Saturday 19 December 2009

Drug money saved banks in global crisis, claims UN advisor

Drug money saved banks in global crisis, claims UN advisor

Drugs and crime chief says $352bn in criminal proceeds was effectively laundered by financial institutions

Drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis, the United Nations' drugs and crime tsar has told the Observer.

Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were "the only liquid investment capital" available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.

This will raise questions about crime's influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago. "In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system's main problem and hence liquid capital became an important factor," he said.

Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said.

"Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities... There were signs that some banks were rescued that way." Costa declined to identify countries or banks that may have received any drugs money, saying that would be inappropriate because his office is supposed to address the problem, not apportion blame. But he said the money is now a part of the official system and had been effectively laundered.

"That was the moment [last year] when the system was basically paralysed because of the unwillingness of banks to lend money to one another. The progressive liquidisation to the system and the progressive improvement by some banks of their share values [has meant that] the problem [of illegal money] has become much less serious than it was," he said.

The IMF estimated that large US and European banks lost more than $1tn on toxic assets and from bad loans from January 2007 to September 2009 and more than 200 mortgage lenders went bankrupt. Many major institutions either failed, were acquired under duress, or were subject to government takeover.

Gangs are now believed to make most of their profits from the drugs trade and are estimated to be worth £352bn, the UN says. They have traditionally kept proceeds in cash or moved it offshore to hide it from the authorities. It is understood that evidence that drug money has flowed into banks came from officials in Britain, Switzerland, Italy and the US.

British bankers would want to see any evidence that Costa has to back his claims. A British Bankers' Association spokesman said: "We have not been party to any regulatory dialogue that would support a theory of this kind. There was clearly a lack of liquidity in the system and to a large degree this was filled by the intervention of central banks."


Friday 11 December 2009

European Stability Initiative reports on 'Ergenekon and the Secret History of Turkey

European Stability Initiative

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Dear friends of ESI,

Sometimes the exposure of a hidden truth changes the course of history.

A White House tape, recording the US president six days after the Watergate break-in, sealed President Nixon's fate, forcing his resignation within weeks. Aleksandr Solzhenitsyn's The Gulag Archipelago, smuggled out of the USSR and published in 1973, shocked the world by describing the vast Soviet system of prison labour. Throughout history, those in power have kept secrets hidden from the public eye. But if it leads to a culture of impunity for crimes committed by the state, secrecy becomes dangerous. A culture of impunity thrives on secrecy, and on complicit media and a passive civil society.

In Turkey, both secrecy and impunity for those defending the state against its enemies at home and abroad were long taken for granted. Attempts to cast light on the activities of groups and institutions referred to as the "deep state" (derin devlet) have invariably failed. Some have even questioned whether the deep state really exists.

Hand grenades found in Poyrazköy / Istanbul (April 2009)

Hand grenades found in Poyrazköy / Istanbul (April 2009)

Recent weeks have seen the Turkish veil of secrecy drawn aside in a spectacular manner. Two documents have emerged which describe, in detail, operations planned by members of the Turkish armed forces to terrify, frame and even assassinate innocent civilians, Christians or Muslim students, and undermine the elected government.

One document is called Operation Cage (Kafes) Action Plan. The other is the Action Plan to Combat Reaction – Current Status. Each of these documents in itself, but even more so when read together, deals a serious blow to the credibility and legitimacy of the Turkish security structures. Both have come to light as a result of the current Ergenekon court case. The case has involved Istanbul prosecutors investigating a range of alleged crimes committed by groups linked to the Turkish security structures with the apparent intent to topple the elected government.

An electronic copy of the Cage Plan was found – encrypted - on a CD seized in April 2009, when a former member of the Turkish Underwater Assault Team of the Naval Forces was arrested. A signed copy of the Reaction Plan was found during the arrest of another former military officer in June 2009. The Turkish General Staff immediately dismissed it as fake, a mere "piece of paper." The Chief of the General Staff even alleged a conspiracy against the military. Then, in October 2009, a whistleblower within the General Staff sent the original signed copy of the Reaction Plan to a Turkish prosecutor, together with a letter explaining the role of the former Deputy Chief of the General Staff in drawing up the plan. This was made public on 24 October. The Cage Plan was made public on 19 November in an article in the Taraf daily.

What makes these two documents so explosive?

The Cage Plan is remarkably specific. There is a date on it: March 2009. There is the name of the author: Ercan Kirectepe, Naval Officer, Acting Special Operations Force Command. The Plan sets out a distribution of tasks among some 35 members of the Navy, under a consultative assembly presided over by Vice Admiral Feyyaz Ogutcu. And there is a clear, concrete target:

"to increase both internal and external pressures on the AKP Government, to keep the public preoccupied and to change the agenda, particularly the Ergenekon case, by calling into question the safety of the life and property of non-Muslims."

Most chilling of all, there is a list of concrete tasks to be prepared and carried out, including these:

"(d) Operation stage:

(1) Bombs will be detonated at various quarters in the Adalar district/the Princes islands near Istanbul.

(2) Assassinations will be organized against persons known as fierce defenders of minority rights.

(3) Sound bombs will be placed in identified locations such as the vicinity of AGOS Newspaper.

(4) By placing suspicious packages at many spots and informing the police of them, the security forces will be kept preoccupied.

(5) Actions with bombs will be carried out at piers from which boat journeys to Adalar originate.

(6) Sensational operations will be executed towards the cemeteries of non-Muslims.

(7) One or several popular non-Muslim businessmen and artists will be kidnapped.

(8) In regions with a dense non-Muslim population vehicles, houses and workplaces will be set on fire at close intervals.

(9) Similar actions will also be conducted in provinces with a high population of non-Muslims, such as Istanbul and Izmir.

(10) Responsibility for sabotage, kidnapping and assassination operations will be claimed by reactionary organizations. The organisations themselves will be determined by way of coordination with the special plan cell leaders."

The full text of the Cage Plan in English translation can be found here.

The Action Plan against Reaction, signed by a colonel working directly in the Office of the General Staff, defines a similar target:

"To put an end to hesitation over this issue by revealing the hidden face of the religious reactionary elements and to eradicate public support for such networks. To minimize the impact of the erosive campaigns staged in the framework of Ergenekon and to put an end to the negative propaganda against the Turkish Armed Forces."

To achieve this, the Action Plan outlines a set of concrete measures, directed primarily against the conservative Gulen movement that supports both the AKP government and Turkey's EU aspirations:

"The theme, 'Fethullah Gulen supporters are out of control, attacking the Turkish Armed forces head on,' will be pursued and work towards getting even conservative citizens to say 'this is too much, we are all Muslims, but these supporters of Fethullah Gulen are making provocations in order to attack the Turkish Armed Forces' will be carried out."

"During the raids against the addresses of Gulen dormitories (ısık evleri) to be conducted under military law, weapons, ammunitions, plans and other material will be arranged to be found so that the Fethullah Gulen group is described as an armed terrorist organization; Pro-Fethullah Armed Terror Organisation (FATO) investigations will be conducted under military jurisdiction."

"News articles will be written that Turkish Armed Forces staff members arrested under Ergenekon investigation are innocent and that they are slandered just because they effectively fight reactionary Islam."

"The issue of moderate Islam will be particularly emphasized, with the fact that Fehtullah Gulen followers act under US guidance and aim to degrade the originality of Islam being voiced intensively."

"House raids will be carried out and it will be ensured that besides weapons and munitions, objects are found that will point to relations with groups that Fethullah Gulen supporters will be made to appear associated with (Jewishness, CIA, MOSSAD, Moon Sect, Khomeini, etc)."

"It will be ensured that information and documents that arouse Anti-Alevite feelings are found in such houses as part of house raids."

Yasemin Congar Bartholomew Ufuk Uras

Yasemin Congar

Bartholomew

Ufuk Uras

Pro-European Turkish media, above all the Taraf daily, played a decisive role in uncovering and disseminating such information. Turkey's minority representatives have also been speaking out. On 4 December the Armenian weekly AGOS ran the headline "The Cage did not Surprise us". The Armenian advisor to (CHP) Mayor of Adalar (the Princes islands near Istanbul) stated that "we experienced such incidents in Heybeliada, Kinaliada and Buyukada. We thought these were separate incidents, but when we saw the Cage plan, we understood that they were all part of a detailed plot." Greek Orthodox Patriarch Bartholomew told Zaman daily that dark forces planned to use minorities to overthrow the government, and that "it is a very satisfactory development that the Turkish police and the prosecutors have been revealing those dark plans so the responsible people are captured and tried."

Eyup Can wrote in Hurriyet (21 November) that "if even half of what is written in Taraf is accurate everybody with a conscience in this country has to go mad." Hadi Uluengin noted in the same paper on 24 November that "if this is true, then this is the most terrible conspiracy ever planned within the ranks of the Armed Forces." Independent left-wing MP Ufuk Uras stated that "those who see this and do not write about it become accomplices to that crime." ("Uras: People who ignore Cage Plan are accomplices").

The ongoing Ergenekon investigation will hopefully uncover the full genesis of these documents. Only a court of law can determine the guilt of any specific individual. But the debates surrounding documents are already changing Turkey. In July, a new law passed by the Turkish Parliament extended the power of civilian courts to try crimes committed by both former and active members of the military. And last week three retired four-star generals were for the first time interrogated by civilian prosecutors on alleged coup plots in 2003-2004.

The silent revolution in Turkish civil-military relations is in full swing.