Clearstream Finally Cleared Of Money Laundering Charges

by Ulrika Lomas, Tax-News.com, Brussels

12 July 2001

It was announced on Tuesday that the Luxembourg-based international clearing and settlement organisation, Clearstream, has been cleared of accusations that it engaged in systematic money laundering activities by Carlos Zeyen, the country's public prosecutor.

It all began in February of this year, when Ernest Backes, a former banker who helped to design and install the clearing house's computerised accounting system in the 1970's, and Denis Robert, a French investigative reporter, joined forces to produce 'Revelation$', a book supposedly detailing money laundering and tax evasion within the trading system, which handles 80 million transactions annually, involving over US$7 billion in assets. The book alleged that the system generated sub accounts which remained disguised in computer listings, providing a veil of secrecy for certain international investors. Mr Backes alleged that among the unlisted accounts at Clearstream were some belonging to the French banking giant Societe Generale, and other major French, US, and UK banks.

Three high profile senior executives were suspended, and in June a spate of investigations were started, involving the Luxembourg Central Bank, KPMG and London law firm Freshfields, and finally Arthur Anderson, who were called in to investigate the investigation. Yves Mersch, the Governor of the Luxembourg Central Bank said at the time that there was 'material evidence that would lead to a fundamental questioning of the settlements system.' The KPMG study, however, found no evidence to support the allegations made in 'Revelation$'.

However, the ordeal looks to be (nearly) over for the clearing house, and in a statement, the Luxembourg public prosecutor said that research had uncovered no evidence that any systematic manipulation of Clearstream's accounts had occurred. However, Mr Zeyen added that the investigation would continue into isolated incidents which might still qualify as money laundering. Clearstream called the verdict a 'vindication', and announced that court proceedings against Mr Backes, the book's publisher, and the newspaper which serialised the book, would continue.

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