Pubdate: Sun, 27 Aug 2006
Source: Sunday Times (UK)
Copyright: 2006 Times Newspapers Ltd.
Author: Jeffrey Robinson and Gareth Walsh


A SUBSIDIARY of Barclays Bank has been used to launder drugs money,
according to findings of an undercover "sting" operation by law
enforcement agencies in America and Canada.

At one stage in the investigation the British government froze $54m
(UKP28.5m) held with Barclays Private Bank (BPB) at the request of the
United States.

Internal BPB memos seen by The Sunday Times show that one of the
bank's officers who expressed concern over the source of the money was

BPB continued to allow the accounts to operate while two other leading
banks used by the same customer - HSBC and ABN Amro - tipped off
British police.

Senior managers at BPB, which serves wealthy clients, were questioned
by members of Britain's National Crime Squad (NCS) after a
transatlantic investigation identified five accounts linked to a
Colombian money laundering scam.

The ring associated with the BPB transactions was eventually broken up
following a joint American, British and Canadian investigation which
lasted two years.

The money trail that led to BPB began in mid-2001 when agents from
America's Drug Enforcement Administration (DEA) managed to turn a
money launderer in Medellin, Colombia, into an informant.

Within months undercover DEA agents had infiltrated drug cartels
making pick-ups of cash in New York, Miami, Atlanta and Puerto Rico.

They also contacted the Royal Canadian mounted police.

An undercover mountie later collected the equivalent of UKP140,000 from
a courier in a hotel car park at Montreal's Dorval airport. Cartel
members told DEA agents, who they thought were part of a laundering
gang, to wire it to a Barclays account in London at BPB. On August 28,
2002, $190,000 was credited to the BPB account.

American investigators tipped off officers at the NCS, led by
Superintendent Terry Burke, about the transfer. Burke's team found
that the money from the Montreal pick-up had been credited to the
account of a BPB client called Auxerre, a shell company registered in
the British Virgin Islands. It had tens of millions of dollars in five
Barclays accounts.

Auxerre appears to have been owned by an elderly textile magnate
called Jose Douer-Ambar from Bogota in Colombia.

Burke discovered that $1.8m had been deposited in Auxerre accounts at
Barclays in 53 wire transfers between 1997 and 2001. All the sums were
in round figures, unlike the typical pounds and pence deposits made in
normal business transactions.

The British investigators also linked more than $8m deposits in the
BPB accounts to two other Colombian laundering suspects.

Burke's team examined accounts that had been held by Douer at two
other banks. In August 2000 Douer had opened an account with HSBC in
London. In the first four months it received 60 wire transfers
totalling $5.7m. In September 2000 Douer also opened an account at ABN
Amro in Jersey with two deposits of $4m.

Officials at both banks soon became suspicious because the sources of
the money had no obvious relationship to Douer.

Banks in Britain are legally bound to inform the police if they
believe that their accounts are being used to launder money.

Both HSBC and ABN Amro were so concerned that they tipped off
Britain's National Criminal Intelligence Service about their
suspicions and asked Douer's daughter Paula, who was managing the
accounts, to take the money elsewhere.

Funds from both banks were then deposited at BPB, where staff were
also growing concerned about the Auxerre accounts.

The Sunday Times has seen memos between senior BPB staff which show
that there were discussions about whether money in the accounts was
linked to crime. They also show that the bank decided not to act
against Douer.

In one memo Richard Lister, the bank's compliance officer, asked the
manager of the Auxerre accounts: "Do we know that they [the Douers]
are above board?

"Have we even asked the question and obtained a satisfactory answer?
Do we know the source/application of the funds so we can confirm they
are coming from or going to companies that we know are investment
vehicles for the family?

"Do we understand the reasons and the rationale for these flows of
funds and why they are being transferred through accounts with us? Do
the reasons being given make sense? "

Alternatively, are we merely assuming that these transactions are
proof of their investment activity?"

Two days later the account manager wrote back assuring Lister: "I asked Mrs
[Paula] Douer about their business activities in Colombia on several
occasions and have not had reason to doubt they are in the textile trade."

After the discovery of the memos by investigators, senior managers at
BPB were questioned by Burke's team in London and by the DEA in the
United States.

In October 2003 the British government froze the five Auxerre accounts
at BPB, which by then contained $54 million.

Burke planned to argue that the management at BPB had - or should have
had - suspicions but had failed to act on them.

On May 2, 2004 in New York, arrest warrants were issued for 34 people,
with charges from narcotics trafficking to money laundering.

DEA agents in America, mounties in Canada and police in Colombia
arrested 25 people.

Douer, however, received special treatment. He agreed to a deferred
prosecution and to forfeit $20m to American authorities, believed to
be from a total of $130m family assets in American banks.

The NCS in Britain later received $10m of the money for its part in
breaking up the laundering ring and put it into fighting crime.

Of those people charged, 20 have now been convicted or have pleaded
guilty. Paula Douer has not been charged with any crime.

Sources close to the investigation say NCS officers were preparing to
make arrests when the Crown Prosecution Service (CPS) halted the case.

Legal sources say that prosecutors would have had extreme difficulty
proving that any named individual within the bank was the controlling
mind behind any negligence, because so many people would have handled
the accounts.

A CPS spokeswoman said: "We concluded there was insufficient evidence
for a realistic prospect of conviction against any individual at
Barclays Private Bank in connection with the allegations."

The money in the frozen accounts was released back to Douer after he
arranged his deal with the US authorities. He has now moved it out of

Last week Barclays refused to comment on its involvement, claiming
client confidentiality.
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