Citigroup proclaims that its "private bankers act as financial architects,
designing and coordinating insightful solutions for individual client needs,
with an emphasis on personalized, confidential service." That is so colorless.
It might better boast, "We set up shell companies, secret trusts and bank
accounts, and we dispatch anonymous wire transfers so you can launder drug
money, hide stolen assets, embezzle, defraud, cheat on your taxes, avoid court
judgments, pay and receive bribes, and loot your country." It could solicit
testimonials from former clients, including sons of late Nigerian dictator Sani
Abacha; Asif Ali Zardari, husband of Benazir Bhutto, former prime minister of
Pakistan; El Hadj Omar Bongo, the corrupt president of Gabon; deposed
Paraguayan dictator Alfredo Stroessner; and Raul Salinas, jailed brother of the
ex-president of Mexico. All stole and laundered millions using Citibank
(Citigroup's previous incarnation) private accounts.
One lesser-known client, Carlos Hank Rhon of Mexico, has been the object of
a suit by the Federal Reserve to ban him from the US banking business. Hank
belongs to a powerful Mexican clan whose holdings include banks, investment
firms, transportation companies and real estate. Hank bought an interest in
Laredo National Bank in Texas in 1990. Six years later, when he wanted to merge
Laredo with Brownsville's Mercantile Bank, the Fed found that Citibank had
helped him use offshore shell companies in the British Virgin Islands to gain
control of his bank by hiding secret partners and engaging in self-dealing, in
violation of US law. One of the offshore companies was managed by shell
companies that were subsidiaries of Cititrust, owned by Citibank.
The Fed says that in 1993, Hank's father, Carlos Hank González, met
with his Citibank private banker, Amy Elliott, and said he wanted to buy a $20
million share of the bank with payment from Citibank accounts of his offshore
companies, done in a way that hid his involvement. Citibank granted him $20
million in loans and sent the money to his son Hank Rhon's personal account at
Citibank New York and to an investment account in Citibank London in the name
of another offshore company.
Citigroup spokesman Richard Howe said, "We always cooperate fully with
authorities in investigations, but we do not discuss the details of any
At press time, there were reports that Hank had negotiated a settlement
with the Fed, which the parties declined to confirm.
Thefts from other countries pale in relation to the looting of Russia, with
the indispensable assistance of the "Offshornaya Zona." The 1995 "loans for
shares" scheme transferred state ownership of privatized industries worth
billions of dollars to companies whose offshore registrations hid true owners.
More billions were stolen around the time of the August 1998 crash.
Insider banks knew about the coming devaluation and shipped billions in
assets as "loans" to offshore companies. The banks' statements show that their
loan portfolios grew after the date when they got loans from the Russian
Central Bank, which were supposed to stave off default. After the crash, it was
revealed that the top borrowers in all the big bankrupt banks were offshore.
For example, the five largest creditors of Rossiisky Credit were shell
companies registered in Nauru and in the Caribbean. As the debtors' ownerships
were secret, they could easily "disappear." Stuck with "uncollectable" loans
and "no assets," the banks announced their own bankruptcies. Swiss officials
are investigating leads that some of the $4.8 billion International Monetary
Fund tranche to Russia was moved by banks to accounts offshore before the 1998
The biggest current scam is being effected by a secretly owned Russian
company called Itera, which is using offshore shells in Curaçao and
elsewhere to gobble up the assets of Gazprom, the national gas company, which
is 38 percent owned by the government. Itera's owners are widely believed to be
Gazprom managers, their relatives and Viktor Chernomyrdin, former chairman of
Gazprom's board of directors and prime minister during much of the
privatization. Gazprom, which projected nearly $16 billion in revenues for
2000, uses Itera as its marketing agent and has been selling it gas fields at
cut-rate prices. Its 1999 annual report did not account for sales of 13 percent
of production. As its taxes supply a quarter of government revenues, this is a
devastating loss. Itera has a Florida office, which has been used to register
other Florida companies, making it a vehicle for investment in the US economy.
The media coverage of the Clinton pardons has been so biased,
overblown and vituperative as to call into question the very purpose of
what currently passes as journalism. It is difficult to recall a more
partisan, one-sided hatchet job.
Surely, even the faintest sense of fairness would compel a comparison
of former President Clinton's actions with that of his predecessors and,
as Rep. Henry Waxman pointed out at a recent hearing to a largely
indifferent Washington press corps, Republican Presidents have more than
matched the outrages of Clinton.
Forget Gerald Ford's pardon of Richard M. Nixon, which, while
effectively short-circuiting an ongoing probe of possibly the most
egregious behavior of any US President, can be rationalized as a
healing gesture. Nixon had accomplished much, and he was by then a broken
man. We can also overlook Ronald Reagan's pardon of Yankee owner George
Steinbrenner, who had pleaded guilty to violating election laws.
But unforgivable is what former President George Bush did. He
protected himself--a former Reagan Administration official--in an ongoing
investigation when he pardoned Reagan's Defense secretary, Casper
Weinberger, and the rest of the Iran/contra gang of six.
At the time, Independent Counsel Lawrence E. Walsh bitterly charged
that "the Iran/contra cover-up, which has continued for more than six
years, has now been completed"--by presidential fiat. Walsh called it
"evidence of a conspiracy among the highest-ranking Reagan Administration
officials to lie to Congress and the American public" and said that, "in
light of President Bush's own misconduct," he was "gravely concerned"
about Bush's decision to pardon others.
Bush could easily have been said to have covered up his own potential
culpability--far short of anything Clinton has been accused of doing in
his pardon of Marc Rich or anyone else. Nor did the Bush Iran/contra
pardons pass the one-more-pardon-before-leaving-the-White-House "smell
test" so liberally applied to Clinton's pardons; the pardon came after
intensive lobbying by former Reagan aides and many last-minute White
As for pardoning drug dealers, so upsetting when ordered by Clinton,
again why no comparison with Bush's similar and arguably more offensive
pardon of that nature? Bush's pardon of Aslam Adam, a Pakistani heroin
trafficker serving a fifty-five-year sentence, would seem more startling than
Clinton's pardon of an LA Latino from a sentence one-fifth as long.
And, OK, let's talk about Marc Rich. Let's compare his pardon to that
of another financier, Armand Hammer. If Rich bought his pardon, he at
least felt the need to employ the precaution of funneling a contribution
through his ex-wife, as some charge. Hammer was considerably more
blatant. Not only had he pleaded guilty to the charge of making illegal
campaign contributions but also, when pardoned from that offense by Bush,
he forked over two gifts of $100,000 to the GOP as well as to Bush's
Those represented fresh contributions to an incoming administration
that could continue to bestow favors--not, as with Clinton, to a
soon-to-be ex-President's library. But if it is library contributions
that now so fascinate, why did House Government Reform Committee Chairman
Dan Burton turn down ranking Democrat Waxman's request that the records
of contributions to Republican Presidents' libraries also be subpoenaed?
And imagine the outcry if Clinton had pardoned an immigrant exile
accused of masterminding an airline bombing that cost the lives of seventy-three
people, including twenty-four teenage members of an Olympic fencing team. Yet
that is what George Bush did in acceding to the requests of his son, Jeb,
to pardon Orlando Bosch, gaining Jeb support in Miami's exile Cuban
The most serious of Clinton's pardon excesses, that of former CIA
Director John Deutsch, does not rise to that level, but it is odd that it
has not been criticized. By pardoning Deutsch, Clinton ended an inquiry
into how sloppily top secrets are handled at the highest level. The
Clinton Administration had held former Los Alamos scientist Wen Ho Lee in
solitary confinement for mishandling data that wasn't even classified as
secret at the time. It was Lee and not Deutsch who deserved a pardon. But
that would have meant enduring criticism, and Clinton only does that for
What Clinton did in catering to the wishes of his rich backers was
probably less motivated by library gifts than by misplaced compassion for
well-heeled but seedy people. That makes it all the more depressing, for
one would have hoped that someone who came up the hard way would know
that the filthy rich don't deserve special favors. But the rich pay the
piper, and no matter who's in the White House, Presidents do dance.
So it is, and so it always has been. The presidential pardon is a perk
of office, which has only the function of exonerating those the judicial
system would otherwise continue to condemn. It is a power begging to be
abused, but no more so by Clinton than many a Republican President who
Remember the bizarre daycare center "ritual abuse" trials of the
eighties--the McMartin case in Los Angeles, the Little Rascals case in
Edenton, North Carolina, the Kelly Michaels case in New J