CAPITALISM'S ACHILLES HEEL Dirty Money and How to

designated by the U.S. State Department as a terrorist organization. The
message for terrorists was clear: Remove assets from the legitimate financial
system as fast as possible.
If demand deposits, CDs, and negotiable instruments are no longer safe,
two basic options remain—currency notes and commodities. Al Qaeda
probably put some of its resources into gems and precious metals. An absorbing
account of paying cash for conflict diamonds is offered in Blood
From Stones: The Secret Financial Network of Terror, by Douglas Farah, formerly
West African correspondent for the Washington Post. Farah details his
observations of how Al Qaeda, Hezbollah, and other terrorist groups bought
diamonds from thugs across Africa. Particularly in West Africa, Charles Taylor
in Liberia, Foday Sankoh in Sierra Leone, and others sold bags of rough
diamonds to Muslim terrorists, South African mercenaries, and U.S. profiteers,
then used the proceeds to purchase guns and munitions, delivered by
the Russian arms merchant Victor Bout, that killed an estimated 200,000 in
these two benighted countries alone. At least one diamond dealer in the
greater Washington, D.C., area participated in this scurrilous business.
The 9/11 Commission Report published in 2004 is a detailed and wellwritten
document. However, in a chapter entitled “What To Do: A Global
Strategy,” the commission erroneously concludes that “Obvious vulnerabilities
in the U.S. financial system have been corrected.” 144 That must be music
to Al Qaeda’s ears, because the truth is just the opposite. The structure that
supports the flow of dirty money—mispricing, transfer pricing, dummy corporations,
tax havens, secrecy jurisdictions, the legal deposit of many forms
of criminal proceeds, and virtually all forms of tax-evading proceeds—all of
this is intact, used every day by thugs and cheats and remains available to
terrorists. Any thought that “obvious vulnerabilities” have been corrected
fails to recognize how obvious U.S. vulnerabilities are to others. Al Qaeda is
likely to take advantage of such flawed thinking again.
Iraq
Dirty Money at Work 127
When President George W. Bush labeled Iraq part of his “axis of evil,” he neglected
to mention the many western corporations trading with the enemy
and the many respectable financial institutions handling funds for Saddam
Hussein and his clique. In Iraq we had a world-class thief who used the tried
and proven dirty-money package to expand his evil regime: false pricing,