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Nov. 6, 1998

iF Magazine publishes honest, independent, investigative journalism.


Rev. Moon’s Bank Scam

By Samuel Blixen

Rev. Sun Myung Moon's operatives stripped a leading Uruguayan bank of nearly all its assets, prompting Uruguay's central bank to seize control of the near-bankrupt institution in September.

Moon's organization depleted the Banco de Credito on Sept. 17, a day after Uruguay's central bank issued a warning that the Moon-controlled bank was violating the nation's rules on liquidity -- by running massive debts. The central bank demanded a recapitalization of Banco de Credito, considered the country's third-leading bank and a financial base for Moon's international empire. But instead of putting money in, Moon-connected companies took out an additional $35 million in loans.

The move effectively left the bank devoid of assets. The next day, Sept. 18, Uruguay's central bank intervened to seize control of the bank's management. Uruguay's bank controller put the bank's accumulated debt at $161 million.

In the past several years, the Banco de Credito has faced other accusations of wrongdoing, including allegations that Moon operatives were using it as money-laundering center. In 1996, a bank employees union alleged that 4,200 Moon followers made cash deposits at the bank, with the total reaching $80 million.

Because the deposits were cash, authorities could not determine if the sources of the money were legitimate. Moon spokesmen have denied that the organization launders drug money in South America. [For details, see iF Magazine, Sept.-Oct. 1998]

Despite the bank's collapse, Uruguayan authorities have brought no criminal charges against the Moon organization. Uruguay, which considers itself the Switzerland of South America, is known for tight bank secrecy rules.

But there could be repercussions for Moon’s status as a major funder of right-wing political-media activities around the world, including The Washington Times, a flagship of the U.S. conservative movement.

The strategy of "cratering" a bank is often associated with organized crime syndicates which quietly take control of financial institutions and siphon off their resources before leaving them as empty shells.

After Moon's operatives left the Banco de Credito effectively insolvent in September, members of the Uruguayan congress criticized the central bank for granting Moon the additional time, which was used to pull the last $35 million out of the bank.

Sen. Luis Eduardo Mallo charged that overall Moon's companies had taken more than $125 million and had turned the bank into a "cashier for Moon's enterprises." One Moon company, the Corporacion Rioplatense de Hoteles S.A., was in debt $96 million.

Uruguayan authorities also learned that Moon's associates called the shots in the last days. Congressman Jose Mujica said some bank managers said they were forced to consult with Moon's advisors on every decision during the last few months. In that time, only Moon's enterprises received credits from the bank.

A bank union member, Mario Busca, also charged that Banco de Credito had violated regulations requiring collateral for the $125 million in loans to Moon-connected companies. "The central bank knowingly allowed the violation of its own rules," complained Busca.

Sources from the Uruguayan congress and bank employees union said it was unlikely that the central bank could recover the $125 million. Noting the last-minute depletion of assets, members of a special commission now overseeing the bank expressed doubts, too, that Moon intends to reassume its direction in the future.

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