Drugs money 'saved the banks from collapse' during global crisis

Drugs money saved some banks from collapse at the height of the global crisis the United Nations' drugs and crime chief claimed today.

Antonio Maria Costa, head of the UN Office on Drugs and Crime, told the Observer that there were signs that some banks were rescued by billions of dollars that 'originated from the drugs trade and other illegal activities.'

Speaking from his office in Vienna, Costa explained that in the second half of 2008, lending was the banking system's main problem.

'The system was basically paralysed because of the unwillingness of banks to lend money to one another,' he told the newspaper.

He said he had seen evidence that the proceeds of organised crime were the 'only liquid investment capital' available to some banks on the verge of collapse last year.

Costa said that as a result, a majority of the $352bn (£216bn) of drugs profits was absorbed into the economics system, effectively laundering it.

The UNs' drugs and crime chief said that he was first made aware of evidence that illegal money was being absorbed into the financial system around 18 months ago, although he would not name countries or banks that may have received drugs money.

A British Bankers' Association spokesman told the newspaper: 'We have not been party to any regulatory dialogue that would support a theory of this kind.

'There was a clear lack of liquidity in the system and to a large degree this was filled by the intervention of central banks.'

Costa's claim comes as police launch a new anti-drugs campaign that aims to appeal environmentally-minded cocaine users with the message that snorting cocaine destroys the rainforest.

The campaign warns that for every gram of cocaine made, four square metres of rainforest are destroyed.

The campaign, headed by the police and Greenpeace, comes amid evidence that cocaine use is on the increase among young people in the UK.

It has been suggested that lower prices have contributed to the prevalence of the drug

Source: Daily Mail