----- Original Message -----
From: Sherry Swiney
To: Patrick Crusade
Sent: Friday, March 10, 2006 10:39 AM
Subject: Dillon, Read & Co. Inc. and the Aristocracy of Prison Profits: Part I
Thank you Jim Kirwan for sending this.
----- Original Message -----
Sent: Wednesday, March 01, 2006 11:54 AM
Subject: Dillon, Read & Co. Inc. and the Aristocracy of Prison Profits: Part I
FYI Fran........hope you are well. JO
Narco News: Dillon, Read & Co. Inc. and the Aristocracy of Prison Profits: Part I
Catherine Austin Fitts is the author of the Narco News series "Narco-Dollars for Beginners: How the Money Works in the Illicit Drug Trade." She is a former managing director and member of the board of directors of Dillon Read & Co, Inc, a former Assistant Secretary of Housing-Federal Housing Commissioner in the first Bush Administration, and the former president of The Hamilton Securities Group, Inc. She is currenly president of Solari, Inc., an investment advisory firm (in formation) based in Hickory Valley, Tennessee.
Dillon, Read & Co. Inc. and the Aristocracy of Prison Profits: Part I
Inside the Financial World, Government Agencies and their Private Contractors Lies a Hidden System of Money Laundering, Drug Trafficking and Rigged Stock Market Riches
By Catherine Austin Fitts
A Six-Part Series for The Narco News Bulletin
February 27, 2006
"Make a Law, Make a Business"
- Old New Jersey street saying
There is a strongly held myth in America. The myth says that large corporations are efficient. They have big profits. They have lots of capital to hire the best people, the best accountants and the best law firms. Everyone looks so spiffy. Their technology is the latest. The best thing for the economy, sings the siren song, is for inefficient government to defer to corporate leaders and corporate "survival of the fittest." Powerful corporations, the myth goes, earned their power through performance in the marketplace by providing the best services and products.
The real truth on the corporate model is far darker, however, and can be found by understanding our current central banking-warfare economic model and the resulting total economic return of activities. That means not just looking at the corporate profits and growth in stock price, but the true cost to people, the environment and government of a particular corporate activity. This necessitates understanding the economy as an ecosystem that is a dynamic living system in places. If corporate profits come from laundering narcotics trafficking used to destroy communities, and from government contracts used to build expensive prisons crammed full of small time non-violent drug distributors and customers, then they are part of a "negative return on investment" economy. This is an economy where the real cost of things is hidden behind secret black budgets, complex government finances, under-the-table deals, market manipulations and economic and military warfare, until they finally show up in the most irrefutable ways: environmental destruction and the exhaustion and death of communities. I refer to this destructive economic force as "the tapeworm" - a financial parasite that weakens and even kills its host.
"Dillon Read & Co. Inc. & the Aristocracy of Prison Profits" is a case study in "tapeworm economics" and how the tapeworm game is played, written by a former partner and member of the board of directors of Dillon Read whose life and business were intimately affected by the events described. Through this one case study we see the patterns of the dominant business model operating in our politically managed economy today. We see how private investors arrange for new laws which are contrary to societies' best interests. With the help of revolving doors between board rooms, law firms and high level government positions, large government contracts and purchases are engineered which increase the value of private stock investments. Those who enjoy rich stock market profits then funnel large political contributions to the political parties and politicians who engineer the laws and contracts.
And so a cycle of public-private profiteering grows that drains real productivity, and increasingly threatens life itself. As we see the Wall Street/Washington merry-go-round unfold, we realize that what we're watching is a deeply bipartisan system that reflects a golden triangle of high finance full of corporate leaders, central bankers, politicians, investors, economic hit men and kingpins of organized crime. Ultimately, through our retirement savings, our personal investments, our bank deposits, our donations and our purchases, most of us are complicit in helping to finance and promote the system. This is a system that cannot be changed through traditional electoral politics but by a fundamental reordering and "coming clean" of who and what we are. This includes where we bank, who we invest in, the charities and universities that we support, the media we give our attention to, how we bring transparency and accountability to the government resources in our community and for whom and what we "vote" for with our time, attention and money.
This series is both an exposé and an invitation to shift the power of wealth creation from those things that diminish and destroy to those which support freedom and productivity in transformative ways.
Read on for Part I
Part II: Narco Dollars in Mena and LA, Insider Deals at Dillon Read and Massive Mortgage Fraud in HUD related to Iran-Contra
Parts III-VI: coming soon.
Brady, Bush, Bechtel & "the Boys"
I remember when John Birkelund first came to Dillon Read in 1981 to serve as President and Chief Operating Officer. Dillon was a small private investment bank on Wall Street with a proud history and a shrinking market share as technology and globalization fueled new growth. I had joined the firm three years before and, after a period in corporate finance, had migrated to the Energy Group ? helping to arrange financing for oil and gas companies who were clients of Birkelund's predecessor, Bud Treman. Bud was a member of the old school ? an ethical man increasingly frustrated with the corrupting influence of hot money and easy debt.
Cruising the Florida Keys 1984: Then Vice President George H.W. Bush, former CIA Director who led the National Security Council during Iran Contra (second from left), photographed with Nicholas F. Brady, then Chairman of the Wall Street firm Dillon Read, lead investment banker for RJR Tobacco, and later U.S. Treasury Secretary (third from left).
White House Photo
This was a time of transition. Dillon's Chairman, Nicholas F. Brady, was considered one of George H. W. Bush's most intimate friends and advisors. Classmates at Yale, both were children of privilege. Bush had left his home in Greenwich Connecticut and with the help at his father's networks at Brown Brothers Harriman had gone into oil and gas in Texas. Brady had gone to Harvard Business School and then returned to the aristocratic hunt country of New Jersey, where the Bradys and the Dillons had estates, to work at Dillon Read.
Bush climbed through Republican politics to become Director of the Central Intelligence Agency (CIA) during the Ford Administration. After spending four years displaced by the Carter Administration, Bush was now Reagan's Vice President with Executive Order authority for the National Security Council (NSC) and U.S. intelligence and enforcement agencies. Bush's new authority was married with expanded powers to outsource sensitive work to private contractors. Such work could be funded through the non-transparent financial mechanisms available through the National Security Act of 1947, and the CIA Act of 1949.
C. Douglas Dillon, Secretary of the Treasury during the Kennedy Administration.
Photo courtesy Harvard University
This was a secret source of money for funding powerful new weaponry and surveillance technology and operations owned, operated or controlled by private corporations. Carter's massive layoffs at the CIA had created plenty of private contractor capacity looking for work. An assassination attempt on President Reagan's life two months after the inauguration meant that Vice President Bush and his team were called on to play an expanded role. Meantime, Nicholas Brady continued as an intimate friend and collaborator from his position as Chairman of Dillon Read.
In April of 1981, Bechtel, working through the Bechtel private venture arm Sequoia, bought the controlling interest in Dillon Read from the Dillon family, led by C. Douglas Dillon, former U.S. Treasury Secretary and son of the firm's namesake, Clarence Dillon. This was a time when Bechtel was facing increased competition globally while experiencing a decline in the nuclear power business that they had pioneered.
We found ourselves with new owners whose operations were an integral part of the military and intelligence communities and who had demonstrated a rapacious thirst for drinking from the federal money spigot. George Schultz, former Secretary of the Treasury during the Nixon Administration, and now Bechtel executive, joined our board.
George Shultz, Bechtel Executive, Dillon Read Board Member, Secretary of the Treasury in the Nixon Administration and Secretary of State in the Reagan Administration appears with Warren Buffet and California Governor Arnold Schwarzenegger.
Unusual things started to happen that were very "un-Dillon-Ready-like." First came a new bluntness. I will never forget the day that one of the partners brought around a very charming retired senior Steve Bechtel to tour the firm. Upon introduction, he peered up at me through thick glasses and said "Far out, a chick investment banker." Then came strategic planning with SRI International, the think tank offshoot of Stanford University that had long standing relationships with the Bechtel family and Schultz. The head of the Energy Group that I worked for at the time was part of the planning group. His mood changed during this period and he later left the firm, retiring from the industry. Before going he warned me that I should do the same. He never said why?leaving a chill that I have felt many times since as ominous changes continue that have no name or a face.
The planning group recommended that we expand our business into merchant banking. This means managing money in venture investment by starting and growing new companies or taking controlling interests in existing companies, including "leveraged buy-outs." Rather than serving companies who needed to raise money by issuing securities, or make markets in existing securities, we were going to start raising money so we could create, buy and trade companies. A company was no longer a customer. They were now a target. Wall Street was its own customer who would raise money to buy companies who would work for us. This required new people with new skills.
A Rothschild Man
John Birkelund arrived at Dillon Read in September 1981. Born in Glencoe, Illinois, he had graduated from Princeton and then had joined the Navy where he served with the Office of Naval Intelligence in Berlin. While in Europe he became friends with Edward Stinnes, who recruited him after a short career with Booz Allen in Chicago to work in New York for the Rothschild family, considered to be one of if not the wealthiest family in the world. He started at Amsterdam Overseas Corporation, which then moved its venture capital business into New Court Securities with Birkelund as co-founder. New Court was owned by the Rothschild banks in Paris and London, Pierson Heldring Pierson in Amsterdam and the management. Their venture successes included Cray Research, inventor of the high-powered computers by that name, and Federal Express, the courier company based in Memphis, Tennessee.
John Birkelund, Chairman and CEO of Dillon, Read & Co. Inc.
Photo courtesy Columbia University
A Time Magazine story from December 1981, "The Rothschilds Are Roving" describes a decision by the French Rothschilds in response to the nationalization of Banque Rothschild by President Mitterrand to move significant operations and focus to the U.S. Time reports that they are changing the name of their aggressive venture capital firm, New Court Securities to Rothschild, Inc. and are taking over from the current CEO, John Birkelund.
Birkelund was tall and energetic. He had piercing blue eyes, a driving and hard working ambition and intelligence. He seemed frustrated by the process of organizing and invigorating Dillon's club-like culture. There was much about his willingness to try that endeared him to me ? a point of view that was not reciprocated. Whatever the reason, I was not Birkelund's cup of tea. I will never forget one of his early addresses to the banking group. He was full of energy and launched a section of his pep talk, "When you get up in the morning and look into the mirror to shave." He suddenly froze, looking at me (one of few or possibly the only woman in the room) with fear that his reference to a masculine practice would offend. In the hopes of putting him at ease, I said with merriment, "Don't worry, John, girls shave too." The whole room burst out laughing and John turned red.
Birkelund had his hands full after arriving at Dillon Read. In 1982, Nick Brady left temporarily to serve in the U.S. Senate, appointed by Governor Tom Kean of New Jersey to serve out Harrison Williams term. George Schultz left Bechtel to serve as Secretary of State under Reagan. With Brady and Schultz in Washington D.C., the Bechtel relationship stalled. With Brady returning in 1983, Birkelund engineered the repurchase of the firm from Sequoia by the partners and the creation of meaningful venture and leveraged buyout efforts. In 1986, Brady and Birkelund lead the sale of Dillon Read to Travelers, the large Connecticut insurance company that later became part of Citigroup. The relationship with Travelers expanded our capital resources to participate in the venture capital and leveraged buyout businesses. In no small part thanks to Birkelund's hard work and dictatorial cajoling, Dillon Read would not be left behind in the 1980s boom time.
One of my favorite Dillon Read officers was the son of a former Dillon chairman and, thus, remarkably wise about the ways of the firm. I sought him out after a Birkelund temper tantrum and said that Birkelund was not at all like a "Brady Man" and that I was surprised at Nick's choice. My colleague looked at me with surprise and said something to the effect of "Brady did not choose Birkelund. Birkelund is a 'Rothschild Man'." I then said something about Dillon being owned by the Dillon partners, so what did the Rothschilds have to do with us? My colleague rolled his eyes and walked away as if I was an interloper out of my league among the moneyed classes ? clueless as to who and what was really in charge at Dillon Read and in the world.
After all, even Time Magazine had declared that the Rothschild invasion of America was underway.
If you want to understand Dillon Read in the 1980s, you must understand R.J. Reynolds (RJR), a tobacco company based in Winston-Salem, North Carolina. According to the official Dillon history, The Life and Times of Dillon Read by Robert Sobel (Truman Talley Books/Dutton, 1991) at pages 345-346, RJR had been Dillon client for many years:
> "With Dillon's assistance Reynolds expanded out of its tobacco base into a wide variety of industries ? foodstuffs, marine transportation, petroleum, packaging, liquor, and soft drinks, among others. In the process the R. J. Reynolds Tobacco Co. of 1963, which had revenues of $117 million, became the R. J. Reynolds Industries of 1983, a $14 billion behemoth."
Throughout the 1980s, RJR's huge cash flow fueled the buying and selling of companies that generated significant fees for Dillon Read's bank accounts and investor connections for our Rolodexes.
Joe Camel: Camel cigarettes were a leading RJR brand. If the European Union is to be believed, Camel cigarettes are also a valued currency serving global mafia.
In 1984 and 1985, Dillon Read helped RJR merge with Nabsico Brands, making the combined RJR Nabisco one of the world's largest food processors and consumer products corporations. Nabisco's Ross Johnson emerged as the President of the combined entity. Johnson preferred the bankers he had used at Nabisco ? Lehman Brothers. Johnson was on the board of Shearson Lehman Hutton.
To help RJR Nabisco digest the Nabisco acquisition, Dillon and Lehman helped to sell off eleven of RJR Nabisco's businesses. In the process, numerous Lehman Brothers partners joined Dillon Read. Among them was Steve Fenster, who had been an advisor to the leadership of Chase Manhattan Bank and was on the board of American Management Systems (AMS), a company that figures in our story in the 1990s.
After tours of duty in Dillon's Corporate Finance and Energy Groups, I spent four years recapitalizing the New York City subway and bus systems on the way to becoming a managing director and member of the board of directors in 1986. I did not work on the RJR account. Odd bits of news would float back. They were always about the huge cash flows generated by the tobacco business and the necessity of finding ways to reinvest the gushing profits of this financial powerhouse.
One of the young associates working for me teamed up with another young associate who worked on the RJR account to buy a sailboat in Europe. The second associate arranged to have the sailboat shipped to the U.S. through Sea-Land, an RJR subsidiary that provided container-shipping services globally. I was told RJR tore up the shipping bill as a courtesy. What kind of cash flows did a company have that could just tear up the shipping bill for an entire boat as a courtesy to a junior Dillon Read associate?
I was to get a better sense of these cash flows many years later when I read the European Union's explanation. The European Union has a pending lawsuit against RJR Nabisco on behalf of eleven sovereign nations of Europe who in combination have the formidable array of military and intelligence resources to collect and organize the evidence for such a lawsuit. The lawsuit alleges that RJR Nabisco was engaged in multiple long lived criminal conspiracies.
Excerpt From European Lawsuit Against RJR Nabisco
If you like spy novels, you will find that the European Union's presentation of fact to be far more fascinating than fiction. One of the complaints filed in the case describes a rich RJR history of business with Latin American drug cartels, Italian and Russian mafia, and Saddam Hussein's family to name a few. The Introduction reads as follows:
1. For more than a decade, the DEFENDANTS (hereinafter also referred to as the "RJR DEFENDANTS" or "RJR") have directed, managed, and controlled money-laundering operations that extended within and/or directly damaged the Plaintiffs. The RJR DEFENDANTS have engaged in and facilitated organized crime by laundering the proceeds of narcotics trafficking and other crimes. As financial institutions worldwide have largely shunned the banking business of organized crime, narcotics traffickers and others, eager to conceal their crimes and use the fruits of their crimes, have turned away from traditional banks and relied upon companies, in particular the DEFENDANTS herein, to launder the proceeds of unlawful activity.
2. The DEFENDANTS knowingly sell their products to organized crime, arrange for secret payments from organized crime, and launder such proceeds in the United States or offshore venues known for bank secrecy. DEFENDANTS have laundered the illegal proceeds of members of Italian, Russian, and Colombian organized crime through financial institutions in New York City, including The Bank of New York, Citibank N.A., and Chase Manhattan Bank. DEFENDANTS have even chosen to do business in Iraq, in violation of U.S. sanctions, in transactions that financed both the Iraqi regime and terrorist groups.
3. The RJR DEFENDANTS have, at the highest corporate level, determined that it will be a part of their operating business plan to sell cigarettes to and through criminal organizations and to accept criminal proceeds in payment for cigarettes by secret and surreptitious means, which under United States law constitutes money laundering. The officers and directors of the RJR DEFENDANTS facilitated this overarching money-laundering scheme by restructuring the corporate structure of the RJR DEFENDANTS, for example, by establishing subsidiaries in locations known for bank secrecy such as Switzerland to direct and implement their money-laundering schemes and to avoid detection by U.S. and European law enforcement.
This overarching scheme to establish a corporate structure and business plan to sell cigarettes to criminals and to launder criminal proceeds was implemented through many subsidiary schemes across THE EUROPEAN COMMUNITY. Examples of these subsidiary schemes are described in this Complaint and include: (a.) Laundering criminal proceeds received from the Alfred Bossert money-laundering organization; (b.) Money laundering for Italian organized crime; (c.) Money laundering for Russian organized crime through The Bank of New York; (d.) The Walt money-laundering conspiracy; (e.) Money laundering through cut outs in Ireland and Belgium; (f.) Laundering of the proceeds of narcotics sales throughout THE EUROPEAN COMMUNITY by way of cigarette sales to criminals in Spain; (g.) Laundering criminal proceeds in the United Kingdom; (h.) Laundering criminal proceeds through cigarette sales via Cyprus; and (i.) Illegal cigarette sales into Iraq.
The European Union goes on to explain the role of cigarettes in laundering illicit monies:
V. THE LINK BETWEEN RJR'S CIGARETTE SALES, MONEY LAUNDERING, AND ORGANIZED CRIME
Money-Laundering Links Between Europe, The United States, Russia, and Colombia
20. Cigarette sales, money laundering, and organized crime are linked and interact on a global basis. According to Jimmy Gurule, Undersecretary for Treasury Enforcement: "Money laundering takes place on a global scale and the Black Market Peso Exchange System, though based in the Western Hemisphere, affects business around the world. U.S. law enforcement has detected BMPE-related transactions occurring throughout the United States, Europe, and Asia."
21. The primary source of cocaine within THE EUROPEAN COMMUNITY is Colombia. Large volumes of cocaine are transported from Colombia into THE EUROPEAN COMMUNITY and then sold illegally within THE EUROPEAN COMMUNITY and the MEMBER STATES. The proceeds of these illegal sales must be laundered in order to be useable by narcotics traffickers. Throughout the 1990s and continuing to the present day, a primary means by which these cocaine proceeds are laundered is through the purchase and sale of cigarettes, including those manufactured by the RJR DEFENDANTS. Cocaine sales in THE EUROPEAN COMMUNITY are facilitated through money-laundering operations in Colombia, Panama, Switzerland, and elsewhere which utilize RJR cigarettes as the money-laundering vehicle.
22. In a similar way, the primary source of heroin within THE EUROPEAN COMMUNITY is the Middle East and, in particular, Afghanistan, with the majority of said heroin being sold by Russian organized crime, Middle Eastern criminal organizations, and terrorist groups based in the Middle East. Heroin sales in THE EUROPEAN COMMUNITY and the MEMBER STATES are facilitated and expedited by the purchase and sale of the DEFENDANTS' cigarettes in money-laundering operations that begin in THE EUROPEAN COMMUNITY and the MEMBER STATES, Eastern Europe, and/or Russia, but which ultimately result in the proceeds of those money-laundering activities being deposited into the coffers of the RJR DEFENDANTS in the United States.
Background on the Convergence of Narcotics Trafficking and Money Laundering
23. This complaint is about Trade and Commerce or, more correctly, illegal Trade and illegal Commerce, and how money laundering facilitates the financing and movement of goods internationally. Merchants engaging in global trade often turn to the more stable global currencies for payments of goods and services purchased abroad. In many markets, the United States dollar is the currency of choice and, in some cases, the United States dollar is the only accepted form of payment. Merchants seeking dollars usually obtain them in a variety of ways, including the following three methods. Traditional merchants go to a local financial institution that can underwrite credit. Private financing is usually available for those with collateral. A third and least desirable source of dollar financing can be found in the "black markets" of the world. Black Markets are the underground or parallel financial economies that exist in every country. Criminals and their organizations control these underground economies, which generally operate through "money brokers." These "money brokers" often fulfill a variety of roles not the least of which is an important intermediate step in the laundering process, one that we will refer to throughout this complaint as the "cut out.
24. The criminal activity that provides the dollars for these black market money laundering operations is often drug trafficking and related violent crimes. South America is the world leader in the production of cocaine, and the United States and the European Union are the world"s largest cocaine markets. Likewise, Colombia and countries in the Middle East produce heroin. Cocaine and heroin are smuggled to the United States and Europe, and are sold for United States dollars as well as in local European currencies (and now the Euro). Russian drug smugglers obtain heroin from the Middle East and cocaine from South America, and sell both drugs in large quantities in the United States and in Europe. Retail street sales of cocaine and heroin have risen dramatically over the past two decades throughout the United States and Europe. Consequently, drug traffickers routinely accumulate vast amounts of illegally obtained cash in the form of United States dollars in the United States and Euros in Europe. The U.S. Customs Service estimates that illegal drug sales in the United States alone generate an estimated fifty-seven billion dollars in annual revenues, most of it in cash.
25. A drug trafficker must be able to access his profits, to pay expenses for the ongoing operation, and to share in the profits; and he must be able to do this in a manner that seemingly legitimizes the origins of his wealth, so as to ward off oversight and investigation that could result in his arrest and imprisonment and the seizure of his monies. The process of achieving these goals is the money-laundering cycle.
26. 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.
Background on Black Market Money Exchanges
27. Within Europe, the United States, South America, and elsewhere, a community of illegal currency exchange brokers, known to law-enforcement officials as "money brokers," operates outside the established banking system and facilitates the exchange of narcotics sale proceeds for local cash or negotiable instruments. Many of these money brokers have developed methods to bypass the banking systems and thereby avoid the scrutiny of regulatory authorities. These money exchanges have different names depending on where they are located, but they all operate in a similar fashion.
28. A typical "money-broker" system works this way: In a sale of Colombian cocaine in THE EUROPEAN COMMUNITY, the drug cartel exports narcotics to the MEMBER STATES where they are sold for Euros. In Colombia, the cartel contacts the money broker and negotiates a contract, in which the money broker agrees to exchange pesos he controls in Colombia for Euros that the cartel controls in Europe. The money broker pays the cartel the agreed-upon sum in pesos. The cartel contacts its cell (group) in the European Union and instructs the cell to deliver the agreed-upon amount of Euros to the money broker"s European agent. The money broker must now launder the Euros he has accumulated in the European Union. He may also need to convert the Euros into U.S. dollars because his customers may need U.S. dollars to pay companies such as RJR for their products.
29. The money broker uses his European contacts to place the monies he purchased from the cartel into the European banking system or into a business willing to accept these proceeds (a process described in more detail below). The money broker now has a pool of narcotics-derived funds in Europe to sell to importers and others. In many instances, the narcotics trafficker who sold the drugs in THE EUROPEAN COMMUNITY is also the importer who purchased the cigarettes. Importers buy these monies from the money brokers at a substantial discount off the "official" exchange rates and use these monies to pay for shipments of items (such as cigarettes), which the importers have ordered from United States companies and/or their authorized European representatives, or "cut outs." The money broker uses his European contacts to send the monies to whomever the importer has specified. Often these customers utilize such monies to purchase the DEFENDANTS' cigarettes in bulk and, in many instances, the money brokers have been directed to pay the RJR DEFENDANTS directly for the cigarettes purchased. The money broker makes such payments using a variety of methods, including his accounts in European financial institutions. The purchased goods are shipped to their destinations. The importer takes possession of his goods. The money broker uses the funds derived from the importer to continue the laundering cycle.
30. In that fashion, the drug trafficker has converted his drug proceeds (which he could not previously use because they were in Euros) to local currency that he can use in his homeland as profit and to fund his operations; the European importer has obtained the necessary funds from the black market money broker to purchase products that he might not otherwise have been able to finance (due to lack of credit, collateral, or U.S. dollars, and/or a desire for secrecy); the company selling cigarettes to the importer has received payment on delivered product in its currency of choice regardless of the source of the funds; and the money broker has made a profit charging both the cartel and the importer for his services. This cycle continues until the criminals involved are arrested and a new cycle begins. Money laundering is a series of such events, all connected and never stopping until at least one link in the chain of events is broken.
31. Many narcotics traffickers who sell drugs in THE EUROPEAN COMMUNITY now also purchase and import cigarettes. In particular, as the trade in cigarettes becomes more profitable and carries lesser criminal penalties compared to narcotics trafficking, the "business end" of selling the cigarettes has become at least as attractive and important to the criminal as the narcotics trafficking. Finally, it makes no difference whatsoever to the money laundering system whether the goods are imported and distributed legally or illegally.
Regardless of whether he sells his cigarettes legally or illegally, the narcotics trafficker has achieved his goal in that he has been able to disguise the nature, location, true source, ownership, and/or control of his narcotics proceeds. At the same time, the cigarette manufacturer (in this case RJR) has achieved its goal because it has successfully sold its product in a highly profitable way.
Particularly endearing, the European Union alludes to one of the most important secrets of money laundering ? that the attorney-client privilege of lawyers and law firms, particularly the most prestigious Washington and Wall Street law firms, are a preferred method for the communication of corporate crimes: