Italy Intercepts Billions in Fake Treasuries From Japanese

Ever since two middle-aged men with Japanese passports were caught in Italy this month trying to smuggle a purported $134.5 billion in United States government bearer bonds into Switzerland, the Internet has been abuzz with theories.

Was the Japanese government, or some other creditor nation, secretly trying to dump Treasury bonds to drive down the value of the dollar? Had the Italian mafia stolen the equivalent of 1 percent of the American gross domestic product, using the paper, which supposedly was instantly convertible into cash, to run a giant scam?

Adding spice was the whole Bond — James Bond — aspect of the tale. A crowded customs checkpoint near the Alps; two men traveling on a local train, professing that they had nothing to declare; and a false-bottom suitcase containing United States government bonds made out in stratospheric denominations.

In all, the Italian financial police and customs guards confiscated 249 paper bonds, each supposedly worth $500 million, and 10 bonds with a face value of $1 billion each.

Too bad the bonds were fake.

“The whole thing is a total fraud,” Stephen Meyerhardt, a spokesman for the Treasury Department, said Thursday. “They don’t look anything like real securities, which in any case were never issued in any of those denominations.”

The highest denomination ever issued by the Treasury Department was $10,000, he said. The Italian financial police claimed some of the paper was “Kennedy bonds” from the 1930s, but no such bonds ever existed. And the total of Treasury bearer bonds still outstanding is a mere $105 million; the Treasury has been issuing bonds in electronic form since 1986.

But none of this has stopped the rumor mill from grinding away. After reports of the seizure began to trickle out of Italy, the blogosphere sprang into action, the ponderings fueled by suspicions that the mainstream media was willfully ignoring the tale.

The story took on greater life after Italian authorities — who have refused to talk about the scandal — declined to declare the bonds fakes until they were examined by Washington. After all, although the Guardia di Finanza suspected the bonds were false, if they were not, the Italian treasury stood to profit from a law that permits the government to pocket up to 40 percent of the total value of cash or securities smuggled into the country over the legal export limit, which is 10,000 euros.

Repeated telephone calls to the prosecutors’ office in Como, Italy, that is handling the investigation were not returned.

Darrin Blackford, a spokesman for the United States Secret Service, which was contacted by the Italian financial police and the prosecutor’s office to determine the “legitimacy of the seized financial instruments,” said that his agency had verified the bonds were “fictitious instruments and were never issued by the United States government.”

Col. Rodolfo Mecarelli, the provincial commander of the financial police in Como, said the investigations were focused on “understanding who these men were and where they were from.”

Or where they might have been going. “Switzerland may not have been their final destination,” he said in a recent interview. “They could have taken a plane anywhere.”

Also unknown are the whereabouts of the two men, who were released after being stopped in early June. Italian law does not call for the criminal arrest of persons found to be taking funds without permission to another country. It might have been another matter if the police had determined immediately that the bonds were false.

“The men were questioned, but not arrested,” said Naoki Oyakawa, an official at the Japanese consulate in Milan, which contacted judicial officials in Como after reading about the seizure in the Italian papers.

He said the two men had valid Japanese passports, but he would not elaborate further on their identities. “We don’t know where they are now,” he said. “We have had no contact with the two men. They have not asked us for our help.”

What the bonds were for remains unclear. “It’s not the sort of thing that you can just go into a bank and convert,” said Colonel Mecarelli. “But they may have been useful to guarantee business deals among people who don’t use cash.”

Agencies that deal with financial crimes, including Europol, declined to comment while the Italian investigation was still under way. The Treasury Department says it is stumped, too. “I can’t speak to the motives of the person or persons who tried to do this,” Mr. Meyerhardt said. “I would guess that they were trying to find someone foolish enough to buy the securities for real money.”

Source: http://www.nytimes.com/2009/06/26/business/global/26fake.html?_r=1&partner=rss&emc=rss

Tags: Italy, Japan, USA, Fake US Treasuries, Colonel Mecarelli, Kennedy bonds, Switzerland, Como, US Treasury Department, Milan, US Secret Service, James Bond, Global Economic News,

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US Draws Line With China On Climate Technology

WASHINGTON (AFP) – Access to green technology is becoming a growing stumbling block in global efforts to fight climate change, with US lawmakers bristling at what they see as China's attempt to "steal" US know-how.

China and India have led calls for developed nations to share technology to help them battle global warming as the clock ticks to a December meeting in Copenhagen meant to seal a successor to the Kyoto Protocol. The US House of Representatives this month unanimously voted to make it US policy to prevent the Copenhagen treaty from "weakening" US intellectual property rights on a wind, solar and other eco-friendly technologies.

Congressman Rick Larsen, a member of President Barack Obama's Democratic Party who authored the measure, said the United States was caught between concern both over the climate and its soaring trade deficit with China. "The US can be part of China's solution for the problems that they admittedly have with energy efficiency and emissions. And I think legitimately we want to be part of that solution -- we're the two largest emitters of C02 in the world," Larsen said.

"But we need to couple being part of that solution with making it part of the solution on the trade deficit as well," he said ahead of the measure's approval. Representative Mark Kirk, a Republican who joined Larsen on a recent trip to China, said that climate change was the most contentious issue during talks with Chinese leaders.

Kirk said the Chinese essentially were seeking "the stealing of all intellectual property" related to energy efficiency and climate change. Kirk warned that China's position could change the political dynamics in Washington, where promoters of a bill to force emission cuts say the United States stands to create millions of jobs in a new green economy. "Right now a number of green industries like the climate change bill coming out. But if an international treaty sanctions the theft of their intellectual property, then there will be hardly any green jobs built in the United States," Kirk said.

The United States is the only major industrialized nation to reject the Kyoto Protocol, with former president George W. Bush saying it was unfair by making no demands of fast-growing developing nations such as China and India. Despite a recession, President Barack Obama has vowed to work to halt the planet's warming, which UN scientists warn will threaten severe weather and the extinction of plant and animal species later this century if unchecked.

More than 180 countries promised at a December 2007 meeting in Bali, Indonesia to take part in the next global treaty with a "common but differentiated responsibility" for developed and developing economies. But 12 days of talks this month in Bonn came up with no visible progress, with top Chinese negotiator Li Gao accusing rich nations of reneging on sharing technology and watering down commitments to cut emissions.

"There is an attempt to obliterate the principle of 'common but differentiated responsibility' and to split up the developing countries," Li told China's state Xinhua news agency.

Shyam Saran, India's envoy on climate change, also criticized rich nations, which he said bore the historic responsibility for climate change. India has proposed setting up global "innovation centers" to work on green technology.

A report last month by experts for the UN climate body called for a "balanced" approach, stressing the importance of intellectual property rights but saying all nations needed to accept the terms.

Technology transfer "is certainly a big and important question that might be a roadblock" in global negotiations, said Daniel Kessler of Greenpeace.

The environmental group has called for public and private funds on climate change to be pooled into an independent global body, funded to the tune of at least 140 billion dollars a year. But such funding may prove hard to come by. The European Union, champion of the Kyoto Protocol, has come under fire from environmentalists for declining to put a figure on climate aid, saying it is waiting to see other nations' proposals.

Source: http://news.yahoo.com/s/afp/20090623/bs_afp/uschinaclimatewarmingtechnology_20090623022226

Tags: China, USA, Obama, Kyoto Protocol, EU, Greenpeace, Xinhua, Li Gao, Daniel Kessler, Shyam Saran, Global Development News, US House of Representatives, Copenhagen, Bali, Mark Kirk, Rick Larsen, Intellectual Property, Global Best Practice,

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Security Council Set to Tighten Sanctions on North Korea

UNITED NATIONS — The Security Council’s five permanent members agreed on Wednesday on a draft resolution that would ratchet up sanctions against North Korea by concentrating on its financial transactions and its arms industry, including allowing for inspections of its cargo vessels on the high seas.

The sharply worded resolution, while diluting some of the sanctions sought by the West and Japan, would still serve notice on North Korea that its nuclear and other weapons programs had created sufficient alarm to forge a rare unified front among the world’s major powers.

Written by the United States, the resolution came after more than two weeks of negotiations among the five permanent members — China, Russia, the United States, Britain and France — as well as with Japan and South Korea. It was presented to the full Security Council on Wednesday, and although no timetable for a vote was announced, it could come as early as Friday. Given its supporters, the measure seems assured of passing.

Vitaly I. Churkin, the Russian ambassador, told reporters, “Having sanctions and things like that is not our choice, but a certain political message must be sent, and some measures must be taken, because we are facing a very real situation of proliferation risks.”

North Korea did not react immediately, although its reclusive government has said in the past that ship inspections or other intrusive steps would be considered acts of war. If the resolution is approved, the next hurdle will be ensuring its highly technical provisions are all carried out. Not all resolutions are equally respected by United Nations member states, and, as Ambassador Jorge Urbina of Costa Rica noted, the draft resolution is complex.

The biggest question mark involved China, which has been reluctant to deploy the full weight of its influence on North Korea out of fear of destabilizing it amid a leadership transition. But various analysts suggested that it would not have publicly backed such sanctions unless it was serious about responding to North Korea’s underground nuclear test on May 25.

“They are deeply troubled by North Korean actions,” Jonathan D. Pollack, a professor of Asian and Pacific studies at the Naval War College, said in a telephone interview from Beijing.

The nuclear test followed a series of confrontational actions taken by the North, largely reversing every step it had taken to abandon its nuclear program in recent years.

“It is important for there to be consequences, and this sanctions regime, if passed by the Security Council, will bite and bite in a meaningful way,” said Susan E. Rice, the American ambassador, who shepherded the resolution through the negotiations.

The United States and its allies had wanted the draft resolution to include mandatory cargo inspections, if there was reasonable suspicion that the cargo was weapons-related — something Washington had been seeking outside the United Nations during the Bush years through its Proliferation Security Initiative. But China and Russia balked at mandatory inspections. In a compromise, the resolution requests that states inspect ships on the high seas. If the country where the ship is registered decided to reject an inspection in international waters, then the country would be required to direct the vessel to a nearby harbor for an inspection. If neither happened, the episode would be reported to the Security Council’s sanctions committee. The resolution also suggests that states should cut off “bunkering” services, like refueling, for North Korean vessels.

It is assumed that North Korea would balk at any inspections of its ships, analysts noted, and the resolution does not come under a United Nations provision that would allow the use of force as the ultimate fallback. The sanctions basically fleshed out measures that were first listed in a Security Council resolution passed after North Korea’s first nuclear test in 2006. They were never enacted, because the North agreed to participate in talks to dismantle the program.

The draft resolution condemns the latest North Korean nuclear test, demanding that North Korea conduct no more tests and that it suspend its ballistic missile program and rejoin the Nuclear Nonproliferation Treaty. The theme salted throughout the resolution is choking off anything that might feed the country’s nuclear and weapons programs, including a complete arms embargo, with the exception of small weapons.

Arms generate significant earnings for North Korea, Ms. Rice said, “and we think it important that that source of revenue be entirely curtailed.”

Analysts said the proposed sanctions with the most bite might be the financial ones. They called upon member states to cut off financial services related to the North’s nuclear and weapons programs, to avoid any new grants or loans to the country and to halt other trade support like export credits. Financial transactions for humanitarian or development purposes would be allowed.

William H. Tobey, the former senior Bush administration official for nuclear nonproliferation, who is now at Harvard’s Belfer Center, said that North Korea imported about $3 billion in goods annually, $2 billion of it from China. It exports about $1.5 billion legally, so it needs significant credit to make up the difference. “It would put a significant crimp in their ability to import,” he said of the financial sanctions.

In recent years, efforts to sanction rogue states like Zimbabwe have foundered on the split between Russia and China, on one side, and Western nations on the other. The fact that all five permanent Security Council members agreed on the draft showed how seriously they viewed the gradual global decay in the nuclear nonproliferation treaty — a message aimed not only at North Korea but at other countries suspected of trying to develop nuclear weapons, like Iran.

“They have to get North Korea right, because it has implications for the entire nonproliferation regime,” said Robert C. Orr, the United Nations assistant secretary-general for policy planning.

Source: http://www.nytimes.com/2009/06/11/world/asia/11korea.html?partner=rss&emc=rss

Tags: UN, United Nations, UN Permanent Security Council, China, Russia, USA, Britain, France, Global Economic News, North Korea, South Korea, Japan, Nuclear weapons, Economic Sanctions, Croatia, Costa Rica, Vitaly Churkin, Robert C Orr,

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