CAPITALISM'S ACHILLES HEEL Dirty Money and How to

vent anything; just reach in and use the tools that are already proven to be
effective.
Pick Your Own Price
Playing the Game 25
Anything that can be priced can be mispriced. Fictitious pricing serves to
relocate money and implement tax-evasion schemes between countries. As
you read this, there are tens of thousands of transactions at docks and airports
and on trucks crossing borders and in bits and bytes flitting through
electronic circuits with mispricing built into commercial invoices, as
agreed between willing buyers and willing sellers. This is by far the most
frequently used device for transferring dirty money. Common in exports,
imports, real estate deals, purchases of services, and nearly every aspect of
international business, false pricing has moved trillions of dollars illegally
between countries.
A Venezuelan businessman calls on a U.S. machinery manufacturer to
negotiate purchase of up-to-date equipment for his factory in Caracas. After
hard bargaining, they settle on a price of $1 million. Then the buyer asks
that the commercial invoice be drawn to read $1,200,000. Why would he
want that? Because when he pays the $1,200,000, he wants the extra
$200,000 sent for deposit into his New York bank account. The machinery
manufacturer, anxious to conclude the transaction, agrees; the sale is made.
A Ukrainian dealer in icons and antiquities negotiates with a German
gallery for sale of several dozen objets d’art and they come to a price of
C= 200,000. Then she asks if she can invoice the shipment for C= 100,000.
Why would she do that? Because together they arrange that, at the same
time the invoiced amount of C= 100,000 is transferred to her Kiev bank account,
the additional C= 100,000 will be deposited into her Frankfurt bank
account. The gallery, anxious to conclude the transaction, agrees; the purchase
is made.
Mispricing in transactions between unrelated parties can and is applied
regularly to virtually anything. A heavy equipment exporter pays a 20 percent
kickback into the offshore account of the owner of a foreign construction
company on his purchases of bulldozers, backhoes, scrapers, loaders,
and dump trucks. Mercedes-Benz cars at the docks awaiting shipment have
often been invoiced at entirely different FOB prices, meaning prices “free on
board” the vessel before transportation charges are added. The price to the