If you are on a limited entertainment budget, have no fear. The legal complaint for the European Union’s lawsuit, filed on October 31, 2002 in the Eastern District of New York, US, against the R.J. Reynolds Tobacco Company is available on line and is better than the latest James Bond movie or Tom Clancy novel. You don’t want to miss this primer on the corporate money laundering worldwide brought to you on behalf of ten sovereign nations of Europe (Finland, Germany, Sweden, France, Luxembourg, the Netherlands, Belgium, Holland, Portugal, Spain, no doubt, with the help of their law enforcement and intelligence agencies).
Here it is:
mirror of html version: https://altcoopsys.org/2017/01/15/eu-v-rjr-nabisco-cigarette-smuggling-laundering/
ADOBE PDF – http://www.nyed.uscourts.gov/coi/02cv5771cmp.pdf -> was taken down:
“UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK
THE EUROPEAN COMMUNITY,
acting on its own behalf and on behalf of the
MEMBER STATES it has power to represent, and the
Kingdom of Belgium, Republic of Finland,
French Republic, Hellenic Republic,
Federal Republic of Germany, Italian Republic,
Grand Duchy of Luxembourg,
Kingdom of the Netherlands,
Portuguese Republic, and
Kingdom of Spain, individually,
– against –
RJR NABISCO, INC.,
R.J. REYNOLDS TOBACCO COMPANY,
R.J. REYNOLDS TOBACCO INTERNATIONAL, INC.,
RJR ACQUISITION CORP., f/k/a
NABISCO GROUP HOLDINGS CORP.,
RJR NABISCO HOLDINGS CORP.,
R.J. REYNOLDS TOBACCO HOLDINGS, INC.,”
For those who want the real short version, here is the EU’s press release of October 31, 2002 announcing the filing of their suit:
R.J. Reynolds Tobacco Holdings (RJR) is the holding company for the second largest tobacco company in the US, manufacturing and distributing Camel, Winston, Salem, Doral and other cigarettes. RJR, headquartered in North Carolina, claims to manufacture one out of every four cigarettes in the US.
The Complaint also names Nabisco Group Holdings, makers of Oreo cookies and numerous other consumer food products, which spun RJR out several years ago (that is Nabisco and RJR were one company until they split into two companies) and is now part of Kraft Foods, which also owns Philip Morris.
If what the EU says is true, every time you buy a pack of Winston cigarettes or a bag of Oreo cookies, you are voting with your money in the market for organized crime.
This story has personal meaning to me. I was a partner and member of the board of directors at Dillon, Read & Co. Inc on Wall Street during the 1980’s. Dillon Read represented the RJR board during the famous takeover war in which Henry Kravis emerged as the lead investor for the takeover of RJR. The fight was so ugly that it resulted in a book and movie about the RJR “takeover war”. The Dillon partner involved in leading our role in the transaction left the firm and started a tree farm in rural Virginia — we all had the distinct feeling that the RJR transaction had helped inspire him to want to get himself, his family and his assets as far away from Wall Street as possible.
At the time, I could not figure out how Kravis and his leveraged buyout firm, KKR, could afford to pay the winning bid for RJR. I remember we would watch the price go up and up and say, “What’s that about?” Later, as I read news reports that KKR was successful paying down the incredible debt load assumed by RJR to pay for the KKR bid, we would wonder, “How? How are they coming up with the cash?”
Well, many years later, if their allegations are true, the European Union has solved the mystery. KKR was paying for one of the premier global corporate money laundering networks — and that money-laundering network was paying down the KKR debt. The RJR Takeover War was an Organized Crime Fight.
In my various articles about the addiction of our economy and the stock market to organized crime profits and money laundering (See “Narco Dollars for Beginners” & “The Myth of the Rule of Law”), I have written that the real mission of the Department of Justice and the US enforcement and intelligence agencies is the “control and concentration of cash.” That is, they are not trying to stop money laundering, rather ensuring that the US leadership and control of money laundering grows. The goal is to ensure that global money laundering and its reinvestment goes through our bank accounts and corporate stocks. J
John Laughland and other observers of the European Union have noted the EU’s role as also the “control and concentration of cash.” With the competition between the dollar and Euro underway, is RJR’s use of cigarettes for money laundering part of the larger competition between the two trading blocs? Is the competition between dollars and Euros squeezing out cigarettes as currency?
RJR’s stock is traded on the NYSE. Here is the disclosure from their website:
Common shares of R.J. Reynolds Tobacco Holdings, Inc. are traded on the New York Stock Exchange under the RJR ticker symbol. Information in this section includes recent and historical stock data, earnings and dividend news as well as direct access to SEC filings.
The stock traded up a bit after the lawsuit was filled on October 31, 2002. This is commensurate with the trading patterns on the Bank of New York’s stock when it was announced that they were laundering money for the Russian mob. Is this a sign that investors respond positively to a corporation that engages in money laundering and gets away with it?
When it comes to your own 401(k) or oversight of your company or organization pension fund, this is a stock you might want to ensure gets sold. Do you want your personal savings and your retirement invested in increasing the power and compensation of people who are helping to hook your kids on cigarettes and drugs? Lest you think they are profitable, think about what this is costing you in tax dollars and personal expenses from living in a sea of crime.
If what the EU says is true, this is a stock to dump.
Lest you think the ten sovereign nations are being farfetched in their accusations, let’s look at one incident that is symptomatic of what has been going on at the NYSE. In 1999, I wrote a story called “The Ultimate New Business Cold Call” about Richard Grasso, Chairman of the NYSE Exchange, traveling to Colombia to meet with FARC Commanders to encourage them to reinvest their money in the US stock market and banks. That same week, the General Accounting Office of the US Congress issued a report saying that the FARC now controlled 40% of the Colombian cocaine market. I presume that Grasso’s trip was not successful which is why US taxpayers are now paying for Plan Colombia to ensure that the likes of Citibank and Merrill Lynch can grow their market share for the “control and concentration of cash” in Latin America.
Lest you think I am making this up up, here is a picture of Richard Grasso, Chairman of the NYSE, hugging
a FARC Commander and his rifle in 1999:
Richard Grasso is recently in the news involved in another corporate fraud. Here is an excerpt from this week’s
International Forecaster weekly market report by Bob Chapman:
“As we predicted the criminal investigation of Computer Associates has intensified with many subpoenas being issued. Charles B. Wang, the founder, has recently resigned. We expect criminal charges. Richard Grasso, Chairman of the NYSE, was a director of CA while all the crimes were taking place. We went short at $36.00 and covered at $18.43, went short gain at $18.00 with no cover. The stock traded at $14.88 on 2/21/02.”
What this means is that the people who are supposed to be overseeing the stock market and making sure that NYSE listed companies like RJR are not engaged in criminal money laundering are busy pursuing money laundering opportunities for NYSE listed companies and profiting from stock market fraud.
As I said recently to a Congressman at a town hall meeting who was talking about the War on Drugs, “How are our children supposed to say no when the Chairman of the NYSE is saying yes with a full body hug?”
Should “Just Say No”
The same could be said for the board of directors and senior management of RJR. To review a list of the board and management as well as full disclosure on their rich compensation — money laundering must pay well—here is a link to their latest proxy filing at the SEC:
The corporate address is there as well. If you feel that narcotics trafficking and the War on Drugs is a drain on your family, your community and your business, please feel free to send the members of the board and senior management a letter telling them how much you appreciate their help in bringing these expenses into your life. Better yet, why not make sure you and your neighbors express yourself by boycotting their products and selling their stock?
If you happen to live next door to any of them, feel free to tell them how you feel.
One of my favorite parts of this complaint is the description of a meeting in 1978 of the Committee of Counsel of The Tobacco Institute, including RJR’s general counsel and several law firms representing other tobacco companies, including the very prestigious Washington law firm, Arnold & Porter, and the New York law firm, Paul Weiss. Not included is my nominee for the mother law firm of all money laundering, Sullivan & Cromwell, but I will bet they show up in this story before it is over.
One of my favorite money laundering stories is told by Christopher Simpson, in his marvelous book Blowback, of the Dulles brothers starting the first Exchange Stabilization Fund (ESF) slush fund operation. The ESF is a fund run by the NY Fed for the US Treasury. This first operation, run from the Sullivan & Cromwell law offices, used monies seized by the Nazis from Jewish victims and then seized by us (and not returned to the victims), to rig the Italian elections for the conservatives at the request of the Vatican.
I have found that the attorney client privilege is part of the essential train tracks over which money laundering operates. Hence it is not surprising to read the EU’s allegation that a group of law firms organized a global money-laundering scheme through the auspices of an industry association committee of lawyers. This tracks my intuition regarding the counsel committees for real estate, tax and bar associations that I observed as the Assistant Secretary of Housing-Federal Housing Commissioner in the first Bush Administration.
Arnold & Porter is of particular interest. Their former managing partner, Jerry Hawke, as Undersecretary of Domestic Finance and Comptroller of the Currency, has presided over the most fiscally irresponsible bubble in federal credit in the history of the US, been responsible for federal accounts missing $3.3 trillion and counting and numerous banking scams such as Enron, the derivatives bubble and the rigging of the gold markets.
I started to learn about Jerry, when I spent several years watching his son fabricate allegations against me and my company, all part of a successful effort to run the honest officials and financial advisors out of HUD, so that Jerry and his network could feed at the trough. The year after we were fired, HUD announced that they were missing $59 billion and refused to produce audited financial statements.
If Richard Grasso is hugging FARC Commanders and leading corporations are laundering money with the Russian mob and Hussein’s son, I can only guess what Jerry Hawke’s real responsibilities have been in running the US domestic credit and accounts and them banking regulation. I dare say it has something to do with the “control and concentration of cash.”
RJR’s auditors are KPMG. If the EU’s allegations are correct, it is highly likely that KPMG is part of this deal. The RJR proxy filed with the SEC shows that RJR paid KPMG $2.3MM for the last year of audit fees and consulting services.
If you want to know how badly the books are cooked at HUD, KMPG is the firm that would not give HUD a clean audit opinion in fiscal 1999 when the $59 billion was missing.
HUD and RJR is a lot of a liability for one accounting firm to handle. After Arthur Anderson, KPMG is an accounting firm to wonder about.
According to the 2002 RJR Proxy, the following investors are the largest holders of RJR stock with more than a 5% ownership position.
Investor # of Shares % of Total
Capital Research and Management Company 14,328,330 15.4%
333 South Hope Street
Los Angeles, CA 90071
FMR Corp. 12,554,713 13.5%
82 Devonshire Street
Boston, MA 02109
Ross Financial Corporation 9,261,803 10.0%
P. O. Box 31363-SMB
Grand Cayman, Cayman Islands, B.W.I.
Wellington Management Company, LLP 5,600,129 6.0%
75 State Street
Boston, MA 02109
Another thing you can do to express your feelings about the cost to you and your family of narcotics trafficking and the War on Drugs in your neighborhood is to pull your investments out of mutual funds or other investment pools run by these companies — and send them a letter saying you would rather earn stock market profits from companies that do not lose you more in tax dollars and other hidden costs — let alone your children’s health and lives.
Another part of the complaint that I find fascinating is a brief reference to the reinvestment of narcotics trafficking profits — laundered with cigarettes – being invested in millions of real estate within the Eastern District of New York. I am reminded of the story of Ricky Ross, the dealer who led the crack cocaine explosion in South Central LA. He complained to his Iran-Contra wholesaler that he did not know what to do with so much cash — he had a stash in the millions under his bed and it was growing. His wholesaler said something to the effect of “don’t you know, you buy real estate.”
It would be interesting to see exactly who financed the exit of a generation of HUD developers out of their Section 8 tax shelters during the 1990’s, while Bob Rubin and his friends oversaw the “enforcement” at the US Treasury and the issuance by the US Treasury of generous new corporate tax credits for “low income” real estate.
If the EU complaint is something that inspires you to learn more about the impact of money laundering on our economy and our lives, here are some suggestions for more to read.
My favorite money laundering pulp fiction novel is Black Money by Michael Thomas. For a more in depth non-fiction overview, try Hot Money and the Politics of Debt by RT Naylor. To access a list of my articles, “Narco Dollars for Beginners” and “The Myth of the Rule of Law” on the impact of money laundering on our economy, go to the articles section of my Solari website. If you still want more, Narco Dollars has a longer bibliography at the end.
The Department of Justice says that US money laundering is $500 billion to $1 trillion annually. That is a large high margin business. Financial flows this large must – by definition – be managed by the large banks and corporations. By definition, the profits will end up leveraged in the stock market.
For decades we have enjoyed the popular notion that black teenagers and Colombia drug lords have controlled these high margin businesses while the rich grew richer on the low margin businesses that were both legal and respectable. Obviously, such notions of reality defy financial “gravity” not to mention the laws of multiplication and compound interest. The European Union has laid out allegations of a criminal corporate conspiracy more amazing and exotic than any pulp fiction novel or Hollywood film has ever posited. And yet, as I read it, it resonates with the spirit of truth and everything I have observed about money laundering and the extent to which organized crime and warfare profits control what happens in government, in enforcement and even in the judiciary.
Rich corporate salaries and bonuses are happening for a reasons. Corporations are not just engaging in organized crime. They are leading it — and crime pays big. That can change the day that consumers and investors realize who is really behind the drugs and War on Drugs destroying our neighborhoods. Forget voting in the polls every two or four years. We chose in the market place every day with our money, our time and our attention. Want to withdraw your support from organized crime and government corruption? Sell your RJR stock and delete Oreo Cookies from your shopping list. Persuade your family and friends to do the same.
The moral of the story is that we should “just say no” to RJR-Nabisco and their investors.