Irish Businessman in Dublin Cleans Gangs Millions
From the Irish Herald Saturday 29th March 2014
A High Profile south Dublin businessman has been laundering millions of euros stolen during a spree of nationwide robberies.
Ireland’s most prolific burglary gang have linked up with well-known figure to profit form their operation.
The well known businessman- who is a household name in Dublin, which is the capital city of Ireland – has become a major target for specialists Gardai (Irish Police) units including the Organised Crime Unit, the Criminal assets Bureau and National Drugs Unit.
A Source said: “These gang members are well-known to Gardai, so they need someone who appears to be a legitimate businessman to launder the money,”
“And that’s what this individual and some of his closest associates do – they are pumping the money into building projects and other such ventures while the general public don’t suspect a thing.”
The scale of the gang’s activities can be seen by the fact that they are by far the biggest and most prolific group involved in the massive burglary spree in Ireland that netter more than £11 million worth of cash and valuable possessions from Irish homes in the last six months of 2013, according to official Gardia figures.
Designer jewellery and money were the most common items stolen in the burglaries, 85 per cent of which were carried out during daylight hours.
A senior source said: “Make no mistake, this ‘businessman’ is not just involved in laundering vast amounts of money for the burglary gang, he is also heavily involved in the drugs scene and is strongly linked to the provos.”
Kneecapped
On top of this, senior sources have revealed that the man is being strongly linked to a punishment attack in north Dublin in which a man, who is not a criminal, was kneecapped shortly after he tried to retrieve funds from the businessman for money owed to him for building work.
It is understood that the businessman owes the gun victims a six-figure sum and the builder is in “ complete fear” that he will be murdered.
The Irish Herald has revealed that a relative of the businessman is heavily involved in carrying out burglaries for a major Tallaght-based Traveller family gang who have been involved in hundreds of burglaries across Ireland in the past five years.
Members of the Traveller gang, which has more than 200 members, are the chief targets of the Gardia’s Operation Fiachla and include members of the notorious ‘Cock Wall Clan’ who have been successfully targeted by the Irish Criminal Assets Bureau.
The crime gang has been using stolen Audis and BMW’s for burglaries and have led Gardia on multiple high-speed chases, often driving extremely aggressively at officers who have less powerful cars than them.
The ringleaders of the gang are members of two notorious Traveller Families form Tallaght who have been involved in organised crime for three decades.
Senior sources say that the gang has a core membership of up to 15 criminals – both male and female – and has been using the Irish National Motorway System for their crime wave.
Irish Gardia have responded with helicopter and spy technology involving registration-plate recognition software.
Dissident republicans
Friday, September 7, 2012
Breaking news, Real IRA Dublin, Alan Ryan murder, Dublin gangs, Dublin shooting, Drug dealers, Sinn Fein, Continuity IRA, alan ryan funeral
Breaking news, Real IRA Dublin, Alan Ryan murder, Dublin gangs, Dublin shooting, Drug dealers, Sinn Fein, Continuity IRA, alan ryan funeral
Latest news: 9.45am/6/9/2012: THERE will be a massive armed garda presence for the paramilitary funeral of Real IRA terror boss Alan Ryan which will take place in his native Donaghmede in north Dublin on Saturday.
The body of murder victim Ryan (32) is expected to be released to his family tomorrow morning for a wake in his family home at Grange Abbey Drive.
Ryan will be buried after a 10am funeral mass at the Holy Trinity Church in Donaghmede.
Leading dissident Republicans from both sides of the border are expected to attend the event which will be closely watched by members of the garda Special Detective Unit.
A source said: “This will be the biggest IRA funeral in the Republic for many years Tensions are very high at the moment and there is a very real expectation that there will be revenge attacks in the days after Ryan's funeral.”
Yesterday hooded men placed Tricolours and black flags on the lamp-posts all around Grange Abbey.
At the home of the terror boss, a massive Tricolour flies from an upstairs window of the house, while another Tricolour and a black flag hanging on a pole outside.
At nearby Grange Lodge Avenue, where Ryan was gunned down on Monday, a large slogan saying Alan Ryan RIP IRA has been painted on a wall.
Floral tributes and candles also mark the spot.
In a statement, the Dublin branch of the 32 County Sovereignty Movement said: “Alan was black and white, straight to the point and never silent within the republican movement when problems arose.
“Alan was not afraid of dying or even being murdered by either the Brits, the freestaters or the cowardly scum that took him away from us.
“His only fear was that he would die in vain, let us stand together and make sure that he does not, let us move forward and fight on for what Alan stood for every living moment of his life.”
Latest News: 10pm/4/9/2012: A Provisional IRA hit-man for hire is a key suspect in the murder of Alan Ryan, a senior member of Sinn Fein in Dublin has today been briefing journalists off-the-record that Alan Ryan was making money from drug dealing and racketeering and in effect excusing his murder. Continuity IRA had put a contract out on the two Ryan brothers.
As a senior member of Sinn Fein in Dublin describes Alan Ryan as a man who made his living off the proceeds of drugs and racketeering, the political wing of the REAL IRA the 32 County Sovereignty Movement has described Alan Ryan’s murder as cowardly.
“The 32 County Sovereignty Movement wishes to extend our heartfelt sympathy to the Ryan family following the cowardly murder of our friend, comrade and activist Alan Ryan. Alan was shot in the back in cold blood on the streets where he grew up, streets where he had worked tirelessly to tackle the scourge of drugs which he had always opposed with every fibre of his being. We cannot express in words the pain now felt by both the movement as a whole and individual activists now that he has been taken from us. Alan's murder does not mean the end of the cause for which he gave his life. Whether it was as an ex Republican prisoner campaigning for his comrades in Maghaberry, or as an anti-drugs activist protecting his community Alan set an example which will be followed. He will not be forgotten by his comrades who remain and who will carry on his legacy as resolutely as he did the legacy of others who fell before him”.
A MAN shot dead in a gangland style attack was regarded by gardaí as a leading member of one of the most dangerous crime gangs in the State and was also a member of the so-called Real IRA. Continuity IRA had put out a contract on Alan Ryan and his brother for their alleged role in the murder of a Continuity IRA member.
Alan Ryan (31) was shot at Grange Lodge Avenue, Clongriffin, north Dublin, close to his home when two gunmen opened fire on him and one of his associates yesterday just after 3.30pm. It was the first gangland killing since March.
The man he was with was wounded in the legs. However, his injuries are not said to be life-threatening and he is expected to make a full recovery.
The dead man lived at Grange Abbey Drive close to where he was shot and was well known to gardaí.
It is understood he was visiting family members at a house in the area and when he left that house he was ambushed on the street. A car carrying what gardaí believe were two gunmen pulled up and at least one of the passengers got out and started firing at Mr Ryan and the other man.
Mr Ryan was hit a number of times, including as he lay wounded on the ground. He was shot at least once in the head by the masked gunman, who then ran back to the waiting vehicle and was driven off at speed.
The victims were taken from the scene to nearby Beaumont Hospital, where Mr Ryan was pronounced dead a short time later. The other man was still in hospital last night.
Gardaí found a burnt-out car at Hole in the Wall Road in Donaghmede which the investigating team of detectives believe was used by the killers.
Mr Ryan was on bail awaiting serious criminal charges arising from an extortion racket he was involved in. He had threatened some pub owners in the city to close their premises and was accused of extorting money from others.
Mr Ryan was also linked to the private security sector and in recent years had control of contracts for the supply of security staff to some pubs and clubs in Dublin.
He and his Real IRA associates had also become involved in feuding with a number of major crime gangs from the city from whom they were trying to extort money. The Real IRA allowed drug dealers to deal drugs in their areas if they paid money to Alan Ryan and his associates.
They were embroiled in a feud with the major drug and armed robbery gang in Finglas once led by Martin “Marlo” Hyland, who was shot dead in 2006, and then led by Eamon Dunne (34), who was shot dead in a pub in Cabra in April 2010.
When drug dealer Sean Winters (41) was shot dead in Portmarnock, north Dublin, in September 2010, Mr Ryan and his associates emerged as the chief suspects.
Members of the gang were also suspected of having shot dead drugs gang leader Michael Kelly (30) in Coolock in September 2011.
In 1999,when he was aged 19 years, Mr Ryan was arrested at a Real IRA firearms training camp in Stamullen, Co Meath. He was one of three young men who were later convicted of receiving firearms training from three older republicans at a disused cellar in the ruins of Herbertstown House.
The derelict property was under surveillance by gardaí when the men arrived for training. Detectives found an assault rifle, a sub-machine gun and a semi-automatic pistol in the cellar.
All six were convicted at the Special Criminal Court in 2001, with Mr Ryan jailed for four years. While he had no convictions at the time of his arrest in 1999, he had been caught in possession of a loaded revolver at his home in September 1998 and was on bail awaiting trial when arrested at the Stamullen firearms training exercise.
By the time he was jailed for four years in relation to the Stamullen incident, he was already serving a three-year sentence for being caught with the gun in 1998. The sentences were ordered to run consecutively, meaning he was effectively jailed for seven years.
Previous
Sunday, July 29, 2012 Dublin Armed robberies, Dublin Real IRA, Dublin Crime, Gardai, Wheatfield Prison
Dublin Armed robberies, Dublin Real IRA, Dublin Crime, Gardai, Wheatfield Prison
Members of a Dublin Real IRA gang have been spotted watching cash-in-transit deliveries and the gang is known to have focused on a tiger-kidnapping opportunity. The gang which centres around a the two Ryan brothers from Donaghmede were linked to a €40,000 robbery of a Dublin pub last month. A Cork-based gang were linked to a €140,000 at a petrol station ATM in Carrigaline in January as well as a robbery at Bank of Ireland in August 2011. The gang made their getaway in a car with a flashing blue light to make it look like an unmarked garda car.
One of the men suspected of involvement in the robbery is Niall 'Houdini' Fitzpatrick (42) who was described by gardai as one of the most notorious and dangerous armed robbers in Cork. The well-known criminal from Mayfield was nicknamed Houdini after escaping from custody on three occasions. He was sentenced to eight years for an armed robbery on Farran Post office in 2001. A gun was held to an employee's head during the terrifying incident. He also served time for ramming a garda car in 1999 and for burglary incidents.
While serving his sentence in Wheatfield Prison Fitzpatrick was a close associate of Limerick killer Dessie Dundon, Fitzpatrick worked on the paint party (painting walls and cells around the prison) and this gave him access to all areas of the prison where he supplied drugs and mobile phones to such noted scum-bags as convicted rapists Martin Dunne, Dunne is serving 15 years for a rape, Dunne had brought his nephew with him to commit the rape on the Dublin housewife. Dunne is due for release in a few months.
One of his associates linked to the Carrigaline robbery was also part of to the BOI raid. Another gang member has been linked to the robbery along with a previous Post Office robbery. There have been several serious robberies in recent weeks including Post Office robberies, business robberies and cash-in-tranist robberies.
One gang made off with €18,000 after smashing their way into a Post Office on Ormond Quay in Dublin in May.The gang made their way into an adjoining derelict building over a number of nights and broke through into the post office when staff came in to open up.
A number of other recent incidents have been linked to a Finglas armed robbery crew highlighted in the Sunday World last month. There are five core members of the gang led by a man from the Glenties Park area.
Gardai have had successes in jailing a number of serious armed robbers in recent times. Alan 'Fatpuss' Bradley and his brother Wayne were jailed earlier this year for conspiracy to commit robbery after gardai foiled a raid on a cash-in-transit van in Celbridge in 2007. Fatpuss and his brother had been linked to several other robberies in the past decade.
A serial armed robber from Wexford was jailed earlier this year after pleading guilty to four counts of armed robbery over a one month period in 2010. Gardai say they are determined to continue to put armed robbers behind bars and will heavily concentrate resources on curtailing their activities.
Previous
On Sunday the 3rd of October 2010 theirishobserver.blogspot.com warned the public that Dissident terrorists were about to launch a bombing campaign from their strong holds in Donegal, north Monaghan and Louth. On Monday the 4th October 2010 Dissidents caused wide spread damage when they exploded a one hundred pound bomb in Derry. Yesterday the Gardai in County Louth made significant seizures of Dissident weapons and explosives. The public must remain vigilant; while the Gardai are to be congratulated on yesterday’s success the Dissidents remain determined to cause death and destruction in Northern Ireland and in England.
The Story so Far:
A “significant” dissident republican explosives dump and arms cache has been uncovered by anti-terror gardaí in county Louth.
An improvised mortar, three kilos of TNT, bomb-making equipment and a pipe bomb were found hidden in a wood in Co Louth.
The weapons haul included a general-purpose machine gun, a shotgun and assorted ammunition. The TNT explosives – a powerful explosive commonly used by the military and in mining – were found in the wooded area near Dunleer.
The finds were the second massive blow to suspected factions of the Real IRA in recent days and followed 10 arrests and separate searches over the weekend.
Garda Commissioner Fachtna Murphy said the discovery was “significant” and added: “This find represents a further step in our determined strategy to target, disrupt and detect the activities of dissident republicans.
“We continue to work closely with our colleagues in the Police Service of Northern Ireland and in the Security Service to thwart the intent of a small group of people who want to inflict violence and pain on communities.”
Justice Minister Dermot Ahern praised the work of detectives, saying: “This was a very significant find at a time when the threat from dissident groups poses dangers for law-abiding people.
“I want to congratulate An Garda Síochána for their detailed work in this area.”
A Garda spokesman said a series of raids were carried out yesterday morning in Co Louth, which straddles the border with Northern Ireland, and its neighbouring county Meath.
It is the second time this year that material for a suspected mortar bomb attack has been uncovered by authorities.
A device suspected of being made into a mortar was uncovered near Dundalk, Co Louth, in May.
The latest major operation, led by the anti-terror Special Detective Unit, followed 10 arrests and explosive seizures at the weekend in a wave of raids in Louth, Waterford and Wexford.
Bomb detonators and a small quantity of Semtex plastic explosive were seized.
Two men were charged in Dublin’s non-jury Special Criminal Court on Sunday night in connection with the anti-dissident operation.
Nicholas Kendall (aged 20) of Row Street, Wexford, was charged with unlawful possession of a semi-automatic pistol, ammunition and a bomb part.
Peter Butterly (aged 33,) of Cortown in Dunleer, Co Louth, was charged with being a member of the IRA.
The eight others included a 24-year-old woman and men aged from 19 to 71.
Coordinated Bombing Campaign Planned –
Dissident Terrorist groups have pooled their resources to carryout a coordinated bombing and shooting campaign this Autumn and Winter. The Dissident Terrorists will launch bomb attacks from their strong holds in the IrishRepublic, namely Donegal, north Monaghan and north Louth in the coming weeks and months. The Dissident Terrorists remain committed to carrying out a bombing campaign in England; this type of spectacular has traditionally been viewed as the life blood of Irish terrorism. Recent successes by the security services on the Island of Ireland have been a set back for the dissidents, however, these groups have been strengthened in recent months by further defections from the Provisional IRA and a significant number of new recruits who have been trained in weapons and explosives. The dissidents have also secured automatic weapons through their relationship with criminal gangs in Cork, Limerick and Dublin. Significant amounts of commercial explosives have not been secured by the dissidents and so they remain dependent on home made explosives.
It is essential that the public remain vigilant and that anyone with any information about the terrorists groups should provide that information to the Gardai or PSNI. It is essential that both the Gardai and the PSNI are given the resources necessary to monitor and where possible apprehend Dissident Terrorists. The border counties on both sides of the Irish border are going to be hot spots in the coming weeks and months for Dissident activity. Due to on going economic criminal activity by the dissident groups in the border areas (for example, smuggling) there is a significant tolerance level of their activity as many local people engage in the selling and buying of illegal goods.
Up Date 17th September 2010:
Four men from County Armagh have been arrested after customs officers seized almost 12,000 litres of suspected illegal fuel.
Police searched premises in west Belfast and dismantled a so-called huckster site that was selling cheap 'green' diesel.
In County Armagh, customs officers found underground storage tanks, containing 8,000 litres of laundered fuel.
There were five other premises searched in counties Monaghan, Roscommon, Meath and Galway.
Mike Connolly, Assistant Director, Specialist Investigations, HMRC said:
"The huckster site and filling stations we raided are operating at an unfair advantage over legitimate traders by selling fuel at a reduced rate.
"It is wrong that honest businesses should be undercut by criminals but our response is to ensure we are targeting those individuals and groups doing most economic harm in our communities.
"This is just one operation stopping the loss of millions of pounds of taxpayer's money - more will follow to dismantle organised criminal groups and their activities."
HM Revenue and Customs say investigations are continuing.
Dissidents, Provisional IRA and Drug Dealers team up to profit from criminality.
During the embryonic years of the ‘peace-process’ when Provisional IRA murders and other criminality were viewed as ‘internal-housekeeping’ by the British and Irish Governments entrepreneurial terrorists made fortunes. While the terrorists continue to make vast sums of money from open criminality, the Gardai can now pursue that criminality in a way that they could not as the Government tried and succeeded in corralling Sinn Fein into the democratic process. However, people who would continue to be viewed as PIRA members are continuing to make vast sums of money from criminality. These PIRA members who have not joined any ‘dissident’ group have now teamed up with ‘dissidents’ and other criminal gangs to maximize their profits. Dublin’s north inner city is now home to an alliance of some of Ireland’s most seasoned and ruthless terrorists and drug dealing criminals. On an almost daily basis these terrorists distribute drugs, illegal cigarettes, fuel, counterfeit CDs/DVDs while at the same time planning and carrying out armed robberies where and when possible.
While the Celtic Tiger roared around the country in October 2006 few even blinked at what was a significant Garda raid in the leafy suburb of Rathfarnham in Dublin. The Gardai raided a very fine house that was nestled among the manicured lawns and polished BMWs of the up market Rathfarnham suburb. The house with a market value of at least two million Euro at that time was not the home of a property speculator or banking executive, but was one of the many properties owned by the Officer Commanding the Provisional IRA in Dublin. The OC of the PIRA in Dublin was a close working associate of one of Dublin’s most notorious or now infamous criminals, Christy Griffin. In 2006 a feud had broken out in the north inner city of Dublin, after it emerged that Christy Griffin had been accused of raping his girlfriend’s daughter since she was a toddler.
When the Gardai searched this fine house they were looking for a stash of hand grenades that had been sent from the PIRA in Belfast to a PIRA member in Dublin who was heavily involved in the bloody feud surrounding Griffin. There had been two hand grenade attacks before the Gardai raid on the house, the grenades were traced back to similar devices that had been used in Belfast. During this period and for many years before, the IRA’s commanding officer in Dublin had been involved in large scale high-jackings from the lucrative DublinPort. The PIRA leader had inside men at DublinPort and these men would identify large shipments of high value goods that would be easy to dispose of on the black market; cigarettes were a particular favorite as they could be sold in the markets and pubs around Dublin. The IRA Commander and his drug dealing associates were making lots of money, and as early as 2001 the IRA Commander who had no visible means of income bought the house in Rathfarnham for 900,000 Euro. The IRA Commander also bought himself a holiday home in Wexford and this house was close to another house that had just been bought by his sister-in-law. His sister-in-law was living in Wexford with a former PIRA prisoner, all of the members of this closely net group where heavily involved with Sinn Fein.
While this criminal empire headed up by the PIRA Commander in Dublin and the Christy Griffin gang were allowed to operate without constraint as the peace process was finding its feet, their multi-million Euro robberies were starting to cause problems for both the Sinn Fein leadership and the Fianna Fail Governemnt who had lead them into democratic politics. The Gallahers cigarette company had informed the Irish Government that it could no longer transport its cigarettes through south Armagh or DublinPort due to the high number of PIRA high-jackings. The security services on both sides of the border felt that their hands were tied as any significant move against the IRA could not go ahead without political sanction. However, Michael Mc Dowell who was then Minister for Justice began to make public pronouncements that warned the Sinn Fein leadership that the honey-moon period was over and the State was going to take direct action against PIRA criminality. The Sinn Fein/IRA leadership was forced to close down its Dublin operation, the Provisional IRA Commander continued to maintain his business links with the drug dealers, but he was told that his association with the IRA would be denied if he ever appeared before a court for his criminal activity.
The Dublin PIRA was now able to get even more involved in the drugs trade as they had been disowned by the Sinn Fein/IRA leadership. By now Christy Griffin was charged, convicted and sentenced to life imprisonment for the rape of his girlfriend’s daughter. Christy had always been someone the PIRA could deny and deny they did, but for those of us who know the truth Christy Griffin was one of the PIRA’s best earners in Dublin. Christy Griffin had been paid hundreds of thousands of Euro by the PIRA in Dublin for his good works on their behalf. The PIRA Commanding officer in Dublin continued and continues to pay money into the Professional IRA/Sinn Fein organization, this money is laundered through a myriad of front businesses. As long as the PIRA in Dublin, along the border and in the north did not stretch their criminal activity to ‘political terrorism’ they could be certain that they could get away with murder and there would be no political sanction against Sinn Fein. The recent murder of 22 year old Paul Quinn in CountyMonaghan by members of the PIRA shows that their assessment is correct. By association people like drug dealer Christy Griffin enjoyed the fact that the Government were turning a blind eye to organized crime that was associated with the PIRA. Griffin and the IRA Commander in Dublin were career criminals, both had graduated from youthful theft to violent crime, they both enjoyed the terrorizing of innocent people or anyone who got in their way.
Christy Griffin involved many members of his extended family in his crimes. His nephew Colm Griffin was a member of his gang. Colm was an ad hoc intelligence officer who would be supplied with the details of Lorries carrying valuable goods and their movements, he would also receive information on banks and post offices that could be easily robbed and the PIRA would supply him with the guns to carry out those robberies. However, in May 2005 Colm Griffin and his associate Eric Hopkins were shot dead as they carried out an armed robbery of a post office in Lusk in north Dublin.
As the feud surrounding Christy Griffin intensified several people were murdered. Thomas ‘tomo’ Byrne was well known within the north inner city, a female relative had been assaulted by the PIRA Commanding Officer, Byrne retaliated by beating the PIRA Commanding Officer and was later shot dead for his act of defiance. The PIRA Commander believed that he had a license to murder and mutilate at will.
This feud had all started with the decision of a then 19 year old women to go to the Gardai and tell them that she had been raped by Christy Griffin from she was eight years old. This decision caused a split in the PIRA that had up until this point protected Christy Griffin and his associates. Those who supported Christy Griffin were simply trying to protect their sourse of income; those who opposed Christy Griffin were simply embarrassed because of their close association with Sinn Fein. The IRA Commander continues to enjoy the life of a wealthy businessman and uses legitimate businesses to launder money for his former PIRA comrades who continue to engage in full-time/front-line criminality including drug dealing. The PIRA Commander has been forced to pay The Criminal Assets Bureau 500,000 Euro but it has made little impact on his criminal earnings, some of which still makes its way to Sinn Fein.
At its height the Christy Griffin feud claimed several lives including Stephen Ledden who was an innocent by-stander in the wrong place at the wrong time. The Gardai have managed to maintain a presence in the hot spots that have been central to the Griffin feud and this has reduced the feud to a smoldering cheek by jowl fist fight. The north inner city remains a dangerous place, yet it also remains a place where a great deal of money can still be made from drug dealing, cigarette smuggling and so forth. Now in 2010 the entrepreneurs among the criminal gangs including the PIRA, dissidents and the traditional drug dealers have joined forces to maximize profits. The PIRA members still manage to siphon off some money to Sinn Fein but keep the bulk for their own luxury; the dissidents are pure criminals who can satisfy their leadership by occasionally getting access to semi-automatic weapons that come in with drug shipments. The drug dealers continue to enjoy licensed protection from the various terrorist groupings. This pattern is being repeated in Limerick, Cork and many other urban centers around the country, however, Dublin remains the real money maker for all concerned.
http://www.reportingproject.net/proxy/en/following-the-magnitsky-money
Details
Published on Sunday, 12 August 2012 16:09
This dilapidated house in Chisinau, the capital of the Republic of Moldova, is the headquarters of Bunicon-Impex SRL a phantom company that received and sent on money from the huge heist discovered by Magnitsky
http://www.irishtimes.com/news/ireland/irish-news/financial-advisor-denies-charges-of-money-laundering-some-of-the-proceeds-of-northern-bank-raid-1.1690984
By OCCRP
Novaya Gazeta story (in Russian)
As Russian tax lawyer Sergei Magnitsky slowly died in a Russian prison from abuse and neglect, US$230 million (5.4 billion Russian Rubles) in taxes stolen from his client disappeared into a maze of phantom companies, crooked banks and offshore accounts. Magnitsky, accused of the largest tax scam in Russian state history despite being the whistleblower who reported it, knew who pulled off the theft but not who the powerful people behind them were.
He died rather than admit to a crime he didn’t do. Magnitsky was the loser. But the winners until now have not been identified. Reporters from the Organized Crime and Corruption Reporting Project (OCCRP), Barron's and Novaya Gazeta, spent months tracking banking records and offshores companies to identify two beneficiaries of the deal: businesses of a Russian state transportation official’s son and the ex-husband of a tax official who granted the refunds.
The Money Flow
The scam began with a Russian police raid on the offices of Magnitsky’s client: Hermitage Capital Management investment fund. People impersonating company employees then used official stamps and documents seized in the raid and pled guilty to various crimes. The company was fined amounts that offset the company’s earnings for the year, and the impersonators then filed for a giant tax refund.
Three phantom businesses, shell companies that exist only on paper, applied at Moscow tax offices #28 and #25 on behalf of Hermitage for a refund which was instantly granted. Magnitsky, who reported the fraud, believed wrongly that if officials only knew what was happening they would react. They reacted by imprisoning him for tax evasion, demanding he write a confession, denying him medical care and beating him repeatedly. He lasted one year dying in 2009.
In 2009 and 2011, secret trials in Moscow’s Tverskoy District Court fixed legal blame for what was a massive, arcane scam on two low-level ex-convicts: sawmill worker Viktor Markelov, once found guilty of manslaughter, and a robber,– Vyacheslav Khlebnikov.
Both pled guilty. Both got minimum sentences of five years in a correctional colony. They were not even ordered to pay back the stolen money. Irina Dudukina, a spokeswoman for the Investigative Department of the Russian police, announced to the public that it was impossible to find the refund money because documents of the Moscow bank UBS were burned up in a truck crash. She had no details on when or where this crash occurred or why the documents were in a truck. And she didn’t specify why investigators didn’t try to get the same documents from the Russian Central Bank, which had copies of many of the transactions.
No government executive or bureaucrat involved in the deals that sparked the rebate, in the illicit tax refund, or in Magnitsky’s death has ever been charged with anything.
A government investigation concluded that the tax officials who handed out the rebates had been tricked by fraudsters, so it was not their fault.
Tracking the Money
Banking records of the three companies that got the illegal tax refund -- Makhaon, Parfenion and Rilend -- show that the stolen money dissipated into phantom companies through thousands of banking transactions. Soon after these transactions, the three companies dissolved. Phantom companies fronted by proxy shareholders and directors designed to hide the real owners, made certain for years that who really was benefitting from the huge heist remained a secret.
OCCRP reporters worked out a money trail that Russian officials were either unable or unwilling to follow.
In January and the beginning of February 2008, for example, Parfenion wired $63 million USD to the bank accounts of two phantom companies: ZhK and Fausta . Another transaction took place directly where Fausta sent $21 million USD to ZhK’s accounts.
ZhK, which received in total about $39 million USD, was established in November 2003, by Marta Dmitrieva of Moscow. Dmitrieva told OCCRP reporters that while, yes, she did file documents with the tax office, she knew nothing of ZhK.
“I have never been a shareholder or director of the company,” she said. “I didn’t have a job, and I found an Internet commercial that said there was a possibility to work as courier and applicant for different companies.”
The sole shareholder of ZhK was Anatoly Dvoinikov from the village of Poselki in the Penzenskaya region, 640 kilometers from Moscow. Court records OCCRP reviewed show that Dvoinikov is likely a proxy shareholder and the director of many phantom companies.
In November 2008, ZhK was folded into a new commercial entity along with two other companies. The address of this new corporate creation was inVladivostok in the Russian Far East, more than 6,400 kilometers from Moscow.
Russian organized crime commonly uses the tactic of reorganizing companies to cover up fraud.
Fausta, the other company that got money from Parfenion – about $45 million USD -- was registered in July 2007by Sergey Kirillov from Moscow. Kirillov told OCCRP he did not establish the company.
“I don’t know anything about this company,” he said. “Nobody asked me to establish it. Maybe some people got my passport details from banks where I took loans.”
In March 2008, just a month after getting the Parfenion millions, Fausta was dissolved, according to the Russian Tax Service. Fausta's banking records show that the money went from its bank account into the bank account of Univers another Moscow company.
Univers was registered in October 2007 with Natalya Senchukova listed as the sole shareholder and director. The Russian state commercial registry lists her as a shareholder in more than 30 companies and she is likely another proxy.
In November 2008, Univers was reorganized too in much the way ZhK had been. It was folded in with another company and the headquarters also were moved from Moscow to Vladivostok.
OCCRP has obtained documents showing that the same registration agents reorganized both Univers and ZhK.
Univers received money from Rilend and Makhaon, too. But bank records show that these transactions were made not directly, but through an intermediary company, called Anika.
From the accounts of Univers and ZhK in Sberbank, the largest state-owned bank in Russia, and in Mosstroyeconombank, a small Moscow bank, money went into what is called a “correspondent bank account” held by tiny Krainiy Sever bank in one of Russia's biggest banks, Alfa Bank. Small banks commonly keep correspondent accounts within large banks so that they can more easily make foreign money transfers.
From Feb. 5-13, 2008, $33 million poured into to Krainiy Sever’s correspondent account from Univers and ZhK. OCCRP has obtained court documents from cases unrelated to the Magnitsky case which indicates that this account has been a major recipient of money stolen from the Russian budget. Court decisions mention a number of phantom companies (including Starmiks, Optimtorg) which wired money to this account. (Doc1, Doc2, Doc3,Doc4, Doc5).
Police files OCCRP has obtained also mention many of these companies including ZhK, Univers, Starmiks, Optimtorg, as phantom firms used to launder money stolen from the Russian budget in December 2007.
The Krainiy Sever account was used as a kind of “border point” from which money flowed to companies registered abroad.
On Feb. 13, 2008, a Russian court ordered that account seized and a month later the Central Bank of the Russian Federation cancelled Krainiy Sever’s banking license for violation of the law “to combat money laundering and the financing of terrorism”.
In a press release the Central Bank said that Krainiy Sever managers had lost control of their Moscow subsidiary. Court records show that during two weeks in February of 2008, bank clients, mostly phantom companies, suspiciously wired $300 million into bank accounts in Ukraine, Kyrgyzstan,Moldova, Latvia, Lithuania, Estonia and Cyprus belonging to companies from the United Kingdom, British Virgin Islands (BVI) and Belize .
OCCRP got in touch with an ex-police officer who investigated money laundering proceeds in Krainiy Sever.
“When we raided the Moscow office of the bank, we met a guy there with a laptop from which he wired billions of rubles to different countries through the Internet. The guy was crying that he is from the FSB [Federal Security Service, the main secret service in Russia] and promised us a lot of problems”, said a former law enforcement officer who asked that his name not be mentioned for fear of retribution.
Vladlen Stepanov
Two phantom companies from Moldova, on the eastern border of the European Union, were among the foreign recipients of money from Krainiy Sever. Bunicon-Impex SRL and Elenast-Com SRL had accounts in Banca de Economii in Chisinau, the capital of Moldova. OCCRP obtained banking records of these two companies which show they received $52 million from Feb. 4-13 from the Krainiy Sever account where the Magnitsky money had gone. The last transaction was on the day the account was seized by Russian authorities. Almost all of their other transactions were also from Russia. Money came into the two companies as rubles and went out in dollars to dozens of companies located in different countries.
A third recipient of Magnitsky funds was Nomirex Trading Ltd. even though it was listed in United Kingdom records at the time as inactive. Nomirex and Bunicon are known to be part of an interconnected laundering network, dubbed the Proxy Platform by OCCRP, which has been used by Mexican drug cartels, Vietnamese, Russian and Moldovan organized crime and others. (see Sidebar: Russian Laundering Machine).
On Feb. 4, 2008, Bunicon received rubles from the Krainiy Sever account and the same day converted it into $4.5 million USD. The next day, $726,000 was wired to Nomirex through its bank account with the Latvian Trasta Komercbanka.
The day after Nomirex got the money from Moldova, it wired $1.9 million to Quartell Trading Ltd in the British Virgin Islands. Swiss prosecutors are investigating Quartell based on a Money Laundering Suspicion Report that Hermitage filed with Swiss Attorney General Erwin Beyeler. Quartell transferred the money it received from Russia to Baikonur Worldwide Ltd from BVI. And it in turn wired it to a Cyprus company, Arivust Holdings Ltd, which had a bank account at Credit Suisse.
Olga Stepanova was the head of Moscow tax office #28, when it approved the fraudulent tax return. Her whereabouts are now unknown
What stands out in this dizzying movement of money is this:
Arivust is controlled by Vladlen Stepanov, the ex-husband of Olga Stepanova, who was the head of Moscow tax office #28, when it approved the fraudulent tax return.
A bank statement for her ex-husband’s firm indicates that money that came into the account was spent on luxury property in Dubai. Stepanov has long maintained that he earned the money in his accounts and that he had nothing to do with the tax refund theft. He even sued political activist Alexey Navalny for reposting a Hermitage video that alleged he benefited from the Magnitsky money. Stepanov won that case. However, the wire transfers show that money did come directly from the Magnitsky money. Meanwhile, Olga Stepanov’s whereabouts and what happened to her after the refunds are unknown.
A Credit Suisse banking statement pinpoints the same accounts as the source of payments made for property in Dubai for Elena Anisimova and Olga Tsareva, Stepanova’s deputies in the Moscow tax office.
According to the Russian Federal Security Service (FSB) Anisimova and Tsareva left Russia in 2011 in the same car and have not been located.
“Stepanov had the possibility to explain it away because there was a gap in the money flow,” said a Hermitage representative who asked that their name not be used. “Nobody could prove the origin of the money he had received on his accounts. Today, after banking records from Russia and Moldovabecame public, the chain has become direct. Now it is obvious that money which Stepanov received on his accounts had been stolen from the budget.”
Stepanov refused to comment on the OCCRP findings.
Denis Katsyv
Denis Katsyv the owner of Prevezon Holding is the son of Petr Katsyv, the wealthy and powerful former minister of transportation in the Moscow region
Another company which received Russian money from Moldova is Prevezon Holdings Ltd owned by Denis Katsyv, the son of Petr Katsyv, the wealthy and powerful former minister of transportation in the Moscow region. Petr Katsyv is considered one of the wealthiest civil servants in Russia. According to Forbes Magazine he is worth more than $4 million in 2012, and real estate records OCCRP obtained show the son is worth far more. In 2012 the father left his ministerial post to head the General Department of Moscow Region for Cooperation with Federal Authorities.
On Feb. 5, 2008, Bunicon received rubles equivalent to $9.4 million USD in 2008 exchange rates in two transactions from the correspondent account of the Krainiy Sever bank. The next day Bunicon sent $410,000 to Prevezon’s account at the Swiss bank UBS AG.
On Feb. 13, 2008, Elenast received the equivalent of $800,000 USD from the same correspondent account, and transferred more than half of that amount to Prevezon.
Records from the Cyprus commercial registry show Prevezon Holdings Ltd was registered in 2005 and is owned by Denis Katsyv (1000 shares) and a company called Martash Investment Holdings Ltd from the British Virgin Islands (1 share). Martash Investments is also owned by Denis Katsyv.
Denis Katsyv told OCCRP that his company never dealt with any companies from Moldova.
“I am really surprised to hear that,” he said. “I give you 200 percent that it is impossible. I am ready to help you in your investigation and show the banking statement of Prevezon to prove that it never received such money.”
Katsyv never showed the statement. Instead he called reporters and said he became shareholder in Prevezon only in April 2009 and had nothing to do with any Moldovan money. Records from the Cyprus commercial registry show Katsyv actually became a shareholder in June 2008, a few months after the transfers. Prevezon’s sole shareholder at the time of the transfers, Timofey Krit, is Katysv’s current business partner and the director of Prevezon.
Other Problems
This is not the first time the Katsyv family has run afoul of the law. In 2010, the Katsyv family was mentioned in a money-laundering case of Israeli bank Hapoalim which was investigated by Israeli authorities.
According to court records OCCRP obtained, millions of dollars were transferred through Katsyv-controlled accounts at the bank. Israeli prosecutors insisted that bank managers concealed the real beneficiaries of this accounts in violation of anti-money-laundering rules. But their lawyers blamed Katsyv’s business for the bank’s problems. The court eventually agreed and found the bank managers not guilty.
According to the judgment, Katsyv’s company Martash Investment had to sign a secret agreement with the Israeli government to avoid indictment.
“If the clients of the bank [Katsyv family] had denied signing the agreement, they would have faced charges and an indictment. The situation described by the lawyer [for Hapoalim managers] leads to the conclusion that the clients of the bank, who are the main culprits, apparently bought their freedom for money,” the final ruling in the case says.
New York Properties
The Katsyv family owns more than $17 million in New York real estate alone despite a new US law that says those who benefited from the Magnitsky case cannot enter the country.
On Nov. 12, 2009, the Katsyv-owned Prevezon Holdings Ltd registered itself as a foreign business corporation in Brooklyn and on Nov. 30 that year Katsyv’s company set up a US business. Two weeks later it signed a deed on a condominium at Pine Street in Manhattan, for $829,000. The same day Prevezon Holding Ltd signed another deed and bought a second condo in the building for $1.2 million. Alexander Litvak, director of Prevezon Holdings Ltd, signed both deeds.
Leviev's group of companies, Africa Israel-AFI, opened shopping malls all over the world. AFI Palace is the biggest shopping mall in Romania.
The New York State Division of Corporations lists seven companies with names similar to Prevezon Holding Ltd that together own more than $17 million in New York real estate. Property records show that all the similarly named companies are affiliated with the same directors and managers, including Litvak and Krit, current director of Cyprus-based Prevezon. Some also own other New York City properties including five units in a luxury condominium complex at 20 Pine Street in the heart of Wall Street. A number of these are currently for sale for between $1 and $2 million each.
Katsyv’s businesses are closely tied to another controversial figure: Russian oligarch Lev Leviev. Leviev and Katsyv’s businesses often trade assets. (see Leviev story)
While the money trail leads to Stepanov and Katsyv, they are not the only persons involved with the Magnitsky money. The whereabouts of hundreds of millions of dollars still missing lie unlocked in other banking records that are still to be checked.
The story was a cooperative effort of OCCRP, Novaya Gazeta and Barron's. It was reported by Mihai Munteanu (OCCRP), Roman Anin (OCCRP/Novaya Gazeta) and Bill Alpert (Barron's). It was coordinated by Paul Radu (OCCRP). OCCRP can be reached at info@occrp.org .
Financial advisor denies charges of money laundering some of the proceeds of Northern Bank raid
Prosecution says it will show Ted Cunningham knew or believed £600,000 he dispersed was proceeds of a criminal offence
Ted Cunningham at Cork Circuit Criminal Court yesterday for his trial on money laundering charges. Photograph: Daragh Mac Sweeney/Provision
Barry Roche
The trial opened yesterday of a financial adviser charged with money laundering over £600,000 allegedly part of proceeds of a Northern Bank raid when £26.5 million was stolen in Belfast 10 years ago. Timothy Cunningham(65), Woodbine Lodge, Farran, Co Cork, has denied nine counts of money laundering at Cork Circuit Criminal Court.
The state alleges in six of the charges that Mr Cunningham laundered sums of cash in January and February 2005, knowing or believing the cash to be the proceeds of the robbery at the Northern Bank Cash Centre, Donegall Square West in Belfast.
The State alleges in a further three charges that Mr Cunningham laundered sums of cash by using these monies to purchase three cars or vehicles, again knowing or believing the cash to be proceeds of the Northern Bank raid on December 20th, 2004.
Tom O’Connell SC , prosecuting, said the State would produce evidence that Mr Cunningham had “dispersed money in an unconventional or unorthodox way”.
The Northern Bank robbery was a large robbery of cash from the Donegall Square West headquarters ofNorthern Bank in Belfast, Northern Ireland. Carried out on 20 December 2004, the gang seized the equivalent of £26.5 million in pounds sterling and small amounts of other currencies, largely euros and US$s. This makes it one of the largest bank robberies in UK history. Although the Police Service of Northern Ireland (PSNI) and theBritish and Irish governments claimed the Provisional Irish Republican Army (IRA) was responsible (or had permitted others to undertake the raid), this is denied by the Provisional IRA and the political party Sinn Féin. Although one person has been convicted of money laundering, the investigation is still ongoing, and the case remains unsolved.
http://en.wikipedia.org/wiki/Northern_Bank_robbery
On the night of Sunday 19 December 2004, groups of armed men arrived at the homes of two officials of the Northern Bank, one in Downpatrick in County Down, the other in Poleglass, near Belfast. Masquerading as PSNI officers, they entered the homes and held the officials and their families at gunpoint. Bank official Christopher "Chris" Ward was taken from Poleglass to Downpatrick, the home of his supervisor, Kevin McMullan, while gunmen remained at his home with his family. Subsequently, McMullan's wife was taken from their home and held, also at gunpoint, at an unknown location. The following day both officials were instructed to report for work at the bank's headquarters at Belfast's Donegall Square West as normal.
At lunch time on Monday, 20 December 2004, Ward removed a sum of money thought to be around £1 million and placed it in a sports holdall. He walked out of the bank's Wellington Street staff entrance with the holdall and made his way to a bus stop in Queen Street, Belfast where he met up with one of the robbers. This action was later released as a closed circuit video presentation. After handing over the sports holdall with the stolen money, Ward returned to his work location. This was regarded as a test run for the main robbery later in the evening.
McMullan and Ward remained at work after the close of business, and later in the evening they gave entry to other members of the gang. The robbers entered the bank via the Wellington Street staff entrance and made their way to the bank's cash handling and storage facility. This held an unusually large amount of cash in preparation for distribution to automated teller machines for the busy Christmas shopping season. Cash was transferred to one or several vehicles parked outside in Wellington Street. The gang then fled. Shortly before midnight the gang holding the Ward family left, and those holding Mrs McMullan released her in a forest near Ballynahinch. The haul included £10m of uncirculated Northern Bank sterling banknotes, £5.5m of used Northern Bank sterling notes, £4.5m of circulated sterling notes issued by other banks, and small amounts of other currencies, largely eurosand US$s.
Following the raid, Northern Bank announced that it would recall all £300 million worth of its banknotes in denominations of £10 or more, and reissue them in different colours with a new logo and new serial numbers. The first of these new notes entered circulation on 11 March 2005.
Initial responses
Although the police initially refused to be drawn as to who might be involved, a number of commentators, including journalist Kevin Myers writing in the Daily Telegraph, quickly blamed the Provisional IRA, saying that only it had the wherewithal to conduct such a professional operation in the province. One senior police officer quoted in The Guardian newspaper said: "This operation required great expertise and coordination, probably more than the loyalist gangs possess".
Investigations were conducted by the Police Service of Northern Ireland. On 7 January 2005 Hugh Orde, the service's Chief Constable, issued an interim report in which he blamed the Provisional IRA for the robbery. The British and Irish governments concurred with Orde's assessment, as did the Independent Monitoring Commission (the body appointed by the Irish and British governments to oversee the Northern Ireland ceasefires). Sinn Féin, however, denied the Chief Constable's claim, saying the IRA had not conducted the raid and that Sinn Féin officials had not known of or sanctioned the robbery.Martin McGuinness said that Orde's accusation represented "nothing more than politically-biased allegations. This is more to do with halting the process of change which Sinn Féin has been driving forward than with anything that happened at the Northern Bank". Bertie Ahern, the Irish Taoiseach, on the other hand, said that "an operation of this magnitude had obviously been planned at a stage when I was in negotiations with those that would know the leadership of the Provisional movement."
On 18 January 2005 the Provisional IRA issued a two-line statement denying any involvement in the robbery: "The IRA has been accused of involvement in the recent Northern Bank robbery. We were not involved".
Despite this denial of involvement from the Provisional IRA, and others by its supporters, it has been widely believed in Northern Ireland, especially in unionist and loyalist circles, that the raid was the work of the IRA, and intended by them as a means of securing a pension fund for its active service members, who have been largely unemployed since the promulgation of the Good Friday Agreement.
Insurance
At the time of the raid, Northern Bank was owned by National Australia Bank although a deal had been signed to sell the bank to Danske Bank in the following year, 2005. This meant that all the costs of the raid were taken by National Australia Bank and not Northern Bank.
Arrests and investigation developments
10 February
On 10 February the houses of Liam and Michael Donnelly were searched in connection with the robbery but nothing was found on the business premises either.[11]
17 February
On 17 February the Gardaí announced it had arrested seven people and recovered over £2 million, including £60,000 in Northern Bank notes, during raids in the Cork and Dublin areas, as part of ongoing investigations intomoney laundering. The Gardaí did not officially confirm that the raids were related to the Northern Bank robbery, but made the arrests under the Offences against the State Act, the republic's chief anti-terrorism law. Those arrested are reported to include several men from Derry and a former Sinn Féin councillor. A suspected IRA member was arrested at Heuston Station, along with two others. Money to the sum of €94,000 was found in their vehicle, in a washing powder box.[13] One of the men, Don Bullman from Co. Cork, was charged on 18 February at the Special Criminal Court with IRA membership. He was jailed for IRA membership but never charged in connection with the Northern Bank robbery.
18 February
On 18 February, Gardaí in Passage West arrested a man found to be attempting to burn sterling banknotes.[15]Two men in Dublin were released from questioning, as was the Sinn Féin member in Cork.
A top Irish businessman and associate of the Taoiseach, Phil Flynn, stepped down from a number of positions pending the outcome of a Gardaí investigation into Chesterton Finance, of which he is a non-executive director. He stepped down as chairman of a government body overseeing decentralisation, as well as giving up a position on the board of VHI and as chairman of the Bank of Scotland.[17]
The PSNI recovered £50,000 in unused Northern banknotes at Newforge Country Club, a sports and social club inBelfast for off-duty and retired police officers, owned by the PSNI's Athletic Association. The PSNI stated it was a diversion, but it is being investigated.
19 February
Police confirm the money found at the Newforge Country Club was part of the £26 million from the bank robbery.
October 2005
On 12 October, Garda Commissioner Noel Conroy told a law enforcement conference in Dublin that he was satisfied that the money recovered in Cork in February came from the Northern Bank robbery.
November 2005
On 2 November the PSNI arrested two men in Kilcoo, County Down, as part of a pre-planned operation in connection with the robbery. Sinn Féin's Willie Clarke says that the two arrested are not members of his party.
On 3 November three more people were arrested in Belfast, Dungannon and Coalisland, bringing the total number of people arrested during the operation to five. All five were questioned in the PSNI's Serious Crime Suite in Antrimpolice station. It was reported that in the early hours of the morning, crowds blocked the road betweenCastlewellan and Newry near Kilcoo with burnt-out vehicles. Hugh Orde defended the police action as "proportionate" and gave his full backing to the detectives handling the operation. Sinn Féin MP Michelle Gildernew claimed the raids were a "political stunt".
One of the five arrested during Tuesday and Wednesday has been released. The individual arrested in Dungannon was named as Brian Arthurs, a member of Sinn Féin and brother of Declan Arthurs, an IRA volunteer killed in 1987.
On 7 November, Martin McAliskey, a 42-year-old man from Coalisland, County Tyrone, was charged with making false statements to police in relation to a white Ford Transit van allegedly used in the robbery.
On 29 November police investigating the raid arrested Chris Ward and searched his home. They confirmed that another bank employee, a 23-year-old woman who was not named, was also arrested on the same day.
December 2005
On 2 December PSNI raided Casement Park, the Gaelic Athletic Association stadium in Belfast, and the related Social Club. The GAA reported the matter to the Irish government.
On 7 December, Chris Ward was charged with the robbery. Belfast Magistrates' Court was told the prosecution case was based on Ward's actions in the days preceding and during the raid, and a suspicious work rota, as well as discrepancies in Ward's original statements to police. Ward denied the charge and claimed police had harassed him and his family in an attempt to frame him. He also complained that he had been held in police custody for an unprecedented eight days under the Criminal Justice Act before being charged.
3 January 2007
All charges against Dominic McEvoy and Martin McAliskey are dropped by the Public Prosecution Service. Hugh Orde describes the developments as a setback. Chris Ward is remanded on bail until 31 January, when he will appear before the court again.
October 2007
A date of September 2008 was set for the trial of Chris Ward, in connection with the robbery. He is charged with robbery and two further charges of false imprisonment.
October 2008
On 9 October 2008, Ward was acquitted of the charges of false imprisonment and robbery. The judge discharged him after the prosecution said it would be offering no more evidence.
March 2009
On 27 March, financial adviser Ted Cunningham from Cork was found guilty of laundering over three million pounds sterling which came from the robbery.
May 2012
On 11 May 2012, the Court of Criminal Appeal quashed the conviction of Ted Cunningham on all ten charges, citing an invalidity of the warrant used to search his house. The invalidity referred to the fact that the warrant was issued by the senior Garda in charge of the investigation, as allowed for by section 29 (1) of the Offences against the State Act, a state of affairs which the Court found to be repugnant to the Constitution of Ireland. The Court ordered a retrial on nine of the ten original counts of money laundering. It directed that the tenth, relating to a sum of money allegedly found in Cunningham's home was not to be retried.
February 2014
Ted Cunningham was given a 5 year suspended sentence having pleaded guilty last week to two counts of money laundering following four days of trial.
Monday Newspaper Review - Irish Business News and International Stories
By Finfacts Team
Jul 11, 2005, 06:55
http://www.finfacts.com/irelandbusinessnews/publish/printer_10002530.shtml
Monday Newspaper Review - Irish Business News and International Stories
By Finfacts Team
Jul 11, 2005, 06:55
http://www.finfacts.com/irelandbusinessnews/publish/printer_10002530.shtml
The Irish Independent reports that a money-laundering racket uncovered by the gardai was used by the Provisional IRA to 'cleanse' at least �5m (�7.2m) in sterling notes from the proceeds of the Northern Bank robbery.
The extent of the racket was revealed last night as gardai worked closely with the PSNI to build up a case against the masterminds of the scam.
The massive investigation, which involves several national garda units, is being carried out alongside inquiries into the Belfast robbery in which the IRA got away with 38m.
Senior garda officers are satisfied that the cash traced and seized in their investigation is directly linked to the robbery last December.
A detailed picture of the money trail emerged last night as inquiries continued here and overseas:
Gardai seized 2.4m in used £20 notes stashed into holdall bags in the basement of a bungalow owned by Cork financier Ted Cunningham whose firm, Chesterton Finance Company, is alleged to have been used to help launder the cash.
Another £1.5m in new sterling notes went up in smoke when a man in Passage West burnt the cash in his fireplace after the scam organisers panicked because they feared the new notes could be traceable.
The remaining �1.1m was identified in the paper trail across a series of financial institutions and has either been seized or spent.
Gardai recovered almost £0.5m of the latter tranche when they were either contacted by businessmen or raided houses or business premises in Cork city, Douglas, Millstreet, Co Cork; Killarney and Rathmore, Co Kerry; Tullamore, Co Offaly; and Dunboyne, Co Meath.
Detectives also seized £93,000 in a Daz washing powder packet after searching a jeep at Heuston rail station in Dublin. Gardai surrounded the jeep on the afternoon of February 16 after an intelligence tip-off resulted in the monitoring of two Derry men who travelled to Dublin in the vehicle to meet a suspected republican, who had travelled from Cork.
Gardai allege that the money had previously been taken south from Derry in sterling to be 'laundered', and was being handed back in 'clean' euro notes when it was seized.
At that stage, the garda investigation had already been under way for about nine weeks and the intelligence about the meeting in Dublinforced officers into moving against a number of suspects at the centre of their inquiries.
Apart from raiding Cunningham's home in the village of Farran, 10 miles outside Cork city, gardai detained two other men and a woman - including a Sinn Fein activist who had been a former councillor and party election agent.
But from a total of seven arrests, only one person has so far been charged and he is now awaiting trial on accusations of being a member of an illegal organisation.
Last month, the PSNI carried out a series of raids in Derry and seized more than �30,000 in 11 searches of houses and businesses; while a related raid was carried out by gardai in Co Donegal.
The Northern Bank estimates the IRA made off with about �9.9m, but the rest of the missing money has not yet surfaced.
The money trail has also led overseas, and gardai have made visits to Britain and to Bulgaria where an Irish-based company had intended to invest in property.
A number of bank accounts had been set up by the company in relation to its legitimate investment plans following a visit to Sofia by an Irish delegation that included Ted Cunningham and Phil Flynn, a former vice president of Sinn Fein and senior trade unionist.
The Irish Independent also reports that Cognotec, the foreign exchange trading software group headed by Brian Maccaba, lost $4.9m in 2003 to take its accumulated deficit to $91.65m, the latest accounts show.
The huge accumulated losses meant that the company's liabilities exceeded its assets by $915,785, causing auditors Ernst & Young to warn that this balance sheet situation may require the convening of an extraordinary general meeting.
"The balance sheet shows an excess of liabilities over assets and, in our opinion, on that basis there did exist at 30 November 2003, a financial situation which under Section 40 (1) of the Companies (Amendment) Act 1983 may require the convening of an extraordinary general meeting of the company," the auditors noted.
According to the financial statement, the accounts were prepared on a going-concern basis as the directors believe current working capital is sufficient to meet the needs of the company until positive cash flow is generated.
Turnover for the year to November 30 2003 was $12.6m, down from almost $15m the previous year.
Staff numbers dropped from 91 in 2002 to 57 in 2003.
The average staff cost is $8,294.
Directors' remuneration shot up by 88pc in the period to $552,285, although it is unclear how many directors were paid in 2003, as four directors resigned that year.
The Maccaba-headed company paid corporation tax of $326,366 in the period but a note in the accounts shows it had a tax loss carried forward at year end of $80.4m. The group had debts of $11.55m, according to the accounts.
Maccaba, one of the highest profile Irish businessmen during the tech boom at the end of the nineties, hit the front pages for all the wrong reasons last year. He lost a case against a London rabbi over lurid allegations about his private life.
During what became known as the 'Indecent Proposal case' - echoing the plot of the Hollywood film starring Robert Redford - Mr Maccaba had accused a rabbi of spreading "poisonous" allegations that he was a "sexual predator" and "serial adulterer" who chased after young married Jewish women.
The entrepreneur is thought to have been hit with legal costs of nearly �3m, the longest slander case in legal history.
Maccaba founded Cognotec in Dublin in 1991 and the company has raised about $90m from international investors, including SoftBank and Warburg Pincus.
The Irish Times reports that Dublin solicitor Brian O'Donnell has emerged as the preferred bidder for a �115 million (�167.43 million) office property in London's docklands, less than four months after he spent �135 million on a neighbouring development.
Mr O'Donnell, a former managing partner of William Fry, and his wife Dr Mary Patricia O'Donnell were told late last week that they had beaten off a number of other wealthy bidders, including at least two Irish businessmen, to win control of 17 Columbus Courtyard in Canary Wharf.
The 18,600 square-metre office building is currently occupied by investment bank, Credit Suisse First Boston on a letting agreement that has another 23 years to run.
The occupancy yields about �6.5 million each year in rent.
Mr O'Donnell, who was advised on the deal by the corporate finance team at Deloitte in Dublin, will buy the property from the Canary Wharf Group.
He is thought to have submitted a highly-leveraged bid that could see him put down less than �20 million of his own funds.
His status as preferred bidder means he has been selected ahead of at least four other would-be buyers.
These are thought to have included two prominent Irish businessmen who were respectively advised by Bank of Ireland Private Banking and KPMG.
Other interested parties included a Middle Eastern consortium and a teachers' pension fund from the US.
The Columbus Courtyard is just the second building to be sold off by Canary Wharf since the group was taken private by Morgan Stanley's Songbird consortium a year ago.
Mr and Mrs O'Donnell bought the first such property, 15 Westferry Circus, in March just days after the British Chancellor, of the Exchequer Gordon Brown, abolished stamp duty in "deprived" areas, including Canary Wharf.
Stamp duty could previously have been charged at 4 per cent of the purchase price.
The yield of about 5.5 per cent that the O'Donnells will draw from the Columbus building marks a decline from the 6.2 per cent that came with 17 Westferry Circus, with the fall linked to the downward movement in UK swap rates in the interim.
The 17 Columbus Courtyard property was built in 1998 and has been occupied by Credit Suisse First Boston from the start.
The Irish Times says that Taoiseach Bertie Ahern successfully fought off moves to harmonise European tax rates in the troubled draft constitutional treaty for the European Union (EU).
But a new battle on taxation may now be looming after the Austrian Chancellor Wolfgang Schuessel suggested that the EU could part-fund its budget with a levy on international financial transactions.
Such a tax is unlikely to find support on Merrion Street. It would hit Ireland harder than most EU members, given the very high level of international transaction in the IFSC in Dublin.
Yet Mr Schuessel, who takes over the EU's rotating presidency at the end of this year, said said it should not continue to be the case that "every euro that we need for [ the EU] is drawn from national budgets".
Interviewed in the German newspaper Bild am Sonntag, he said fundamental budget reform was required to that provide the EU with its own source of cash.
"I suggest there should be an automatic financing mechanism for part of the EU budget - for example through taxation of international financial transactions," he said.
About half the EU's budget, worth �106.3 billion in 2005, is paid for by contributions from member states based on their gross national product (GNP). The rest comes mainly from levies on agricultural imports and customs duties and VAT .
EU leaders meeting in Brussels last month failed to agree on the bloc's 2007-2013 funding and Mr Schuessel said budget talks were becoming "ever more brutal". He warned that if the EU was not given its own source of cash, there would be an "unprecedented scrap over distribution".
His proposal for a tax on international transactions similar to one made by French President Jacques Chirac to help fight Aids.
The Irish Examiner reports that recruitment activity remained buoyant in the second quarter of the year, Bank of Ireland said yesterday.
The bank said the level of job advertising in the three months to June was 6% ahead of the same period last year and the retail and professional sectors were particularly strong.
Chief economist Dan McLaughlin said the demand for labour continued to grow strongly and immigration was playing �a key role� in filling the gap between demand and Irish-based supply.
�Ireland is at full employment and this pace of job creation is significantly outstripping the growth in the indigenous supply of labour, so the balance can only be met by tapping into the excess supply of labour available across the EU,� said Dr McLaughlin.
Job ads in the financial sector were 48% ahead of the same quarter last year, while ads placed by retailers were 35% higher.
There were 20% more professional jobs on offer, but slowdowns were recorded in construction, information technology and manufacturing, where job ads were down by around 15%.
The Irish Examiner also reports that Irish people who regularly buy goods and services over the internet believe it is a relatively safe method of shopping, according to a new EU survey.
Just over 2% of customers who made purchases online experienced difficulty in obtaining redress or repair following an initial complaint.
Some 3.6% of respondents said they were annoyed that delivery costs were higher than anticipated, while 3% complained that suppliers failed to provide a satisfactory response to a complaint.
Only 1.4% of e-shoppers in Ireland expressed concern about a lack of security with regards to payment over the internet with just half that number experiencing fraudulent use of either credit or debit cards.
The most frequent complaint by Irish internet users was the fact that delivery times were longer than promised a fault experienced by almost 7% of those who bought goods online.
The Financial Times reports that European Union (EU) regulators have expressed concerns that any US government decision to prosecute the US business of KPMG, one of the big four accounting firms, could badly damage the already-concentrated audit market.
The regulators have stopped short of demanding that the US government refrain from bringing criminal charges against KPMG for past tax work but they do not want to see the number of big accounting firms falling to three.
Arthur Andersen, once the world's biggest accounting firm, collapsed after the US justice department brought criminal charges against its US partnership in 2002.
KPMG could suffer a similar fate if the department presses criminal charges against its US partnership over past sales of tax avoidance products to clients.
A decision is expected soon but the justice department and KPMG declined to comment.
KPMG, Deloitte, Ernst & Young and PwC dominate the auditing of multinational companies.
Since Andersen's demise, regulators have often expressed concerns about the high concentration of the audit market and the lack of choice big companies have.
European regulators accept they cannot interfere with the US justice department's decision on KPMG but they are concerned about the potential consequences.
An official at the European Commission said: "It was already an issue going down to four big accounting firms. Obviously, having only three would be an even bigger problem."
Some European regulators have relayed their concerns about the potential consequences of the KPMG case to their counterparts in the US.
Andersen's international network of accounting businesses disintegrated after the justice department pressed obstruction of justice charges against its US partnership, which had been auditor to Enron, the energy company that collapsed in 2001.
The US Justice Department's investigation into KPMG's US business focuses on sales of tax avoidance products to clients between 1998 and 2002.
Last month KPMG admitted some former partners had engaged in unlawful conduct during that period.
The Financial Times also reports that at the end of a shortened, dramatic trading week, shares on Wall Street went out on high after good economic news prevailed over terrorist attacks and surging oil prices.
With no trading on Monday because of the Fourth of July holiday, oil prices, spurred on by a vicious hurricane season that threatens the country�s oil supplies, continued to be of major concern on Wall Street.
Positive data on unemployment and consumer confidence coupled with some strong figures from the US earning season helped the markets to weather the storm and all three indices rose more than 1 per cent on Friday.
Friday�s data showed from the Labor Department showed that US employers added 146,000 jobs in June. This was below Wall Street forecasts, but the unemployment rate fell to its lowest since September 2001, a government report showed. �What we have seen is a tug of war between politics and corporate fundamentals,� said Quincy Krosby, chief investment strategist at The Hartford.
One such corporate fundamental was the gains made by Alcoa, the world�s biggest aluminium maker, that on Friday posted the best quarterly profit in its history. Its shares gained 4.3 per cent on Friday, taking it to $27.20. Over the week it was up 4.1 per cent.
By the close, the Dow Jones Industrial Average had climbed 1.4 per cent to 10,449.14 and the broader S&P 500 was up 1.2 per cent at 1,211.86. The technology heavy Nasdaq gained 1.8 per cent, taking it to 2,112.88.
Since the close of trade last Friday the Dow was up 1.4 per cent, the S&P 1.2 per cent and the Nasdaq 1.8 per cent.
The recovery makes for a striking contrast with other recent atrocities that sent markets reeling and showed traders now fully �price in� terrorism. While the markets recovered in one session from the London blast, it took the S&P 500 more than two years to recover to its pre-September 11 levels. It took 14 session to recover from the Madrid blasts.
The market was helped in its swift recovery, said Ms Krosby, in part because of the impressive show of resolve by Tony Blair and George Bush and because of strong underlying consumer and economic news.
One of the most striking comebacks of the week was by the airline industry, which was badly hit by the double whammy of an oil spike and a terrorist attack but still managed to rally. The Amex Airline index was up 1.8 per cent at 48.03. Delta shares rose by 3.6 per cent on Friday after its share price plummeted in the wake of the news from London. However, it was still down 6 per cent over the week, finishing at $3.50.
The tourist sector also made a comeback with the Marriott International hotel group up on last Friday by1.2 per cent at $69.49. The cruise operator Carnival also recovered after Thursday, and ended the week virtually unchanged at $54.74.
Ms Quincy said the continued good health of America�s shoppers had also helped to lift markets.
�The consumer confidence figures and the good retail sales showed that, despite higher prices at the pump, the US consumer is still alive and well,� he said.
Wal-Mart, the world�s biggest retailer, certainly had a good week with shares up 3.4 per cent at $49.90. The company was helped by an announcement on Thursday that its June same-store sales rose 4.5 per cent, helped by seasonal merchandise such as air conditioners and summer clothes.
Shares of Gap were up 5.8 per cent at $20.97 and Target advanced 4.3 per cent, to $56.93.
By mid-week, Exxon was among the biggest drags on both the Dow and the S&P 500, falling 1.7 per cent to $59.11 on Wednesday. However, it finished 1.9 per cent up from the previous week at $59.40.
The most dramatic gains of the week came from a group of little-known specialist security companies that saw their shares leap on the terrorist news from London.
Ipix and Digital Recorders, two companies that make surveillance devices, both saw their share prices jump on the news of the London attacks. Ipix soared 23.7 per cent on the day before finishing the week 2.8 per cent higher at $2.90.
Wolfgang Munchau in the FT, under a headline Europe must tackle terrorism, writes:
We do not know the next target of the terrorists after Madrid and London. Maybe Rome, where prime minister Silvio Berlusconi will be facing an election next year. Or maybe Copenhagen. The Danish government also helped US President George W. Bush in the war against Iraq. But the surprise of the timing of the London attack reminds us that the terrorists do not usually behave as we expect them to.
The French and Germans also have reason to fear that Paris and Berlin, too, may be future targets despite their governments� opposition to the Iraq war.
But even if we have no clue where the al-Qaeda network will strike next, we know they operate on a pan-European level. After September 11, al-Qaeda has focused increasingly on the Middle East and Europe, which are today far more vulnerable and less prepared to cope with terrorist attacks than the US.
One reason is the way the European Union has chosen to organise the fight against terrorism. Anti-terrorism is not the business of the EU and its institutions. Europol, the EU�s nascent police services, has extended its official remit to include anti-terrorism. But it hardly matters. The fight against terrorism has remained primarily the job of national agencies, intelligence services and police forces. They were set up at a time when the main terrorist threat in Europe was indeed national � the IRA in the UK, Eta in Spain, Baader-Meinhof in Germany or the Red Brigades in Italy.
The trouble is that the al-Qaeda terrorists are thinking more European than Europe�s national anti-terrorism agencies. It is therefore a legitimate question to ask whether our present institutional set-up is still appropriate. Or rather, whether it is the best conceivable system we could think of, whether we would reinvent it in this manner if it did not exist today.
The answer to all these questions is an emphatic No. If we had to build a new system from scratch, we would not establish independent national systems in each country. After the Madrid bombings last year, the EU only went so far as to set up an embryonic anti-terrorism unit, headed by the Dutchman Gijs De Vries, the European co-ordinator for counter-terrorism.
As his title suggests, the main job at EU level is co-ordination. It is essentially a bureaucratic agency, very much the kind of thing one would expect the EU to do. Mr De Vries is not the head of a European Central Intelligence Agency. He has no agents in the field. His job is to provide a bird�s-eye view analysis of terrorist threats in Europe.
There has been some good progress in bringing together national security and anti-terrorism analysts as part of Mr de Vries�s activities. The European arrest warrant and the setting up of joint investigation teams of national police forces were also helpful.
While the EU has a limited role in intelligence analysis, it has no operational responsibilities. The defenders of the status-quo always say there already exists a great deal of co-operation between the national security services, on a �need-to-know� basis, mostly bilaterally or trilaterally. We are assured � and have no reason to disbelieve � that this system works reasonably well. The agencies have apparently prevented several deadly attacks. One case we know of occurred in December 2001 when French and German police foiled a terrorist attempt to blow up the Christmas market in Strasbourg.
Despite these successes, it is doubtful that this is the best the EU can do. Richard Falkenrath, a former White House adviser on homeland security, has argued that the EU should tear down the wall between military intelligence and civil law enforcement.
The EU is the natural level at which to base an effective homeland security agency, comprising an analytical and an operation arm.
>The reason is that the EU has become a deeply integrated political and economic area. In the so-called Schengen area, citizens enjoy passport-free travel. Travelling to the non-Schengen parts of the EU is not difficult either. In such an area it would be nonsensical to have different standards of airport security or different national systems for the protection of the EU�s external borders.
You might say that this is politically impossible. After all, national security is at the heart of national sovereignty. But this is not how the EU�s citizens see it. Opinion polls � even in eurosceptic Britain � suggest a large majority want the EU to fight terrorism. They no longer believe that national governments can deliver the appropriate level of security in the EU.
This is the fundamental trouble with the EU. It does what it should not be doing, such as running discriminatory agricultural price support systems, while it does not what it should be doing, such as fighting terrorism and providing security.
We have all marvelled at the stoicism and defiance of Londoners in the aftermath of Thursday�s attacks. But it is not our attitude that will defeat terrorism. It is the way we organise the fight. We should have had a fundamental debate about the effectiveness of our anti-terrorism systems after the Madrid bombing last year. We urgently need it now.
The New York Times reports that Goldman Sachs and Allianz of Germany are in talks to acquire a $1 billion stake in China's largest state-owned bank, the Industrial and Commercial Bank of China, according to a person briefed on the discussions.
The talks come at a time when some of the world's biggest financial institutions are rushing into China to acquire stakes in some of the country's large but troubled state-owned banks ahead of planned initial public offerings in the next few years. The Bank of America said last month that it would pay $3 billion for a 9 percent stake in the nation's third-largest lender, the China Construction Bank, which is expected to offer shares to the public late this year.
And UBS said last month that it was considering investing as much as $500 million in the Bank of China, another huge state-owned bank.
"All the big financial institutions want a piece of the action," said Jack J. T. Huang, who oversees China coverage for the law firm Jones Day in Taipei, Taiwan. "This is not necessarily a rational decision when you look at the numbers. But these institutions believe the government won't allow these banks to fail. They will step in to help them succeed."
I.C.B.C. has nearly 400,000 employees, more than 100 million customers and about $500 billion in assets. It is unclear how large a stake in the bank Goldman and Allianz may get. The negotiations were reported by the South China Morning Post in Hong Kong on Saturday.
Goldman and other large investment banks may be positioning themselves to help take the banks public in the next few years in deals that could result in hundreds of millions of dollars in investment banking fees.
Citigroup was initially expected to help take China Construction Bank public, but bankers said that deal is now likely to be handled by Morgan Stanley and its Chinese joint venture partner, the China International Capital Corporation, after Citigroup passed on buying a stake.
But the huge investments could be risky for some of the financial institutions because China's banking system has been struggling for years with massive debts, poor management and deep-rooted corruption.
The Chinese government has consistently stepped in to help bail out the banks. For example, it injected $45 billion into the China Construction Bank and the Bank of China in 2003. And analysts say the government is determined to revitalize the nation's banking system as it prepares to open the market to foreign banks.
I.C.B.C. is one of the most troubled. For years, the bank has racked up bad loans tied to poorly operating state-owned enterprises. It has also been plagued by corruption. In the past year, more than 350 I.C.B.C. officials were punished after an auditor found over $800 million in irregularities at the bank. Some bank officials were arrested on charges of trying to steal about $900 million.
The bank has also been a victim: a private company used forged documents to borrow nearly $900 million from the bank, according to reports in state news outlets.
But analysts say the government has pressed the big financial institutions to help clean up the banking system by taking sizable stakes in the four largest state-owned banks, which also include the Agricultural Bank of China.
Goldman Sachs and Morgan Stanley - considered the two most powerful foreign investment banks in China - have each purchased a substantial number of bad loans from China's financial institutions.
Goldman, J. P. Morgan Chase and I.C.B.C. have also teamed up to agree to loan about $9 billion to the China National Offshore Oil Corporation, one of China's largest state-owned oil companies, if it succeeds in acquiring theUnocal Corporation, an American company. The Chinese oil company, known as Cnooc, is in a bidding war with Chevron over Unocal, and Goldman and J. P. Morgan are Cnooc's financial advisers in that effort.
Indeed, Goldman has moved aggressively in recent years to strengthen its operations in China and solidify its ties to the government in the expectation that the country could some day be a source of billions of dollars in profits.
Henry M. Paulson Jr., Goldman's chairman, has made dozens of trips to China in recent years. And last year, Goldman agreed to donate $67 million to the government to bail out a Chinese brokerage firm.
Goldman then got approval to form a joint venture that could operate in China's domestic securities market. Altogether Goldman's investment in the joint venture is expected to top $200 million in the first few years.
Goldman has ample money to invest in a deal now. It finished raising $8.5 billion in April for Goldman Sachs Capital Partners V, one of the largest investment funds created this year.
The NYT says that banner ads, the Internet's favorite petri dish, have begun yet another round of experimentation, this time as shopping assistants.
Late last month, Chitika (pronounced CHIH-tih-ka), an advertising company based in Marlborough, Mass., began testing eMiniMalls, a technology that scans a Web page, chooses a product the reader might be interested in, then displays banner ads that are miniature shopping comparison pages, with prices, product reviews and links to merchants.
Analysts and online executives say the idea may find a market if consumers can overcome their longstanding habit of ignoring anything that appears in a rectangular box toward the top of a Web page.
"I know it's interactive, and shopping search is a good idea, but it's still perceived as this thing, this space," said Gary Stein, an analyst with Jupiter Research, an online consultancy. "Banners just aren't all that great at attracting attention."
Chitika's unusual approach to banners is aimed at attracting attention. The ads, which are being tested by a handful of online publishers, including the college savings site Upromise.com, allow users to click on different tabs to view various features of a product without being whisked away to another site.
For instance, on a client's Web page that mentions MP3 players, Chitika could instantly send to the publisher a banner ad featuring iPods available at three different retailers. Next to the merchants' names and their prices, users could click on a tab to see brief product reviews, descriptions and quotes about iPods from selected online Web logs. Only when users click on a merchant's link are they taken to the retailer's product page for that item.
At that point, the merchant pays a fee averaging about $1, whether there is a purchase or not, to Chitika, which shares an undisclosed portion with Shopping.com, the product comparison site that feeds merchant and product data to Chitika.
Indeed, the affiliation with Shopping.com is one of two fairly strong factors that could help Chitika gain the attention of advertisers and publishers. Besides the ascendancy of shopping search engines, there is a growing appetite among publishers for so-called contextual advertising.
Online merchants and investors have grown fond of shopping comparison sites in the last year. Sites like Shopzilla, Shopping.com, Nextag, Pricegrabber and others were visited by about one-third of all active online users in the United States in May, according to Nielsen/NetRatings, an Internet consultancy. Those numbers will probably climb during the holiday season, when shoppers look to comparison sites for bargains and gift ideas.
Merchants, who typically pay to list their products on the shopping sites, report fairly good success in attracting customers this way. The resulting increases in shopping search revenues at Shopping.com and Shopzilla led to those companies being bought last month, when eBay acquired Shopping.com for $620 million, and E. W. Scripps, the media company, purchased Shopzilla for $525 million.
Google has helped invigorate the market for contextual ads, with its AdSense service. In that program, publishers devote a certain amount of space - typically near the bottom of the page - to text advertisements. Google scans the Web page and plugs in text ads for products that are somehow related to its content. When someone clicks on an ad, Google sends the publisher a commission.
AdSense has gained a huge following over the last two years among Web publishers, who particularly like that Google sells and places the ads on their behalf.
Chitika can offer the same benefits to publishers, while also offering them the ability to control what goes into the banner and, in the near future, when and how its banners can be displayed. For instance, they may opt to leave the Chitika ads aside until readers click on pages for which the publisher has been unable to attract high-paying advertisers. Or, they may block the listings of merchants who compete with the publisher's existing ad clients. Chitika clients may also eschew the banner format in favor of a square display.
According to Venkat Kolluri, Chitika's chief executive, a handful of mostly small publishers began testing the service in the last week of June, including bloggers, home decorating sites and a site offering money-saving advice. Mr. Kolluri said "several hundred" more publishers have applied to receive the ads - a process that requires no fees, and the insertion of only one line of computer code to pages on which the ads will appear.
Mr. Kolluri said early results suggest that people click on more than 1 percent of the eMiniMall ads they see, compared with the industry average of less than half of 1 percent for banner ads.
For now, the biggest publisher to sign up for the eMiniMalls is Upromise, which offers its members the ability to open a college fund with cash rebates they receive by shopping at certain merchants.
David Coppins, vice president of the online mall for Upromise, said his site would introduce eMiniMalls on the site's home page before the end of September. The eMiniMalls will feature only products from the site's 350 retail affiliates.
"I've been dying to do something like this," he said, "but it would've involved us changing our backend systems."
For now, Shopping.com will retain the rights to distribute its listings through Chitika, but Mr. Kolluri said he planned to solicit other shopping search engines, so the engines would be competing to offer the best terms to merchants.
Josh Wetzel, director of business development for Shopping.com, which is based in Brisbane, Calif., said Chitika's initiative could help Shopping.com increase exposure for merchants. "I definitely think it's got a future," he said. "It's taking the AdSense idea to the next step, and making it very specific to commerce."
Corey Jeffery, an analyst with Nielsen/NetRatings, said the concept was so close to Google's AdSense model, in fact, that Chitika "should keep an eye in their rearview mirror."
Google would not say if it might consider a similar offering, but even if it did not, others could be watching for the market's response to Chitika, Mr. Jeffery said.
Mr Wijat's friend Magic Rabbit 
