Sam Smith, 2009 -Based on media coverage at least, name the largest industry in America that never contributes to political campaigns, never tries to influence politicians, never is involved in political corruption and has no lobbyists in Washington? In other words, name the cleanest business in America - that is, if you believe the media
The answer: the illegal drug trade.
For example, the Review has been among the lonely voices raising the possibility that drug and mob money may have played a much larger role in the current fiscal crash than has been noted.
It is clear the media doesn't want to touch this matter. But they've had a setback with the testimony of financial investigator and Madoff whistleblower Harry Markopolos. Talking Points Memo notes: "Markopolos elaborated while being questioned by lawmakers, alleging Madoff 'had a lot of dirty money' from the Russian mafia and Latin American drug cartels."
In the end, Markopolos realized he had done the mobs a favor. Here's part of a Q&A with Rep. Gary Ackerman:
ACKERMAN: I'm talking about, when you talk about the Russian mob and organized crime, these are people who invested through European investors or European feeder funds?And the Independent in Britain reports that "Amid persistent rumors that Russian mob money found its way into the Madoff Ponzi scheme, a panic button has been installed in the [Madoff] apartment, along with 24-hour surveillance, as much to protect him as to check he is not planning to flee. He wears a bullet-proof vest for trips to court."
MARKOPOLOS: Correct. And I didn't fear of them, and I didn't think they were going to come after me, I want to make this perfectly clear to all those Russian mobsters and Latin American drug cartels out there. . .
ACKERMAN: You're talking directly to them.
MARKOPOLOS: I was acting on your behalf trying to stop him from zeroing out your accounts. I'm the good guy here. Just like to make that clear.
It seems obvious that the parallel rise of the illegal drug trade and the use of hedge funds and other devices to hide the origin and movement of money deserves, at the very least, deep looking into. There seems a reasonable possibility that our current crisis was driven in some part by a need to launder large sums belonging to criminal groups.
Why is the media so reluctant to consider this? Partly because it sounds too movie-like. But, as we have recently learned, Bernie Madoffs actually exist outside of Hollywood.
Part is because the media traditionally takes its cue on covering crime from law enforcement, which may itself - as with other government bodies - be involved, incompetent or indifferent.
Finally we have the little noted problem that in a hyper-corporatized media, a good scoop can ruin a career as fast as it can make one if the wrong people in power are angered by it.
I have been alternately frustrated and fascinated by the money laundering story and the refusal of major media for the most part to even mention it. To the media, the drug trade is largely the result of minorities and undisciplined young white dudes. It makes the story so much easier.
Then I discussed the role of drugs and money laudering in Arkansas
as the Clintons were rising in power:
as the Clintons were rising in power:
As one examined the [Arkansas drug] story, it was clear even back then that there were major ties to other major scandals such as BCCI and the savings & loan crisis, forerunners of current mass fiscal manipulation gone awry. The state of Arkansas was laundering money in Grand Cayman, which had a population of 18,000, 570 commercial banks, one bank regulator and a bank secrecy law. Foreign investors helped to set up a bank in a small town near the major drug center at Mena. One secretary told told an IRS investigator that she was ordered to obtain numerous cashier's checks, each in an amount just under $10,000, at various banks in Mena and surrounding communities, to avoid filing the federal currency transaction reports required for all bank transactions that exceed that limit. Bank tellers testified before a federal grand jury that in November 1982, a Mena airport employee carried a suitcase containing more than $70,000 into a bank. "The bank officer went down the teller lines handing out the stacks of $1,000 bills and got the cashier's checks."
Yet, with a few exceptions like Roger Morris, Sally Denton and Ambrose Evans-Pritchard, reporters haven't wanted to touch it and have spent their efforts instead creating a benign Clinton myth. Clinton was - like a typical prohibition era politician - a beneficiary and peripherally complicit at the very least through studied indifference, but in a sense he was really just part of the background. He was a window into the real story: how a huge part of the American economy - created by the crudely misnamed War on Drugs - operated in just one state.
If the media had honestly followed the money back then, if they had asked obvious questions about the war on drugs, if they hadn't fallen for the politicians' lines on BCCI and the S&L scandal, if they had wondered why so much money was moving around without any visibility or regulation, we might have approached the end of 2008 in better shape.
So as you read stories about Russian and American money laundering, bear in mind that the money doesn't just appear; it has to come from someplace. And in recent decades, the grossly under-reported major drug trade has been a primary source.