Saturday, April 2, 2011

"The illegal destruction of foreign capital should be a crime"

In 1999 the EU established the European Anti-Fraud Office (OLAF), the independent body based in Brussels responsible for combating corruption and other adverse financial interests of the Community. The German Wolfgang Hetzer, since 2002 director of Intelligence and Analysis of the organization, has just published an interesting book entitled Finanzmafia in which he asks, "how is it that criminals and bankers with impunity." The book is a genuine product of the "angry German." The country has a considerable number of professionals, including some in positions of corporate responsibility, which, regardless of their political and idiosyncrasies, does not comply with the shows and abuses that the financial crisis has revealed.

The result is that the debate on the criminal liabilities of banks and the consequences that policymakers should draw from the crisis, much less taboo than in other countries. There is a legal debate, even a Supreme Court decision related-and in the media some of it is spoken. That is the context of the book of Hetzer.

The author believes that "the financial crisis is not a simple system failure", but "has been caused by a massive and objectively criminal behavior of persons responsible for the banking sector, supported by state grossly negligent." In most countries, "politicians do not realize at all what happened," he says.

Media, "have also given the impression that something happened unpredictable and uncontrollable," he says, but that vision, "not only misleading and erroneous, but possibly the result of a political business information by those who have the power, "he explains. Wolfgang Hetzer answered questions of La Vanguardia, not OLAF official, but as the author of that book just published.

RELATIONSHIP BETWEEN THE FINANCIAL INDUSTRY AND ORGANIZED CRIME What is the link between financial industry and organized crime? Where is this "functional intersection" you mention in your book? Is a complex issue. Organized crime is defined by cultural, national, economic or historical varied.

There are common factors such as total dedication to profit, creating an effective network of contacts, accomplices and influential people, economy and politics, and the lack of transparency, or rather, the opacity. Also almost conspiratorial agreements, as in the insider trading, the insider trading in the stock market, as can be seen in trials that are taking place now in New York.

In these trials have used methods like those used in the fight against organized crime classic, which also is a strong indication that there are common elements. Successful attempts to influence politics and the media are common phenomenon of organized crime as part of the financial industry.

Clearly, not every bank is a criminal organization, but if there are banks, and Germany as well (the case of HSH Nordbank), who have used technical means to imply false suspicions and isolate his adversaries. All this and much but not all, and shows that these structural and functional intersections exist, and that the approximation between sectors of the financial industry and organized crime is significant.

Are there differences between countries in Europe, North and South? "I would say no. There are cultural differences and economic situation as different possibilities for action. Surely there are unique factors in behavior, but the principles are the same: the strength, brutality and contempt for the common good: this is seen in both the north and south.

Why not a crime the destruction of foreign capital? In this issue spoke with good sense, the Federal President, Christian Wulff, when he was prime minister of Lower Saxony. He said that the unlawful destruction of capital should be recognized as a crime. There is a law, but we have other offenses, including trespass, fraud or insolvency promptly, and a large number of rules, for example in the securities trading law ...

The law provides for many cases but not criminal prosecution. This has many reasons. Now they have launched some interesting trials, such as reopened against Mr Landowsky (Klaus-Rüdiger Landowski, politician of the CDU in Berlin charged with trespass in connection with the issuance of real estate funds), on appeal to the Constitutional Court .

The issue in that trial will be whether it can be considered trespass act with investors' money in a way that puts money in great danger. Speculation may lead to a risk level that can be an existential threat. Interconnection with international financial systems, speculation can reach a level that endangers the stability of entire regions and their currencies, as has happened.

Could this case set a legal precedent? Yes. With that appeal to the Constitutional Court already have open legal debate: Is it under the Constitution the determination of the transgression punishable offense? Many considered too vague the definition of that offense, but the Constitutional confirmed.

He also confirmed that it may be criminal even when there was no loss of money, but just as dangerous exposure of capital could be considered prejudice. The third point - and that is the reason why the Constitutional canceled the previous tribal decision - is that the injury must be clearly defined, which was not done.

The trial was reopened for expert help to determine the exact level of injury. If that is achieved, can be a good precedent. But I must say that this way of doing business has not been the trigger for the financial crisis. There are many other factors that are difficult to access to criminal law ...

Is it legally works similarly in other countries? The United States is starting a criminal act against speculation, especially against insider abuse in the stock market (insider trading), but we must distinguish between Madoff cases like that of a conventional fraud scheme, and the Pyramids, or as we say in Germany "snowball systems." It was this that triggered the financial crisis, but in large part, the high-risk policy decisions that led to macroeconomic damage.

Recently, the U.S. is putting in the spotlight more energy than in other countries such conduct of the financial system, where criminal activity is suspected. EUROPEAN SOCIAL CONTRACT BREACH What are the implications for justice and democracy can be the fact that nobody has been punished for triggering the financial crisis? Graves, because people realize that small cliques can be enriched at the expense of society.

Because it creates social inequality. Secondly, it creates a huge problem with debt. The banks involved have been saved by taxpayers' money, we'll see how long, and obviously this has consequences for society, because it destroys the relationship between job performance and success. Just be determined and criminal to be able to give the high life, while others pay the bill or can not find work, as young people in Greece.

It no longer fulfills the social contract, is kept to a minimum level of welfare recipients, while others have much money ... All this shows the lack of equity and damages the social consensus. Obviously carries risks for democracy. What is your general reaction of the political class against this crisis? Totally inadequate.

It has avoided personal responsibility and destiny has been invoked as an explanation. Recognize errors, but errors are presented as objective and not as personal failures. This is what in Germany is called charge the dead to another (the principle "Schwarzer Peter"). Seemingly rational solutions are sought as the need to save the banks because otherwise, as the domino theory, can bring down an entire economic system or major risks appear.

I do not see or politicians, or managers have been presented as responsible, or has been requested responsibilities. Is a serious failure. Can I change this institutionally? Can the European Anti-Fraud Office (OLAF) to do something? What agencies would have jurisdiction? I can not talk about OLAF.

There is a challenge for the European Parliament, where they begin to start discussions, and European governments. You must change the basic overview of acting methods and economic goals. Should legislate to different levels on the whole range of economic, issues of company law, liability, insolvency, early detection systems on a common policy in a monetary union.

In addition, there are big differences of interest between countries, say, like Greece and England ... All these things can only be addressed with a large political consensus. It is one of the most difficult tasks of modern politics, but will not try to force that will transform the European Union.

In Germany or Austria and the dramatically growing skepticism about institutional Europe ... EL 'Rhenish capitalism' "NO LONGER EXISTS" The financial power of lobbyists is a serious problem in Brussels? The financial industry is one of the best organized and disciplined groups, may be the main force.

It is true throughout the world, not just a European problem. The United States can see a very troubling. As the author of a book on the "financial mafia", are you free in your job in Brussels? Is a difficult question. Say you would like more insight into the legitimacy of my concerns. It's a very diplomatic answer, I know, but it has been able to read between the lines of introduction to my book, know from experience what I mean ...

Here the most significant phrase is that "between the lines." I note. Can we still speak of a "German model"? What a "Rhenish capitalism"? If Rhenish capitalism means a social capitalism that seeks consensus, no longer exists. With the opening of Germany's financial industry by the Modernization Act of 2004 red-green government (SPD coalition with the Green Party), it contributed to the demolition of this social capitalist.

It gave good everything that happened in Ireland, London, on Wall Street or in Luxembourg, and declared that it was modern, the financial industry that created jobs and contributed to GDP, and had, therefore, that open the German market to hedge funds, etc. Now perhaps you see that not everything that was taken as the model was good.

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