"Was Citibank a way for Saudis to move money to al-Qaeda?" -- Leonard D. Wallace, Financial Consultant.
DETROIT -- The question haunts Wallace and, as much as he tries to find the answer, he may never know the truth. That's because Saudi secrecy laws forbid revealing bank records to anyone outside the kingdom and, as a result, several Western banks may have been caught up in diverting money collected for "charitable" purposes that was actually piped to terrorists and their families.
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Cut off the money and the bad guys are in trouble. The nexus of greed, corporate corruption, powerful influences and the ability to shift vast sums of money through shady multinational channels is a serious threat to our national security -- an issue given scant attention in the presidential campaign. Instead of following the money, we are on the trail of mindless zealotry and grand distractions.
President George W. Bush declares the forefront in the war on terror is an indefinite occupation of Iraq and the need for "resolve" to engage in daily, bloody conflicts with "the enemy."
Last week, an Army Reserve platoon refused to deliver a shipment of fuel in what the soldiers called a "suicide mission." Bush sees Iraqi insurgents as our foes, while the real enemy -- Osama bin Laden and his murderous minions -- laugh all the way to the bank, literally.
The truth is, we can better protect the homeland and thwart global terrorism by going after bankers in expensive Italian suits who use networks of shady bagmen to shift huge sums of money around the world than by shooting at angry people in Baghdad.
American dollars are routinely transferred around the world with little scrutiny from our own government and even the banks involved seem to know little about these matters. Maybe that's the way they like it.
The media has spent far more time covering Martha Stewart's crimes than examining the behavior and corrupt practices of the world's largest financial institution -- America's own Citigroup.
Calls to Citigroup for comment in connection with this article were unreturned.
During 2001, Leonard Wallace, a Florida-based financial consultant, was involved in a series of loans that would have totaled $5 billion. The money was intended to finance his own projects and others. It involved several banks. Citigroup assured collateral and its authenticity. It featured a Saudi prince and bank accounts in Singapore, Miami, Scotland and, perhaps, beyond.
The aborted deal cost Wallace plenty and he now has a notice of claim against Citigroup for $550 million.
Wallace's story is best understood with the backdrop of the vast reach of Citigroup and a corporate culture plagued with scandal. With subsidiaries, branches, partnerships, politically powerful customers, relationships with foreign governments, and 300,000 employees, Citigroup's influence is globally powerful and pervasive -- and, in many cases, corrupt.
The bank was deeply involved in the Enron collapse -- the symbol of modern corporate criminality. Enron cheated its shareholders and employees, and Citigroup was a willing accomplice.
After Enron went belly-up, the bank reached an agreement with the Securities and Exchange Commission to pay $120 million in fines for helping Enron disguise loans as cash in order to defraud investors. That was a slap on the wrist for Citigroup, and just one of many recent examples of the bank's slippery dealings in loans and other manipulated transactions to cater to its clients' needs, regardless of the legitimacy of the purpose.
This past May, the bank agreed to a $2.65 billion settlement with people who invested in WorldCom before it filed for bankruptcy. Citigroup was WorldCom's lead banker, and its stock research of the company is under fire for failing to reveal obvious problems.
Citigroup is also under investigation for its role in the failure of the Italian dairy giant, Parmalat, its accounting of huge loan losses in Argentina, and the British are probing a questionable $13.5 billion deal linked to European government debt.
Citigroup suspended two of its investment banking executives in China who are accused of using phony financial information with bank regulators.
In September, Japanese bank regulators slapped Citigroup with severe penalties, providing another blow to the bank's already tarnished reputation. The Financial Services Agency ordered the subsidiary Citibank NA to completely shut down its private banking operations in Japan.
The Wall Street Journal reported regulators learned that "Citibank employees failed to prevent transactions that may have been linked to money laundering, extended loans used to manipulate publicly traded stocks, routinely misled customers about risk involved in financial products and tied loans to the purchase of specific instruments."
Remember, Citigroup's friends are everywhere. The Saudis are always on the top of the list of the most seasoned and sophisticated money-shufflers on the planet and they, of course, are cozy with Citigroup.
"Forbes" Magazine uncovered evidence that a Saudi bank Citigroup partially owned may have been funneling thousands of dollars to terror groups and the families of Palestinian suicide bombers, at the urging of members of the House of Saud.
For over 20 years, Citigroup has had a 20 percent stake in the Saudi American Bank, also know as Samba, and ran the operation under a management contract since 1980.
"Forbes" reports the U.S. bank used Samba to nurture its ties with the Saudi elite and that the relationship runs deep and sometimes loose.
Prince Alwaleed bin Alsud is the fourth-richest man in the world and he owns $9.4 billion in Citigroup stock and a 7 percent stake in Samba. Other Saudi royal family members have significant holdings in both banks.
In 2000, the Saudi government issued an edict requiring all banks operating in the kingdom to have charitable accounts to handle donations to the "martyrs" in the Palestinian uprising. Money from the funds, known as Account 98, was paid to the beneficiaries of suicide bombers and to Hamas to help with recruitment. Samba was a major conduit for this money.
The Saudis refused to cooperate when Citigroup expressed concerns about the cash going to terrorist groups.
And where does Lenny Wallace fit into this? Is he Citigroup's next Parmalat? In 2001, just one day before the events of Sept. 11, Wallace came to the threshold of a deal that is disturbing and baffling for him. It seems to have many things in common with the litany of Citigroup misdeeds and points to a pattern of behavior by officers and employees of the bank.
Wallace was caught in the crossfire of a deal where he was asked to help facilitate a series of five $1 billion loans and then help invest the proceeds of the transactions in various business ventures of his own and others.
His records show that the loans, from several banks, were supposed to be collateralized by what turned out to be phony account authorizations linked to Citigroup Singapore's office, and counter-verified through the bank's Park Avenue headquarters and their Miami branch.
Wallace -- who has detailed records of all his communications -- then learned the real holder behind the Singapore account was Saudi Prince Alwaleed bin Alsud, a man who bragged that Sanford Weill, Citigroup's then-CEO, was his personal "banker."
Wallace then alerted Citigroup officers, executives and directors, along with federal authorities, about the unusual reporting and transactions. Where the hell was all this money supposed to be going? Why can't Citigroup explain how their people were involved in such a deal? Why doesn't the Saudi government respond to questions about the prince's role?
What about the oversight committees in Congress? And, God forbid, the Justice Department and the regulatory agencies might take a peek at these matters?
Leonard Wallace deserves some answers -- and so do the American people.
| Niagara Falls Reporter | www.niagarafallsreporter.com | Oct. 19 2004 |