High-level crime
By Xavier Caño
In mid-December, a gap totaling more than $4 billion was found in the accounts of the Italian multinational company Parmalat. The Italian press contends that those billions have disappeared in a web of subsidiary companies in the Cayman Islands, the darkest fiscal haven in the world.
Bonlat, a Parmalat subsidiary that handled that money, claimed it had invested it in the Epicurum Fund, but the money did not surface. Bonlat then stated that those funds were in the Bank of America but the U.S. bank denied the assertion and now has sued Parmalat for falsification of documents. Italy’s Minister of the Economy, Giulio Tremonti, described the scandal as “Europe’s Enron case.”
In late 2001, the crimes of swindle, deceit and fraud committed by the management of the U.S. company Enron became public. That scandal was followed in 2002 and 2003 by others – also major crimes – on both sides of the Atlantic: WorldCom, AOL Time Warner, Elf, Crédit Lyonnnais, Adelphia, Global Crossing … and now, Parmalat.
As the Spanish economics journalist Joaquín Estefanía wrote: “No day passes without a scandal.” In some cases, economic crime has – by playing with smoke and mirrors – committed swindles under the guise of financial engineering or imaginative accounting. In others, like Parmalat, industrial companies that produce tangible goods have swiped money with the necessary assistance of the opaque and impenetrable framework of the fiscal havens.
This is not a question of shameless proprietors who drive their companies into bankruptcy because they themselves are thieves. When a major company goes bankrupt or is targeted for criminal activities, thousands of people are harmed and they’re not only major shareholders. For the most part, they are small and medium shareholders, workers and retired employees. High-level delinquency may be elegant, well-dressed and perfumed but it causes more harm than the mugger who steals a handbag on the bus or seizes a wallet at knifepoint.
But when the companies that commit crimes handle investment funds (the core of the current financial capitalism), then the number of people harmed rises to the millions and even the hundreds of millions. In the United States late last year, several prosecutors began to investigate irregularities in the management of investment funds; Eliot Spitzer, New York’s attorney general, after investigating those irregularities on Wall Street, said they represented “a stinking pit.”
That investigation of extortion, fraudulent practices, swindle of investors and money laundering has reached into major banks, powerful financial intermediaries and important management societies. The people responsible for those crimes are respectable and distinguished high-ranking executives, chairmen and members of management councils, and the top operators of various companies. In a word: the new neoliberal capitalists.
In the 1980s, two ultraconservatives, Ronald Reagan and Margaret Thatcher, began the rightist retreat that became the nefarious “Washington consensus,” one of whose dogmas is financial deregulation, that is, total freedom for financial capitalism, the end of standards and control regulations for the movement of capital, all of this replaced by a fairytale known as “self-regulation.”
Joseph Stiglitz, Nobel laureate in economics, has written that the financial and accounting scandals of recent years have destroyed the purported intellectual foundations of deregulation: “There is nothing fortuitous in the fact that the origin of so many problems in the 1990s dates back to the deregulation of power, telecommunications or financial companies.” And William Donaldson, chairman of the Securities and Exchange Commission, said in early December: “Self-regulation has failed.” Yet, there are people who still insist that no standards and no controls be placed on financial capitalism.
When the magazine The Economist celebrated its more than 160 years of existence, it published an editorial that said the worst enemies of capitalism are the capitalists who abuse the unlimited power they have gained. The prestigious magazine must suffer from pathological naiveté, because it is capitalism’s own predatory version of neoliberalism that harbors the metastatic tumor of high-level crime that causes so much inequality and poverty. Not to mention its complicity and concomitance with the laundering of money generated by terrorism and organized crime.
Neoliberal capitalism, whose dogmatic dictatorship began in the mid-1980s, is one of the worst catastrophes that has befallen humanity, which now witnesses its results. It is a catastrophe whose origin is the predators’ conviction that there are two kinds of human beings: A minority elected by the gods of success and unending profits (they), and a majority that can be victimized and exploited at the convenience and whim of the former (everybody else).
Xavier Caño is a journalist. This article is made available by the Centro de Colaboraciones Solidarias. For any suggestions, please contact the Center at: ccs@tsai.es
