Sovereignty test taken to new arena

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The Mohawk Council of Kahnawake caused a few flutters in Ottawa and Quebec City in early November when Chief Davis Rice announced his community wants to exercise its sovereignty by creating the equivalent of an Antigua on the St. Lawrence Seaway.

Chief Davis Rice told reporters his council intended to become a presence in the world of off-shore international banking by offering the same kind of tax advantages that places like Antigua offer to the financial world.

Chief Billy Two Rivers, another member of the Kahnawake council, said the idea grew out of another venture that met with success in his territory.

"The council was approached by a couple of people that used to work in the stock exchange in New York. They got into the process of setting up a company website to deal with off-shore gambling. It began to get a few legs on it and one of them is similar to an off-shore banking process like the Caribbean and Aruba and a couple of islands where they have tax havens," he said. "So that was a side issue, but it immediately became a big issue with the governments - Quebec and Canada. It's not the prime thing, it's just one part of it, and whether it becomes a reality was not the important thing because that's not the reason the thing was created. It was created for off-shore gambling."

Kahnawake, Que., has been a leader in the on-going contest of wills between First Nation and public governments over jurisdiction. First Nations insist their inherent right to govern is not a delegated authority that is subservient to federal and provincial governments. Mohawks have led the sovereignty fight based on the Two Row Wampum treaty which states the Six Nations Confederacy (of which the Mohawk Nation is a member) is an ally of the Crown, not subjects. They insist the law and the treaties back up their claim to unfettered sovereignty over their territory and continually make the point that anything any other sovereign government has the authority to do is also within its authority. Off-shore gaming allows the Mohawks to participate in the lucrative gaming market without submitting to Canadian government regulations.

Two Rivers said Canada has no business telling his council not to get involved in off-shore financial businesses because Canada is deeply involved itself.

"If you go into those Caribbean islands, those tax havens, the very banks that we have here are all located there. The Royal Bank, the Bank of Montreal, they're all on those off-shore islands," he said.

Most off-shore banks are able to be immensely profitable because they offer a safe shelter from taxation and law enforcement agencies. Two Rivers said his council is aware that organized criminals are attracted to off-shore opportunities, but he said his council believes it can enter the market without getting involved in such illegal and immoral businesses as drug trafficking, money laundering or organized crime.

"Laundering money is not a thing that they're looking at and probably they'll make every effort to avoid it or do everything possible to ensure it can't happen," he said.

Canada's domestic banking industry has been criticized in various international law enforcement circles for not cracking down on the movement of "dirty" money across Canadian borders. Two Rivers said his council might be able to provide an example to Canada of how off-shore business can be conducted without such connections.

Two Rivers said Canadian authorities are more interested in shutting down any Mohawk attempt to exercise jurisdiction than in examining whether the development might be a good thing for the people of the community.

"The whole chain of events in the last 30, 40, 50 years has been economic strangulation of Indian communities and as soon as we start to make an effort to break out of it, there's a negative spin put on it. As soon as it became public knowledge, the first response from the government of Quebec was, 'let's look at this and see how we can shut it down,'"he said.

But the question of whether it's possible to enter the off-shore financial market without becoming associated with organized crime is one that bears examination. Jeffrey Robinson, a New York City-born author now living in England, is currently on tour promoting his 17th novel: The Merger. How Organized Crime Is Taking Over Canada And The World. During a promotional stop in Vancouver, Robinson said his research into criminal organizations in every corner of the globe suggests there are some serious problems that come along with off-shore tax havens.

"The example he used is so perfect. Antigua is drug trafficking, money laundering, political corruption and a major warm water for Russian organized crime. What a great idea to bring all of this to North America. Now, he's being extremely well advised because there is a lot of money in this. The problems are a multitude: a) that money never trickles down to the people. Go to Antigua and look at the average guy on the street. He doesn't have the kind of money that the government has, that the politicians have, and that the money launderers and the Russian organized criminals have. It never trickles down."

Robinson said the huge profits to be made in off-shore banking are enough to convince bankers to look the other way when potentially illegally-obtained cash is deposited in their banks. Canadian laws allow this to happen, he said, because the government listens closely to the banking lobby when it formulates regulations.

"The laws in Canada are so lax, especially the money laundering laws, the recent one where you're dealing again with 'suspicious cash transactions.' As soon as you use the word 'suspicious' and allow the bankers themselves to decide what's suspicious, you get the game keeper turning poacher," the author said. "It's business. You're talking about the banking business. You're talking about the business of money laundering. And that word 'business' keeps popping up whenever you have these discussios with anybody. Business is about making money and all of these people are in business to make money.

Bankers and organized criminals know the limits of the law and the problems law enforcement agencies have with investigations that cross international borders, he said, and the lure of million- or even billion-dollar profits is hard to resist.

"It's called plausible deniability. All the drug trafficker has to do, all the transnational criminal has to do when he's dealing with bankers, accountants, lawyers, company formation agents, investment brokers - and remember he needs them to help move his money around the world - all he has to do is come up with a story that gives the professional enough, just enough, space to say, 'This isn't a drug dealer.' And as long as you can plausibly deny that your client is a crook, you'll take his money because it is a business and that's what you're in business to do," he said.

"I don't think it's at all naive to be outraged by this. I'm outraged by it. I'm outraged every time I see bankers show up in front of parliamentary committees or in front of the U.S. House of Representatives or the Senate and say 'we have rules and regulations in place; we're fighting this thing,' when I know for a fact - and I know I'm going to get in trouble for this, but I will say it anyway - there is not a senior banker anywhere in the entire country, not a single one, who can put his hand on his heart and say honestly 'there's no dirty money in my bank.'"

"Now, I'm not saying these bankers are willfully taking that money. I'm saying that they can plausibly deny that their clients are drug traffickers and they don't want to look too terribly far because they know if they turn down a client, he'll just go next door to the next guy."

The world needs to change if police are going to have a chance against transnational organized crime, Robinson said.

"As long as we live in a world where a 17th century philosophy of sovereignty is enforced on an 18th cenury model, defended by a 19th century concept of law enforcement that is still trying to come to terms with 20th century technology, the 21st century will belong to transnational criminals," he said.

He criticized Canadian politicians for not waking up to the need for an active legislative response to high tech crime.