I don't know about Black Hotels, but Black Goldmines no worries

 Panoramic view of the Comarsa Mine, La Libertad region, Peru 

(click to enlarge)

Felix Salmon today waxes lyrical about the new John Le Carré novel and excerpts a bit about what Le Carré calls "Black Hotels", a way of laundering money. Salmon asks whether such a money laundering scheme is possible and offers up the novel snippet as context:

‘Would somebody mind telling me what a black hotel is?’ Matlock demanded of the air in front of him. ‘I happen to take my holidays in Madeira. There never seemed anything very black about my hotel.’

Fired by a need to protect the subdued Hector, Luke appointed himself the somebody who would tell Matlock what a black hotel was:

‘You buy a bit of prime land, usually on the sea, Billy. You pay cash for it, you build a five-star luxury-hotel resort. Maybe several. For cash. And throw in fifty or so holiday bungalows if you’ve got the space. You bring in the best furniture, cutlery, china, linen. From then on your hotels and bungalows are full up. Except that nobody ever stays in them, you see. If a travel agent calls: sorry, we’re fully booked. Every month a security van rolls up at the bank and unloads all the cash that’s been taken in room rentals, bungalow rentals, the restaurants, the casinos, the nightclubs and bars. After a couple of years, your resorts are in perfect shape to be sold with a brilliant trading record.’

No response beyond a raising of Matlock’s avuncular smile to maximum strength.

‘It’s not only resorts either, actually. It can be one of those strangely white holiday villages — you must have seen them, trickling down Turkish valleys to the sea — it can be, well, scores of villas, obviously, it can be pretty well anything that’s lettable. Car hire too, provided you can fudge the paperwork.’

Well Felix (and others), this humble scribe isn't so sure about 'Black Hotels' but is more confident of the existence of 'Black Goldmines' such as the one photographed above, the Comarsa mine in Peru owned by the notorious Peruvian narcotrafficking family, the Sanchez-Paredes (who, thanks to their corrupt ties with the APRA party, never seem to get thrown in jail). Here's how the laundering works (well, part of it at least):

1) Produce your cocaine
2) Transport your cocaine across the porous Amazon jungle border between Peru and Brazil
3) Exchange your cocaine at an agreed rate for gold produced by Brazil's "Garimpeiros" the informal gold miners there.
4) Smuggle the gold back into Peru and take it to your mine
5) Add the Brazilian gold to the production pile from the supposedly working mine.
6) Declare all the gold, the Peruvian and the Brazilian product, as "Made In Peru" and run it through the company books.
7) Et Voila! Washed, rinsed, tumble-dried and ironed with a touch of starch in the collar.

For more details, Google "Sanchez-Paredes", "Gold", "Cocaine", "Trafficking".

So what's your favourite corrupt Peru narcostate story at the moment, Otto?

Good question. There are so many to choose from, you see.

It could be the one about Luis Valdez, the cocaine capo from the Ucayali region of Amazonian Peru who was shamefully found not guilty of murdering an investigative journalist earlier this year and today left prison to be held under house arrest at his luxurious Lima pad. He's still charged with several other crimes, but when a rich dude gets to leave prison before any trial takes place the writing in on the wall in any Banana Republic.

It could be the latest twist in the long-running story of the biggest narco family in Peru, the Sanchez-Paredes family. They've just won another round in the courts to stop them ever getting arrested or going to trial. This family is up to its eyeballs in the white powder, but thanks to their large bank balances and APRA party buddies they just keep rolling along. The best reaction to last week's ruling that froze the case against them in very dubious circumstances came from Peru's main anti-drugs prosecutor who said, "There are judges (in Peru) who are in cahoots with illegal activity and with organized crime", which gets a big "No Shit Sherlock" from IKN.

No, the winner of best cocaine corruption story goes to this one cos we even get a video included. Underneath find the moving pictures, but first comes a direct translation of the report. Enjoy.

Shameful: Judge Frees Narcotrafficker and then Goes to Drink Beer With Him

Both were filmed in a bar in the town of Chachapoyas together with two police officers and the head of prison security, where the sentence for illegal trafficking of drugs was dropped.

Judge Edgar Víctor Gómez Quispe and the man he had just freed from a sentence for illegal drug trafficking, Teófilo Portocarrero Fernández, were found at a bar in Chachapoyas at the same table and with four bottles of beer.

Last July 16th at midday, the judge of the court of Penal liquidation in the province of Rodríguez de Mendoza of the High Court of Justice in the Amazonas (region of Peru) freed the drug runner on conditional bail. But four hours later, both were spotted by personnel from the Office of Control of the Magistrature (OCMA) drinking beer in a bar.

Also there were two police officers and the head of security at the prison where Portocarrero's sentence had been overturned, according to the news program "24 Hours".

"It's a great disappointment for us to be faced by a situation of this nature, with a magistrate that does not have the qualities of integrity required. It cannot be right for a judge to drink alcoholic beverages with a prisoner", said Enrique Mendoz, head of OCMA, who suspended judge Gómez and has begun an investigation into this grave error.

¡VIVA INVESTMENT GRADE!

Sulliden (SUE.to): A special message to one regular reader

This post goes out to one certain person who wrote to me on September 4th concerning Sulliden (SUE.to), received my reply and then told me about his friend who was (as he put it) "in love with SUE".

The message is: LOVE IS BLIND

Hey, I sure hope your friend didn't take a slice of that 80c bought deal led by Cormark.....

dyodd, dude.

World of Mining: Just in case you're naïve enough to think......

She's 55 years old, by the way

.....that cheats never prosper in the world of gold mining and that the worst dregs of society can't make it rich by scamming the world of its cash in the most underhand ways possible, here's news from Century Mining (CMM.v):

Century Mining Settles Law Suit Surrounding "Poderosa"

- Century receives cash payment and shares of Poderosa as settlement -

BLAINE, WA, July 6 /CNW/ - Century Mining Corporation (CMM: TSX-V) announced today that it has settled a lawsuit in Peru that the Company had brought against Corporacion Minera San Manuel S.A., Compania Minera Atacocha S.A.A. and Monica Patricia Arias Vargas de Ucelli, Veronica Rocio Arias Vargas de Gamero, White Peak Resources Inc. and Koriarias Inc. regarding the binding agreement signed for the sale of shares to Century of Compania Minera Poderosa S.A.

As part of the settlement announced today, Century will receive 260,868 common shares of Poderosa, which have been held in trust since a Letter of Intent was signed by both parties in 2006. In addition to the shares of Poderosa, Century will receive a cash payment in the amount of US$300,000.

Today's announcement brings to an end all litigation concerning the "Poderosa" deal.

The law suit Century filed in Peru was the result of yada yada continues here

Death in Peru: The Pandora's Box is opening

Ever wondered what a Peruvian drug baron looks like?

In this post on Friday, I told you about the very strange goings on in the La Libertad region of Peru, with district mayors accused of murdering a gov't employee because he wouldn't join in with the drug money scam operating in the locality.

Well, it looks like this story might blow the lid off one of the long-standing truths so far held unaccounted in Peru. The Sanchez-Paredes family have long been "suspected" of being narcos, and I put the word suspected in inverted commas because only someone with no idea of all things Peru and mining thinks they're innocent. The scam has been going on for years, and the Peruvian fiscals have always been on their tail without actually doing anything concrete. The reason is that the kickbacks go very high up in the Peruvian justice and gov't system, and nobody wants the S-P family to go under and start talking. I mean NOBODY.

The Sanchez-Paredes own two mines in the La Libertad region, namely Comarsa and San Simon, and these mines have been an integral part of the drug running operation. It's a long story, and if you're proficient in Spanish just Google the names already provided and find out as much as you want about the whole thing (much ink has been spilled), but basically the operation is suspected as running as follows:

1) The mine provides legitimate cover to import the necessary chemicals for cocaine production.

2) The cocaine makes its way to the USA via Mexico

3) The unlaundered dollars return to Brazil, where they're exchanged for gold bullion mined by artisan 'garimpeiro' miners.

4) The gold is smuggled into Peru via the highly perforated border with Brazil, where it is thrown onto the heap leaches at San Simon and Comarsa.

5) The mine then "produces" the gold bought in Brazil and the drug money is laundered, spun-dry and clean as a whistle. (It's widely understood by the Peru mining scene that the ore grades and throughput tonnage at the two mines are not enough to produce the quantity of gold that they do).

But it seems like there's a big development about to take place in the Huamachuco murder case that might just change everything. Tonight Peruvian investigativeTV show "El Cuarto Poder" (The Fourth Power) is going to show a video of a town hall meeting featuring the mayor of Sangorán, Santos Ruíz Guerra (the man accused of the original murder) telling the meeting that there will be no more mining concessions authorised in the San Simón sector, the decision being by popular demand.

The finger is being pointed even more directly at the Sanchez-Paredes family now, and threatens to spread the scandal into a nationwide affair. And as a bit of a gossip exclusive, your ear-to-the-ground Otto can reveal that all this comes at a time when the Sanchez family is looking to float the San Simon mine in a public offering in the USA (names can be provided, but not on blog). To be frank, I think the last thing they need right now is exposure to SarbOx rules.