On June 17, a post on the Fellowship, “America Is Losing Southern Arizona to Mexican Drug Lords,” reported that three counties in southern Arizona are so overrun with armed illegals that the federal government has signs up warning Americans not to tred. In effect, the Obama administration is ceding thousands of acres of land to Mexico.
Yesterday, June 29, Adam Thomson of the Financial Times reports that Mexico,
“the country of 108m people is embroiled in a bloody drugs war that has risen to the top of the domestic agenda and has become a real concern for Washington as fears grow that the violence could destabilise the US’s southern neighbour – with all the security implications that that would involve.According to Mexican government figures, more than 22,000 people have died in drugs-related violence since President Felipe Calderón…declared a frontal assault on organised crime in December 2006. There have been 183 beheadings among this year’s deaths alone.With important gubernatorial and municipal elections taking place in almost half the country next Sunday, there are signs that rich and well-armed drug cartels are intimidating local candidates. On Monday, Rodolfo Torre, the PRI’s candidate for governor of Tamaulipas state, which borders Texas, was gunned down as he travelled to a campaign event. Authorities believe the killing, the highest-profile murder of a Mexican politician since the slaying of 1994 presidential candidate Luis Donaldo Colosio, was the work of the drug cartels. Threats have forced some others to abandon their campaigns.”
According to Michael Smith of Bloomberg, the 45,000 troops Calderon deployed to fight the cartels have had little success. The drug-related battles that have taken more than 22,000 lives have raged mostly along the 2,000-mile border that Mexico shares with the U.S. Among the dead are police, soldiers, journalists and ordinary citizens. In the Mexican city of Ciudad Juarez, just across the border from El Paso, Texas, 700 people had been murdered this year as of mid-June. Six Juarez police officers were slaughtered by automatic weapons fire in a midday ambush in April.
Back in February 19, 2009, three of Mexico’s border cities were rocked by riots. Hundreds of protesters took to the streets demanding, paradoxically, that the Mexican army leave town.
In an interview then with FoxNews, Texas state Senator Dan Patrick (R) said, “We [Texas government] believe that the protesters are in the pay of the drug cartels to protest.” Patrick also said the just-across-the-border violence had led Texas to go on alert for the first time in modern history. The state drew up a multi-point plan depending on the state of violence across the border. “We’re concerned about violence spilling across the bridge into Texas on a regular basis. We’re going to see a rapid escalation of violence in Mexico, especially along the border. Yesterday, the drug cartels used bazookas against the police. Mexico is on the verge of civil war on the western coastal region and along our border.” Then Patrick declared, “We’ll be ready in Texas to defend ourselves, [even] if the Obama administration is not.”
But, as Smith of Bloomberg points out, in the end Americans are responsible for Mexico’s drug lords and wars:
“Behind the carnage in Mexico is an industry that supplies hundreds of tons of cocaine, heroin, marijuana and methamphetamines to Americans. The cartels have built a network of dealers in 231 U.S. cities from coast to coast, taking in about $39 billion in sales annually, according to the Justice Department. Twenty million people in the U.S. regularly use illegal drugs, spurring street crime and wrecking families. Narcotics cost the U.S. economy $215 billion a year — enough to cover health care for 30.9 million Americans — in overburdened courts, prisons and hospitals and lost productivity….”
America’s banks have also played a hitherto undocumented role in the violent drug trade that has convulsed Mexico for the past four years.
Moving money is central to the drug trade — from the cash that people tape to their bodies as they cross the U.S.-Mexican border to the $100,000 wire transfers they send from Mexican exchange houses to big U.S. banks. As Smith describes it, Bloomberg Markets magazine reports in its August 2010 issue that for the past two decades, U.S. and European banks have been used by Latin American drug traffickers to launder their drug money, so says Paul Campo, head of the U.S. Drug Enforcement Administration’s financial crimes unit. Two of the biggest banks in the U.S., Wachovia Corp. and Bank of America Corp., are involved.
No bank has been more closely connected with Mexican money laundering than Wachovia, which has made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers. Wachovia admitted it didn’t do enough to spot illicit funds in handling $378.4 billion for Mexican-currency-exchange houses from 2004 to 2007. That’s the largest violation of the Bank Secrecy Act, an anti-money-laundering law, in U.S. history — a sum equal to one-third of Mexico’s current gross domestic product.
“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” says Jeffrey Sloman, the federal prosecutor who handled the case. “It’s the banks laundering money for the cartels that finances the tragedy,” says Martin Woods, director of Wachovia’s anti-money-laundering unit in London from 2006 to 2009. Woods says he quit the bank in disgust after executives ignored his documentation that drug dealers were funneling money through Wachovia’s branch network. “If you don’t see the correlation between the money laundering by banks and the 22,000 people killed in Mexico, you’re missing the point,” Woods says.
Miami-based American Express Bank International paid fines in both 1994 and 2007 after admitting it had failed to spot and report drug dealers laundering money through its accounts. Drug traffickers used accounts at Bank of America in Oklahoma City to buy three planes that carried 10 tons of cocaine, according to Mexican court filings. Federal agents caught people who work for Mexican cartels depositing illicit funds in Bank of America accounts in Atlanta, Chicago and Brownsville, Texas, from 2002 to 2009. Mexican drug dealers used shell companies to open accounts at London-based HSBC Holdings Plc, Europe’s biggest bank by assets, an investigation by the Mexican Finance Ministry found.
Mexico’s drug cartels have become multinational criminal enterprises. Some of the gangs have delved into other illegal activities such as gunrunning, kidnapping and smuggling people across the border, as well as into seemingly legitimate areas such as trucking, travel services and air cargo transport, according to the Justice Department’s National Drug Intelligence Center. Mexican Senator Felipe Gonzalez says these criminal empires have no choice but to use the global banking system to finance their businesses, “With so much cash, the only way to move this money is through the banks.” Gonzalez carries a .38 revolver for personal protection. “I know this won’t stop the narcos when they come through that door with machine guns,” he says, pointing to the entrance to his office. “But at least I’ll take one with me.”
Although the 1970 Bank Secrecy Act requires banks to report all cash transactions above $10,000 to regulators and to tell the government about other suspected money-laundering activity, no big U.S. bank has ever been indicted for violating the Bank Secrecy Act or any other federal law. Instead, the Justice Department settles criminal charges by using deferred-prosecution agreements, in which a bank pays a fine and promises not to break the law again.
Large banks are protected from indictments by a variant of the too-big-to-fail theory. Indicting a big bank could trigger a mad dash by investors to dump shares and cause panic in financial markets, says Jack Blum, a U.S. Senate investigator for 14 years and a consultant to international banks and brokerage firms on money laundering. The theory is like a get-out-of-jail-free card for big banks, Blum says. “There’s no capacity to regulate or punish them because they’re too big to be threatened with failure. They seem to be willing to do anything that improves their bottom line, until they’re caught.”
Against all this, Obama announced this May he’ll send 1,200 National Guard troops to the border with Mexico — a Band-aid on the 17,400 agents on the U.S. side of the border. Texas will receive 250 of the 1,200 troops; 224 troops will head to California; 524 to Arizona; 72 to New Mexico; and a national liaison office will draw another 130. In effect, only about 20% of the deployed troops will go to Texas, which has 64% of the U.S.-Mexico border.
In Tijuana, 15 miles south of San Diego, 75-year-old Gustavo Rojas has lived for a quarter of a century in a shack in the shadow of the 10-foot-high steel border fence that separates the U.S. and Mexico there. He points to holes burrowed under the barrier: “They go across with drugs and come back with cash. This fence doesn’t stop anyone.”