US waves white flag in disastrous ‘war on drugs’

After 40 years, Washington is quietly giving up on a futile battle that has spread corruption and destroyed thousands of lives Read the full story

Cash from organized crime ‘rescued’ banks during crisis: UN official

The vast majority of an estimated $352 billion in proceeds of organized crime, mostly from the drug trade, was funneled through the global banking system during the financial crisis of the past two years, and in some cases, the money rescued banks from collapse, says the head of the UN Office on Drugs and Crime.

Antonio Maria Costa told the UK Observer that intelligence agencies and prosecutors alerted him 18 months ago to evidence that drug money was being “absorbed into the financial system.”

“In many instances, the money from drugs was the only liquid investment capital,” Costa said. “In the second half of 2008, liquidity was the banking system’s main problem and hence liquid capital became an important factor.”

The Observer reports:

Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, [Costa] said.

“Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities… There were signs that some banks were rescued that way.” Costa declined to identify countries or banks that may have received any drugs money, saying that would be inappropriate because his office is supposed to address the problem, not apportion blame. But he said the money is now a part of the official system and had been effectively laundered.

Gangs are now believed to make most of their profits from the drugs trade and are estimated to be worth £352bn, the UN says. They have traditionally kept proceeds in cash or moved it offshore to hide it from the authorities. It is understood that evidence that drug money has flowed into banks came from officials in Britain, Switzerland, Italy and the US.

Read the complete Observer article here.

Costa has been head of the UN’s drug and crime office since 2002, and is known for his tough stance on illicit drugs, including marijuana. He recently warned that Africa is becoming a major drug hub, following an investigation into the crash of a Boeing 727 in Mali that had flown in from Venezuela carrying 10 tons of cocaine.

ARTICLE FROM The Observer:

Drug money saved banks in global crisis, claims UN advisor

Drugs and crime chief says $352bn in criminal proceeds was effectively laundered by financial institutions

Drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis, the United Nations‘ drugs and crime tsar has told the Observer.

Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were “the only liquid investment capital” available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.

This will raise questions about crime’s influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago. “In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system’s main problem and hence liquid capital became an important factor,” he said.

Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said.

“Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities… There were signs that some banks were rescued that way.” Costa declined to identify countries or banks that may have received any drugs money, saying that would be inappropriate because his office is supposed to address the problem, not apportion blame. But he said the money is now a part of the official system and had been effectively laundered.

“That was the moment [last year] when the system was basically paralysed because of the unwillingness of banks to lend money to one another. The progressive liquidisation to the system and the progressive improvement by some banks of their share values [has meant that] the problem [of illegal money] has become much less serious than it was,” he said.

The IMF estimated that large US and European banks lost more than $1tn on toxic assets and from bad loans from January 2007 to September 2009 and more than 200 mortgage lenders went bankrupt. Many major institutions either failed, were acquired under duress, or were subject to government takeover.

Gangs are now believed to make most of their profits from the drugs trade and are estimated to be worth £352bn, the UN says. They have traditionally kept proceeds in cash or moved it offshore to hide it from the authorities. It is understood that evidence that drug money has flowed into banks came from officials in Britain, Switzerland, Italy and the US.

British bankers would want to see any evidence that Costa has to back his claims. A British Bankers’ Association spokesman said: “We have not been party to any regulatory dialogue that would support a theory of this kind. There was clearly a lack of liquidity in the system and to a large degree this was filled by the intervention of central banks.”

2009 will go down as the beginning of the end of the United States drug war. I have worked at the Drug Policy Alliance promoting alternatives to the war on drugs for 10 years, and I can say without a doubt that there was more debate and movement toward sensible drug policies this year than in the last 9 years combined! Here are 10 stories that contributed to the unprecedented momentum to end America’s longest running war.

1) Three Former Latin American Presidents Call Drug War a Failure (February) Read the full story

PALMVIEW, Texas (CBS/AP) President Barack Obama’s approval rating may be hovering in the 50 percent range, but that doesn’t mean America’s Commander-in-Chief isn’t catching on with new constituents.

There is now a line of Ecstasy pills made in the image of the 44th president of the United States, according to Texas police who have snatched a batch off the streets. Read the full story

This story is part of a special series that explores the global water crisis. For more clean water news, photos, and information, visit National Geographics Freshwater Web site.

How’s this for a sweet surprise: A team of researchers in Washington State has found traces of cooking spices and flavorings in the waters of Puget Sound. (See map.)

University of Washington associate professor Richard Keil heads the Sound Citizen program, which investigates how what we do on land affects our waters. Read the full story

There are 50 murders a day in South Africa, the host country of the 2010 football World Cup. And Brazil, host of both the 2014 World Cup and the 2016 Olympics, also suffers from extreme violence. With a view to the high-profile events, the two countries are now attempting to crack down on rampant crime — and are using ruthless tactics to do so.

An orchid, a laptop and a Bible adorn the desk of Pricilla de Oliveira Azevedo. She is wearing the blue uniform of the military police, but there is no weapon visible in her small office. Her territory is the Favela Santa Marta, a hillside slum in the heart of the southern tourist zone of the Brazilian city of Rio de Janeiro. From the top of the hill, there is a magnificent view of Sugar Loaf Mountain, the statue of Christ the Redeemer and Copacabana beach. Read the full story

BUENOS AIRES (AFP) – Argentina’s Supreme Court on Tuesday decriminalized the possession of small amounts of marijuana for personal use, tossing out tough provincial drug laws whose penalties it deemed unconstitutional.

The high court ruling protects “the privacy of adults who are responsible for their own conduct,” according to a court statement.

It said the constitution protected “the private actions of individuals who in no way offend order or public morality, or harm a third party, who answer to God free from a judge’s authority.” Read the full story

Traces of cocaine taint up to 90 percent of paper money in the United States, a new study finds.

A group of scientists tested banknotes from more than 30 cities in five countries, including the United States, Canada, Brazil, China, and Japan, and found “alarming” evidence of cocaine use in many areas.

U.S. and Canadian currency had the highest levels, with an average contamination rate of between 85 and 90 percent, while Chinese and Japanese currency had the lowest, between 12 and 20 percent contamination.

The findings were presented yesterday at the 238th National Meeting of the American Chemical Society in Washington, D.C.

Study leader Yuegang Zuo of the University of Massachusetts in Dartmouth said that the high percentage of contaminated U.S. currency observed in the current study represents nearly a 20 percent jump in comparison to a similar study he conducted two years ago.

“To my surprise, we’re finding more and more cocaine in banknotes,” Zuo said.

Scientists have known for years that paper money can become contaminated with cocaine during drug deals and directly through drug use, such as snorting cocaine through rolled bills. Contamination can also spread to banknotes not involved in the illicit drug culture, because bills are processed in banks’ currency-counting machines.

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TAMPA, Fla. — An official autopsy report released Friday found that cocaine use contributed to the heart disease that suddenly killed TV pitchman Billy Mays in June, but his family called the finding “speculative” and was considering getting an independent look at the results.

The Hillsborough County medical examiner’s office previously determined that the bearded, boisterous TV spokesman had a heart attack in his sleep. His wife found him unresponsive in bed in their Tampa condo June 28. Read the full story