Can you launder money through black hotels?
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John Le Carré has a new book out, Our Kind of Traitor, which stars a big-deal Russian money launderer called Dima. There’s not actually all that much on the mechanics of money laundering, but this would be rather clever, I think, if it actually worked:
‘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.’
The book as a whole is very cleverly constructed, and full of wildly implausible ever-so-English characters who sound as though they’ve just walked out of a Noel Coward play. It’s a rollicking read, and I got through it in no time; I’m now wondering how common this black hotel ruse really is. Do people really buy hotels which have never actually been stayed in? One would think that before shelling out vast amounts of money for a seafront resort you might at least take a look at Tripadvisor. Still, I suppose that absent a legitimate buyer, Money Launderer Number One could always just sell to Money Launderer Number Two.
Update: Otto, in the real world, explains how black gold mines work in Peru — and even provides an example.
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Perhaps this explains the Trump Soho building!
Felix,
As a novelist, do allow me to implore you:
Do not get taken in by novelists.
And as a novelist with a background in the hotel industry, I can assure you such a scenario could only be plausible with the disclaimer that is typically inserted in the insert-title page stating that “This Is A Work Of Fiction.”
BTW: I loved “A Small Town In Germany.” Haven’t read JLC’s latest, however.
John Le Carré, organized crime, “avuncular,” “Billy,” and even “peripatetic” over there in a little box on the side.
Not sure what’s going on, but it’s almost as much fun as trying to decode the new Cyber Command logo.
I always thought that this was why gangsters owned restaurants – a business where everyone pays cash. you never have to serve a meal or even cook any food and you can take all the dirty cash to the bank at the end of the week.
They’re clearly focussed around the Black Sea…
If you wanted to launder money there would be about a million ways to do it more efficently than building and flippin a resort.
The most common money laundering businesses are jewlery stores, pawn shops, art gallaries.
You want to minimize overhead expences (like the maitenence and upkeep of a hotel) and maximize the amount of money the bogus enterprize can actually make on its own.
Resturants get inspected by health inspectors and are a hassle to run. They are also terrible businesses in terms of return on invested capital.
You also want to minimize the number of employees that could discover your rouse. Resorts and Resturants hardly fit that bill.
I’ll add that book to my reading list though… I’m so backlogged I’ll be lucky to get to it by 2012
Two choices:
1. John Le Carré should attend a money laundering class :)
2. John Le Carré knows that the readers of his books will never understand how money laundering works, so he decided to make it simple (and add some “secrets” of the rich that sell).