A sandwich table decorated for the filthy rich

 In the early 1960s, a financial revolution was initiated which, through loopholes, created today's paradise for the corrupt and the criminal. In his book "Moneyland", Oliver Bullough shows how money laundering in Estonia, trafficing in Asia, forest wreckage at Borneo and foundations in the Netherlands are parts of the same ecosystem.

 Probably, few readers of this article have heard of Siegmund Warburg. Nevertheless, he has more than most of us contributed to shaping the world during the post-war era. This and much more you can learn from reading Oliver Bullough's book "Moneyland: Why Thieves and Crooks Now Rule The World & How to Take It Back" (Profile Books). As the subtitle indicates, it is about a global shift of power, where the big winners are players of doubtful background.

 Bullough is a freelance journalist and author who has mostly reported from the former Soviet Union. "Moneyland", his third book, released in the autumn of 2018, has received brilliant reviews in English-language media. Recently the Sunday Times appointed it as the Business Book of the Year. And for those who want to understand the world beyond President Trump's twittering and what is happening with the Swedish Academy and the Nobel price, "Moneyland" is a must.

 According to the author, the idea of ​​the book was born in a toilet after the Majdan insurgency in Ukraine 2014. Exclusive television screens in comfortable seating height made him realize why things went wrong in many of the former Soviet states. The answer was unrestrained corruption. The plant was owned by a Ukrainian company owned by a British, owned by a foundation in Lichtenstein - nowhere was the president's name specified. The ownership structure is a standard template for how corrupt individuals all over the world hide illegal assets.

 Yanukovych was not so much president as he was the leader of a criminal consortium plundering the assets of the Ukrainian people as a business idea. He tumbled in vulgar luxery that seems inevitable when doubtful taste meets abnormal wealth. But Ukraine is just the first stop on a journey that takes us farther and beyond into what Bullough describes as a virtual country where national borders, laws, taxes and morals are overshadowed. A country where only the richest can aspire to citizenship. Welcome to Moneyland! - the dark backyard of globalization.

 In July 1944, the Allies negotiated a new financial system in Bretton Woods, USA. According to the architects of the system, unregulated financial markets caused the instability that preceded the takeover of Nazis and led to war. If future wars were to be avoided and the democratic order is protected, capital must be regulated and free trade encouraged, was their conclusion. The restrictions of Bretton Woods on capital movements set limits to how rational it was to steal for corrupt individuals - too much money was simply difficult to handle and spend.

 However, in the early 1960s, a financial revolution began to open the ports of Eldorado for the corrupt and criminal. At the heart of this process, was Sigmund Warburg, owner of the bank S G Warburg & Co. in the City of London (mentioned in the introduction). He was one of actors in the intergovernmental bond market during the interwar period. He saw the potential of the considerable amount of unproductive dollars, known as euro banknotes or eurodollars, on accounts outside the United States, mainly in Switzerland and City of London. The only problem was that the United States had sole right to issue bonds in dollars under the Bretton Woods agreement.

 However, Warburg employees succeeded in identifying a number of loopholes in the regulatory framework, and in 1962 the first dollar bond was issued outside the United States. These became known as eurobonds, today the world largest financial product in terms of turnover. The holding was anonymous as it was not registered and the certificate was a piece of paper that could easily be transferred from one country to another. The international capital had blown their shackles and the basic foundation for Moneyland was made. It meant a crack in Bretton Woods, which eventually undermined the US's ability to maintain the system as its guarantor. 1973 definitely put an end to it. Since then, tha banking system of various countries have competed in deregulations to attract the capital, that is increasingly ripping across the world, in pursuit of returns - usually they show very little interest in the origins of that capital.

 Bretton Woods was bypassed by the fact that the transactions in the bonds - despite being registered on the London Stock Exchange - were transferred to a legally undefined site, offshore as it was called. The Bank of England understood that a gold mine was in progress and decided to overlook the actions of the procedure. City's bankers then took on the concept and created the modern offshore industry, the best ever tool for money laundering and tax evasion. Offshore usually points to the Channel Islands, Guernsey, Jersey and Isle of Man, as well as England's ancient crown colonies, Nevis, the Cayman Islands, whose legislation was tailored to managing capital that for various reasons fled from its homelands. Moneyland had found its structure.

 Bulluogh is an initiated and educational ciceron into the gloomy world of legal loopholes that makes the planet a smorgasbord for the truly rich. In Moneyland, they can buy citizenship and diplomatic status, register their ownership where they do not get taxed and hide their assets from governments and transparency.

 Bullough describes the luxury consumption of corrupt authorities, which can not be described as anything less than pathological, not least in contrast to the situation in their home countries. Creativity knows no limits when Moneyland's financial engineers serve their clients. A piquant example is the rich Chinese who pick up eggs from their wives and allow paid surrogate mothers in Japan to become pregnant with these - all to have children who are Japanese citizens who then can act as anchors for capital and investment.

 Globalization has made capital transnational while laws remain national, according to Bullough, this asymmetry represents the engine of the global "kleptomania economy". This relationship also makes this crime almost untouchable - it may take months or years before an investigator gets an answer to a simple ownership question from another jurisdiction and then the reviewed assets have often moved elsewhere. It is no coincidence that the great revelations in recent years have been made by activists and journalists who through networks can coordinate their efforts globally.

 Moneyland, however, also offers protection against unwelcome scrutiny. An individual who gets his business inspected can make use of Britain's notoriously hard injunction laws relating to offenses, which reach far beyond the country's borders. Bullough himself has been forced to renounce publications after legal threats. But most vulnerable are the activists and journalists who find themselves closest to the source of corruption - abuse, prison and murder are common means when Moneyland protects their own.

 The illegitimate capital each year leaving Africa is estimated to amount to three times the total aid to the continent. Every year about 3 billion dollars from developing countries are embezzeled. 50 per cent of Russia's total wealth, is estimated to be located abroad. These money could have gone to healthcare, education and development. Instead, the greater part is sucked up by the financial system of the West, which therby assists the industrial robbery. Bullough's hometown of London is in many ways the capital citiy of Moneyland. There, illegitimate capital transforms into real estate in the luxury segment. There are lawyers and auditors who know everything about money and money laundering. It is from the City of London that the  major parts of the offshore systems are controlled.

 There is, however, an actor who strikes hard when irregularities in the financial world are discovered, namely the United States. At the time of the financial crisis in 2008, the US Department of Justice forced the Swiss banks to open their client registers, which ended the country's infamous banking secrecy and its leading position as a trustee of dirty capital. But the United States does not make the same demands on its own states. This means that, among other things, Nevada and South Dakota, with their purposeful (tax excempt) foundations, attract the money forced away from traditional tax havens when the United States is increasing the pressure. The US is thus well on its way to becoming the world's largest tax haven and hideout for stolen property.

 Bullough is very clear to point out that Moneyland is the result of pack behavior, driven by mutual interests, and not by any conspiracy. On the one hand, we have the individuals who systematically rob their homelands and constantly seek ways to escape, hide and spend "their" money. On the other hand, we have those who get rich by showing how to do. Together they constitute the world's most profitable interest groups and they have billions of reasons to ensure the existence of Moneyland.

 The grip of "Moneyland" as an allegory for the complex of seemingly autonomous structures that allow for corruption is brilliant. Money laundering in Estonia, trafficking in Asia, illegal logging on Borneo and foundations in the Netherlands are seen as isolated phenomena, but Bullough shows that they are parts of the same ecosystem and how Moneyland is the point of intersection of the destiny of the world today. As long as its fi nancial structures delivers, environmental crime and drug trafficking will be an extremely profitable business. As long as corruption is growing, the flow of refugees and asylum seekers will grow and terrorist organizations have a safe recruitment base of bitter young men. The institutionalized corruption erodes democracy and the rule of law throughout the world, especially as kleptocracy needs the protection of an authoritarian regime. And the capital accumulated in Moneyland is used to buy influence and affect the political development of democratic countries.

 "Moneyland explains so much," writes Bullough and refers to the concept. But it also applies to the book. Let us hope that some publisher will ensure that even Swedish readers get to know one of the most important publications of the year.

      

Gunnar Wiman Freelance writer understrecket@svd.se

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Also check:  http://axiom1b.blogspot.com/2018/12/greed-fraud-banks-accountants-attorneys.html