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Japan closes four offices

Citibank caught money laundering again

By Deirdre Griswold

The Japanese government's Financial Services Agency has taken the unusual step of shutting down four key offices of Citibank Japan that have catered to wealthy customers.

The FSA charges Citibank with a multitude of violations of laws and regulations, including providing money to clients who were subsequently prosecuted for stock price manipulation; defrauding customers of more than 1.8 billion yen in foreign currency deposits; lending money to beef up documents to borrow public funds from a municipality; and taking customers' passwords out of the office.

"As to why Citibank made such repeated abuses, [an FSA] official said New York headquarters imposed unrealistically high targets for private banking operations in Japan. The bank tied salaries closely to sales performance, giving incentive to managers and employees to break rules if it meant large profits, he said." (Japan Times, Sept. 18)

Reuters news agency reported that regulators charged the bank with "failing to prevent suspected money laundering."

This move by Japan will undoubtedly cause shock waves in the world of high finance. It gives the public a glimpse of the venomous competition going on among imperialist financial institutions to be top dog in a world economy that is becoming increasingly unstable and polarized between rich and poor.

Citibank has been caught before courting big depositors, no matter how nefarious their operations may be. On Oct. 30, 1998, the General Accounting Office issued a report giving detailed information showing that the bank ignored the law and its own internal procedures in assisting Raul Salinas, brother of the former president of Mexico, to move between $90 million and $100 million of suspected drug money out of Mexico.

This happened in 1995 while Salinas was in jail on a murder charge. His brother, Carlos Salinas de Gortari, was the Mexican president who had gotten his country to go along with NAFTA, the U.S.-sponsored trade agreement.

Any worker who has ever tried to open a checking account will be shocked at the special treatment accorded Salinas. At a time when he was in prison on a murder charge, Citibank opened an account for him in the name of his fiancée. It accepted a double-endorsed check that wasn't even made out to her real name.

Had the check been for $100, the bank would have told her to take a hike. But the checks she used to open the account added up to $100 million. So she got special treatment--from Citibank's offices in Mexico City, New York, Zurich and London--and was able to open an offshore account in the Cayman Islands.

Money laundering, it seems, is as "Amer ican" as apple pie. In 1986, during the supposedly "tough on crime" Reagan administration, some of the biggest banks--including Bank of America, First Boston Corp., Chase Manhattan, Manu facturers Hanover Trust, Chemical, Crocker National and Irving Trust--paid civil penalties, some in the millions of dollars, because of money laundering. The New York Times of Jan. 22, 1986, reported that Bank of America, which was fined $4.75 million, had failed to report 17,000 large cash transactions.

But no criminal charges were brought against the banks or any of their officers by the Reagan government.

Then on Oct. 4, 1989, Salvatore R. Martoche, an official of the Bush administration, admitted in testimony to the Senate Subcommittee on Terrorism, Narcotics and International Operations that U.S. banks were laundering $110 billion a year.

The drug laws of the United States have made it so easy to incarcerate people for possession of small amounts of controlled substances that the rate of imprisonment here is the highest in the world and the jails are bursting. You would have to look hard to find any bankers behind walls, however.

What are banks? Why do they yield so consistently to temptation? And why are they so untouchable by the state?

The first thing to understand is that these are capitalist banks. If the workers controlled the state, banks would merely be socially-owned repositories for the money-wealth created through labor, whose use is being deferred for future projects. But when owned by the capitalist class, they are controlling institutions at the very pinnacle of the process of capitalist exploitation and accumulation of wealth.

Every day the moneyed class draws into its coffers the surplus wealth created by the working class. They plow most of it back into production in order to gather in even more next year, more the year after that, and so on.

There is a constant struggle among the capitalists to survive by growing larger and larger, thus beating out the competition. They are not born greedy. The system makes them greedy by consigning the less greedy to failure.

Karl Marx, quoting an economist of his day, wrote in "Capital" that there is nothing capitalists would not do to get a higher return on their investments than their rivals. The slave trade in the Western Hemi sphere, after all, was to feed labor to capitalist enterprises producing cotton and sugar for a growing market. If human slavery is acceptable to the capitalist--and it was until technological advances in agriculture made it counter-productive--then why not drug-money laundering?

Driving the capitalists to take ever more risks is their fear that the system stands on the edge of a precipice. When a boom period shows signs of going bust, everyone wants cash. A bank's assets dwindle as many of those who have borrowed its money go bankrupt. Credit collapses. Only cash will do.

So what's better than all those accounts funneling large amounts of cash into the bank? And so what if it comes in brown paper bags? To paraphrase the words of one Nixon administration crook, the bankers will walk over their own grandmothers to get their hands on the loot.

Reprinted from the Sept. 30, 2004, issue of Workers World newspaper

This article is copyright under a Creative Commons License.
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