Russian 'mafia' marches on paradise

A Caribbean island is being used by gangs to launch an international crime network, US officials say

Phil Davison
Tuesday 08 October 1996 23:02
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It was an influx of Russian tourists, businessmen and investors to the Caribbean island of Antigua that attracted the attention of United States law enforcement officials. When some of the Russians broke away from their groups and contacted local criminals with suspected Colombian or Sicilian mafia ties, the Americans' suspicions about the visitors were raised.

Caribbean and US anti-drugs agents now believe the visitors to the former British colony and tourist paradise were Russian organised crime envoys, setting up ties with Colombian and Italian mafias who ship cocaine, heroin and marijuana through the eastern Caribbean to North America and Europe.

The Russians' aims were twofold, the agents believe. To wrest control of drug shipments to eastern Europe and to find ways of laundering the billions of dollars of proceeds through offshore banks on Antigua and other Caribbean islands.

With anti-narcotics crackdowns in Colombia and Mexico, and tighter banking restrictions in such financial centres as Venezuela and Panama, more and more drugs are passing through the Caribbean and the drug lords are tending to simplify their operations by laundering their proceeds on the spot, where banking restrictions are often lax.

President Bill Clinton's anti-narcotics tsar, the retired general Barry McCaffrey, recently estimated that up to $50bn (pounds 35bn) in drug money was now passing through the Caribbean. That is around one-tenth of the world total.

Twenty-seven new offshore banks opened in Antigua in the last two years alone, including four Russian and one Ukrainian. The offices are listed mostly on the upper floor of the so-called Woods Estate, a sort of shopping and office mall on the edge of the capital, St John's. Some appear to consist of little more than brass plates on doors.

"It is being stated quite openly around the island that that money is being laundered," said Baldwin Spencer, leader of Antigua's opposition United Progressive Party. Prime Minister Lester Bird has declined to comment but other government sources admit privately that both the US and Britain have expressed concern over reported money laundering.

The Prime Minister's brother, Vere Bird Jnr, was barred from politics for life after helping ship 500 Israeli assault rifles through Antigua to the Medellin cartel in Colombia in 1990. But he has recently emerged as a political adviser to his brother.

Another brother, Ivor, was arrested at St John's airport - named after their father VC Bird - last year carrying 12kg of cocaine on to a flight. He got off with a $75,000 fine.

Local curiosity over the intentions of Russian visitors was heightened when a Russian submarine docked at Jolly Harbour outside St John's in 1994 and stayed more than a year, coming and going sporadically.

"There are all sorts of weird things happening in Birdland," said Tim Hector, a leading opposition politician and managing editor of the local Outlet newspaper, using his nickname for Antigua. Mr Hector said: "The crew of the sub would wander around St John's in casual clothes. It seemed to be on a private mission and there was talk that it was going to be converted as a kind of underwater cruise ship for tourists.

"Rumours were rife that it was actually picking up drugs dropped from aeroplanes but there was never any proof and one day it was gone.

"There was an influx of Russians in 1994-95, announcing grandiose plans to build hotels. One group bought a restaurant and a casino but suddenly they closed down and disappeared."

US officials say they are investigating a particular Antigua bank, the European Union Bank, chartered as an offshore subsidiary of the Russian bank Menatep by a Russian called Alexander Konanykhine. He has since been jailed in the US for defying visa restrictions. EUB is apparently still operating, advertising on the Internet as keeping "the strictest standards of banking privacy".

The plague of money-laundering

Money-laundering is the plague of the modern global banking system. Laundering of illegal drug profits is estimated to exceed $80bn (pounds 53bn) in the US alone, writes John Willcock.

The purpose of laundering is to turn soiled cash into clean cash, to remove any trace of its origins. It may seem strange that money needs to be "cleaned" in this way. Surely cash is just cash, anonymous and untraceable? But to the drug-dealer, or any criminal, cash is a problem. Honest people do not need to keep thousands of pounds of cash on them. Possession of a lot of cash therefore puts criminals in jeopardy. Any police officer can ask how they got it: From employers? The sale of a car? A gift? Where is the evidence that it was got honestly? Governments have recognised that one of the most effective ways to fight drug crime is to strike at the launderer. Thus banks in the US and elsewhere have to report any cash deposits above a certain amount (about $2,000) to the central narcotics agencies. Similar rules were recently introduced by the European Union. Criminals have reacted in several ways. Sending cash to countries with laxer laws is one solution. The Caribbean has always been a big draw,since supervision of deposits and who makes them is so lax. Another laundering method is to buy something, such as a car, and then sell, producing new, "clean" cash. But this is risky. Perhaps the most effective ploy, pioneered by US drugs barons, is to get subordinates to open small bank accounts, spreading the cash into small, unsuspicious packets. Such people are called "smurfs" because that is what they are: little people. The fight against laundering goes on, but none of the authorities pretends it is winning.

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