Compliance policies are far from foolproof. The investigation that led Customs to Bell Helicopter’s bank account also turned up $47,840 in payments to Southfield, Michigan-based auto-parts maker Federal-Mogul. Spokeswoman Lisa Weber says Federal-Mogul has had formal policies and safeguards in place for years, and audits them on a regular basis. “Money-laundering is a major problem,” she says. According to court documents, Federal-Mogul cooperated with the government’s investigation, but it still fought the government’s seizure, noting in court documents that it “has an established history of … similar financial transactions … and that all such transactions represent legitimate business transactions.”
Ironically, cooperating with the government doesn’t eliminate a company’s risk of prosecution, particularly in the multiagency world of drug enforcement. “No matter what the Treasury Department says, the Department of Justice still tries to make cases,” says Santangelo. “You have one part of the government trying to work with you, and another part of the government trying to prosecute you.”
Of course, the U.S. government is not the only party involved here. With rebel guerrillas controlling a Switzerland-size chunk of the country and with their economy in shambles, Colombian officials take a dim view of U.S. company claims that they cannot help stop the estimated $5 billion in goods that flow through the BMPE. With legal imports in 1998 of $15 billion, contraband accounted for 25 percent of all imports. In 1998, this cost the Colombian government a precious $840 million in taxes and tariffs.
“We have guerrillas surrounding the city and terror bombings here in Colombia, but we won’t give up this fight. We are just asking the international community to help us. As long as drug dealers can launder their money, they will continue their operations,” says Enrique Giraldo, chief of international investigations for DIAN, Colombia’s customs and excise agency. “Companies should be more concerned about their payment operations,” he adds. “Why do they wait until they’re in court to be concerned about this? It is more expensive at that point.”
DIAN’s former director, Fanny Kertzman, was even more critical. In 1999, she testified before the U.S. Congress that “the Colombian government believes that many of the multinational companies perfectly know the mechanism described above [the BMPE], and are aware of the fact that their products finally enter Colombia.” Recently, however, such companies as Sony and Philip Morris have signed agreements with DIAN promising to help shut down rogue dealers if DIAN provides documentation and serial numbers for seized goods. That’s a breakthrough, says Giraldo, although it’s too early to see results.
Philip Morris signed its agreement in March 2000. But just two months later, a New York law firm filed a RICO suit on behalf of 25 Colombian states and the city of Bogota, claiming Philip Morris knowingly conspired with smugglers for more than 20 years, and cost the Colombian states billions of dollars in tax revenues and other fees.
“The suit is wholly without merit,” responds Philip Morris’s Leiber. “The factual allegations of the complaint contain falsehoods, fabrications, distortions, and misleading half-truths…. We certainly do not engage in and have not engaged in ‘smuggling activities,’ ‘money- laundering,’ ‘wire fraud,’ or ‘mail fraud.’ Nor do we do business with so-called peso brokers.”