Transfer cash is directly related to money laundering: the allegations, and the court case.

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Money Laundering and Football

“Rather than simply being used as a conduit for money laundering the proceeds of other crimes, there is some sort of activity relating to player transfers that is generating cash proceeds from criminal activity.”

Recently Untold published a series of articles about how money laundering plays its part in football.  Although we pointed to no particular club we tried to suggest that it is hard to find any explanations for why certain clubs are purchased by men with no football experience, spend lots of money, talk the talk about reaching the heights, and then go bust with a big bang.

The background articles are recorded in Untold Corruption although if you want to start at the start with What is money laundering?  and also  How could money laundering hypothetically work in the football transfer market?

Now onto the latest discoveries.   This article is longer than usual, and much of the early part is about a case that does not involve football.  But the concluding link to football is explosive.

If you don’t want to go through the background (and really you should because it explains how the how system works, based on an EU court case) the football related element starts half way through with the headline “Possible application to the football transfer market“.

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Transfer cash is directly related to money laundering: the allegations, and the court case.

By: Anne

Introduction

As an introduction to this article, I’d like to say “thank you” to the European Union…. The lawsuit that you filed has exposed more about global money laundering than I would ever have expected to see in one place. Based on the EU’s  lawsuit, this is the first of a three-part series of articles that I’m hoping will show a complete multi-billion global money laundering cycle.

(However, I should include the disclaimer that any factual information about this syndicate that I include in my article is taken from allegations in the lawsuit filed by the EU, so I can’t personally confirm that everything the EU said is accurate. However, the lawsuit does provide quite thorough documentation to back up the allegations.)

The lawsuit filed by the European Union was filed on behalf of 10 EU member countries against American tobacco company R.J. Reynolds. The basis for the suit was the damages suffered as a result of criminal activities by the defendant’ “RJR Money-Laundering Enterprise.”

In general, although it is complex I recommend that everyone who is interested in money laundering take a look at the lawsuit. It provides a fascinating look at global money laundering, the criminal conduct alleged against RJR.. among other things, laundering money for Latin American drug cartels, the Italian mafia, the Russian mafia, PKK, other terrorist organizations, heroin traffickers in Afghanistan, narcotics traffickers in Colombia, the Medellin Cartel, Saddam Hussein’s family… Oh, the corruption and destabilization of the governments of Bosnia and Montenegro… there’s more.

However, the thing that makes the lawsuit the most interesting is the fact that the EU seems to have really tried to the best of their ability to fully document as much of this criminal activity as possible. They had government resources at their disposal, and could obtain bank account numbers, etc. This lawsuit really does show a reasonably comprehensive picture of how this money laundering conspiracy was operating.

Also, I think that a lot of what they exposed is relevant to more than just the RJR operations. As I document each stage of the money laundering process, I’m going to be noting whether there’s circumstantial evidence that these same methodologies are being used elsewhere; for example in the transfer market.   (And indeed I can answer “yes”; see end of article )

Note to anyone who doesn’t have a general familiarity with money laundering: These articles provide a general explanation.

Global Money Laundering: How it works from A-Z

Starting Point:

A criminal is holding dirty cash that he earned from his criminal activities. He needs it “clean,” and introduces it into the money laundering cycle…..

The purpose of the money-laundering cycle is to establish total anonymity for the participants, by passing the cash drug proceeds through the financial markets in a way that conceals or disguises the illegal nature, source, ownership, and/or control of the money.

There are three different stages in the money laundering cycle. Part I of this article addresses “placement,” Part II will address “layering,” and Part III will address “integration.”

The RJR Scheme:

The following is the basic money laundering scheme that RJR built their entire operation on (omitting the “layering process”). It really demonstrates the way that money laundering is almost as simple as it is complicated:

  • Step 1: A criminal organization has cash proceeds from crime
  • Step 2: Criminal organization purchases cigarettes from RJR with the dirty cash from his crimes
  • Step 3: Criminal organization sells cigarettes purchased from RJR (when cigarettes are sold criminal has his money back, but looks like legal profits from cigarette sales. Laundering cycle complete).

Step One in the Money Laundering Process: “Placement” of the initial cash proceeds of crime

The main objective of the “placement” stage of the money laundering cycle is to introduce the proceeds of crime into the legitimate financial system, but to do so in a manner that does not leave any clues as to where the funds originated. Once the funds are placed, they will be moved into stage 2 (“layering”)

Example 1 “Placement” by the Italian Mafia

The Italian mafia generated large amounts of cash proceeds from arms trafficking, drug trafficking, and other illegal activity. In order to first “place” this cash into the financial system and initiate the money laundering process, the Italian mafia used an organized group of “money couriers.”

These couriers would receive criminal cash in Italy and other parts of Europe, and then illegally smuggle the cash out of Italy and into Switzerland. In Switzerland, the couriers would hand the dirty cash over to Swiss money-laundering broker organizations, such as the “Alfred Bossert organization” and the “Gegis money-laundering broker organization.” (More on these “money brokers” in Part II,  “layering”).

Example 2: “Placement” by Colombian drug cartels

RJR set up a scheme to launder Colombian narcotics money through a company called “El Torreon, S.A.,” which was owned, operated, and directed by a Spanish multinational corporation.

In this scheme, El Torreon’s front man in Medellin, Colombia was in charge of the collection of the cash proceeds from narcotics trafficking in Medellin. This cash would then be smuggled out of Colombia by plane, and “placed” with an RJR cigarette distributor in Aruba, in exchange for the equivalent value in cigarettes.

Example 3: Alt. “placement” method by the Italian mafia.

WALT S.R.L. was an Italian company with offices in several European countries, which would receive illegal cash proceeds from criminal organizations throughout Europe.  This cash would then be smuggled through Belgium, France, Spain, and Italy. Once transported to Italy, the criminal proceeds were delivered to certain “friendly” banking institutions, and then “placed” into a network of bank accounts.

Example 4: Placement with “money broker” through illegal currency exchange

This example involves both a narcotics cartel and a “money broker” (illegal currency exchange broker) who are involved in global criminal enterprise. A Colombian narcotics cartel earns illegal cash from selling drugs in the EU. This cash is in euros. The cartel in Colombia contacts a money broker in the EU. The money broker has operations in Colombia as well, and he agrees to accept the illegal euros from the narcotics trafficking. In exchange for the dirty money, the cartel in Colombia receives “clean” local currency from the broker’s Colombian affiliate

Possible application to the football transfer market

In addition to the examples provided above, another common “placement” technique used in international money laundering is when illegal cash is “exported..[across national borders and] used to buy…property.

In light of the above analysis of the “placement” stage in the money laundering cycle, let’s take another look at one of the news reports I quoted in my introductory article to this series (Money Laundering, Premier League football, Operation Apprentice, and a little more on Portsmouth FC (again)).

Specifically, I quoted portions of a Daily Mail article headlined French police raid drug and money-laundering gang linked to English Premier League. While I cannot personally vouch for the accuracy of all of the facts that were reported in this article, taking them for the moment as true, let’s consider the implications of the following three aspects of the article:

1) Two English men were caught smuggling large quantities of cash out of England, into other European nations, using luxury cars that had been specially equipped with hidden compartments to conceal the cash:

In May 2009, “one of the accused – named as Stephen Campbell – was arrested in a car travelling from Narbonne to Toulouse…Police found £500,000 worth of used notes in a hidden compartment in the boot of his Mercedes, along with traces of cocaine.

The Englishman had been put under surveillance, and detectives established that he had made at least 20 ‘suspicious’ journeys delivering money around Europe.  Much of it had been transported in reinforced hidden compartments in luxury cars…

They are suspected of recruiting ‘lieutenants’ from London, to act as ‘runners’ of both drugs and laundered money.”

2) The cash at issue was being smuggled into France and Cyprus, where it was intended to be used to buy property:

The cash “was being used to buy châteaux and land in the area….Both apparently poured their profits from organised crime into luxury properties in the area, and into farmland….[Police] also found three luxury cars linked to Mr Keating, as well as documentation on property investment in Cyprus, where the gang are suspected of having laundered money.”

In short, this article appears to be describing verbatim the  “common ‘placement’ technique used in international money laundering…where illegal cash is ‘exported...[and] used to buy…property.’” Furthermore, the method used to transport this cash appears to be the very same method that the EU lawsuit documented as being used by the Italian Mafia for the “placement” of the cash proceeds of crime, which involved:

“an organized group of ‘money couriers.’ These couriers would receive criminal cash in Italy and other parts of Europe, and then illegally smuggle the cash out of Italy and into Switzerland.”

Now back to the EU lawsuit on the operations of “couriers.” It appears that these sorts of courier services might be separate criminal organizations whose services are for hire:

“RJR used of an organized group of money couriers whose function was to receive criminal proceeds in Italy and other parts of Europe and to illegally ferry those proceeds out of Italy and Europe to Switzerland, where the couriers would hand the cash proceeds over to the Swiss money-laundering broker organizations. Examples of the courier organizations include those associated with Nedo Caneva, Adriano Corti, Donino Verdamo, Aldo Tacchini, Pietro Cerroni, Lorenzo Fieni, Americo Mirandi, and Angelo Carboni. These courier organizations provided a vital and necessary link between the Italian Mafia-type criminal organizations and the Swiss money-laundering broker organizations, and provided an essential link in the laundering of the criminal proceeds distributed to RJR”

In general, assuming the above facts are correct, it would strongly suggest that these men were smuggling the cash proceeds of criminal activity, and that they were  intercepted during the “placement” stage of the money laundering cycle. Which makes the final aspect of the scenario reported in the article quite interesting:

The men who were arrested for smuggling this cash claimed that the cash “was linked to agents or other parties involved in the lucrative – and notoriously unregulated – trade in footballers.”

Specifically:

“The criminals claimed the millions of used notes came from Premier League football ‘transfer bungs’….

Campbell claimed that the money in his Mercedes was provided as part of a ‘bung’ connected with the transfer of a player to a leading English club, police said yesterday….

‘He told us that all the money came from professional footballer transfers in England,’ added the investigating officer.

‘Those arrested say they had links with big names in the world of Premiership football.’”

If the above information is correct, there are some interesting implications regarding the transfer market.

First, this cash appears to be the direct proceeds of criminal activity, intercepted during the first stage of the money laundering cycle. As such, this would seem to indicate that, rather than simply being used as a conduit for money laundering the proceeds of other crimes, there is some sort of activity relating to player transfers that is generating cash proceeds from criminal activity. And not a small number of cash proceeds either. I mean, £500,000, in one run, by one courier?

Which leads us to wonder how much cash might be floating around this “transfer black market.”

We will continue to examine these topics in Part II of this article, which will examine the “layering” stage of the money laundering cycle.

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The latest on the referees…

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From the Arsenal History Society web site

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Iconic moment No 7 – caretaker manager Joe Shaw wins the league.

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41 Replies to “Transfer cash is directly related to money laundering: the allegations, and the court case.”

  1. Another eye opening article Anne. Looking forward to the rest of your findings.

    A rather scary thought just passed my mind after reading this. As Arsenal had some problems in the George Graham years where the manager then lost his job because he was linked with let me call it almost illegal transfer activities. So it would be not that surprising that the board said after this period: we will not take part in any such activity at all in the future.
    So when other clubs ask for let us say a transfer sum of £5M in the books and another payment of £1M out of the books the answer could be: NO from Arsenal.

    But do other clubs take the same position? As long as they haven’t been caught why should they?
    And then you get the player X in talks with Arsenal and suddenly player X goes to another club despite him declaring wanting to join Arsenal at first.

    But maybe the manager of the player and both buying and selling club want a part of the money without the taxman knowing about it and so sell the player to the other club.

    And suppose Arsenal doesn’t want to dance this dance it could be an explanation of why Arsenal is a target for some (dark) forces…

    Maybe we are not just being the only club that wants to keep in line with the financial fair play rules without being forced to do it but maybe we are also one of the few clubs who don’t want to be involved by such messy things.

  2. A very insightful article, Anne. Your methodious research deserves much acclaim. Don’t keep us waiting too long for the next part 😉

  3. By the way, when did this lawsuit take place? I quickly glanced through the document, but didn’t see any date.

  5. @Walter:

    Glad you enjoyed the article. Hopefully I’ll be able to make the next one a bit more concise 🙂

    However, I’m not sure that what’s going on here necessarily falls within the ambit of regular transfer dealings.

    Basically, what was described in these articles (if taken as true) would suggest that dirty cash money was being taken out of EPL clubs, totally off the books, and transported to money laundering broker “organizations” (more on that later) in Switzerland.

    And while that wouldn’t give us any information on what happened to the money, or anything else (since it was all off the books), it might tend to help us explain why some clubs go broke when it doesn’t seem to make any sense (hypothetically).

  6. Oh, by the way, it was the European Community, not the European Union that filed the lawsuit. Damn 🙂

  7. @Kentetsu:

    I’ll try not to keep you waiting too long for the next part. Of course, the “layering” process is twice as complicated. Hard to narrow it down. Would you rather hear about Swiss money laundering “banks” or the Russian mafia moving money through New York?

  8. @Kentetsu:

    The lawsuit was filed in 2002. I actually came across it through a quite circuitous route. The following article (more the length of a book) is one of my favorite pieces of writing ever published (albeit only on the internet):

    http://www.dunwalke.com/

    However, it’s kind of funny that something that has so little relationship to football turned out to include something that was so relevant to it.

    As for what ultimately happened to this lawsuit, I haven’t been able to confirm it, but my guess would be that it met with no greater success than Mandaric’s recent tax trial.

  12. @Pat:

    Thank you for taking the time to read it. And I mean that. I really do appreciate it. I feel bad for not figuring out how to narrow it down more 🙂

  13. Of course, now that I read it on the site, I have plenty of ideas on how to narrow it down… I guess that’s just always the way it works, isn’t it?

  14. I don’t think you could really narrow it down more Anne. It needed the explanation and examples to make it clear. It was pretty concise in my opinion!

  16. Thanks Anne. I’m guessing most of my knowledge on how money laundering happens is through your articles.

    I tried reading every bit of it…but I’ll be honest..I kept wanting to skip to the football bit : ).

    Now the point being though…Who is Campbell? Is he an agent? Or someone connected with ‘Player X’ in some way? How? If that comes out some day it’ll be fun. And maybe maybe that’s why Diarra went in 6 months.. just saying …

    However thanks again for your ceaseless dedication to the Untold cause… and once more .. its that which deserves more praise than the content itself(that’s a compliment by the way : ) ).. keep writing

  17. @Arvind:

    “Campbell” is actually just a courier. It’s probably not his real name. But what he’s doing is earning his paycheck by driving all over Europe and picking up/transporting money for any criminal organization that needs it. Hypothetically.

    However, and not saying I necessarily agree with this, but I believe that his particular “courier” organization might possibly be linked to the Italian mafia. Or at least, the EC lawsuit would seem to suggest as such.

    He then drives the money across national borders and deposits it somewhere where it can’t be traced. That’s the general idea 🙂

  18. The most obvious way that you would link ‘dirty money’ to football transfers, without it looking totally obvious, is for the money to be ‘invested’ eventually in a third party ownership vehicle which deals in transfers across continents.

    Another obvious way, in a roundabout way, would be one club knowing that Owner X was a drug trafficker and using that to blackmail them to pay over the odds for one of their players in order to keep schtumm. Risky business that. Bullets might find their way into heads……but they might reckon that the trafficker would pay a bung to keep schtumm once. If it inflated the value by £10m, that might be all the club would ever want……

    A third way is to use the proceeds of drug trafficking, initially laundered into some ‘acceptable’ monetary form, to buy a football club and continue to finance it. If you’re, say, making £500m a year from drugs, spending £50m a year subsidising a football club is merely ‘paying tithes’ as the church would have said in centuries past. I have no idea if anyone has done that…..

    Another would be to set up a ‘ticketing agency’ which buys 5000 tickets a weekend for games. That way, you could probably launder £1m a month whilst paying yourself a decent salary.

    There is no end of the ingenious ways you could do it. Any escort agencies supplying ‘box office entz’ to corporate football land??

    What I think you’re suggesting is that transfers can be ‘sweetened’ using dirty money as bungs to ‘incentivise’ managers, club officials etc etc. Presumably then you would need money deposited in some suitably obscure jurisdiction prior to recycling it into the system somehow or other.

    This is pretty small beer to be honest compared to the bungs paid in industries like defence. I had it on good authority during my MBA that certain places in SE Asia routinely saw bungs of up to 15% of contract value paid to Govt ministers or other senior officials and that, if you weren’t prepared to pay them, you might as well not do business there. In the Middle East, too, ‘agents’ get paid a up to 5% commission of contract value. When that’s ££1bn+ like Al Yamamah was, that’s a tidy sum for the Mark Thatchers and David Mellors of this world……you can scream and shout about it, but that’s the way business gets done there.

    Whether or not any of those bungs are dirty money, I have no idea. But don’t think for a moment that bungs are only linked to drug money. They’re endemic in the world………..

  19. @Rhys:

    Out of all of this, the one thing that’s the most curious to me is that certain ppl would choose to put these activities on display in front of a football audience.. An audience that otherwise wouldn’t have the slightest interest in these sorts of issues. A miscalculation, in my opinion.

  20. Anne you are a glutton for punishment?

    http://www.rangerstaxcase is very interesting in that Craig Whyte aka MBB (Motherwell Born Billionaire) on that site, was able to buy Rangers Football Club! His c.v. is not at all impressive, so why should “investors” place £millions in Whyte’s care somewhere in the British Virgin islands. Sir David Murray aka SDM and Minty (Murray Mints) Moonbeam (stay in the shadows) on that site, is in my view being misinterpreted. So I am left to wonder why Jabba aka as Jim Traynor of the Daily Record and BBC Scotland, Chucker aka Chic Young, another reporter, and other so-called journos such as Roddy Forsyth of the Daily Telegraph did not ask the obvious question – Why(te)?

  21. Anne, another excellent article and very well explained. Like the other readers I look forward to the next part.

  22. @Notoverthehill:

    No, I’m not a “glutton for punishment.” There would be no audience for an article like this if football fans weren’t already wondering about these things, and discussing them with friends and family. I have no inside sources, just a lap top, and everything that I’m saying is right there on display for everyone to see. It’s just a fact.

  26. For those who are too busy to click and skim through the link, here’s a highlighht:

    “Mazhar Majeed, the Croydon-based businessman filmed by the News of the World bragging about fixing Pakistan Test matches, was also quoted as having said “the only reason” he bought Croydon Athletic was to launder the money made from match-fixing”

  27. @Anne

    You probably wouldn’t know a “bitcoin” if you tripped over one. They are an artificial currency backed by technology (cryptanalysis) and not a government. Some governments are concerned that they could be used in laundering, and they do trigger some kinds of laws related to banks and investments.

    In any event, a cursory examination of bitcoins seems to indicate that while determining ownership can be problematic, tracing bitcoins is easier than regular currencies. And hence, probably isn’t of concern to your quest.

  28. Incredibly researched article. Just hope the authorities have the means in place , and in some cases, the will to completely blow this out in the open.
    Just hope we do not ever become beguiled into buying into any of this with the promise for a few pieces of silver.

  29. @finsbury:

    Thanks for that link to the Croydon athletic case. I actually covered it a bit here:

    http://blog.emiratesstadium.info/archives/17658

    It’s at the very end. Apparently, shortly after that story broke, the Chairman of Croydon athletic was found dead in a garage with a gunshot wound to the head. Reportedly, it was a suicide.

  30. @Gord:

    That’s really interesting about bitcoins. I had never heard of them. I know that gambling chips can be used as currency in money laundering, so the use of any other kind of alternative currency is certainly a possibility.

  31. @mandy dodd:

    Glad you enjoyed the article, and I as well hope that Arsenal doesn’t get involved in this. As for the authorities… Well, we saw how Operation Apprentice turned out.

  32. Anne, if you let me choose, then how about the Swiss money laundering “banks”? From a European perspective (although neither you or me lives in Europe) it seems closer to home then the Russian mafia and New York.

  33. Very impressive young lady .Am waiting with baited breath for the follow up.Keep up the good work .

  34. @Kentetsu:

    That’s where I was planning to go anyway. 🙂 The main reason being that the courier organizations that I already referred to in this article were allegedly muling all that cash to Switzerland for deposit with the shadow banking industry.

  35. @Brickfields:

    Glad you enjoyed it. Hopefully part 2 won’t disappoint (no pressure on me, right? 🙂 )

  36. @Anne,
    I am becoming greatly impressed with your work ethic and commitment to the cause. Very well done, keep it up! 🙂

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