The Magnitsky Myth & Other Keys

to the Geopolitical Hoax of the Century – Page 2

"Activism" Is the New "Refuge of the Scoundrel"

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A Corrupt Global Enterprise

  Cycomm International Inc.’s a Canadian-listed stock play associated with Republic National Bank of New York when RNBoNY’s controlled by billionaire Edmond Safra – whom con-man Bill Browder, key generator of the Magnitsky myth, calls “my mentor and role model”.

Republic National Bank of New York – click thumbnail

for full-size image from 1993 Annual Report

  As outlined on the previous page (1), Cycomm began N.A. trading in 1986 as Sonartec North America Inc. (subsequently changing its name to Sonatel Telecommunications Corp. and then Cycomm) – on the Alberta Stock Exchange (ASE), a junior trading wheel in the financial “Wild West”. Vaunted technology was vended to Cycomm by Sonartec Ltd. – an entity listed in Australia – and by Canuck Dieter Blum (incl. phantom inventions noted earlier).

  In 1987, a major political scandal dubbed “WA Inc.” engulfed the 1971-registered Western Australia Teachers’ Credit Society and other Australian institutions exposing a raft of questionable dealings between characters in government and the private sector.

  "The Royal Commission into Commercial Activities of Government and Other Matters" was established in WA in 1990. After 21 months of hearings the Commission concluded there'd been a level of corruption so high as to "place our government system at risk." Prominent community figures were jailed for a range of illicit conduct. Two WA Premiers, Labor’s Brian Burke and his predecessor, Liberal Raymond O’Connor, went to prison amidst the expulsion from power positions of what became known as Burke’s “sleaze team”.

Sonartec Ltd. shares were among those in the portfolio of the WA Teacher’s Credit Society. Not just teachers, but pensioners as well – via the WA State Superannuation Fund – and all taxpayer and citizens were the losers.

Sonartec, the Australian listing, in turn was found to be holding a block of shares in the Canadian Sonartec/Sonatel/Cycomm. Following the tanking of the teacher’s society, The Globe and Mail’s Dan Westell disclosed these 500,000 shares of Cycomm went to International Investments (1983) Ltd. of P.O. Box 423, Geneva Aeroport for CDN $550,000 – when the public trading market valued them at $5 million.

Unsecured loans of AU $28 million to Sonartec Ltd. director/promoter Robert Paul Martin were uncovered in review of the teacher’s society books. Losses from loans to Martin and three other major debtors proved critical factors in the collapse of the WA Teacher’s Credit Society in 1987. A government bailout of the society cost the people of WA AU $120 million.

“Improper” dealings between Len Brush, then Chairman of WA’s State Superannuation Board, and Robert Martin were revealed. At trial, Martin’s counsel argued that three sums of AU $50,000 each made by Martin to Brush were loans – not bribes. Soon after being found not guilty of paying off the fund manager, Martin was charged with illegally hacking private communications. Found guilty of phone-bugging a trial witness, in 1990 the land developer and sea-crab-pot entrepreneur was sentenced to three years in jail. (The same term was handed Martin’s co-conspirator, Robert Smith, a former policeman.)

"WA Inc." scandal exposes intersection of government and corporate malfeasance – The Canberra Times, Saturday, November 3, 1990

Around the globe Sonartec N.A. aka Sonatel aka Cycomm buoyantly engaged in years of false and misrepresentative public disclosures, making grossly unrealistic projections and losing millions of real dollars along the way. Cycomm’s executive HQ was located at Suite 420, 1420 Springhill Road, McLean, Virginia, USA. (Additionally, facilities in Montreal, Quebec and Melbourne, Florida are noted in filings.)

  Highly-touted inventions of Robert Martin and Dieter Blum sank to murky depths – their scandalous provenance enshrined in a venture capital version of Davy Jones’ locker. By the end of 1991, Cycomm’s publicly-stated mission was voice privacy and encryption technologies. Word from the “street” to market regulators’ offices was of secretive deals with the CIA and other US defence/intell business.

  The group had dropped talk of revolutionizing commercial and recreational piscicapture. Still its corporate claims remained fishy. Of purported deals that were not top-secret, the company’s March 1992 “business plan” foretold of a GEC-Marconi-vended products marketplace that’d generate sales of more than $40 million by the end of 1994. In 1995 The Vancouver Sun disclosed that the outfit’s actual sales for this period from the arrangement amounted to just $200,000. Cycomm, whatever its status as a financial conduit and ‘paper play’, was a resounding bust as a business.

The company’s stock initially listed on Canada’s ASE. In August 1993 it also gained a listing on the American Stock Exchange. (The “AMEX” had been loosening its standards in an effort to compete for new listings with the Nasdaq market). In January 1999, Cycomm’s notified it “no longer met the AMEX continued listing criteria, and that Cycomm would be de-listed”. By late 2002, and its final filing with SEDAR (the N.A. securities regulatory agencies’ ‘System for Electronic Document Analysis and Retrieval’), the company was relegated to OTC (over-the-counter) trading under US$0.20 (collapsed from an all-time share peak of CDN $11.50). Before entering SEDAR’s black-hole of delinquent-filers Cycomm/Sonatel/Sonartec N.A. had accumulated a deficit of US $73,779,889.00.

Such a failed operational arc is not that exceptional for Canadian-listed “junior” stock plays of the era. Had Edmond Safra’s bank done its due diligence it’d not be business “fundamentals” that warranted joining the game. In the wake of Cycomm’s 1987 – 1991 history of fraudulent activities RNBoNY money-managers signed off on the purchase of two tranches of shares, (one in December ’91 and another in June ’92), placing the institution in mixed company of insiders and outsiders of many stripes – from associates, accomplices, to punters, dupes and victims – individual as well as institutional.

   In October 1992, Michael Gillard, veteran investigative journalist then with London’s “Observer”, reported findings of a three-month investigation by that venerable broadsheet and “Canada Stockwatch” (a trade journal edited and published by market sage John Woods – employing myself at the time). The “Observer”revealed: “British investors – including City institutions and Church Commissioners – have lost tens of millions of pounds as a result of investments in highly speculative shares… that have gone badly, if not fraudulently, wrong.”

Shares of Cycomm, and those of Rare Earth Resources Ltd., (a VSE-listing related by management and backers), were found among those stashed in the portfolio of the West Midlands Metropolitan Authorities Superannuation Fund – a pensioner’s fund managed by the Wolverhampton Metropolitan Borough Council (WMBC). Merchant bankers Singer & Friedlander, (probably best-known in N.A. as the place George Soros got his start, doing arbitrage, in the 1950s), also was in Cycomm’s UK circle of institutional shareholders.

   The Royal Bank of Scotland plc was drawn to Cycomm’s allure. Dubious share purchases in numerous “colourful” pubcos (public companies) held by RB, and its Nassau, Bahamas-situated subsidiary, Charterhouse Bank and Trust, were focus of an investigation by Scotland on Sunday’s Euan Ferguson, whose findings were published by SoS in a feature, “Crooks Grab Royal Mask”. This “dodgy deals” scandal blew up in the West Midlands, across England, Scotland, and beyond. Channel 4 television broadcast a remarkable documentary, “Who’s Minding the Managers”.

  Scottish “investment manager” William Philip “Willie” McLucas was a “consultant”to the Wolverhampton pension fund since at least May 1990. Between 1988 and 1993 his Waverley Mining Finance plc and Waverley Asset Management took down shares in, first, Cycomm and, then, Rare Earth. Records filed in Canada in 1994 show The Royal Bank of Scotland holding shares in McLucas’ Waverley Mining Finance.

   MC Hammer's "Hammerpants", aka harem pants, a light moment for an iconic company, Simplicity, that endured dark days – driven near bankruptcy by corporate raiders

   Another Cycomm player was Graham Ferguson Lacey, Isle of Man resident and offshore Bermuda+ operator. Founder of The Church of Nations, Lacey delivered a most apt sermon from the pulpit of Atlanta’s Dunwoody Baptist Church: “How to Lose Everything and Still be Rich” records Forbes in 1989. In February 1994, OffShore Alert's David Marchant noted that Lacey's "failed ventures are reported to have cost investors more than $400 million." (Manx court declared Lacey himself bankrupt – in October, 2013 – with reports estimating “he owes in the region of £2.2 million in executions alone in the Isle of Man”.)

  Lacey’s trail of financial wreckage earned him notoriety in 1980s and ‘90s America as a “corporate raider” esp. in connection with such disastrous (for employees, pensioners, the environment, investors+) sagas as those of: Simplicity Pattern Co. (iconic maker of patterns for the home-sewing market); and Gulf Resources & Chemical Corp. Operator of North Idaho's historic Bunker Hill mine, Gulf had shifted into oil and gas before being steered off-course in 1989/90 by millionaire, British property developer, David John Rowland (more recently in the news as a major donor to the UK Conservative party eg. providing the Tories £2.8 million before the 2010 election). In May 1991, Rowland's Inoco PLC sold its stake to Lacey's Nycal Corp. "Lacey didn't reverse Gulf's fortunes. He sped the company's demise," observes The Spokeman Review's Steve Massey. Lacey was a “finder” for Cycomm in 1988, and held shares directly and through his holding company, Arimathaea.

   An investigation by Britain’s Serious Fraud Office into the 1990 collapse of Polly Peck International, high-flying London Stock Exchange-listed textiles-(Delmonte brand)fruit-electronics-hotels-and-leisure-complexes conglomerate, found a great volume of sales of Polly Peck shares at market-high-prices, for a mysterious client named Behcet T. Ali, administered by an outfit called Rhone Finance – transactions flowing through “letterbox companies” further insulated by Switzerland’s privacy laws. In October of that year, London’s "Times on Sunday" reported: "The Swiss police call it the Bermuda triangle… Large amounts of money disappear into it never to be traced again."

The SFO’s Polly Peck investigators zeroed in on trading via P.O. Box 423, 1215 Geneve - 15 Aeroport – letterbox entities, police say, set-up for Polly Peck transactions by Michael Morton Duncan Laidlaw, former exec-director of ‘City’ brokerage Giles & Overhury, aided by a Switzerland-based fiduciare, Roger A. Leopard.

Letterbox companies facilitated transactions in Polly Peck, Cycomm plus

  Other letterbox companies, beneficial owners concealed, using this same address included the previously-noted International Investments (1983) Ltd. (which had benefited from receipt of Cycomm stock at a fraction of its public market valuation), Alpha Fund Management and Epsom Fund Management. Related Epsom Investment Services NV dealt through the airport P.O., as well as an addy in Netherland Antilles. Roger Leopard was documented as officer of Rhone Finance situated, The Sunday Times explained, in three rooms of the World Trade Centre next to the Geneva Airport.

  While the Polly Peck fraud-theft-share-manipulation-and-more investigation was underway in the early 1990s, documents filed with securities regulatory agencies in Canada disclose Rhone Finance holding a stake in The Van Diemen’s Land Company. VDL, one of the first-ever corporations in the Australian state of Tasmania, has passed through quite some hands since its founding and royal charter receipt in 1825. Billed in the country’s press as “a company with a mixed pedigree coupled with a touch of the exotic”, today VDL’s in grave trouble.

  By late ’93 Rhone’s listed alongside aforementioned “corporate raider” Graham Ferguson Lacey, Van Diemen’s majority owner of-the-time. Lacey’s stake’s held  directly, and through his Arimathaea Holdings and related Arimathaea Resources Inc. (later renamed Van Diemen’s Company Ltd., and VDC Corp Ltd.) – directors of which included Lacey and life-long Torontonian Irwin Singer. (Singer, who held Cycomm shares in 1988, served as director of an associated company, Shephard Insurance Group Ltd., from late 1990 to late 1993. As well, Singer’s a director of Lacey’s Nycal Corp. and Nycal Canada Inc. in the early ’90s.) Also stake-holder of Van Diemen’s Land Co. in this period is Edmond Safra’s Republic National Bank of New York.

   (In 2004 – by which time VDL’s control was in the hands of unlisted New Zealand entity Tasman Farms – “The Age” reports approval was received to move Tasman’s “dairy farming operations, which have no debt, into The Van Diemen's Land Company, which is debt-heavy”. Now, in 2018, there are fears for the future of Australia’s largest dairy in the wake of VDL’s 2015 sale by New Zealand's New Plymouth District Council. The purchaser was Moon Lake Investments Pty Ltd. Controlled by Chinese entrepreneur Lu Xianfeng, Moon Lake financed its end via some huge loans from Australian and Chinese entities. This major story is ongoing in the Antipodes.)

   After the mid-September 1990 raid by agents for the Serious Fraud Office (SFO) on his management HQ in London’s Mayfair district, Polly Peck’s chief, Asil Nadir, went on the offensive – blaming authorities for his problems. British Conservative MP Michael Mates added to the controversy. With a criminal investigation underway Mates sent Nadir a birthday gift. Police found it in Nadir’s home – a watch engraved in Latin on its back: “Don’t let the buggers get your down”. Polly Peck donated £440,000 to UK's Tory party.

   Nadir denied the charges against him and called himself a victim of “gross prosecutorial misconduct of the gravest kind”. Publicly blaming the SFO for the collapse of his corporate domain, Nadir fled before his 1993 trial date. For the next 17 years his domicile was Turkish-controlled Northern Cyprus – outside the reach of UK law. In August 2010, Asil Nadir agreed to return and face trial in London. In August 2012 Nadir’s found guilty of 10 counts of theft from Polly Peck totalling £29 million – for which he’s sentenced to 10 years in prison.

The Observer's Michael Gillard delivers Polly Peck's letterbox post-mortem – May 9, 1993

    Money managers at the Wolverhampton Metropolitan Borough Council purchased shares in letterbox-traded Polly Peck – saying they’re obliged by law to do so once it joined the “The Financial Times Stock Exchange 100”. (FTSE 100, aka the "Footsie", is a share index of those LSE-listed companies with, collectively, the 100 largest market capitalizations.) What compelled overseers of pension funds for the people of England’s West Midlands to pick up shares in Cycomm and Rare Earth, stocks also linked to P.O. Box 423 in Geneva’s Aiport, has yet to be answered.

  The WMBC’s Assistant Director of Finance, Keith Stout, “resigned his employment while… enquiries were ongoing”. The Council’s “former Conservative chairman, Mrs. Williams, left town in her socks,” notes her successor, Labor’s John McCallum. By 1992/’93 when Cycomm, Rare Earth and a sackful of Canadian “penny dreadfuls” were revealed in the Wolverhampton portfolio, it’s reported that the fund's Polly Peck holding, which cost pensioners “well into six figures, is valued at just 1p (a single pence)”.

   Edmond Safra’s Republic National Bank of New York (RNBoNY) participated in two “private placement” tranches of Cycomm shares – first in late 1991, and, again, in mid-1992. Unique among Cycomm’s institutional placees, RNBoNY also shows up as a shareholder of Van Diemen’s Land Co., appearing in such role on the same date – in December 1993 – as does Graham Ferguson Lacey and Rhone Finance (of which Roger A. Leopard’s an officer, and neighbour to the Geneva Aiport Post Office Box 423).

   Ahead on these pages, the focus is less on such financial filigree and more on the corporate culture and community – introducing a colourful cross-section of those cast-members who keep the wheels in spin. Cycomm makes way for still more controversial, and public money-losing, dealings within RNBoNY’s orbit. Safra and "diamond tycoon" of 'Angolagate' infamy, Beny Steinmetz bankroll+ Moscow operations – seeding an enterprise for Bill Browder and team that will reap ill for many. And it will propagate a fantastic myth.

   Under-oath #2 – "Give me a fact." Con-man Bill Browder fails to find cover in court. NB For the full transcript of Browder's examination which debunks the myths - click on the thumbnail below: 

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