Our m

A rather innocuous Study was released last week in the United States which has dra- matic ramifications for Canada.

The study, done by nwo Florida International” ~ University College of Business Administration finance professors, found that the United States government lost more than $42 billion in tax revenues in 1999 duc to the artificial overpricing and underpricing of products entering and leaving the United States

Now this, in itself, means licle, albeit $42 billion is a heck of a lot of money, Even Jane Stewart would have trouble losing that much. But the phrase “overpricing and underpricing” caught my attention.

{Moving forward in the report we learn that Canada is the number one culprit in the ficilitation of this. The study cites $15.5 billion crossed the border in 1999 in these bogus transactions. In fact, Canada is responsible for almost 25% more than that of its nearest rival, Japan. Mexico, number three on the

ist, is over 30% less than Canada. *., Now, what the study shows, when it refers to over- pricing and underpricing is - moncy Jaundering pure and simple. Examples of Canadian exports tu the. U.S. cited are thitigs like $7,000 hacksaw blades.: How about Christmas tee lights for $815 each? They must have extraordi- narily good water in the Netheriands because it costs $3,050 per litre. China evi- dently. produces wristwatch _ atteries for. their notorious

laundering

crime and punishment

Tractors came to Canada tor the princely sum of $448.41 each.

Now, Pr no expert in till- ing the fields, but Pm willing to bet that John Deere could- n't survive very tong selling tractors for that price.

So, what we see are things being sald to companies in the U.S. fom companies in Canada for ridiculously high prices. The reverse is true for

roducts leaving the U.S.A.

is makes no business sense,

obviously, so we draw the conclusion that this is one of the methods uscd by orga- | nized crime to launder their money between their legiti- mate, corporate fronts,

“Criminals and tax evaders have discovered that launder- ing money through the bank- ing system is dangerous, but it is virtually undetectable in international trade,” said John Zdanowicz, who co- authored the study.

Dr. John Evans wrote The Proceeds Of Crime: Problems Of Investigation And Prosecution for The International Centre for Criminal Law Reform and Criminal Justice Policy, a United Nations organization.

"He explains the issues around

money laundering in the opening paragraph.

“Criminals engage in money laundering to thwart investigation and make prose- cution impossible. Their goal * is to protect themselves ‘and

the proceeds of their criminal

operations from the reach of courts and tax authorities. In this pursuit criminals have :

chad the advantage. They have

learned to. manipulate and use

tinancial systems and standard -:

business practices to disguise . - the origin of capital,”. said Evans.. os

“They have learned to use

o SURREY © 20055 WILLOWBROOK

professional advisers and develop complex structures that make detection unlikely and the collection of evidence particularly onerous. They have learned to operate inter- nationally to compound the difficulty of tracing proceeds of crime,” he continued.

Evans wrote his document in the latter part of 1996 and it was published in early 1997 in textbook format as part of an international project. i spoke to him this week and show n the report out of the U.S.A.

He chuckled and agreed with my assessinent of the material.

The RCMP estimates that $17 billion is laundered through Canada annually. This is through all methods of laundering. The study out of the States would seem to indicate the number is much larger than that. According to Evans there is no way to know for certain how much money is being laundered cach year in Canada, but Evans said the amount is at least the equivalent of 40% of the entire Iederal govern- ment’s budget.

That staggered me. Jane Stewart’s budget alone is over $60 billion. So why is this happening? Are the citizens of Canada apathetic on the issue of organized crime?

Partly, according to Evans.

“It’s partly because they don’t know,” said Evans. “But it’s partly because the numbers are so huge they can’t comprehend it.”

So organized criminal activity is literally overtaking our economy. Last weck, the governor of the Bank of Canada showed his complete lack of understanding of the nature of the problem when

‘he announced that $1,000

bills would be taken out of circulation to combat the money launderers. If his com-

rehension of money launder- ing is thac shallow, he should not be in the position he’s in. -- Canada, unlike our neigh- bours to the south, does not have mandatory reporting by financial institutions. Thus far it has-been a voluntary

legacy

reporting process. Needless to say it has failed absolutely.

On fuly 25 1997, Finance Minister Paul Martin announced tough new mea- sures to combat money laun- dering through amendments to the Proceeds of Crime leg- islation, making reporting mandatory.

“Fhese amendments respond to the evolving prob- lem of money laundering and the concerns of faw enfore ment authorities,” the mi ter said.

Well, the legislation didn’t hit the order paper as a Bill (€-22) until Feb. 9, 2000. And it’s still not passed despite the Opposition’s agreement with the bill. Apparently the federal gor- emment’s commitment is as strong as the depth of the governor of the Bank of Canada’s knowledge on the issue.

While ail this is going on, our federal police force, the RCMP, is struggling just to maintain its core services while the government is rolling around in an $11 bil- lion (and growing) budget surplus.

¢ RCMP are having to make private deals with the Royal Bank and other private entities to get funding des- perately needed for things like community policing initia- tives.

The Mounties are now finding themselves the butt of fiscal jokes. Mordecai Richfer’s column in last Saturday’s National Post dis- cussed the recent PQ conven- tion and a hotel room where a strategy session was being held. .

Richler said, “ Their suite was first swept of listening devices, although, ifthe truth were told, the most the RCMP can afford these days © is a. Victorian car trumpet pressed to the wall of an adjoining suite, providing it was available at the corporate rate.” .

Witty, poignant and, as with everything emanating from his talented pen, appallingly true.

_ tknight@direct.ca .

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