Russian-Style Kleptocracy Is Infiltrating Americahttps://www.defenseone.com/ideas/2019/02/russian-style-kleptocracy-infiltrating-america/154749/When the U.S.S.R. collapsed, Washington bet on the global spread of democratic capitalist values—and lost.... Washington had placed its faith in the new regime’s elites; it took them at their word when they professed their commitment to democratic capitalism. But Richard Palmer, the CIA station chief in the United States’ Moscow embassy, had seen up close how the world’s growing interconnectedness—and global finance in particular—could be deployed for ill. During the Cold War, the KGB had developed an expert understanding of the banking byways of the West, and spymasters had become adept at dispensing cash to agents abroad. That proficiency facilitated the amassing of new fortunes. In the dying days of the U.S.S.R., Palmer had watched as his old adversaries in Soviet intelligence shoveled billions from the state treasury into private accounts across Europe and the U.S. It was one of history’s greatest heists.
Washington told itself a comforting story that minimized the importance of this outbreak of kleptomania: These were criminal outliers and rogue profiteers rushing to exploit the weakness of the new state. This narrative infuriated Palmer. He wanted to shake Congress into recognizing that the thieves were the very elites who presided over every corner of the system. “For the U.S. to be like Russia is today,” he explained to the House committee, “it would be necessary to have massive corruption by the majority of the members at Congress as well as by the Departments of Justice and Treasury, and agents of the FBI, CIA, DIA, IRS, Marshal Service, Border Patrol; state and local police officers; the Federal Reserve Bank; Supreme Court justices …” In his testimony, Palmer even mentioned Russia’s newly installed and little-known prime minister (whom he mistakenly referred to as Boris Putin), accusing him of “helping to loot Russia.”
The United States, Palmer made clear, had allowed itself to become an accomplice in this plunder. His assessment was unsparing. The West could have turned away this stolen cash; it could have stanched the outflow to shell companies and tax havens. Instead, Western banks waved Russian loot into their vaults. ... this was capital flight on an unprecedented scale, and mere prologue to an era of rampant theft. When the Berkeley economist Gabriel Zucman studied the problem in 2015, he found that 52 percent of Russia’s wealth resided outside the country.
As in the Russian case, much of this plundered wealth finds its way to the United States. New York, Los Angeles, and Miami have joined London as the world’s most desired destinations for laundered money. This boom has enriched the American elites who have enabled it—and it has degraded the nation’s political and social mores in the process. While everyone else was heralding an emergent globalist world that would take on the best values of America, Palmer had glimpsed the dire risk of the opposite: that the values of the kleptocrats would become America’s own. This grim vision is now nearing fruition.
... Every House district in the country has real estate, and lobbyists for that business had pleaded for relief from the PATRIOT Act’s monitoring of dubious foreign transactions. T... And they persuaded Congress to grant the industry a
temporary exemption from having to enforce the new law (International Money Laundering Abatement and Anti-terrorist Financing Act).
Around the time that Trump took up occupancy in the White House, the PATRIOT Act’s “
temporary” exemption for real estate entered its 15th year. Without anyone ever declaring it so, the ephemeral has been enshrined.
Much of the money that might have snuck into banks before the PATRIOT Act became law was now used to purchase property. The New York Times described the phenomenon in a series of exposés, published in 2015, called “Towers of Secrecy.” Reporters discovered that condos in the ultra-luxe Time Warner Center at Columbus Circle in Manhattan were owned by a constellation of kleptocrats. One condo belonged to the family of a former Russian senator whose suspected ties to organized crime precluded him from legally entering Canada for a few years. A condo down the hall belonged to a Greek businessman who had recently been arrested in an anti-government-corruption sweep. The family of a former Colombian governor, imprisoned for self-enrichment while in office, owned a unit he could no longer visit.
As the Treasury Department put it in 2017, nearly one in three high-end real-estate purchases that it monitors involves an individual whom the government has been tracking as “suspicious.” Yet somehow the presence of so many shady buyers has never especially troubled the real-estate industry or, for that matter, politicians. In 2013, New York City’s then-mayor, Michael Bloomberg, asked, “Wouldn’t it be great if we could get all the Russian billionaires to move here?”The warm welcome has created a strange dissonance in American policy. Take the case of the aluminum magnate Oleg Deripaska, a character who has made recurring cameos in the investigation of Russian interference in the 2016 presidential election. The State Department, concerned about Deripaska’s connections to Russian organized crime (which he has denied), has restricted his travel to the United States for years.
Such fears have not stood in the way of his acquiring a $42.5 million mansion on Manhattan’s Upper East Side and another estate near Washington’s Embassy Row. ...
