August 19, 1998

Rev. Moon's Uruguayan Money-Laundry

By Samuel Blixen

Rev. Sun Myung Moon, who has invested heavily in media and politics in both North and South America, has built what appears to be a major money-laundering center in the secretive banking haven of Uruguay.

Moon, the founder of The Washington Times and a major conservative funder in the United States, allegedly has used religious followers to transport money clandestinely to Uruguay and deposit amounts adding up to the tens of millions of dollars, and possibly much more.

Uruguay's bank secrecy laws and Moon's political clout have spared his operations from significant legal action. But the money laundry has drawn periodic attention from government and other investigators in recent years.

In 1996, for instance, the Uruguayan bank employees union blew the whistle on one scheme in which some 4,200 female Japanese followers of Moon allegedly walk into the Moon-controlled Banco de Credito in Montevideo and deposited as much as $25,000 each.

The money from the women went into the account of an anonymous association called Cami II, which was controlled by Moon's Unification Church. In one day, Cami II received $19 million and, by the time the parade of women ended, the total had swelled to about $80 million.

It was not clear, however, where the money originated and whether it came from illicit sources. Nor was it known how many other times Moon's organization has used this tactic -- sometimes known as "smurfing" -- to transfer untraceable cash into Uruguay. Authorities did not push the money-laundering investigation, apparently out of deference to Moon's political influence and fear of disrupting Uruguay's banking industry.

Still, a powerful Roman Catholic group and some investigative journalists have kept up pressure on the financial irregularities at Moon's bank. Sometimes, the scrutiny has led Moon's organization to complain about religious persecution. Other times, the critics have found their work a risky business.

In January 1997, only two months after the money-laundering flap, Pablo Alfano, a reporter for El Observador who had been investigating Moon's operations, was kidnapped by two unidentified men. The men claimed not to belong to Moon's Unification Church, but threatened Alfano at gunpoint unless he revealed his sources on Moon's operations.

One gunman shoved a revolver into Alfano's mouth and warned "this is no joke." After holding Alfano for 30 minutes, the gunmen returned the reporter to his house, with a warning that they knew his movements and those of his family. Despite the threats, the reporter said he refused to disclose his sources. But the message was clear: he should drop his investigation. [See FBIS, Jan. 30, 1997.]

Other critics have cited Moon's heavy-handed tactics elsewhere in Uruguay. "The first thing we ought to do is clarify to the people [of Uruguay] that Moon's sect is a type of modern pirate that came to the country to perform obscure money operations, such as money-laundering," said Jorge Zabalza, a leader of the Movimiento de Participacion Popular, part of Montevideo's ruling left-of-center political coalition. "This sect is a kind of religious mob that is trying to get public support to pursue its business."

But Moon has his defenders in Uruguay, as he does in the United States. Many Uruguayans welcome his investments, the jobs they produce, and his charitable social programs. Moon has called Uruguay his South American "oasis" and has invested an estimated $200 million in the country, with more promised in the future.

The Cocaine Coup

Tucked between Brazil and Argentina, tiny Uruguay has modeled itself as a South American Switzerland, granting tight secrecy to its banking institutions. With its banks and free trade zones, Uruguay hopes to become the financial capital of Mercosur, South America's free trade agreement. Even critics, such as Zabalza, note that Moon's investments have produced needed employment.

Moon first put down roots in Uruguay during the 12-year reign of right-wing military dictators who seized power in 1973. During the 1970s, the anti-communist South Korean religious figure also cultivated close relations with military dictators in Argentina, Paraguay and Chile. Moon reportedly ingratiated himself to the juntas by assisting the military regimes arrange arms purchases and by funnelling money to allied right-wing organizations.

Even in those early years, government investigators recognized that one key to Moon's success was the surreptitious use of his followers to smuggle money across borders. A 1978 U.S. congressional investigative report found that Moon's followers had transported large sums of cash into the United States in violation of U.S. currency statutes.

Then, in 1980, Moon expanded his South American influence into the landlocked nation of Bolivia. There, ultra-conservative army officers -- backed by drug lords, Argentine intelligence agents and former Nazi commander Klaus Barbie -- staged a bloody putsch which turned Bolivia into the continent's first modern narco-state. The putsch became known as the Cocaine Coup.

Soon after the Bolivian generals took power, Moon dispatched some of his top lieutenants, including his right-hand man Bo Hi Pak, to coordinate with the new rulers in La Paz. Moon's church was so proud of its new contacts that it published a photo of Pak meeting with Gen. Garcia Meza, a coup leader.

After the visit to the mountainous capital, Pak declared, "I have erected a throne for Father Moon in the world's highest city." Moon's political arm, CAUSA, began joint political-military operations with the Bolivian junta.

A month after the coup, Garcia Meza participated in the Fourth Congress of the Confederacion Anticomunista Latinoamericano [CAL], an arm of the World Anti-Communist League, which Moon and other Asian anti-communists founded in the 1960s. Attending that Fourth Congress was WACL president Woo Jae Sung, a leading Moon disciple. [See Martin Andersen's Secret Dossier, a book about the Argentine dirty war.]

During its violent two-year run, Bolivia's Cocaine Coup government protected cocaine production inside Bolivia and allowed cocaine shipments to processing centers in Colombia. The emerging Medellin cartel thus gained a secure source of cocaine while introducing modern corporate organization to the industry and transporting vast quantities of cocaine to the United States.

But the Bolivian junta suffered from widespread corruption and incompetence -- as well as international condemnation -- leading to its collapse in 1982. After their ouster, some coup leaders were charged with narcotics trafficking in the United States, while Klaus Barbie was extradited to France to stand trial on war-crime charges for his work in Adolf Hitler's Gestapo.

Later Bolivian investigations would assert that a Moon representative had invested $4 million in preparations for the Cocaine Coup. [For details on Moon and Bolivia, see The Consortium, Oct. 13, 1997; Cocaine Politics by Peter Dale Scott and Jonathan Marshall; and The Big White Lie by former Drug Enforcement Agency official Michael Levine.]

A Big Investment

In the early 1980s, Moon's organization was flush with cash elsewhere, too. In 1982, Moon launched The Washington Times, a right-wing daily which has cost Moon an estimated $100 million a year in losses. But the newspaper gave Moon's backers access to the highest levels of the Reagan-Bush administrations and the ability to influence public debate. President Reagan hailed the new publication -- one of only two Washington-based dailies -- as his "favorite" newspaper.

In 1983, back in Uruguay, Moon expanded his South American holdings by purchasing Banco de Credito, one of Montevideo's leading banks. The price tag was $52 million. Uruguay's military authorities awarded Moon a quick $8 million profit by buying back $60 million in uncollectible loans from the bank.

When democracy was restored in Uruguay in 1985, Moon's operations survived by keeping close ties to still-influential military officers and to conservative civilian politicians. They helped Moon fend off opposition from civilian president Julio Maria Sanguinetti and other critics.

Later, Opus Dei, a right-wing international Catholic organization, joined in criticizing Moon's cult-like church. The Unification Church considers Jesus a failed messiah and Moon the new Chosen One who is destined to rule a one-world theocracy that will eliminate all individuality.

But Moon's deep roots in Uruguayan politics and business proved strong enough to withstand his critics. His bank brushed aside nettlesome questions about money-laundering and other financial irregularities. Moon's allies -- and Uruguay's secrecy laws -- prevented even the powerful Opus Dei from forcing the bank's financial records into public view.

Through the 1980s, Moon continued to expand his Uruguayan holdings. He bought the elegant-but-faded Hotel Victoria, the Ultimas Noticias newspaper, a travel agency and vast tracts of real estate. His big investments in the hotel and newspaper, however, never generated significant profits. The newspaper never achieved strong circulation or advertising revenues. Despite an upgrading to five-star status, the Hotel Victoria never flourished either.

Bank Allegations

Finally, in 1993, Uruguayan Central Bank president Ramon Diaz pushed the long-whispered allegations against Moon's bank into the parliamentary record. Diaz accused Banco de Credito of violating financial rules, operating at a constant loss, practicing dubious credit policies with insolvent customers and holding inadequate cash reserves.

Diaz demanded that the bank add $30 million in capital within 48 hours or face government intervention. Within hours, panicked customers pulled $10 million in deposits out of the bank. Diaz's goal of forcing Moon to sell the bank seemed within reach. One senator claimed that Diaz hoped an Argentine investment group would step in and take over the bank.

Moon proved, however, that his seemingly bottomless well of cash could fill the bank's vaults in a crisis. Before the 48-hour deadline, Moon transferred $30 million into the ailing bank and retained control. Since then, Moon's influence has continued to grow in Uruguay, although Banco de Credito continues to suffer chronic financial troubles.

Despite delivery of mysterious cash from Moon's followers -- such as the alleged $80 million deposits in November 1996 -- the bank again has slipped into a deficit estimated at $120 million. The deficit -- or "red numbers" in the Spanish jargon -- has been blamed largely on credits given to the Rio de la Plata hotel company ($65 million) and to Creditos S.A., a financial institution that was the bank's first client.

Moon's investment arm, Rondilcor S.A., also has invested money in privatization projects that have been slow to turn a profit. According to a U.S. State Department cable obtained under the Freedom of Information Act, "the Unification Church has few adherents in Uruguay [but] the church's hotel ventures are just part of a significant business presence that the church hopes will prove profitable over the long term."

The cable, dated Sept. 17, 1994, added that "Rondilcor officials admit ... that the church is at least several years away from earning back its investments even under the most favorable circumstances."

But Moon's money continued to flow into new projects anyway. Embittered by his church's decline in the United States -- where membership reportedly has sunk to 3,000 members -- Moon shifted his personal base of operations to a luxurious estate in Uruguay. In the last three years, Moon also bought the ex-Frigorifico Nacional, a cool-storage house; the Astilleros Tsakos dockyard; and other privatized port services. Moon has promised to build containers as well as fishing and chemical ships -- and to construct a paper plant.

Nelson Cesin, a reporter for the newsweekly Brecha, has noted that the new acquisitions would allow Moon to move money freely around the world.

Planes & Subs

Moon himself has announced an ambitious plan for a worldwide transportation and propaganda system. To his followers, he has boasted about plans for building a network of small airstrips throughout South America and other parts of the world, supposedly for tourism. In one speech on Jan. 2, 1996, he even announced a scheme for deploying submarines to evade coastal patrols.

"There are so many restrictions due to national boundaries worldwide," Moon lamented during the speech, which the Unification Church posted on its Internet site. "If you have a submarine, you don't have to be bound in that way."

(As bizarre as Moon's submarine project might sound, a cable from the U.S. Embassy in Japan, dated Feb. 18, 1994, cited press reports that a Moon-connected Japanese company, Toen Shoji, had bought 40 Russian submarines. The subs were supposedly bound for North Korea where they were to be dismantled and melted down as scrap.)

Moon, however, understands that his primary protection comes from the political alliances that his money has bought. In the 1996 speech, Moon added that he "has been practicing the philosophy of fishing here [in Uruguay]. He [Moon] gave the bait to Uruguay and then the bigger fish of Argentina, Brazil and Paraguay kept their mouths open, waiting for a bigger bait silently. The bigger the fish, the bigger the mouth. Therefore, Father [Moon] is able to hook them more easily."

In recent years, Moon also has continued his clandestine cash transfers into the United States. According to court records from a divorce case involving one of Moon's sons, Hyo Jin, $1 million in cash was carried into the United States in early 1994 by Moon's followers and delivered to Hyo Jin who ran a Moon-controlled recording studio in New York City.

In an interview, one of Hyo Jin Moon's top aides, Maria Madelene Pretorious, stated that the cash was circulated through Moon's business empire in the United States as a way to launder it, before it was dispatched to church projects.

In a separate interview, another senior figure in Moon's U.S. operations claimed that after Asia slid into an economic downturn in the 1990s, the bulk of Moon's money began to arrive from South America. [For more details on Moon's recent activities and history, see iF Magazine, Sept.-Oct. 1997.]

Clearly, Moon's big-dollar spending on conservative politicians in the United States and South America has helped shield the South Korean theocrat from serious scrutiny. In recent years, Moon's American beneficiaries have included former President George Bush and Religious Right leader, Jerry Falwell.

But paradoxically, Moon's banking deficits in Uruguay have given him additional leverage. Uruguayan authorities fear that a major financial bankruptcy could damage the country's reputation. So, in exchange for "laissez-faire" treatment for his bank, Moon pumps in the necessary cash to keep Banco de Credito afloat.

Still, the ultimate source of Moon's influence remains his subterranean flow of money, a virtual underground river of cash spewing from a hidden spring whose origin remains the biggest mystery of Moon's organization. It is that spring which keeps Moon's Uruguayan "oasis" green and his critics in both North and South America at bay.

Copyright (c) 1998

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