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May 22, 2001

Narco News 2001

Citigroup &

Montesinos, Inc.

"Private Banking" for Montesinos Family

Protection for U.S. Favored Drug Traffickers

The Selective White Collar Drug War

Special to The Narco News Bulletin

By Al Giordano

May 22, 2001

An investigation by the daily La Republica of Peru revealed that among the clients of Citibank's controversial "Private Banking" program was found the wife and two daughters of Peruvian strongman-turned-fugitive Vladimiro Montesinos.

As recently as 1998, Citibank is found on the Montesinos clan's money-laundering route of more than $18 million U.S. dollars, according to La Republica.

That year, Maria Trinidad Becerra Ramirez, wife of Montesinos, and their two daughters, Samantha and Silvana Montesinos Torres, ordered a complex routing of $18,643,276 dollars through the following banks: Luxembourg Societe Anonyme; Midland Bank Public Lmt.; The Royal Bank of Scottland-U.K; Schweizerische Volks Bank Zurich; Bank of America National Trust & Savings Association; Popular Bank of Florida (today, BAC Florida Bank, branch in Buffalo N.Y); Comerica Bank USA; Unicredito (Italy); Royal Bank of Canada; Midstate Bank & Trust Co (Washington); Union National Bank & Trust Co.; Banco Paribas (France); Weston Compagnie de Finance Et D'investissement(Suisse); and Citibank Private Bank.

Citibank Private Bank conducts Private Banking for wealthy clients. As SUNY Binghamton professor James Petras, a global expert on money laundering, explained in La Jornada of Mexico City last week (and published in English on The Narco News Bulletin):

"Private Banking is a sector of a bank which caters to extremely wealthy clients ($1 million deposits and up). The big banks charge customers a fee for managing their assets and for providing the specialized services of the private banks. Private Bank services go beyond the routine banking services and include investment guidance, estate planning, tax assistance, off-shore accounts, and complicated schemes designed to secure the confidentiality of financial transactions. The attractiveness of the "Private Banks" (PB) for money laundering is that they sell secrecy to the dirty money clients."

Montesinos certainly fits the profile of an "extremely wealthy client" who needed secrecy. But by 1998 it was well-known even to casual observers of Peru politics that Montesinos, an advisor to then-president Alberto Fujimori who controlled the feared state security apparatus, had frequently and publicly been accused of involvement in embezzlement, corrupt activities, narco-trafficking and grave acts of torture and violations of human rights.

Still, the appearance, specifically, of Citibank Private Bank on this money-laundering trail suggests that none of those accusations concerned Citibank, arguably the most powerful bank on the planet.

In fact, prior to that 1998 adventure in laundering $18 million dollars by the Montesinos family, Citibank had instructed its bankers to keep a special vigilance over Latin American political leaders, reports Money Laundering Alert:

"In September 1997, in the aftermath of the scandal over how it handled the stolen fortune of Raul Salinas de Gortari, brother of the former Mexican president, Citibank adopted a written policy that established "special criteria for approval of accounts for public figures." It requires various levels of approval, reporting and the maintenance of special records, including "Opening Diary Notes."

The La Republica investigation, published last November, revealed that Citbank International's offices in Great Britain held $322,720 - nearly a third of a million dollars - for a key Montesinos ally in the Peruvian military: General Luis Delgado de La Paz. And that this deposit, too, was made after the new "special criteria" was enacted by Citibank for accounts of public figures:

"Sources confrm that in Latino bank there were documents that confirmed those deposits, made in 1998… Delgado de La Paz is the title holder of two accounts, one in Citibank International, in London, for $322,720 dollars, and another in Credit Suisse, for $188,200 dollars."

De La Paz had been in the news in 1998 - the same year he made the deposit - in Peru after Montesinos promoted him to the logistical command of the Peruvian military.

In mid-2000, due to the reluctance of the Fujimori regime in Peru to back the $1.3 million Plan Colombia military intervention in neighboring Colombia, U.S. officials turned against the dictator they had helped to install, had favored and protected for eight years prior. It was Peru correspondent Peter Gorman who first suggested in the January 1, 2001 edition of The Narco News Bulletin, that the downfall of Fujimori and his enforcer Montesinos was a "bloodless coup" engineered by Washington and Langley not because of their drug trafficking activities or gross human rights violations, but because they would not go along with the Plan Colombia program.

A secret videotape transcribed and made public on May 14th of this year by La Republica in the Peru capital of Lima, and translated to English by Narco News this week, precisely confirmed that rift between the Peruvian and U.S. officials.
Montesinos had made thousands of secret videotapes of meetings he had with Peruvian leaders and U.S. officials, many of which are in his control even while he hides as an international fugitive, which explains the reluctance of officials in both countries to capture him; last Fall, when Montesinos escaped to Panama, he released a photograph of himself in front of some of those videos, as a warning of what might become public upon his capture.

In the "Vladi-Video #1487," made on April 21, 1999, Montesinos explains to a Peru television executive his government's difference with the Americans:

"The only alternative that the Americans have in order to solve the problem of Colombia, is the invasion... They are preparing half a million Marine infantry troops in order to invade Colombia and they asked us for the President to make declarations because they could not say it themselves… When the infantry of the Marines does enter, what are they going to make the FARC and the drug dealers do? They are going to come to Perú. And if we don't close the border now and adopt security measures, we will bring the problem here."

He who lives by the videotape dies by the videotape, and it was precisely the astonishing public release of one of Montesinos' videotapes by his political opponents (how they got it remains a mystery) in which Montesinos bribes a member of Peru's congressional opposition, that led to Montesinos' loss of control. He fled the country and his former sponsor, President Fujimori, named a special prosecutor, Jose Carlos Ugaz, to investigate his former right hand man.

According to the daily Clarin of Argentina last November 5th, Jose Carlos Ugaz, in no time at all, easily obtained evidence of the Montesinos money-laundering trail. Facts that the vast global empire of Citibank, previously, had no incentive to know about their Montesino family and friends accounts:

"The prosecutor said that he will investigate not only the bank accounts in Switzerland, but others that he also had, according to information obtained by Clarin, in Atlantic Security Bank, Bank of New York, Republic National Bank, Florida Bank, Midstate Bank & Trust Company, Citibank Private Bank and the Central Counties bank, as well as other banks in Panama, the Cayman Islands, Trinidad and Tobago.

"In the majority of the mentioned banks, the accounts would be in the name of Montesinos' wife, Trinidad Becerra Ramirez, and it is suspected that they are also in the name of one of the sisters of the ex-advisor, Karelia Montesinos Torres, married with the ex-strategic chief of the Second Military Region, General Luis Cubas Portal."

Again, Citibank appears through its Private Banking division.

And from here we begin to arrive at the unspoken public policy scandal to come over the behavior of Citibank and other financial giants in the United States when it comes to laundering the ill-gotten gains of Latin American dictators and businessmen: Citibank's declarations of "special criteria" and vigilance over public figures is only selectively applied according to the current political positions of the U.S. government.

As long as Montesinos was an "intelligence asset" of the CIA and U.S. government, Citibank and the other U.S. banks knew they could safely look the other way without provoking the attention of the authorities who, supposedly, prosecute illicit money laundering.

It was only when Montesinos fell out of favor with U.S. authorities that Citibank made any move against his vast money-laundering operation. U.S. law enforcers moved on a key Montesinos "bagman" only weeks after the November 2000 downfall of Fujimori, and just a few months after Montesinos went underground, both having lost the support of the United States.

The March 2001 issue of Money Laundering Alert included a sub-section titled:

Montesinos "bagman" a Citibank customer

And it reported:

Now, another of its (Citibank's) foreign "public figure" customers, Victor Venero Garrido, a Peruvian military official, whom the FBI says was a "most trusted bag/straw man" for Montesinos, has had his Citibank accounts and large cashiers checks seized by the U.S. on money laundering and other grounds. On January 26, the FBI arrested him in Miami as a foreign fugitive as he tried to withdraw funds from Citibank.

Money Laundering Alert called Montesinos' operation a "Far-reaching laundering scheme," noting that:

Montesinos allegedly moved $75 million between 1998 and 2000 through other accounts to diverse businesses in several countries. Fujimori fled Peru in December shortly after Montesinos escaped. The president took refuge in Japan, his ancestral home, which refuses to honor Peru's extradition request because of Fujimori's previously undisclosed dual nationality.

The Justice Department and FBI have initiated a bi-coastal effort to find and seize the fortune Venero allegedly deposited in California and Florida banks. Federal court orders freezing his accounts have been obtained in both states on laundering and other grounds (Title 18, USC Sec. 981(b)(4)). "We think there are more assets to be found," said Judy Orihuela, an FBI spokeswoman.

The FBI says Venero recently deposited about $15 million at Citibank in Miami, and had four Citibank cashiers checks and six from Hacienda Bank, of California, when arrested. The FBI believes Venero had up to $1 million in a Sanwa Bank account and $250,000 in Northern Trust, which advertises itself as "The Private Bank."

The military pension fund scheme, the U.S. says, involved kickbacks to Venero from Peruvian banks where he had deposited millions in fund dollars. The FBI says he stole over a hundred million dollars from the fund. Neither he nor Montesinos has yet been charged with a U.S. crime.

And Money Laundering Alert concludes that part of Montesinos' fortune comes from "Alleged drug trafficking":

In Peru, the corruption allegations against Fujimori and Montesinos go far beyond misappropriation and shady business deals. They allegedly netted up to $45 million from deals with, and payoffs from, Pablo Escobar, the late Colombian drug lord, according to his brother, Roberto, who is now in a Colombian prison. Montesinos allegedly had agreed to give safe passage to Escobar's drug-laden planes at Peru airstrips.

And yet, it was not until after Montesinos' fall from grace with U.S. authorities that Citibank moved against his money-laundering operation, by alerting federal authorities to the accounts of the "bagman," Venero.

Reuters reported this Spring that Venero opened his Citibank account in 1998, but that Citibank claims that "nothing seemed out of place" with his deposits of $15 million U.S. dollars in the Miami branch:

NEW YORK, March 28 (Reuters) - A high-ranking Peruvian official, Victor Alberto Venero-Garrido, opened a bank account at Citibank in Miami in 1998, and moved about $15 million through it until January this year, when the U.S. Federal Bureau of Investigation arrested him.

As Latin Americans often opened dollar-denominated bank accounts in the United States to protect their savings and stocks from inflation in their home countries, nothing seemed out of place -- at first.

But Citibank, a unit of financial services firm Citigroup Inc. and other banks with Venero-Garrido's money gradually noticed unusual activity in the accounts and alerted the authorities, law enforcement officials said.

Whatever the "special criteria" boasted about by Citibank officials (including by former Citicorp CEO John Reed in his 1999 testimony before a Congressional committee investigating drug money laundering), "nothing seemed out of place" with Venero's accounts to Citibank officials, said law enforcers.

Yet, it was a matter of public information that Venero controlled Peru's police and military pension funds, and that he was closely allied with Montesinos.

Reuters adds that the Venero millions, before they reached Citibank, were "surreptitiously removed from Peru through banks in the Cayman Islands. He used wire transfers to deposit funds in to the account, opened accounts under corporate names and even used relatives to deposit money from Peru, according to sources close to the investigation… Ultimately, the funds wound up at a number of U.S. banks and brokerages," including, "Citibank, where Venero-Garrido had a personal banker although he was not a private bank client."

Earlier this year, the Miami Herald reported that there was, indeed, plenty "out of place" with Venero's activities, including within Florida, and yet none of this seemed "out of place" to Citibank officials - at least while Montesinos still enjoyed the banking of the U.S. government.

The Herald reports on Venero:

His South Florida homes were bought in cash for a combined $666,400 in 1995, Miami-Dade County records show.

The luxury Surfside condo in Champlain Towers East, 8855 Collins Ave., was purchased in his name. The house, a two-story, 2,500-square-foot home in the Three Lakes development, 13365 SW 151st Ter., was deeded to his wife, Luz Elena Nazar Loayza.

In a 1997 deal, the condo was transferred to Vialve Company Ltd., a corporation registered in the Cayman Islands. Records list Venero as the company director. A year later, the house was transferred to the same company. No money was involved in either transaction, real estate documents show.

On Dec. 4, 2000, the properties were transferred again, this time to a company in the British Virgin Islands called Coral Row Group, according to real estate records. The company's local address: Mail Boxes Etc. on Southwest Eighth Street.

Again, we see the selectivity of Citibank's "special criteria" regarding public officials, enacted in 1997 after the scandal erupted around the bank's laundering of illicit funds for the family of former Mexican President Carlos Salinas de Gortari.

Citibank began doing business with Venero in 1998, after the "special criteria" for "public figures" was put into force. The public official, Venero, head of the state pension funds in Peru, had already bought a $666,400 South Florida home "in cash," but "nothing seemed out of place" to Citibank. He transferred his condo to a Cayman Islands company that listed him as the director, and later a house to the same; "no money was transacted," but, to Citibank, "nothing seemed out of place."

All this occurred before Citibank gave Venero a personal banker (who, despite the oft-stated duty to "know your client" apparently was unconcerned with the source of his funds or the nature of his Florida property ownership) and accepted $15 million dollars in deposits from this government functionary from Peru.

The Miami Herald also reports that, while a Citibank client with his own personal banker there, Venero had a scrape with the law last Summer:

Venero, who was in the United States on a tourist visa, didn't live in either home for very long, neighbors said.

In fact, on a July 2000 visit to the United States, he stayed in Room 1076 at the Fontainebleau Hotel, a Miami Beach Police report said. Officers showed up at his room after someone reported screams. They found Venero's girlfriend, Lourdes Muñoz, on the bed with a bloody nose.

Venero, who told police Muñoz's face had accidentally struck his elbow while his arms were raised, was hauled off to jail, along with $2,500 in his Versace billfold. The charges were dropped.

A month later, the Montesinos video scandal hit, he soon went underground, Fujimori soon fled to Japan, and only after that did U.S. officials take action against Venero, arresting him on January 26, 2001.

Venero must have intuited that the jig was up: In December 2000, as Fujimori fled, according to the Herald, he disappeared. That's when his Citibanker said he lost contact with him. And Venero changed his address to a "Mail Boxes, Etc." storefront mailbox in the British Virgin Islands.

Federal officials told the Herald they began surveillance upon Venero's house in South Florida "last year." They were not specific on the date, but the first identification of Venero by a neighbor came in December. Certainly, there had been no All Points Bulletin on Venero last July when he was apprehended by local police after bloodying his girlfriend's nose in a hotel room. Although an immigrant on a tourist visa, he was allowed to walk free: In Miami, a virtual bee hive of federal immigration officials.

But Montesinos and Fujimori were still in power then, and their bagmen and money-launderers could still count with immunity and impunity from U.S. authorities. It was in the following months that they fell. Then, and only then, did the "special criteria" kick in.

When it comes to Citibank - and other U.S. banks - this is really about an unwritten "very special criteria": Individuals who are "intelligence assets" of the U.S. government may launder millions. And the banks will compete for their business.

It is only when foreign politicians fall out of favor with U.S. authorities that the law suddenly applies.

Like the larger drug war for which it stands, government and business "controls" on money laundering represent a hypocritical policy. That policy has nothing to do with combatting drugs, but, rather with persecuting the powerless while protecting the powerful.

And when it comes to politically favored strongmen across our América like Vladimiro Montesinos, his bagmen, and his family, as long as they obey the larger official agendas of globalization, repression against social movements for true democracy and justice, and support for Plan Colombia and similar interventions, U.S. officials have their own "special criteria." They look the other way.

Holding a Mirror Up to the Drug Warriors