Global Icons who Laundered proceeds of corruption

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According to a first of its kind report on ‘Ascertaining size of corruption in India with respect to money laundering’, an individual spent over Rs 2,000 as a cost of corruption in 2009, which is 260 per cent higher than the amount borne by a citizen ten years back. “In the past decade, money laundered out of India was at least Rs 18,86,000 crore or $419 billion. If the gross domestic product-based money laundering model is translated to quantify the corruption, then the size of corruption in the last decade is Rs 15,55,000 crore or $345 billion in India.

However, laundering the proceeds of corruption is a global phenomenon. This article identifies five global icons who laundered money obtained through corruption. These are the cases in the public domain.

Origin of Proceeds of corruption

Laundering proceeds of corruption can take a variety of forms, depending on the nature of the corrupt act. In the broader corruption context, the most prevalent forms of proceeds originate from acts like

  • Bribe-taking or kickbacks;
  • Extortion;
  • Self-dealing and conflict of interest;
  • Embezzlement from the country‘s treasury by a variety of fraudulent means.

Global Icons

Understanding the typical methods by which politically exposed persons unlawfully obtain proceeds assists in understanding how those funds could be laundered.

Joseph Estrada – Kickbacks (2007)

Joseph Estrada, then the President of the Philippines, often received cash or check payments from gambling operators in exchange for their protection from arrest or law enforcement activities. This money was simply deposited into domestic accounts in the name of a fictional person or in corporate vehicles established by Estrada‘s attorney, and then used for a variety of expenses

Pavel Lazarenko – Extortion (2006)

Pavel Lazarenko, former Prime Minister of Ukraine, regularly required entities that wished to do business in Ukraine to split equally the profits of the enterprise with him in exchange for his influence in making the business successful. These businesses would transfer a share of ownership to Lazarenko associates or family members, and money would be wired from the victim companies to offshore accounts controlled by Lazarenko.

Sani Abacha – Embezzlement (2007)

In the case involving Sani Abacha, then the President of Nigeria, Abacha directed his national security advisor to create and present false funding requests, which Abacha authorised. Cash ―in truckloads‖ was taken out of the central bank to settle some of these requests. The national security advisor then laundered the proceeds through domestic banks or Nigerian and foreign businessmen to offshore accounts held by family members.

Augusto Pinochet – Self dealing

Augusto Pinochet, the former President of Chile. Pinochet was assisted by his US-based bank (and its U.K. branch) in setting up corporate vehicles in order to both hide his assets and shield them from the reach of asset freezing and confiscation or civil recovery orders. Specifically, Pinochet was able to set up offshore shell corporations and a trust in 1996 and 1998, even after a Spanish magistrate had filed a detailed indictment against Pinochet for crimes against humanity and issued world-wide freezing orders. These corporations, established in jurisdictions that at the time had weak AML controls, were listed as the nominal owners of the US bank accounts and other investment vehicles that benefited Pinochet and his family. The bank‘s KYC documentation listed only the corporations, not Pinochet, as the owners of the accounts, despite the fact that the bank knew that Pinochet was the beneficial owner (since the bank itself had set up the corporations). The bank has since been convicted of AML-related criminal charges.

Randall Cunningham – Kickbacks (2006)

in the case of the bribery of US Congressman Randall Cunningham, who was a senior legislator with significant control over military expenditures, a military contractor bribed him both by checks to a corporation controlled by Cunningham, but also by agreeing to purchase real estate owned by Cunningham at a vastly inflated price

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