CAPITALISM'S ACHILLES HEEL Dirty Money and How to

two. In the midst of its civil war in the late 1960s, Nigeria did not have
enough hard currency earnings to enable us local manufacturers to get the
foreign exchange we needed to buy imports. Intermediaries would call on
me offering to purchase abroad the raw materials we needed, ship the tonnage
to our companies, and I could pay them in local funds, avoiding the
long wait for allocations of foreign exchange from the Nigerian central bank.
The problem was they wanted a 20 percent commission, which was too
steep a hike in costs for my operations, so I never used them.
Today, similar arrangements are common in South America, known as
the Black Market Peso Exchange system. A typical peso broker will have offices
in, for example, the United States and Colombia. Drug dealers in the
States need to get rid of dollars. They deliver huge sums of cash to the U.S.
end of the peso broker’s operation. The broker feeds the cash into the U.S.
financial system by carefully depositing modest sums into many U.S. bank
accounts or by paying cash for U.S. purchases.
Meanwhile, the Colombia office is receiving pesos from local businesspeople
who need to buy imported goods. Now the U.S. end has millions of
dollars and the Colombia end has millions of pesos. The Colombian businesspeople
give instructions that so many dollars are to be paid to their foreign
suppliers. The U.S. office of the peso broker pays the suppliers, who
ship the required goods to Colombia. Meanwhile, the U.S. drug dealers give
instructions that so many pesos are to be paid to their Colombian drug cartel
chieftains. The Colombia office of the peso broker is happy to oblige,
keeping about 20 percent as commission for services rendered.
Goods flow from the United States to Colombia, but no money is wire
transferred, thus avoiding bank scrutiny. Everyone ends up happy, except
the U.S. government, thoroughly frustrated that it cannot shut down this
system. The Customs service regards the Black Market Peso Exchange as an
unusually complex and sophisticated laundering mechanism. It’s neither; it’s
the same facilitation at the same level of commission that I was offered
nearly 40 years ago. And you can still use it today.
Gimmicks Galore
Playing the Game 41
There are all sorts of financial ruses you should know about, useful in moving
dirty money. Many of these serve specialized purposes, so knowledge of
such techniques can come in very handy.