by Anne Marie Goetz and Rob Jenkins (Palgrave 2005). The authors did
most of the research while working on the United Nations Development Program’s 2002
report, Deepening Democracy in a Fragmented World. For that reason, the book provides
example from all over the world, from the expansion in India of public interest law and of
theories of standing and facilitated filing by letter, so-called epistolary jurisdiction,
to Bangladesh, where it is reported that “micro-finance programs are known to favor
better-off villagers for credit, even though they are above the poverty line.” The book recites “litigation in the United
States for a range of alleged violation: Texaco for the adverse economic impacts of its
activities in Ecuador; Unocal for human rights abuses associated with its investment in
Myanmar; Freeport McMoran for environmental destruction caused by its copper mine in
Indonesia...[and] action against Rio Tinto for its Rossing Uranium mine in Namibia.”
And so it goes...
November 14, 2005
Our review this week is of “The U.N. Building,” by Ben Murphy (Thames & Hudson 2005). It begins with black and white photographs of the building being built (stopping at 39 rather than the planned 45 floors, due to budget constraints), including “rarely seen views” of the private apartment of Dag Hammarskjold on the 39th floor, Scandinavian furniture facing the East River and Queens. Everything is very Jetsons, from the curvy balconies of the General Assembly Hall to the special UN signage typeface, a sans-serif based on Futura. As one caption puts it, “Some of the building’s most endearing features are in the details, such as the vintage clocks or exit signs that might be overlooked during discussion, and yet they very quickly evoke an era in which the building was designed and built.” Of that era, another caption (page 128) says, “At the time the Secretariat was designed, the architects considered the view east over the river more desirable, and therefore located the restrooms on the western side [with] glorious views of the skyline.” There are photographs of the printing plant (“the largest internal reproduction plant in New York City”) and of the mail room, of which it is noted that “the U.N. receives an average of 6.6 million pieces of mail per year, mostly from the United States.” That last seems strange: the country that least believes in the U.N. sends it the most mail. Or maybe the USPS doesn’t allow in some of the mail directed to the U.N. from outside the United States…
November 7, 2005
Citigroup bragged last week of its hiring of ex-World Banker James Wolfensohn, to
add to a roster already including Robert Rubin, who has still done nothing to address
CitiFinancial’s predatory lending (and took no public position on Citi’s super
high cost HOEPA loans in 2004, leaving that task to the now-gone Bob Willumstad). As noted by the FT, “the announcement came
just a day after the world's biggest financial services group said it had hired Shengman
Zhang, Mr. Wolfensohn's former number two at the World Bank, to be chairman of its public
sector group.” Here’s a thought: why
doesn’t the World Bank have anti-revolving door policies, as even the U.S. bank
regulators have had to adopt?
On Citigroup’s continued globalization
of standardless subprime (predatory) lending, the Polish News Bulletin of October 31
reported that “CitiFinancial, a
department offering cash loans to less wealthy clients, will help it strengthen its
position. After two years of operating, CitiFinancial's assets are worth around ZL 560
million and the department is beginning to generate a return on investment. In the near
future it will diversify its offer.” High cost consumer lending in Poland by CitiFinancial -- what will Wolfensohn
have to say about that? We’ll see. Or about this?
“Nov 2, 2005 - SEOUL (Reuters) - A
one-day strike by unionized workers at Citibank Korea shut one third of its branches on
Wednesday, the company said, with the union threatening to escalate the action over pay
and welfare benefits. The union represents about 2,700 employees from former KorAm bank,
which Citigroup Inc. acquired for $2.7 billion last year, and accounts for nearly half of
Citibank Korea's workforce... The union said in a statement its members would boycott
selling investment and bancassurance products beginning Thursday.”
ICP/Fair Finance Watch on November 4 filed comments with regulators in Colombia and
Spain on the October 31 proposal by Banco Bilbao Vizcaya Argentaria Colombia to acquire Granahorrar. Cited in ICP’s comments is an enforcement action
In the New York City MSA in 2003, for
mortgage refinance loans, HLC reported originating 1.92 loans to African Americans for
each loan to a white. The aggregate in this
MSA made 0.24 refinance loans to African Americans for each loan to a white. HLC targets its higher cost loans at African
Americans EIGHT TIMES more frequently than whites
BBVA withheld from ICP most of its answers
to regulators, and, tellingly, tried to give ICP its 2004 HMDA data in paper form, making
further analysis difficult. ICP finally got the information and filed more comments. The
regulators in March 2005 approved BBVA’s applications, but the story continued,
leading to the OCC’s $14 million fine. And now a new round of comments, to Bogota and
Spain. The globalization of predatory lending...
October 31, 2005
At the United Nations
Environment Program Financial Initiative meeting on October 26, there was bragging about
Citigroup’s micro-finance programs. But when the head of Citigroup’s
microfinance group was asked about the relation between his unit and the larger subprime
CitiFinancial was, he referred to “CitiFinancial and other micro-finance
institutions” wanting effective regulation and transparency. His answer -- which a
number of observers including from Citigroup peer banks and rating agencies notes was not
at all responsive -- ignored that Citigroup has lobbied against regulation and
transparency; it also implies that Citigroup is including its high-cost CitiFinancial unit in its definition of
micro-finance. Also not addressed: Deutsche Bank’s failure to respond
to a complaint to the UN Global Compact (by ICP/Fair Finance Watch) regarding Deutsche
Bank’s business with the dictator of Turkmenistan. For shame...
In other portions
of the meeting, in a session called “Lending for a sustainable future,” a
representative from Bank of Tokyo Mitsubishi claimed that “since civil society in
Japan is not mature,” only the banks can improve society. In the micro-finance
session, the moderator said that in a recent trip to India she’s found that a
microfinance institution is about to get paid to be a distribution channel for the product
of Proctor & Gamble…
Click here
October 24, 2005
Speaking in Mexico City last week, HSBC’s Stephen Green bragged that
“We have a very significant platform in Brazil.”
It’s become largely subprime: HSBC has been present in Brazil since 1997, but
it was not until 2003 that it started to grow aggressively with the acquisition of
consumer finance company Losango and other assets from Lloyds TSB for $815 million. The
following year, HSBC bought the consumer finance operations of Indusval Multistock Group
for $166 million) and purchased consumer finance company CrediMatone from local bank Banco
Matone for 30 million reais. "We did invest, both in terms of the original
acquisition of the bank there and more recently of the consumer finance business there so
actually in Brazil we think we have a very good platform," Green added. HSBC now
wants to bank Losango's 16 million customers by offering them credit cards as the first
step toward opening a checking account. HSBC has also started to expand the range of
products it sells through Losango to include small ticket life insurance policies. Small
ticket -- and high cost. Meanwhile, Standard Bank Group says it is in talks to buy Bank of America's BankBoston Argentina
unit...
October 17, 2005
We note, like RSF, the Chinese government's refusal to issue tourist visas to French journalists Claude B. Levenson and Jean-Claude Buhrer, Le Monde's former correspondent at the UN in Geneva. They applied for their visas at the Chinese embassy in Bangkok for a trip to Chengdu. Consular officials there told them the refusal was probably due to their "activities" as journalists. We also note, and therefore link to, four of the sites blocked by the Chinese government: www.ehoron.com and www.monhgal.com (both in the Inner Mongolian Autonomous Region, for allegedly hosting "separatist" content); and www.uyghuramerican.org and www.uhrp.org ...
October 10, 2005
ICP/Fair Finance Watch has filed comments with the Central Bank of Iraq Governor
Dr. Sinan Al-Shibibi on HSBC’s proposal to acquire a 70% stake in Dar Es Salaam
Investment Bank there. The proposal was commented on publicly by HSBC last week:
“’We are very close to concluding an agreement,’ David Hodgkinson, the
chief executive officer of HSBC Bank Middle East, told a news conference.. Hodgkinson
later told Reuters that HSBC was looking to buy 70%, not just the 51% previously
mentioned... the Iraqi central bank said it has received a request to approve HSBC's
purchase of a 51% stake from the Khudairy family.” Beyond predatory lending, HSBC’s lack of anti-money laundering standards
seem particularly relevant. We’ll see.
In the past week, Inner City Press / Fair Finance Watch has filed comments with
regulators in Turkey and the Philippines opposing bank acquisition proposals by General
Electric Consumer Finance. This stealth player, which owns subprime lender WMC in the
United States, confines its highest-rate lending to overseas (and to protected classes,
particularly Latinos, here in the Americas).
In Manila, ICP has commented HSBC’s proposal to acquire a controlling stake in
Keppel Bank Philippines, reported in the Washington Post of October 3, 2005: “GE
Consumer Finance, based in Stamford, will acquire a majority interest in Keppel Bank
Philippines for $25.8 million.”
Beyond environmental
GE’s predatory lending is
not limited to the United States. See, e.g.,
“Office of Fair Trading Delivers Damning Verdict on Store Cards,” Cards
International, April 2, 2004. These are the type of predatory practices that GE has exported to
various markets, and now seeks to export to Turkey (through Garanti Bank, of which GE
proposes to buy 25.5% from the Dogus Group, a conglomerate owned by the Sahenk
family), the Philippines and soon China - more on that
anon.
October 3, 2005
Finally, an answer from HSBC, and a telling one. More than a month ago, ICP/Fair
Finance Watch filed comments opposing HSBC’s application to acquire another high-cost
subprime lender, Metris, as reported by
the UK’s Observer newspaper. Last week HSBC responded. Under the heading
“International Operations and Ethical Business Practices,” HSBC spouts
generalities that dodge the issues raised in ICP’s comment. HSBC writes that
“HSBC Group members are expected to follow all relevant local, international and
industry standards in addition to our internal standards.” But in the only example
given, HSBC used local (Luxembourg) “standards” to refuse to provide information
about its wiring of money related to Riggs Bank / Equatorial Guinea’s dictator. HSBC
writes:
“ICP references an
investigation into certain wire transfers made through Riggs National Bank... HBUS did
receive from Riggs a request under section 314(b) of the USA Patriot Act, which authorizes
financial institutions in the United States to exchange account information that may be
related to money-laundering offenses or terrorist financing. Such information-sharing
authority is in stark contrast to federal and state privacy protections provided in the
United States that generally prohibit banks from publicly releasing account-level
information, except under limited circumstances. Upon receiving the request for Riggs,
HBUS confirmed that the account in question had been opened by an HSBC Group affiliate in
Luxembourg, and that HBUS had forwarded the funds to a United States correspondent account
in the United States for its Luxembourg
affiliate. HBUS also informed Riggs, pursuant to the 314(b) request, that HBUS had sent
funds for another mentioned company to an HSBC Group affiliate in Cyprus. Like the United
States and many other sovereign countries where HSBC Group companies operate, both
Luxembourg and Cyprus maintain privacy laws that prohibit the sharing of account
information with other companies, even between companies related by ownership. In this
case, HSBC affiliates in Luxembourg and Cyprus -- and are neither branches nor
subsidiaries of a US institution (i.e., they are not branches or subsidiaries of HBUS but
share a common, foreign parent), operate under laws which forbid such sharing of customer
information. Thus, if those institutions had provided information to HBUS, to any other US
bank, or directly to the US Government, they would have been in violation of the laws of
Luxembourg and Cyprus respectively and could have been subject to criminal and/or civil
sanctions in their host countries. Section 314(b) [of] the USA Patriot Act does not
override these local laws applicable to banks operating in Luxembourg and Cyprus.”
A final sentence: “The MLAT process was not used in the case involving the
Riggs accounts noted by ICP.” Developing..
September 26, 2005
An Indonesian
court last week rejected arguments by Newmont Mining Corp. and its top executive that
charges of contaminating Buyat Bay on Sulawesi
Island, sickening villagers and contaminating fish, should be dropped. And so, the trial
will proceed next month. Richard Ness, the president of Newmont's Indonesian subsidiary,
faces up to 10 years in prison and a $68,000 fine if convicted. The industry and its
analysts are unhappy, according to AFP. "From an industry perspective, it's
disappointing to see the matter still going on without resolution," said Marc
Upcroft, who analyzes the Indonesia mining sector for PricewaterhouseCoopers in Australia.
"It really is continuing to have an impact on mineral investment spending in
Indonesia, which is unfortunate since we're in the middle global minerals boom."
"Based on today's ruling, the president director of every company in Indonesia should
be concerned by the decision," the company said in a statement. Yep...
September 19, 2005
Remember
Citigroup’s loud claims to have become environmental? Well, last week it was reported
that Citigroup will arrange a $10 billion loan to OAO Gazprom to finance the state-owned
gas producer's purchase of a controlling stake in OAO Sibneft. Citigroup spokeswoman
Lindsey Deans in London declined to comment. Typical... Meanwhile, Citi is expanding into
Kuwait. The Central Bank of Kuwait's board
"initially approved the licensing of the New York-based Citibank to open a branch in
Kuwait," CBK Governor Sheikh Salem Abdulaziz al-Sabah announced last week. All we can
say is “watch your bond market -- and your consumers.”
On September 13, Bank Hapoalim announced a
proposal to acquire a controlling interest in Turkey's C Kredi ve Kalkinma Bankasi AS for
$113 million...
September 12, 2005
In the week before the United Nations’ World Summit, more than 1,150 non-governmental organizations met at the acronym-heavy DPI/NGO Conference. The director of ICP/Fair Finance Watch, attending the conference, marveled at the view of Queens out over the East River, and the surprisingly good 60 cent coffee from a machine in the U.N. basement. Following speeches by Shashi Tharoor, Jean Ping and Jan Egeland, an NGO panel on partnerships was held. At the last minute, it was announced that there were no translators available, so the panel spoke in English to an overflow crowd. Ziad Abdel Samad of the Arab NGO Network for Development spoke of the war in Iraq. Victoria Tauli-Corpuz of the Philippines spoke of injustice more generally, particularly against indigenous people. Questions were allowed, but only if pre-screened: they could be written on cards and might or might not be read out. Thus is civil society listened to. The corporations in the Global Compact, on the other hand, are not edited... -by staff reporter Matthew Lee
September 5, 2005
Last week the Korea Times reported that “HSBC is set to check the market
conditions here for its business expansion by dispatching a group of senior officials to
South Korea in September. About 20 officials from the HSBC headquarters in London plan to
hold an executives meeting in Seoul during the last week of September. It will be the
first time for the HSBC to hold an
annual executives meeting in Korea.” What comes next -- bringing Household
International’s predatory lending model to Korea?
August 29, 2005
Banco Santander, which bobbed and weaved and denied earlier in the inquiry into Pinochet’s finances, has now quietly returned some -- we emphasize “some” -- of its ill-gotten deposits to Chile. Intrepid journalists at Money Laundering Alert have reported that “Banco Santander International had placed $1 million from an account linked to Pinochet in trust for the benefit of the government of Chile. The account was in the name of Eastview Finance, a British Virgin Island offshore company established for the benefit of Pinochet by Oscar Aitken, a lawyer and confidante of the former strongman. Santander inherited two Eastview accounts from Coutts & Co. when it purchased the Coutts Miami private banking portfolio in July 2003. For more on human rights-relevant money laundering, see ICP's Fair Finance Watch report.
August 22, 2005
In further corporate globalization, Societe Generale has just bought 69.7% of shares in Misr International Bank, giving it overall control of one of Egypt's big four banks. SocGen beat out BNP Paribas in a deal valuing MIBank at $420 million...
August 15, 2005
On August 13, ICP/Fair Finance Watch submitted a timely comment opposing BNP Paribas' application to the FDIC to acquire Commercial Federal. On issues relevent here, ICP noted that BNP's involvement in the now-widening Iraq Oil-for-Food scandal is not "blowing over" -- see, e.g., French Bank Admits Oil-for-food 'irregularities' But Fraud Link --
"The French bank BNP-Paribas on Thursday admitted that there had been some irregularities in payments it processed for the scandal-tainted UN oil-for-food program in Iraq but insisted it was not linked to any diversion of funds. The bank revealed the problems in a statement as top officials appeared before a US Congress hearing on the scandal. 'It appears from an extensive, ongoing review being conducted by the bank, that a small fraction of payments under the program were made to persons other than letter of credit beneficiaries orbanks making them direct loans,' the French bank said in a statement. 'However, based upon our review to date, the overwhelming number of payments were made to beneficiaries and their banks,' it added." (Liquid Africa, April 28, 2005)
And see, BNP May Have Violated UN Oil-For-Food Rules, DOW
JONES NEWSWIRES, April 28, 2005... Also, South Korea's financial regulator, the Financial
Supervisory Commission, last month penalized the Seoul office "over inadequately
advising state-run companies over the risks involved in derivatives trading. (Associated
Press, July 22, 2005). Indicative of BNP Paribas' lack of standards with regards to
human rights, anti-money laundering and the environment, see, e.g., Africa Energy
Intelligence of October 15, 2003: "Equatorial Guinea's government is set to shortly
announce the results of an invitation to banks to bid for a contract to provide funding to
pay for Malabo's share in Marathon's project to build a LNG plant on Elba Island. All of
the banks responding to the call - including BNP-Paribas." For the record, the
Equatorial Guinea accounts played a large role in the collapse and sale of Riggs Bank...
We’ll see...
August 8, 2005
Buying while getting indicted General Electric on August 2 announced a proposal to
buy a 43 percent stake in the credit card arm of South Korea's Hyundai Motor Co. for $390
million. Meanwhile in Peru, 23 current and
former GE employees, including Jack Welch, have been indicted....
August 1, 2005
From a complaint against Citigroup from an employee in Europe, the other details of
which remain confidential for now at his request: “In case this is not yet known in
the U.S., a trick that is being used in Europe (especially Germany) by Citibank in
Consumer Finance is the ‘Top Up’ -- Citi offers a loan to someone, then after a
few months of repayments, Citi proposes (‘you’re a good customer’) an
increase in the loan amount, which is processed through an early repayment and a new loan.
What Citi doesn’t tell the customer is that the T&C include the payment of a
penalty in case of early repayment, penalty that is charged and paid with the new loan,
which makes it ‘invisible’ to the customer but juicy for the bank.” Sounds like Citigroup...
July 25, 2005
A response has been received from Panama’s Superintendent of Banks Delia
Cárdenas, regarding the proposed “shares acquisition of BAC Credomatic Holding Co.
Ltd and Vintage Properties Limited toward GE Consumer Financial Central Holding Corp... On
this matter, we communicate to Inner City Press / Fair Finance Watch that this
Superintendency of Bank is assessing your opposition.”
Well alright...
July 18, 2005
More on the irony noted
last week, fact being more pro-corporate than fiction: a week after the July 7 bombings in
London, the UK FSA announced that it is loosening anti-money laundering rules. The banks
had asked for it, in the poll reported on last week and otherwise. But how could the FSA
give in, at this time? Then again, it’s
the same FSA which let Citigroup off the hook on the Doctor Evil trade, and which for now
denies access to any and all records under the Freedom of Information Act 2000...
July 11, 2005
What timing -- last month, the Corporation of London and the Institute of Chartered
Accountants in England and Wales released a survey in which bankers complained about the
burden of anti-money laundering compliance in the United Kingdon. The study, entitled “The Anti-Money
Laundering Requirements: Costs, Benefits, and Perception,” and reported on July 4 in
the publication Money
Laundering Alert,
July 5, 2005
On July 4, ICP Fair Finance Watch filed comments with regulators in Central America
on General Electric’s proposal to buy control of BAC International Bank and export
its (subprime) consumer finance to six more countries:
On behalf of the non-profit / NGO Inner City Press / Fair Finance Watch
(“ICP”), this concerns the proposal by General Electric Consumer Finance,
announced on May 12, 2005, to acquire BAC International and its operations in your
country. We are requesting a copy of
GE’s application to your agency for regulatory approval. This letter should be
considered an interim comment in opposition to GE’s applications. As set forth below, GE Consumer Finance is a
high-cost lender which seeks to evade regulatory scrutiny. See, e.g,
www.iinews.com/site/pdfs/IIMag_GEConsumerFinance_Nov_2004.pdf , including ICP’s
analysis of GE Consumer Finance’s export of predatory lending. GE’s affiliates
are, among other things, military contractors, and have for example been named one of the
twelve worst polluters in New York State. Its performance with Enron on the Dabhol project
in India is shameful, as well. It is
imperative that your agency consider these issues, particularly the sample of GE’s
WMC Mortgage Company’s lending, targeting high cost loans at Latinos, set forth
below.
ICP specifically requests, including under the human rights laws cited below, that
these issues be considered in connection with the regulatory approval GE would require, as
acknowledged in its May 12, 2005, press release, which
announced that it would acquire a 49.99
percent stake in BAC International Bank Inc. (BAC), a privately held retail bank and
credit card issuer based in Panama City, Panama. The transaction, which requires regulatory approvals, is expected
to close in the next few months. The terms were not disclosed. BAC is one of the largest
banks in Central America and has been operating in the region for over 50 years. BAC has
178 branches in countries including Costa Rica, El Salvador, Guatemala, Honduras,
Nicaragua and Panama. The new partnership between GE Consumer Finance and BAC will enable
the two companies to deliver enhanced consumer credit products to the growing Central
American financial services market.
ICP has obtained the 2004 U.S. mortgage lending data of GE’s subprime / high
cost mortgage lender, WMC. The National
Mortgage News of April 26, 2004, reported that GE “has
agreed to buy WMC Mortgage... the nation's 12th largest subprime funder... According to
figures compiled by NMN, WMC originated $8.1 billion last year... In a statement, Mark W.
Begor, president of GE Consumer Finance-Americas, said, ‘We are thrilled to have the
WMC team, headed by Amy Brandt, join GE Consumer Finance.’ But what is GE “thrilled” with, and what
would it be exporting? In 2004 to borrowers identified as Hispanic and
African-American, over 65% of GE’s WMC’s loans were high cost / “rate
spread,” defined by the U.S. Federal Reserve Board as over three percentage points
over comparable Treasury Securities on first liens, 5% on subordinate liens. To
non-Hispanic whites, the percentage was below 53%. This
compares unfavorably with GE WMC’s peers, and is indicative of GE Consumer
Finance’s targeting of Latinos for higher than normal interest rate credit.
GE’s predatory lending is not limited to the United States. See, e.g., “Office of Fair Trading Delivers
Damning Verdict on Store Cards,” Cards International, April 2, 2004. GE is under fire not only for high cost credit
cards, but also mortgages. See, e.g.,
“Mortgage Giants Faces Court Over ‘Unfair’ Loans,” Sunday Express, May 12, 2002:
“A support group set up by an ex-teacher is
taking one of the world's largest financial companies to court in a case that could save
millions for thousands of mortgage borrowers. The National Association of Mortgage Victims
(NAMV) will next month ask a court to set a date to hear test cases against US firm Ocwen
and international giant GE Capital... the terms of its loans are unfair. Its mortgage
interest rates can be doubled if borrowers are late with payments, for whatever reason.
High early redemption penalties are also payable.”
These are the type of predatory practices that GE has exported to various markets,
and now seeks to export to your country. ICP has received numerous complaints about GE,
including about its credit cards. Simply as one example:
Subj: GE Card.
Date: 9/24/03 5:25:17 PM Eastern Daylight
Time
From: [Name available on request]
To: GE-Watch [at] fairfinancewatch.org
I just got
burned on their overly complicated "deferred interest" scam. We
used this GE
promotional card (recommended by my dentist) to get $5000 amount of dental work done on my
wife. To make a long story short, the interest
was "deferred" for a year. I worked diligently to get the balance down to $1740
at the year end and my next bill had a $980 "deferred interest" charges (at
21.98%). The whole thing sounds crooked to me. I
think a Mafia loan shark would have been more straight forward about the deal...
See also, GE on pollution list, Poughkeepsie Journal, June 30, 2005:
“General Electric was designated for failing to clean up the 150,000 pounds of PCBs
its plant in Fort Edward, Washington County, dumped into the Hudson River, said Rich
Schiafo, of Scenic Hudson. GE ‘continues to drag their feet despite the EPA's
decision that they clean up the Hudson.’”
You should request information from General
Electric; ICP is requesting a copy of all such correspondence, and is requesting a copy of
GE’s applications, and public hearings.
Developing...
June 27, 2005
Annals of globalization: as reported in the
Moscow newspaper Vedomosti, “Sanford Weill, CEO of Citigroup, will lead the Americans
who are meeting with Putin. At the meeting with the president on February 11 Weill offered
to organize a ‘visit’ of a delegation of US business executives and Putin
supported this idea, says a member of the presidential administration. Susan Tether, a
spokeswoman for Citigroup Europe, confirmed that Weill will come to Russia together with
several clients of the bank to take part "in several meetings," but refused to
reveal the details. Alcoa CEO Alain Belda will visit Putin as a member of Citigroup's board of directors, a
company employee explained... Alcoa has purchased two aluminum-rolling enterprises from
RusAl for $300 million.” Equator
principles, anyone?
June 20, 2005
The Bronx’ Fordham University was venue last week of UNDP’s
“Community Commons” meeting, held under a large white tent replete with
simultaneous translation, wireless microphones, glossy flyers of the German development
bank and pointed questions from the participants to the representatives of the World Bank
and UNDP. The assistant administrator of the latter, Shoji Nishimoto, concluded the June
17 session by encouraging the non-government organizations in attendance to focus on
results, on quantifying their impact. “Don’t
tell me how many lawyers you have, or what accountants,” he said. “Tell me about impact. How many people with
HIV did you save? How many people did you re-integrate into society even though they are
carriers?” Shoji Nishimoto was previously with the Asian Development Bank. The
meeting was in preparation for Civil Society hearings, and September’s follow-up on
the Millennium Development Goals. In the tent, banner flapped with the words Vilaj and
Kampung. There were nearly as many photographers as participants. The weather was cool and
they ran out of coffee cups. The participants were New Age trim like their laptops. This
is the future...
June 13, 2005
We turn this week
to Congress, where a new low has been reached. At the June 10 hearing by the House
Judiciary Committee on the USA Patriot Act, Chairman James Sensenbrenner repeatedly cut
off the answers of the witnesses, including immigration lawyer Carlina Tapia-Ruano. His
logic, such as it was, was only articulated as he departed the room clutching his gavel.
His claim is that detentions, whether in the U.S. or in Bagram or Gitmo, along with human
rights more generally, are not within the jurisdiction of his committee. The documented
beating to death of detainees in Bagram was scoffed off; the microphones were turned off
leading one wag to propose that Congress members henceforth arrive at Sensenbrenner’s
hearings with their own bullhorns, just in case...
June 6, 2005
Deutsche Bank’s response to issues ICP raised to the United Nations Global
Compact, including Deutsche
Bank’s unseemly role as the main banker for the dictator of Turkmenistan (who had
renamed the months in that country for his mother, and forces all resident to read his
book Ruhnama), consists of a half-page about “sustainability criterias” [sic],
ISO 14001 and the repetition of Breuer’s statements about DB’s business in
Kazakhstan and Turkmenistan. We can only ask -- why
not Belarus?
HSBC’s standardless business in rogue nations was profiled last week by Bloomberg News’ Vernon Silver, including these sample squibs:
“From their offices atop Tehran's
15-story Sayeh Tower, HSBC Holdings Plc bankers have helped lend more than $825 million to
the Iranian government... HSBC, Europe's biggest bank by market value, says it isn't
breaking the law and is merely trying to make money. ``The job of HSBC Bank Middle East is
to take advantage of business opportunities in the region,'' says Steve Martin, a
spokesman in Dubai for HSBC's Middle Eastern unit... HSBC does additional Syrian business
through London-based British Arab Commercial Bank Ltd. HSBC owns 46.5 percent of the bank,
whose chief executive officer is an HSBC employee on loan. HSBC holds five of the 11 board
seats.
Other shareholders of British Arab Commercial Bank, known as
BACB, are the Libyan government's Libyan Arab Foreign Bank, with 25 percent, and Iraq's
state-owned Rafidain Bank, with 4.91 percent. Libyan and Iraqi representatives sit on
BACB's board alongside HSBC bankers. During Saddam Hussein's rule, an Iraqi representative
traveled from Baghdad to London for some board meetings, according to BACB.
BACB is a corner of the HSBC empire that specializes in doing
business legally with countries that have been marginalized by sanctions, BACB General
Manager and Deputy Chief Executive Mohamed Fezzani says... BACB's Web site calls these
``niche markets,'' listing Iran, Libya, Sudan and Syria along with other countries that
aren't on the U.S. terror list, such as Algeria and Morocco.
Leaflets promoting BACB's activities in Syria and Libya are
displayed in the lobby of its London headquarters on Mansion House Place, a six-story
modern cement building decorated with stripes of brick, nestled behind the 250-year-old
official residence of the lord mayor of London. HSBC does its Sudan business through BACB,
Martin says.
And the article
didn’t even mention HSBC refusing to tell money laundering Riggs Bank who
owned the account(s) into which the Equatorial Guinea funds were funneled...
May 31, 2005
Amid international criticism for the violent suppression of the uprising in
Andizhan earlier this month, Uzbekistan's President Islam Karimov arrived on last week on
a three-day state visit to China. In Beijing on May 24, Chinese Foreign Ministry spokesman
Kong Quan said, "We firmly support the efforts by the authorities of Uzbekistan to
strike down the three forces of terrorism,
separatism and extremism.” The reference,
it seems, was to the Xinjiang Uighur Autonomous Province...
The
Inner City Press / Human Rights Enforcement project has received a Freedom of Information
Act denial in full by the Central Intelligence Agency, regarding the CIA’s role in
lifting the arms embargo on the government of Rwanda.
Purportedly, not a single document can be released without compromising U.S.
national security...
May 23, 2005
Fair Finance Watch has received HSBC's (apparently interim) response to issues FFW
has raised to the United Nations Global Compact:
From: ivorgodfrey-davies [at] hsbc.com
To:
[UNGC]
16/05/2005 10:12 AM
Subject:
Memo: Re: Re HSBC, Grupo
Santander, Riggs/PNC and others
Dear Ms Wynhoven
Thank you for your email message of 25
February about a communication received from... Fair Finance Watch. We appreciate your
bringing [FFW]'s issues to our attention as it provides us with the opportunity to confirm
for ourselves our compliance with the principles we have established for the HSBC
organisation. Please be assured that we will
undertake the appropriate investigation of the matters raised in [FFW]'s communication.
HSBC has operated pursuant to the highest
ethical standards throughout its history and has always attached the utmost importance to
honesty, integrity and a strong sense of responsibility in all our dealings. We respect fully the ten principles of the Global
Compact and we look forward to participating in the future development of this initiative.
Yours sincerely
Ivor Godfrey-Davies
Head of Group Corporate Relations
HSBC Holdings plc
Registered Office: 8 Canada Square, London
E14 5HQ, United Kingdom
Registered Number 617987
Hmm....
May 16, 2005
Since January, legislation has been introduced in seven U.S. states -- from Texas
to New Jersey -- calling on public pension funds to shed billions in Sudan-related
investments. The California Assembly has passed a nonbinding measure. Six other states are
considering similar divestment bills. A proponent of divestiture notes that
"PetroChina, Siemens and other companies are being set up for a huge equity market
fall.” Here’s hoping...
May 9, 2005
Interim update from Togo: The vacuum left
by a steady decline in Togo's economy has been filled by an increasingly criminalized
informal sector. Illegal weapons, drugs, human trafficking, money laundering and smuggled
used cars form a significant part of the country's trade, especially since the European
Union suspended aid in 1993 in protest at Eyadema pere's
poor human rights record. The country fell into chaos when President Gnassingbe Eyadema,
who ruled for 38 years, died in February and his son Faure Gnassingbe was installed as
president by the army in violation of the constitution. Forced to step down under
international pressure, Faure at the end of April won elections the opposition parties
said were stolen. Mass protests ensued, but the security forces crushed the insurrection.
Several people were killed and scores injured. A United Nations report in 2000 named Togo
as a key entrepot for weapons supplied to Angolan rebels in the late 1990s. Regional
analysts say Togo is still a warehouse for weapons smuggled to and from other neighboring
countries...
May 2,
2005
In the wake of the Federal Reserve’s rubber-stamp
approval of PNC-Riggs (see midweek FFW
Finance Watch Report
“The commenter raised concerns with Riggs
Bank’s service as a correspondent baqnk with, among others, Bank of Sierra Leone,
Sierra Leone Commercial Bank Ltd; Energobank of Bishkek, Kyrgyzstan; Banco de Cabo Verde;
and Banco International SA... Riggs maintained correspondent relationships with each of
these banks, except Banco de Cabo Verde; however, two of these four correspondent
relationships closed two years ago, and the remaining two closed recently.”
The vague reference to “recently” closed correspondent relationships is
why FFW maintains that Riggs is a crime scene, that shouldn’t be sold off and swept
under the carpet... Ah, Monoco, land both of casinos and money laundering and now a new
Prince, Albert. Monaco has a zero percent income tax policy for residents after
five years, although French nationals do not qualify, in order to keep Paris happy about
having an offshore centre right on its doorstep. Nevertheless, Monaco has been repeatedly
and properly criticized for accommodating money laundering . In 2000, the French
parliament issued a report detailing tax evasion and money laundering. Will it get cleaned
up now? We’ll see.
April 25, 2005
Oil and human rights: events in Darfur are likely to disrupt exploration work by its ABCO corporation (which is 37% owned by Swiss-based Cliveden). Two of the major rebel groups in the region, the Justice and Equality Movement and the Sudan Liberation Movement have called for a cessation of exploration drilling. The Total-led consortium operating Block B in Southern Sudan is still trying to resolve a dispute over acreage with White Nile Petroleum. Meanwhile Belgium is to reopen an investigation into Total's involvement in alleged human rights abuses in the 1990s against Burmese citizens working on the $1.2 billion Yadana gas project in southern Myanmar. The probe was first opened in 2002 after a lawsuit was filed by four Burmese villagers accusing Total of ignoring human rights abuses during construction of the Yadana pipeline. They claimed they were enslaved by Myanmar's military -- which guarded the project from 1993 until its completion in 1998 -- and forced to build the pipeline. The inquiry was later suspended, pending a court ruling on whether political refugees in Belgium have the same rights as Belgian citizens to exercise its human rights law. The constitutional court recently granted one of the plaintiffs, who has lived in Belgium for three years, the right to press ahead with the claim. Total faces legal action over a similar lawsuit in France.
Updating the below (April 11 and other Reports), see, e.g., “HSBC predatory
in U.S. lending,” by Conal Walsh, The Observer (UK), April 24, 2005
April 18, 2005
On April 15, the Swiss government announced
that Aba Abacha, a son of late Nigerian dictator Sani Abacha, has been extradited to
Switzerland by Germany to answer money laundering charges. The Justice Ministry in Bern
said Abacha was handed over at the border town of Loerrach on April 14 and taken to
Geneva. Abacha was arrested in Neuss, Germany on December 9, 2004 under an international
warrant. Switzerland filed for his extradition on January 9 this year. He was being sought
on a number of allegations including money
laundering, fraud and embezzlement. Then of course there are the human rights
abuses...
April 11, 2005
On the human rights beat this week, we have this update from the staff of the
United Nations’ Global Compact:
Subj: Update
Date: 4/5/2005 5:46:37 PM Eastern
Standard Time
From:
[Global Compact staff at] un.org
To: HRE [at] fairfinancewatch.org
I am writing to let you know that Deutsche Bank and HSBC have both
Fair Finance Watch / Human Rights Enforcement project has provided the following
update:
HSBC last week, after complaints, provided ICP Fair Finance Watch with its
2004 mortgage lending data. Analysis to date, using the SPSS (Statistical Package for the
Social Sciences) program reveals that within HSBC in the United States in 2004, African
Americans were 5.42 times more likely than whites to be processed through HSBC’s
higher cost subprime units. While HSBC’s higher-cost subprime units (the former
Household International) make 4.3 loans to whites for each loan to an African American,
HSBC’s prime units make over 23 loans to whites to each loan to an African American.
Of the higher cost rate spread loans made by HSBC Bank USA, African Americans are
6.46 times more likely to get such loans than whites; Hispanics are 6.5 times more likely
to get rate spread loans from HSBC Bank than are whites.
Meanwhile, HSBC Mortgage denies the applications of African Americans 2.53 times
more frequently than whites.
Combining HSBC’s prime
and subprime units, over 32 percent of HSBC’s mortgage are higher cost, subject to a
rate spread. This is inconsistent with HSBC’s claims, at the time it acquired
Household International and since, that only a small part of its mortgage loans are
subprime. Sir John Bond said that 63% of
Household’s loans were prime, at HSBC’s shareholders’ meeting on March 28,
2003, at which the Household acquisition was voted on.
Beyond the substance of this update, as it relates to the principles committed to
in the Global Compact, it should be noted that transparency about these issues is the
first step to substantive compliance. We
continue to await the banks’ responses.
April 4, 2005
On March 29, U.S.
District Judge Ricardo Urbina accepted the plea agreement between the Justice Department
and Riggs; he ordered Riggs to pay the $16 million penalty immediately. "There is no
way of measuring the amount of harm and atrocities and human rights violations perpetrated
by Pinochet and Equatorial Guinea as a result of the enabling criminal activity by Riggs
Bank," Urbina said. But then how do you know that $16 million is enough? Particularly
after the Senate’s Second Riggs-Pinochet report released in mid-March (after the
DOJ-Riggs plea agreement), and in light of Riggs total impunity for harms it aided and
abetted in Equatorial Guinea?
PNC’s lawyers from Wachtell Lipton last week wrote to the Federal Reserve,
providing a requested update on “Riggs’ material litigation.” These include cases overseen by Judge Garzon in
Spain, the Allison Vadhan / 9-11 case, and a RICO case about Riggs’ “allegedly
deficient anti-money laundering
program.” Allegedly?
Inner City Press has now reviewed the 2004 lending of
controversy-plagued Riggs Bank, N.A., and has now commented to the three regulatory
agencies considering PNC’s take-over proposal that Riggs in 2004 denied the
applications of African Americans 7.52 times more frequently than those of whites (while
denying the applications of Hispanics 4.81 times more frequently than whites). Beyond its money-laundering for Augusto Pinochet
and the dictator of Equatorial Guinea, this striking under-service to communities of color
in and around the District of Columbia militates for the public hearings Fair Finance
Watch has requested on PNC-Riggs.
March 28, 2005
Lost in
the muddled news from Bishkek was the question of who did Akayev’s banking, and where
the money (as well as Akayev) took off to. Click here for Fair Finance
Watch’s beginning report on the Kyrgyz banking system. In Central Asia, it’s
anything goes: last week a Japanese banking expert spoke
blithely in Uzbekistan
Meanwhile, we’re compelled to compare the HBO film “Sometimes in
April” with “Hotel Rwanda.” The latter glossed over much of Rwandese
history, and also the scope of the killings in 1994. “Sometimes
in April,” to the contrary, begins with words scrolling on the screen, describing how
the Belgians formalized the Tutsis to rule over the Hutus, the pulled a switch at the time
of independence. The HBO movie, which was first shown last week, depict Habyarimana’s
plane being shot down, and then the road blocks, the evacuation only of Europeans and
Americans, the killing of the Belgian U.N. soldiers. The tribunal in Arusha is depicted;
the irony of the accused getting AZT while women they raped die of HIV in Kigali. The use of a drug lord from the HBO series
“The Wire” as a moderate Hutu was sometimes disorienting. But this is a film
more about the history than precious, award-directed performances. Deborah Winger (now, we
know where she is) has a supporting role in the U.S. State Department. Throughout, the history is not subordinated to the
actors or performances -- which feels rights, given the extent of the killing.
March 21, 2005
The U.S. Senate’s report last
week on Pinochet’s funds
Regarding Citigroup, the Senate states that its
“investigation has determined that Citigroup had a substantial, years long
relationship with Augusto Pinochet and his family"... Only in "response to
Subcommittee requests, Citigroup has identified 63 U.S. accounts and certificates of
deposit that were opened for Mr. Pinochet and his family in New York and Miami at various
points in time from 1981 to 2004... It was not until July 2004, two years later, that
Citigroup first alerted the OCC to its years-long relationship with the Pinochet
family.” The report at page 82 deadpans
that Citigroup “declined to provide any information in response to Riggs’
Section 314(b) requests. When the Subcommittee asked why, Citigroup pointed out that, at
the time the requests were made, Riggs was under civil and criminal investigations raising
questions about the bank’s management and operations." That's ironic -- because under that standard, no
one should answer Citigroup's questions either... The report refers (too) obliquely, at
footnote 132, to HSBC’s and Santander’s refusal to identify who owned the
accounts into which Riggs Bank wired money. And
from the U.N. Global Compact, regarding the questions the Compact has asked HSBC and
Santander about this and other matters? No substantive response as yet...
March 14, 2005
From the Marcy 9 U.N. press conference of
the Office of Spokesman for the Secretary-General:
“the United Nations Global
Compact began its first major regional meeting in South Asia today in India. The two-day
Global Compact Regional Conclave in South Asia brings together more than 200 senior
representatives of companies, civil society and the United Nations from India, Pakistan,
Sri Lanka and Thailand. The Secretary-General, in a message welcomed the meeting as a
strong expression of support for the Global Compact, a voluntary corporate citizenship
initiative based on universal values in human rights, labor, the environment and
anti-corruption. He says the meeting is also a contribution to the wider process of change
and renewal at the United Nations. We have copies of that message upstairs.”
That
message said that “responsible corporate citizenship has become the management
philosophy of a growing number of enterprises, large and small. They have found that such
an approach, emphasizing transparency, a focus on stakeholders and the well-being of a
company's own workers, helps to drive long-term success. I would like to thank you for
your commitment to the Compact, your openness to new forms of public-private cooperation,
and your efforts to bring the Compact's principles to life in South Asia and around the
world. This meeting is also a contribution to the wider process of change and renewal at
the United Nations, which will culminate in a Summit meeting at United Nations
Headquarters in New York in September.”
Meanwhile, under the Global Compact’s procedures, three banks have been asked
by the Compact to respond to formal complaints. Presumably
their responses will soon arrive; they’ll be reported here.
In
impunity news, Riggs Bank’s Robert L. Allbritton, weeks after grudgingly tossing $1
million to the many victims of Augusto Pinochet (whose money Riggs laundered), cashed in
stock options for a profit of $5.8 million. There’s still been no restitution for
Riggs Bank’s much larger dealings for Equatorial Guinea’s Obiang (including the
reported pilfering of at least $35 million). Riggs,
following Allbritton’s resignation, rushed to appoint Tony Terracciano, previously of
First Fidelity / First Union, so someone can sign the SEC filings under Sarbanes-Oxley on
March 15...
From the Cyprus News Agency in Nicosia last
week: “Government spokesman Kipros Khrisostomidhis has noted... the casino operating
in the Turkish-occupied north, the banking system and the financial institutions are
‘actual bodies where money-laundering can be promoted’... The US report said ... that although casinos,
Internet gaming sites, and bearer shares are not permitted in the government-controlled
area of Cyprus, the areas under Turkish occupation present a different picture, with 22
essentially unregulated, and primarily Turkish-mainland owned, casinos being the primary
vehicles through which money laundering occurs.”
And which is the global bank which operates in North Cyprus? None other than HSBC
March 7, 2005
The U.S. State Department 2004 Human Rights Report
The report does not mention Riggs Bank or the Senate’s 2004 investigation,
which shows much more extensive engagement by Riggs with Obiang ($700 million) than
Pinochet, and leaves open important Equatoguinean questions with regard to Grupo Santander
and HSBC...
Of Turkmenistan, the report says
February 28, 2005
On the same day that Riggs announced it will pay $9 million to a fund for
Pinochet’s thousands of victims, it was also disclosed that the managers of Riggs,
including the Allbrittons, stand to get golden parachutes well over $9 million (up to
$15.4 million, it’s reported). The Allbritons, of course, stand to get over $250
million on the sale. Comparing these numbers shows the place of human rights in
today’s field of banking, at least at PNC: an afterthought. And what of the much larger sums Riggs helped loot
from Equatorial Guinea? These are described in the Senate report and Riggs’ plea.
What of Obiang’s victims? This shows the place of Africa to Riggs and PNC: less than
an afterthought. ICP/Fair Finance Watch will
be notching up its opposition.
February 21, 2005
What follows is a
portion of the letter that ICP Fair Finance Watch / Human Rights Enforcement project filed
last week with the U.S. Export Import Bank, concerning the coup in Togo, and situation in
Equatorial Guinea:
Dear Messrs. Merrill and Saba, and members of the Board and
Committee:
On behalf of the Fair Finance Watch / Human Rights Enforcement project (FFW), this
submission in advance of the Sub-Saharan Africa Advisory Committee meeting of February 16,
as invited by the Federal Register notice of January 27, 2005, focuses on two countries in
Sub-Saharan Africa: Togo and Equatorial Guinea. Togo is in the midst of a military coup.
Regarding Equatorial Guinea, the recent guilty plea of DC-based Riggs Bank and the
underlying facts should be taken into account.
12 U.S.C. § 635(b)(1)(B) provides for the Export-Import Bank and its Board (and
presumably Committees) to consider “human rights (such as are provided in the
Universal Declaration of Human Rights adopted by the United Nations General Assembly on
December 10, 1948).” As you should be
aware, following the death on February 5 of Togo’s long-time dictator Gnassingbe
Eyadema, the Togolese military unilaterally brought to power his son, Faure Gnassingbe. For the record, in a statement issued afterwards,
the Togolese Human Rights League (LTDH) denounced these "egregious and successive
violations of the constitution.” We note that the Federal Register of January 27,
2005, provided that “the last 10 minutes will be set aside for oral questions or
comments. Members of the public may also file written statement(s) before or after the
meeting.” FFW, based in New York, is not able to attend the meeting, but asks that
this be presented, in hard-copy and, if possible, orally in the final ten minute period.
FFW has been working on issues relating to Equatorial Guinea, including as relates
to DC-based Riggs Bank’s money laundering for that country’s dictator, Teodoro
Obiang Nguema. In terms of human rights and press freedoms, Obiang threatened journalists
in Equatorial Guinea when media carried news of the Senate report on the Riggs scandal. See,
<http://news.bbc.co.uk/1/hi/world/africa/3911855.stm>.
As regards freedom of conscience, Obiang had previously jailed political
opponents for “insulting” him on the Internet. See,
<http://news.bbc.co.uk/1/hi/world/africa/2164050.stm>.
See also the more detailed report of the Senate Permanent Subcommittee on
Investigations Report, online at
<www.senate.gov/~govt-aff/_files/071504miniorityreport_moneylaundering.pdf>.
Troublingly, the publication “Energy Compass” of November 20, 2003,
reported: Reports spark embarrassment in Equatorial Guinea
Equatorial Guinea's government had an
embarrassing week, after two influential television programs took the ruling family to
task for misusing oil revenues. On Nov. 18, US network CBS's 60 Minutes alleged that
President Teodoro Obiang Nguema Mbasogo and his family were the primary recipients of
proceeds from oil and gas output. It also highlighted the regime's human rights abuses,
and revealed that a former US ambassador had received death threats for reporting a
torturer to the US State Department. The UK's Channel Four news aired another highly
unflattering report later in the week...
The alleged breaches do not appear to worry the US, which is keen to strengthen trade ties
with Equatorial Guinea, where American firms Exxon Mobil, Amerada Hess, and Marathonall
have large investments. Says Joseph Grandmaison, director of the US
Export-Import Bank (Eximbank), "Equatorial Guinea is for us a priority country."
(emphasis added).
Given Obiang’s record of human rights abuses, the Ex-Im Bank’s
director’s statement is disconcerting, and contrary to recent statements about
freedom on the march. Here for the record from
another recent report on “the context of Equatorial Guinea... Tropical Gangsters by Robert Klitgaard, an
economist who worked in Malabo during the late 1980s. The book ends with Klitgaard
protesting the torture of a local colleague who was taken to the presidential compound
above Malabo’s harbor, blindfolded, and had his hands tied behind his back. He was
then hung by his ankles -- as Klitgaard writes, ‘like a marlin at the weight
scale’ -- and lowered into a barrel of soapy water and kept there until he choked. He
was pulled out, questioned, and submerged again. This went on for several hours.”
In terms of financial
transparency, as recited in the Statement of Offense recently agreed to by Riggs as part
of a proposed plea bargain announced on January 27, 2005
From in or about 1996 to
in or about 2004, Riggs Bank maintained numerous accounts for EG. Over the course of this
period, Riggs Bank opened over 30 accounts for the EG government, numerous EG senior
government officials, and their family members. Riggs Bank opened multiple personal
accounts for the EG president and his relatives and assisted in establishing offshore
shell corporations for the EG president and his sons (collectively, the “EG
Accounts”). By 2003, the EG accounts had become Riggs Bank’s largest single
relationship with balances and outstanding loans that totaled nearly $700 million... In
September 1999, Riggs Bank assisted the EG President Obiang in the establishment of Otong
S.A., an offshore shell corporation, incorporated in the Bahamas, and held a money market
account for the corporation. Otong was a Private Investment Company... These transactions
were suspicious because of the cash nature of the deposits, because of the lack of
understanding as to the source or destination of the money, and because the transactions
were not the sort in which the particular customer would normally be expected to engage.
22. Additionally, Riggs Bank filed inaccurate CTRs on these cash deposits. The CTRs listed
the Otong account as an exporter of timber, rather than a PIC controlled by the EG
president. Certain Riggs Bank employee(s) knew this representation to be inaccurate. 23.
From June 2000 to December 2003, 16 separate wire transfers, totaling approximately $26.4
million, were sent from an EG oil account at Riggs Bank, which held oil royalty payments
to the government of EG, to an account in the name of Kalunga Company, S.A. at Banco
Santander in Madrid, Spain.
FFW has previously asked the U.S. Federal Reserve (and certain other agencies,
including the UK FSA and UN Global Compact) to take action on these Banco Santander and
HSBC issues. See, e.g., “Request for Halt to Santander
Takeover,” by Karl West, (Glasgow) Herald, September 23, 2004,
www.theherald.co.uk/business/24582.html; “New York Protest at SCH Plans,” by
Jane Croft, Financial Times, September 23, 2004; “FSA
Urged to Block Abbey Bid over Laundering Report,” by Conal Walsh, The Observer,
September 26, 2004, http://observer.guardian.co.uk/business/story/0,,1312662,00.html,
and, in Spanish, “Piden a las autoridades británicas que paren la OPA sobre
Abbey hasta que no se aclare el papel del Santander en un caso de blanqueo de dinero,”
In its anti-terrorism mandate -- also in 12 U.S.C. § 635(b)(1)(B) -- we
urge the Ex-Im Bank to consider the degree to which lack of anti-money laundering
standards can enable terrorism. In terms of
human rights, we urge the Ex-Im Bank to publicly qualify its director’s above-quoted
statement in light of Teodoro Obiang Nguema’s record of human rights abuses, and to
appropriately consider it all of its decision-making, as well as the ongoing military coup
in Togo.
We ask to be kept informed in this regard, and stand ready to answer any questions or provide any further information.
Very Truly Yours,
Matthew Lee, Esq.
Executive Director
Fair Finance Watch/
Human Rights Enforcement project
February 14, 2005
On February 12 in Lome, Togo, three people protesting the ongoing coup d’etat
were killed, and radio stations closed. Over 60 Togolese associations and trade unions
have condemned the "constitutional coup" staged by the country's army last
Saturday to confer power on Faure Gnassingbe, son of the late President Gnassingbe
Eyadema. In a statement issued after a meeting at the headquarters of the Togolese Human
Rights League (LTDH), the groups denounced the "egregious and successive violations
of the constitution" and called the people to "mobilize and resist" these
violations to "preserve the dignity and freedom of Togolese". Immediately after
the demise of President Eyadema last Saturday, the Togolese army endorsed Gnassingbe, 39,
to succeed his late father until the end of his term in 2008.
As recently as Jan. 17, 2005, the regime’s web site
trumpeted
So after 38 years of the father, now the succession of the son by military coup. As protests mount, here’s BBC’s web page of Africa News
February 7, 2005
In Turkmenistan, President Saparmurat Niyazov is the man who makes the decisions for oil and gas. He signs the E&P deals or JV agreements with foreign companies. APS Review Downstream Trends of October 4, 2004 calls his regime "the most repressive" state in Central Asia --
"The constitution says Turkmenistan is a 'secular democracy' in the form of a presidential republic. In practice, it is a Niyazovland in which policy is only what the president decides - a private estate with its income going to the "presidential fund", now worth over $ 5 bn, which is managed by Deutsche Bank in Frankfurt. Only Niyazov can use the money. Parliament is dominated by his Democratic Party of Turkmenistan, the sole political group in the country."
Excerpts from report by Turkmen TV on October 31, 2000: "Yesterday Turkmen President Saparmyrat Turkmenbashy received a member of the board of German Deutsche Bank, Tessen von Heydebreck, who is leading a visiting Deutsche Bank delegation... They talked about Turkmenistan's economic potential; von Heydebreck praised the country's economic development program."
TASS News Agency of October 30, 2000: "Investments in the oil and natural gas sector of Turkmenistan are seen as a high priority by the Deutsche Bank, its officials assured President Saparmurat Niyazov during the course of their meeting in Ashkhabad on Monday. Niyazov and Deutsche Bank board member Tessen von Heidebraek highly assessed the fulfilment of the agreement on cooperation between the German Bank and the government of Turkmenistan signed in 1996 and approved the signing of a new agreement on continued cooperation. the German Bank and the government of this Central Asian republic will sign a framework crediting agreement on the funding of the investment projects, including the supplies of equipment and provision of services."
Commenting on Deutsche Bank's presence in Central and Eastern Europe, ['DB CEO Rolf] Breuer "emphasized that its longstanding, close relationships with these countries have been important even during times when the political and economic climate has been difficult. Deutsche Bank was pleased to accept the challenge to help rebuild the economies of Central and Eastern Europe. The opening and liberalization of these markets offers further businesses in which the bank expects to see substantial growth. Deutsche Bank is currently represented through offices, branches and subsidiaries in Georgia, Kazakhstan, Croatia, Poland, Russia, Romania, the Czech Republic, Turkmenistan, Ukraine, Hungary and Uzbekistan. " (Breuer Statement of September 25, 2000)
Deutsche Bank is, ironically, a member of the UN's Global Compact. Developing...
Following the announcement of its flawed plea bargain on January 27, Riggs Bank
said that it and PNC would make an announcement about their stalled merger “on or
about” February 4. That day passed with
no announcement. Earlier in the week, the Federal Reserve and OCC announced
cease-and-desist orders with Banco de Chile, for holding and concealing accounts for
Augusto Pinochet. Also reported to have been
holding Pinochet accounts are Royal Bank of Scotland’s Coutts unit, and Espirito
Santo, regarding which an application by Credit Agricole, on which ICP / Fair Finance Watch commented to the Federal
Reserve back in 2003, is still pending... (The
RBS Coutts and Espirito Santo connections were reported among other places in the
newspaper Clarin
January 31, 2005
Following the January 27 announcement of a proposed plea bargain by Riggs Bank of
its money laundering for Augusto Pinochet and Equatorial Guinea’s Teodoro Obiang, FFW
/ Human Rights Enforcement project made three filings, including to the United
Nations’ Global Compact. While Riggs Bank
is not a member, HSBC and Grupo Santander Central Hispano are. The underlying U.S. Senate's Permanent Subcommittee
on Investigation's Report on Riggs Bank, at 55-56 of the Report, states as follows:
"On February 10, 2004, in an attempt
to gather additional information, Riggs sent letters to several banks sponsoring accounts
to which questionable wire transfers had been sent from the [Equatorial Guinea] E.G. oil
account. These letters requested information about the accounts under Section 314(b) of
the Patriot Act, which allows financial institutions to share client and transaction
information to guard against money laundering and terrorist financing.... A Riggs letter
to HSBC Bank USA requested information on the identity of the owners or authorized
signatories for the account belonging to Kalunga. [FN 198: Letter from Riggs Bank to HSBC
Bank USA (2/10/04).]
"HSCB USA... confirmed that the
Apexside account had been opened by an HSCB bank in Luxembourg and that HSBC USA had
forwarded the funds to a U.S. correspondent account for its Luxembourg affiliate, but
declined to disclose the identity of the persons behind Apexside due to Luxembourg bank
secrecy laws. HSBC USA said that the funds for the second company had been sent to an HSBC
bank in Cyprus which also has bank secrecy laws. HSBC USA claimed that Luxembourg and
Cyprus laws barred disclosure of client information to both third parties and HSBC's own
affiliates outside of the country.
"The position taken by... HSBC USA
means, in essence, that banks in the United States attempting to do due diligence on large
wire transfers to protect against money laundering are unable to find out from their own
foreign affiliates key account information. This bar on disclosure across international
lines, even within the same financial institution, presents a significant obstacle to U.S.
anti-money laundering efforts."
The U.S. Senate Report is available here
FFW has formally requested action, which will be reported in this space.
January 24, 2005
Corporate human rights white wash -- of the Unocal settlement, Business Week quotes “insiders... that Unocal will pay about $30 million in damages to settle the cases. The award will include money for the 15 plaintiffs and for a fund to improve living conditions, health care, and education in the [Myanmar] pipeline region. Unocal has declined further comment.” Meanwhile, China National Offshore Oil Corporation is reportedly considering acquiring Unocal. China’s oil interests in the Sudan were raised at a recent panel discussion considering what the U.N. Security Council may do about Darfar. The proponents of a referral of the case(s) to the International Criminal Court noted that China has spoken in favor of the ICC. But with regard to Sudan, it’s oil interests may carry more weight. Unfortunately, the referral is unlikely. A recent visitor to the region reports seeing armaments from Ukraine and Russia....
The inquiry into the Pinochet accounts has spread accounts at Banco de Chile's New York and Miami branches. Banco de Chile said Jan. 21 in a statement to Chile's Securities and Insurance Superintendency that the Federal Reserve Bank in Atlanta is looking into money laundering at it accounts at its Miami branch while the Office of the Comptroller of the Currency is handling the New York investigation. We’ll see...January 18, 2005
Human rights accountability -- or just securitization? Last week it emerged that Nigeria plans to issue $500 million of Treasury bills
to cover its 2004 fiscal deficit while it waits for Switzerland to return funds looted by
its former dictator Sani Abacha. In a letter
to the Senate earlier this month, President Olusegun Obasanjo said that the government
planned to issue 90-day Treasury bills to help finance the 2004 budget deficit in lieu of
the $500 million. "The funds are now expected to be released around the end of
January 2005 ... This amount was already programmed into the 2004 budget as a financing
item. Our plan is to redeem the bills with the recovered funds once we receive them,"
he said. Nigerian authorities calculate that Abacha embezzled between $2 and $5 billion
from the state coffers. And where did it go? By most accounts, to the following:
Credit Suisse and two of its subsidiaries,
Bank Leu and Bank Hoffman; Credit Agricole Indosuez; Union Bancaire Privie; MM Warburg;
Deutsche Morgan Grenfell in Jersey. In London, branches of ANZ Banking, Banque Nationale
de Paris, Barclays, Citibank, Bank of Boston, HSBC, NatWest and Standard Bank of South
Africa were among those that held funds looted by Abacha. In New York, Bankers Trust (now
Deutsche Bank) and Merrill Lynch in New York; Goldman Sachs in Zurich, UBS in Geneva...
January 10, 2005
Human rights
accountability: in Santiago, Chile, on January 6, a judge backed by eight detectives
searched the office of Gen. Augusto Pinochet. The search was part of a separate
investigation by Judge Sergio Munoz of multimillion-dollar accounts kept by the retired
general at Riggs Bank in Washington. The judge did not comment, but Chilean media reported
that he seized some documents. Pinochet's chief lawyer, Pablo Rodriguez, called the raid
"illegal" because his client has immunity from prosecution as a former
president. The Supreme Court has stripped Pinochet of the immunity to allow his trial on
nine kidnappings and one homicide allegedly committed during his rule from 1973 to 1990.
But the law requires immunity to be lifted for each case, Rodriguez said. Munoz's judicial
aides said the immunity does not protect Pinochet from a police search. Click here
Following up on
the series of Freedom of Information Act-related stories below in this Report: ICP last
week received a FOIA response from the CIA: “We reviewed the material and determined
it is properly classified and must be denied in its entirety on the basis of FOIA
exemptions (b)(1) and (b)(3)... You have a right to appeal this decision by addressing
your appeal to the Agency Release Panel within 45 days.” Will do.
January 3, 2005
While
most United Nations news at year-end concerned response to the tsunami, more quietly the
U.N.’s peace verification mission in Guatemala, Minugua, closed after eight years of
operation. The mission extended its stay in September last year during the presidential
election in which incumbent Oscar Berger got himself re-elected. Minugua chief Tom
Koenigs, in his most recent annual report, refers to ongoing “obstacles and
setbacks” to implementing institutional reforms, combined with a “steady
deterioration of the National Civilian Police (PNC).” Things are still dicey: last
week, Salvadoran Public Works Minister Carlos Guerrero had his car shot at during a
visit...
In human rights law news, Chile's
Supreme Court last delayed into January a decision on whether to uphold an indictment
against Augusto Pinochet on murder and kidnapping charges. (The charges stem from "Operation Condor," a plan
implemented in the 1970s by Latin American military leaders to repress political opposition.) One member of the
five-judge panel, Enrique Cury, said that a ruling will be issued in early January. He did
not name a date, nor give a reason for the delay. Oscar Aitken, the financial adviser of
former Chilean dictator Augusto Pinochet resigned after nearly two years of service,
Pinochet's son Marco Antonio said on December 29. Aitken decided to step down two weeks
ago because he feared legal action could be
opened against him, Marco Antonio Pinochet added.
Meanwhile, the Bosnian central bank and the
entities' banking agencies have not yet received instructions from the B-H
Bosnia-Hercegovina Council of Ministers to block the bank accounts of war crimes indictees
including Radovan Karadzic, Ratko Mladic and 19 other persons accused of war crimes (see
below, for list). "We know that the Council of Ministers decided about 20 days
ago to freeze the assets and block the accounts of persons indicted of war crimes.
However, we have not received any official document instructing us to block these
accounts. We cannot act on information obtained from the media," Ibrahim Polimac,
spokesman for the B-H Federation's Banking Agency, told Bosnian Serb newspaper Nezavisne novine.
Note: the above-referenced 19
Hague fugitives: Ante Gotovina, Ljubomir Borovcanin, Goran Borovnica, Miroslav Bralo,
Vlastimir Djordjevic, Goran Hadzic, Gojko, Jankovic, Vladimir Lazarevic, Milan Lukic,
Sredoje Lukic, Sreten Lukic, Dragomir Milosevic, Drago Nikolic, Vinko Pandurevic, Nebojsa
Pavkovic, Vujadin Popovic, Savo Todorovic, Dragan Zelenovic, and Stojan Zepljanin.
Inner City Press' quick fact-check of the film "Hotel Rwanda"
has dug up, beyond a 2001 radio interview of Paul Rusesabagina (described online at www.bbc.co.uk/radio4/aboutradio4/diary/18.shtml)
the following:
From the Press Association of April 28, 1994: “UN troops
and armored vehicles guarded a hotel in the embattled Rwandan capital of Kigali today
against pro-government militiamen who threatened to butcher 300 Rwandan civilians
sheltering inside. "We received a threat that these people were going to be
slaughtered by militia," said Abdul Kabia, executive director of the UN mission in
Rwanda.”
From the Press Association of May 3, 1994: “Rwandan
troops and pro-government militiamen surrounded a UN convoy in the Rwandan capital of
Kigali today, preventing it evacuating 300 civilians, UN officials said. "The
situation is very tense. Our people are surrounded at the Hotel des Mille Collines and we
are sending reinforcements there immediately," an official told Reuters by telephone
from Kigali. Abdul Kabia, executive director of the UN Assistance Mission in Rwanda
(UNAMIR), said: ‘Some elements of the Rwandese armed forces and militias are
preventing the evacuation operation from going through. We are having problems getting the
people out of there.’... The UN convoy carrying 300 refugees later returned safely to
the hotel. ‘We have succeeded in returning to the Hotel des Mille Collines and are
getting people into their rooms and will provide protection overnight,’ an official
said.”
More substantively, from IPS of May 3, 1994:
"In Kigali the killers are
looking for those who are hiding and killing them. Yesterday they killed 70 at Nyaminambo
(children, old people, pregnant women). No one, especially Tutsi, has been spared,"
said a Rwandan in a fax sent to Oxfam from the Hotel des Milles Collines in Kigali on Apr.
26. "There are 500 of us in the hotel. There are six soldiers guarding us but several
attempts have been made to kill us. Do something very soon," the Rwandan wrote. A
copy of the fax was delivered by hand to Major today by the heads of five British aid
agencies, who are calling for the British government to reverse its support for the U.N.'s
"callous and short-sighted" decision to pull out of Rwanda. The current UNAMIR
force is widely seen by aid organizations as too small to be effective. The rump 270-man
UNAMIR force is mandated to broker a ceasefire, assist humanitarian relief to "the
extent feasible," and monitor developments. But with so few soldiers, and a limited
mandate, UNAMIR's efforts at arranging a ceasefire have so far been futile.
Jump-cut to the present, from Amnesty International’s December 21 statement: “"The stakes in North Kivu are extremely high. The RCD-Goma, traditionally allied to and supported by Rwanda, regards the province as its bastion. Elements of the political and military wings of the RCD-Goma are increasingly opposed to the extension of the transitional government's authority to the province. Following the loss of South Kivu province to governmental control earlier this year, the dissident RCD-Goma force under its commander General Laurent Nkunda, responsible for multiple human rights abuses across South Kivu, has regrouped in North Kivu." Developing..
December 27, 2004
In Santiago last week, counsel for Augusto Pinochet argued to the Supreme Court that the 89-year-old retired general's health makes him unfit to stand trial on human rights charges, as Pinochet was released from the hospital after five days recovering from a stroke. After three hours of arguments, the court delayed a decision in the case. The court will now decide on December 27. As reported in last week's update, below, on December 13 Judge Juan Guzman ruled, against the judgment of two of the three court-appointed psychiatrists, that Pinochet should face trial for his role in Operation Condor, an intelligence-sharing network used by the di