Friday, April 25, 2008

A distinction without a difference?

What is the effective difference between a rogue trader, a hedge fund, some Sovereign Wealth Funds and organized crime?

No, really. Guambat can't articulate a coherent answer and is seeking your help after reading Gangsters Manipulating Oil Price! at FT Alphaville.
On the gangsters-running-commodity-markets theme, the US Department of Justice cites the example of one Semion Mogilevich who, with several members of his criminal organisation who were charged in 2003 in the Eastern District of Pennsylvania in a 45-count racketeering indictment for their involvement in a sophisticated securities fraud and money laundering scheme.
Published reports state that since that indictment and being placed on the FBI most-wanted list, Mogilevich has continued to expand his criminal empire, to the point where he is said to exert influence over large portions of the natural gas industry in parts of the former Soviet Union. Many commentators have noted the significant role that area of the world plays in global energy markets. Mogilevich was arrested by Russian police on tax charges in January 2008. Other members of his organization remain at large.

Even CNN has the story:
Attorney General Michael Mukasey warned Wednesday that organized criminal networks have penetrated portions of the international energy market and tried to control energy resources.

In a speech at the Center for Strategic and International Studies in Washington, he said similar efforts have targeted the international financial system by injecting billions of illicit funds to try to corrupt financial service providers.

The only slightly more sober LA Times says,
Michael B. Mukasey renews the war on what he calls a growing threat that touches 'all sectors of our economy.'

saying that a new breed of mobsters around the world was infiltrating strategic industries, providing logistical support to terrorists and becoming capable of "creating havoc in our economic infrastructure."

"They are more sophisticated, they are richer, they have greater influence over government and political institutions worldwide, and they are savvier about using the latest technology, first to perpetrate and then cover up their crimes.

"This new group of organized criminals are far more involved in our everyday lives than many people appreciate," he said. "They touch all sectors of our economy, dealing in everything from cigarettes to oil; clothing to pharmaceuticals."

Mukasey said international organized crime groups controlled "significant positions" in global energy and strategic materials and were expanding holdings in the U.S. materials sector.

A strategic plan on fighting organized crime released by the department also said such groups manipulated securities exchanges and laundered billions of dollars through legitimate financial institutions. "They are expanding their holdings in these sectors, which corrupts the normal functioning of markets and may have a destabilizing effect on U.S. geopolitical interests," Mukasey said.

Crikey, no wonder Wall Street is so nervous these days.

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