CAPITALISM'S ACHILLES HEEL Dirty Money and How to

134 CAPITALISM’S ACHILLES HEEL
times soon.” Meanwhile, with the help of entrenched foreign suppliers, he
and one or two of his top officers are salting away a half-million dollars a
year in a Miami bank account, and no one can lever into this tight-knit little
fraternity.
Let me repeat: I’m all for free trade. Provided it’s legal. It’s the illegal
components of trade that I oppose—the use of trade to move illicit flight
capital, to evade taxes, to stifle competition, and to defraud employees and
mislead investors. As an Indian businessman put it to me, this is “straight
theft, even if you are stealing it from your own company.” 160
Manipulation of trade takes many forms, as laid out in the Dirty-
Money User Manual. Exports and imports of goods and services are falsely
priced, referred to as mispricing in unrelated-party transactions and as abusive
transfer pricing in related-party transactions. Not only are prices subject
to manipulation, but also quantities, qualities, weights, and measurements.
And transactions can be completely faked, with money easily flowing to pay
for trade that never existed.
About 65,000 multinational corporations operate across borders.
Trade within corporations comprises some 50 to 60 percent of global
commerce. The remaining 40 to 50 percent is trade between unaffiliated
parties. And an estimated 50 percent of all global commerce passes
through tax havens and secrecy jurisdictions at some point between seller
and buyer.
Much of this global trade is falsely priced. This serves to eliminate
taxes, avoid regulations, and accumulate wealth secretly. A few examples
(Table 3.11) of items and invoiced prices into and out of the United
States, drawn from the work of Professors Simon Pak and John Zdanowicz,
will make the point. Besides the excellent work of these two gentlemen,
I also have trade data on thousands of transactions, with buyers and
sellers identified.
Recall the advice offered in the Dirty-Money User Manual: Anything
that can be priced can be mispriced. False pricing is done every day, in every
country, on a large percentage of import and export transactions. This is the
most commonly used technique for generating and transferring dirty
money—money that breaks laws in its origin, movement, or use. False pricing
is cooperation among the world’s powerful for exploitation of the world’s
weak. The fact is, for almost every illegal dollar, euro, pound, peso, ruble, or
other currency that moves out of poorer countries by this means, there is a