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Thread: Has The IFSC Attracted Dubious Activities ?

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    Default Has The IFSC Attracted Dubious Activities ?

    The more I look at some of the banking transactions and operation of some subsidiary companies in the IFSC the more I wonder how much the lax regulatory controls attracted Organised Crime.

    I know of one Central European bank currently under investigation in its home country for laundering money. That same bank ran into trouble in 2008/2009 when it changed its accounting practices apparently to disguise a huge loss on mark-to-market trades. The same bank is linked with an investigation into money laundering at the Institute for Works of Religion (Vatican).

    This bank is the parent company of one of the bondholders released on the Guido Fawkes list recently.

    Let me park that section of the OP for a moment. As I read through some of the recent information on this forum contained within the 'Whistleblower' thread I began to be reminded of the Parmalat scandal, still I think Europe's largest bankruptcy. (With apologies for once again bringing up the subject of cheese in Irish affairs).

    For those who don't recall the scandal here is a link to an explanation of the Parmalat affair from Executive Intelligence Review. I absolutely recommend reading through this summary if only for the sense of 'deja vu' it provokes http://www.larouchepub.com/other/200...at_invest.html

    Some small extracts which might sound mightily familiar to Irish ears;

    'A senior European financial source, for example, told EIR that Parmalat's collapse throws a spotlight on the huge volume of dirty deals that are being run by top international banks through offshore centers such as the Cayman Islands. These deals are often used to finance political, illegal, or high-risk speculative efforts, he said'.

    It was discovered that Parmalat's claimed liquidity of 4 billion euro did not exist, and that EU 8 million in bonds of investors' money had evaporated as well.

    Parmalat is the largest bankruptcy in European history, representing 1.5% of Italian GNP—proportionally larger than the combined ratio of the Enron and WorldCom bankruptcies to the U.S. GNP.

    The summary which I have linked is a tale of derivative transactions shuffled back and forth through centres like the IFSC and false valuations, dodgy bond issues and failed regulation.

    I am reminded, when thinking of two odd transactions involving banking subsidiaries, one belonging to Anglo-Irish Bank in Austria which was sold off rather quickly and rather surprisingly as it was profit making, to another bank. This seems to have had the effect also of removing the bank concerned (which operates under Austrian banking laws a 'nominee' system for people and organisations which buy bank bonds from the Anglo-Irish group which was coming at the time under scrutiny) from Irish regulatory oversight or investigation.

    Similarly there is another rather odd transaction involving a German bank which was in trouble ... a bank which was effectively nationalised by German authorities in 2009, Hypo was the owner of a subsidiary operation in the Dublin IFSC called Depfa.

    Reviewing the 'Whistleblower' thread I can't help noticing the comments about staff at German banks being flown to Dublin to do deals which would not have been allowed under German law.

    Oddly enough the Central European bank I mentioned earlier which is being investigated for suspected money laundering also has an ongoing relationship with Hypo.

    The Dublin subsidiary Hypo bought was the straw that broke Hypo's financial back when it was found that Depfa, based in the Dublin IFSC had been granting long-term loans and financing them by issuing short- and medium-term bonds. The credit crunch dried up the availability of money to refinance these bonds.

    The German government had to bail out parent company Hypo to the tune of 50billion euro. http://www.propertyweek.com/german-b...133024.article

    I cannot help wondering whether the low regulation environment in the IFSC attracted more than 'careless' bankers. The sale by Anglo-Irish bank of its profitable Austrian subsidiary when it needed every penny it could get strikes me as an odd deal - unless there was another reason to remove the subsidiary from the group.

    The more I read about Anglo-Irish, Hypo, the IFSC and Austrian nominee rules the more I wonder how any regulatory authority could be sure that organised crime was either involved or whether the proceeds of organised crime were being washed through bondholdings in a number of banks?

    How does the Irish Government know it is not simply a victim of a mafia raid on its taxes to prop up a banking sector based on money laundering?
    Last edited by C. Flower; 21-11-2010 at 11:46 AM.
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    Default Re: Did the IFSC attract Organised Crime?

    Quote Originally Posted by Captain Con O'Sullivan View Post
    The German government had to bail out parent company Hypo to the tune of 50billion euro.
    Make that 150 billion Euro plus an additional guarantee fund to the tune of 200 billion Euro.

    That's how Angela makes the bondholders suffer.
    Thus all which you call Sin, Destruction—in brief, Evil—that is my true element.

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    Default Re: Did the IFSC attract Organised Crime?

    I can't help thinking that between Austria and the IFSC alone one could say that there has been a giant heist of taxpayer's euros to prop up 'systemic' private companies.

    It would make an ideal conspiracy thriller ... how the mafia stopped making withdrawals from banks using shotguns and realised it was more profitable to make a vig by effectively making a couple of shotgun shaped holes in the European banking system?

    It would explain why one of those holes appeared in the IFSC. Interestingly Hypo had made some disastrous forays into 'eastern european investments' as well.

    It would be a very good idea for Messrs Interpol and Co to wait until our friend Silvio has cleared off the European stage and take a banker and a mafia goon and examine them for differences under a microscope.

    There's a smell of olive oil off European banking that I do not like at all.
    Think National. Act Local. Oh- and superstition is just the dark matter of human history.

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    Default Re: Did the IFSC attract Organised Crime?

    One odd little postscript ... in the executive review article about the Parmalat scandal i noticed an odd phrase;

    'The red thread of this catastrophe is represented by the role of the banks. Italian banks, not unlike their international colleagues, have lured unaware customers into high-risk investments—workers, pensioners, and professionals who, in most cases, did not know where their money was invested, or who were fraudulently told that it was "safely" invested.'

    Anyone remember another whistleblower who was a technical expert in the IFSC banking sector who left a cryptic hint as to where much of the scandal in the banking collapse originated when they said 'follow the green threads'?
    Think National. Act Local. Oh- and superstition is just the dark matter of human history.

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    Default Re: Did the IFSC attract Organised Crime?

    Would'nt disagree there Cap'n...I go back to the 60s and 70s...and I have always retained a healthy skepticism regarding all things "legitimately financial" believe me!
    It's a real truth and logically accurate that...globally...it's impossible to have extreme wealth without extreme poverty...it's just not possible!
    The same applies to our 'micro' situation in this perverted kip...if we all had the wealth of those in Shrewsbury rd...Aylesbury rd...etc etc etc...sure we'd have been invaded long before the vikings!
    Truth is....there is no such thing as wealth without poverty. Time the wealthy accepted this fact...instead of 'poncing' around...pretending to care for the worlds hungry while building 'million' € extensions to their houses...avoiding taxes here and still calling themselves Irish....and getting their 'mugs' on ..."the fashionable" pages...they make me sick to my stomach!!! Ooops...sorry...getting angry again!
    Corruption in financial houses here Cap'n?....If any one even now refuses to believe that logic....then we're really *****d ! Thanks for that post and the work you put in!

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    Default Re: Did the IFSC attract Organised Crime?

    Strange how tales of global financial wheelings and dealings sometimes carry with them human interest stories....

    One of the Anglo bondholder companies, a fully owned subsidiary of and global investment arm of Italian bank Unicredito called Pioneer Global Investments with 500 employees in Dublin is run by a former Unicredito executive called Sebastiano Bazzoni.

    Sebastiano experienced a family tragedy when his son Roberto was killed in a plane crash in Kosovo while on a charity mission. Sebastiano has since set up a charity which operates in Kosovo, Zimbabwe and Kazakhstan.

    http://www.independent.ie/business/i...dy-218652.html
    Think National. Act Local. Oh- and superstition is just the dark matter of human history.

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    Default Re: Did the IFSC attract Organised Crime?

    Quote Originally Posted by whydontwe View Post
    Would'nt disagree there Cap'n...I go back to the 60s and 70s...and I have always retained a healthy skepticism regarding all things "legitimately financial" believe me!
    It's a real truth and logically accurate that...globally...it's impossible to have extreme wealth without extreme poverty...it's just not possible!
    The same applies to our 'micro' situation in this perverted kip...if we all had the wealth of those in Shrewsbury rd...Aylesbury rd...etc etc etc...sure we'd have been invaded long before the vikings!
    Truth is....there is no such thing as wealth without poverty. Time the wealthy accepted this fact...instead of 'poncing' around...pretending to care for the worlds hungry while building 'million' € extensions to their houses...avoiding taxes here and still calling themselves Irish....and getting their 'mugs' on ..."the fashionable" pages...they make me sick to my stomach!!! Ooops...sorry...getting angry again!
    Corruption in financial houses here Cap'n?....If any one even now refuses to believe that logic....then we're really *****d ! Thanks for that post and the work you put in!
    From what I can see at this moment in time the walls between mafia moneylaundering and some surprisingly well known international banking brands aren't thick enough to comprise even Chinese walls.

    In fact I would go so far as to say that if Interpol along with the German government and the assistance of some other European countries were to take a look at the sector over a bottle of vino and some pasta they'd soon notice a few interesting transactions ...
    Think National. Act Local. Oh- and superstition is just the dark matter of human history.

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    Default Re: Did the IFSC attract Organised Crime?

    Just meandering along the ownership lines of Anglo bondholder Pioneer Group, owned by Unicredito one can almost feel a twinge of sympathy for international bankers these days of challenge...

    Pioneer Group aren't one of those little investment and knitting circles for old ladies that Brian Lenihan intimated were Anglo bondholders by the way ... they have over $100billion in assets and are effectively the investment arm of Unicredito.

    Challenging days for Unicredito in that they've had to be recapitalised by the Italian taxpayer (3billion in 2008 and a further 4billion in 2010 in ongoing support from the Italian Central Bank).

    Apart from dropping 2billion in the Bernie Madoff scandal it is also being investigated for its links with money laundering allegations levelled at the Vatican Bank (now known as the Institute for Works of Religion - snigger).

    They must be cursing the day that they decided to forget their humble origins as Banco Sicilia and in recent years bought into German and Austrian banks.

    You'd almost feel sorry for them if your eyes weren't narrowing ....
    Think National. Act Local. Oh- and superstition is just the dark matter of human history.

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    Default Re: Did the IFSC attract Organised Crime?

    Alas poor Cap'n...it's not in our stars, but in ourselves that we are underlings (or do the Germans say-undermenchen or something?)!!
    Any one wondered why Switzerland was so protected by all the loo-las (both-sides) in WW2?.....never wondered? I invite all to nvestigate (as much you're permitted to)....and having done so....tell us you are all confident about the rich paying their 'dues' after the 'EUROS' have come to town!! Whole thing is getting 'funnier'!!

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    Default Re: Did the IFSC attract Organised Crime?

    Is the Pope a Catholic?

    Did the bear **** in the woods

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  11. #11

    Default Re: Did the IFSC attract Organised Crime?

    Captain Con O'Sullivan,

    On the question of organized crime. It is a fact that Ireland was one of THE no.1 places, by volume and value for setting up Russian SIV's.

    Ireland was, don't have figures for present I'm afraid, one of the top domiciles for SIV's which were the housing for all the Collateralized Debt Obligation (CDO) trade and the Credit Defaut Swap (CDS) trade. In 06 - 08 the big banks originated a tidal wave of CDO/CDS paper led, in volume and value terms, by by Merril Lynch and BoA (now combined) but with the major French and German Banks as well as RBS via its US subsidiary RBS Greenwich Capital all making as much hay as they could. See this brilliant peice of investigative journalism by Propublica.

    Merrill did a lot of the deals out of their London office. A typical route was for the SIV to be incorporated in Cayman Island and domiciled in Ireland. There are companies dotted around Ireland such as Maples Finance who are listed as the paying agent or the Trustee who run the SIV's day to day in terms of money in and out.

    Maples is just one example. Maples Ireland based in Dublin is "the Irish branch of MFD Limited (a company incorporated in the Cayman Islands)" - quoted from their own paper work. Paper work that also listes the names of the CDOs.

    They like to tell you the Irish Agent is 'just in charge of the Irish bit' (As said to me in a personal converstaion with A Maples Dublin representative) giving you the impression that they are nobodies in this, just accountants posting out checks, while the real bosses are elsewhere. Which is not quite true. The Irish branch of Maples is the paying agent for Ireland. What isn't clear is how much of the whole deal IS the Irish part. Could be 5% could be 95%. The Irish branch is the one doing the agent work for what could be a tiny slice of the whole CDO but equally could be nearly all of it. And it is worth remembering that the 'Paying Agent' or "Trustee' is NOT just posting checks. The Paying Agent/Trustee normally has the legal responsibility to evaluate the recommendations of the Collateral Manager who is the one who actively manages the CDO portfolio. Evaluate in this instance means making sure that the decisions and actions being taken by the Manager are in the best intersts of the investors for whom he is the 'paying agent'. In short there is a duty of financial care. That duty of care in Ireland resides with the Irish branch, not off in the Cayman 'head office'.

    I am not suggesting for one minute, as I am sure you are equally carefull to not to suggest, that Hardings is doing or has done anything illegal. That said, however, I have a big chunk of paperwork of Harding managed CDO's which were all transfered to Hardings Irel;and in July 08 and even AT the time they were transferred, a number of them were already defaulted. To give you a concrete example Ridgeway Court Funding II Ltd was already liquidated in March of 2008, before it was transefered to Maples Dublin in July. Ridgeway Court Funding II was also subject of a law suit between the Insurer of the CDO, Ambac, and Citi and Credit Suissee who created the CDO. So obvioulsy Ambac and their lawyers think Ridgeway Court Funding II was suspect. There are page after page of now deafulted/liquidated CDO's tranfered to and listed as manged by Hardings in Dublin.

    At the very least, there is is considerable reason to be concerned over what was housed in Ireland, its financial quality, and the probity of those who created the stuff in the first place.

    Anyway thought you might be interested to know that tid bit. I written more on CDOs and the dangers their role in our crisis here with a second half to come in the next few days.
    Last edited by David Malone; 21-11-2010 at 01:24 PM.

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    Default Re: Has The IFSC Attracted Dubious Activities ?

    Quote Originally Posted by Captain Con O'Sullivan View Post
    You are right David and that is very interesting. It was only when memories from 2004 started stirring and I thought of the Parmalat scandal that it began to click with me that the sort of capers we've seen with subsidiaries of major banks within the IFSC started to sound very familiar.

    The Modus Operandi of major banks in relation to low regulation regimes like the IFSC and what we now know about the utterly hapless approach of the Irish financial regulator ("Good man yourself Willie) means to my mind that we should be calling for an investigation of what exactly has been the profile of certain banks in that zone.

    I started looking last night at some of the events in the home countries where these banks are based and in Germany there is the stench of something familiar. Mrs Merkel and the German authorities I'm convinced are absolutely aware that some private banks there have been doing some false accounting and taking huge gambles on derivatives such as CDO's and running them outside the German regulatory regime via such centres as the Dublin IFSC.

    She's been bounced into recapitalising German banks involved as well and I strongly suspect for the same reason that Cowen and Lenihan were bounced into guaranteeing the Irish banks- the underlying horrorshow of what the banks have been up to cannot be revealed to the public.

    I note your comments about the wild East- its noticeable that one bank I've been staring particularly narrow-eyed at has a profile where they bought into Austria (hello 'nominee bondholder confidentiality regime') possibly for the same reasons as Anglo did and also noticeably have exposure to eastern european markets and some surprisingly 'zero regulation' regimes in the former soviet bloc.

    If I had to summarise what we're looking at in the round and with Ireland as a bit part player I'd say we are looking at a banking sector Enron-style period.

    Take what we know about Quinn's gambles with CDO's in Anglo. Multiply that perhaps by a factor of at least a thousand and stretch it from eastern Europe through Austria to Dublin and all stops in between and we're looking at a gigantic Enron. False accounting by banks in Ireland, Germany and Italy- massive gambling on derivatives which they managed by doing the transactions through Austrian nominees and places like the Dublin IFSC.

    Essentially the banks have actively sought out a way to get around proper banking rules and regulations and run wild like Quinn. German, Irish, Italian governments have been bounced into keeping the lid on the real situation with European banks.

    Lehman Brothers tried to bounce the US government into covering up their version but the US govt did the right thing and burned them.

    European governments including Ireland have done exactly the wrong thing- tried to hide the real situation by covering the holes with public money.

    Unbelievable. Thanks also for your mention of the Cayman Islands. I noted that one of the largest hedge-funds (and shortsellers) working out of London's St James is also registered like many other hedge-funds in the Caymans where they don't have to declare what we would call proper report and accounts and where their shortselling transactions can't be examined.

    I think we are looking at deliberate malfeasance right across the finance sector and it's closely linked with CDO and other highly dangerous derivatives.

    Its a replay of the junk bond fiasco with Milliken and co in the 80's. The banks have done it again.

    Time for German, Italian and other European authorities to start jailing boardrooms and I have to say that the IFSC needs to be picked up and shaken by regulatory authorities.

    Some of the top names in Irish business circles are involved in this. I cannot name them for obvious reasons and I advise caution all round. I don't see anything any lawyer could threaten on with this thread at the moment but for others like myself sniffing around this stuff I would humbly suggest that we check with each other by PM before mentioning any names of individuals or banks.
    I think you are right, Con, to advise caution all round. This is the type of topic that could attract a lot of legal interest.

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    Default Re: Has The IFSC Attracted Dubious Activities ?

    Absolutely- to the point where I have carefully checked everything I have said thus far and drawn a deliberate line between posts where I think I see whats been going on generally and any posts where individuals and companies have been named. Where I have named any banks or individuals on this thread I am saying nothing that is not already in the public environment via newspaper reports- and those newspaper reports remain unchallenged by legal bods.

    Extreme caution advisable here. There is another angle to the money coming into the derivatives market via Austria and other markets and then moving around the Caymans and I strongly suspect the IFSC in Dublin that I cannot outline at the moment but there is one investigation ongoing in central Europe (and another that may also shed some light on this angle) which may allow me to comment at some point.

    Being very careful here...
    Think National. Act Local. Oh- and superstition is just the dark matter of human history.

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    Default Re: Has The IFSC Attracted Dubious Activities ?

    Captain Con O'Sullivan,

    Please see edits to previous post.

    And would you be averse to dropping me a private email to let me konw which banks you are thinking of in Austria. I would like to compare your hunches with mine. I undertand if you would rather keep it to yourself but I thought I'd ask.

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    Default Re: Has The IFSC Attracted Dubious Activities ?

    Quote Originally Posted by Captain Con O'Sullivan View Post
    Absolutely- to the point where I have carefully checked everything I have said thus far and drawn a deliberate line between posts where I think I see whats been going on generally and any posts where individuals and companies have been named. Where I have named any banks or individuals on this thread I am saying nothing that is not already in the public environment via newspaper reports- and those newspaper reports remain unchallenged by legal bods.

    Extreme caution advisable here. There is another angle to the money coming into the derivatives market via Austria and other markets and then moving around the Caymans and I strongly suspect the IFSC in Dublin that I cannot outline at the moment but there is one investigation ongoing in central Europe (and another that may also shed some light on this angle) which may allow me to comment at some point.

    Being very careful here...
    It is a fascinating subject, Con, and one which goes to the very heart of why we in Ireland find ourselves in the position we are in. The nature of international capital is that much of it, like an iceberg, is not visible yet exerts significant influence on the more transparent stuff. we set up a fiancial centre, gave it a sort of regulatory structure and let in a pile of foreign companies to operate. Given what is known about our regulator, and probably was known about our attitude to regulation in the past, the possibility of a few dodgy geezers operating in the IFSC is not to be ruled out. But proving that is a very difficult undertaking so speculation should be avoided. You are absolutely correct to be very careful here.

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