New Book Accuses Luxembourg Clearing House Of Money Laundering

Ulrika Lomas, Tax-news.com, Brussels

28 February 2001

According to a report this week in the International Herald Tribune, allegations have been surfacing in France (again) that a Luxembourg financial facility used by banks to clear stock trades has been operating secret accounts for money laundering and other unsavoury purposes. The company is Clearstream Banking SA, which merged a year ago with the settlements arm of the Frankfurt stock exchange, and it has denounced the accusations made in a book to be published in France this week as "complete nonsense".

The book in question - "Revelations" - alleges that the trading system, which handles 80 million transactions annually involving US$7bn in assets, has generated sub-accounts that remain disguised in computer listings and thus provide some secrecy for depositors worldwide. The book says that among the unlisted accounts at Clearstream are some belonging to French banking giant Societe Generale and other major French, UK and US banks. The International Herald Tribune also reports that the book points to Moscow bank Menatep as having "hidden" accounts at Clearstream.

The newspaper quoted David Cowan, Clearstream vice president for public affairs, as saying that Clearstream was closely checked by auditor KPMG. A spokesman for him is reported to have said: 'The publisher hasn't sent us the book. But it is complete nonsense to accuse us of laundering money. We don't transfer money, only share titles.'

The book is the brainchild of Ernest Backes, an ex-banker who helped with the design and installation of the clearing house's computerised accounting system in the 1970's for what was then Cedel Bank, and Denis Robert, a French investigative reporter. They claim to have obtained secret lists of pominent business people and banking institutions who deposit in furtive accounts but apparently acknowledge that they were generally unable to establish exactly what transactions flowed through the unlisted accounts.

Whilst the evidence presented by the book might not be totally water-tight, it's likely to cause quite a stir in Luxembourg financial circles. Its neighbours Liechtenstein and Switzerland have both been under attack for harbouring money launderers' ill-gotten gains - only last week the Swiss came under attack from a couple of French parliamentarians who said that Switzerland's efforts to fight money laundering were a sham. And last autumn, Monaco too came in for some stick from the French. There is the very real chance that "Revelations" might spawn yet another French parliamentary visit, bent this time on digging the dirt on Luxembourg's financial practices.

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