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Mercosur Opens the Doors to Socialism

The MERCOSUR alliance officially welcomed Venezuela as a permanent member.

By ALONSO SOTO | REUTERS | AUGUST 1, 2012

On his first foreign trip since undergoing cancer treatment in Cuba earlier this year, Venezuelan President Hugo Chavez hailed his country’s welcome by fellow South American leaders into a troubled regional trade bloc on Tuesday.

Ignoring criticism that Venezuela’s entry could eventually cause greater dysfunction among the Mercosur trade bloc’s members, Chavez cast the event as a continuation of his self-styled revolution and a sign of greater ascendance for South America as a whole.

“Our north is the south,” the Venezuelan president said, evoking Simon Bolivar and other revolutionaries who wrested the continent from colonial rule. “Mercosur is, without a doubt, the most powerful engine that exists to preserve our independence.”

Chavez, who recently declared himself cancer-free, stood at a podium throughout his 20-minute speech in Brazil’s capital and spoke in a clear, strong voice. Later, after a meeting at Brazil’s foreign ministry, he jigged and declared that his health “is very good, as you can see.”

The meeting was overshadowed by controversial events that enabled Venezuela’s entry into Mercosur, which also includes Brazil, Argentina, Paraguay and Uruguay. The grouping now accounts for about $3.3 trillion in combined gross domestic product, and the leaders said it would be the world’s fifth-largest economy if it were a single nation.

The expansion of Mercosur was criticized by many who see a paradox in the protectionist policies and leftist slant that increasingly have come to dominate a bloc originally created to liberalize trade.

After years of stalled negotiations with Caracas, the group hastily accepted Venezuela despite the objections of Paraguay, a marked absence at Tuesday’s meeting. The other three countries made their invitation to Chavez after suspending Paraguay in June because of the controversial impeachment there by conservative legislators of leftist president Fernando Lugo.

That move troubled critics, who said it was emblematic of the decline of a bloc that was founded in 1995, at a time when a group of free-market reformers was dominant in the region.

“What was once an economic bloc has now been reduced to a political sideshow,” said Mario Marconini, a former Brazilian trade secretary who is now a business consultant in Sao Paulo. The inclusion of Venezuela despite the veto of a full-fledged member, “is a fatal blow to its economic credibility.”

Brazilian President Dilma Rousseff said on Tuesday that Paraguay’s suspension is justified until the country “normalizes” its internal politics. Brazil and other neighboring countries have argued that Paraguay must proceed with its regularly scheduled presidential elections next year before they consider its government to be stable.

FOCUS ON CHAVEZ

Most of the other leaders present glazed over the Paraguay controversy, and focused instead on criticizing the orthodox economic policies of the developed world. They cited Mercosur as a vehicle that could further regional goals of fair trade, equitable growth and social inclusion.

Chavez said construction companies from Mercosur countries should take part in ongoing projects to build millions of subsidized homes in Venezuela. Argentine President Cristina Fernandez said the region would continue to produce all-important raw materials for the global economy, but demanded “financial stability” in return from richer countries.

Mercosur, she said, could “make this new pole of power indivisible, indestructible.”

Chavez, who has spent more than 13 years in office, has pursued a personality driven government that has scared away foreign investors and crippled productivity. His acceptance by Mercosur, opponents say, will give him one more thing to boast about as he campaigns for another six-year term ahead of Venezuela’s presidential election in October.

Officially, the leaders hailed Venezuela’s strengths as a major oil producer and an important market for everything from Brazilian machinery to Argentine wheat. In practice, though, Venezuela can’t fully participate in the bloc until it agrees to accept a common tariff adopted by Mercosur, common agreements with third-party countries and other prerequisites that Chavez has failed to embrace since talks for inclusion began in 2006.

In a statement Tuesday, Brazil’s National Industry Confederation, a powerful business group, reminded Venezuela that “the new member has obligations to fulfill.” Citing the common tariff and other existing bloc conventions, the group urged Mercosur to establish a timeline by which Venezuela must comply.

Mercosur, the group added, “should focus on reinforcing the stability and predictability of the economic bloc.”

BLOC IS ALREADY TROUBLED

Many fear Venezuela will only complicate relations in an already dysfunctional grouping. “The bloc is a mess,” said Rubens Barbosa, a former Brazilian representative to Mercosur who is now a consultant.

“Just imagine if you start adding Venezuela and others,” he said, noting recent discussions to include Bolivia and Ecuador, two countries with close ties to Chavez.

Tuesday’s ceremony was accompanied by a trickle of business as Chavez and Rousseff formalized a previously disclosed plan by Conviasa, the Venezuelan airline, to purchase 100-seat jets made by Embraer, the Brazilian aircraft manufacturer. Under the terms

of the agreement, Conviasa will pay about $270 million for six Embraer 190 jets, with an option for 14 more.

Meanwhile, Venezuela and Argentina signed an agreement for greater investment in each other’s oil sector. PDVSA, Venezuela’s state-run oil producer, will invest in Argentine petrochemicals, and YPF, its Argentine counterpart, will invest in Venezuelan oil fields, according to the agreement.

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HSBC Permits Money Laundering for Wealthy Clients

Documents and E-mails show that the bank not only doesn’t inquire about the origin of funds, but also works hard to conceal the transfer of large amounts of cash from clients of Iranian, Lebanese, Brazilian and Cuban origin.

Most suspicious transactions are done through the HSBC’s New York and Miami offices.

By CARRICK MOLLENKAMP, BRETT WOLF and BRIAN GROW | VANCOUVER SUN | MAY 8, 2012

In April 2003, the Federal Reserve Bank of New York and New York state bank regulators cracked the whip on HSBC Bank USA, ordering it to do a better job of policing itself for suspicious money flows. Staff in the bank’s anti-money laundering division, according to a person who worked there at the time, flew into a “panic.”

The U.S. unit of London-based HSBC Holdings Plc quickly rallied. It hired a tough federal prosecutor to oversee anti-money laundering efforts. It installed monitoring systems for operations that had grown unwieldy during the bank’s U.S. expansion. The aim, as HSBC said in an agreement with regulators at the time, was to “ensure that the bank fully addresses all deficiencies in the bank’s anti-money laundering policies and procedures.”

Nearly a decade later, the effort has failed to satisfy law-enforcement officials.

The extent of that failure is laid out in confidential documents reviewed by Reuters that originate from investigations of HSBC’s U.S. operations by two U.S. Attorneys’ offices.

These documents allege that from 2005, the bank violated the Bank Secrecy Act and other anti-money laundering laws on a massive scale. HSBC did so, they say, by not adequately reviewing hundreds of billions of dollars in transactions for any that might have links to drug trafficking, terrorist financing and other criminal activity.

In some of the documents, prosecutors allege that HSBC intentionally flouted the law. The bank created an operation that was a “systemically flawed sham paper-product designed solely to make it appear that the Bank has complied” with the Bank Secrecy Act and is able to detect money laundering, wrote William J. Ihlenfeld II, U.S. Attorney for the Northern District of West Virginia, in a draft of a 2010 letter addressed to Justice Department officials.

In that letter, Ihlenfeld compared HSBC unfavorably to Riggs Bank. In 2004 and 2005, that scandal-plagued Washington bank was fined a total of $41 million after it was found to have violated anti-money laundering laws, and it was acquired by PNC Financial Services.

“HSBC is to Riggs, as a nuclear waste dump is to a municipal land fill,” Ihlenfeld wrote.

The allegations laid out in the Ihlenfeld letter and other documents couldn’t be confirmed. It is possible that subsequent inquiries have led investigators to alter their views of what went on inside HSBC’s compliance operation.

As they are, the documents reviewed by Reuters, combined with regulatory filings, court documents and interviews with current and former HSBC employees, paint a damning portrait of a bank allegedly unable, and unwilling, to police itself or its clients.

HSBC’s U.S. anti-money laundering division – the people charged with ensuring that the bank toes the line of regulators and law enforcement – has experienced high turnover among executives. Since 2005, at least half a dozen overseers have come and gone. Compliance staff also encountered pushback from bankers eager to maintain relationships with lucrative clients whose dealings raised red flags.

In the Miami office – an important center for HSBC’s private-banking and retail operations – a longtime private banker was fired for alleged sexual harassment after he warned compliance officers that clients were engaged in shady dealings.

In one email exchange submitted as evidence in that case, employees debated whether the bank should help a Miami client get around U.S. sanctions by moving the client’s business to HSBC’s Hong Kong office. “I believe that the best outcome would be for the customer to open a relationship with Hong Kong just for leters (sic) of credit purposes. He travels there all the time,” private banker Antonio Suarez wrote in a 2008 email. Suarez has since left the bank and couldn’t be reached for comment.

UNDER THE RADAR

The revelations come as HSBC confronts multiple investigations into its internal policing abilities. The Justice Department, the Federal Reserve, the Office of the Comptroller of the Currency, the Manhattan district attorney, the Office of Foreign Assets Control and the Senate Permanent Subcommittee on Investigations are scrutinizing client activities such as cross-border movements of bulk cash, and transactions linked to Iran and other parties under U.S. economic sanctions, the bank said in a February regulatory filing.

“We continue to cooperate with officials in a number of ongoing investigations,” HSBC spokesman Robert Sherman said. “The details of those investigations are confidential, and therefore we will not comment on specific allegations.” HSBC said in its February filing that it was likely to face criminal or civil charges related to the probes.

A successful case against HSBC could result in an onerous fine and represent one of the most significant money laundering cases ever brought against an international bank. It also would draw unaccustomed attention to the challenges governments — and financial institutions — face in monitoring the trillions of dollars flowing through banks’ back-office operations, flows essential to the daily functioning of the global financial system.

“Disguised in the trillions of dollars that is transferred between banks each day, banks in the U.S. are used to funnel massive amounts of illicit funds,” Jennifer Shasky Calvery, head of the Justice Department’s Asset Forfeiture and Money Laundering Section, said in congressional testimony on organized crime in February.

In response to Reuters inquiries about the investigations, Gary Peterson, chief compliance officer of HSBC’s U.S. bank operations, said: “Since joining HSBC in 2010, I’ve been proud to lead an AML (anti-money laundering) team that has vastly increased investments in people, systems and expertise. We are continuously seeking to strengthen our core AML mission: to detect and deter money laundering and terrorist financing – and our efforts are showing results.”

To date, the only enforcement action detailing any anti-money laundering shortcomings at HSBC was a 2010 consent order from the Office of the Comptroller of the Currency, the Treasury agency that is HSBC’s chief regulator. The OCC, calling HSBC’s compliance program “ineffective,” told the bank to conduct a review to identify suspicious activity. This “look-back” was expected to yield a report to HSBC and regulators. The status of the report isn’t known. A spokesman for the OCC declined to comment.

The West Virginia U.S. Attorney’s probe of HSBC, which ran from 2008 until at least 2010, originated in a case against a local pain doctor who allegedly used HSBC accounts to launder ill-gotten gains from Medicare fraud. Over time, the U.S. Attorney’s office began to discern that, as Ihlenfeld wrote in his letter, the doctor’s case was just “the tip of the iceberg” in terms of the volume of suspicious money sluicing through HSBC.

The U.S. attorney for the Eastern District of New York in Brooklyn – one of the most powerful prosecutors outside of Justice Department headquarters in Washington – has conducted a parallel investigation, in collaboration with the Justice Department’s money laundering section.

Specifics on the investigations have until now been cloaked in secrecy. The documents reviewed by Reuters for the first time fill in some of the details. Taken together, they depict apparent anti-money laundering lapses of extraordinary breadth. Among them, according to the documents:

* The bank understaffed its anti-money laundering compliance division and hired “gullible, poorly trained, and otherwise incompetent personnel.” In 2009, the OCC deemed a senior compliance official at HSBC to be incompetent – the same executive in charge of implementing a new anti-money laundering system.

* HSBC failed to review thousands of internal anti-money laundering alerts and generate legally required suspicious activity reports, or SARs, on transactions picked up by the bank’s internal monitoring system. SARs are important because they are sent to U.S. law enforcement and scrutinized for leads to criminal activity. In May 2010, the bank’s backlog of alerts was nearly 50,000 and “growing exponentially each month,” according to one of the documents.

* Hundreds of billions of dollars moved unchecked each year through various bank operations because of lax due diligence and monitoring of accounts with foreign correspondent banks, which are financial institutions that rely on U.S. banks for processing services. The bank maintained accounts with “high risk” affiliates such as “casas de cambios” – Mexican foreign-exchange dealers – widely suspected of laundering drug-trafficking proceeds, and some Mexican and South American banks.

* In some instances, “management intentionally decided” not to review alerts of suspicious activity. An investigation summary also says, “There appear to be instances where Bank employees are misrepresenting” data sent to senior managers, and where management altered risk ratings on certain clients so that suspect transactions didn’t set off alarms.

Sherman, the HSBC spokesman, said the bank cleared the backlog of alerts and has remained current. Sherman also said the bank “regularly reviews risk ratings. We have revised and strengthened our country risk rating review policies.”

Spokesmen for the U.S. Attorney in Wheeling, West Virginia, and for the U.S. Attorney in Brooklyn declined to comment. The Justice Department in Washington also declined to comment, citing “an ongoing investigation into this matter.”

THE MIAMI CONNECTION

HSBC was born in 1865 as the Hongkong and Shanghai Banking Corp in the then-British colony of Hong Kong. It had little presence in the U.S. market until its purchase in the 1980s of Marine Midland Banks Inc based in Buffalo, New York.

Now the fifth-largest bank in the world in terms of market value, HSBC had $2.6 trillion in assets at the end of 2011 and operations in 85 countries and territories. Its North American business, which includes HSBC Bank USA and a consumer finance unit, accounts for about 5 percent of HSBC’s profit.

In 1999, HSBC’s U.S. unit paid $10 billion to buy Republic New York Corp and a European affiliate, banks controlled by Lebanese financier Edmond Safra. The deal doubled HSBC’s private bank to 55,000 clients with $120 billion in assets and broadened business in New York, Florida, Latin America and Europe.

The purchase also yielded one of the world’s biggest banknote businesses, an operation that handles bulk cash exchanges between central banks and large commercial banks. In 2003, HSBC plunged into the U.S. market for subprime lending, paying $14 billion for Household International Inc.

By then, all banks faced U.S. regulatory pressure aimed at stopping shady money flows. In the wake of the September 11, 2001, attacks, the Patriot Act took effect, attempting, among other things, to choke off terrorist financing by strengthening requirements that banks look for and report suspicious activity. In recent years, U.S. law enforcement added an emphasis on money tied to the illegal drug trade.

When the 2003 order came down from regulators for HSBC to improve its anti-money laundering efforts, the bank had no centrally organized means of monitoring the movement of money across borders. That’s when it hired Teresa Pesce. Pesce came from the high-profile U.S. Attorney’s office in Manhattan, where she made a name for herself as a tough prosecutor overseeing money laundering prosecutions.

Pesce “knew the ropes,” according to a person who worked in compliance at the time, and the sense among many staffers was that a “savior was here.” One of her first initiatives was to order the installation of the Customer Account Monitoring Program, or CAMP, a technology system designed to filter suspicious retail transactions across HSBC’s U.S. operations.

In 2006, regulators lifted their 2003 order, according to people familiar with the situation.

Pesce left the bank in 2007 to run KPMG LLP’s anti-money laundering consulting business. A lawyer for Pesce declined to comment.

Despite Pesce’s efforts, problems with HSBC’s program persisted. In 2009, the OCC determined that Lesley Midzain, a compliance executive with little direct experience running anti-money laundering programs, was incompetent. She was in charge of the installation of a monitoring program to replace Pesce’s CAMP system, which the OCC had determined was “inadequate to support the volume, scope and nature of international money transfer transactions,” according to the documents reviewed by Reuters. Efforts to locate and obtain comment from Midzain were unsuccessful.

The former compliance-division staffer said that in the Miami office in particular, with millions of dollars from Mexico, Brazil, Argentina and other countries flowing through the Premier private-banking business for wealthy clients, “it was a nightmare to figure out what was going on down there.”

Those observations mesh with allegations in a 2010 lawsuit against HSBC brought by Tomas Benitez, a longtime private banker in South Florida who had worked at Republic Bank. Benitez alleged that HSBC fired him in January 2009 after he warned colleagues that clients had violated U.S. restrictions on trade with Iran and Cuba.

HSBC said in a court filing that it fired Benitez for alleged sexual harassment – allegations Benitez denied.

In court documents, Benitez alleged that during an audit meeting in 2008, an unidentified federal bank examiner told HSBC employees that a client referred to only as “CM” “had multiple affiliations whose ties to Iran and Cuba were part of their ordinary course of business.

At a follow-up meeting, the account was discussed because of indications its owner “was funneling large amounts of funds in and out, with no apparent business purpose,” Benitez alleged. He told Clara Hurtado, director of anti-money laundering compliance at HSBC’s private bank in Miami, that the account had ties to Iran and Cuba and “as a result, it should not be maintained,” according to the lawsuit.

After the meeting, Benitez alleged, another banker said “he would not allow Benitez’s word and suspicions to defeat a million-dollar-plus account relationship.” The account wasn’t terminated, Benitez alleged.

Hurtado declined to comment. She left HSBC in 2009, according to her LinkedIn account.

In an email exchange submitted as an exhibit in the lawsuit, Hurtado and other HSBC employees discussed whether the bank could help a Miami client avoid violating U.S. sanctions by issuing letters of credit for the client from the bank’s Hong Kong offices, according to Benitez’s lawsuit. “Clara, we are persuing (sic) another solutions……(anything but losing the account!!!),” Suarez, the private banker, wrote in an email. The banker suggested issuing the letters of credit through Hong Kong.

In January 2009, HSBC fired Benitez. In late 2010, a federal judge dismissed his case and demand for pay, saying there was no evidence of a connection between Benitez’s concerns about the accounts and the firing. The judge didn’t address Benitez’s allegations about illicit transactions.

Benitez’s Miami lawyer, Mark Raymond, declined to comment on his client’s behalf.

HSBC spokesman Sherman declined to comment on Benitez’s case. “It’s inappropriate to comment on unsubstantiated allegations in termination of employment cases,” he said.

OBVIOUS TO STOOGES

Around the time Benitez was sounding warnings in Miami, authorities were accelerating an investigation in West Virginia of Barton Adams, a pain clinic operator in the Ohio River town of Vienna. In 2008, the U.S. Attorney in Wheeling indicted Adams on 157 counts of alleged healthcare fraud and other crimes. They allege that Adams moved hundreds of thousands of dollars in Medicare fraud proceeds between a U.S. HSBC account and HSBC accounts in Canada, Hong Kong and the Philippines.

Adams has pleaded not guilty.

In building their case against him, the West Virginia prosecutors determined that HSBC’s compliance problems were systemic. As Ihlenfeld wrote in his letter to the Justice Department: “The Adams money laundering practices – which Moe, Larry, and Curly would dismiss as too transparent – would not be detected by HSBC regardless of who the customer was, or where any transaction occurred.” HSBC, he said, “systematically and egregiously” violated the Bank Secrecy Act.

One document reviewed by Reuters says HSBC developed a “large appetite for risk” after snapping up business with Mexican foreign-exchange houses formerly handled by Wachovia Corp. In 2010, Wachovia agreed to pay $160 million as part of a Justice Department probe that examined how drug traffickers had moved money through the bank.

West Virginia prosecutors focused much of their attention, according to the documents, on HSBC’s failure to report suspicious activity on hundreds of billions of dollars in business from “high-risk” sources.

For instance, 73 percent of accounts with foreign correspondent banks were rated “standard” or “medium” risk and thus weren’t monitored at all, the documents say, noting that oversight of such accounts was “extremely limited despite indications of possible terror financing.” In one example, the bank “summarily cleared as many as 5,000” internal alerts of suspicious activity from correspondent customers in Argentina after lowering the country’s risk rating.

Investigators cited a litany of failings in the bank’s back-office operations — the vast but mundane business of clearing transactions by moving big sums of money around the globe. In the bank’s “remote deposit capture” business – an operation that electronically zaps checks around the world — HSBC “failed to detect, review and report large volumes of sequentially numbered traveler’s checks” from non-U.S. sources. Such checks are a red flag signaling possible money laundering, regulators have said.

HSBC also repatriated more than $106.5 billion in banknote deposits through foreign correspondent accounts, many of them in Mexico and South America, in a three-year period. And yet, “since 2005, the bank has filed only 19 suspicious activity reports relative to the receipt of bulk cash and banknote activities.”

People familiar with HSBC and the reports said 19 is a low number given the risk of the clients. Between 2005 and 2010, banks and other depository institutions filed more than 3.8 million SARs, according to the Financial Crimes Enforcement Network, a bureau of the Treasury Department.

Similarly, investigators found that HSBC didn’t report any suspicious activity after Drug Enforcement Administration agents posing as drug dealers deposited millions of dollars in Paraguayan banks and then transferred the money to accounts in the U.S. through HSBC. They have also been examining connections between one of the Paraguayan banks and Hezbollah, the Lebanon-based Islamist group classified by the U.S. as a terrorist organization. HSBC has since ended its relationship with the Paraguayan bank, according to government documents.

Ultimately, the U.S. Attorney’s office in West Virginia entered into plea negotiations with HSBC, the documents show. A person familiar with the investigation said a deal could have resulted in one of the largest settlements ever in a bank money laundering case.

For reasons that aren’t clear, prosecutors in West Virginia were told to stand down while the Eastern District of New York and other Justice Department divisions continued to investigate, according to a Justice Department document and an HSBC regulatory filing. The West Virginia probe could ultimately prove to be a narrow slice of a broader case if criminal or civil charges emerge.

Mossad in South America

By WAYNE MADSEN | WMR | JUNE 2, 2010

“N”, a correspondent from an Iranian media agency, whom I met in the association of foreign journalists in Caracas, told me that he Israeli Mossadused to work in Buenos Aires for some time. Things were going well, N’s employer was satisfied with the job he did, and he planned to spend a few more years in Argentine, but eventually had to change his plans. After a while “N” noticed that he was under surveillance and that his mail regularly got stolen. Uninvited guests started to frequent his office. He talked to the local police and counterintelligence service, but both replied they had nothing to do with the problem. They did mention to “N” cautiously that he was in the sphere of interests of «the Zionists». He told me: «The people in my agency in Tehran knew that Iranian citizens often encounter such problems and concluded that the Mossad was planning a provocation against me. This is why I relocated to Venezuela. It is a country friendly to Iran, one enjoys a certain level of security guarantees here and can expect to be protected in case of need».

I had a similar conversation with “F”, a journalist from Syria. He told me frankly that he preferred to stay on the alert even in Venezuela because the Israeli intelligence service watches over all Syrians working in Latin America and often attempts to compromise them. Like most of his countrymen, “F” believes that hostile acts by the Mossad — drugs put in his pocket, allegations of links to Arab terrorists, the emergence of «documentary evidence» of connections to Colombian guerrillas — are likely. “F” said: «I am ready to face whatever happens. I’m not paranoid, I just look at things realistically. I even obtained a gun permit» and showed me a gun he wore under his jacket.

The Mossads’s objectives are listed on its official web site. They include secret collection of operative, political, and strategic information abroad, termination of terrorist activity targeting Israeli and other Jewish installations, prevention of development or acquisition of nuclear weapons by countries hostile to Israel, and covert operations abroad. The January, 2010 killing by the Mossad of the leader of the the paramilitary wing of Hamas Mahmoud al-Mabhouh in a Dubai hotel gives an idea of what the term «covert operations abroad» refers to.

A Mossad hit squad of 11 agents disguised as tourists blocked the corridor leading to the hotel room where al-Mabhouh stayed. Then the Israeli hitmen got inside, electroshocked and strangulated the man. In several hours the Mossad agents left the Emirates with fake British, Canadian, Irish, and Australian passports.

The demonstrative character of the act was supposed to highlight the Mossad’s capability to score with the enemies of Israel in any part of the world. The operation drew extensive coverage in Latin American media, most of which published the photos of the Mossad agents and, of course, that of their chief – the 64 year old Meir Dagan who has long deserved the nickname of «a man with a knife between his teeth». Among other operations, hundreds of killings of Iranian and Iraqi scientists who were involved in military-related research and were regarded as potentially dangerous to Israel are tracked to Dagan.

According to ALAI (Latin America Information Agency), the Mossad is using at least 40 Israeli companies (as well as embassies and other official institutions of the state of Israel) as fronts for its activity. The total number of the Mossad operatives in Latin America is not greater than 100-110, but an extensive network of agents and the cooperation with Jewish organizations and communities ensure the Mossad’s presence across Latin America and the Caribbean.

The Mossad’s interests gravitate to the regions south of the Rio Grande which are densely populated by Arab immigrants. The Mossad analysts believe that the epicenter of the potential «Muslim terrorism» in Latin America is located in the Zone of Three Borders between Paraguay, Argentina, and Brazil. Venezuela’s Isla Margarita, a place where Lebanese and Syrian immigrants hunting for pearls started to settle down in the early XX century, is viewed similarly. When a free trade zone was opened on Margarita Island, the Arab populations switched to selling shoes, textile, and bijouterie. The Venezuelan government was a number of times forced to disprove allegations that Chavez hosts Muslim terrorists. In reality, Margarita is a small island where more or less everybody knows everybody else and no secret activity — least the operation of Hezbollah training camps — is possible.

Over the years of spying on the above «terrorist centers» Mossad never discovered the networks that could present a threat to Israel. Nevertheless, the Mossad’s efforts were not wasted, at least since the Israeli «reliable» data were invariably used by Washington in planning its struggle against terrorism in Latin America. This is the mechanism of ideological support for the establishment of increasing numbers of US military bases on the continent in the proximity of the Latin American countries with «populist» regimes.

In many cases, Israeli intelligence operatives are involved in legal arms trade business which they use to gain connections in local military circles and security services.

The Mossad also uses affiliated companies to advise its Latin American colleagues on fighting terrorism, «leftist extremism», guerrilla groups and their support networks, as well as to help intelligence services modernize their technical base. A company most often mentioned in the context is Israel’s Global CST, whose CEOs are retired high-ranking Mossad operatives. In July, 2009 the Peruvian government hired the company to help reorganize the country’s intelligence community in order to boost the efficiency of its struggle against «subversive and terrorist organizations» including the re-emerging Sendero Luminoso Maoist group. Global CST is also helping the Peruvian government create a joint system of control over mobile communications, Internet, and other communications media.

Global CST has grown notably more active in Colombia. The Israeli company familiarizes the country’s military intelligence and political police (DAS) officers with new techniques in the spheres of anti-terrorist activity and espionage. Over recent years, Columbia’s intelligence services have been increasingly assertive outside the country, evidently imitating the modus operandi of their CIA and Mossad peers. Columbia maintains intelligence networks in Brazil, Ecuador, Mexico, Panama, and other Latin American countries. The FARC and ELN envoys are finding themselves under permanent surveillance, routinely kidnapped and sometimes — assassinated.

International Security Agency (ISA) mainly staffed by former Israeli special forces officers and intelligence operatives is also active in Latin America. The agency (in tight cooperation with the CIA and the Mossad) took part in the coup that displaced M. Zelaya, the legitimate President of Honduras. Currently ISA specialists are working in the security service of the current President of Honduras P. Lobo, who was propelled to presidency as the result of an imitation of free elections like those Washington realized in Iraq and Afghanistan.

There is a consensus among experts that the Mossad’s number one adversary and target in Latin America is Hugo Chavez, the political leader condemning Israel’s attempts to resolve conflicts in the Middle East by force. Chavez suspended Venezuela’s diplomatic relations with Israel in August, 2006, following the Israeli aggression against Lebanon. At that time Israeli Ambassador Shlomo Cohen and the embassy staff (mostly Mossad operatives) left Caracas. In several months Chavez took steps to normalize the relations with Israel, largely in response to the requests made by Venezuela’s 12,000 Jewish community.

The diplomatic relations between Venezuela and Israel were severed again in January, 2009 when the former protested the crimes committed by the Israeli army in the Gaza Strip, where the Israeli operation resulted in the killing of over 1,000 Palestinians, a third of them — children. In a televised address, Chavez criticized Israel as a country guilty of genocide and inhumane persecution of Palestinians. Not surprisingly, Israel’s reaction was negative. In November, 2009 Shimon Peres addressed a thinly veiled threat to Chavez by saying that «Chavez will soon disappear». The Venezuelan leader remarked that Perez had to undertake a long journey to Latin America to say the words and wondered publicly what would have happened if similar words were said about Peres in Venezuela.

TV commentator and former Venezuelan Vice President José Vicente Rangel often warns in his TV show that the Mossad is planning to assassinate Chavez. Agents with the corresponding qualifications were sent to Columbia, Peru, the Dominican Republic, Panama, and Curacao Island. In Rangel’s view, the greatest threat emanates from Colombia as DAS — instigated by the CIA — already conspired quite a few times to kill Chavez. Alarming comments were also made by US journalist Eva Hollinger who is a renown expert in operations against Venezuela. Author of CIA in Venezuela Hose Sant Ross calls the Venezuelan authorities to be mindful of the Mossad’s operations in the country.

As a rule, the efforts of Venezuelan security services to identify the Mossad agents echo with carefully orchestrated protests staged by the country’s Jewish community and with «solidarity» campaigns across Latin America. Media synchronously respond by charging Chavez with antisemitism and collusion with Muslim extremism.

Actually, the theme of antisemitism recurs due to a range of causes, for example whenever the Venezuelan government takes measures to scrutinize the country’s financial sphere. For decades, there used to be a number of jewelry stores in La Francia building in downtown Caracas, not far from the Venezuelan Foreign ministry, where gold and jewelry were bought and sold with practically no fiscal control. The administration’s attempts to make the business take legal shape and to subject the accounting documents of the stores to the long-overdue audit were condemned by the opposition media as persecution of Jewish businessmen. Nevertheless, the announcement of the coming audit had an explosive effect: in a matter of hours La Francia building was completely abandoned. The most valuable stuff was evacuated secretly at night.

Venezuelan counterintelligence agents watched the process from a distance, occasionally taking pictures. They did not expect to learn anything new — it was known that the Mossad used La Francia to carry out its financial transactions.