draining development.pdf - Khazar University

390 Draining Development?from Cayman Islands, Switzerland, and the United States), while a furtherUS$56 million had been frozen. The fate of the missing US$1 billionestimated to have been looted, but not sent abroad, is not discussedexplicitly, nor can it be deduced readily from the data. Dumas (2007, 7)clarifies as follows:Through bribery and extortion, Montesinos was able to capture the Judiciary,the Media and the Legislature. . . . the average bribe given to aSupreme Court and Superior Court judge was between US$5,000 andUS$10,000 a month. Members of the print media received initial paymentsas high as US$1.5 million, and also requested additional sums for manipulatingheadlines ($3,000–4,000), and stories on the inside pages ($5,000).The television media received bribes that ranged between US$2 [million]and US$9 million. Fujimori undermined all checks and balances and wasable to concentrate executive, legislative and judiciary powers in himself.The manipulation of the press and the capture of other watchdog groupswithin civil society further reduced Fujimori’s public accountability.If bribes were collected within Peru, the cash was transformed intobearer certificates (now almost unavailable anywhere because of ex postFATF pressure), which were then given to Montesinos. As the custodianof the certificates, Montesinos would use a local bank to wire the certificatesto a foreign bank that would remit monies to a financial haven oracquire assets abroad (see figure 12.1). If this were to happen today, itwould arouse concerns or SARs from compliance officers because thefunds so exceeded Montesinos’s known income and wealth. Given hiscontrol over the state apparatus, however, reporting might have provedhazardous for the bankers (and might have been considered dangerousby them), and successful action against Montesinos would have beenextremely unlikely at that time.Inbound laundering operations greatly benefited from a domesticlaw, the Repatriation of Foreign Currency Act, that came into force in1988 in the context of balance of payments difficulties. This law allowedthe repatriation of foreign currency without tax and informationrequirements. Using different legislative measures, Fujimori kept thispractice legal and, so, facilitated the repatriation of illegal funds for thepurpose of election campaign financing and the bribing of judges, membersof Congress, and the mainstream media.