Drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis, the United Nations' drugs and crime tsar has told the Observer.Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were "the only liquid investment capital" available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.This will raise questions about crime's influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago. "In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system's main problem and hence liquid capital became an important factor," he said.Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said."Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities... There were signs that some banks were rescued that way." Costa declined to identify countries or banks that may have received any drugs money, saying that would be inappropriate because his office is supposed to address the problem, not apportion blame. But he said the money is now a part of the official system and had been effectively laundered.
Drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis, the United Nations' drugs and crime tsar has told the Observer.
Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were "the only liquid investment capital" available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.
This will raise questions about crime's influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago. "In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system's main problem and hence liquid capital became an important factor," he said.
Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said.
"Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities... There were signs that some banks were rescued that way." Costa declined to identify countries or banks that may have received any drugs money, saying that would be inappropriate because his office is supposed to address the problem, not apportion blame. But he said the money is now a part of the official system and had been effectively laundered.
profil: In welcher Form geschieht das? Costa: Es sieht aus, als seien Interbank-Kredite durch Geldmittel finanziert worden, die aus dem Drogenhandel und anderen illegalen Aktivitäten kommen. Es ist natürlich schwer, das zu beweisen, aber es gibt Hinweise, dass manche Banken auf diese Art und Weise gerettet wurden.
profil: Wie darf man sich das vorstellen? Der Drogenboss wird ja kaum zu seiner Filiale marschieren und dort Bargeld einzahlen, um einen Bankenkonkurs zu verhindern. Costa: Nein, aber vielfach ist Drogengeld derzeit das einzige verfügbare liquide Investmentkapital - etwa, um Immobilien zu kaufen. In der zweiten Hälfte des Jahres 2008 wiederum war Liquidität das größte Problem des Bankensystems, und damit wurde flüssiges Kapital zu einem wichtigen Faktor.
profil: In what way does this happen? Costa: It looks as though interbank lending has been financed by money coming from drug trafficking and other illegal activities. It is of course difficult to prove this, but there are indications that some banks have been saved in this way.
profil: As one may imagine that? The drug boss is indeed difficult to march to his office and then pay cash to avoid bank bankruptcy. Costa: No, but in many cases drug money is currently the only available liquid capital investment - for example, to buy real estate. In the second half of 2008, liquidity was again the biggest problem of the banking system, and thus liquid capital has become an important factor.
that would be inappropriate because his office is supposed to address the problem, not apportion blame
now theres a quote and a half. Any idiot can face a crisis - it's day to day living that wears you out.
because his office is supposed to address the problem, not apportion blame step on toes.
I say again: Put return on investment in one pan of the balance and put all other alleged values in the other and ROI outweighs them all. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
