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Comment by cs702 | Hacker News Reader

Greatly informative piece about shady characters laundering money in the US at a pretty large scale by investing in, or outright buying, struggling US businesses such as steel mills.

Managers and employees think they're getting a lifeline. In reality they're getting a new owner who cares very little about the long-term health of the operation and the safety and well-being of its employees.

The new owner will use financial engineering to extract as much cash as possible while cutting capital expenditures as much as possible. Eventually, the business will have no choice but to file for bankruptcy. Along the way, all cash paid out of the business will have been legitimized.

Employees and towns suffer the consequences. Ugly and sad.

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So, if they're from a former soviet republic, we call they shady characters and the process money laundering; if they're from the US, we call them private capital and the process leveraged buyout.

That’s why they set up the British Virgin Islands private equity fund

Because it is indistinguishable

UK territories (or whatever you want to call them) don't have the geopolitical baggage that larger economic unions do, so they are good intermediaries with laws that are more relevant for business in the 21st century

I wonder how nations will react to such abuse going forward now that UK is no longer in EU. It should be pretty straightforward now for countries to outright ban any investment or cash flow from UK based entities. Nobody's now going to protect UK from such actions like EU membership could have.

Of course the counter is these UK territories will be too useful for the corrupt politicians for them to want to ban.... Much like Switzerland.

I don't understand why thr UK leaving the EU would matter. The UK's position in the world of global banking before and after the EU hasn't changed. Banning all UK entities would kill the global economy.

> I don't understand why the UK leaving the EU would matter.

If a country pisses off the EU, for example by applying sanctions to one of its member states, the EU can reply "fine, we won't trade with you". This is a credible threat because the EU has a large share of the world economy.

The UK could also threaten to not trade with a country, but this is a much smaller threat as the UK is a much smaller part of the world economy.

In geopolitics, size matters: https://pontifex.substack.com/p/why-scotland-should-leave-th...

China has a bigger market than the EU. Does China have more power? I would say China has less influence. Marketsize matters but it is only one of many factors.

Remember the British Commonwealth is quite large with Canada, Australia, India, South Africa, etc. These create special relationships that don't exist with the EU.

Banning all UK entities, means cutting off all of the Hong Kong relationships, many commonwealth relationships, anglo countries.

As important as the EU relationship is. The Anglo alliance of countries holds the true power and it has been this way since WWII.

> Banning all UK entities would kill the global economy.

I wonder which of these "too big to fail" statements will end up being the one that actually kills the global economy.

Banks moved a lot of operations from London to Frankfurt due to Brexit.

Yes and Russian billionaires are “oligarchs” while American billionaires are “businessmen”.

https://fair.org/home/russia-has-oligarchs-the-us-has-busine...

>Mr. Kolomoisky, 58, a mercurial figure in Ukraine who once funded his own militia to fend off pro-Russian insurgents

the scope and type of available power is what distinguishes oligarchs from mere rich businessmen. In that particular case the Kolomoisky dukedom happened to be right next to the insurgency and he, like it were the actual feudal times, had to "raise the fyrd" so to speak to protect his dukedom and the whole kingdom by extension - his forces were among the key ones who blocked the insurgency from expanding further in the first months when the Ukrainian state and army were kind of in disarray.

That's available to Jeff Bezos, he just doesn't need it right now. I guarantee you if militants were blowing up Amazon trucks regularly, and the US government was ineffective to stop it, there would be Amazon MRAPs patrolling the streets

Yes, and at a small scale it already happens today. I was working for a largish tech firm a few years ago when they made an agreement with the local and state government to get the right to run their own private police force on their campus. This was not security, they had (limited) rights to detain, arrest, and use deadly force in some cases, very similar to American university police if you're familiar with that.

Are you sure things are so different?

https://www.nationofchange.org/2016/11/01/security-firm-runn...

Hostile takeover > leveraged buyout > private equity. They keep changing the name once people catch on to what a dirty business it is.

Very true. One launders money when the money is dirty. Money laundering requires placement of "raw cash", which is dirty. In this particular cash, the source of money is NOT "raw cash". Sure, Ihor took loans with the intention of not paying it back. This money is a product of corruption--not "dirty" though.

Imagine someone buying a new BMW M5 car on finance. Later, this guy claims that his car got stolen, gets a check from the Insurance company. Further, he uses this money as a down payment to buy a home in Texas. Do we call this "laundering"? I don't think so, since this money is traceable; neither placement, nor layering is involved. Yes, he schemed with his buddies to have his new car stolen, taken to Mexico. He can be prosecuted for his involvement in the theft, not for "money laundering".

It doesn’t need to be cash for it to be laundered money; the act of moving dirty funds around to difficult its tracing is also laundering.

Right, because PE launders money.

Money laundering means the money was illegally obtained. In this case it was allegedly stolen from a bank. It doesn't matter who steals or launders it for the definition.

To begin with, investment money were stolen from the largest Ukrainian bank via fake loans and investments. Hence the laundering. But instead of fake car wash sessions there were "for show" acquisitions: invest own money, quickly siphone them out of the business, sometimes but not necessarily making profit if lucky.

I would guess that if you are laundering money, launderer would happily spend extra money on safety and other issues to prevent getting too much attention. Here the case sounds like if the laundering oligarch hadn't been stingy on those things he wouldn't have gotten caught.

Maybe this is happening already and we don't know because some other oligarch is not being stingy?

Welcome to London.

of course it is happening

people think “money laundering” is hard or impossible and will point to articles like this one as “see they got caught”

it is completely unfalsifiable when the reality is that money is fungible and it is a complete waste of resources to try to enforce a whitelist

it isn't necessary to have no evidence of the money, but that is also possible too but wasnt necessary here or in most areas of reintegration

the whole economy has practically no separation from licit and illicit sources and they routinely traverse back and forth

That's why central banks start working on crypto and China even plans to introduce money with expiry date.

Money laundering is my favorite curiosity. The amount of resources needed to keep control of something like that would be astronomical.

Might happen eventually if governments move to centralized digital currencies though.

I think it’s a crime that attracts folks of all kinds. It’s a good business, you don’t “hurt” anyone besides the government, very quiet, sex, money, etc. The bad shit is where the money comes from.

Or the money was spent in buying the factory and what happens after is just extraction.

Speculation being that investments in economy are perceived as a very good thing and the origin of the money is not checked that tightly.

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