Transfer cash is directly related to money laundering: the allegations, and the court case. « Untold Arsenal: Arsenal News. Supporting the Lord Wenger; coach of the decade
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Money Laundering and Football
“Rather than simply being used as a conduit for money laundering the proceeds of other crimes, there is some sort of activity relating to player transfers that is generating cash proceeds from criminal activity.”
Recently Untold published a series of articles about how money laundering plays its part in football. Although we pointed to no particular club we tried to suggest that it is hard to find any explanations for why certain clubs are purchased by men with no football experience, spend lots of money, talk the talk about reaching the heights, and then go bust with a big bang.
The background articles are recorded in Untold Corruption although if you want to start at the start with What is money laundering? and also How could money laundering hypothetically work in the football transfer market?
Now onto the latest discoveries. This article is longer than usual, and much of the early part is about a case that does not involve football. But the concluding link to football is explosive.
If you don’t want to go through the background (and really you should because it explains how the how system works, based on an EU court case) the football related element starts half way through with the headline “Possible application to the football transfer market“.
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Transfer cash is directly related to money laundering: the allegations, and the court case.
By: Anne
Introduction
As an introduction to this article, I’d like to say “thank you” to the European Union…. The lawsuit that you filed has exposed more about global money laundering than I would ever have expected to see in one place. Based on the EU’s lawsuit, this is the first of a three-part series of articles that I’m hoping will show a complete multi-billion global money laundering cycle.
(However, I should include the disclaimer that any factual information about this syndicate that I include in my article is taken from allegations in the lawsuit filed by the EU, so I can’t personally confirm that everything the EU said is accurate. However, the lawsuit does provide quite thorough documentation to back up the allegations.)
The lawsuit filed by the European Union was filed on behalf of 10 EU member countries against American tobacco company R.J. Reynolds. The basis for the suit was the damages suffered as a result of criminal activities by the defendant’ “RJR Money-Laundering Enterprise.”
In general, although it is complex I recommend that everyone who is interested in money laundering take a look at the lawsuit. It provides a fascinating look at global money laundering, the criminal conduct alleged against RJR.. among other things, laundering money for Latin American drug cartels, the Italian mafia, the Russian mafia, PKK, other terrorist organizations, heroin traffickers in Afghanistan, narcotics traffickers in Colombia, the Medellin Cartel, Saddam Hussein’s family… Oh, the corruption and destabilization of the governments of Bosnia and Montenegro… there’s more.
However, the thing that makes the lawsuit the most interesting is the fact that the EU seems to have really tried to the best of their ability to fully document as much of this criminal activity as possible. They had government resources at their disposal, and could obtain bank account numbers, etc. This lawsuit really does show a reasonably comprehensive picture of how this money laundering conspiracy was operating.
Also, I think that a lot of what they exposed is relevant to more than just the RJR operations. As I document each stage of the money laundering process, I’m going to be noting whether there’s circumstantial evidence that these same methodologies are being used elsewhere; for example in the transfer market. (And indeed I can answer “yes”; see end of article )
Note to anyone who doesn’t have a general familiarity with money laundering: These articles provide a general explanation.
Global Money Laundering: How it works from A-Z
Starting Point:
A criminal is holding dirty cash that he earned from his criminal activities. He needs it “clean,” and introduces it into the money laundering cycle…..
The purpose of the money-laundering cycle is to establish total anonymity for the participants, by passing the cash drug proceeds through the financial markets in a way that conceals or disguises the illegal nature, source, ownership, and/or control of the money.
There are three different stages in the money laundering cycle. Part I of this article addresses “placement,” Part II will address “layering,” and Part III will address “integration.”
The RJR Scheme:
The following is the basic money laundering scheme that RJR built their entire operation on (omitting the “layering process”). It really demonstrates the way that money laundering is almost as simple as it is complicated:
- Step 1: A criminal organization has cash proceeds from crime
- Step 2: Criminal organization purchases cigarettes from RJR with the dirty cash from his crimes
- Step 3: Criminal organization sells cigarettes purchased from RJR (when cigarettes are sold criminal has his money back, but looks like legal profits from cigarette sales. Laundering cycle complete).
Step One in the Money Laundering Process: “Placement” of the initial cash proceeds of crime
The main objective of the “placement” stage of the money laundering cycle is to introduce the proceeds of crime into the legitimate financial system, but to do so in a manner that does not leave any clues as to where the funds originated. Once the funds are placed, they will be moved into stage 2 (“layering”)
Example 1 “Placement” by the Italian Mafia
The Italian mafia generated large amounts of cash proceeds from arms trafficking, drug trafficking, and other illegal activity. In order to first “place” this cash into the financial system and initiate the money laundering process, the Italian mafia used an organized group of “money couriers.”
These couriers would receive criminal cash in Italy and other parts of Europe, and then illegally smuggle the cash out of Italy and into Switzerland. In Switzerland, the couriers would hand the dirty cash over to Swiss money-laundering broker organizations, such as the “Alfred Bossert organization” and the “Gegis money-laundering broker organization.” (More on these “money brokers” in Part II, “layering”).
Example 2: “Placement” by Colombian drug cartels
RJR set up a scheme to launder Colombian narcotics money through a company called “El Torreon, S.A.,” which was owned, operated, and directed by a Spanish multinational corporation.
In this scheme, El Torreon’s front man in Medellin, Colombia was in charge of the collection of the cash proceeds from narcotics trafficking in Medellin. This cash would then be smuggled out of Colombia by plane, and “placed” with an RJR cigarette distributor in Aruba, in exchange for the equivalent value in cigarettes.
Example 3: Alt. “placement” method by the Italian mafia.
WALT S.R.L. was an Italian company with offices in several European countries, which would receive illegal cash proceeds from criminal organizations throughout Europe. This cash would then be smuggled through Belgium, France, Spain, and Italy. Once transported to Italy, the criminal proceeds were delivered to certain “friendly” banking institutions, and then “placed” into a network of bank accounts.
Example 4: Placement with “money broker” through illegal currency exchange
This example involves both a narcotics cartel and a “money broker” (illegal currency exchange broker) who are involved in global criminal enterprise. A Colombian narcotics cartel earns illegal cash from selling drugs in the EU. This cash is in euros. The cartel in Colombia contacts a money broker in the EU. The money broker has operations in Colombia as well, and he agrees to accept the illegal euros from the narcotics trafficking. In exchange for the dirty money, the cartel in Colombia receives “clean” local currency from the broker’s Colombian affiliate
Possible application to the football transfer market
In addition to the examples provided above, another common “placement” technique used in international money laundering is when illegal cash is “exported..[across national borders and] used to buy…property.
In light of the above analysis of the “placement” stage in the money laundering cycle, let’s take another look at one of the news reports I quoted in my introductory article to this series (Money Laundering, Premier League football, Operation Apprentice, and a little more on Portsmouth FC (again)).
Specifically, I quoted portions of a Daily Mail article headlined French police raid drug and money-laundering gang linked to English Premier League. While I cannot personally vouch for the accuracy of all of the facts that were reported in this article, taking them for the moment as true, let’s consider the implications of the following three aspects of the article:
1) Two English men were caught smuggling large quantities of cash out of England, into other European nations, using luxury cars that had been specially equipped with hidden compartments to conceal the cash:
In May 2009, “one of the accused – named as Stephen Campbell – was arrested in a car travelling from Narbonne to Toulouse…Police found £500,000 worth of used notes in a hidden compartment in the boot of his Mercedes, along with traces of cocaine.
The Englishman had been put under surveillance, and detectives established that he had made at least 20 ‘suspicious’ journeys delivering money around Europe. Much of it had been transported in reinforced hidden compartments in luxury cars…
They are suspected of recruiting ‘lieutenants’ from London, to act as ‘runners’ of both drugs and laundered money.”
2) The cash at issue was being smuggled into France and Cyprus, where it was intended to be used to buy property:
The cash “was being used to buy châteaux and land in the area….Both apparently poured their profits from organised crime into luxury properties in the area, and into farmland….[Police] also found three luxury cars linked to Mr Keating, as well as documentation on property investment in Cyprus, where the gang are suspected of having laundered money.”
In short, this article appears to be describing verbatim the “common ‘placement’ technique used in international money laundering…where illegal cash is ‘exported...[and] used to buy…property.’” Furthermore, the method used to transport this cash appears to be the very same method that the EU lawsuit documented as being used by the Italian Mafia for the “placement” of the cash proceeds of crime, which involved:
“an organized group of ‘money couriers.’ These couriers would receive criminal cash in Italy and other parts of Europe, and then illegally smuggle the cash out of Italy and into Switzerland.”
Now back to the EU lawsuit on the operations of “couriers.” It appears that these sorts of courier services might be separate criminal organizations whose services are for hire:
“RJR used of an organized group of money couriers whose function was to receive criminal proceeds in Italy and other parts of Europe and to illegally ferry those proceeds out of Italy and Europe to Switzerland, where the couriers would hand the cash proceeds over to the Swiss money-laundering broker organizations. Examples of the courier organizations include those associated with Nedo Caneva, Adriano Corti, Donino Verdamo, Aldo Tacchini, Pietro Cerroni, Lorenzo Fieni, Americo Mirandi, and Angelo Carboni. These courier organizations provided a vital and necessary link between the Italian Mafia-type criminal organizations and the Swiss money-laundering broker organizations, and provided an essential link in the laundering of the criminal proceeds distributed to RJR”
In general, assuming the above facts are correct, it would strongly suggest that these men were smuggling the cash proceeds of criminal activity, and that they were intercepted during the “placement” stage of the money laundering cycle. Which makes the final aspect of the scenario reported in the article quite interesting:
The men who were arrested for smuggling this cash claimed that the cash “was linked to agents or other parties involved in the lucrative – and notoriously unregulated – trade in footballers.”
Specifically:
“The criminals claimed the millions of used notes came from Premier League football ‘transfer bungs’….
Campbell claimed that the money in his Mercedes was provided as part of a ‘bung’ connected with the transfer of a player to a leading English club, police said yesterday….
‘He told us that all the money came from professional footballer transfers in England,’ added the investigating officer.
‘Those arrested say they had links with big names in the world of Premiership football.’”
If the above information is correct, there are some interesting implications regarding the transfer market.
First, this cash appears to be the direct proceeds of criminal activity, intercepted during the first stage of the money laundering cycle. As such, this would seem to indicate that, rather than simply being used as a conduit for money laundering the proceeds of other crimes, there is some sort of activity relating to player transfers that is generating cash proceeds from criminal activity. And not a small number of cash proceeds either. I mean, £500,000, in one run, by one courier?
Which leads us to wonder how much cash might be floating around this “transfer black market.”
We will continue to examine these topics in Part II of this article, which will examine the “layering” stage of the money laundering cycle.
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The latest on the referees…
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Player interviews translated into English
Vermaelen interview, the translation of the full interview
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From the Arsenal History Society web site
Iconic moment No 7 – caretaker manager Joe Shaw wins the league.
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