Tuesday, June 9, 2015

Prosecutors search Deutsche Bank offices for client transaction evidence

German prosecutors have raided Deutsche Bank (DBKGn.DE) offices in Frankfurt in a search for evidence related to client securities transactions, as Germany's largest lender struggles to break free of regulatory issues that contributed to an overhaul of its top leadership this week.
A source familiar with the situation said Tuesday's raid was tied to a tax rebate strategy by some of the bank's clients known as "dividend stripping", in which a stock is bought just before losing rights to a dividend, then sold, taking advantage of a now-closed legal loophole which allowed both the buyer and the seller to reclaim capital gains tax.
Deutsche Bank confirmed the raid but declined to comment on what prompted it. A spokesman for the lender said no employees have been accused of wrongdoing in the case.
Frankfurt prosecutors carried out "wide-ranging investigative measures," a spokesman for the prosecutors' office said, declining to give details of the target or cause of the probe.
Deutsche Bank shares were the biggest decliners in Germany's Dax .GDAXI index of blue chip companies, falling 2.8 percent by 8 a.m. EDT. The Dax fell 0.9 percent, while the STOXX Europe 600 banking index .SX7P was down 0.8 percent.
The lender, which on Sunday announced the surprise departure of co-chief executives Anshu Jain and Juergen Fitschen following a sharp drop in shareholder confidence, has been straining to maintain its reputation in face of a raft of legal and regulatory problems.
Those problems have prompted billions of dollars in fines and settlements.
Authorities have repeatedly raided its offices in recent years, in connection with investigations linked to the collapse of the Kirch media empire and a tax fraud case related to the trading of carbon dioxide emissions rights.
A separate source familiar with the situation had said earlier on Tuesday that the latest investigation was related to German private bank Sal. Oppenheim, which Deutsche bought in 2010. The bank said the raid was not linked to Sal. Oppenheim.

(Writing by Jonathan Gould; Editing by Maria Sheahan and David Holmes)

Wednesday, June 3, 2015

Historical Bond Fraud

Historical bonds are those bonds that were once valid obligations of American entities but are now worthless as securities, are quickly becoming a favorite tool of scam artists. Here are several things that you should know about them:

Types of Historical Bonds Used for Fraud

Although all sorts of historical bonds are collected and traded, historical railroad bonds comprise most of the bonds used to perpetrate fraud. Historical railroad bonds commonly used by scam artists include those issued by the Chicago, Saginaw, and Canada Railroad Co., the East Alabama and Cincinnati Railroad Co., the Mad River and Lake Erie Railroad Co., the Galveston, Houston & Henderson Railroad Co. and the Richmond, and York River Railroad Co. These railroad bonds are but a few of the 12,000 to 15,000 varieties of historical railroad bonds that are known to exist. Non-railroad historical bonds commonly used by scam artists include bonds issued by the Noonday Mining Co.

Lies Used

Lie: Historical bonds are payable in gold.
Fact: Historical bonds are not payable in gold.
Historical bonds are not valid obligations. Even if they were valid obligations, they would not be payable in gold because gold clauses in bonds issued before 1977 are unenforceable in U.S. courts. Adams v. Burlington Northern R.R. Co., 80 F.3d 1377, 1380 (9th Cir. 1996)(26K TXT file, uploaded 9/28/98); 31 U.S.C. § 5118(d)(2) (2.5K TXT file, uploaded 9/28/98).
Lie: Historical bonds are backed by the Treasury Department.
Fact: Historical bonds are not and have never been backed by us.
While historical bonds often have the words "United States of America" printed on them, these references were merely to identify the bonds as issued by entities located in the United States. Nowhere on historical bonds are there any statements that the bonds are issued or backed by us or any other part of the United States Government. Only in limited and well-known circumstances have we guaranteed obligations issued by private parties, for example, the bonds issued by the Chrysler Corporation in the early 1980s.
Lie: The Treasury Department has established a federal sinking fund to retire historical bonds.
Fact: There is no federal sinking fund to retire historical bonds.
As these historical bonds were neither issued nor backed by us or any other part of the United States Government, it would be patently absurd to suggest that we would establish a sinking fund to retire these historical bonds.
Lie: Funds in, or some proceeds from, these high-yield trading programs go to humanitarian purposes or infrastructure development projects that are approved by the United Nations, the World Bank, or the Treasury Department.
Fact: There are no such "trading programs" or "high-yield investment programs."
The scam artist's use of humanitarian or infrastructure development theme is a trick to (1) make the investor want to believe that the trading programs are real and (2) make the investor believe that they could be helping a Third World country by forking over their money.
Lie: Historical bond trading programs yield high rates of return through the buying and selling of "debenture" or "medium term notes" supposedly issued by "prime" or "top" European or "World" banks.
Fact: Officials of leading European banks, including Barclays Bank, have denied any participation in such programs and there is no evidence that the market for such instruments exists as described by scam artists.
This appears to be a recycling of the "prime bank" schemes that have long been labeled as bogus by countless domestic and foreign banking authorities. See, for example, the warnings issued about "prime bank" scams by the Federal Reserve Board, the Federal Reserve Bank of New York and the SEC. Courts have repeatedly held that prime bank trading programs, including those purporting to generate profits through the use of historical railroad bonds, are fictitious. See, e.g., SEC v. The Infinity Group, 993 F. Supp. 324 (E.D. Pa. 1998) (prime bank instruments described as "fantasy securities")(28K TXT file, uploaded 9/28/98); SEC v. Lauer, < link to cclauer.txt> 52 F.3d 667, 670 (7th Cir. 1995) (such instruments "do not exist")(12K TXT file, uploaded 10/5/98); SEC v. Daniel E. Schneider et al., No. 98-CV-14-D (D. Wyo. February 13, 1998) (order granting preliminary injunction; "prime bank trading schemes are fictitious according to readily available information")(22K TXT file, uploaded 9/25/98).

True Values of Historical Bonds

Historical bonds are worthless as securities. None of the historical United States railroad bonds are payable by today's successor railroads such as CSX, Norfolk Southern and Union Pacific. Instead, historical bonds only have value as collector's items. A 1995 publication, Stocks and Bonds of North American Railroads: Collectors Guide with Values (one of many available publications) assessed the collector's value of the historical railroad bonds listed at between $25 and $700 each. Moreover, there are many sites on the Internet that you can visit to evaluate the collector's value of any particular bond.

Bogus Third-Party Valuations to Trick Investors

Scam artists are selling historical bonds to unsophisticated investors at inflated prices far exceeding their fair value as collectibles. They often use third-party valuations, which state that the bonds are worth millions or billions of dollars each. These valuations or authentications, which are often referred to as "hypothecated" or "hypothetical," are bogus. A typical valuation (104K JPG file, file uploaded 1/24/98) will falsely overstate the value of these bonds by assuming erroneously that, despite the unenforceability of the gold clauses contained in the bonds, and the defunct and bankrupt status of most of the bonds' issuers, some person or entity is obligated to redeem the bonds in gold bullion. See SEC v. Gerald A. Dobbins et al., No. 98-229 (C.D. Cal. May 19, 1998) (findings on order to show cause re: preliminary injunction; valuations of historical bonds held to be "misstatements")(8.5K TXT file, uploaded 9/25/98).
Scam artists using such valuations may also make the false assertion that while perhaps not payable today in gold or in money, the bonds are used in high-yield trading programs in the United States, offshore and in Europe. As stated above, there are no such trading programs. In several cases, the third parties issuing the valuations appear to be working in conjunction with the scam artists. All these false assertions have been used to defraud investors into paying as much as $150,000 for historical bonds that regularly trade for $25.

Chicago, Saginaw and Canada Railroad Co. Bonds

CS&Cs creditors forced it into bankruptcy in 1876 and a predecessor of CSX Transportation, Inc. ("CSX") purchased its assets. CSXs predecessor did not assume any of CS&Cs outstanding debt, including the railroad bonds. All claims to money due under the bonds, which had a face value of $1,000 each, were resolved 112 years ago in the 1876 bankruptcy proceeding. At that time, investors presented their bonds for payment out of funds from the foreclosure sale and received a distribution amounting to less than 25 cents on the dollar. After the bankruptcy proceeding, the bonds remained in court archives until they were discovered in the basement of a federal building. A museum in Grand Rapids, Michigan, packaged the bonds with other historical information about this railroad for sale as collector's items for $29.95 each. Despite what a bogus valuation (104K JPG file, file uploaded 1/24/98) might claim about CS&C bonds, the bonds have no value other than as collectible memorabilia, since CSX has disclaimed any liability for redemption of these bonds, and they are most certainly not payable in gold. See Adams (26K TXT file, uploaded 9/28/98); 31 U.S.C. § 5118(d)(2)(2.5K TXT file, uploaded 9/28/98).

Courts have held that the CS&C bonds have only nominal value as collectibles. See Schneider (22K TXT file, uploaded 9/25/98) (preliminary injunction entered against defendants; bonds have "no value, except that of a collectible"). Similarly, other courts have found that bonds issued in the 1800s by the East Alabama & Cincinnati Railroad Co. and the Marietta & Northern Georgia Railway lack any investment value. See SEC v. Dobbins (C.D. Cal. March 9, 1998) (complaint)(13K TXT file, uploaded 9/25/98); SEC v. Dobbins (C.D. Cal. May 19, 1998) (8.5K TXT file, uploaded 9/25/98) (findings on order to show cause re: preliminary injunction); SEC v. Dobbins (C.D. Cal. May 19, 1998) (preliminary injunction) (7.6K TXT file, uploaded 9/25/98); Infinity Group, 993 F. Supp. at 330(28K TXT file, uploaded 9/28/98).

http://www.treasurydirect.gov/instit/statreg/fraud/fraud_historicalbond.htm

Tuesday, June 2, 2015

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Sunday, May 31, 2015

Goldman Sachs expected to settle forex suit for almost $130 million: WSJ

Goldman Sachs Group Inc is expected to pay $129.5 million to settle its portion of a lawsuit that accuses banks of rigging prices in the foreign exchange market, The Wall Street Journal reported, citing a person familiar with the matter.
The Journal said in its report that a final agreement may be reached in the next several weeks.
The lawsuit accused traders at a dozen banks of improperly sharing confidential information about their clients' orders through electronic chat rooms, then using that information to make money at the expense of their clients.
In April, Bank of America Corp had agreed to pay $180 million to settle the lawsuit. JPMorgan Chase & Co settled for $99.5 million in January, and Switzerland's UBS AG settled for $135 million in March.

Goldman Sachs was not available for comment outside regular U.S. business hours.

Friday, May 29, 2015

Forex’s ‘Last Look’ Practice Gets Curbed

Two of the world’s biggest currency-trading platforms plan to restrict a controversial industry practice in which banks can pull out of trades at the last moment if the market moves against them.
Thomson Reuters Corp. and BATS Global Markets Inc. will limit the practice, known as “last look,” on their platforms in coming weeks, in a move aimed at increasing transparency in the foreign-exchange market.
The change comes amid a broader shake-up of the trading industry prompted by concerns about traders’ efforts to manipulate a range of financial markets. Markets for precious metals, interest rates, stocks and currencies have all come under scrutiny from regulators in recent years because of allegations of inappropriate behavior.
Regulators in the U.K., the global hub for foreign-exchange trading, are expected to report next month on their own review into the supervision and transparency of some markets, including the foreign-exchange market. The so-called Fair and Effective Markets Review, or FEMR, specifically asked asset managers and other bank clients about their views on last look.
While some foreign-exchange platforms already don’t permit last look, it is still allowed on some large venues, including Hotspot, owned by BATS; and FXall, owned by Thomson Reuters. Hotspot and FXall account for about 25% of clients’ electronic forex trading, according to financial-industry consultants Greenwich Associates.
The last look practice is a legacy of over-the-phone currency trading, when traders would take a final check of the market before executing an order. It has survived even as foreign-exchange trading moved onto electronic platforms, leaving banks with the option to back out of an order after it was accepted by a client.
Thomson Reuters and BATS plan to tighten the time frame for canceling quotes and introduce a minimum acceptance rate banks have to respect.
Phil Weisberg, global head of foreign exchange at Thomson Reuters, said last look requires “more clarity.” Some clients don’t understand “the rules of engagement with the bank” and “are confused about trading protocols,” he added, referring to the exact conditions banks have to respect on the execution of each specific trade.
William Goodbody, head of FX at Hotspot, said, “Last look is a widely used practice in the industry. To make it work, it needs a clear set of guidelines.”
In June 2014, the U.K. Treasury, the Bank of England and the Financial Conduct Authority, the U.K.’s financial watchdog, launched the FEMR to consider ways to improve the supervision and transparency of some markets. FEMR findings, due to be released on June 10, are expected to establish rules on the execution of currency trades.
Foreign exchange is a highly unregulated market, compared to stock trading, as currencies aren’t traded on exchanges.
Banks’ foreign-exchange trading clients are likely to welcome the move to curb last look, said Kevin McPartland, a principal at Greenwich Associates.
“Giving market participants more visibility into where, how and with whom their orders are executed is a good thing,” Mr. McPartland said.
Javier Paz, a senior consultant at Aite Group, said last look echoes the equity-market practice of “spoofing,” an illegal strategy in which traders place orders they don’t intend to execute to move the market to their advantage.
But there are also some significant differences, he said. In spoofing, a trader places an offer to buy or sell, then cancels it quickly, whereas in last look, there’s always a client willing to execute one side of the trade, Mr. Paz said.
Write to Chiara Albanese at chiara.albanese@wsj.com
The Justice Department has begun looking into a common practice in foreign-exchange markets that allows banks to back out of unfavorable trades at the last moment, a person briefed on the matter said.
Prosecutors, along with the Securities and Exchange Commission, have asked Barclays Plc for information related to its electronic-trading platform, which contains a program that allows traders to take a “last look” at an order before executing it, according to the person, who asked not to be named because the matter isn’t public.
Prosecutors’ interest in the last-look practice has grown out of a broader investigation into the manipulation of benchmarks and client orders in the $5.3 trillion-a-day currency market. The inquiries follow an investigative path laid out in recent months by Benjamin Lawsky, New York’s banking regulator.
Barclays said earlier Tuesday that it set aside an additional 750 million pounds ($1.2 billion) to cover the cost of settling the currency-rigging investigation, bringing its total expected cost to about 1.25 billion pounds.

Vestige Practice

The last-look option is a vestige of the early computer era when the time lag between an order being entered at one bank and confirmed at another was long enough to expose the market maker to unpredictable price fluctuations. As that lag tightened, banks retained the right to halt currency trades on a last-look basis.
Critics of the practice say it’s obsolete and can harm investors.
“Last look is a hangover from a technology problem that no longer exists, yet still allows traders to reject trades and re-quote orders to the disadvantage of clients,” David Mercer, chief executive of LMAX Exchange, a forex trading platform, said in a Feb. 20 statement.
BlackRock Inc. said last month that last looks can cause market participants to experience so-called phantom liquidity where prices that appear to be available suddenly disappear, in response to the Bank of England’s Fair and Effective Markets Review. Making completed trades available and transparent would make the market better, BlackRock said.
“These developments, would in our view, facilitate fairer outcomes for end investors and increase market effectiveness and efficiency,” BlackRock said.

New Front

It isn’t clear whether the Justice Department’s review of last-look practices will lead to a new front in its forex investigation. The SEC is exploring whether any elements of the practice violate disclosure laws, another person briefed on the matter said.
Peter Carr, a Justice Department spokesman, declined to comment on any inquiry specifically into last-look practices, as did Florence Harmon of the SEC.
Until now, regulators in the U.K., Switzerland and the U.S. have been primarily focused on manipulation of benchmark currency exchange rates by traders at some 30 global banks, with an emphasis on collusive behavior. The last-look review indicates that regulators and prosecutors are turning their focus to established practices that could make markets unfair.
The prosecutors’ request appears to bolster a line of inquiry opened up by Lawsky, superintendent of New York’s Department of Financial Services, who said last month that he was looking into the practice.
In its annual report released Tuesday, Barclays said that various “regulatory and enforcement authorities,” including the Justice Department, SEC and Lawsky’s agency, “are investigating a range of issues associated with Foreign Exchange sales and trading, including electronic trading.” Kerrie Cohen, a spokeswoman for Barclays, declined to comment.

Chinese Stocks Are Crashing

The Shanghai Composite has extended yesterday's losses and is now officially in "correction" - down over 11% from its highs yesterday.
This is the biggest 2-day drop since August 2009
The much-heralded Shenzhen Composite is also down over 11% from yesterday's highs...

Intraday, a small opening ramp has been demolsihed in Shenzhen, CHINEXT, and CSI-300...

*  *  *
Charts: Bloomberg

Thursday, May 28, 2015

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Tuesday, May 26, 2015

Your CitiFX Pro Account is Closing and Transferring to FXCM

Dear Valued Client,
We are writing to inform you that as of Friday, June 26, 2015, Citibank, N.A. ("Citibank") will no longer offer its CitiFX Pro service and all related accounts will be closed. To facilitate your ability to continue to trade FX, we are pleased to inform you that Citibank has arranged for the transfer of your CitiFX Pro account to Forex Capital Markets, LLC, which is a subsidiary of FXCM Inc. ("FXCM") (NYSE: FXCM) and one of the largest foreign exchange brokers in the market. Forex Capital Markets, LLC is a registered Futures Commission Merchant (FCM) and Retail Foreign Exchange Dealer (RFED) with the Commodity Futures Trading Commission (CFTC), and is a member of the National Futures Association (NFA). Please see Important Disclosures & Disclaimers below.
FXCM is a leading provider of online forex trading and related services, with over 170,000 active accounts as of March 31, 2015. Further information on FXCM can be found here. Citi makes no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the information, products, services offered by FXCM.

Your Account Will Seamlessly Transfer
Provided you do not opt out (as described below), we have established a process for the seamless transfer of your CitiFX Pro open trade positions and cash margin account balance to FXCM. This process will include:
Citibank providing your account information, including open trade positions and other information (including personally identifiable information) from your CitiFX Pro account application to FXCM;
Citibank closing any open positions at 2:00 pm EDT on Friday, June 26, 2015 (*except for those currency pairs listed below), so they may be re-established by FXCM on your new FXCM account (as described below); and
Citi transferring your cash margin to FXCM.

Your new FXCM account will be available for trading on Sunday, June 28, 2015. The terms and conditions that will govern your open trade positions that are re-established by FXCM within the FXCM trading platform as well as your closing cash margin balance that is transferred to FXCM will be such terms and conditions as FXCM shall determine or as otherwise agreed to between you and FXCM. In addition, use of your personally identifiable information will be governed by FXCM's privacy policy. For further information on FXCM, please see the URL provided above.

*PLEASE NOTE that FXCM does not support the same currency pairs as Citi. You can see the full list of currency pairs that FXCM supports in the FAQs here. You are advised to close out your open trade positions in unsupported currency pairs, if any, before 09:00 am EDT Monday, June 22, 2015, otherwise they will be closed out by Citi and not re-established by FXCM. Any mark to market gain or loss will be applied or debited from your account prior to the account transfer.

Please also note that any open order you have placed at the time of the transfer that has not been triggered yet will need to be re-established by you within the FXCM trading platform.

Monday, May 25, 2015

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Sunday, May 24, 2015

The Original Chechnya Bombers - The CIA, The Saudis And Bin Laden

What if Putin is Telling The Truth?
On April 26 Russia’s main national TV station, Rossiya 1, featured President Vladimir Putin in a documentary to the Russian people on the events of the recent period including the annexation of Crimea, the US coup d’etat in Ukraine, and the general state of relations with the United States and the EU. His words were frank. And in the middle of his remarks the Russian former KGB chief dropped a political bombshell that was known by Russian intelligence two decades ago.
Putin stated bluntly that in his view the West would only be content in having a Russia weak, suffering and begging from the West, something clearly the Russian character is not disposed to. Then a short way into his remarks, the Russian President stated for the first time publicly something that Russian intelligence has known for almost two decades but kept silent until now, most probably in hopes of an era of better normalized Russia-US relations.
Putin stated that the terror in Chechnya and in the Russian Caucasus in the early 1990’s was actively backed by the CIA and western Intelligence services to deliberately weaken Russia. He noted that the Russian FSB foreign intelligence had documentation of the US covert role without giving details.
What Putin, an intelligence professional of the highest order, only hinted at in his remarks, I have documented in detail from non-Russian sources. The report has enormous implications to reveal to the world the long-standing hidden agenda of influential circles in Washington to destroy Russia as a functioning sovereign state, an agenda which includes the neo-nazi coup d’etat in Ukraine and severe financial sanction warfare against Moscow. The following is drawn on my book, “The Lost Hegemon” to be published soon…
CIA’s Chechen Wars
Not long after the CIA and Saudi Intelligence-financed Mujahideen had devastated Afghanistan at the end of the 1980’s, forcing the exit of the Soviet Army in 1989, and the dissolution of the Soviet Union itself some months later, the CIA began to look at possible places in the collapsing Soviet Union where their trained “Afghan Arabs” could be redeployed to further destabilize Russian influence over the post-Soviet Eurasian space.
They were called Afghan Arabs because they had been recruited from ultraconservative Wahhabite Sunni Muslims from Saudi Arabia, the Arab Emirates, Kuwait, and elsewhere in the Arab world where the ultra-strict Wahhabite Islam was practiced. They were brought to Afghanistan in the early 1980’s by a Saudi CIA recruit who had been sent to Afghanistan named Osama bin Laden.
With the former Soviet Union in total chaos and disarray, George H.W. Bush’s Administration decided to “kick ‘em when they’re down,” a sad error. Washington redeployed their Afghan veteran terrorists to bring chaos and destabilize all of Central Asia, even into the Russian Federation itself, then in a deep and traumatic crisis during the economic collapse of the Yeltsin era.
In the early 1990s, Dick Cheney’s company, Halliburton, had surveyed the offshore oil potentials of Azerbaijan, Kazakhstan, and the entire Caspian Sea Basin. They estimated the region to be “another Saudi Arabia” worth several trillion dollars on today’s market. The US and UK were determined to keep that oil bonanza from Russian control by all means. The first target of Washington was to stage a coup in Azerbaijan against elected president Abulfaz Elchibey to install a President more friendly to a US-controlled Baku–Tbilisi–Ceyhan (BTC) oil pipeline, “the world’s most political pipeline,” bringing Baku oil from Azerbaijan through Georgia to Turkey and the Mediterranean.
At that time, the only existing oil pipeline from Baku was a Soviet era Russian pipeline that ran through the Chechen capital, Grozny, taking Baku oil north via Russia’s Dagestan province, and across Chechenya to the Black Sea Russian port of Novorossiysk. The pipeline was the only competition and major obstacle to the very costly alternative route of Washington and the British and US oil majors.
President Bush Sr. gave his old friends at CIA the mandate to destroy that Russian Chechen pipeline and create such chaos in the Caucasus that no Western or Russian company would consider using the Grozny Russian oil pipeline.
Graham E. Fuller, an old colleague of Bush and former Deputy Director of the CIA National Council on Intelligence had been a key architect of the CIA Mujahideen strategy. Fuller described the CIA strategy in the Caucasus in the early 1990s: “The policy of guiding the evolution of Islam and of helping them against our adversaries worked marvelously well in Afghanistan against the Red Army. The same doctrines can still be used to destabilize what remains of Russian power.”6
The CIA used a dirty tricks veteran, General Richard Secord, for the operation. Secord created a CIA front company, MEGA Oil. Secord had been convicted in the 1980s for his central role in the CIA’s Iran-Contra illegal arms and drugs operations.
In 1991 Secord, former Deputy Assistant Secretary of Defense, landed in Baku and set up the CIA front company, MEGA Oil. He was a veteran of the CIA covert opium operations in Laos during the Vietnam War. In Azerbaijan, he setup an airline to secretly fly hundreds of bin Laden’s al-Qaeda Mujahideen from Afghanistan into Azerbaijan. By 1993, MEGA Oil had recruited and armed 2,000 Mujahideen, converting Baku into a base for Caucasus-wide Mujahideen terrorist operations.
General Secord’s covert Mujahideen operation in the Caucasus initiated the military coup that toppled elected president Abulfaz Elchibey that year and installed Heydar Aliyev, a more pliable US puppet. A secret Turkish intelligence report leaked to the Sunday Times of London confirmed that “two petrol giants, BP and Amoco, British and American respectively, which together form the AIOC (Azerbaijan International Oil Consortium), are behind the coup d’état.”
Saudi Intelligence head, Turki al-Faisal, arranged that his agent, Osama bin Laden, whom he had sent to Afghanistan at the start of the Afghan war in the early 1980s, would use his Afghan organization Maktab al-Khidamat (MAK) to recruit “Afghan Arabs” for what was rapidly becoming a global Jihad. Bin Laden’s mercenaries were used as shock troops by the Pentagon and CIA to coordinate and support Muslim offensives not only Azerbaijan but also in Chechnya and, later, Bosnia.
Bin Laden brought in another Saudi, Ibn al-Khattab, to become Commander, or Emir of Jihadist Mujahideen in Chechnya (sic!) together with Chechen warlord Shamil Basayev. No matter that Ibn al-Khattab was a Saudi Arab who spoke barely a word of Chechen, let alone, Russian. He knew what Russian soldiers looked like and how to kill them.
Chechnya then was traditionally a predominantly Sufi society, a mild apolitical branch of Islam. Yet the increasing infiltration of the well-financed and well-trained US-sponsored Mujahideen terrorists preaching Jihad or Holy War against Russians transformed the initially reformist Chechen resistance movement. They spread al-Qaeda’s hardline Islamist ideology across the Caucasus. Under Secord’s guidance, Mujahideen terrorist operations had also quickly extended into neighboring Dagestan and Chechnya, turning Baku into a shipping point for Afghan heroin to the Chechen mafia.
From the mid-1990s, bin Laden paid Chechen guerrilla leaders Shamil Basayev and Omar ibn al-Khattab the handsome sum of several million dollars per month, a King’s fortune in economically desolate Chechnya in the 1990s, enabling them to sideline the moderate Chechen majority.21 US intelligence remained deeply involved in the Chechen conflict until the end of the 1990s. According to Yossef Bodansky, then Director of the US Congressional Task Force on Terrorism and Unconventional Warfare, Washington was actively involved in “yet another anti-Russian jihad, seeking to support and empower the most virulent anti-Western Islamist forces.”
Bodansky revealed the entire CIA Caucasus strategy in detail in his report, stating that US Government officials participated in,
“a formal meeting in Azerbaijan in December 1999 in which specific programs for the training and equipping of Mujahideen from the Caucasus, Central/South Asia and the Arab world were discussed and agreed upon, culminating in Washington’s tacit encouragement of both Muslim allies (mainly Turkey, Jordan and Saudi Arabia) and US ‘private security companies’. . . to assist the Chechens and their Islamist allies to surge in the spring of 2000 and sustain the ensuing Jihad for a long time…Islamist Jihad in the Caucasus as a way to deprive Russia of a viable pipeline route through spiraling violence and terrorism.”
The most intense phase of the Chechen wars wound down in 2000 only after heavy Russian military action defeated the Islamists. It was a pyrrhic victory, costing a massive toll in human life and destruction of entire cities. The exact death toll from the CIA-instigated Chechen conflict is unknown. Unofficial estimates ranged from 25,000 to 50,000 dead or missing, mostly civilians. Russian casualties were near 11,000 according to the Committee of Soldiers’ Mothers.
The Anglo-American oil majors and the CIA’s operatives were happy. They had what they wanted: their Baku–Tbilisi–Ceyhan oil pipeline, bypassing Russia’s Grozny pipeline.
The Chechen Jihadists, under the Islamic command of Shamil Basayev, continued guerrilla attacks in and outside Chechnya. The CIA had refocused into the Caucasus.
Basayev’s Saudi Connection
Basayev was a key part of the CIA’s Global Jihad. In 1992, he met Saudi terrorist Ibn al-Khattag in Azerbaijan. From Azerbaijan, Ibn al-Khattab brought Basayev to Afghanistan to meet al-Khattab’s ally, fellow-Saudi Osama bin Laden. Ibn al-Khattab’s role was to recruit Chechen Muslims willing to wage Jihad against Russian forces in Chechnya on behalf of the covert CIA strategy of destabilizing post-Soviet Russia and securing British-US control over Caspian energy.
Once back in Chechnya, Basayev and al-Khattab created the International Islamic Brigade (IIB) with Saudi Intelligence money, approved by the CIA and coordinated through the liaison of Saudi Washington Ambassador and Bush family intimate Prince Bandar bin Sultan. Bandar, Saudi Washington Ambassador for more than two decades, was so intimate with the Bush family that George W. Bush referred to the playboy Saudi Ambassador as “Bandar Bush,” a kind of honorary family member.
Basayev and al-Khattab imported fighters from the Saudi fanatical Wahhabite strain of Sunni Islam into Chechnya. Ibn al-Khattab commanded what were called the “Arab Mujahideen in Chechnya,” his own private army of Arabs, Turks, and other foreign fighters. He was also commissioned to set up paramilitary training camps in the Caucasus Mountains of Chechnya that trained Chechens and Muslims from the North Caucasian Russian republics and from Central Asia.
The Saudi and CIA-financed Islamic International Brigade was responsible not only for terror in Chechnya. They carried out the October 2002 Moscow Dubrovka Theatre hostage seizure and the gruesome September 2004 Beslan school massacre. In 2010, the UN Security Council published the following report on al-Khattab and Basayev’s International Islamic Brigade:
Islamic International Brigade (IIB) was listed on 4 March 2003. . . as being associated with Al-Qaida, Usama bin Laden or the Taliban for “participating in the financing, planning, facilitating, preparing or perpetrating of acts or activities by, in conjunction with, under the name of, on behalf or in support of” Al-Qaida. . . The Islamic International Brigade (IIB) was founded and led by Shamil Salmanovich Basayev (deceased) and is linked to the Riyadus-Salikhin Reconnaissance and Sabotage Battalion of Chechen Martyrs (RSRSBCM). . . and the Special Purpose Islamic Regiment (SPIR). . .

On the evening of 23 October 2002, members of IIB, RSRSBCM and SPIR operated jointly to seize over 800 hostages at Moscow’s Podshipnikov Zavod (Dubrovka) Theater.

In October 1999, emissaries of Basayev and Al-Khattab traveled to Usama bin Laden’s home base in the Afghan province of Kandahar, where Bin Laden agreed to provide substantial military assistance and financial aid, including by making arrangements to send to Chechnya several hundred fighters to fight against Russian troops and perpetrate acts of terrorism. Later that year, Bin Laden sent substantial amounts of money to Basayev, Movsar Barayev (leader of SPIR) and Al-Khattab, which was to be used exclusively for training gunmen, recruiting mercenaries and buying ammunition.
The Afghan-Caucasus Al Qaeda “terrorist railway,” financed by Saudi intelligence, had two goals. One was a Saudi goal to spread fanatical Wahhabite Jihad into the Central Asian region of the former Soviet Union. The second was the CIA’s agenda of destabilizing a then-collapsing post-Soviet Russian Federation.
Beslan
On September 1, 2004, armed terrorists from Basayev and al-Khattab’s IIB took more than 1,100 people as hostages in a siege that included 777 children, and forced them into School Number One (SNO) in Beslan in North Ossetia, the autonomous republic in the North Caucasus of the Russian Federation near to the Georgia border.
On the third day of the hostage crisis, as explosions were heard inside the school, FSB and other elite Russian troops stormed the building. In the end, at least 334 hostages were killed, including 186 children, with a significant number of people injured and reported missing. It became clear afterward that the Russian forces had handled the intervention poorly.
The Washington propaganda machine, from Radio Free Europe to The New York Times and CNN, wasted no time demonizing Putin and Russia for their bad handling of the Beslan crisis rather than focus on the links of Basayev to Al Qaeda and Saudi intelligence. That would have brought the world’s attention to the intimate relations between the family of then US President George W. Bush and the Saudi billionaire bin Laden family.
On September 1, 2001, just ten days before the day of the World Trade Center and Pentagon attacks, Saudi Intelligence head US-educated Prince Turki bin Faisal Al Saud, who had directed Saudi Intelligence since 1977, including through the entire Osama bin Laden Mujahideen operation in Afghanistan and into the Caucasus, abruptly and inexplicably resigned, just days after having accepted a new term as intelligence head from his King. He gave no explanation. He was quickly reposted to London, away from Washington.
The record of the bin Laden-Bush family intimate ties was buried, in fact entirely deleted on “national security” (sic!) grounds in the official US Commission Report on 911. The Saudi background of fourteen of the nineteen alleged 911 terrorists in New York and Washington was also deleted from the US Government’s final 911 Commission report, released only in July 2004 by the Bush Administration, almost three years after the events.
Basayev claimed credit for having sent the terrorists to Beslan. His demands had included the complete independence of Chechnya from Russia, something that would have given Washington and the Pentagon an enormous strategic dagger in the southern underbelly of the Russian Federation.
By late 2004, in the aftermath of the tragic Beslan drama, President Vladimir Putin reportedly ordered a secret search and destroy mission by Russian intelligence to hunt and kill key leaders of the Caucasus Mujahideen of Basayev. Al-Khattab had been killed in 2002. The Russian security forces soon discovered that most of the Chechen Afghan Arab terrorists had fled. They had gotten safe haven in Turkey, a NATO member; in Azerbaijan, by then almost a NATO Member; or in Germany, a NATO Member; or in Dubai–one of the closest US Allies in the Arab States, and Qatar-another very close US ally. In other words, the Chechen terrorists were given NATO safe haven.