Bringing in-depth reporting of crime and corruption in high places
ELECTRONIC BLACK MARKET
Diamonds, Gold, Oil, Cigarettes - That Will Do Nicely, Sir!
has grown to become a multi billion dollar market place that straddles
the planet, and yet is still in its infancy. Recent
estimates place annual internet turnover well above the $100 billion
mark - a figure that is set to sky-rocket over the next decade.
global reach, easy access, speed and relative anonymity that is available
via the internet has, however, benefited one sector of international
business more than most. This is the electronic elite of the international
Discrete websites and hard to locate trade boards have become
home to a global community of shadowy wheeler-dealers anxious to join
the ranks of the very wealthy without a moments delay.
it is in the murky world of the electronic black bazaar that humungeous
quantities of used banknotes change hands. One
recent "Cash to Cash Exchange" - as it is known amongst these
insiders - was based on a "trial tranche of 30 million French Francs"
($6 million) being exchange for Sterling, Italian Lire or Spanish Peseta
offering party stipulated that the exchange was to take place at the
"Brinks Security House" located at St. Laurent Du Var, France.
The French Francs were offered at a 20% gross discount with 6%
of this earmarked for disbursement as "commission" to intermediaries
on both the buyers and sellers side.
does this black currency market deal in trifling amounts.
One seller located outside London, recently posted an offer to
sell 2.2 billion
Libyan Dinars (£2.8 billion) together with 5 billion Hong Kong Dollars
A subsequent phone enquiry revealed that these currencies were
no longer available, following representations made by an intermediary
acting on behalf of Middle Eastern oil companies. However,
the broker now wished to acquire as much as $2 billion worth of Kuwaiti
Dinars in order to smooth his deal with the oil companies.
In addition to this he was a strong buyer of Japanese Yen and
Italian Lire, but was in any case, always interested to do business
in any G7 currency.
The latter, due to their strength, continue to form the backbone
of these shady transactions.
scams in this shadow realm are common-place.
The principal one in the black currency market is to obtain payment
of one currency before handing over the other.
This is immediately followed by the prolonged disappearance of
the suitably enriched con-man, naturally. Besides
this there are numerous other swindles and get-rich-quick schemes primed
and ready to catch the unwary and unwise.
where there is smoke there is always fire.
One senior executive in the insurance industry recollected -
in strict confidence - an occasion where a sum of several hundred million
dollars was to be physically, and discretely, shipped from one country
This was occasioned by an impending change of government when
certain highly placed officials, seeking to protect their "interests,"
wanted an insurance policy to cover against possible loss during the
least, the vast amounts of ready cash that daily spills out from the
global drug trade - now reckoned to top one trillion dollars annually
- has to be laundered and banked.
Currency exchange is obviously one method of laundering mountains
of dirty cash.
players in this cyber-market place avoid trading banknotes and instead
focus their efforts on dealing in large quantities of cigarettes. The
bulk standard black market "fag" peddled throughout the known
smoking universe is Marlboro Red.
One Internet site specialises in offering anything from delivery
of a few Master Cases through to multiple container loads.
The price fluctuates, of course, but generally remains within
the $280-300 band.
This is for a "Master Case" that holds 500 packets
of cigarettes, and works out at 60 cents or about 38 pence a packet.
Delivery is negotiable, but typically is ex-warehouse - for example
in Amsterdam, or a similar port elsewhere in the world. There
is nothing new about tobacco smuggling and in the past fortunes have
been made on the back of it.
What is new, however, is the role the internet now plays in bringing
partners in crime together.
putting banknotes and cigarettes to the side, it is gold that continues
to mesmerise and bedazzle all those who barter in the back streets of
the electronic arcade.
Hundreds of offers and bids -often expressed as "AU"
in reference to its Latin name - are posted each year on an array of
internet trade boards.
offer posted in March this year on the international trade board hosted
by Thaipost.com (http://www.thaipost.com)
was hocking "1.8 million ounces of unprocessed gold in 12 kilo
originated from a seller in Ecuador who offered the gold at a 7% discount
to the "Second London Gold Fix" due to the impurity of the
bars and because they bore no refiners mark or "chop."
Clearly, this gold was straight out of a mine and destined for
a buyer who cared little if local tax or other laws were breached in
deal is an exception, however.
It is far more common for gold to be offered or bid on the basis
of Good London Delivery.
This specifies the bar size, minimum required purity and an acceptable
While London Delivery remains the bar of choice for many, the
preferred destination is Switzerland, and in particular, the free trade
zone located at Kloten airport.
Hidden beneath the airport runway well-guarded vaults house large
stocks of bullion for a diverse range of customers.
of the most notorious black market gold dealers in the world, the late
President Marcos of the Philippines, rented space at Kloten to store
some of his plundered gold.
By depositing the metal at the airport's free zone, he avoided
registering it with Swiss customs, thus also keeping it hidden from
prying eyes closer to home.
however, preferred to avoid keeping all his golden eggs in one basket
and therefore stashed bullion in banks vaults all over the world.
Documents given to this writer in confidence purport to identify
57 banks in 33 countries where Marcos gold was deposited.
Verifying the accuracy of such gold deposits is often fraught
with danger. .
A copy fax message dated 1994, noted that a Swiss lawyer who
had undertaken to "probe" a sensitive gold deposit once belonging
to Marcos, was now "missing, presumed dead."
for those who are not attracted to trading in banknotes, cigarettes
or plain old-fashioned gold, there are plenty of other high value commodities
to chose from.
A range of websites hawk silver, platinum, diamonds, topaz and
Oil also continues to sit high on the list. Then there is a bewildering
array of financial instruments up for grabs.
This is in addition to rare earth and scientific metals.
In fact, anything that will make a quick buck ultimately finds
its way to the info highway's numerous trade boards.
striking feature of this market is that it possesses its own unique
procedures and documentation.
Following initial contact between the buying and selling party,
fax and mobile phone numbers are exchanged to enable negotiations to
continue in private.
If these preliminary contact shows promise - meaning that access
to the offered commodity on the one hand, and the money to pay for it
on the other, can be demonstrated to everyone's satisfaction - then
negotiations move to a third phase.
This invariably involves face to face meetings, usually referred
to as "table top meetings."
And, while meetings at Brinks Security House in France are not
always the norm, London hotels are.
summer I sat sipping Champagne in the plush lounge of the Thistle hotel
My host was an eastern European gentleman flanked by his youthful
and perpetually silent "assistant." The individual bore signed
and sealed papers identifying him as an authorised intermediary for
certain high level individuals and government departments in Moscow
and elsewhere in the former Soviet Union.
was in London seeking support for a large project finance package aimed
at cleaning up chemical weapons waste from the floor of the Baltic Sea
- where it had been dumped by previous Soviet administrations.
Apart from that, however, he had on offer a dazzling array of
commodities ranging from billions of dollars worth of Russian Rouble
banknotes - available at a 20% discount - through to massive quantities
of Russian Government Treasury securities. A
huge block of gold bullion, located in a dozen western European centres
was also on offer.
In addition, I was shown deposit receipts for $50 million worth
of cut gemstones held in a Moscow bank on behalf of a corporation located
in New York.
my two meetings with the individual who I soon dubbed "the Man
from Moscow," I learned that other eastern delights were also available.
These included oil, timber, scientific metals and, of course,
ampoules of Red Mercury - just in case I knew someone who wished to
build their own suitcase sized nuclear bomb.
within a few months of these London hotel meetings, the Soviet economy
collapsed spectacularly forcing the government to suspend dealing in
Treasury notes. Was
it possible that the "Man in Moscow" was so well informed
and so closely connected to the corridors of power that he knew in advance,
what was soon going to happen?
Russian rats fleeing the sinking ship of communism had earlier
plundered a vast assortment of state owned assets following the ousting
of Mikhail Gorbachev, in 1991.
The entire process seemed destined to be repeated in 1998.
the dizzying growth of the internet as a global marketplace is set to
boost even more dubious transactions across the border-less regions
of deepest cyberspace.
This raises the question of which government department or agency
is tasked with regulating this rapidly developing arena.
The answer, it seems, is that there is no answer.
Business Age contacted the
Home Office; the Department of Trade & Industry; the Metropolitan
Police Computer Crime Unit and the National Criminal Intelligence Service
The latter includes Interpol.
Our enquiries were generally met with a blank response.
One problem for this is the multi-jurisdictional nature of the
internet which makes it difficult for any one government department
or agency to get to grips with the matter.
NCIS are the only law enforcement agency that is aware a real
This followed their recently completed "Project Trawler,"
that looked at internet crime. Despite
this, no plans are in the pipeline to monitor or combat the growth of
the electronic black market.
It seems that for once, anyway, Big Brother isn't watching.
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