That commitment earned applause from Global Witness, Global Financial Integrity and the Tax Justice Network, which were all happy that world leaders are at least entertaining thoughts of doing something to stop money laundering and the flow of illicit money.
But each organization also criticized the G-20 for not going far enough, or for not offering steps to take next. Global Witness noted that the Financial Action Task Force (FATF) – the international group that monitors anti-money laundering laws – may have forced banks to crack down on terrorist funding, but that’s not enough to make sure the banks are clean.
There is another task, however, that the G20 must ask FATF to do: act more aggressively to ensure that countries have, and enforce, the right laws to prevent banks taking corrupt funds. In this respect the name and shame policy used by FATF in the late Nineties was very effective, although it was later killed off at the behest of the IMF and World Bank, which didn't want to offend their members.
Global Financial Integrity, a US-based group that lobbies to stop illegal money flows, said the next step to opening up the financial system is something they call automatic information exchange. Rather than Spain having a suspicion that one of its citizens has a bank account in Montenegro, for example, and Spain needing to ask Montenegro about the account, automatic exchange would mean that when a Spanish citizen opens an account in Montenegro, Montenegro would send the information to Spain, without any requests or delay. The Tax Justice Network wants to see automatic exchange, stricter reporting requirements for owners of trusts and corporate accounts, and a few other measures. (For a takedown of on-request exchanges, click here.)
Global Financial Integrity also took the recently signed US-Switzerland tax treaty to task last week, because it relies on the guidelines of the OECD rather than on automatic information exchange. Those guidelines leave investigators of tax evasion, money laundering, drug dealing, securities fraud and other crimes involving foreign bank accounts high and dry.
Critics of the OECD's model treaty complain that it requires a country seeking data on an individual to develop a fairly rigorous case before getting needed information.
"You really have to, in certain cases, make the case of tax evasion, before you get some of the most basic information back," said Tom Cardamone, a managing director at Global Financial Integrity, which advocates for greater financial transparency. "It's a catch-22."
Moscow Cop: Mafia Thrives on Corrupt Police
Moscow’s new police chief had some tough words for corrupt cops last week. In a local television interview, Vladimir Kolokoltsev said that organized crime groups will continue doing their dirty work in the Russian capital as long as corrupt police look the other way. He said there’s one solution: Fire them, and then follow up with criminal charges.
President Dmitry Medvedev approved Kolokoltsev’s appointment earlier this month. Kolokoltsev, 48, succeeds a man that Medvedev fired five months ago after a local district chief shot up part of Moscow, killing three people and wounding six.
Serbian Court Seizes Zemun Gang Property
Serbia’s highest court seized property belonging to the widows and children of two members of a notorious Serbian crime gang last week. The Supreme Court seized land on which various houses and businesses used to stand – as the properties themselves were destroyed during a March 2003 police operation aimed at finding the perpetrators of Prime Minister Zoran Djindjic’s murder. The two gang members, Dusan Spasojevic and Mile Lukovic, were killed in the operation.
A European official said that new laws like Serbia’s asset forfeiture law were a “good start” in fighting organized crime in the region. EC Vice President Jacques Barrot told an organized crime conference in Belgrade:
“Organized crime is, without a doubt, an international, world issue. Obviously, the problem is related not only to the Western Balkans, but the problem has special weight in the Balkans and could endanger stability in the region and even the region’s EU integration,” he told the conference.
Croatia Moves against Corruption and OC
Also in the neighborhood last week, Croatian Prime Minister Jadranka Kosor opened new anti-corruption and anti-organized crime departments in the capital Zagreb and three other cities. And Montenegro’s police chief rubbished Serbia’s claims that his police aren’t cooperative with the neighbors. Veselin Veljovic was alternately mildly threatening (“I’d like one of them to tell me that in person”) and dismissive (“their perception”) of Serbia’s claims that it did not have good cooperation with Montenegro’s police. Then again, this was the same cop who said a few months ago that there was no organized crime in Montenegro.
Italy: Amnesty Plan Criticized
Italian opposition leaders and the country’s largest union attacked Silvio Berlusconi’s government last week after the Senate approved an amnesty that would protect Italians who hid money abroad through accounting fraud. “This is the stuff of rascals,” said the head of Italy’s largest union.
"Shameful," centrist Senator Gianpiero D'Alia told the Senate, "With this, Mafiosi and terrorists can repatriate illegally gained capital without any control by the state."
The amnesty will allow Italians to avoid prosecution by paying a 5 percent penalty on their undeclared funds hidden outside the country.
In organized crime news, police last week seized a crocodile a suspected mob boss used for extorting protection money from his victims. Authorities found the 88-pound crocodile in the Naples home of Antonio Cristofaro while they were searching the place for weapons. CNN had the story:
The crocodile was 1.1 meters long (3.6 feet), the Italian Forest Service said, and was capable of pulling off a man's limb with one bite. It lived atop Cristofaro's condominium in Caserta, less than an hour northeast of Naples, the Forest Service said.
Meanwhile, Italian authorities say they may have found two bodies on board the “waste ship” that a mob informant said he sank in the Mediterranean in the 1990s as part of a Calabrian mafia waste-disposal racket. Prosecutors told the BBC that it was possible that some of the crew didn’t know about the plot to sink the whip, or that the mafia murdered them.
Israel: Mobster Gets Light Tap
The feather-light sentence of 11 months that a northern Israeli mob boss received for making dozens of threats from prison against prosecutors and judges has outraged police professionals in the country, reports the Jerusalem Post. (Because Nahariya mobster Michael Mor has already been in jail for nine months, he’ll be out in just two more months.)Â
Voices in the law enforcement community have responded furiously to the sentencing, while former senior officers, who are at liberty to criticize the courts openly, have warned of a severe blow to the morale of officers who engage mob leaders.
Speaking to The Jerusalem Post on Tuesday, former northern police Cmdr. (ret.) Yaakov Borovsky said embattled police officers facing underworld kingpins might now think twice before risking their safety, unless legislation was passed in the Knesset forcing courts to hand down harsh mandatory prison sentences for serious crimes.
Mor gained notoriety by terrorizing his hometown of Nahariya through violent extortion and took the war to the police by throwing grenades and planting explosives around the homes and families of officers who were investigating him. The trepidation faced by the officers, whose children were being threatened, is difficult to imagine.
In 2006, a detective and four officers at the receiving end of Mor's bomb campaign felt so abandoned by their superiors that they took the law into their own hands, planting a number of explosive devices around Mor's home and vehicle. The four officers, nicknamed the "avenging cops," were convicted in July and will soon receive prison sentences.
A mobster that walks free at the same time that vigilante police officers sit in jail is a “travesty,” said an editorial from the same paper.
Corruption News
In corruption news, former Israeli prime minister Ehud Olmert’s corruption trial began Friday, making him the first current or former Israeli PM to face such charges. He faces charges of double-billing his trips abroad and illegally accepting money from an American supporter in the years he served as mayor of Jerusalem and later as a Cabinet minister. The investigation didn’t begin until after he was elected prime minister in 2006; Olmert announced last year that he would step down because of the allegations. But he maintains his innocence, reported the Guardian:
As he walked into the Jerusalem district court today, Olmert continued to protest his innocence. "I came here as an innocent person and I believe my innocence will be proven," he said. Olmert had been the target of an "unfair" legal witch-hunt over three years, Olmert said.
