World Finance Corporation
Encyclopedia
Coral Gables, Florida
Coral Gables is a city in Miami-Dade County, Florida, southwest of Downtown Miami, in the United States. The city is home to the University of Miami....
Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
. When WFC Corp was headed and controlled by Guillermo Hernandez-Cartaya
Guillermo Hernández-Cartaya
Guillermo Hernández-Cartaya was a Cuban banker born sometime in 1932 ; he spent 20 years as a banker in Cuba, until he emigrated to the United States, where he became infamous as a dirty banker and the leader of the corrupt World Finance Corporation.-Bay of Pigs fiasco:He first became notable when...
(a former Cuban banker who was an agent of the CIA
Central Intelligence Agency
The Central Intelligence Agency is a civilian intelligence agency of the United States government. It is an executive agency and reports directly to the Director of National Intelligence, responsible for providing national security intelligence assessment to senior United States policymakers...
, and believed to be an agent of the Mafia, Fidel Castro
Fidel Castro
Fidel Alejandro Castro Ruz is a Cuban revolutionary and politician, having held the position of Prime Minister of Cuba from 1959 to 1976, and then President from 1976 to 2008. He also served as the First Secretary of the Communist Party of Cuba from the party's foundation in 1961 until 2011...
, and also of various Colombian drug lords) through the WFC Group
WFC Group
The WFC Group was a shell company owned entirely by Guillermo Hernandez-Cartaya; it owned a large proportion of share in the World Finance Corporation, and served to also mask his controlling interest in it and other corporations.-References:...
shell company, it became known for a major financial scandal in which over $50 million was lost. This scandal was the subject of a 60 Minutes
60 Minutes
60 Minutes is an American television news magazine, which has run on CBS since 1968. The program was created by producer Don Hewitt who set it apart by using a unique style of reporter-centered investigation....
segment on 26 February 1978. Cartaya controlled it through a number of shell companies, the most well known of which was the WFC Group
WFC Group
The WFC Group was a shell company owned entirely by Guillermo Hernandez-Cartaya; it owned a large proportion of share in the World Finance Corporation, and served to also mask his controlling interest in it and other corporations.-References:...
.
Founding
The corporation was founded in 1971 by the Cuban expatriate banker Guillermo Hernandez-Cartaya, after he finished serving a Cuban sentence for his participation in The Bay of Pigs InvasionBay of Pigs Invasion
The Bay of Pigs Invasion was an unsuccessful action by a CIA-trained force of Cuban exiles to invade southern Cuba, with support and encouragement from the US government, in an attempt to overthrow the Cuban government of Fidel Castro. The invasion was launched in April 1961, less than three months...
. The New York Times said:
With the formation of WFC, former associates said, Mr. Hernandez-Cartaya hoped to utilize his wide-ranging contacts in the Latin American political and economic world to tap the growing market between American lenders and Latin American borrowers made possible by the 1969 Edge ActEdge ActThe Edge Act is a 1919 amendment to the United States Federal Reserve Act of 1913,codified as:which allows National Banks to engage in international banking through federally chartered subsidiaries. The Act is named after Walter Evans Edge, a U.S. Senator from New Jersey who sponsored the original...
.
Overseas loans and banks
In 1975, WFC was designated an "exclusive official agent by the ColombiaColombia
Colombia, officially the Republic of Colombia , is a unitary constitutional republic comprising thirty-two departments. The country is located in northwestern South America, bordered to the east by Venezuela and Brazil; to the south by Ecuador and Peru; to the north by the Caribbean Sea; to the...
n Government for a loan of $100 million, the largest in the nation's history."
Unibank
Two years previously, in 1973, WFC founded a bank in PanamaPanama
Panama , officially the Republic of Panama , is the southernmost country of Central America. Situated on the isthmus connecting North and South America, it is bordered by Costa Rica to the northwest, Colombia to the southeast, the Caribbean Sea to the north and the Pacific Ocean to the south. The...
called "Unibank". It received with unusual swiftness Panama's most liberal banking license, a Class One license. Most of the equity was held by WFC, but a total of %24 (8 per cent each) was held by three American banks- Mercantile International Corporation (subsidiary Mercantile Trust Company of St. Louis), First National Bank of Louisville (subsidiary of First Kentucky National Corporation), and Midatlantic International Inc. (subsidiary of Midatlantic Banks of West Orange, N. S.).
Unibank was rather successful- by 1976 it had affiliates worldwide and ~50 million dollars in deposit. Unibank was instrumental in the frauds, as it often diverted loans and loan repayments to WFC, where they typically vanished. Financial fraud was not the only actitiy- it diversified into arms smuggling and circumventing the embargo of Cuba
Cuba
The Republic of Cuba is an island nation in the Caribbean. The nation of Cuba consists of the main island of Cuba, the Isla de la Juventud, and several archipelagos. Havana is the largest city in Cuba and the country's capital. Santiago de Cuba is the second largest city...
. The deceit could not last forever, and in 1977, the Banking Commissioner of Panama seized Unibank; he had little choice since Unibank was a debtor to the National Bank of Panama
National Bank of Panama
The National Bank of Panama is one of two Panamanian government-owned banks. As of January 2009, it held deposits of about US$5 billion. The other government-owned bank is Caja de Ahorros, with about US$1 billion in total deposits....
, and already $10,000,000 had been lost. Unibank would not be the only bank
begun by WFC principals to collapse with great financial loss.
Pan American Bank
In 1976, the Comptroller of the Currency forced Cartaya out of his control of the Pan American Bank of Hiateah in FloridaFlorida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
- 2 million dollars had gone missing due to bad overdraft
Overdraft
An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be "overdrawn". If there is a prior agreement with the account provider for an overdraft, and the amount overdrawn is within the authorized overdraft...
s and uncollected funds. This incident was the reason for the Comptroller's later involvement in the investigation that broke open the WFA scandal.
Also in 1976, US Customs agents intercepted a private plan inbound from Panama. Aboard was thousands of dollars in cash, strapped to a woman associated with WFC's Vice President. On the plane were also that Vice President, Cartaya, and Cartaya's wife.
Ajman Arab Bank
Another bank had been started in the United Arab EmiratesUnited Arab Emirates
The United Arab Emirates, abbreviated as the UAE, or shortened to "the Emirates", is a state situated in the southeast of the Arabian Peninsula in Western Asia on the Persian Gulf, bordering Oman, and Saudi Arabia, and sharing sea borders with Iraq, Kuwait, Bahrain, Qatar, and Iran.The UAE is a...
's Sheikdom of Ajman
Ajman
Ajman , also spelt Ujman, is one of the seven emirates constituting the United Arab Emirates . With an area of just 260 square kilometres , Ajman is the smallest emirate by area...
, with the collaboration of the Ajman government. It was called the Ajman Arab Bank. It was plagued by the same problems as Unibank, and was shut down May 1977. Cartaya went to the UAE, apparently to try to explain the missing money, and the authorities confiscated his passport. Cartaya nonetheless escaped the UAE, using documents brought him by a fellow Cuban.
Investigation and scandal
WFC came to national attention when an investigation in 1976 by the District Attorney of Dade County, FloridaFlorida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
, (along with four other governmental agencies; besides the Dade County Public Safety Office, the FBI
Federal Bureau of Investigation
The Federal Bureau of Investigation is an agency of the United States Department of Justice that serves as both a federal criminal investigative body and an internal intelligence agency . The FBI has investigative jurisdiction over violations of more than 200 categories of federal crime...
, the IRS
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
, the DEA
Drug Enforcement Administration
The Drug Enforcement Administration is a federal law enforcement agency under the United States Department of Justice, tasked with combating drug smuggling and use within the United States...
, and the Comptroller of the Currency
Office of the Comptroller of the Currency
The Office of the Comptroller of the Currency is a US federal agency established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States...
all participated in the joint investigation) revealed that the WFC held the dubious distinction of being the longest running (and largest) launderer of money
Money laundering
Money laundering is the process of disguising illegal sources of money so that it looks like it came from legal sources. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount...
for Colombia
Colombia
Colombia, officially the Republic of Colombia , is a unitary constitutional republic comprising thirty-two departments. The country is located in northwestern South America, bordered to the east by Venezuela and Brazil; to the south by Ecuador and Peru; to the north by the Caribbean Sea; to the...
n cocaine
Cocaine
Cocaine is a crystalline tropane alkaloid that is obtained from the leaves of the coca plant. The name comes from "coca" in addition to the alkaloid suffix -ine, forming cocaine. It is a stimulant of the central nervous system, an appetite suppressant, and a topical anesthetic...
smugglers; the investigation proceeded for approximately two years. Somewhat ironically, the law enforcement personnel literally stumbled onto lead, when, during an investigation of a pest-control service called King Spray Service suspected of drug smuggling, two agents of the Dade County Public Safety Office (which, under Donald Skelton, led the investigation until the Justice Department took over) were searching through the company's garbage, in which they found financial records of WFC, recording very large transfers of funds between the bank and the company, along with small amounts of marijuana. The investigation ruined WFC Corp, and it closed in 1980. Simultaneously, overdrafts at the National Bank of South Florida (controlled by WFC after a large payment of cash for equity) prompted an investigation by bank examiners.
Cartaya used the bank as the centerpiece of an elaborate corporate labyrinth, through which the funds and bad loans (to Cartaya and his associates) were filtered and "laundered". An example of the labyrinth: WFC Corp. was 100% owned by the WFC Group
WFC Group
The WFC Group was a shell company owned entirely by Guillermo Hernandez-Cartaya; it owned a large proportion of share in the World Finance Corporation, and served to also mask his controlling interest in it and other corporations.-References:...
, which itself was owned by Cartaya to the amount of %24.7; another %23.3 was held by "Neo-Floridian Development Company"- of NFDC, %54.4 was held by Cartaya, again.
A considerable proportion of the money was funneled through a bank in the Bahamas called the Cisalpine Bank, and from thence to the Vatican Bank to Swiss numbered accounts
Numbered bank account
A numbered bank account is a type of bank account where the name of the account holder is kept secret, and he identifies himself to the bank by means of a code word known only by the account holder and a restricted number of bank employees, thus providing the holder with a degree of bank privacy in...
; this bank was owned by Vatican Bank
Vatican Bank
The Institute for Works of Religion , commonly known as the Vatican Bank, is a privately held institute located inside Vatican City run by a professional bank CEO who reports directly to a committee of cardinals, and ultimately to the Pope...
manager Archbishop Paul Marcinkus
Paul Marcinkus
Paul Casimir Marcinkus was an American archbishop of the Roman Catholic Church. He was best known for his tenure as President of the Vatican Bank from 1971 through 1989.-Early life:...
and notorious dirty Italian banker Roberto Calvi
Roberto Calvi
Roberto Calvi was an Italian banker dubbed "God's Banker" by the press because of his close association with the Holy See. A native of Milan, Calvi was Chairman of Banco Ambrosiano, which collapsed in one of modern Italy's biggest political scandals...
. Interestingly, the Cisalpine bank seems to have also been laundering heroin profits through the Nugan Hand Bank
Nugan Hand Bank
Nugan Hand Bank was an Australian merchant bank thatcollapsed in 1980 in sensational circumstances amidst rumours of involvement by the Central Intelligence Agency and organized crime.-Founding:...
bank for the Grey Wolves
Grey Wolves
The Idealist Youth , commonly known as Grey Wolves , is an ultra-nationalist neo-fascist youth organization. It is accused of terrorism. According to Turkish authorities, the organization carried out 694 murders between 1974–1980.-Name:...
.
The bank was involved with a number of prominent Floridians, such as Walter Sterling Surrey, a stockholder in, director of, and lawyer for, WFC Corp. Kwitny recounts,
Surrey says he came aboard mainly to help start a foreign-based mutual fundMutual fundA mutual fund is a professionally managed type of collective investment scheme that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities.- Overview :...
for an old client, a Cuban exile who helped found World Finance. He says he dropped out in 1976 when the mutual fund deal fell through, and that he was unaware of any criminal or intelligence activities of the company.
The investigation and its aftermath were marred and dogged by persistent rumors and allegations of corruption and cover ups by various governmental agencies. Jonathan Kwitny
Jonathan Kwitny
Jonathan Kwitny was a Jewish American writer and investigative journalist. He received the University of Missouri School of Journalism's honor medal for career achievement. His book jacket biographies record that his reporting forced J...
writes this of the Justice Department's head investigator, Jerome Sanford:
He says the main investigation was halted by Washington in 1978, after the CIA objected that 12 of the Justice Department's chief targets were "of interest" to it. Sanford says he was told that this meant the men he was investigating were CIA operatives of one sort or another. Florida lawmen who worked with Sanford backed up his story.
Two of the suspects were Richard Fincher and Hernandez-Cartaya. In the aftermath, Florida Attorney General
Attorney General
In most common law jurisdictions, the attorney general, or attorney-general, is the main legal advisor to the government, and in some jurisdictions he or she may also have executive responsibility for law enforcement or responsibility for public prosecutions.The term is used to refer to any person...
Robert Shevin
Robert Shevin
Robert L. Shevin was the Florida Attorney General from 1971 until 1979 and a judge on the Florida Third District Court of Appeal.-Background:...
returned $7,600 in contributions from WFC-connected Latin businessmen. Dade County
Miami-Dade County, Florida
Miami-Dade County is a county located in the southeastern part of the state of Florida. As of 2010 U.S. Census, the county had a population of 2,496,435, making it the most populous county in Florida and the eighth-most populous county in the United States...
Democratic chairman Michael Abrams resigned from the board of a WFC-backed insurance company.
Kwitny and Sanford were not the only ones to detect things amiss; Kwitny offers this extract from a House Select Committee on Narcotics and Drug Abuse staff report:
There is no question that the parameters of the WFC can encompass a large body of criminal activity, including aspects of political corruption, gun running, as well as narcotics trafficking on an international level... It is against this background that our investigation encountered a number of veiled or direct references to CIA or KGBKGBThe KGB was the commonly used acronym for the . It was the national security agency of the Soviet Union from 1954 until 1991, and was the premier internal security, intelligence, and secret police organization during that time.The State Security Agency of the Republic of Belarus currently uses the...
complicity or involvement in narcotics trafficking in South Florida.
There were also allegations that 8 of the 12 bank directors were either current or former CIA
Central Intelligence Agency
The Central Intelligence Agency is a civilian intelligence agency of the United States government. It is an executive agency and reports directly to the Director of National Intelligence, responsible for providing national security intelligence assessment to senior United States policymakers...
employees, and that then-CIA director William J. Casey
William J. Casey
William Joseph Casey was the Director of Central Intelligence from 1981 to 1987. In this capacity he oversaw the entire United States Intelligence Community and personally directed the Central Intelligence Agency ....
(coincidentally, a Roman Catholic
Roman Catholic Church
The Catholic Church, also known as the Roman Catholic Church, is the world's largest Christian church, with over a billion members. Led by the Pope, it defines its mission as spreading the gospel of Jesus Christ, administering the sacraments and exercising charity...
) apparently stymied the investigation for reasons of "national security". And so the two year investigation ended in the conviction of Cartaya in 1982 for nothing more than tax evasion.