The Dilemma of Dirty Money

Lawrence Malkin and Yuval Elizur

Whether protected by the stolid, self-righ- teous stone frontage on Zurich 's Bahn- hofstrasse, or secluded off the quais of the Rhone in Geneva, banks make Switzerland. This national myth began more than two centuries ago when Swiss Calvinists shel- tered the wealth of the aristocracy fleeing the wrath of the revolutionaries across the mountains in France. Today, a client enters a spacious hall filled with purposeful people humorlessly conducting the serious business of changing, storing, and guarding money, then glides past the tellers to the last win- dow and whispers the name of a bank offi- cer. An electric buzzer opens a discreet door. A private elevator rises above the busy banking hall.

Upstairs, an obsequious flunky awaits, nodding the guest into a carpeted room with a hushed atmosphere. Finally, an anon- ymous man appears with a file of numbers. No names, please. He presents papers to transfer money, buy or sell securities, de- posit or withdraw cash. Signatures are ex- changed. No piece of paper need ever leave the premises, and any French client would risk his liberty by taking home even a slip with a number on it. Crossing the Swiss border, a prosperous-looking French tax- payer is as likely to be stopped and even body-searched as a black driver on the New Jersey Turnpike.

Numbered Swiss accounts must have seemed to offer this cosseted kind of shelter to the incongruously named Col. Vladimiro Lenin Montesinos, chief of intelligence un- der President Alberto Fujimori of Peru. Dur- ing the past decade, Montesinos or his rep- resentatives forwarded some $50 million in arms commissions, bribes, and other kinds of dirty money to the Zurich offices of the Canadian Imperial Bank of Commerce and two Israeli banks, Bank Leumi and First International Bank of Israel. Until, that is, one of the three—Swiss authorities will not say which bank—raised an alarm last No- vember to Switzerland 's central money laundering office. ¹

The Zurich public prosecutor, empow- ered by a criminal complaint from Lima that had been prompted by no less than the Swiss ambassador, promptly froze the ac- counts. Even in hiding Montesinos could no longer touch his now exposed wealth. But the most surprised character in the drama was probably Fujimori himself, who had conducted a public search for Montesinos in a vain attempt to blame the corruption on him. Peruvians assumed that Montesinos could never have amassed such huge sums without the knowledge and probably the collusion of his patron. Fujimori was forced to flee across the Pacific to the land of his an- cestors, and his autocratic regime collapsed, a victory for democracy and human rights from an utterly unexpected source. Mere numbered accounts, as many have learned to their chagrin, do not provide sufficient pro- tection against serious crimes of state; secret Swiss accounts of several Serbian cronies of Slobodan Milosevic have been frozen, as well as more than a hundred linked to various schemes of the Russian kleptocracy.

Only a few years ago this would have provided little more than the raw mate- rial for the plot of an implausible political

thriller. These now are seen as textbook cases by officials trying to illuminate this dark side of financial globalization. Because of the public obloquy heaped on them for their shameless behavior in stealing Holo­ caust victims' accounts after World War II, the Swiss have been in the vanguard of deal­ ing with a problem that has far outgrown its original impetus, which was not Jewish money seeking a safe haven but drug money fleeing the law. This now is estimated at only one-third to one-half of the world's criminal finance, which has long depended on international banking and the coopera­ tion of political elites. ²

Jonathan Winer, recently deputy assis­ tant secretary of state for enforcement in the Clinton administration, prosecuted a man in a 1970s banking scam who later turned up laundering money for one of the Reagan ad­ ministration's adventures in Central Amer­ ica. In a more notorious example, the origi­ nal expertise of the terrorist Osama bin La­ dendid not lie in killing infidels. As ...