How a big US bank laundered billions from Mexico’s murderous drug gangs

As the violence spread, billions of dollars of cartel cash began to seep into the global financial system. But a special investigation by the Observer reveals how the increasingly frantic warnings of one London whistleblower were ignored

Mexico drugs

A soldier guards marijuana that is being incinerated in Tijuana, Mexico. Photograph: Guillermo Arias/AP

On 10 April 2006, a DC-9 jet landed in the port city of Ciudad del Carmen, on the Gulf of Mexico, as the sun was setting. Mexican soldiers, waiting to intercept it, found 128 cases packed with 5.7 tons of cocaine, valued at $100m. But something else – more important and far-reaching – was discovered in the paper trail behind the purchase of the plane by the Sinaloa narco-trafficking cartel.

During a 22-month investigation by agents from the US Drug Enforcement Administration, the Internal Revenue Service and others, it emerged that the cocaine smugglers had bought the plane with money they had laundered through one of the biggest banks in the United States: Wachovia, now part of the giant Wells Fargo.

The authorities uncovered billions of dollars in wire transfers, traveller’s cheques and cash shipments through Mexican exchanges into Wachovia accounts. Wachovia was put under immediate investigation for failing to maintain an effective anti-money laundering programme. Of special significance was that the period concerned began in 2004, which coincided with the first escalation of violence along the US-Mexico border that ignited the current drugs war.

Criminal proceedings were brought against Wachovia, though not against any individual, but the case never came to court. In March 2010, Wachovia settled the biggest action brought under the US bank secrecy act, through the US district court in Miami. Now that the year’s “deferred prosecution” has expired, the bank is in effect in the clear. It paid federal authorities $110m in forfeiture, for allowing transactions later proved to be connected to drug smuggling, and incurred a $50m fine for failing to monitor cash used to ship 22 tons of cocaine.

More shocking, and more important, the bank was sanctioned for failing to apply the proper anti-laundering strictures to the transfer of $378.4bn – a sum equivalent to one-third of Mexico’s gross national product – into dollar accounts from so-called casas de cambio (CDCs) in Mexico, currency exchange houses with which the bank did business.

“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” said Jeffrey Sloman, the federal prosecutor. Yet the total fine was less than 2% of the bank’s $12.3bn profit for 2009. On 24 March 2010, Wells Fargo stock traded at $30.86 – up 1% on the week of the court settlement.

The conclusion to the case was only the tip of an iceberg, demonstrating the role of the “legal” banking sector in swilling hundreds of billions of dollars – the blood money from the murderous drug trade in Mexico and other places in the world – around their global operations, now bailed out by the taxpayer.

At the height of the 2008 banking crisis, Antonio Maria Costa, then head of the United Nations office on drugs and crime, said he had evidence to suggest the proceeds from drugs and crime were “the only liquid investment capital” available to banks on the brink of collapse. “Inter-bank loans were funded by money that originated from the drugs trade,” he said. “There were signs that some banks were rescued that way.”

Wachovia was acquired by Wells Fargo during the 2008 crash, just as Wells Fargo became a beneficiary of $25bn in taxpayers’ money. Wachovia’s prosecutors were clear, however, that there was no suggestion Wells Fargo had behaved improperly; it had co-operated fully with the investigation. Mexico is the US’s third largest international trading partner and Wachovia was understandably interested in this volume of legitimate trade.

José Luis Marmolejo, who prosecuted those running one of the casas de cambio at the Mexican end, said: “Wachovia handled all the transfers. They never reported any as suspicious.”

“As early as 2004, Wachovia understood the risk,” the bank admitted in the statement of settlement with the federal government, but, “despite these warnings, Wachovia remained in the business”. There is, of course, the legitimate use of CDCs as a way into the Hispanic market. In 2005 the World Bank said that Mexico was receiving $8.1bn in remittances.

During research into the Wachovia Mexican case, the Observer obtained documents previously provided to financial regulators. It emerged that the alarm that was ignored came from, among other places, London, as a result of the diligence of one of the most important whistleblowers of our time. A man who, in a series of interviews with the Observer, adds detail to the documents, laying bare the story of how Wachovia was at the centre of one of the world’s biggest money-laundering operations.

Martin Woods, a Liverpudlian in his mid-40s, joined the London office of Wachovia Bank in February 2005 as a senior anti-money laundering officer. He had previously served with the Metropolitan police drug squad. As a detective he joined the money-laundering investigation team of the National Crime Squad, where he worked on the British end of the Bank of New York money-laundering scandal in the late 1990s.

Woods talks like a police officer – in the best sense of the word: punctilious, exact, with a roguish humour, but moral at the core. He was an ideal appointment for any bank eager to operate a diligent and effective risk management policy against the lucrative scourge of high finance: laundering, knowing or otherwise, the vast proceeds of criminality, tax-evasion, and dealing in arms and drugs.

Woods had a police officer’s eye and a police officer’s instincts – not those of a banker. And this influenced not only his methods, but his mentality. “I think that a lot of things matter more than money – and that marks you out in a culture which appears to prevail in many of the banks in the world,” he says.

Woods was set apart by his modus operandi. His speciality, he explains, was his application of a “know your client”, or KYC, policing strategy to identifying dirty money. “KYC is a fundamental approach to anti-money laundering, going after tax evasion or counter-terrorist financing. Who are your clients? Is the documentation right? Good, responsible banking involved always knowing your customer and it still does.”

When he looked at Wachovia, the first thing Woods noticed was a deficiency in KYC information. And among his first reports to his superiors at the bank’s headquarters in Charlotte, North Carolina, were observations on a shortfall in KYC at Wachovia’s operation in London, which he set about correcting, while at the same time implementing what was known as an enhanced transaction monitoring programme, gathering more information on clients whose money came through the bank’s offices in the City, in sterling or euros. By August 2006, Woods had identified a number of suspicious transactions relating to casas de cambio customers in Mexico.

Primarily, these involved deposits of traveller’s cheques in euros. They had sequential numbers and deposited larger amounts of money than any innocent travelling person would need, with inadequate or no KYC information on them and what seemed to a trained eye to be dubious signatures. “It was basic work,” he says. “They didn’t answer the obvious questions: ‘Is the transaction real, or does it look synthetic? Does the traveller’s cheque meet the protocols? Is it all there, and if not, why not?'”

Woods discussed the matter with Wachovia’s global head of anti-money laundering for correspondent banking, who believed the cheques could signify tax evasion. He then undertook what banks call a “look back” at previous transactions and saw fit to submit a series of SARs, or suspicious activity reports, to the authorities in the UK and his superiors in Charlotte, urging the blocking of named parties and large series of sequentially numbered traveller’s cheques from Mexico. He issued a number of SARs in 2006, of which 50 related to the casas de cambio in Mexico. To his amazement, the response from Wachovia’s Miami office, the centre for Latin American business, was anything but supportive – he felt it was quite the reverse.

As it turned out, however, Woods was on the right track. Wachovia’s business in Mexico was coming under closer and closer scrutiny by US federal law enforcement. Wachovia was issued with a number of subpoenas for information on its Mexican operation. Woods has subsequently been informed that Wachovia had six or seven thousand subpoenas. He says this was “An absurd number. So at what point does someone at the highest level not get the feeling that something is very, very wrong?”

In April and May 2007, Wachovia – as a result of increasing interest and pressure from the US attorney’s office – began to close its relationship with some of the casas de cambio. But rather than launch an internal investigation into Woods’s alerts over Mexico, Woods claims Wachovia hung its own money-laundering expert out to dry. The records show that during 2007 Woods “continued to submit more SARs related to the casas de cambio“.

In July 2007, all of Wachovia’s remaining 10 Mexican casa de cambio clients operating through London suddenly stopped doing so. Later in 2007, after the investigation of Wachovia was reported in the US financial media, the bank decided to end its remaining relationships with the Mexican casas de cambio globally. By this time, Woods says, he found his personal situation within the bank untenable; while the bank acted on one level to protect itself from the federal investigation into its shortcomings, on another, it rounded on the man who had been among the first to spot them.

On 16 June Woods was told by Wachovia’s head of compliance that his latest SAR need not have been filed, that he had no legal requirement to investigate an overseas case and no right of access to documents held overseas from Britain, even if they were held by Wachovia.

Woods’s life went into freefall. He went to hospital with a prolapsed disc, reported sick and was told by the bank that he not done so in the appropriate manner, as directed by the employees’ handbook. He was off work for three weeks, returning in August 2007 to find a letter from the bank’s compliance managing director, which was unrelenting in its tone and words of warning.

The letter addressed itself to what the manager called “specific examples of your failure to perform at an acceptable standard”. Woods, on the edge of a breakdown, was put on sick leave by his GP; he was later given psychiatric treatment, enrolled on a stress management course and put on medication.

Late in 2007, Woods attended a function at Scotland Yard where colleagues from the US were being entertained. There, he sought out a representative of the Drug Enforcement Administration and told him about the casas de cambio, the SARs and his employer’s reaction. The Federal Reserve and officials of the office of comptroller of currency in Washington DC then “spent a lot of time examining the SARs” that had been sent by Woods to Charlotte from London.

“They got back in touch with me a while afterwards and we began to put the pieces of the jigsaw together,” says Woods. What they found was – as Costa says – the tip of the iceberg of what was happening to drug money in the banking industry, but at least it was visible and it had a name: Wachovia.

In June 2005, the DEA, the criminal division of the Internal Revenue Service and the US attorney’s office in southern Florida began investigating wire transfers from Mexico to the US. They were traced back to correspondent bank accounts held by casas de cambio at Wachovia. The CDC accounts were supervised and managed by a business unit of Wachovia in the bank’s Miami offices.

“Through CDCs,” said the court document, “persons in Mexico can use hard currency and … wire transfer the value of that currency to US bank accounts to purchase items in the United States or other countries. The nature of the CDC business allows money launderers the opportunity to move drug dollars that are in Mexico into CDCs and ultimately into the US banking system.

“On numerous occasions,” say the court papers, “monies were deposited into a CDC by a drug-trafficking organisation. Using false identities, the CDC then wired that money through its Wachovia correspondent bank accounts for the purchase of airplanes for drug-trafficking organisations.” The court settlement of 2010 would detail that “nearly $13m went through correspondent bank accounts at Wachovia for the purchase of aircraft to be used in the illegal narcotics trade. From these aircraft, more than 20,000kg of cocaine were seized.”

All this occurred despite the fact that Wachovia’s office was in Miami, designated by the US government as a “high-intensity money laundering and related financial crime area”, and a “high-intensity drug trafficking area”. Since the drug cartel war began in 2005, Mexico had been designated a high-risk source of money laundering.

“As early as 2004,” the court settlement would read, “Wachovia understood the risk that was associated with doing business with the Mexican CDCs. Wachovia was aware of the general industry warnings. As early as July 2005, Wachovia was aware that other large US banks were exiting the CDC business based on [anti-money laundering] concerns … despite these warnings, Wachovia remained in business.”

On 16 March 2010, Douglas Edwards, senior vice-president of Wachovia Bank, put his signature to page 10 of a 25-page settlement, in which the bank admitted its role as outlined by the prosecutors. On page 11, he signed again, as senior vice-president of Wells Fargo. The documents show Wachovia providing three services to 22 CDCs in Mexico: wire transfers, a “bulk cash service” and a “pouch deposit service”, to accept “deposit items drawn on US banks, eg cheques and traveller’s cheques”, as spotted by Woods.

“For the time period of 1 May 2004 through 31 May 2007, Wachovia processed at least $$373.6bn in CDCs, $4.7bn in bulk cash” – a total of more than $378.3bn, a sum that dwarfs the budgets debated by US state and UK local authorities to provide services to citizens.

The document gives a fascinating insight into how the laundering of drug money works. It details how investigators “found readily identifiable evidence of red flags of large-scale money laundering”. There were “structured wire transfers” whereby “it was commonplace in the CDC accounts for round-number wire transfers to be made on the same day or in close succession, by the same wire senders, for the … same account”.

Over two days, 10 wire transfers by four individuals “went though Wachovia for deposit into an aircraft broker’s account. All of the transfers were in round numbers. None of the individuals of business that wired money had any connection to the aircraft or the entity that allegedly owned the aircraft. The investigation has further revealed that the identities of the individuals who sent the money were false and that the business was a shell entity. That plane was subsequently seized with approximately 2,000kg of cocaine on board.”

Many of the sequentially numbered traveller’s cheques, of the kind dealt with by Woods, contained “unusual markings” or “lacked any legible signature”. Also, “many of the CDCs that used Wachovia’s bulk cash service sent significantly more cash to Wachovia than what Wachovia had expected. More specifically, many of the CDCs exceeded their monthly activity by at least 50%.”

Recognising these “red flags”, the US attorney’s office in Miami, the IRS and the DEA began investigating Wachovia, later joined by FinCEN, one of the US Treasury’s agencies to fight money laundering, while the office of the comptroller of the currency carried out a parallel investigation. The violations they found were, says the document, “serious and systemic and allowed certain Wachovia customers to launder millions of dollars of proceeds from the sale of illegal narcotics through Wachovia accounts over an extended time period. The investigation has identified that at least $110m in drug proceeds were funnelled through the CDC accounts held at Wachovia.”

The settlement concludes by discussing Wachovia’s “considerable co-operation and remedial actions” since the prosecution was initiated, after the bank was bought by Wells Fargo. “In consideration of Wachovia’s remedial actions,” concludes the prosecutor, “the United States shall recommend to the court … that prosecution of Wachovia on the information filed … be deferred for a period of 12 months.”

But while the federal prosecution proceeded, Woods had remained out in the cold. On Christmas Eve 2008, his lawyers filed tribunal proceedings against Wachovia for bullying and detrimental treatment of a whistleblower. The case was settled in May 2009, by which time Woods felt as though he was “the most toxic person in the bank”. Wachovia agreed to pay an undisclosed amount, in return for which Woods left the bank and said he would not make public the terms of the settlement.

After years of tribulation, Woods was finally formally vindicated, though not by Wachovia: a letter arrived from John Dugan, the comptroller of the currency in Washington DC, dated 19 March 2010 – three days after the settlement in Miami. Dugan said he was “writing to personally recognise and express my appreciation for the role you played in the actions brought against Wachovia Bank for violations of the bank secrecy act … Not only did the information that you provided facilitate our investigation, but you demonstrated great personal courage and integrity by speaking up. Without the efforts of individuals like you, actions such as the one taken against Wachovia would not be possible.”

The so-called “deferred prosecution” detailed in the Miami document is a form of probation whereby if the bank abides by the law for a year, charges are dropped. So this March the bank was in the clear. The week that the deferred prosecution expired, a spokeswoman for Wells Fargo said the parent bank had no comment to make on the documentation pertaining to Woods’s case, or his allegations. She added that there was no comment on Sloman’s remarks to the court; a provision in the settlement stipulated Wachovia was not allowed to issue public statements that contradicted it.

But the settlement leaves a sour taste in many mouths – and certainly in Woods’s. The deferred prosecution is part of this “cop-out all round”, he says. “The regulatory authorities do not have to spend any more time on it, and they don’t have to push it as far as a criminal trial. They just issue criminal proceedings, and settle. The law enforcement people do what they are supposed to do, but what’s the point? All those people dealing with all that money from drug-trafficking and murder, and no one goes to jail?”

One of the foremost figures in the training of anti-money laundering officers is Robert Mazur, lead infiltrator for US law enforcement of the Colombian Medellín cartel during the epic prosecution and collapse of the BCCI banking business in 1991 (his story was made famous by his memoir, The Infiltrator, which became a movie).

Mazur, whose firm Chase and Associates works closely with law enforcement agencies and trains officers for bank anti-money laundering, cast a keen eye over the case against Wachovia, and he says now that “the only thing that will make the banks properly vigilant to what is happening is when they hear the rattle of handcuffs in the boardroom”.

Mazur said that “a lot of the law enforcement people were disappointed to see a settlement” between the administration and Wachovia. “But I know there were external circumstances that worked to Wachovia’s benefit, not least that the US banking system was on the edge of collapse.”

What concerns Mazur is that what law enforcement agencies and politicians hope to achieve against the cartels is limited, and falls short of the obvious attack the US could make in its war on drugs: go after the money. “We’re thinking way too small,” Mazur says. “I train law enforcement officers, thousands of them every year, and they say to me that if they tried to do half of what I did, they’d be arrested. But I tell them: ‘You got to think big. The headlines you will be reading in seven years’ time will be the result of the work you begin now.’ With BCCI, we had to spend two years setting it up, two years doing undercover work, and another two years getting it to trial. If they want to do something big, like go after the money, that’s how long it takes.”

But Mazur warns: “If you look at the career ladders of law enforcement, there’s no incentive to go after the big money. People move every two to three years. The DEA is focused on drug trafficking rather than money laundering. You get a quicker result that way – they want to get the traffickers and seize their assets. But this is like treating a sick plant by cutting off a few branches – it just grows new ones. Going after the big money is cutting down the plant – it’s a harder door to knock on, it’s a longer haul, and it won’t get you the short-term riches.”

The office of the comptroller of the currency is still examining whether individuals in Wachovia are criminally liable. Sources at FinCEN say that a so-called “look-back” is in process, as directed by the settlement and agreed to by Wachovia, into the $378.4bn that was not directly associated with the aircraft purchases and cocaine hauls, but neither was it subject to the proper anti-laundering checks. A FinCEN source says that $20bn already examined appears to have “suspicious origins”. But this is just the beginning.

Antonio Maria Costa, who was executive director of the UN’s office on drugs and crime from May 2002 to August 2010, charts the history of the contamination of the global banking industry by drug and criminal money since his first initiatives to try to curb it from the European commission during the 1990s. “The connection between organised crime and financial institutions started in the late 1970s, early 1980s,” he says, “when the mafia became globalised.”

Until then, criminal money had circulated largely in cash, with the authorities making the occasional, spectacular “sting” or haul. During Costa’s time as director for economics and finance at the EC in Brussels, from 1987, inroads were made against penetration of banks by criminal laundering, and “criminal money started moving back to cash, out of the financial institutions and banks. Then two things happened: the financial crisis in Russia, after the emergence of the Russian mafia, and the crises of 2003 and 2007-08.

“With these crises,” says Costa, “the banking sector was short of liquidity, the banks exposed themselves to the criminal syndicates, who had cash in hand.”

Costa questions the readiness of governments and their regulatory structures to challenge this large-scale corruption of the global economy: “Government regulators showed what they were capable of when the issue suddenly changed to laundering money for terrorism – on that, they suddenly became serious and changed their attitude.”

Hardly surprising, then, that Wachovia does not appear to be the end of the line. In August 2010, it emerged in quarterly disclosures by HSBC that the US justice department was seeking to fine it for anti-money laundering compliance problems reported to include dealings with Mexico.

“Wachovia had my résumé, they knew who I was,” says Woods. “But they did not want to know – their attitude was, ‘Why are you doing this?’ They should have been on my side, because they were compliance people, not commercial people. But really they were commercial people all along. We’re talking about hundreds of millions of dollars. This is the biggest money-laundering scandal of our time.

“These are the proceeds of murder and misery in Mexico, and of drugs sold around the world,” he says. “All the law enforcement people wanted to see this come to trial. But no one goes to jail. “What does the settlement do to fight the cartels? Nothing – it doesn’t make the job of law enforcement easier and it encourages the cartels and anyone who wants to make money by laundering their blood dollars. Where’s the risk? There is none.

“Is it in the interest of the American people to encourage both the drug cartels and the banks in this way? Is it in the interest of the Mexican people? It’s simple: if you don’t see the correlation between the money laundering by banks and the 30,000 people killed in Mexico, you’re missing the point.”

Woods feels unable to rest on his laurels. He tours the world for a consultancy he now runs, Hermes Forensic Solutions, counselling and speaking to banks on the dangers of laundering criminal money, and how to spot and stop it. “New York and London,” says Woods, “have become the world’s two biggest laundries of criminal and drug money, and offshore tax havens. Not the Cayman Islands, not the Isle of Man or Jersey. The big laundering is right through the City of London and Wall Street.

“After the Wachovia case, no one in the regulatory community has sat down with me and asked, ‘What happened?’ or ‘What can we do to avoid this happening to other banks?’ They are not interested. They are the same people who attack the whistleblowers and this is a position the [British] Financial Services Authority at least has adopted on legal advice: it has been advised that the confidentiality of banking and bankers takes primacy over the public information disclosure act. That is how the priorities work: secrecy first, public interest second.

“Meanwhile, the drug industry has two products: money and suffering. On one hand, you have massive profits and enrichment. On the other, you have massive suffering, misery and death. You cannot separate one from the other.

“What happened at Wachovia was symptomatic of the failure of the entire regulatory system to apply the kind of proper governance and adequate risk management which would have prevented not just the laundering of blood money, but the global crisis.”


Confederações fazem propostas a negociadores do FMI

publicado 16:33 20 abril ’11
Confederações fazem propostas a negociadores do FMI

A flexibilização dominou os encontros da missão da Comissão Europeia, do BCE e do FMI Mário Cruz, Lusa

Os representantes das entidades patronais de comércio, agricultura, turismo e indústria portugueses foram auscultados pelos delegados da Comissão Europeia (CE), Banco Central Europeu (BCE) e Fundo Monetário Internacional (FMI). O mercado de trabalho e a eventual alteração da legislação laboral foram temas da conversa. A confederação do comércio pediu instrumentos para financiar empresas, enquanto o turismo admite que também os privados possam cortar salários.

Confederações fazem propostas a negociadores do FMI

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Num encontro em que o salário mínimo não foi objeto de conversa, o presidente da Confederação do Comércio e Serviços de Portugal (CCP) constatou que os especialistas internacionais manifestaram maior interesse nos “aspetos financeiros, custos de contexto e alguns aspetos laborais”, sobretudo no que respeita à flexibilização.

A flexibilização do mercado de trabalho dominou, de igual modo, o encontro com os representantes dos agricultores, tendo sido considerada “uma questão menor” a atualização do salário mínimo. O subsídio do desemprego e os cortes salariais não estiveram na agenda.

Comércio quer meios para financiar empresas
A CCP propôs a criação de instrumentos para financiar as empresas, uma vez que, na sua perspetiva, muitos encerramentos “de empresas viáveis” se deveram à falta de meios financeiros. “Centrámo-nos basicamente nas medidas de apoio às empresas e focámos de uma forma muito insistente a necessidade de serem criados meios para financiar as mesmas”, afirmou João Vieira Lopes, no Ministério das Finanças.

Os patrões do comércio defendem para base negocial o acordo entre parceiros e Governo assinado em Março. Na altura, tal como agora, pretendem uma reforma no Estado que “fosse feita de forma mais organizada”. “Primeiro, ver quais são os serviços que o Estado deve prestar; segundo, evitar duplicações de serviços; terceiro, os serviços a prestar pelo Estado devem ter o número adequado de funcionários e os restantes (serviços) extinguem-se”, enumerou o presidente da CCP.

João Vieira Lopes não considera como “solução fazer cortes transversais de salários e de deduções” mas antes pretende “saber quais são as funções do Estado”.

Agricultores defendem capacidade para substituir importações
A Confederação dos Agricultores Portugueses (CAP) sublinhou a especificidade do sector mas que também precisa de legislação particular e de “alguma flexibilização”, perante uma missão mais interessada em “ouvir”.

João Machado pediu que as verbas inscritas no Orçamento do Estado para o sector agrícola (150 milhões de euros) sejam respeitadas e defendeu perante os negociadores internacionais que é essencial apostar no sector para garantir o abastecimento nacional substituindo as importações.

“Temos 3.500 milhões de euros em importações anuais, que podem ser substituídas por produção nacional; é isso que queremos que a ‘troika’ perceba”, disse João Machado, que considerou fundamental a manutenção dos fundos comunitários e do investimento nacional. João Machado defendeu “uma melhor gestão (de fundos) do Governo e do Ministério da Agricultura para os agricultores receberem a tempo e horas as comparticipações a que têm direito”.

Ainda segundo o presidente da CAP, a agricultura “pode dar um grande contributo”, através da produção em Portugal de parte do 30 por cento de importações “se os fundos forem mantidos” e o país continuar a investir.

CIP critica tolerância de ponto do Estado
A Confederação da Indústria Portuguesa (CIP) transmitiu as suas preocupações com “os constrangimentos ao desenvolvimento das atividades económicas” no sector empresarial do Estado, na legislação laboral e no acordo para o crescimento e o emprego, subscrito em concertação social a 22 de março, declarou António Saraiva.

A CIP defendeu a necessidade de “gerar crescimento económico” e reforçou o objetivo de atingir 40 por cento do PIB com exportações. “Temos de mudar hábitos, trabalhar mais, com inovação e com conhecimento”, disse.

“Temos 14 mil organismos públicos, governadores civis que são perfeitamente dispensáveis, institutos socialmente inúteis. A reforma do PRACE (Programa de Reestruturação da Administração Central do Estado) tem de ser feita e foi isso que nós dissemos”, acrescentou o presidente da CIP.

Segundo António Saraiva, os negociadores internacionais estão bem informados sobre a situação do país. “A troika não fez qualquer sugestão ou qualquer medida” e “não referiu quaisquer cortes nesta ou naquela empresa”. “A ‘troika’ não se pronunciou, está muito bem informada e coloca cirurgicamente as perguntas. Conhece muito bem a situação do Estado e da Administração Pública e o que propusemos foi menos Estado e melhor Estado”, resumiu.

Nesta perspectiva, António Saraiva envia um recado ao Estado, dizendo que nestes tempos difíceis não fica bem andar a conceder tolerâncias de ponto, como vai verificar-se amanhã, a partir da 13h.

Turismo quer “adaptação de salários” no setor privado
A Confederação do Turismo Português (CTP) defendeu, junto dos emissários internacionais, uma política empresarial de adaptação dos salários e dos horários laborais, em vez de se optar pelos despedimentos. Carlos Pinto Coelho defendeu que os privados possam, à semelhança do Estado, efetuar cortes nos salários a partir dos 1500 euros. “Porque razão numa situação económica diferente não se podem fazer adaptações”, questionou.

Na reunião que manteve com os responsáveis europeus, a conversa decorreu em torno da discussão de políticas na área do turismo que produzam resultados.

“É um setor que tem capacidade de crescimento, desde que sejam alinhadas políticas para o turismo crescer, empregar mais gente e produzir riqueza”, destacou Carlos Pinto Coelho. “Nos próximos anos, queremos aumentar em 50 por cento o número de pessoas que trabalham nesta área e produzir o dobro”, concluiu.

Inside Job: how bankers caused the financial crisis


The film Inside Job brilliantly exposes the corruption in US banking that led to the 2008 crash. We ask four bankers for their verdict on this damning indictment of their world

Peter Bradshaw reviews Inside Job

  • Phillip Inman and Patrick Kingsley
  •, Thursday 17 February 2011 21.00 GMT
  • Article history
  • An aerial view of Wall Street, the heart of the global financial meltdown. An aerial view of Wall Street, the heart of the global financial meltdown. Photograph: Cameron Davidson

    When Michael Moore made his debut feature, Roger and Me, he set about vilifying the boss of General Motors, the now deceased Roger B Smith, for destroying his home town of Flint, Michigan. Charles Ferguson’s film Inside Job attempts to blame a wider cast list for the banking crash of 2008 and explains why so little has been done to reform the financial world or bring criminal prosecutions against the main protagonists.

    1. Inside Job
    2. Production year: 2010
    3. Country: USA
    4. Cert (UK): 12A
    5. Runtime: 108 mins
    6. Directors: Charles Ferguson
    7. Cast: Matt Damon
    8. More on this film

    His villainous lineup includes bankers, politicians (many of whom were previously bankers), regulators, the credit ratings agencies and academics. When Glenn Hubbard, George Bush’s chief economic adviser and dean of Columbia Business School, is shown as a partisan advocate of deregulation, we have one of the movie’s punch-the-air moments. During the interview, Hubbard, who denies he was corrupted by his paid-for relationships with government, angrily barks: “You’ve got five minutes, mister. Give it your best shot.”

    The spotlight has largely bypassed academics in the UK. There are plenty of economists who believed the banks understood what they were doing and supported deregulation. Whether they took large slugs of cash for writing poorly researched, cheerleading reports on the economic miracle in Iceland (pre-crash), as former US central banker Frederic Mishkin is found doing, is less clear. Over here, the relationship between academia and business appears to be more arm’s length, though London Business School dean Sir Andrew Likierman sits on the Barclays board, while Howard Davies, who argued for light-touch regulation while head of the Financial Services Authority, has become director of the London School of Economics. The UK’s chief villian, however, is probably the disgraced, but largely unpunished, banker Sir Fred Goodwin, the former boss of Royal Bank of Scotland, once the fifth-largest bank in the world.

    In Inside Job, the name that keeps cropping up is Larry Summers, a friend of President Bill Clinton and more recently Barack Obama. Summers exemplifies the links between cheerleaders in academia, Wall Street, supine regulators and an ignorant Capitol Hill that Ferguson stresses were at the root of the problem. It helps that Summers looks like a mafia boss, but the difficulties in making the case against him are shown by the need to explain financial products like credit default swaps and how securitisation was used by banks to increase their borrowing.

    Still, no matter how much it is explained, the general public is not going to understand. How does one go into battle yelling slogans about credit default swaps? The bankers know ignorance is their trump card. Maybe Inside Job will make us more savvy in time for the next crash.

    Phillip Inman

    The derivatives trader

    “The film’s first half-hour was absolutely dead-on. The explanation of what happened was a chilling re-run of all the events that led up to the financial crisis. It also showed very accurately the denial by everybody inside or outside the industry that such a crisis was even occurring – even up to the last minute before Lehman’s bankruptcy.

    I have an issue with some of the elements pursued in the rest of the film. One was the vilification of individual people. Chuck Prince, the CEO of Citigroup at the time of the crisis, may have been overpaid – but I don’t think he was particularly at fault. At worst he perhaps should have known more about what was going on, but really he’s just the nice old geezer at the top who shakes people’s hands at cocktail parties. There may be people lower down who knowingly did criminal things, but that is a different matter.

    A weak point was the anti-free market and conspiratorial tone of the film. Yes, deregulation did go too far – particularly with the repeal of the Glass-Steagall Act of 1933, which might have prevented banks gambling with depositors’ money. But to imply that all deregulation in the last 20 years was a conspiracy perpetrated by an academic elite of economists in the pay of the banks is paranoid and absurd.

    An oversight by the film was to ignore how risk managers at many banks knowingly failed to voice their fears about the way their companies operated. A risk manager once told me that to raise an issue that undermined the bank’s multi-billion-dollar profits would have been to “sign his own death warrant”. This inability to challenge trading desks generating billions in phantom profits was endemic.

    Inside Job clearly catches some of the anti-banker mood, and the public is quite right to be outraged at how banks refinanced at the taxpayers’ expense are paying outsized bonuses. Staff at banks such as RBS should be retained by longer-term incentive schemes such as the one being introduced at Barclays. But, as a free marketeer, I believe banks that have not taken public money should be able to do as they please within the law.”

    Ian Hart was a Wall St derivatives trader, before becoming a head-hunter for, among other banks, Lehman Brothers. He now runs Sacred Microdistillery.

    The bank director

    “This was a well-researched film that clearly explained the complexities of the crisis and the greed of bankers. It laid the blame squarely where it belongs – at the feet of bankers, of ratings agencies, of regulators – and it interviewed a lot of heavyweight people, such as Dominique Strauss-Kahn, Eliot Spitzer, Raghuram Rajan and Glenn Hubbard.

    It will doubtless make many people – especially those who lost their jobs and savings – angry at not only what the banks did, but that many of the people responsible are still in their jobs, and that no one’s gone to prison. It beggars belief that ordinary taxpayers are facing higher taxes and spending cuts, while bankers walked away scot-free. The film shows that people who had bought a house they couldn’t afford are now living in a tent, whereas bankers have still got their jobs. Consumers enjoyed buying houses that ultimately they couldn’t afford, but mortgages were shoved down their throats without any care on the part of the bankers. In the old days, the bank would say: “We don’t think you can afford that mortgage, so we won’t lend you money.” The film showed how this kind of advice was thrown out of the window.

    Unfortunately, it’s clear that for many investment banks business continues pretty much as normal and that another crisis is only a matter of time. Sure, there’s greater scrutiny of bonuses – but many bankers think they were not responsible personally for the crisis and they’re worth every penny they’re paid. Clearly they’re not.

    I thought the film also brought out well the “capture” of regulators, politicians and academics who all became cheerleaders for the continued deregulation of finance that began under Ronald Reagan and that culminated in the great crisis. Massive re-regulation is required to ensure that finance is safely locked up in a straitjacket again.

    Of particular interest is the dubious role played by academic economists, especially those in the US. Many were paid vast, undeclared sums to produce biased reports saying CDOs and other dodgy derivatives were safe and that Iceland was fine to be gambling with 10 times its annual GDP. The corruption of top US economists and their complete lack of awareness of what they had done was truly shameful.”

    The broker

    “The film was right that banking became synonymous with living the high life, with drug-taking, and basically being above the law. This culture filtered down from the top, and needs to be stopped and questioned a lot more. In Europe, we have tried to since the crisis. Where I work, we are compliant up to our eyeballs – be it drug checks, expenses checks, or simply the monitoring of all phonecalls and emails.

    But it was too simplistic for the film to imply that we need more financial regulation. It’s not a black-and-white issue, and you can’t be that kneejerk: the UK is a service-based economy. I would love that to change, but right now, a lot of the GDP comes from people in and around finance. The City itself employs vast numbers of people – not just as bankers, but also on the periphery – and until we move away from that, and find other ways of employing these people, you can’t just shut down an industry. With very harsh regulation, that’s unfortunately what you risk. As a lot of these banks are global and flexible, they can just go overseas. HSBC’s been threatening for years to move its headquarters to Asia. For the UK, that would be a disaster. So I think the government has to tread a fine line between bringing in regulation bit by bit, and regulating all at once.

    I’m one of the few women in banking and it’s really obvious watching Inside Job that this is the case. We see the French minister of finance [Christine Lagarde], there’s a woman from the Securities and Exchange Commission – but they’re few and far between. As they say in the film, banking is such an alpha-male society and it’s very hard for women to succeed within it and yet maintain some sense of femininity. If they had more women in banking, I really think there would be more sense of community, and perhaps things such as this crisis wouldn’t happen quite so often, because you wouldn’t have this sense of being part of a boys’ club.”

    The investment banker

    “Inside Job ignored the enormous level of consumption by ordinary people that drove debt levels so high. The film suggested it was the bankers and the politicians who were driving the collapse – and fair enough, there was some mis-selling of mortgages. But it wasn’t just mortgages: it was bank debt, credit-card debt, car loans. Blame the banker for providing the credit, but the consumer must also take some of the rap. If you talk to a sole trader, they’ll tell you that when times are good, put some money away for when times are bad. But the consumers just spent and spent, and assumed the good times would go on for ever.

    Another angle missed by the film was the role of accounting firms. There is a huge amount of blame to be attributed to them. It was their responsibility to monitor the accounts of banks, and when they signed off a bank’s results, they were stating their confidence in the bank’s ability to trade solvently. The film ignored the failure of accountants to say anything. It talked about regulators and ratings agencies. But the accountancy firms are just as big as some of the larger banks and not to analyse their role in the crisis was a huge omission.

    The film was very much in the style of Michael Moore – they’d clipped and edited the interviews to twist slightly what was said in them – but it was also very watchable, succinct and very good at simplifying a chain of events. And the accusation that the worlds of academia and politics were complicit in the crisis was completely valid. There is a lot of cronyism out there, and people who criticised regulation did end up in the Obama government. There’s a gentleman’s club, and they all look after each other.”

    Interviews by Patrick Kingsley. The interviewees above wished to remain anonymous.

Dois terços da ajuda anticrise foram parar aos bancos

As ajudas aprovadas em 2009 pelo Governo para combater os efeitos da crise internacional em Portugal foram absorvidas pelos bancos e pelas empresas.

Artigo | 24 Dezembro, 2010 – 12:48

Dois terços da ajuda anticrise foram parar aos bancos

Os 2,2 mil milhões atribuídos ao BPN e os 650 milhões garantidos a outras instituições financeiras tiveram um grande peso nestas contas. Foto Rex Roof/Flickr

Segundo o parecer do Tribunal de Contas sobre a Conta Geral do Estado desse ano, divulgado esta quarta-feira, 61 por cento dos 2,2 mil milhões de euros foram para a banca, 36 por cento para as empresas e um por cento para o apoio ao emprego.

Segundo noticiou o Jornal de Negócios, entre dívida directa, contratos de “leasing” e garantias prestadas, o Estado empenhou mais de 88% do PIB do país. Os 2,2 mil milhões atribuídos ao BPN e os 650 milhões garantidos a outras instituições financeiras tiveram um grande peso nestas contas.

Contrariando a expectativa do Governo de que a crise na Europa, desencadeada em Setembro de 2008 com a falência da firma Lehman Brothers, não tocaria Portugal, a crise marcou o exercício orçamental de 2009.

No final de 2009 o défice atingiu os 9,3 por cento, enquanto que em 2008 o défice foi de 2,9 por cento do PIB. Mas, deste agravamento de 6,4 pontos percentuais, apenas 22,4 por cento se deveram à aplicação das ajudas. O maior contributo veio da quebra das receitas, em resultado de uma travagem abrupta da actividade económica.

Segundo adianta o Público, o Tribunal assinala, ainda assim, um conjunto de medidas com impacto na despesa e na receita. Foi o caso, entre outras, do aumento do funcionalismo em 2,9 por cento, a criação da taxa de 12,5 por cento em IRC para todas as empresas, a descida dos pagamentos por conta para as pequenas e médias empresas, o aumento de capital da CGD (mil milhões), incentivos às empresas (460 milhões), o empréstimo para as Estradas de Portugal (130 milhões) e o programa e-escolas (180 milhões).

O parecer assinala que, “embora as consequências da crise financeira internacional fossem já previsíveis no segundo semestre de 2008, o OE de 2009 perspectivou para este ano um crescimento económico de 0,6 por cento”, ou seja, “apenas uma ligeira desaceleração face ao valor estimado para 2008 e um desvio muito acentuado de 3,2 pontos percentuais face ao crescimento do PIB efectivamente verificado”, cita o mesmo jornal. Sublinha ainda que, das duas alterações ao OE feitas ao longo de 2009, apenas a realizada em Dezembro – após as eleições legislativas de Setembro – assumiu os valores mais reais da quebra das receitas.

Neste parecer, o TC reitera recomendações já apresentadas em pareceres anteriores, relacionadas com a falta de rigor dos números da Direcção-Geral de Orçamento.

O extenso relatório revela ainda várias situações que são sintomáticas de uma gestão menos criteriosa dos dinheiros públicos (ver caixa).

Mas a principal crítica foi para os atrasos na aplicação do Plano Oficial de Contabilidade Pública (POCP). “Em 2009, doze anos após a sua aprovação, o POCP continuou a não ser aplicado pela generalidade dos serviços integrados do Estado e por uma parte dos serviços e fundos autónomos, embora tenham continuado a ser dados alguns passos nesse sentido”, escreve-se no relatório publicado esta semana.

O presidente do Tribunal, Guilherme d”Oliveira Martins, afirmou ao presidente do Parlamento, Jaime Gama, na entrega do parecer, que, “se necessário”, o TC usará dos seus poderes legais “para contribuir para acelerar o processo de aplicação do POCP” e pressionar os serviços a aplicar aquele que é tido como um instrumento “indispensável” do controlo plurianual das despesas públicas. Ou seja, vai multar os serviços.

Na verdade, o Tribunal tem condescendido com os serviços que aleguem falta de recursos ou de pessoal, como o reconheceu Oliveira Martins em conferência de imprensa. Por outro lado, a responsabilidade última dos atrasos é da empresa pública responsável pelos serviços partilhados do Estado, a GERAP, sobre a qual o Tribunal não possui qualquer jurisdição.

“The People of Greece Are Fighting for the Whole of Europe”: Tariq Ali and Mark Weisbrot Discuss Greece’s Economic Crisis and Popular Uprising


The European Union and the International Monetary Fund have approved a nearly $1 trillion package to stop Greece’s debt crisis from spilling beyond its borders into the rest of the eurozone. Stocks surged in Europe, Asia and the United States Monday after EU leaders agreed to a $960 billion package to contain Greece’s financial troubles. Meanwhile, the austerity measures demanded by the IMF and the European Union as a condition of their loan are continuing to exact their toll. Greece’s two main unions have continued to hold protests against the reforms. In a statement, one of the unions said, “The crisis should be paid by…all those who looted public finances.” Last week nearly 100,000 people participated in a mass demonstration and a twenty-four-hour general strike against the austerity measures. [includes rush transcript]

Goldman makes rare, extensive lawsuit disclosure

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Traders are seen working by the Goldman Sachs kiosk on the floor  of the New York Stock Exchange, April 26, 2010. REUTERS/Brendan  McDermid

Traders are seen working by the Goldman Sachs kiosk on the floor of the New York Stock Exchange, April 26, 2010.

Credit: Reuters/Brendan McDermid

NEW YORK (Reuters) – Goldman Sachs Group Inc, in a rare move, disclosed information about the many lawsuits and shareholder challenges facing the bank.

Goldman, which made the disclosure in a filing with the U.S. Securities and Exchange commission, has been criticized for being too tight-lipped about its legal entanglements.

The disclosure came nearly a week after Chief Executive Lloyd Blankfein faced off with a Senate panel about the role the dominant Wall Street bank played in the subprime mortgage market meltdown.

It comes after Goldman lawyers received a subpoena to testify or give information in an insider trading case that parallels the U.S. government’s case against the Galleon hedge fund’s founder, Raj Rajaratnam, according to a court document made public on Monday.

The Goldman filing says several shareholder lawsuits have been filed against the bank, accusing it and its executives of “breach of fiduciary duty, corporate waste, abuse of control, mismanagement and unjust enrichment … and challenging the accuracy and completeness of GS Inc’s disclosure.”

Goldman, which included copies of a half dozen shareholder complaints in the filing and a shareholder letter, said the lawsuits seek declaratory relief, compensatory damages, restitution and corporate governance reforms.

The shareholder lawsuits began pouring in after the SEC accused Goldman of failing to tell investors the securities underlying a so-called synthetic collateralized debt obligation were chosen by billionaire hedge fund investor John Paulson, whose fund was betting that the CDO would lose value.

Goldman also has been criticized for not telling shareholders that it received a Wells Notice last summer from the SEC, signaling the likelihood of civil charges.

Some of the shareholder lawsuits allege Goldman’s failure to disclose the Wells Notice cost them dearly, given the 21 percent drop in the company’s shares since the filing of the SEC civil suit.


Goldman also received a subpoena to testify or provide information in a case of alleged insider trading, according to a court document made public on Monday.

The subpoena to Goldman Sachs & Co and Goldman Sachs Execution and Clearing LP on April 15, requests “all trading records and monthly account statements associated with account number UF703881” of Michael Kimelman, a former trader at Quad Capital LLC and Incremental Capital.

Kimelman is charged in a case running parallel with the one U.S. prosecutors are pursuing against Galleon hedge fund founder Raj Rajaratnam. Prosecutors described the probe as the biggest-ever U.S. hedge fund insider trading case.

Kimelman was arrested and charged last November 5 along with Zvi Goffer, a onetime Galleon employee who later started the Incremental Capital trading firm and five other traders or lawyers. They have all pleaded not guilty to an indictment and are free on bail.

The subpoena, signed by presiding Manhattan federal court Judge Richard Sullivan, was submitted by Kimelman’s lawyer. It asks representatives of the investment bank’s legal department to appear before the judge at a hearing in the case on May 14.

A spokesman for Goldman Sachs could not immediately be reached to comment. Lawyers for Kimelman could not be reached.

U.S. prosecutors have accused Rajaratnam of obtaining confidential information on Goldman, but have not formally included those in the charges, according to court documents.

Prosecutors said Rajaratnam sought information on the purchase by Warren Buffet’s Berkshire Hathaway Inc of preferred Goldman shares before the transaction became public in 2008. They also said he conspired to obtain confidential information about Goldman’s quarterly earnings before public announcements on or about June 17, 2008, and December 16, 2008.

The Sri Lankan-born Rajaratnam, a U.S. citizen, has pleaded not guilty and is free on bail.

(Reporting by Steve Eder and Grant McCool; editing by John Wallace, Maureen Bavdek, Andre Grenon and Robert MacMillan)

¿A quién le deben dinero España, Portugal, Grecia e Italia?

Por Gurus Hucky el 3 Mayo, 2010

deudas españa, grecia, portugal italia con la banca europea

Ahora que parece que ya se ha aprobado un préstamo-rescate consistente para salvar a Grecia, la friolera de 110.000 millones de euros, de los que España contribuirá con un préstamo de 9.742 millones de euros a aportar entre 2010 y 2011 (la magnitud de un par de planes E), puede ser interesante darle un vistazo a un buen infográfico donde podemos observar que bancos de países de la UE son los principales tenedores  de la deuda de los  países denominados PIIGS (Portugal, Italia, Irlanda, Grecia y España).

Atención porque el cruce de deudas es curioso:

Deuda de España, Grecia y Portugal con países UE


Grecia es un problema relativamente pequeño, su deuda asciende a 236 mil millones de dólares, y Francia es el principal acreedor seguido de Alemania y Reino Unido. España tenía una posición acreedora insignificante que gracias al préstamo rescate de casi 10 mil millones hemos multiplicado x10. Obviamente el gran beneficiario del rescate pues seguramente el Reino Unido, que no ha puesto un euro y en principio salvaguarda la deuda que Grecia tiene con ellos.

Por cierto la solución al problema Griego, sigue siendo tan poco original como seguir incrementando el nivel de endeudamiento del país a la espera que se soluciones los problemas del déficit.


Portugal es un problema de un tamaño similar al de Grecia, en cuanto a volumen de la deuda. Debe 286 mil millones de euros 2 , de los cuales o sorpresa el principal acreedor es España (o los bancos españoles) con 86 mil millones. Es decir si cayese Portugal, probablemente le  podría seguir España, no por simple efecto contagio, sino porque 86 mil millones son un buen motivo para meter algún que otro de nuestros bancos en problemas. Así que cuidado si la situación en Portugal se tensiona.


En caso que España entrara en problemas, seríamos un quebradero de cabeza, a partes iguales, para Francia y Alemania, les debemos cerca de 230 mil millones a los bancos de cada uno de ambos países. España es un problema serio para la banca francesa y alemana.


En el país transalpino, quién se la juega realmente es la banca francesa. Italia le debe a los bancos franceses más de 500 mil millones de dólares. Esto representa cerca del 20% del PIB Francés y una caída de Italia sin duda arrastraría consigo a Francia.

Quedó claro que los cerdos no podían volar….. ¿será que sabrán nadar?

Gráfico encontrado vía Twitter @oscarcavero