- Substantial sums of hard currency provided to Saddam
Hussein from the sale of Iraqi oil allowed under United Nations sanctions
have been laundered through banks around the world by a Russian Mafiya
boss described in an MI5 report as "one of the world,s top criminals."
- Despite that, Israel continues to allow Semyon Yukovich
Mogilevich to travel openly on one of its passports. Even more remarkable,
the MI5 description was reinforced by an investigation by Mossad. Its
report concluded that Mogilevich is a "major criminal - but has taken
great care to commit no crime against Israel."
- His supply of arms to Iraq has come from the former Soviet
Union's vast stockpile of weapons.
- Mogilevich has made several trips to Iraq since the M15
investigation led to his being declared persona non grata after his money-laundering
activities in London and the Channel Islands were discovered.
- Two years ago his Israeli passport was renewed by its
embassy in Switzerland. It is not known if he has used it to visit Israel.
Its Foreign Ministry refuses to discuss the matter. But Israel's own tight-lipped
banking system might find itself caught up in Mogilevich's financial scams
that are now rocking the West's financial world.
- One of America's largest and oldest banks, the Bank of
New York, was caught up in a maelstrom of money-laundering orchestrated
by Mogilevich. It was in the records of the conservative and, until now,
well-regulated institution, that the first clues emerged about the secret
deal Saddam had struck with the Mafiya baron.
- The Bank of New York was the end of a 'laundering' journey
to make sure it could not be traced back to its source. Once 'clean,' the
money was used by Mogilevich as payment against the Soviet arms he had
- says one source close to the investigation - almost certainly stolen
in Russia - and shipped to Iraq through the Islamic Republics of the former
- The Saddam deal is only a small part of an unprecedented
money laundering operation.
- Banks as far apart as Germany and Australia are being
investigated to establish their position in the laundering chain Mogilevich
created. The investigators do not discount that he may have funneled some
of the cash from his deal with Saddam through Israeli banks.
- A source close to the investigation told Globe-Intel:
"We are just in the early stages, but it looks as if a lot of people
in a number of countries are going to have to answer some very awkward
questions from us. What we have here is a massive penetration of the global
financial market by Russian organized crime."
- The hapless Bank of New York suspended two employees.
Both are senior officers in the bank,s Eastern European division and are
married to Russian businessmen, one of whom is believed by investigators
to have controlled the various accounts Mogilevich ran through the bank.
- Money laundering is a legal catch-all that refers to
the criminal practice of taking ill-gotten gains and shifting them through
a chain of bank accounts around the world. Each move along the chain 'washes'
the money so that ultimately it looks like genuine profits from legal
- It was this method, investigators now believe, that Mogilevich
used to "launder" Iraq's currency. The money was intended to
buy medical supplies and other humanitarian aid for Iraq.
- Intelligence sources say that Mogilevich has the resources
available to him through his global criminal network that equals that
of a medium-sized nation.
- An FBI report on organized crime in Russia states that
"when the Soviet Union ceased to exist, many Russian generals sold
their weapons to Mogilevich who sold them to Iraq."
- Investigators in New York and London are now urgently
trying to establish how far the Iraqi deal had gone before they discovered
it. Already they have established that this year Saddam's aides met with
Mogilevich's brokers in Geneva.
- But the deal with Saddam has been described "as
a drop in the sand" compared to Mogilevich's other activities.
- He entered the Western financial world in 1988 when the
Bank of New York began to aggressively seek business in Russia. Their contact
man in the former Soviet Union was Bruce Rapport, a Swiss banker. Born
in Haifa, Israel, the 50-year-old Rapport ran an investment brokerage
out of a modest office in Geneva. He operated in, among other places,
Oman, Liberia and Haiti before setting up in New York.
- Within five years he had established himself, through
investments, as one of the Bank of New York's biggest individual stockholders,
Using that position he offered to open doors for the bank in Russia. At
some point Mogilevich saw his opportunity to use the Bank of New York
for money laundering.
- Investigators have now traded close to $5 billion that
was laundered through one account in a short period this year. They believe
that, all told, over $10 billion may have come and gone through the account.
- One member of the investigating team told Globe-Intel:
"It could end up around the $30 or even $40 billion mark. It is the
most frightening evidence of how far Russian organized crime has been
able to manipulate and infiltrate the West's financial markets."
- Like a number of Russian criminals, Mogilevich is barred
from entering the United States or Britain.
- Meantime, he continues to travel between Moscow and Budapest.
It is in the Russian capital that the first evidence of his criminal activities
came. In the 1980s, as Jews prepared to leave the Soviet Union for Israel,
he told them they would need hard currency in the West. He took their
art, jewelry and other valuables and sold them. He only handed back half
- It was the precursor to the deal he would strike with
- Gordon Thomas is a writer on intelligence for a number
of leading European newspapers (the Sunday Express, UK; El Mundo, Spain;
Welt am Sonntag, Germany). His work is also syndicated internationally
by World Wide Syndication. Any use of the above must carry a clear attribution
to both Gordon Thomas and Globe-Intel. He is a Contributing Editor to
Globe-Intel, an international newsletter devoted to intelligence matters.
- For archived Globe-Intel issues, click on www.topica.com/lists/gordonthomas/read
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