CAPITALISM'S ACHILLES HEEL Dirty Money and How to

34 CAPITALISM’S ACHILLES HEEL
owners of the African franchise got rich in sterling. The U.S. bottler understood
full well that it was abetting a tax-evasion scheme taking profits out of
the continent, but who cares? And this process continued for years, even after
the African firm, now expanded to several bottling plants, gained local
shareholders who knew nothing about this arrangement benefiting the original
owners.
Reinvoicing can be done more than once. A shipload of wheat left the
United States valued at $7 million. The commercial invoice went through
several repricings, finally arriving in Abidjan at $70 million. While some
Ivoirians got rich, a lot of Ivoirians angrily paid high prices for bread. Honestly,
I don’t recommend tenfold markups on food items. It generates too
much emotion.
Russian exporters learned the repricing game very quickly. In the late
1980s and early 1990s, Russian exports were often sold directly to European
buyers, who paid generous kickbacks into offshore bank accounts. But the
Russians tired of these arrangements and, instead, set up hundreds of buying
entities in Europe to purchase their own exports from Russia. In this way,
commercial invoices could be drawn for underpriced amounts on sales made
to their own affiliated companies in Europe. Then those entities would reinvoice
to the final European buyers. Thus, exports of oil, gas, gold, diamonds,
aluminum, pulp, timber, and more left Russia at dirt-cheap prices, were sold
to these branch offices domiciled in Europe, and then were resold again at
world-market prices to European buyers. The profits, of course, stayed in
Europe, and in many cases not even the originally invoiced amount was ever
repatriated to Russia.
One of my favorite enterprises is a fruit exporter based in Latin America.
I would be happy to name it, but many of you might unnecessarily disturb
the equanimity of these fine fellows with excessive inquiries about their
well-practiced money-moving techniques. This group grows fruit on its extensive
plantation holdings, buys fruit from other nonassociated producers,
provides its own trucks to transport fruit to docks, delivers its fruit to distant
ports, owns numerous buying companies in overseas markets taking title to
arriving fruit for resale, purchases packaging materials abroad, brings these
back to the home country, and fabricates boxes in its manufacturing facilities.
Trade documents and financial transfers are handled by the group’s own
banks in various countries and tax havens. This circle of companies performs