By 2000, according to Backes, Clearstream managed about 15,000 accounts (of which half were non-published) for 2,500 clients in 105 countries; most of the investment companies, banks and their subsidiaries are from Western Europe and the United States. Most of the new non-published accounts were in offshore tax havens. The banks with the most non-published accounts are Banque Internationale de Luxembourg (309), Citibank (271) and Barclays (200).
Backes found numerous discrepancies in the lists he obtained of the secret accounts. For example, code No. 70287 on the published list belongs to Citibank NA-Colombia AC in Nassau, and code No. 70292 is that of the Banco Internacional de Colombia Nassau Ltd. But on the non-published list, the numbers both belong to Banco Internacional de Colombia in Bogota. There’s no mention of Citibank. Based on the published list, members may think they are dealing with two banks in the Bahamas, one of which is a subsidiary of Citibank, but anything sent to these establishments goes directly to the country of cocaine cartels. On the April 2000 Clearstream list, there are 37 Colombian accounts, of which only three are published. (Richard Howe, spokesman for Citicorp in New York, declined repeated requests for comment. Cope declined to talk about any individual customers or accounts, citing Luxembourg banking secrecy laws.)
Clearstream’s dealings with Russian banks are another area of concern. Menatep Bank, which had been bought in a rigged auction of Soviet assets and has been linked to numerous international scams, opened its Cedel account (No. 81738) on May 15, 1997, after Lussi visited the bank’s president in Moscow and invited him to use the system. It was a non-published account that didn’t correspond to any published account, a breach of Clearstream’s rules. Menatep further violated the rules because many transfers were of cash, not for settlement of securities. “For the three months in 1997 for which I hold microfiches,” Backes says, “only cash transfers were channeled through the Menatep account.”
“There were a lot of transfers between Menatep and the Bank of New York,” Backes adds. Natasha Gurfinkel Kagalovsky, a former Bank of New York official and the wife of a Menatep vice president, stands accused of helping launder at least $7 billion from Russia. U.S. investigators have attempted to find out if some of the laundered money originated with Menatep, which they believed had looted Russian assets. (The Justice Department declined to comment on the investigation.)
Even though Menatep officially failed in 1998, it oddly remained on the non-published list of accounts for 2000. (Clearstream also lists 36 other Russian accounts, more non-published than published.) Kathleen Hawk, a U.S. spokeswoman for Clearstream, says that was “a mistake.” But Cope contradicts her: “Closed accounts remain on our files and systems even though they’re non-active because we don’t reuse numbers. We keep the records for many years so there is no future confusion from reused numbers.”
But Backes explains that there’s no systematic rule about delisting canceled accounts. He found that “some that didn’t exist any longer were on the list. Others were delisted when they didn’t exist. And still other accounts were delisted, when we knew they existed, though the numbers no longer appeared.”
Régis Hempel, a computer programmer who worked for Clearstream, says some dormant accounts were activated for special transactions. “Such an account can be opened in the morning, used for a transaction, and closed to appear as delisted in the evening,” Backes explains. “Only the guy who gave the order to open it in the morning knows about the transaction. An investigator or auditor would not look at such an account because it doesn’t appear on the accounts list.”
Hempel also claims that Clearstream erased the records of some transfers. In testimony before the French National Assembly’s financial crimes committee last year, he explained that a computer system had been developed to wipe out the traces of transactions in non-published accounts. When a bank wanted to carry out such a transaction, Hempel testified, it simply contacted a Cedel staff person. “We made a ‘hard coding’ in the program and corrected the instruction that was going to come,” he explained. “[An instruction could be] a purchase, a sale, a movement of funds or a security. We made it disappear, or we put it on another account. Then, when all was finished, we put back the old program and removed the exception. It was not seen or known.”
He said such requests came every two or three days.
Hempel volunteered to help Luxembourg prosecutor Carlos Zeyen investigate Clearstream. But Hempel says local authorities seem more interested in blocking an investigation than in exercising oversight. Zeyen responded that the inquiry into Hempel’s charges hadn’t produced any evidence and dismissed claims that Hempel had been prevented from seeing relevant files as “rubbish.” In a July 2001 public statement, Zeyen said the investigation would continue.
Luxembourg sources say Zeyen was looking into how Menatep used the system and also into improper ways André Lussi might have gained personally. In January, a French judge took depositions about Menatep corruption. According to Luxembourg journalist Marc Gerges, writing in the local newspaper Land, the FBI and the German BKA are also interested in what might be revealed about the role of Menatep in the diversion of IMF funds. Gerges says investigators are also looking to implicate Lussi in suspected financial swindles conducted through holding companies and trusts in the offshore financial havens of Guernsey or Jersey. (Lussi could not be located; his attorney did not respond to phone and e-mail requests for comment.)
The publication of Révélation$ brought forward others with stories about how Cedel/Clearstream had facilitated corruption. Joël Bûcher, former deputy general director of the Taiwan branch of the bank Société Générale, wrote Zeyen volunteering to testify that SG used the clearinghouse to hide bribes and to launder money. In his deposition for Zeyen — which is cited in Denis Robert’s new book on the Clearstream saga, The Black Box—Bûcher said he had worked for the bank for 20 years, but quit in 1995 out of disgust at its rampant money-laundering. He said much of that occurred though a Luxembourg affiliate working through non-published accounts at Cedel. “Cedel didn’t ask any questions about the origin of funds that would have appeared suspect to any beginner,” he told Robert. “[As a result] we directed our clientele with funds of doubtful origin to Luxembourg.”
In the early ’90s, Bûcher contends, Cedel was used to launder $350 million in illegal “commissions” on a contract for the sale by Thomson-CSF, a French government arms company, of six French frigates to Taiwan. He said that the money, handled by an SG subsidiary, was paid as a registered securities transfer to a “nominee” — a stand-in for the real beneficiary — and that Thomson (now known as Thales) didn’t appear in the transaction except in the Cedel archives.
The kickbacks were exposed after the 1993 murder of a naval captain named Yin Ching-feng, who had written a critical report on the purchase and its inflated $2.8 billion price. Bûcher told Taipei authorities that a third of the kickbacks went to Taiwanese generals and politicians, while the rest was pocketed by French officials. Taiwan courts sentenced 13 military officers and 15 arms dealers to between eight months and life in prison for bribery and leaking military secrets.
In March, Bûcher will testify before a French court examining French complicity. “SG is very much implicated,” he told In These Times. “Taipei police searches found many records of transfers of commissions” relating to the frigates and also to the sale of French Mirage fighter planes. In New York, SG spokesman Jim Galvin denies that the bank had any involvement in the arms deal.
There has been no legal action by the Luxembourg prosecutor based on any of his investigations. However, Clearstream Banking, Lussi and others have filed 10 lawsuits for libel in Luxembourg, France, Belgium and Switzerland against Backes, Robert and their publisher, Les Arenes. The first case, Clearstream v. Backes went to court in March in Luxembourg. Another case began its first hearings in Paris a few days later. With no sense of irony, the liquidator of Russia’s notorious Menatep Bank is also suing the authors and publishers for damage to its reputation. (Mikhail Khodorkovsky, the Russian oligarch who controlled Menatep, did not respond to a request for comment.)
Backes’ knowledge and records make him a valuable investigative partner, and he cooperates with numerous authorities, though he prefers not to say in which countries. But his agenda is larger than that. Backes is lobbying for oversight by an international public body. Unlike banks, Clearstream has no effective outside surveillance. It is audited by KPMG, one of the “big five” international accounting firms, which either has been ignorant of or has overlooked the non-published accounts system. KPMG announced last year it found “no evidence” to support the allegations made in Révélation$, though its report was not made public.
Local officials’ attempts to defend financial secrecy are not surprising. Luxembourg’s multi-billion-dollar financial sector brings in 35 percent of GNP and gives the inhabitants a per capita income of more than $44,000, the highest in the world. (Next on the list are Liechtenstein, Switzerland and Bermuda, all money-laundering centers, with the United States fifth.) For years, local officials have refused to provide bank information to other countries.
But Luxembourg authorities have turned their sights on Backes. Using a March 2001 judicial order based on a complaint made by Lussi before he was fired, police raided Backes’ house on September 19 in search of records. He says they seized unimportant documents and diskettes; he keeps the microfiches outside the country as “life insurance.” “The raid was organized to impress [others] not to repeat what this dangerous guy Ernest Backes has done,” he says. “Those who know me well know I am not at all impressed by such a raid.”
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