DON'T EXPECT REAL UN ACTION AGAINST DRUG TRAFFIC

LONDON --- A two-day Special Session of the General Assembly opens this
Mopnday at the United Nations in New York, intended as a major assault on
the global drug problem,. By the lime dessert and coffee are scrved Tuesday
night, everything will return to business as usual, including the inability
of the United Nations to have any effecton the global drug problem.

They have gone this route before. In 1988 the General Assembly adopted the
Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic
Substances. Ten years later, a quarter of the member states had still not
signed on, and among the rest fewer than 30 bothered passing legislation
that even came close to resembling the model in the convention.

The United Nations' impotence stems directly from individual members'
interests. Too many countries flourish in the narco-economy.

Worldwide, more money is spent on illicit drugs than on food, making illicit
drugs the planet's largest and most lucrative cash crop.

The devastation wreaked by drugs on everything from families to democracies
is too often shrouded by glass skyscrapers---witness Miami, now the economic
capital of South America. Or by the dividends of international banking
groups---bad loans to Latin America in the 1970s were repaid thanks to drug
money. Or by the huge invisible earnings of global financial
centers---witness Britain selling its sovereignty in the murky world of
offshore banking.

Ultimately, rhetoric is easier than turning the war on drugs into a war on
the business of drugs.

As in any multinational industry drug trafficking thrives on cash flow and
reinvestment. Cash from the streets gets put into the world's banking
system, moved in and out of shell companies and through secret banking
jurisdictions, then repatriated, disguised as legitimate profit.

The United Nations has conceded that as much as $300 billion worth of drug
money is currently immersed in this money laundering cycle. Yet more than 50
UN member states openly sell phony shell companies.

It is not just the Caribbean---the Cayman Islands, for example, with oue
bank for every 57 citizens. It is also Western Europe (Switzerland,
Liechtenstein, Luxembourg, the Charmel Islands), the Middle East, Latin
America, Eastern Euroope, Africa (Nigeria in particular) and the Pacific.

Two months ago, preparing a French television film based on my book, "The
Laundrymen," I phoned a company-formation agent in London to wonder,
blatantly, where I could hide money. The person suggested Niue. Where is
that? The person didn't know.

It turns out to be a British Commonwealth sandbar in the middle of the
Pacific, population 2,321. It has been put on the map by Panamanian lawyers
acting for Colombian drug barons.

For $135, white-collar professionals operating legally in UN member states
will hook anyone into the network of countries, companies and banks used for
hiding dirty money.

Company-formation agents are backseat passengers on this bandwagon. Sitting
up front are otherwise legitimate bankers, lawyers and accountants who have
mined colossal fortunes out of brokering dirty money.

The United States has the world's strictest regulations against money
laundering---perhaps not surprisingly, as it is the largest consumer of
illicit drugs. Yet there are no laws in the United States or in any other
member state which hold white-collar professionals criminally responsible
for not knowing that way down the line the ultimate beneficial owner of the
money turns out to be a drug baron.

Relying on "plausible deniability," these professionals need only look to
their immediate client to claim: "I'm not dealing with a trafficker. I'm
doing business with a lawyer.

Requiring them to identify everyone involved at every level back to the
ultimate beneficial owner of the rnoney would effectively thwart the
traffickers' ability to launder his profits.

And the community of nations-should ruthlessly ostracize governments which
countenance trafficking and money laundering. Shutting down businesses in
member states, that rely on secret banking and phony shell companies in
rogue states would send the correct zero-tolerance message. You beat the
traffickers by bankrupting them.

But that means taking on globally influential bankers, lawyers and
accountants, and at least a quarter of the member states. Where are the
politicians with the stomach for this fight?

[The writer's books include an updated edition of "The Laundrymen," a survey
of the world of money laundering. He contributed this comment to the
International Herald Tribune.]

Checked-by: Melodi Cornett