Tony Soprano used his lapdancing club; Mickey Blue Eyes sold paintings. But in real life money laundering is much bigger business.
And as highlighted in our feature this week (page 22), there are growing suspicions that organised crime is targeting arbitration to wash its dirty cash.
Surprised? You shouldn’t be; big crime can always find a way into legitimate business. Take the report on money laundering through the football sector published by inter-governmental policy body the Financial Action Task Force in 2009, which identified both the specific vulnerabilities and the complex techniques used.
And now many practitioners are expressing well-founded fears that international arbitration is also vulnerable to corrupt practice.
The explosion of international arbitration in the past few years has created an entirely new community of users. Clearly, bodies such as the ICC have a built-in process of scrutiny (although its airy dismissal of the possibility of any dodgy practices within arbitration seems complacent). There is some evidence that certain parts of the world have a cultural suspicion of the ICC regime, with its Franco-Anglo Saxon baggage, preferring the Uncitral rules. In any case, the vulnerabilities lie not in the probity of the arbitrators – there is no evidence of any danger in that regard – but in consent awards. If apparently disagreeing parties suddenly settle, then the arbitrator’s approval for that settlement will essentially allow a big-money transfer to take place, with no awkward questions.
Complex? Yes, but then all money-laundering is complex; just look at the BCCI and Abacha cases, which involved elaborate structures and billions of dollars. And as Mafia expert John Dickie notes in this week’s feature, organised crime has its own professional advisers attached; since the 1960s the Calabrian Mafia, to take just one example,
have had their children trained as lawyers and financial experts.
If you’re partial to organising a spot of maritime piracy or people-trafficking, then faking contract disputes isn’t going to faze you. A scam is a scam is a scam – even if
it involves unwitting lawyers.